author: SIMPSON, Circuit Judge: DYER, Circuit Judge BY THE COURT:

text:
    Willie McLAURIN et al., Plaintiffs-Appellants, v. The COLUMBIA MUNICIPAL SEPARATE SCHOOL DISTRICT et al., Defendants-Appellees.
    No. 71-3022.
    United States Court of Appeals, Fifth Circuit.
    April 11, 1973.
    Rehearing and Rehearing En Banc Granted May 24, 1973.

      Nausead Stewart, Fred L. Banks, Jr., Melvyn R. Leventhal, Jackson, Miss., for plaintiffs-appellants.
    Maurice Dantin, Columbia, Miss., for defendants-appellees.
    Before GOLDBERG, DYER and SIMPSON, Circuit Judges.
   SIMPSON, Circuit Judge:

This Court’s en banc decision in Singleton v. Jackson Municipal Separate School District, 1970, 419 F.2d 1211, cert. denied, 1970, 396 U.S. 1032, 90 S.Ct. 612, 24 L.Ed.2d 530, prescribed detailed procedures for the effectuation of staff reductions resulting from the judicially-ordered desegregation of formerly dual public educational systems:

“If there is to be a reduction in the number of principals, teachers, teacher-aides, or other professional staff employed by the school district which will result in a dismissal or demotion of any such staff members, the staff member to be dismissed or demoted must be selected on the basis of objective and reasonable non-discriminatory standards from among all the staff of the school district. In addition if there is any such dismissal or demotion, no staff vacancy may be filled through recruitment of a person of a race, color, or national origin different from that of the individual dismissed or demoted, until each displaced staff member who is qualified has had an opportunity to fill the vacancy and has failed to accept an offer to do so.
Prior to such a reduction, the school board will develop or require the development of nonracial objective criteria to be used in selecting the staff member who is to be dismissed or demoted. These criteria shall be available for public inspection and shall be retained by the school district. The school district also shall record and preserve the evaluation of staff members under the criteria. Such evaluation shall be made available upon request to the dismissed or demoted employee.
“Demotion” as used above includes any reassignment (1) under which the staff member receives less pay or has less responsibility than under the assignment he held previously, (2) which requires a lesser degree of skill than did the assignment he held previously, or (3) under which the staff member is asked to teach a subject or grade other than one for which he is certified or for which he has had substantial experience within a reasonably current period. In general and depending upon the subject matter involved, five years is such a reasonable period.” 419 F.2d at 1218.

The district court ruled that the failure of the Columbia, Mississippi, Municipal Separate School District to renew the teaching contracts of five black staff members for the 1970-1971 academic year was not required to be evaluated pursuant to the Singleton procedures governing staff reductions. Accordingly, he rejected the claims for reinstatement lodged by four of the five teachers and dismissed all claims for awards of back pay. We believe that the district judge misconstrued the scope of our Singleton decision as applied to the facts of this case and therefore reverse the judgment rendered below with directions to grant the relief requested.

THE DESEGREGATION LITIGATION

Desegregation of the Columbia Municipal Separate School District was accomplished by means of a lawsuit instituted by the United States. That action was consolidated with 24 other Mississippi school desegregation cases in the Hinds County School Board litigation which received concentrated attention from this Court in 1969.

In United States v. Hinds County School Board, 5 Cir., July 3, 1969, 417 F.2d 852, cert. denied, 1970, 396 U.S. 1032, 90 S.Ct. 612, 24 L.Ed.2d 531, we held that freedom-of-choice public school desegregation plans were no longer constitutionally adequate. We directed the defendant school districts to implement workable desegregation plans by the start of the 1969-1970 school year. On August 28, 1969, upon the motion of the United States Department of Justice and the recommendation of the Secretary of Health, Education and Welfare, we suspended the July 3, 1969, order and postponed the date for the submission of new plans until December 1, 1969.

On October 29, 1969, sub nomine Alexander v. Holmes County Board of Education, 396 U.S. 19, 90 S.Ct. 29, 24 L.Ed. 2d 19, the Supreme Court held that we had erred in delaying the implementation of our July 3, 1969 order. The Supreme Court vacated our order of August 28, 1969, and directed that the defendant school districts were to operate unitary educational systems effective immediately.

This Court, on November 7, 1969, directed the defendant school districts to implement permanent desegregation plans devised by the Office of Education, Department of Health, Education, and Welfare, no later than December 31, 1969. United States v. Hinds County School Board, 5 Cir., 1969, 423 F.2d 1264, cert. denied, 1970, 396 U.S. 1032, 90 S.Ct. 612, 24 L.Ed.2d 531.

COMPLIANCE ON THE PART OF THE COLUMBIA DISTRICT

The Columbia Municipal Separate School District responded to our November 7, 1969, order by moving classes, with their teachers, intact from one building to another for the second semester of the 1969-1970 school year. As a result, black teachers in the employ of the District continued to instruct their all-black classes and white teachers continued to instruct their all-white classes. The only difference was that the school buildings were no longer racially segregated. The situation lasted until the end of the 1969-70 academic year. A true merger of the faculties and student bodies was not effectuated until the start of the 1970-1971 school year.

THE REDUCTION IN THE INSTRUCTIONAL STAFF

On March 26, 1970, the five plaintiffs in this action W. S. McLaurin, Mrs. Alberta Collins, Shirley Johnson, Mrs. Rose Johnson, and Joe Reddix, all instructional personnel in the school system, were given notice that their contracts would not be renewed for the 1970-1971 school year. The notices failed to state specific reasons for the non-renewals and requests for explanations proved unavailing.

During the 1969-1970 school year, the Columbia Municipal Separate School District employed 129 teachers; that figure was reduced to 116 teachers for the following year. For the 1970-1971 academic year, the District employed twelve new teachers, all but one of them white. None of the five plaintiffs was offered an opportunity to fill any of the apparent vacancies. It is undisputed that at the time the plaintiffs were notified that their contracts were not to be renewed, no objective criteria for the selection of teachers to be demoted or dismissed had been adopted by the District. In addition, no systematic comparisons of the five plaintiffs with the District’s other faculty members were made prior to the non-renewals of the contracts and the District’s evaluations of the plaintiffs were formulated only after suit was brought in the district court.

PROCEEDINGS IN THE DISTRICT COURT

On August 4, 1970, the plaintiffs filed their complaint in the district court and alleged jurisdiction under the First, Thirteenth, and Fourteenth Amendments to the United States Constitution; Title VI of the Civil Rights Act of 1964, Sec. 601, 42 U.S.C. Sec. 2000d; and 42 U.S.C. Secs. 1981 and 1983. They sought temporary and permanent injunctive relief in the form of teaching contracts for the 1970-1971 school year, back pay awards, and counsel and litigation costs and fees. The complaint alleged the following Singleton violations:

“Upon information and belief defendants have violated the above cited order: (1) plaintiffs and members of the plaintiff class are as qualified or more qualified than many of the white teachers who have obtained contracts for the 1970-1971 school year; (2) defendants have failed and refused to consider the qualifications of all teachers in the defendant school districts as a basis for determining which teachers were to be dismissed prior to the dismissal of plaintiffs and members of the plaintiff class; (3) defendants will hire and have hired white teachers with qualifications and experience equivalent to or inferior to that possessed by plaintiffs and members of the plaintiff class; (4) defendants have recruited and employed teachers new to the system for alleged vacancies without first considering the qualifications of plaintiffs and members of the plaintiff class; (5) defendants have failed to develop objective criteria to be used in selecting staff members to be dismissed or demoted.”

The Columbia Municipal Separate School District answered by denying that it had committed the Singleton violations enumerated in the complaint. After extensive discovery was had, a two day trial before the district judge began on July 15, 1971. In an opinion dated August 24, 1971, the trial judge found against the plaintiffs (with the exception of Mrs. Rose Johnson, whose non-renewal was directed to be reconsidered on the basis that she had been evaluated for her performance at a grade level other than the one for which she was certified) for the following reasons:

1. The Singleton criteria were not applicable to this case, thereby rendering non-compliance with those criteria irrelevant.

' 2. Each plaintiff (except for Mrs. Johnson) was dismissed for legitimate cause based upon his or her performance while employed by the District.

3. None of the five plaintiffs was entitled to awards of back pay because they had permitted their suit to remain dormant until well into the second semester of the 1970-1971 school year.

THE APPLICABILITY OF THE SINGLETON CRITERIA

The district court addressed itself to the applicability of the Singleton standards as follows:

“One of the plaintiffs’ allegations is that the board, in the implementation of its desegregation plan, failed to adopt objective nonracial criteria in the ‘dismissal or demotion’ of any staff member, and to make these criteria available for public inspection and evaluations made thereunder available to any dismissed or demoted employee. The Court finds this partially true in that within the two months’ time this board had to implement its plan prior to the time teacher recommendations were statutorily required, it had not made such criteria public. This is not to say that- such criteria were not considered by the board with regard to plaintiffs herein. Moreover, the Court finds that objective nonra-eial criteria have been developed and adopted by the board since the filing of the suit. Further full and complete evaluations of plaintiffs’ teaching performances were furnished plaintiffs in defendants’ answers to interrogatories, months prior to the trial.
The board’s position with regard to plaintiffs is that they were not dismissed due to a ‘reduction’ in teaching staff to which the HEW provisions are applicable. Following integration in January 1970, only 1 teaching station was lost to the system. No reduction in staff was necessary, attrition having taken care of any reduction due to loss of enrollment. Eight faculty members were not rehired, including the black assistant principal and four teachers, plaintiffs herein. These faculty members were not re-hired for cause . . .”

We believe that the district judge erred in holding the Singleton criteria inapplicable for two reasons: (1) full compliance with the desegregation directives of this Court was not achieved until the start of the 1970-1971 school year, when classes were first conducted on an integrated basis; and (2) there was in fact a reduction in the number of teaching personnel of the District between the 1969-1970 school year and the 1970-1971 school year.

Once it is determined that the Singleton standards were applicable to the non-renewals of these five plaintiffs, it is clear that those standards were violated when the District decided not to renew the plaintiffs’ contracts for the 1970-1971 school year. No objective criteria had been promulgated prior to the decisions not to renew; the displaced black faculty members were not given first consideration for subsequent vacancies on the District’s staff; and the evaluations of the plaintiffs’ performances were not made until long after their employment relationships had been terminated.

DISMISSALS FOR CAUSE

Before summarizing the evidence adduced at trial dealing with the alleged deficiencies in the performances of the plaintiffs, the district court observed:

“The State of Mississippi has no tenure for its public school teachers. By statute, the principal of each school recommends to the superintendent on or before April 1st of each year those teachers to be employed for the school involved. If such recommendations meet with the approval of the superintendent, the statute then provides that he shall recommend the employment of such teachers to the board of trustees of the district, and, unless good reason to the contrary exists, the board of trustees shall elect the teachers so recommended. There are no statutes providing for notice or hearing procedures for teachers not recommended for reemployment ...”

Having concluded that the plaintiffs were without tenure or the right to notice or hearing procedures prior to the non-renewals of their employment contracts, the trial court found that each non-renewal was based upon valid grounds (with the exception of Mrs. Johnson, supra).

In Sparks v. Griffin, 5 Cir., 1972, 460 F.2d 433, we held that a Texas school district had unconstitutionally refused to renew the employment contracts of two black teachers while the process of disestablishment of the dual educational system was taking place. We there stated:

“The district court ruled that neither plaintiff-appellant had any legitimate expectancy of continued employment by the Union Hill Independent School District because neither one had tenure and it had long been the custom to reconsider the contract of every teacher in the district on an annual basis. While the expectancy of continued employment has been an important issue in several decisions of this Court dealing with public educational institutions, see, e. g. Sinderman v. Perry, 5 Cir., 1970, 430 F.2d 939, cert. granted, 1971, 403 U.S. 917, 91 S.Ct. 2226, 29 L.Ed.2d 694 (alleged refusal to renew teaching contract because of teacher’s exercise of First Amendment rights), we have never recognized the relevancy of this concept to school desegregation proceedings. The plaintiffs-appellants in this case, both blacks, have charged that their contracts were not renewed for the 1968-1969 academic year for racially discriminatory reasons. The mere fact that they were not offered new contracts for the following year rather than being dismissed outright does not limit their right to seek relief under the controlling decisions of this Court.” 460 F.2d at 442.

We are not at all persuaded that each plaintiff was denied employment for the 1970-1971 academic year for valid, objective, nonracial reasons. As the district court noted, “ . . . all plaintiffs had numerous years of teaching experience, at least four years in the Columbia schools, except Rose Johnson who had only one year, but had five years’ teaching experience elsewhere.” It is difficult to believe that the District’s level of tolerance of the plaintiffs’ alleged deficiencies in the performance of their duties was coincidentally reached and exceeded during the period meaningful desegregation was being achieved. Guided by Singleton standards, we conclude that the district court’s finding that all the plaintiffs were dismissed for valid cause is clearly erroneous, Rule 52(a), Federal Rules of Civil Procedure, and not binding on this Court.

THE PROPRIETY OF BACK PAY AWARDS

Because we have decided that the plaintiffs were improperly denied re-employment by the Columbia Municipal Separate School District for the 1970-1971 academic year, we must now inquire into their eligibility for awards of back pay. As noted earlier, the district court ruled that the plaintiffs were not entitled to awards of back pay because they had permitted their suit to remain dormant well into the second semester of the 1970-1971 school year. The following chronology is taken verbatim from the district court’s opinion in this case:

“The complaint and motion for preliminary injunction was filed on August 4, 1970, nearly six months after plaintiffs were terminated. On August 26, 1970, defendants promptly filed answers and a motion for severance as to the separate school boards. On September 1, 1970, plaintiffs propounded interrogatories to defendants requiring voluminous answers which were promptly filed on September 21, 1970. On February 17, 1971, present counsel for plaintiffs entered an appearance and on the same date filed a motion for an early hearing noticing same for a time to be designated by the Court, but with no notice being given to the Court. On March 4, 1971, plaintiffs’ counsel for the first time notified the Court of the pending action and motions. On March 26, 1971, the Court acknowledged counsel’s letter advising that after holding court in Hat-tiesburg during the middle two weeks of March, the Court, for the first time, had an opportunity to review the pleadings. In the same letter, the Court advised counsel that it was denying the motion for preliminary injunction for relief as to the 1970-1971 school year as moot, but would hear all other pending motions on April 5, 1971, including the Court’s own motion to dismiss for lack of prosecution.
On April 5, 1971, at a hearing in chambers, the Court approved defendants’ motion for severance and reaffirmed its position that plaintiffs’ motion for preliminary relief for the 1970-1971 school year had become moot. An order to this effect was entered on April 29, 1971.
Following unsuccessful conferences between counsel for both sides to agree on a pre-trial order pertaining to those plaintiffs not offered reemployment by the Columbia Municipal Separate School District, a two day trial on the merits was held, beginning July 15, 1971. As to that portion of the case, pertaining to the Marion County Board of Education, it has been settled and is not before the Court.”

We hold that awards of back pay should have been made by the district court. The sequence of events related in the district court’s opinion does not reveal such an inordinate delay in the prosecution of this case as to justify denial of back pay. As the district court noted, the responses to interrogatories were “voluminous”. In addition, the Columbia Municipal Separate School District did not help to expedite matters by its denial of any Singleton violations. Finally, as we noted in Harkless v. Sweeny Independent School District, 5 Cir., 1970, 427 F.2d 319, back pay awards are closely related to grants of injunctive relief in matters pertaining to the desegregation of public schools:

“Section 1983 was designed to provide a comprehensive remedy for the deprivation of federal constitutional and statutory rights. The prayer for back pay is not a claim for damages, but is an integral part of the equitable remedy of injunctive reinstatement. Reinstatement involves a return of the plaintiffs to the positions they held before the alleged unconstitutional failure to renew their contracts. An inextricable part of the restoration to prior status is the payment of back wages properly owing to the plaintiffs, diminished by their earnings, if any, in the interim. Back pay is merely an element of the equitable remedy of reinstatement.” 427 F.2d at 324.

PLAINTIFFS’ ENTITLEMENT TO COUNSEL FEES

The plaintiffs have moved this Court for an award of reasonable attorney’s fees to be taxed as costs against the Columbia Municipal Separate School District.

The leading decision in the area of attorney’s fee awards pertaining to public school desegregation actions is the Fourth Circuit’s en bane ruling in Bradley v. School Board of the City of Richmond, Virginia, 4 Cir., 1965, 345 F.2d 310, wherein it was stated:

“Finally, the attorneys for the appellants ask an award of attorneys’ fees. They asked for such fees in the District Court and were awarded a nominal fee because of their representation of the two additional plaintiffs whose entry into the school of their choice was ordered by the District Judge, despite the fact that their applications were belated. While the District Court’s order was otherwise generally unfavorable to the plaintiffs, and we affirm it here, the plaintiffs’ attorneys say that as a result of their efforts in the first trial the plaintiffs obtained very substantial relief. It is true that the original plaintiffs did obtain substantial relief in the District Court in the first trial, and it is true also that we directed an award of attorneys’ fees in Bell v. School Board of Powhatan County, 4 Cir., 321 F.2d 494.
It is only in the extraordinary case that such an award of attorneys’ fees is requisite. In school cases throughout the country, plaintiffs have been obtaining very substantial relief, but the only ease in which an appellate court has directed an award of attorneys’ fees is the Bell case In this Circuit. Such an award is not commanded by the fact that substantial relief is obtained. Attorneys’ fees are appropriate only when it is found that the bringing of an action should have been unnecessary and was compelled by the school board’s unreasonable, obdurate obstinacy . . .” 345 F.2d 321.

See, also, Monroe v. Board of Commissioners of City of Jackson, Tennessee, 6 Cir., 1972, 453 F.2d 259, 263 where the district court’s award of attorneys’ fees to prevailing plaintiffs in a school desegregation proceeding was upheld on appeal.

The Fourth Circuit has recently relaxed its test for assessing the propriety of an award of attorneys’ fees in school desegregation matters. In Brewer v. Norfolk School Board, 4 Cir., 1972 (en banc), 456 F.2d 943, cert. denied, 1972, 406 U.S. 933, 92 S.Ct. 1778, 32 L.Ed.2d 136, it was held that parents who secured the right of free bus transportation for students assigned to public schools far from their homes were entitled to an allowance for attorneys’ fees under a quasi-application of the “common fund” doctrine.

This Court has recognized that an award of attorneys’ fees in favor of prevailing plaintiffs in a school desegregation proceeding may be appropriate. In Horton v. Lawrence County Board of Education, 5 Cir., 1971, 449 F.2d 793, we stated:

“It is settled law in this circuit that federal district courts may, at their discretion, award attorneys’ fees in civil rights litigation where the actions of the defendants were ‘unreasonable and obdurately obstinate.’ Lee v. Southern Home Sites Corporation, 5 Cir., 1970, 429 F.2d 290; Williams v. Kimbrough, 5 Cir., 1969, 415 F.2d 874. Nevertheless, as appellants conceded on oral argument before this court, the district judge in the case at bar has never ruled on their demand "for attorneys’ fees. Since this court is not empowered to make an initial adjudication of such a claim, we remand this issue to the district court for its determination without even the slightest intimation as to whether the Board did or did not engage in such conduct as would merit an award of reasonable attorneys’ fees to appellants.” 449 F.2d at 794.

We believe that in this case it is appropriate to follow the course of action taken in Horton. The district court should make the initial determination as to whether to compel the District to underwrite the plaintiffs’ attorneys’ fees under either of the theories discussed above. Either party will be able to seek review in this Court of the district court’s disposition of the claim for attorneys’ fees.

CONCLUSION

The judgment of the district court is reversed and the cause is remanded with directions to require the defendant Columbia Municipal Separate School District to offer • employment contracts to the appellants effectively reinstating them in the positions which they occupied prior to their dismissals at the end of the 1969-1970 school year or equivalent positions. In addition, the district court is directed to enter judgment in favor of each of the plaintiffs for back pay in the amount of compensation lost by each plaintiff as a result of the District’s unlawful refusal to renew their contracts for the 1970-1971 school year, less the amounts which each has earned, if any, during the interim period. Finally, the district court is directed to conduct further proceedings and to make findings of fact and conclusions of law concerning the right of the plaintiffs in this action to an award of attorneys’ fees for services rendered to them in this Court and in the district court.

Reversed and remanded.

DYER, Circuit Judge

(dissenting):

The trial court’s determination that the Singleton principle is inapplicable to this case is the only contested issue in this appeal. In Singleton, we held that the Equal Protection and Due Process Clauses of the Fourteenth Amendment required that if there was to be an absolute reduction in the number of principals, teachers, or professional staff employed by a school district as a result of court-ordered desegregation consolidation, then the staff member or teacher to be dismissed or demoted as a result must be selected on the basis of a comparative evaluation of all the employees of the district at the same level on the basis of objective and reasonable nondiscriminatory standards to be developed and promulgated by the Board prior to the evaluation. Singleton v. Jackson Municipal Separate School District, 5 Cir. 1969, 419 F.2d 1211, 1218 (en banc), cert. denied, 396 U.S. 1032, 90 S.Ct. 612, 24 L.Ed.2d 530.

Singleton is inapplicable because the court-spawned faculty reduction at the heart of that case is not present here. While there was reduction in number of six teacher stations in the school system between the 1969-70 and 1970-71 school terms, it is perfectly clear that the reduction cannot be traced to court-ordered school consolidation in furtherance of desegregation. At the time the Board failed to renew appellants’ contracts there had been no instructions or suggestions to the principals or superintendent to reduce the size of the faculty. Furthermore, it is undisputed that new personnel had to be employed for the 1970-71 term in the fields of those not rehired and thus there was no need for reduction by discharge. In short, I must conclude, as did the trial court, that the non-renewal of appellants’ contracts was not required because of a decrease in enrollment or reduction in personnel.

With Singleton inapplicable, nothing exists here to condition the discretionary right of local school authorities in Mississippi to supervise the conduct of their teachers and refuse to renew their contracts. The trial court found and the record is replete with illustrations of unfitness to teach and professional incompetency which the Trustees relied upon in making their evaluations. Under section 6282-26 of the Mississippi Code of 1942, as amended, the superintendents of county and municipal school districts in the state are authorized to remove or suspend teachers, upon proper notice and hearing, for incompetence, neglect of duty, immoral conduct, intemperance, brutal treatment, or other reasons determined to be good cause.

As did the district court, I find substantial evidence that the conduct of these teacher-appellants created disciplinary problems and discord among their fellow teachers, reflected in some instances intemperance, indicated fiscal irresponsibility with respect to public funds, and disrupted the orderly administration of the school system. Under these circumstances the district court’s finding of good cause for the dismissals was not clearly erroneous. See Jennings v. Meridian Municipal Separate School District, 5 Cir. 1971, 453 F.2d 413; Moore v. Winfield City Board of Education, 5 Cir., 1971, 452 F.2d 726.

Assuming arguendo that Singleton is applicable I would have to disagree with the majority that appellants Johnson and Reddix are entitled to relief.

It is not suggested, nor could it be, that the district court’s findings that Johnson, who was teaching driver education, had an alcohol problem, and that Reddix, an instructor for educable mentally retarded children, struck a girl across the hand with a board with such force that it drew blood, are clearly erroneous.

In my view, no pre-established objective criteria were necessary to justify the non-renewal of these two teachers. See Thompson v. Madison County Board of Education, 5 Cir., 1973, 476 F.2d 676.

I respectfully dissent.

ON PETITION FOR REHEARING AND PETITION FOR REHEARING EN BANC

Before JOHN R. BROWN, Chief Judge, and WISDOM, GEWIN, BELL, THORNBERRY, COLEMAN, GOLDBERG, AINSWORTH, GODBOLD, DYER, SIMPSON, MORGAN, CLARK, INGRAHAM and RONEY, Circuit Judges.

BY THE COURT:

A member of the Court in active service having requested a poll on the application for rehearing en banc and a majority of the judges in active service having voted in favor of granting a rehearing en banc,

It is ordered that the cause shall be reheard by the Court en banc with oral argument on a date hereafter to be fixed. The Clerk will specify a briefing schedule for the filing of supplemental briefs.

      . The record contains some disparities as to the number of teaching positions reduced, but App. 312 indicates a stipulation was reached that between school years the number of black teachers decreased by ten and the number of white teachers by three, a total of thirteen. This is the figure we use in the text, 129 reduced to 116, although other cal-culatious may show a different total number for each year.

      . The complaint also named the Marion County Board of Education as a defendant. A settlement was reached in the Marion County matter as a result of which only the actions of the Columbia Municipal Separate School District are now before us.


source: Caselaw Access Project

author: RUSSELL E. SMITH, District Judge:

license: Public Domain

text:
    UNITED STATES of America, Plaintiff-Appellee, v. Sterling Brooks HUNT, a/k/a James Booker Reed, Defendant-Appellant.
    No. 73-1012.
    United States Court of Appeals, Ninth Circuit.
    May 16, 1973.

      James F. Hewitt, Federal Public Defender, William A. Brockett, Asst. Federal Public Defender, San Francisco, Cal., for defendant-appellant.
    James L. Browning, Jr., U. S. Atty., F. .Steele Langford, Michael W. Field, Asst. U. S. Attys., San Francisco, Cal., for plaintiff-appellee.
    Before DUNIWAY and WRIGHT, Circuit Judges, and SMITH, District Judge.

       The Honorable Russell B. Smith, Chief Judge of the United States District Court for the District of Montana, sitting by designation.

   OPINION

RUSSELL E. SMITH, District Judge:

Here and below defendant conceded that he committed an armed bank robbery. The only defense was insanity. The government’s case-in-chief was devoted to the proof of the robbery. In his case defendant called a clinical psychologist who testified that defendant lacked capacity to commit crime under the test established by Wade v. United States, 426 F.2d 64 (9th Cir. 1970). In rebuttal the government called Dr. Rapa-port, a psychiatrist, who testified to the contrary.

Dr. Rapaport had been appointed at defendant’s request to make an examination as to competency to stand trial under 18 U.S.C. § 4244. In the early stages of the trial defendant moved to exclude the testimony of Dr. Rapaport for the reason that he was appointed only to determine defendant’s competency to stand trial. In United States v. Mattson, 469 F.2d 1234 (9th Cir. 1972) this court said:

. Rather, this case is within the general rule that a psychiatrist appointed to make a § 4244 examination may give his opinion of the sanity of the accused at the time of the alleged offense.

Mattson establishes the law in this circuit. United States v. Malcolm, 475 F.2d 420 (9th Cir. 1973). The facts in Mattson differ from the facts here in that the order in Mattson did appoint the doctor for both purposes although neither defendant nor his lawyer was aware of the fact that the order did include directions to examine for capacity to commit crime. This fact difference is not in our opinion sufficient to distinguish Mattson. The facts in United States v. Driscoll, 399 F.2d 135 (2nd Cir. 1968) were identical to the facts here in that the order appointing was limited to a Section 4244 examination. In Driscoll the court reversed the conviction on the grounds asserted here but this court in Mattson accepted the views presented in the dissent in Dris-coll. See United States v. Malcolm, supra.

We note a problem raised by United States v. Malcolm, supra. In that case (decided after this case was tried) the court said that the restrictive language of Section 4244,

. . . No statement made by the accused in the course of any examination into his sanity or mental competency provided for by this section, whether the examination shall be with or without the consent of the accused, shall be admitted in evidence against the accused on the issue of guilt in any criminal proceedings . . .,

applies to an examination made for the purpose of determining the capacity to commit crime and also that the words “on the issue of guilt’’ relate not only to the facts constituting the crime but also to mental state of the defendant.

In this case Dr. Rapaport did testify as to statements made to him by the accused. The error was harmless in view of the record in this case. The testimony of Dr. Rapaport as to defendant’s statements is set out in Appendix A. Defendant’s admission of the crime normally would be damaging, as would be the statements that defendant knew it was wrong to rob a bank, but the psychologist called by the defendant had previously said the same things. On cross-examination defendant elicited similar statements from Dr. Rapaport. The remainder of the statements attributed to defendant on direct examination tended to confirm the thesis of defendant’s witness, i. e., that defendant felt pressures and that the crime was a reaction to them.

The contention that the defendant’s cross-examination of Dr. Rapaport was unduly limited is without merit.

The judgment is affirmed.

Appendix A

Direct Examination

I questioned him regarding the offense. He told me about it in detail He knew — he told me he knew, and I was of the opinion that he did know, that it was wrongful and unlawful and punishable to commit the offense of bank robbery and he was conscious of what he was doing and conscious of the fact that it was against the law. That is, the law as is set up by the states and the Federal Government.

He — he told me that since an experience which he had some few years ago, he had a lot of time to think and he felt he had developed some very pronounced ideas concerning treatment of human beings by human beings and of a racist quality, so I asked him, in particular, whether he meant that it was the whites against the blacks. He said no, he says, “You know, there are black racists too, and where I came from, most of my association was with blacks and I found that they also were intolerant and prejudiced, but then California was more.”

He came here shortly before his arrest. He said here he always found the same situation between the whites and the blacks and that he felt, in his own mind, his reasoning, that he had to do something even though he knew it was wrong in order to get even with the element which were (sic) abusive.

* -X- -x- -x- * *

Cross-Examination

Q. Did Mr. Hunt appear to be repelled by or horrified at his actions in holding up the bank?

A. No, he — he had done it, he knew it was wrong and expected what was going to happen, right or wrong. He knew what could happen and he didn’t believe he was being framed or that there was any organization or group that forced him into this position in order to get him out of the way. He made a mistake, that’s all.

Q. Did he indicate to you that he was resolved to not repeat this kind of mistake?

A. Would he repeat it?

Q. Yes.

A. He indicated to me that he would not. He would now — what he wants to do now is, whenever it’s possible, is return to school and improve his general life situation and be back with his family, and I think it’s in Illinois.


author: FRIENDLY, Chief Judge:

text:
    Barbara B. SACK et al., Plaintiffs-Appellants, v. V. T. LOW, et al., doing business as a partnership under the name of Bear, Stearns & Co., and Richard W. Silverman, Defendants-Appellees.
    Docket 72-2327.
    United States Court of Appeals, Second Circuit.
    Argued Feb. 13, 1973.
    Decided April 13, 1973.

      Gordon T. Walker, Boston, Mass. (Hale & Dorr, Boston, Mass., and Kurtz & Vassallo, New York City, of counsel), for plaintiffs-appellants.
    Arnold S. Anderson, New York City (A. Edward Grashof, and Winthrop, Stimson, Putnam & Roberts, New York City, of counsel), for defendants-appel-lees.
    Before FRIENDLY, Chief Judge, OAKES, Circuit Judge, and DAVIS, Judge.

       Of the United States Court of Claims, sitting by¡ designation.

   FRIENDLY, Chief Judge:

The plaintiffs, Barbara B. Sack, a resident of Massachusetts, and three other residents of that state, acting as trustees of a Massachusetts profit sharing trust, brought this action in the District Court for the Southern District of New York in March 1972 against the partners of Bear, Stearns & Co., a brokerage firm which has its principal place of business in New York City, and Richard W. Silverman, an employee having the title of Vice President, alleging that defendants had committed various violations of federal securities laws. .Defendants immediately moved for summary judgment on the ground that a previous action between the same parties on the identical claim had been dismissed by the District Court for Massachusetts because of the running of the statute of limitations; defendants argued that this was a dismissal “on the merits” which barred relitigation here under the principle of res judicata. The late Judge McLean granted summary judgment, and plaintiffs appealed. For an understanding of the issues, we must set out the procedural history of this litigation in some detail.

In July 1969 the Bay State Smelting Co., a Massachusetts corporation, brought an action in the District Court for Massachusetts against the same defendants alleging essentially the same violations of the securities laws on the basis of the same course of conduct as is involved here. Bay State moved in December 1970 for leave to join the Sack plaintiffs, who were represented by the same counsel as Bay State, as additional plaintiffs in its action and to file a “consolidated, substitute bill of complaint.” These motions were denied by Judge Murray in September 1971.

Shortly thereafter, on October 13, 1971, the Sack plaintiffs filed a separate complaint in the District Court for Massachusetts. After stating that “the acts and transactions complained of occurred in-substantial part within the District of Massachusetts,” the complaint alleged that in February 1969 defendants had purchased shares of Armour & Co. common stock for plaintiffs’ accounts; that defendants had failed to sell these shares when payment had not been received within a week, as required by § 4(c) of Regulation T of the Board of Governors of the Federal Reserve System, 12 C.F.R. § 220.4(c), although Barbara Sack was six days and the Trust was four days late in making payment; that, also in violation of said Regulation, defendants purchased the Armour shares with the intent to exchange them for debentures and warrants of General Host Corporation, pursuant to a tender offer then outstanding, before payment was received from the plaintiffs, and in fact did so; that the General Host securities subsequently declined in value; and that some of the General Host securities were sold at a substantial loss and others are still being held with a market value lower than the amount paid. The complaint also alleged that Silverman had falsely represented in a telephone call from New York City to the plaintiffs in Massachusetts that the purchase was a riskless arbitrage transaction since the General Host securities, which were selling at a higher price than the Armour shares, would be sold promptly, and that defendants failed to reveal they were making a market in the Armour and General Host securities and were trading in them for their own account, in violation of sections 9, 10, and 15 of the Securities Exchange Act and Rules 10b-5 and 15c-l through 7. The complaint further alleged that defendants’ failure to sell the General Host securities promptly was a breach of their agreement with plaintiffs. Somewhat inconsistently with the allegations that the purchases were made on the basis of Silverman’s misrepresentations and an agreement, the complaint also alleged that the purchases were made by Silver-man in the exercise of a discretionary power which, in violation of Rule 408 of the New York Stock Exchange, was not in writing.

Defendants then moved for summary judgment dismissing the complaint on the ground that it sounded in tort and was barred by the two-year Massachusetts statute of limitations, Mass.Gen. Laws ch. 260, § 2A, which had run while the motion to intervene in the Bay State action had been pending, since the last transactions in plaintiffs’ accounts took place prior to March 31, 1969 and the last of the General Host securities were sent to the plaintiffs not later than April 15, 1969. Not disputing the facts, the plaintiffs asserted that the six-year contract statute of limitations applied. On January 4, 1972, Judge Murray held that the tort statute of limitations applied, and granted summary judgment for the defendants.

On March 22, 1972, the plaintiffs filed the instant action in the Southern District of New York. The complaint was substantially identical with that filed in Massachusetts except for an allegation that “the acts and transactions complained of occurred in substantial part within the Southern District of New York.” On April 14, defendants moved for summary judgment, claiming that the Massachusetts judgment was a bar. Judge McLean granted the motion on September 28, on the authority of Bertha Building Corp. v. National Theatres Corp., 248 F.2d 833, 840 (2 Cir. 1957), cert. denied, 356 U.S. 936, 78 S.Ct. 777, 2 L.Ed.2d 811 (1958), which, relying on the provisions of F.R.Civ.P, 41(b), stated that dismissal of a complaint on the basis of the statute of limitations “operates as an adjudication upon the merits” unless the district judge specifies otherwise, and Murphy v. A/S Sobral, 187 F.Supp. 163 (S.D.N.Y.1960), which applied this reasoning to bar on grounds of res judicata an action brought here if a previous action in another forum had been dismissed on the basis of the statute of limitations.

Plaintiffs appealed to this court. At the same time, they also moved before Judge Murray in the District of Massachusetts for an amendment of his order of January 14, 1972. On January 9, 1973, Judge Murray entered the following order:

Summary judgment for defendants ordered on January 14, 1972 is not an adjudication upon the merits and is without prejudice to plaintiffs’ rights to bring another action in another jurisdiction based upon the transactions or occurrences which are the subject matters of their claims herein subject to the appropriate statute of limitations of such other jurisdiction.

Plaintiffs thereupon moved that we remand to the District Court to enable it to vacate its order of September 28, 1972, on the basis of the subsequent Massachusetts order. Defendants moved for summary affirmance, claiming that the amendment of the Massachusetts order was without legal effect in the Southern District of New York and that in any event the action was barred by the New York “borrowing statute,” C.P.L.R. § 202, which reads as follows:

An action based upon a cause of action accruing without the state cannot be commenced after the expiration of the time limited by the laws of either the state or the place without the state where the cause of action accrued, except that where the cause of action accrued in favor of a resident of the state the time limited by the laws of the state shall apply. .

I.

Prior to the Bertha Building decision, the law in this circuit, as set out by Judge A. N. Hand for our court’s “first team” in Warner v. Buffalo Drydock Co., 67 F.2d 540 (2 Cir. 1933), cert. denied, 291 U.S. 678, 54 S.Ct. 529, 78 L.Ed. 1066 (1934), was that dismissal of a complaint in another forum on the ground that the statute of limitations had run was not an adjudication on the merits and did not bar a subsequent action on the same claim here. The court adopted the traditional reasoning that unless the statute of limitations was intended to extinguish the right (i. e., if it were an integral part of the statute which created the right), a defense on the basis of the statute was a procedural question on which each forum state would apply its own law and therefore dismissal on that ground represented only a determination that the particular remedy the plaintiff had sought to pursue was unavailable, leaving him free to seek to enforce the right in another forum if the limitations of that forum allowed. This is still the general rule. See IB Moore, Federal Practice fí 0.409 [6], at 1035-36 (1965). The Restatement of Judgments § 49, comment (a) (1942), explains that dismissal on the ground of the statute of limitations operates as a bar to the extent that it will prevent a future action in the state where the judgment was rendered, but not so far as other states are concerned.

The issue in Bertha Building concerning the effect of a dismissal on the basis of the statute of limitations arose in a rather peculiar way. The precise question, as stated by the court, was whether, in a treble damage action brought in the Eastern District of New York under the antitrust laws for an injury suffered in California, it was “proper for the judge instead of a jury to decide whether the defendant could have been sued in the Southern District of California between July 20, 1935 and July 20, 1938,” 248 F.2d 833, at 834. This was important because if the defendant could have been so sued, the California statute of limitations would not have been tolled and the action would be barred under the New York borrowing statute, then § 13 of the Civil Practice Act. In stressing the importance of holding that the action was thus barred in New York and what was held to be the consequent need for a jury trial on the factual issue critical to the defense, the court went on to say, 248 F.2d at 835:

A determination of this defense has a reach and a finality not inhering in any decision as to venue. For if the defense of the statutory bar is sustained, the resulting judgment of dismissal operates as a final adjudication of the merits of the controversy; a decision as to venue, however, of course leaves the plaintiff free thereafter to seek an adjudication on the merits of his claim. Fed.Rules Civ'. Proc. rule 41(b), 28 U.S.C.A.

When the defendant petitioned for rehearing, the court said this, 248 F.2d at 840:

We are unmoved by the petitioner’s contention that we were wrong in asserting that a dismissal based upon a defense of the statute of limitations is an adjudication on the merits. Warner v. Buffalo Drydock Co., 2 Cir., 67 F.2d 540, which is cited in support of that contention, we think is distinguishable. And moreover, it has been superseded by the clear mandate of Rule 41(b) of the Federal Rules of Civil Procedure, 28 U.S.C.A. which in its last sentence directly contradicts the holding of the Warner case. Although under the rule in a proper situation the District Judge may specify that his order be without prejudice, Judge Galston did not so qualify his order of dismissal.

These remarks have been taken to establish the rule in this circuit that a dismissal on the ground of the statute of limitations would bar a second action on the same claim in a different forum. See Murphy v. A/S Sobral, supra, 187 F.Supp. 163; IB Moore, supra, at 1035 & n.13.

We must own to some discomfort with these statements in Bertha Building; they seem to go either too far or not far enough. While the statements cannot properly be characterized as dicta, they may have gone beyond the necessities of the case. In addition to the possibility of holding that a plaintiff in an action which would formerly have been “at law” was entitled to a jury trial on an issue of fact relevant to the defense of the statute in the forum of his choice, it might very well have been true in Bertha Building that, with the long lapse of time between September, 1951, when the New York action was brought, and the district court’s decision in 1956 dismissing the action as time-barred, it would have been too late to sue elsewhere, quite apart from the effect in another forum of a judgment of the district court sustaining the New York statute of limitations as a defense. The opinion on rehearing says that Warner is distinguishable but not why. The provision in F.R.Civ.P. 41(b) permitting a judge to specify that dismissal is without prejudice would seem to have been designed for cases in which the judge has discretion whether to dismiss, e. g., for want of prosecution, where his decision might be affected by determination whether dismissal should be with or without prejudice, not for cases which he must dismiss as a matter of law. Indeed, it would be possible to read the district judge’s power to specify that dismissal be without prejudice under the “unless” clause in the final sentence of Rule 41(b) as limited to “a dismissal under this subdivision,” with the result that all other dismissals save the three mentioned — lack of jurisdiction, improper venue, or failure to join a party under Rule 19 — and particularly a dismissal on limitations grounds, would necessarily be with prejudice. Finally, we have some doubt whether the last sentence of Rule 41(b) was intended to authorize a judge to dictate to another forum that a dismissal should have a different effect there than in his own court. However, Bertha Building said he could do exactly that. So long as that decision stands, we are thus obliged to hold that Judge Murray’s later order undercut the basis for Judge McLean’s grant of summary judgment for the defendants.

II.

Defendants argue that Judge McLean’s dismissal of the complaint was in any event correct because the action is barred by the New York borrowing statute. Plaintiffs do not dispute that the reference to New York limitations law required in the absence of a statute of limitations in the federal securities laws, Holmberg v. Armbrecht, 327 U.S. 392, 395, 66 S.Ct. 582, 90 L.Ed. 743 (1946) ; UAW v. Hoosier Cardinal Corp., 383 U.S. 696, 86 S.Ct. 1107, 16 L.Ed.2d 192 (1966); Fischman v. Raytheon Mfg. Co., 188 F.2d 783, 787 (2 Cir. 1951), includes the borrowing statute, see Cope v. Anderson, 331 U.S. 461, 67 S.Ct. 1340, 91 L.Ed. 1602 (1947). They contend, however, that New York’s borrowing statute does not apply here because their action was not “based upon a cause of action accruing without the state,” but rather on one accruing within it.

Defendants’ first response is that, in light of the allegations in the Massachusetts complaint, plaintiffs may not now be heard to say that the cause of action accrued in New York. We disagree. The doctrine of collateral estoppel is not applicable here. Clearly the District Court for Massachusetts did not decide that the cause of action arose there. The rule in Massachusetts, as in most jurisdictions, is that a general statute of limitations applies to all actions brought in the forum, regardless of where the cause of action accrued. Clarke v. Pierce, 215 Mass. 552, 102 N.E. 1094 (1913); Bonsant v. Rugo, 190 F.Supp. 958 (D.Mass.1961); see generally Restatement (Second) of the Conflict, of Laws § 142 (1971). We also do not see any reason why plaintiffs’ allegation in the Massachusetts complaint that “the acts and transactions complained of occurred in substantial part within the District of Massachusetts” should bar their contentions here. Although this allegation may be available to the defendants as an admission, it is not necessarily inconsistent with plaintiffs’ present assertion that defendants’ acts and transactions also took place in substantial part in New York or their claim that the cause of action arose within New York. We therefore turn to consideration of where the New York courts would hold this cause of action to have accrued.

The traditional view has been that a cause of action for tort arises when and where “the last event necessary to make an actor liable . . . takes place.” Restatement of the Conflict of Laws § 377 (1934). Since a tort action traditionally has not been viewed as complete until the plaintiff suffers injury or loss, the cause of action has been considered to arise at the place where this damage was sustained. As applied to a cause of action for fraud or deceit, the closest common law analogy to an action under Rule 10b-5, see Klein v. Auchincloss, Parker & Redpath, 436 F.2d 339, 341 (2 Cir. 1971); 3 Loss, Securities Regulation 1774 (2d ed. 1961); 6 id. 3901-02 (1969), and eases there cited, this reasoning leads in the direction of the rule of the First Restatement of Conflicts, § 377, note 4, that “when a person sustains loss by fraud, the place of wrong is where the loss is sustained, not where fraudulent representations are made.” This rule is followed by an illustration quite pertinent to this ease:

6. A, in state X, owns shares in the M company. B, in state Y, fraudulently persuades A not to sell the shares. The value of the shares falls. The place of wrong is X.

While we have found no New York decision directly in point, we believe that the New York courts would follow this traditional approach. This prediction follows almost inevitably from New York’s long held view, Hibernia Nat’l Bank v. Lacombe, 84 N.Y. 367, 384 (1881), that “the time when the cause of action arises determines, also, the place where it arises, for when that occurs which is the cause of action the place where it occurs is the place where the cause of action arises.” See Tandoc v. Luckenbach S. S. Co., 5 App.Div.2d 857, 171 N.Y.S.2d 381 (1st Dep’t), leave to appeal denied, 5 App.Div.2d 989, 173 N.Y.S.2d 992 (1958); Lowell Wiper Supply Co. v. Helen Shop, Inc., 235 F.Supp. 640, 644 (S.D.N.Y.1964) (Weinfeld, J.) (“Claims accrue in New York when the plaintiff first acquires the right to seek a judicial remedy.”). This reasoning has led to the view in personal injury tort actions that “It is only the injury to persons or property . which constitutes an invasion of a personal right, protected by law, and, therefore, an actionable wrong,” Schmidt v. Merchants Despatch Transp. Co., 270 N.Y. 287, 300, 200 N.E. 824, 827 (1936), and therefore that the cause of action accrues for purposes of the borrowing statute in the state where the injury is suffered rather than where the defendant committed the wrongful acts. Myers v. Dunlop Tire & Rubber Corp., 40 App.Div.2d 599, 335 N.Y.S.2d 961 (1st Dep’t 1972). Clearly a cause of action for fraud does not arise until loss is suffered; we have every reason to believe that the New York courts would therefore hold that the cause of action accrues where the loss is suffered. *****8

This view is strengthened by the weight of authority in other jurisdictions, which generally adopts the view of the First Restatement of Conflicts that a cause of action for fraud arises where the loss is sustained and that loss from fraud is deemed to be suffered where its economic impact is felt, normally the plaintiff’s residence. Trussell v. United Underwriters, Ltd., 236 F.Supp. 801, 803 (D.Colo.1964) (application of borrowing statute in litigation under Rule 10b-5); Smith v. New York Life Ins. Co., 208 F.Supp. 240 (S.D.Iowa 1962) (choice of law); Strand v. Librascope, Inc., 197 F.Supp. 743 (E.D.Mich.1961) (choice of law); Boulevard Airport, Inc. v. Consolidated Vultee Aircraft Corp., 85 F.Supp. 876 (E.D.Pa.1949) (liability to service of process); Geller v. Transamerica Corp., 53 F.Supp. 625, 629-630 (D.Del. 1943), aff’d, 151 F.2d 534 (3 Cir. 1945) (choice of law). Contra, Smyth Sales, Inc. v. Petroleum Heat & Power Co., 128 F.2d 697 (3 Cir. 1942) (choice of law). Some added support for the view that plaintiffs’ loss would be considered to have been suffered where they lived and conducted their investment activities is furnished by holdings that private antitrust claims “arise”, for borrowing statute purposes, where the plaintiff’s business is located. Seaboard Terminals Corp. v. Standard Oil Co., 24 F.Supp. 1018 (S.D.N.Y.1938), aff’d, 104 F.2d 659 (2 Cir. 1939); Electric Theater Co. v. Twentieth Century Fox Film Corp., 113 F.Supp. 937 (W.D.Mo.1953); Aero Sales Co. v. Columbia Steel Co., 119 F.Supp. 693 (N.D.Cal.1954).

We recognize that the rigid rules of the First Restatement have been largely discredited as a sensible approach to solving choice of law problems; it may well be that if this were a common law action for fraud rather than one based on federal law, New York, under the principles of Babcock v. Jackson, 12 N.Y.2d 473, 240 N.Y.S.2d 743, 191 N.E.2d 279 (1963), and the Second Restatement of the Conflict of Laws § 148, would apply its own law, rather than that of Massachusetts, in determining defendants’ culpability. See also Ehrenzweig, Conflict of Laws 558-59 (1962); Ehrenzweig, The Place of Acting in Intentional Multistate Torts: Law and Reason versus the Restatement, 36 Minn.L.Rev. 1, 37-43 (1951); Rheinstein, The Place of Wrong: A Study in the Method of Case Law, 19 Tulane L.Rev. 165 (1944). But, with all respect to the contrary view of a commentator, Siegel, Conflict of Laws, 19 Syracuse L.Rev. 235, 254-56 (1968), we do not think the likelihood of such a holding would justify the further prediction that New York would rule that the state whose law is chosen to govern a defendant’s conduct is necessarily the state where the cause of action accrued for purposes of its borrowing statute. One of the policies behind Babcock and many of its harbingers, such as Kilberg v. Northeast Airlines, Inc., 9 N.Y.2d 34, 211 N.Y.S.2d 133, 172 N.E.2d 526 (1961), and descendants, such as Miller v. Miller, 22 N.Y.2d 12, 290 N.Y.S.2d 734, 237 N.E.2d 877 (1968), was to afford New York residents the protection of those rules of substantive law underlying which New York had significant policies or as to which New York had important interests. In sharp contrast, the policy behind the borrowing statute is to protect New York resident-defendants from suits in New York that would be barred by shorter statutes of limitations in other states where non-resident-plaintiffs could have brought suit. See National Surety Co. v. Ruffin, 242 N.Y. 413, 417, 152 N.E. 246 (1926); George v. Douglas Aircraft Co., 332 F.2d 73, 77 (2 Cir.), cert. denied, 379 U.S. 904, 85 S.Ct. 193, 13 L.Ed.2d 177 (1964); Fullmer v. Sloan’s Sporting Goods Co., 277 F.Supp. 995 (S.D.N.Y.1967). The few borrowing statute cases since Babcock afford no inkling that the New York courts are applying its sophisticated teachings, rather than the rigid approach of the First Restatement of Conflicts, to the problem of where a cause of action arose under the borrowing statute. Quite to the contrary, they take a rather simplistic approach, adhering to the mechanical question where the cause of action arose or, in the words of the borrowing statute, whether the “cause of action aecru [ed] without the state . . . . ” Cellura v. Cellura, 24 App.Div.2d 59, 263 N.Y.S.2d 843 (4th Dep’t 1965); Myers v. Dunlop Tire & Rubber Corp., supra, 40 App.Div.2d 599, 335 N.Y.S.2d 961; Daigle v. Leavitt, 54 Misc.2d 651, 283 N.Y.S.2d 328 (Sup.Ct.1967). A recent note, Choice of Law and the New York Borrowing Statute: A Conflict of Rationales, 35 Albany L.Rev. 754, 762 (1971), concludes, although with some regret:

The impact of the conflict of laws decisions discussed above [i. e., Bab-cock v. Jackson, et al.] on the New York State “borrowing statute” has been non-existent. Except for a few commentaries to the effect that these decisions should affect the borrowing statute, there has been no actual impact on the statute by these decisions.

The result which we thus reach in our interpretation of the New York borrowing statute is neither wholly unexpected nor unique. In George v. Douglas Aircraft Co., supra, 332 F.2d at 78, we perceived “no obstacle to predicting that the New York Court of Appeals would consider a cause of action as ‘arising’ for the purposes of the borrowing statute in a state different from the one whose substantive law would determine liability.” And the Third Circuit has reached the same result as we do here, predicting that, despite Pennsylvania’s recent adoption of the interest analysis approach to determining the proper choice of substantive law, see Griffith v. United Air Lines, Inc., 416 Pa. 1, 203 A.2d 796 (1964), it would apply “the final significant event” test in determining when and where a cause of action arose under its borrowing statute. Mack Trucks, Inc. v. Bendix-Westinghouse Automatic Air Brake Co., 372 F.2d 18 (3 Cir. 1966), cert. denied, 387 U.S. 930, 87 S.Ct. 2053, 18 L.Ed.2d 992 (1967).

However, even with these general principles as to where the New York courts would hold the cause of action to accrue established, we cannot properly affirm Judge McLean’s order on the ground that the cause of action here accrued in Massachusetts. The problem is that the record does not contain sufficient facts to enable us to apply our prediction of New York law with complete confidence. We do not know exactly how plaintiffs paid for the securities— whether by check sent from Massachusetts or in some other fashion; perhaps if the plaintiffs maintained an open account at defendant’s New York offices, and the loss was reflected in that account, this might make some difference. Similarly, we do not know the details as to how the securities were handled. Although on what is now before us, it seems unlikely that plaintiffs can demonstrate that the cause of action arose in New York under the traditional test, they should not be foreclosed from an opportunity to do so.

We add a reference to a point that the district court will have to consider if it should conclude the cause of action accrued in New York under the traditional test. In an effort to escape from the collateral estoppel effect that plaintiffs feared would attach to Judge Murray’s decision if we held it to include a determination that their cause of action accrued in Massachusetts, plaintiffs suggested at oral argument that the cause of action could be deemed to have “arisen” both in New York and in Massachusetts. The conclusion the plaintiffs would apparently have had us draw is that since the cause of action could be said to have accrued in both states, the borrowing statute would not apply. However, application of the statute depends on whether it can be said that the cause of action accrues “without the state,” and if it could fairly be said that the cause of action arose in both New York and Massachusetts, then, under the letter of the borrowing statute, the action would be barred.

Indeed, several states have held, in applying their borrowing statutes, that notwithstanding that the traditional rules would indicate that the cause of action accrued in the forum state, the borrowing statute would bar the action if it could be said that the action also arose in a second state where the statute of limitations had run. The courts of Minnesota, which have a statute virtually identical to New York’s, have held this. Pattridge v. Palmer, 201 Minn. 387, 277 N.W. 18 (1937). The Illinois courts have apparently gone further and held that a cause of action arises in any jurisdiction where suit could have been brought on the claim. Strong v. Lewis, 204 Ill. 35, 68 N.E. 556 (1903). See Vernon, Statutes of Limitation in the Conflict of Laws: Borrowing Statutes, 32 Rocky Mt.L.Rev. 287, 302-04 (1960).

There is much to be said for thus recognizing that a cause of action can arise in more than one place and, under an appropriate borrowing statute, is barred if the statute of limitations has run in one where the defendant was available for suit, at least when the one is the state of plaintiff’s residence. Such a rule avoids the mechanical nature of the single place of arising theory, allows the defendant to ascertain the applicable time period with certainty while affording the plaintiff a fair opportunity to sue in a convenient forum, and prevents local courts from being cluttered with actions that could have been brought elsewhere but are now time-barred there —particularly actions by out-of-state plaintiffs who had a fair opportunity to sue in their home state but delayed too long, as was the case here. Compare Fullmer v. Sloan’s Sporting Goods Co., supra, 277 F.Supp. 995. We refrain from now deciding the case on this basis only because the problem does not seem to have been considered by the New York courts and the chances are that, on full development of the facts, the same result will be reached on grounds that would not carry us so far into the field of prophecy. If that should not occur, the district court must address itself to this point.

The order dismissing the complaint is vacated and the cause remanded for further proceedings consistent with this opinion.

      . Defendants have not questioned the timeliness of plaintiffs’ application for the amendatory order, but since the question is jurisdictional, we must consider it. The motion purported to be made under F.R. Civ.P. 60(b), of which the most pertinent subdivision seems to be (6), and, if properly so made, it was timely. On the other band, if the motion were in fact one under F.R.Civ.P. 59(e) “to alter or amend the judgment,” which was what in fact was asked, the ten-day limit of that rule had long since expired. The Advisory Committee notes make it plain that a principal purpose of Rule 59(e), which was added in 1946, was to make clear that a district court had power to amend a judgment dismissing without prejudice so that the dismissal should be with prejudice, as held in Boaz v. Mutual Life Ins. Co., 146 F.2d 321 (8 Cir. 1944), and vice versa, but at the same time place a short time limit on such motions since these tolled the time limits for the taking of appeals under then F.R.Civ.P. 73(a), now FRAP 4(a). However, the short time limit also implies that the respect in which alteration or amendment is needed should be readily apparent. Here, as will appear from the subsequent discussion, the law of judgments as generally applied would not have required that the judgment be amended in order to permit an action to be maintained on the same claim in a state where the statute of limitations had not run. The importance of an amendment to the judgment became fully apparent only after Judge McLean’s decision. We therefore hold that, under the unusual circumstances here presented, the motion was properly made under F.R.Civ.P. 60 (b) (6). Cf. Klapprott v. United States, 335 U.S. 601, 614-615, 69 S.Ct. 384, 93 L.Ed. 1099 (1949) ; Menier v. United States, 405 F.2d 245 (5 Cir. 1968), and authorities there cited; 7 Moore, Federal Practice 1f 60.27 [1], at 341-43 (2d ed. 1972).

      . The same considerations would support a prediction that New York would hold that plaintiffs’ claims for violations of Regulation T arose where the loss was suffered rather than where the wrongful conduct occurred, even though fraud is not an ingredient of an action for violation of § 7 of the Securities Exchange Act of 1934. See Junger v. Hertz, Neumark & Warner, 426 F.2d 805, 806 n. 1 (2 Cir.), cert. denied, 400 U.S. 880, 91 S.Ct. 125, 27 L.Ed.2d 118 (1970) ; Klein v. Bower, 421 F.2d 338, 343-344 (2 Cir. 1970).


author: PER CURIAM:

text:
    UNITED STATES of America, Appellee, v. Gene Arlyn WILLIAMS, Appellant. UNITED STATES of America, Appellee, v. Robert Brice ELLIOTT, Sr., Appellant.
    Nos. 72-1828, 72-1829.
    United States Court of Appeals, Fourth Circuit.
    Submitted Jan. 9, 1973.
    Decided May 7, 1973.

      Frank Patton Cooke, Gastonia, N. C., (on brief) for appellant in No. 72-1828.
    Arthur Goodman, Jr., Charlotte, N. C., (on brief) for appellant in No. 72-1829.
    Keith S. Snyder, U. S. Atty., and David B. Sentelle, Asst. U. S. Atty. (on brief) for appellee in Nos. 72-1828 and 72-1829.
    Before BRYAN, Senior Circuit Judge, and FIELD and WIDENER, Circuit Judges.
   PER CURIAM:

These appellants were tried together by a jury in the United States District Court for the Western District of North Carolina. They were found guilty of the first five counts of a seven count indictment charging them with embezzling, abstracting and purloining the moneys, funds and credits of a federally insured bank, in violation of 18 U.S.C. §§ 656 and 2. Count six was dismissed during trial and the jury found them not guilty as to count seven. They allege that various errors were committed during the course of their trial and seek reversal of their convictions and an acquittal or, alternatively, a new trial. For reasons that will be set forth in this opinion, we agree that the appellants are entitled to a new trial.

I

Appellant Williams was employed as a Vice-President of the Security Bank and Trust Company of Salisbury, North Carolina. He was also the branch manager of Security’s Belmont, North Carolina branch bank. This was a small branch and was operated by Williams, two cashiers, and perhaps a bookkeeper.

Appellant Elliott was the managing officer of Shoreline Provision Company, a refrigerated trucking company that specialized in transporting refrigerated products from the' East to the West Coast.

In May, 1969, Elliott opened an account, in the name of Shoreline, at Security Bank and Trust Company.' Shoreline had other accounts at the Citizens National Bank in Cramerton, North Carolina. Elliott also had established an account in the name of MEW Brokerage Company at the Mechanics and Farmers Bank in Charlotte, North Carolina. MEW Brokerage was a factoring corporation, founded by Elliott, whose purpose was to finance the Shoreline Company.

Subsequent to the opening of the Shoreline account with Security in May, 1969, the Belmont branch of Security issued numerous cashier’s checks to Shoreline. Williams, as branch manager, had to approve these checks. The indictments against the appellants arose from certain of these transactions.

The first five counts involved situations where Williams would deliver a Security cashier’s check to Elliott, which check was made payable to Shoreline. The consideration to Security for these cashier’s checks were checks, at least equal in amount to the appropriate cashier’s checks, delivered by Elliott and drawn on Shoreline’s various accounts or on the new account of MEW Brokerage. It seems that the checks Elliott gave to Security ■ for which Shoreline received cashier’s checks were drawn on insufficient accounts and that Security has never received payment for them. The above events occurred during the period of October 14 to October 21, 1969.

Counts six and seven are not involved in this appeal since count six was dismissed during trial and the appellants were found not guilty as to count seven.

II

During the course of the trial, the government called Mrs. Peggy Farris Byrd, a Security employee at the Belmont branch, as one of its witnesses.

Her testimony related to the cashier’s check referred to in count two of the indictment. It showed that the cashier’s check in issue, number 826, had been issued for $57,000 on Friday, October 17, 1969, but was not recorded on her work sheet until Monday, October 20, 1969. She had no independent reeollee-lection of the transaction. She further testified that, under normal banking procedure, the check would have appeared on her work sheet either on Friday, October 17, or Saturday, October 18, 1969. The inference the government sought to show from this was that Williams had issued the check on the 17th, and then held it out until the 20th, causing a false entry of the transaction on Peggy Byrd’s work sheet, so Elliott could cover the bad check he had given Williams in consideration of the cashier’s check. The object obviously was to show Williams’ bad intent from this testimony, as well as the facts concerning the specific transaction.

The defense attorneys sought to test Peggy Byrd’s recollection by cross-examining her as to how well she remembered the physical layout and other details of the operation of the Belmont branch bank. The government objected to such questions, and the trial court sustained the objections, refusing to allow the defense the opportunity to test the recollection of the witness except as to matters precisely covered on direct examination.

The right to cross-examine the prosecution’s witnesses is a fundamental constitutional right under the Sixth Amendment. Smith v. Illinois, 390 U.S. 129, 88 S.Ct. 748, 19 L.Ed.2d 956 (1968). Although the scope of cross-examination is within the discretion of the trial court and usually limited to matters brought out on direct, there are exceptions. One of these exceptions is where the cross-examiner challenges the credibility of a witness by testing the individual’s memory. United States v. Hoffman, 415 F.2d 14 (7th Cir. 1969), cert. den. 396 U.S. 958, 90 S.Ct. 431, 24 L.Ed.2d 423 (1969); 3A Wigmore on Evidence (1970) § 995. See also Loesch v. Federal Trade Commission, 257 F.2d 882, 885 (4th Cir. 1958), cert. den. 358 U.S. 883, 79 S.Ct. 125, 3 L.Ed.2d 112 (1958). While the scope of the questioning concerning a witness’ credibility may be within the discretion of the trial court, we believe that a denial of all such cross-examination designed to test the recollection of a witness is improper. In our opinion, the questions posed to Peggy Byrd by the appellants’ attorneys were pertinent to her credibility and the disallowance of them by the trial court was erroneous. “ . . . [T]he range of evidence that may be elicited for any purpose of discrediting is to be very liberal. . . . ” 3A Wigmore on Evidence (1970) § 944.

Ill

Toward the end of the trial, the government called Leonard V. Dahl, an FBI agent, as a witness. His testimony revealed that he had gone to Williams’ house on November 17, 1969 to talk to him about the matters involved in these cases. Dahl testified that he advised Williams of his constitutional rights and that Williams signed a waiver. He further testified that he questioned Williams about the cases and that Williams answered his questions. The prosecutor then asked Dahl if Williams told him what experience he had had in banking prior to working for Security. Dahl said that Williams had told him he had fourteen years prior experience in banking. Then, on cross-examination, Williams’ counsel asked Dahl to read the rest of his notes as to the content of the conversation. The prosecutor objected and the court sustained the objection, refusing to allow any part of the notes to be read except that which may have touched on the questions asked on direct examination. Although the statement was proffered into evidence and ordered filed by the trial judge, it does not appear with the record.

In Banning v. United States, 130 F.2d 330 (6th Cir. 1942), cert. den. 317 U.S. 695, 63 S.Ct. 434, 87 L.Ed. 556 (1943), the court said:

“It frequently happens that on direct examination of a witness as to a conversation, transaction or other matter, counsel will bring out only such parts as are favorable to the party he represents. When this occurs, it is the right of the cross-examiner to put the trial court in possession of the full details respecting the matters within the scope of the direct examination.” 130 F.2d at 338.

Dahl’s testimony, of course, by showing Williams’ experience in the banking business, sought inferentially to prove intent and bad purpose. Any statement of Williams’ made to Dahl at the time going to show lack of intent or bad purpose should have been admitted, and Williams was entitled to show it by the witness Dahl. VII Wigmore on Evidence (1940) § 2115. The denial of the right of the defendant to show statements from which innocence could be inferred along with those which tended to show guilt was error.

IV

In the present cases, the appellants were indicted for embezzling, abstracting and purloining money from Security in violation of 18 U.S.C. §§ 656 and 2. The trial court instructed the jury on the charge of embezzling.

The court charged the jury that they could find the defendants guilty if they found that Williams “knew or should have known by understanding the affairs of the banking world and familiarizing himself with the accounts on deposit, that he issued a cashier’s check and, by so doing, embezzled . . .” [Emphasis added]. Another part of this instruction said: “. . .; fourth, that he, knowing that it was not his own, converted it to his own use or to the use of some third person, not the true owner.” [Emphasis added]. Although no objections were made to these instructions, they are obviously erroneous.

It is true that criminal intent must be inferred from the facts and circumstances of the case. Hall v. United States, 286 F.2d 676 (5th Cir. 1961), cert. den. 366 U.S. 910, 81 S.Ct. 1087, 6 L.Ed.2d 236 (1961). However, we are of opinion that, since intent is an essential element under § 656, the trial court misled the jury by using the phrase “should have known” in its instructions on intent. By giving effect to such a phrase, the jury could have convicted appellants if they found that Williams was guilty of nothing more than negligence in the handling of the bank’s affairs. This will not support an embezzlement conviction under the statute. The government must show that the acts were done willfully and intentionally, not by inadvertence or carelessness.

We are further of opinion that the embezzlement charge given by the trial court was too broad. One of the elements of the crime of embezzlement as used in the statute is that the money or property embezzled be converted to the embezzler’s own use or benefit. United States v. Northway, infra; 120 U.S. 327, 333, 7 S.Ct. 580, 30 L.Ed. 664 ; Black’s Law Dictionary 4th Ed. p. 614. Thus, the definition of embezzlement used by the trial court was erroneous in that it permitted conviction for embezzlement although the funds may have been put to the use of a third person.

While the court did not instruct the jury as to the meaning of abstracting under the statute, unless it may be inferred from the charge which was given, we note that United States v. Northway, 120 U.S. 327, 7 S.Ct. 580, 30 L.Ed. 664 (1887), defines the word abstract to mean “ . . . to, take or withdraw from so that to abstract the funds of the bank, or a portion of them, is to take and withdraw from the possession and control of the bank the moneys and funds alleged to be so abstracted.” 120 U.S. 327, 334, 7 S.Ct. 580, 584. Of course, it is not unlawful to merely take or withdraw the funds of a bank by a person having the authority so to do. What is unlawful is to take and withdraw from the possession and control of the bank moneys in the bank’s possession and control without its knowledge and consent and which will deprive the bank of its lawful possession and control of such moneys. A mere negligent act would not be enough under the statute to convict for abstracting. The act would have to be done willfully and intentionally, secretly or dishonestly, and with the knowledge of the person causing the withdrawal of the funds that he was without authority so to do. See Northway, supra; Webster’s New International Dictionary, 2nd Ed., Unabridged.

V

On retrial, we trust the jury will be instructed with the elements of the offense charged. The attorneys, of course, have a right to submit suggested jury charges to the court.

Judges Bryan and Field are of opinion a new trial is required by Part IV of the opinion, believing it to be plain error, especially insofar as the submission to the jury allowed them to convict for Williams’ carelessness. F.R.Cr.P. 52(b). They believe the error mentioned in parts II and III of the opinion is harmless. F.R.Cr.P. 42(a).

Judge Widener believes a new trial is required because of parts II and III of the opinion. He believes the error mentioned in Part IV should not be noticed because not objected to in the trial court. F.R.Cr.P. 30.

Since we are of opinion that a new trial is required, we do not reach the other assignments of error, including the challenge to the favor of a juror.

Reversed and remanded for a new trial.

      . Williams was indicted as principal; Elliott for aiding. 18 U.S.C. § 656 reads as follows:
      Theft, embezzlement or misapplication by bank officer or employee, Title 18 U.S.C. § 656
      “Whoever, being an officer, director, agent or employee of, or connected in any capacity with any Federal Reserve bank, member bank, national bank or insured bank, or a receiver of a national bank, or any agent or employee of the receiver, or a Federal Reserve Agent, or an agent or employee of a Federal Reserve Agent or of the Board of Governors of the Federal Reserve System, embezzles, abstracts, purloins or willfully misapplies any of the moneys, funds or credits of such bank or any moneys, funds, assets or securities intrusted to the custody or care of such bank, or to the custody or care of any such agent, officer, director, employee or receiver, shall be fined not more than $5,000 or imprisoned not more than five years, or both; but if the amount embezzled, abstracted, purloined or misapplied does not exceed $.100, he shall be fined not more than $1,000 or imprisoned not more than one year, or both. As used in this section, the term ‘national bank’ is synonymous with ‘national banking association’; ‘member bank’ means and includes any national bank, state bank, or bank and trust company which has become a member of one of the Federal Reserve banks; and ‘insured bank’ includes any bank, banking association, trust company, savings bank, or other banking institution, the deposits of which are insured by the Federal Deposit Insurance Corporation. June 25, 1948, c. 645, 62 Stat. 729.”
      18 U.S.C. § 2 reads as follows: “§ 2. Principals
      (a) Whoever commits an offense against the United States or aids, abets, counsels, commands, induces or procures its commission, is punishable as a principal.
      (b) Whoever willfully causes an act to be done which if directly performed by him or another would be an offense against the United States is punishable as a principal.”

      . See Bell v. United States, 185 F.2d 302, 310 (4th Cir. 1950), cert. den. 340 U.S. 930, 71 S.Ct. 492, 95 L.Ed. 671 (1951) ; Smith v. Illinois, supra; Carpenter v. United States, 264 F.2d 565 (4th Cir. 1959), cert. den. 360 U.S. 936, 79 S.Ct. 1459, 3 L.Ed.2d 1548 (1959) ; 3A Wig-more on Evidence § 944.

      . Northway was decided under Rev.Stat. § 5209, a predecessor of § 656.


author: PER CURIAM: WYZANSKI, Senior District Judge

text:
    In the Matter of the Arbitration of the TYPO-PUBLISHERS OUTSIDE TAPE FUND. Thomas G. S. CHRISTENSEN, Petitioner-Appellant, New York Typographical Union No. 6 et al., Union, Union-Trustees-Appellants, v. NEW YORK TIMES COMPANY et al., Employers, Employers-Trustees-Appellees.
    Nos. 514, 515, Docket 72-2118, 72-2183.
    United States Court of Appeals, Second Circuit.
    Argued March 6, 1973.
    Decided May 15, 1973.
    Constantine P. Lambos, New York City (Lorenz, Finn, Giardino & Lambos and Jacob Silverman, New York City, on the brief), for petitioner-appellant.
    Gerhard P. Van Arkel, Washington, D. C. (Van Arkel & Kaiser, Washington, D. C., Stephen C. Vladeck and Vladeck, Elias, Vladeck & Lewis, New York City, on the brief), for appellants New York Typographical Union No. 6 and Bertram Powers and David Crockett.
    John J. Stanton, Jr., New York City, for New York Times Co. and John Bogart, employer trustee.
    Sidney Orenstein, New York City, for New York Post Corporation and Leonard Arnold, employer trustee.
    Before LUMBARD and TIMBERS, Circuit Judges, and WYZANSKI, District Judge.

       Of the District of Massachusetts, sitting by designation.

   PER CURIAM:

These are consolidated appeals from a judgment of the Southern District, 344 F.Supp. 194 (1972), denying arbitrator Thomas G. S. Christensen’s petition for a declaratory judgment that certain payments from the jointly administered “Typo-Publishers Outside Tape Fund” (the “Fund”) did not violate section 302 of the Labor Management Relations Act of 1947, 29 U.S.C. § 186. In 1970 the trustees representing the New York Typographical Union Local No. 6 (the “Union”) proposed the payment of benefits from the Fund to employees of any employer having a collective bargaining contract with the Union, irrespective of whether the employer had made contributions to the outside tape fund. The trustees representing the New York Times and the New York Post opposed this plan, arguing that under the collective bargaining agreements, the trust agreement, and section 302 of the Labor Management Relations Act only former or present employees of the Times and the Post could receive benefits from the Fund.

Under the terms of the trust agreement the dispute was submitted to arbitration before Thomas G. S. Christensen, who determined that the collective bargaining agreements and the trust agreement authorized payments from the Fund to employees of non-contributing employers. The arbitrator, pursuant to the submission, then petitioned the district court for a ruling as to the legality of such payments under section 302(c) (5). From the district court’s denial of the petition the arbitrator and the Union, together with Bertram Powers and David Crockett, the two Union-trustees, have appealed.

The factual background of the dispute is fully set out in the opinion below and need not be repeated here. The only question on appeal is the narrow one of whether the district court erred in its determination that section 302(c)(5) of the Labor Management Relations Act of 1947 prohibits the payment of benefits from the Fund to employees of noncontributing employers. We agree with the district court that section 302 does prohibit such payments.

Section 302(a), 29 U.S.C. § 186(a) makes it “unlawful for any employer . to pay, ... or agree to pay, . . . any money or other thing of value—

(1) to any representative of any of his employees who are employed in an industry affecting commerce; . . ”

Section 302(c)(5) excepts from the prohibition of section 302(a) payments by employers to trust funds established for certain specified purposes if the trust is “for the sole and exclusive benefit of the employees of such employer . . ” Appellee newspaper publishers and employer-trustees contend that the clear import of this language is that only employees whose employers contribute to a qualified section 302(c)(5) trust can lawfully receive benefits from the trust.

Appellants, citing Bey v. Muldoon, 223 F.Supp. 489 (E.D.Pa.1963), aff’d, 354 F.2d 1005 (3 Cir.), cert. denied, 384 U.S. 987, 86 S.Ct. 1888, 16 L.Ed.2d 1004 (1966), argue that “any employee in the newspaper industry whose employer is a signatory to a collective bargaining agreement with the Union is an employee within the meaning of section 302(c)(5), and eligible to receive benefits under the [plan].” They assert that the purpose of section 302 was not to eliminate the type of payments at issue here, but to prevent employers from tampering with the loyalties of union officials and to assure that the money deducted from an employee’s wages for payment to a union trust fund would not become unrestricted property of the Union, but would be used to benefit the employees whose labor was responsible for the employer contributions. See, e. g., Bey v. Muldoon, supra; I Legislative History of Labor Management Relations Act of 1947, 458; II Legislative History of Labor Management Relations Act of 1947, 1311, 1498. But see Copra v. Sure, 236 F.2d 107, 115 (1 Cir. 1956).

While it may be that Congress in enacting section 302 did not intend to prohibit the type of trust fund at issue here, this court is bound, nonetheless, by the express statutory language that only payments by an employer to a “trust fund . . . for the sole and exclusive benefit of the employees of such employer . . . ” are exempt from the general prohibitions of section 302. Where several employers have agreed in negotiations with a union to set up a section 302 trust for the benefit of union members, it is clear beyond cavil that “[o]nly employees and former employees of employers who are lawfully contributing to [the] union . . . trust fund may qualify as beneficiaries.” Moglia v. Geoghegan, 403 F.2d 110, 116 (2 Cir. 1968), cert. denied 394 U.S. 919, 89 S.Ct. 1193, 22 L.Ed.2d 453 (1969). Accord Rittenberry v. Lewis, 238 F.Supp. 506 (E.D.Tenn.1965); Bolgar v. Lewis, 238 F.Supp. 595 (W.D.Pa.1960).

Appellants nevertheless urge that the term “employer” in section 302(c)(5) should be taken to refer to all those newspaper publishers having collective bargaining contracts with the Union. Their argument is based in large measure on the decision of Judge Lord in Bey v. Muldoon, supra. Judge Tyler dealt fully with this contention and no purpose would be served in repeating the district court’s analysis here. It suffices to point out that the result in Bey rested on the peculiar nature of the use of longshoremen on the Philadelphia waterfront; the longshoremen worked for the “waterfront” rather than for any particular stevedoring company. It is apparent from the record developed here that, unlike the Philadelphia longshoremen, the vast majority of typographical workers at the Times and the Post are employees of one newspaper employer. Thus Bey is not persuasive authority for the contention of appellants.

Affirmed.

WYZANSKI, Senior District Judge

(dissenting):

The majority opinion and the opinion of District Judge Tyler have a strong basis for their conclusions. Literally, the statute is plainly, unambiguously opposed to the trust fund at issue.

But it is equally clear that the Congressional purpose was solely to prevent an employer from paying funds into a union welfare fund, or the like. The Congressional reports and the Congressional Record are replete with references to abuses, or at least plans, involving payments to funds which union leaders could manage for a variety of different purposes and not necessarily for the immediate and exclusive use of those with whom employees chose to be in a common fund of mutual support. See, for example, S.Rep. No. 105, on S. 1126, 80 Cong. 1st Sess. (1947); H.R.Rep. No. 245, on H.R. 3020, 80th Cong., 1st Sess. (1947); House Conf. Rep. No. 510 on H.R. 3020 (1947); 93 Cong.Rec. 4157, 4679-4680, 4746-4747, 4875-4884, 5494-5496, 7501 (1947).

However, a careful reading of the primary and other sources by counsel and the court has not uncovered any expressions of opinion, hostile or otherwise, by Senators, Congressmen, witnesses, or others with respect to the type of plan here involved. We have no ground to suppose that, in general, Congress has been unsympathetic with pooling of employees’ unemployment, pension, and like funds which treat all employees in an industry, or section thereof, as having such a common interest that they become, by their own free choice, mutual self-insurers.

Moreover, such a mutual support system has particular relevance to an industry, 'or section thereof, where the pattern of collective bargaining is as wide as the industry or a geographical or other broadly drawn section and where there is, if not identity of interest, a least a strong common bond against a common danger which may manifest itself almost haphazardly against some but not against others, and without any predictability.

Nor is it easy to discern what could be a public objection to allowing employers and employees who on a wholly voluntary basis, as in the case at bar, wished to enter into such a bargain, to execute their purpose. No one is the loser if all want to pool risks under such a self-insurance scheme.

Thus the question is whether to disregard the letter of the statute, and to hold it inapplicable because the challenged conduct is not within the reason of the statute. This raises a familiar issue. Theoretically little can be added to the classic authorities on the subject. United States v. Carbone, 327 U.S. 633, 66 S.Ct. 734, 90 L.Ed. 904; see Holy Trinity Church v. United States, 143 U.S. 457, 12 S.Ct. 511, 36 L.Ed. 226. Lynch v. Overholser, 369 U.S. 705, 710, 82 S.Ct. 1063, 8 L.Ed.2d 211.

In my view those authorities point to the desirability in this case of disregarding the letter of the prohibition and allowing the parties to carry out their agreement to which, so far as we are informed, there is no objection founded on declared or undeclared, discoverable or undiscoverable, alleged or implied, public policy.

      . Brief of appellant Christensen at page 16.