text:
    AIRCO, INC. v. The UNITED STATES.
    No. 160-73.
    United States Court of Claims.
    Oct. 23, 1974.
    As Amended Jan. 17, 1975.

      James F. Thacher, San Francisco, Cal., attorney of record, for plaintiff, Thacher, Jones, Casey & Ratcliff, San Francisco, Cal., of counsel.
    Stephen Schachman, Washington, D. C., with whom was Acting Asst. Atty. Gen., Irving Jaffe, for defendant.
    Before DAVIS, SKELTON and NICHOLS, Judges.
   ON DEFENDANT’S MOTION TO DISMISS THE PETITION

DAVIS, Judge.

In August 1971 the Air Force agreed to purchase from plaintiff Aireo, Inc., through the Aireo division which is engaged in selling industrial gases, some 4.250 pounds of propellant hydrogen (in liquid form) at a price of $30,217.50. The contract also established a rental charge of $12 per day for the contractor-furnished containers, this charge to begin on the 31st day of the Government’s possession of the container. Delivery of the gas was to be made f. o. b., after receipt of a delivery schedule from the Government, to two facilities, one in Phoenix, Arizona, and the other in Sau-gus, California. The contract provided: “Delivery schedules may be issued at the sole option of the Government during period of performance set forth on the applicable Commitment Document.” The “effective period” for the contract was stated to be August 13, 1971 through November 15, 1971. During this three-month time-span plaintiff received orders for less than 200 pounds of the hydrogen, which was delivered.

On January 28, 1972, Aireo wrote the contracting officer recalling that the contract obligated defendant to purchase 4.250 pounds at the price of $30,217, but that only a small fraction of that amount had been ordered by the end of the contract period. The letter continued:

Inasmuch as the Government has defaulted on its obligation to purchase the quantity as stipulated in the contract, we are billing you for the balance due. The attached invoice has been prepared for the amount due of $30,091.50.
Aireo continues to hold in reserve status the two each 1000 liter liquid hydrogen dewars [containers] and with no advice to the contrary, will continue to hold these in reserve status for the Government at the agreed rental of $12 per day per container. Charges for the rental have been included in the invoice through December 31, 1971.

Next, the Government sent, on February 17, 1972, a telegram (followed by a letter to the same effect on February 24th) terminating the contract as of February 17th under its convenience-termination clause. In May 1972 plaintiff submitted a termination settlement claim, on the Defense Department form for termination settlement proposals, requesting a total of $8,962. There followed an exchange of communications and a negotiation conference, but apparently no accord was reached.

Early in December 1972 the Government wrote that the Termination Contracting Officer intended to render a unilateral determination of the amount due for the termination. Plaintiff was asked to present any further written evidence supporting its claim. In apparent response, plaintiff, toward the end of December, asked for $13,711 as “our damages for the Government’s breach” of the contract, rejecting the termination notice of February 1972 as too late, and declaring that its settlement proposal (and the ensuing settlement effort) had been submitted and carried on in an unsuccessful attempt to compromise damages for breach of contract, and not under the termination clause. This letter from Aireo was followed very shortly by a unilateral determination by the contracting officer that only $503.21 was due the contractor.

Aireo did not appeal to the Armed Services Board of Contract Appeals. Instead it began this suit for breach of contract, asserting (as it had in its letter of December 1972 to the contracting officer) that the Government had already committed a material breach, and the contract was therefore at an end, well before the termination notice in February 1972. Contending that the termination was valid when issued and that plaintiff has failed to exhaust its administrative remedy through appeal to the ASBCA, defendant has moved to dismiss the petition.

On the basis of the record we have before us on this motion to dismiss, we would have to say that the plaintiff was free, if such a move was timely made after November 15th, to declare expressly, or indicate in effect, that it considered the contract materially breached, and at an end, because of the Government’s gross failure to order by November 15th the quantity of gas it undertook to buy. Cf. Nolan Bros. v. United States, 405 F.2d 1250, 1255 n.5, 186 Ct.Cl. 602, 609 n.5 (1969); Clement Bros. v. United States, 418 F.2d 1356, 190 Ct.Cl. 50 (1969); Northern Helex Co. v. United States, 455 F.2d 546, 197 Ct.Cl. 118 (1972); William Green Constr. Co. v. United States, 477 F.2d 930, 201 Ct.Cl. 616 (1973), cert. denied, 417 U.S. 909, 94 S.Ct. 2606, 41 L.Ed.2d 213 (1974). The question for decision is whether plaintiff actually took that course, or whether it elected, instead, to treat the contract as still viable and continuing in operation.

Airco’s post-November 15th conduct, and its exchanges with the Government, impel us to conclude that it chose the latter route. Its first contact with the defendant after November 15th was the letter of January 28, 1972 (quoted supra, in pertinent part) the contents of which are inconsistent with plaintiff’s current view that at that time it deemed the agreement totally breached and at an end. If that had been Airco’s stand, in January 1972, it would have asked for breach damages, i. e. the contract price less the amount it could obtain elsewhere for the gas. Instead, it billed the Air Force for the full balance of the contract price, just as one would do if he had decided to treat the contract as continuing to subsist and remain in effect. The plain implication was that the gas would still be delivered if the Air Force ordered it.

Moreover, and very significantly, plaintiff told the defendant in the same letter that it was holding two containers for the Goverment’s use “at the agreed rental of $12 per day per container”, and that “[cjharges for the rental have been included in the invoice through December 31, 1971.” If Aireo had deemed the contract ended in the preceding November, there would have been no rental charge for December and no advice that Aireo was keeping the containers “in reserve status” for the Government. The letter must be read, rather, as an express indication that plaintiff considered the contract to be still alive and operative.

When it received the defendant’s termination notice, some three weeks later, Aireo continued to act under and within the confines of the contract, by appearing to accept the termination as fully valid and by following the procedures established for termination claims. In May 1972, the contractor sent to the Termination Contracting Officer a settlement proposal on a printed form to be used in settlement of “a fixed price terminated contract when total charges claimed are less than $10,000.” In the space asking for the “Effective Date of Termination”, plaintiff inserted “2/17/72”, i.e. the date of the Government’s termination notice. The amount sought was $8,962. When the contracting officer asked for justification of this claim, Aireo responded with its specific answers and without any indication that it considered the termination to have been improper, ineffective, or invalid. Later, after oral conversations with the federal representatives about the amount of the claim, Aireo gave, in written form, further information on the points still at issue, again without any intimation that it viewed the termination as inoperative. On the contrary, in explaining the sum it asked for return on investment, plaintiff designated “the term of the Government contract” as “one-half year”; since the contract clearly began on August 1.3, 1971, this must have meant that, in plaintiff’s eyes at that time, the agreement ran to February 17, 1972 (the termination date)— not November 15, 1971. There is no suggestion by either side that in any of the oral conversations Aireo said or implied that the termination notice came too late or was ineffective. So far as this record reveals, the’ first intimation of that character came with the letter of December 1972, described supra, after the contracting officer had revealed that he contemplated a unilateral determination.

In this situation we hold it plain that plaintiff did not put an end to, or think that it had put an end to, the contract before the Government invoked the convenience-termination article in February 1972. In this respect the case is the same as Nolan Bros. v. United States, supra; Clement Bros. v. United States, supra and William Green Constr. Co. v. United States, supra — in each of which the contractor similarly acted to keep the agreement alive.

It may superficially seem that a contract which provided that all supplies should be ordered by November 15; 1971 could not be terminated on February 17, 1972. But there are two connected reasons why this easy judgment would be incorrect. The first is that this contractor chose to pursue its option to hold itself ready and willing to continue performance after November 15th despite the Government’s breach (see Northern Helex Co. v. United States, supra, 455 F.2d at 51 ff, 197 Ct.Cl. at 125 ff.) and that deliberate choice kept the contract alive, since the Government was not harmed by that stance. The second ground is that the agreement provided for storage fees for the containers so long as the defendant held them, and that part of the undertaking had no stated time limit; the storage obligation, at the least remained in existence when the termination notice issued.

Thus the February termination was valid and effective, and plaintiff was required to pursue, as it did for several months, the procedure of the convenience-termination clause. See Nolan Bros., Clement Bros., and William Green Constr. Co., supra. That process called upon Aireo, after the negotiations broke down and the contracting officer issued his unilateral determination to appeal to the Armed Services Board of Contract Appeals. Its failure to do so, says the defendant, means that it is now entirely out of court and completely remediless.

The court has several times held, however, that, if the circumstances justify such leniency, we can send a case like this back to determine whether there should be an administrative determination, despite the absence of a timely appeal to the board. See Robertson Electric Co. v. United States, 176 Ct.Cl. 1287, 1301-1302 (1966); Universal Ecsco Corp. v. United States, 385 F.2d 421, 427, 181 Ct.Cl. 10, 20-21 (1967); Zidell Explorations, Inc. v. United States, 427 F.2d 735, 737-738, 192 Ct.Cl. 331, 335-336 (1970); William Green Constr. Co. v. United States, supra, 477 F.2d at 937, 201 Ct.Cl. at 627-28 cert. denied, 417 U.S. 909, 94 S.Ct. 2606, 41 L.Ed.2d 213 (1974); cf. Schlesinger v. United States, 383 F.2d 1004, 1005-1006, 181 Ct.Cl. 21, 24 (1967). These were cases, like the present one, in which the contractor mistook its remedy, suing on a breach claim when its only correct remedy was “under the contract.” Some of the cases antedate Pub.L. No. 92-415, but at least the William Green decision came after.

Plaintiff has not sued '“under the contract,” but pursuant to our Rule 39, requiring that leave shall be “freely given when justice so requires,” we can allow it to amend its petition, if it wishes, especially since the possibility of administrative disposition was raised at the oral argument and we are making no definitive decision on the plaintiff’s right to such a determination. If the petition is amended within thirty (30) days, the court will be in a position to remand under Pub.L. No. 92-415. If it is not so amended, the present petition will be dismissed as failing to state a proper “breach” claim.

We think that there is enough, at the present stage, to remand to the Department of Defense to consider whether to consider a delayed appeal. We are told that Airco’s local division, which handled the contract and the termination negotiations, acted without the appropriate legal advice in deciding too late to treat the matter as a “breach” claim rather than “under the contract.” Though the company is obviously not an indigent, the untutored choice made by its local personnel might, or might not, be excused if they simply chose the easier path down which to press a claim which has consistently been pushed. It is clear from the course of negotiations that plaintiff continued to seek much more than the defendant offered, and it cannot be said to have abandoned its claim at any time. It took prompt action to bring the matter to a head, and, though it was wrong in believing that it could pursue its breach claim after the unilateral determination, its legal position was not altogether frivolous. On the other hand, the ease is remanded without prejudice to the power of the remandee agency to refuse to reconsider it, if it finds as a fact that defendant has been substantially prejudiced by the failure of the plaintiff to exhaust its administrative remedies in the first instance, or that the plaintiff has been inexcusably negligent in properly prosecuting its claim. This is not a case in which it is now clear that leniency should be exercised.

To avoid difficulties over the correct recipient of our remand under Pub.L. No. 92-415, we remand to the Secretary of the Air Force and let him decide, through whatever agency or person he designates, whether an appeal to the ASBCA should be permitted. The agency or person selected to decide this issue should give plaintiff a full and fair opportunity to present its case for the allowance of a delayed appeal.

On these grounds, action on the defendant’s motion is suspended for thirty (30) days to allow plaintiff to amend its petition to state, if it wishes, a claim “under the contract.” If such an amendment is duly filed, that new claim will be remanded under Pub.L. No. 92-415, this opinion, and Rules 149-150, to the Secretary of the Air Force to determine whether or not, in his discretion, to allow a delayed appeal to the ASBCA. At the same time the claim now stated in plaintiff’s petition will be dismissed on defendant’s motion which will be granted to that extent. If an amendment to the petition is not duly filed, the petition will be dismissed on defendant’s motion.

      . Neither side has hinted that it lias anything further to present on this particular issue, but in any event we are warranted in deciding all aspects of, and all issues involved in, the defendant’s motion to dismiss on the basis of the record presented to us on that motion. See also footnote 5, infra.

      . Contrast the $30,091.50 demanded in January 1972 before the termination notice.

      . The December letter sought $13,711 “covering our damages for the Government’s breach of the subject contract.” This amount is to be compared with the $30,091.-50 billed in the ¡¡receding January, as well as with the $8,962 sought in the plaintiff’s termination claim.

      . The unilateral determination was issued on January 4, 1973, and the petition in this court was filed on May 25, 1973.

      . Since we have considered documents filed by defendant in support of its motion to dismiss, we treat the motion as one for summary judgment for failure to exhaust the administrative remedy. See Rule 38(b).

      . See footnote 5, supra.


source: Caselaw Access Project

author: PER CURIAM: BERNHARDT, Trial Judge:

license: Public Domain

text:
    James Leo KING et al. v. The UNITED STATES

    No. 138-67.
    United States Court of Claims.
    Oct. 23, 1974.

      James N. Jacobi, Washington, D. C., attorney of record, for plaintiffs; Kur-rus & Jacobi, Washington, D. C., Robert H. Nelson, Darrell D. Kellogg, Kahrs, Nelson, Fanning, Hite & Kellogg, Wichita, Kan., of counsel.
    Nicholas S. Nadzo, Washington, D. C., with whom was Asst. Atty. Gen. Wallace H. Johnson, for defendant.
    Before COWEN, Chief Judge, and BENNETT, Judge.

      Since the decision of the court on June 12, 1970, the plaintiffs George K. Winter and Tom Routs have died and their widows, Rachael Winter and Jennie Pouts, remain as surviving joint tenants. Motions to delete the decedents’ names as plaintiffs were allowed on March 13, 1973.

   OPINION

PER CURIAM:

This case comes before the court on defendant’s motion, filed August 12, 1974, for judgment, requesting that the court adopt the recommended decision of trial Judge C. Murray Bernhardt, filed June 14, 1974, as amended, ex parte, on June 26, 1974, as the basis for its judgment in this case, plaintiffs having failed to file a notice of intention to except thereto and the time for so filing pursuant to the Rules of the court having expired. Upon consideration thereof, without oral argument, since the court agrees with the trial judge’s recommended decision, as hereinafter set forth, it hereby grants defendant’s motion and affirms and adopts the said decision as the basis for its judgment in this case. Therefore, plaintiffs are entitled to recover and judgment is entered for them to the extent set forth in the trial judge’s conclusion of law following his opinion and findings of fact.

OPINION OF TRIAL JUDGE

BERNHARDT, Trial Judge:

Since the decision of the court on June 12, 1970 (427 F.2d 767, 192 Ct.Cl. 548) holding for fee-owning and tenant plaintiffs on the issue of liability and remanding for damage determination a trial has been held, primarily to adjudge the fair market value of flowage easements over those portions of plaintiffs’ upriver farmlands exposed to the likelihood of frequent flooding due solely to the backwater effects of the Toronto Dam and its impounded pool in Greenwood County, Kansas, and for secondary purposes of adjudicating claims for damages to crops, At the damage trial the defendant advanced new hydrology studies and, for the first time, contour elevation maps based on a photogrammetrie survey conducted between trials under Government contract. The results of the survey bottom the Government’s present contention that flowage easements are applicable to only a scant 35.-57 acres out of a total of 1,037.24 acres, with the trifling aggregate of $92.74 in easement value, although defendant concedes a nominal value- of $200 to each fee-owning plaintiff.

Bearing in mind the court’s earlier conclusion that “ * * * those parts of the plaintiffs’ properties lower than 931 feet to 939.5 feet in elevation would be affected in certain parts by flood waters passing them in the river at a water surface elevation of between 931 and 939.5 feet * * * ” (finding 8 in first opinion), the preparation and submission by the defendant of extensive hydrology data designed to persuade a contrary belief seems somewhat superfluous at this time and only peripheral to the present inquiry. Retrial of the liability issue is not in order. Finding 7(b) in the prior decision observes that the isolation of backwater effects involves a value judgment as to which experts might differ, which may account for the Government’s current tack, as well as for the contrast with pre-dam predictions by its then hydrologists that backwater effects would justify the acquisition of partial flowage easements bordering all or most of the river’s route threading through the plaintiffs’ properties. Failure to follow the latter advice led to the present dispute. To adopt the Government’s latest position would offer no greater assurance of accuracy (or mayhap error) than the view announced in the liability opinion to which the court is already committed, a view which is more akin to the Government hydrologists’ very first prognostication as to backwater consequences than that to which the defendant now subscribes.

For these reasons we omit findings rehashing these liability aspects and adhere to those already made on the subject, rightly or wrongly, despite the submission of requests for findings drawn from testimony and exhibits as to liability in the damage trial record. The essential remaining problems are quantity and value.

As to quantity the plaintiffs claim 841.44 acres, the Government concedes 35.57, plus another 14.90 tenanted acres. The Government’s figure is somewhat low because it is based on new hydrologic data at odds with the court’s announced finding as described above, and the plaintiffs’ is unrealistically high because it purports to embrace all of their land lying below elevations of 945 feet in the lower tracts and 950 feet in the upper. In the condemnation proceeding prior to building of the dam, the Government bought fees and flowage easements to properties flanking the river between river mile 271.5 (the dam site) and upriver to mile 292.7, the fees being acquired generally for properties below an elevation of 927 feet, and flow-age easements for properties between 927 feet and 936 feet, plus some easements up to 939.5 feet. Despite the fact that substantial areas of plaintiffs’ farms stretching between river miles 293.5 and 298.1 are shown on the contour elevation maps to be lower than 939.5 feet in elevation, and the further fact that the river bed falls approximately 15 feet in traversing the properties in suit (which would infer a generally corresponding change in elevation in the adjacent lands), the decision was made in the condemnation program to cut off all acquisitions above river mile 292.7, even in the face of hydrological advice that slight backwater effects of the dam extended a bit beyond the upstream limit of the subject properties.

Given the 15-foot decline in the river bed as the stream bisects plaintiffs’ farms en route to the Toronto Dam, and the known elevations at which fees and flowage easements were acquired through condemnation in the downstream approaches to the dam as described above, there might appear to be some rough justice in raising the fee and flowage easement taking elevations in plaintiffs’ farms to graduating levels from 0 to 15 feet higher than those employed in condemnation of the downstream reaches, depending on the decline in streambed elevation and surrounding land as the river progresses downstream past the plaintiffs’ farms, provided of course that the backwater effect persists as disclosed by the hydrologists’ envelope curve. However, finding 8 in the previous decision, which has been quoted above in part, would serve to restrict the easement taking areas to those below an elevation of 939.5 feet. Finding 8, infra, measures this area to be 72.09 acres, of which 67.42 acres lie below the cropline and 4.67 acres above the crop-line. Those acres below the cropline are presumably areas restricted to timbered river banks and sloughs not used for cultivation of crops, while those above the cropline are regularly planted to crops. But in the ultimate valuations arrived at we have given plaintiffs the benefit of the doubt and have considered the easement acreage to be crop land and valued accordingly.

Findings 5 and 6, respectively, describe in detail the appraisal evidence rendered by appraisers for plaintiffs and defendant, and the strengths and weaknesses of their methods will be omitted in this opinion. Whereas plaintiffs’ appraisers advised that the flow-age easement value of plaintiffs’ 841.44 affected acres was $147,850, while defendant’s appraiser advised a flowage easement value of $92.75 (voluntarily increased to a nominal $1,400, or $200 per plaintiff) for 35.57 affected acres, we have sifted the record closely and arrive at a figure of $4,361.46 for 72.09 affected acres, which finding 10 allocates among the various plaintiffs.

Findings 11 through 13 present the evidence of record relating to plaintiffs’ claims for flood damage to crops during the years 1962, 1964, 1965, 1967-70 inclusive, and 1972. The plaintiffs, some as land owners and others as tenants under cropsharing agreements, claim a total of $139,278.99 in crop damages for the years in question, of which $76,446.-55 represents, according to their contentions, damage ' to growing crops by floods occurring prior to maturity of the crops, while $62,832.44 is allocated to matured crops which were damaged by floods when they were ready for harvesting. The plaintiffs’ reason for the separation is that, generally speaking, growing crops are considered part of the realty and so their value may be subsumed within the compensation for the flowage easement, while mature though unsevered crops ready for harvesting are considered to be personalty and hence, according to plaintiffs, not included in the flowage easement valuation. In each claim the but-for allegation is that the floods causing the damage were attributable to the Toronto Dam and Reservoir, although the computations are based on the assumption that the crops occupied 856.34 acres which plaintiffs claim were flood prone solely because of the dam and reservoir, while we have substantially reduced this flood prone acreage to 72.09 acres. This sharp reduction would, of course, itself drastically curtail the crop damage claims even if they were reimbursable at all, which they are not.

The existence of flowage easements over the flood prone lands in question running to the Government since September 14, 1961, according to the defendant, or January 1, 1962, according to plaintiffs, for which the Government must pay pursuant to this decision, quite clearly precludes the recovery of crop damage in 1962 and subsequent years resulting from exercise of the easement prerogatives. Manifestly it would be improper for the Government to pay twice for the flowage rights. Compensation for a taking must be determined as of the time and place of taking. Potts v. United States, 126 F.Supp. 170, 173, 130 Ct.Cl. 88, 94 (1954). The time of taking is the date the United States enters into possession. United States v. Dow, 357 U.S. 17, 78 S.Ct. 1039, 2 L.Ed.2d 1109 (1958). “* * * [t]he value to be ascertained does not include, and the owner is not entitled to compensation for any element resulting subsequently to or because of the taking.” Olson v. United States, 292 U.S. 246, 256, 54 S.Ct. 704, 709, 78 L.Ed. 1236 (1934). As stated in 2 Nichols, Eminent Domain (3d ed.) § 6.21, pp. 6-51:

Where a defacto taking is followed some time later by a formal vesting of title under the statutory method, the owner is not entitled to interim damages for the intervening period. Plaintiffs’ reliance on United States v.

Twin City Power Co., 248 F.2d 108 (4th Cir. 1957) is misplaced. Twin City simply held that just compensation for the taking of land subject to a flowage easement in another must be apportioned between the owner of the fee and the owner of the easement. Had the damage to crops in the ease under consideration occurred at the time of the taking, the compensation paid would require apportionment between the owner of the land and the owner of the mature crops thereon, assuming them to be different entities. But that is not the situation here. Other cases relied on by plaintiffs are not remotely in point.

Plaintiffs are entitled to interest from September 14, 1961, the defendant’s selection as the date of taking, as a part of just compensation. The parties stipulated that the interest rate should be commensurate with those rates of interest paid by the Government in the market for its own borrowing purposes. The plaintiffs urge an interest rate of 6 percent, compounded annually from the date of taking, whereas the defendant proposes interest of 4 percent from the date of taking. The court’s award of interest as part of just compensation in taking cases has traditionally been at the rate of 4 percent per annum from the taking date, although in Drakes Bay Land Co. v. United States, 459 F.2d 504, 198 Ct.Cl. 506 (1972) the court, in awarding interest at 4 percent, did so in the absence of evidence justifying a higher rate, thereby inferring that the 4 percent figure is not sacrosanct and immutable, but flexibly responsive to the ends of justice. In Carlstrom v. United States, 177 F.Supp. 245, 147 Ct.Cl. 297 (1959), the court had occasion to consider a higher rate, but found no special circumstances to justify any more than the customary 4 percent rate.

The special circumstance in the instant case is the stipulation of the parties to rest on the rate at which the Government borrows money. This rate is given in finding 16, infra, which reflects a steadily rising rate of interest for each year from 1962 through 1972 on long-term United States Government bonds, from 3.95 percent in .1962 to 5.70 percent at the end of 1972. This amount contrasts with the Federal Reserve discount rate which varied from 3 to 4 percent in 1960 to 6 percent in March 1970, and with the prime interest rate charged by the majority of commercial banks which increased from 4.5 percent in August 1960 to 5.75-6 percent by the end of 1972. It would seem most logical, in view of the agreement of the parties, to apply in this case the annually fluctuating rate on long-term United States Government bonds as listed in finding 16.

Under the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970, approved January 2, 1971, 84 Stat. 1906, 42 U.S.C. § 4654(c), the plaintiffs claim reimbursement for their “reasonable costs, disbursements, and expenses, including reasonable attorney, appraisal, and engineering fees, actually incurred because of the condemnation proceedings.” Finding 19 totals these expenses to $10,031.95, including a reasonable fee of $1,090.37 for plaintiffs’ counsel which conforms to counsel’s arrangements with plaintiffs for a 25 percent contingency basis. To this must be added 25 percent of the interest recoverable on the compensation awarded, referred to above. Counsel has worked arduously and skillfully for such a slender reward.

CONCLUSION OF LAW

Upon the foregoing findings of fact and conclusions of law, which are made a part of the judgment herein, judgment is entered for plaintiffs as follows:

1. For the taking of flowage easements over plaintiffs’ properties the total sum of $4,361.46, to be distributed among the individual plaintiffs as specified in the last column of the schedule in finding 10.

2. Interest thereon as part of just compensation at the rates specified in finding 16, including interest at the rate of 3.95 percent from September 14, 1961, and interest at the rate of 5.70 for 1973 and subsequent years until the date of payment.

3. Attorneys’ fees allowed at 25 percent of the principal and interest awarded in paragraphs 1 and 2 of this order.

4. The following expenses of litigation totalling $10,031.35, to be -divided among the individual plaintiffs in accordance with their contributions or commitments: surveyor’s fees and expenses ($1,478.04); appraisers’ fees and expenses ($3,300); hydrologist’s fees and expenses ($1,901.06); court reporting fees ($682.20); miscellaneous expenses ($2,670.05).

5. In all other respects plaintiffs’ petition is dismissed.

      . As to fee-owning plaintiffs. Another 14.90 acres conceded by the defendant to be subject to flowage easements relate to the claim of a tenant plaintiff.

      . Plaintiffs’ arithmetic is conflicting. See fn. 1 to finding 3, infra.

      . Erroneously (but harmlessly) reported as 292.7 in the first opinion.


author: MARKEY, Chief Judge.

text:
    Application of Charles Henry KROEKEL and Frederick Andrew Pfaff.
    Patent Appeal No. 74-535.
    United States Court of Customs and Patent Appeals.
    Nov. 7, 1974.

      Michael B. Fein, Philadelphia, Pa., attorney of record, for appellants. George W. F. Simmons, Philadelphia, Pa., of counsel.
    Joseph F. Nakamura, Washington, D. C„ for the Commissioner of Patents. Jack E. Armore, Washington, D. C., of counsel.
    Before MARKEY, Chief Judge, and RICH, BALDWIN, LANE and MILLER, Judges.
   MARKEY, Chief Judge.

This appeal is from a decision of the Patent Office Board of Appeals which upheld the examiner’s rejection of all of appellants’ claims under 35 U.S.C. § 112. No appeal was taken with respect to claim 13. The case presents the question of whether a three-component composition claim which recites the amounts for the components as 20 to 80% by weight, 20 to 80% by weight, and 1 to 25% by weight, embracing a theoretical composition having a total weight of 101%, is sufficiently definite to satisfy the requirements of 35 U.S.C. § 112, second paragraph. We conclude that it is. Accordingly, the decision below is reversed.

The Invention

The parties have agreed that all of the claims stand or fall with independent claim 1, which is representative:

1. As an article of commerce, a resin system with reduced polymerization shrinkage in bulk molding compounds and sheet molding compounds to yield improved surface smoothness characteristics, said resin system comprising
(a) 20 to 80% by weight of an a, p-ethylenically unsaturated polyester having a molecular weight per double bond factor of 142 to 215, said polyester formed as the poly-condensation product of at least one a, P-ethylenically unsaturated dicar-boxylic acid or anhydride and at least one dihydric alcohol or alkaline oxide with the proviso that up to 25 mol percent of said ethylenically unsaturated dicarboxylic acid can be replaced by saturated dicarboxylic acid,
(b) 20 to 80% by weight of an ethylenically unsaturated monomer system comprising at least one member of the group consisting of styrene and styrenes having hydrocarbon group ring substitution, the balance of said system comprising less than 50% of at least one member of the group consisting of lower alkyl esters of acrylic and metha-crylic acid, alphamethylstyrene, cyclic acrylates and methacrylates, benzyl methacrylates and acrylates, bicyclic acrylates and methacrylates, halogenated styrenes, alkaline dimethacrylates, and diallyl phthalate and,
(e) 1 to 25% by weight of an acid functional thermoplastic addition polymer containing 0.1 to 5% by weight acid groups, said thermoplastic addition polymer characterized as soluble in (b) or in mixtures of (a) and (b),
said resin system being at least partially heterogeneous when cured.

Appellants’ specification spells out broad, • as well as preferred and most preferred, ranges for his composition which, like those of claim 1, would together total more than 100% if the maximum amount of one range were selected together with the minimum amounts of the ranges specified for the remaining components.

The Board Opinion

The board (Examiner-in-Chief With-erspoon dissenting) upheld the examiner’s rejection for failing to satisfy the requirements of the second paragraph of 35 U.S.C. § 112. Both the examiner and the board observed that by selecting the maximum amount of component (a) or (b) even the minimum amounts specified for the remaining components would result in a composition exceeding 100% for the total weight, a mathematical inconsistency.

The board distinguished the situation presented by the rejected claims from that in which all of the figures in a specified range for a component of a composition are mathematically “possible” if appropriate percentages within the ranges specified for the remaining components are selected, as would be the case were all three components to cover the range of 10% to 80%. Although in such a case the claims might theoretically include hypothetical compositions containing more than 100% (i. e., if the maximum for each component were selected, the result would be a composition containing 240%, an absurdity), the board observed, “the upper limit of 80% for one component would be possible by selecting the lowest limit of 10% for each of the other two components.”

Looking to the specification for assistance in correcting or modifying the claimed ranges, the board commented:

We are unable to ascertain from a study of the specification which of the inconsistent figures are in error and which are correctly fixed for some good reason. We cannot determine the reason for or the validity of the upper limits of 80% or the lower limits of 20% and 1%. The working examples are of no assistance in this respect because, of course, the three components add up to 100% yet they do not approach the numerical limits of the claims to demonstrate criticality in 80%, 20%, or 1%. This is a case of confusion arising from apparently arbitrary selection of figures without adequate regard for their interrelationship.

Examiner-in-Chief Witherspoon filed a dissenting opinion. In view of its commendable brevity, we set forth the relevant portion thereof in its entirety:

Mathematics aside, I am convinced the public would not be confused as to what subject matter is circumscribed by appellants’ claims, In re Moore et al., 439 F.2d 1232 [58 CCPA 1042], 169 USPQ 236, 238 (CCPA 1971). The requirements of the claims are clear: that each of three physical substances designated (a), (b) and (c) be present and that the amount of each be somewhere within the specified range. Since it can be readily ascertained whether a given resin system meets these two conditions, it should be clear whether such composition would or would not infringe (if made, used or sold) or would or would not anticipate (if found to be prior). This is nonetheless the ease because, in an arithmetic sense, a total of 101% may be obtained from a reading of the claims. Subject matter which cannot exist in fact can neither anticipate nor infringe in law.

The board's opinion contains this response to the foregoing dissent:

We do not agree with the opinion of Examiner-in-Chief Witherspoon that anticipation or infringement would be clear. If, for example, an allegedly anticipatory or infringing composition were made up of 80% (a), 19%% (b), and %%(c), appellant might well argue that such a composition does not anticipate because of low amounts of (b) and (c) yet does infringe because some adjustment of (b) and (c) is necessary within the overall limit of 100%.

OPINION

Our inquiry is restricted to the determination of whether the claims comply with the second paragraph of section 112. Applying the analysis set forth in In re Moore, 439 F.2d 1232, 58 CCPA 1042, (1971), we must first determine whether the instant claims “set out and circumscribe a particular area with a reasonable degree of precision and particularity.”

As we observed in Moore, claims are not to be considered in a vacuum, “but always in light of the teachings of the prior art and of the particular application disclosure as.it would be interpreted by one possessing the ordinary level of skill in the pertinent art.” When considered in the light of the prior art and the specification, claims otherwise indefinite may be found reasonably definite. Similarly, claims considered definite on their face may be found to be deficient under 35 U.S.C. § 112, second paragraph. See In re Cohn, 438 F.2d 989, 58 CCPA 996 (1971).

We find that one having ordinary skill in this art would have no difficulty ascertaining the subject matter encompassed within the scope of the appealed claims.

Although we, like the board, are inclined to question the wisdom of appellants’ selection of upper and lower limits for the components of his claimed composition, we cannot agree with the board’s ultimate determination to sustain the examiner’s rejection of the claims as “reading on” compositions containing more than 100% by weight of the components. Clearly, a rejection based on indefiniteness cannot stand simply because the proportions actually recited in the claims may be read in theory to include compositions that are impossible in fact to formulate. In this regard we agree fully with Examiner-in-Chief Witherspoon’s observation that, “[s]ubject matter which cannot exist in fact can neither anticipate nor infringe in law.”

We do not find that determination of anticipation or infringement is rendered any less certain by appellants’ claimed ranges. The board’s example of a composition containing 80% (a), 19%% (b) and %% (c) falls plainly outside the language of the claims. Whether the board’s example, or any other composition containing an amount of at least one component outside its specified range, would infringe appellants’ claims or render them unpatentable, is determinable by application of precisely the same well-recognized criteria as are applied with respect to all patent claims.

Insofar as the board’s decision is based on appellants’ alleged failure to demonstrate criticality for his selection of claimed ranges, we again must disagree. We note in this regard that there are no outstanding rejections based on prior art. When an applicant seeking a patent for a chemical composition claims a range of proportions for various elements thereof, he need not demonstrate the criticality of his selection of a particular range unless such criticality is essential to non-obviousness.

In view of the foregoing, it is unnecessary to rule on the propriety of the board’s refusal to consider certain new arguments raised by appellants for the first time on oral hearing before the board.

The decision of the Patent Office Board of Appeals sustaining the rejection of claims 1, 3-12, 14-22, and 24-28 under the second paragraph of 35 U.S.C. § 112 is reversed.

Reversed.


author: LANE, Judge.

text:
    SCHIEFFELIN & CO., Appellant, v. The UNITED STATES, Appellee.
    Customs Appeal No. 74-16.
    United States Court of Customs and Patent Appeals.
    Nov. 7, 1974.
    Barnes, Richardson & Colburn, New York City, attorneys of record, for appellant; James F. Donnelly and James S. O’Kelly, New York City, of counsel.

      Carla A. Hills, Asst. Atty. Gen., Andrew P. Vance, Chief, Customs Section, Gilbert Lee Sandler, New York City, for the United States.
    Before MARKEY, Chief Judge, and RICH, BALDWIN, LANE and MILLER, Judges.
   LANE, Judge.

This appeal is from the judgment of the United States Customs Court, First Division, Appellate Term, 360 F.Supp. 1386, 71 Cust.Ct. 209, A.R.D. 317 (1973), affirming the judgment of a single judge sitting in reappraisement, 67 Cust.Ct. 549, R.D. 11759 (1971). The parties agree that export value, as defined in section 402(b) of the Tariff Act of 1930, as amended, 19 U.S.C. § 1401a(b), is the proper basis for valuation, and the sole controversy now is over the inclusion of a $2.00 per case “advertising allowance” in arriving at export value. The trial court and the Appellate Term held that the $2.00 per case advertising allowance was properly included in determining export value. We affirm.

The merchandise consists of two shipments of Bras Arme Cognac brandy in one-tenth gallon bottles packed 24 per case (2.4 gallons per case) produced in Cognac, France, by Jas. Hennessy & Co. (Hennessy) and exported in September and November, 1964 to Hennessy’s selected purchaser in the United States, Schieffelin & Co. (Schieffelin), the importer-appellant here. The record indicates that Schieffelin was the exclusive distributor in the United States for Hennessy Cognac. The Appellate Term opinion contains a sufficient statement of the historical background relating to the so-called “Chicken War” Proclamation (Presidential Proclamation No. 3564, issued December 4, 1963, effective January 7, 1964) and how that proclamation induced Hennessy and Schieffelin to change their method of invoicing in an effort to avoid the $5 per gallon duty on brandy valued over $9.00 per gallon (which extrapolates to a case containing 2.4 gallons of brandy valued over $21.60). We adopt that portion of the Appellate Term opinion as our own.

The subject brandy was entered at the port of New York at an invoice price of $21.495 per case. This figure represents Hennessy’s FOB French port list price of $25.40 per case, less a 7% percent distributor’s discount, less the disputed $2.00 per case advertising allowance. The merchandise was appraised on the basis of export value at a higher value (above the invoice price and also above $21.60 per case) which in effect included the $2.00 per case advertising allowance. The trial court found as a fact that the brandy was sold in France for exportation to the United States in the ordinary course of trade and in the usual wholesale quantities at a price of $25.40 per case, less a 7Yz percent distributor’s discount (net price $23.495 per case), which price fairly reflected the market value of such merchandise. The trial court concluded as a matter of law that the export value was $25.40 per case, less the 7% percent distributor’s discount (net value $23.495 per case). The Appellate Term affirmed and incorporated by reference the trial judge’s findings of fact and conclusions of law.

In this court, as before the trial court and the Appellate Term, appellant’s contention is that the invoice price of $21.-495 per case is the export value.

Since this is a reappraisement case in which the trial commenced before October 1, 1970, the following statute controls the scope of our review:

28 U.S.C. § 2637. Review of decisions of divisions
The decision of a division of the Customs Court, in any matter within its jurisdiction shall be the decision of such court, and shall be final and conclusive upon all parties, unless a party to such proceeding takes an appeal to the Court of Customs and Patent Appeals within the time and manner provided in section 2601 of this title, but if the decision relates to a reappraisement of merchandise, such appeal to the Court of Customs and Patent Appeals shall be upon questions of law only. [Emphasis added.]

This is the old version of 28 U.S.C. § 2637, i. e. — prior to the amendment made by The Customs Courts Act of 1970, Pub. L.No.91-271, 84 Stat. 274, effective October 1, 1970. Since the trial of the instant case commenced on February 4, 1970, the old section applies by virtue of § 122(a) of Pub.L.No.91-271, 84 Stat. 281.

The effect of the statute is that the findings of fact of an Appellate Term of the Customs Court in a reappraisement case will not be disturbed if there is substantial evidence in support of those findings. It is not our province to weigh the evidence. See Bud Berman Sportswear, Inc. v. United States, 60 CCPA 34, C.A.D. 1077, 469 F.2d 1107 (1972), and United States v. Josef Mfg., Ltd., 59 CCPA 146, C.A.D. 1057, 460 F.2d 1079 (1972).

The Appellate Term found that prior to 1964 Schieffelin placed advertising and laid out money for Hennessy (for which it was subsequently reimbursed) to promote the sale of Hennessy products in the United States. The Appellate Term further found that during 1964 this method of doing business did not change in substance, although there was a change in form. During 1964, instead of making periodic reimbursements to Schieffelin on a lump sum basis, Hennessy paid for such advertising in advance by subtracting the $2.00 per case advertising allowance from the FOB list price of Bras Arme tenths.

An importer may change his method of doing business to reduce customs duties, but as in Bud Berman Sportswear, Inc. v. United States, supra, the question here is not one of motives but whether or not a change in substance was actually effected.

We agree with the Appellate Term that there was no change in the manner of doing business but simply a change in the invoicing procedure. The record amply supports the finding that during 1964 the $2.00 per case advertising allowance was part of Hennessy’s general business expense incurred in connection with its exports to the United States. The correspondence between Hennessy and Schieffelin found in Defendant’s Exhibit B clearly shows that during 1964, as in 1963, Hennessy was intent on bearing the major portion of actual advertising expenses in the United States. Also, the testimony of Mr. Gerald deGeoffre deChabrignac, one of the three managing directors of Hennessy indicates that the $2.00 per case advertising allowance was entered on the Hennessy accounting books as an amount spent for advertising. Hence, the $2.00 per case advertising allowance was a means for transmitting Hennessy’s advertising funds to Schieffelin, and therefore, this amount was one of Hennessy’s expenses. This characterization, formulated by the trial court and adopted by the Appellate Term, is supported by substantial evidence.

Having found that this amount of advertising placed in the United States during 1964 ($2.00 per case of Bras Arme tenths) was one of Hennessy’s expenses, it was correct for the Appellate Term to conclude that the $2.00 per case advertising allowance was properly included in the determination of the export value of the merchandise. See Erb & Gray Scientific, Inc. v. United States, 53 CCPA 46, C.A.D. 875 (1966); Bud Berman Sportswear, Inc. v. United States, supra, and Norco Sales Co. v. United States, 319 F.Supp. 1399, 65 Cust. Ct. 778, R.D. 11732 (1970).

Since the $2.00 per case advertising allowance was properly included as a component of export value, appellant has not met its burden of proving that its claimed value (the invoice price of $21.-495 per case) represented the export value of the merchandise. The judgement of the Customs Court is affirmed.

Affirmed.

      . 19 U.S.C. § 1401a(b) reads as follows: (b) Export Value. — For the purposes of this section, the export value of imported merchandise shall be the price, at the time of exportation to the United States of the merchandise undergoing appraisement, at which such or similar merchandise is freely sold or, in the absence of sales, offered for sale in the principal markets of the country of exportation, in the usual wholesale quantities and in the ordinary course of trade, for exportation to the United States, plus, when not included in such price, the cost of all containers and coverings of whatever nature and all other expenses incidental to placing the merchandise in condition, packed ready for shipment to the United States.


text:
    Felix F. MIKUS and Francis N. Shaffer, Appellants, v. Anselm WACHTEL, Appellee.
    Patent Appeal No. 74-511.
    United States Court of Customs and Patent Appeals.
    Nov. 14, 1974.
    James Theodosopoulos, Danvers, Mass., attorney of record, for appellants.
    William D. Palmer, Pittsburgh, Pa., attorney of record, for appellee.
    Before MARKEY, Chief Judge, and RICH, BALDWIN, LANE and MILLER, Judges.
   MARKEY, Chief Judge.

This appeal is from the decision of the Board of Patent Interferences awarding priority of invention to the appellee. We remand for further consideration of the evidence.

The interference involves the application of Mikus et al., serial No. 709,213, filed February 29, 1968, and Wachtel’s application serial No. 726,464, filed May 3, 1968. The subject matter at issue embodied in a single count is a composition of matter which finds utility in its property of fluorescence. The emitted light has a narrow range of wavelengths in the blue to blue-green part of the visible spectrum when excited with ultraviolet radiation or cathode rays. Thus, radiation visible to the human eye is produced from that which is invisible.

The sole count of the interference is:

A luminescent composition consisting essentially of a matrix of halophos-phate of alkaline-earth metal, wherein the alkaline-earth metal is calcium, barium, and/or strontium, the halogen is chlorine and/or bromine, and an activating proportion of divalent europium.

Priority Proofs and Board Opinion

Both parties, attempting to prove priority of invention by actual reduction to practice, presented documentary evidence and relied on stipulated testimony in the form of affidavits. Also, appellant argues that appellee’s reduction to practice of one “species” within the scope of the count was insufficient to support an award of priority to appellee.

On authority of Petisi v. Rennhard, 363 F.2d 903, 53 CCPA 1452 (1966), the board found August 14, 1967, the date of appellee’s species reduction, to be its priority date.

The heart of the controversy involves the proofs presented by appellants. Shaffer, Mikus’ co-inventor, testified that he prepared certain phosphors within the scope of the count. As supporting evidence, Shaffer referred, inter alia, to certain exhibit which comprised pages from his Technical Notebook. None of the pages bears a witnessing signature but all are signed and dated by Shaffer. The pages fail to appear in precise numerical sequence and many gaps exist between the pages presented. Appellants say the missing pages relate to non-relevant work. Onto certain of the presented pages are stapled reports of tests performed by others on compounds alleged to be within the scope of the count. The tests involved studies of the phosphor’s Spectral Energy Distribution and X-ray diffraction. Those studies provide an indication of the quantity of light produced for each wavelength and of the particular crystalline form of the phosphor, respectively.

Appellants argue that the notebook pages and the analytical reports, with the analysts’ supporting testimony, adequately corroborate the testimony of Shaffer on reduction to practice of a phosphor within the count. Appellee counters that none of the evidence establishes that the phosphor seen by the analysts contained the recited activator.

The board found that appellants’ proofs were insufficient to serve as independent corroboration of the testimony of reduction to practice of the invention. The board concluded that the analysts’ testimony did not establish the presence of the specific phosphor activator recited in the count and, therefore, failed to corroborate Shaffer’s testimony regarding reduction to practice. Accordingly, the board awarded priority of invention to appellee.

OPINION

We agree with the board’s view respecting appellee’s actual reduction to practice of a species within the scope of the count. A prior reduction to practice of the species precludes another party from claiming that he is the first inventor of the genus containing the species.

The primary question to be resolved is whether the evidence of record constitutes sufficient corroboration of appellants’ testimony directed to preparation of a composition within the scope of the count, including the specified activator. The requirement for independent corroboration exists to insure, by proof that could not have been fabricated or falsified, that the inventor actually prepared the composition and knew it would work. Gianladis v. Kass, 324 F.2d 322, 51 CCPA 753 (1963). However, to satisfy the spirit of the requirement for corroboration, all of the evidence must be considered, applying a “rule of reason” standard rather than some mechanical standard. Berry v. Webb, 412 F.2d 261, 56 CCPA 1272 (1969).

At oral argument appellants called attention to our recent opinion in Blicharz v. Hays, 496 F.2d 603 (CCPA 1974), which was not available to the board at the time of its decision herein. Blicharz involved an inventor’s unsigned and un-witnessed notebook. Although we said that such a notebook per se would be insufficient to corroborate an inventor’s testimony of actual reduction to practice, we held that a witnessed “Record of Invention,” which was consistent with the notebook and had been promptly submitted to the patent department of Bli-charz’s employer, together with testimony of a witness (Weidenheimer), who observed the experiments recorded in Blicharz’s notebook, did provide sufficient corroboration of Blicharz’s testimony of actual reduction to practice on the claimed date.

A careful review of the instant record reveals that appellants’ Exhibit BH is a “Record of Invention.” It was signed by the inventors and two witnesses and dated November 4, 1965. Both witnesses testified to having read, understood, and signed the document on its date. The parties treated Exhibit BH lightly before us and before the board. Appellants casually argue that Exhibit BH is one of several documents which corroborate Shaffer’s testimony of actual reduction to practice. Appellee contends that the exhibit corroborates only conception, the witnesses testifying only to having read and understood the document.

The paucity of argument on the significance of Exhibit BH does not aid us in reaching a decision. The board’s opinion does not mention the exhibit, and our review of the decision below is impeded by our lack of knowledge of the significance the board placed on Exhibit BH. Because the probative value accorded a similar document in Blicharz, supra, was significant, the avoidance of a possible miscarriage of justice requires that we have the benefit of the Board’s position on Exhibit BH in this case. We do not infer that the result here should be either different from or the same as that reached in Blicharz. Instead, every case must be decided on its own merits. However, because of the potential significance of appellants’ Exhibit BH, a decision at this juncture without benefit of argument or elucidation of the board position would risk injustice.

Accordingly, we remand this cause to the Board of Patent Interferences to consider the extent of the significance of Exhibit BH and to take whatever further action it may deem advisable consistent with the present opinion.

Remanded.


author: HEANEY, Circuit Judge.

text:
    UNITED STATES of America, Appellee, v. Arman KILIYAN, Jr., Appellant.
    No. 74-1426.
    United States Court of Appeals, Eighth Circuit.
    Submitted Sept. 11, 1974.
    Decided Nov. 1, 1974.
    Certiorari Denied Feb. 24, 1975.
    See 95 S.Ct. 1333.
    Donald L. Sehlapprizzi, St. Louis, Mo., for appellant.
    Richard E. Coughlin, Asst. U. S. Atty., St. Louis, Mo., for appellee.
    Before VAN OOSTERHOUT, Senior Circuit Judge and HEANEY and STEPHENSON, Circuit Judges.
   HEANEY, Circuit Judge.

Arman Kiliyan, Jr., was convicted on two counts of violating federal firearms statutes. Count I involved the making of firearms (two hand grenades) without filing application and without payment of a making tax, in violation of 26 U.S.C. § 5861(f).' Count II involved the transfer of the same firearms without-paying a transfer tax, in violation of 26 U.S.C. § 5861(e). The sole issue raised on appeal is whether the District Court erred in denying the petitioner’s request to vacate and correct the imposition of two consecutive eight-year prison setences, in light of 26 U.S.C. § 5871, which provides for a maximum prison sentence of ten years for violation of “any provision” of the firearms chapter.

In support of his contention, the petitioner points to United States v. Clements, 471 F.2d 1253 (9th Cir. 1972), and United States of America v. Ackerson, 502 F.2d 300 (8th Cir., 1974), each of which held that the punishment meted out to the defendant for certain multiple violations of the firearms statute could not exceed ten years. As in those two cases, there is no question but that Congress had the power under the Constitution to impose cumulative sentences for the offenses for which the petitioner was charged. The question is solely one of statutory interpretation. For reasons set forth below, we hold that Clements and Ackerson are not controlling here, and that the total sentence of sixteen years given to the petitioner was permissible under § 5871.

In Clements, the defendant was convicted of violating § 5861(c) (possession of a firearm upon which a making tax had not been paid), § 5861(d) (possession of a firearm which had not been registered to him), and § 5861(f) (making a firearm without payment of a making tax). The Court, in deciding that the statute did not allow cumulative punishment exceeding ten years, stressed that a “single transaction” was involved:

The effect of the Government’s construction of the Act * * * was to divide the single transaction of unlawfully making a firearm into three separate offenses, which could be aggregated to pyramid punishment. * * *

United States v. Clements, supra, 471 F.2d at 1254.

In Ackerson, the defendant was convicted of violating § 5861(e) (possessing a firearm upon which a making tax had not been paid) and § 5861(d) (possessing a firearm which had not been registered to him). In dictum, since he had not in fact been sentenced to more than ten years, this Court declared that the cumulative sentence for the unlawful possession of the gun could not properly exceed ten years. In so holding, we spoke of “one course of conduct” by the defendant. United States of America v. Ackerson, supra, 502 F.2d at 305, 306.

The theory underlying Ackerson’s “one course of conduct” language, as well as Clements’ “single transaction” language, was a theory of merger, tracing its roots at least as far back as Prince v. United States, 352 U.S. 322, 77 S.Ct. 403, 1 L.Ed.2d 370 (1957). That case held that when Congress prescribed a twenty-year sentence for bank robbery and a twenty-year sentence for entry of a bank with intent to commit a felony therein, it had not intended that a defendant who had committed bank robbery could be sentenced to more than twenty years. In reaching its decision, the Court relied heavily on the fact that the latter offense had been “merged” with the former, since anyone who robs a bank presumably entered it with intent to do so. Id. at 328-329, 77 S.Ct. 403.

When we read Clements and Aekerson in the light of Prince, the reasons for their nonapplicability are apparent. In Aekerson, the defendant was dually charged for unlawfully possessing a firearm. Since it had been made without payment of a making tax, it was, as an inevitable incident to that unlawful making, obviously not going to be registered to him. Hence, the two offenses were merged. In Clements, the defendant’s unlawful action was in making the firearm and retaining it. The Court there stressed that “possession is always incidental to making by the person who is the maker.” United States v. Clements, supra, 471 F.2d at 1254. Again, the offenses were merged. Here, however, unlawful making and unlawful transfer are separate, non-merged offenses; transfer is not “always incidental to making by the person who is the maker.”

We recognize that an argument can be made that Congress intended a single punishment for one who carries out a scheme to make and transfer a firearm. The argument is that the making and transfer prohibitions are but a small part of the grand regulatory scheme of the Act, aimed at controlling the distribution and possession of firearms through an elaborate system of registration and taxation. The contention is that, so long as each person who acts to keep a firearm out of the channels of registration and taxation is punished, the goal of the Act is achieved and it is not necessary to punish him more than once.

We do not believe, however, that the argument is valid where a making and a subsequent transfer are involved. First, the language of the statute declares that a person may be sentenced to ten years for violation of “any provision” of the Act. 26 U.S.C. § 5871. This is consistent with a maximum sentence of ten years for each offense. Second, the theory underlying a different result in the Clements and Aekerson cases does not apply here, because there is no merger of offenses. Third, as a matter of public policy, there are two distinct evils in the making and transferring of illegal firearms. By virtue of the separate offense of the transfer, the petitioner’s ability to inflict damage by using his specialized knowledge of how to make grenades was magnified. For all of these reasons, we conclude that § 5871 contemplates multiple punishment for multiple offenses which are not merged and which each threaten unique danger to society. The acts of making an illegal firearm and of transferring that firearm are — at least on the facts of this case — offenses of that character. So long as the sentence imposed for either of those offenses did not exceed ten years, the sentence was according to law.

The District Court’s denial of petitioner’s motion for reduction of sentence is affirmed.

      . The indictment, arrest warrant, judgment, affirmance [United States v. Kiliyan, 456 F. 2d 555 (8th Cir. 1972) ], and most of the pleadings erroneously cite 26 U.S.C. § 5861(c) as the basis of Count II, rather than § 5861(e). It has been clear from the outset, however, that the second count involves failure to pay a transfer tax, which is governed by § 5861(e).
      If the second count were truly based on § 5861(c), whicli proscribes possession of a firearm upon which a making tax has not been paid, the sentencing issue raised on appeal here would be identical to that in United States v. Clements, 471 F.2d 1253 (9th Cir. 1972), and we would agree that the maximum total sentence could not exceed ten years. See, United States of America v. Ackerson, 502 F.2d 300 (8th Cir., 1974).

      . The case relied upon by the District Court, United States v. Jones, 487 F.2d 676, 679 (9th Cir. 1973), does not furnish adequate support in and of itself for the ruling below. That case sustained cumulative sentences which did not exceed ten years and merely held, as we did in United States of America v. Ackerson, supra, that conviction on multiple counts was permissible. It did not deal with the question of when, if ever, cumulative sentences could properly exceed ten years.

      . The petitioner stresses that language, and insists that his offense, in making two hand grenades pursuant to a solicitation by a government agent and selling those grenades within the same day, amounted to but “one course of conduct.” We reject the petitioner’s attempt to turn that phrase into a magic touchstone in cases involving multiple offenses under the firearms statute. Obviously, the Ninth Circuit’s language in Clements cannot serve as a touchstone either, since the possession which led to Ackerson’s downfall cannot properly be defined as a “transaction.”


author: ALFRED T. GOODWIN, Circuit Judge:

text:
    UNITED STATES of America, Appellee, v. Michael BARRAGAN-MARTINEZ, Appellant.
    No. 74-1030.
    United States Court of Appeals, Ninth Circuit.
    July 16, 1974.
    Rehearing Denied Nov. 19, 1974.

      Michael J. McCabe (argued), of Federal Defenders of San Diego, Inc., San Diego, Cal., for appellant.
    Michael E. Quinton, Asst. U. S. Atty. (argued), San Diego, Cal., for appellee.
    Before ELY and GOODWIN, Circuit Judges, and EAST, District Judge.

       The Honorable William G. East, Senior United States District Judge for the District of Oregon, sitting by designation.

   OPINION

ALFRED T. GOODWIN, Circuit Judge:

We reverse this conviction for conspiring to transport and transporting aliens, because the arrest of the defendant and his subsequent identification by one of the illegally transported aliens were the products of an illegal stop by immigration agents. See Almeida-Sanchez v. United States, 413 U.S. 266, 93 S.Ct. 2535, 37 L.Ed.2d 596 (1973).

The officials had probable cause to stop a truck loaded with aliens, the license number of which had been given them by a reliable informer, but the officers had no more than a suspicion that the green Ford the defendant was driving was connected with the ongoing smuggling operation which they were investigating. The officers nonetheless stopped the defendant and detained him long enough for one of the smuggled aliens to identify him as a participant in the enterprise.

We have examined every fact testified to in court, and, putting aside the arguments of government counsel on the scope of “common knowledge” and facts outside the record, we have concluded that if the government had a constitutional basis for stopping the defendant’s automobile, that basis was never explained by the evidence produced in court.

The government's evidence was as follows:

1. A confidential informant told the Border Patrol that on Monday, September 17, 1973, twelve to fifteen illegal aliens would be leaving a drop house near Heber, California, in a red pickup truck bearing a Mexican license plate. The informant also gave the license-plate number.

2. That day, a border-patrol agent went to the drop house near Heber, but found no aliens. Assuming that the aliens had already left, he radioed this information to other agents.

3. A second agent, in an unmarked car, located a red pickup truck with a Mexican license number corresponding with that given by the informant. The truck was traveling north on Highway 111, just south of Highway 80, approximately five miles north of the house in Heber.

4. Shortly after 2:30 in the afternoon, two more agents, also in an unmarked car, were called to the scene and joined a procession of four vehicles traveling east on Highway 80 — the red pickup truck, a white Chevrolet, a green Ford, and an unmarked car carrying the other agent.

5. All five vehicles were driving approximately 40 miles per hour in a 60 mile-per-hour zone. For part of the time, the white Chevrolet was between the pickup truck and the green Ford.

6. Three miles east of the intersection of Highways 111 and 80, the pickup truck, the green Ford, and the two border-patrol cars turned left on Highway 115. The white Chevrolet continued east on Highway 80.

7. The green Ford remained two to three car-lengths behind the pickup truck on Highway 115. Traffic was light.

8. After traveling ten miles north on Highway 115, the pickup truck, still followed by the green Ford, turned right on Highway 78.

9. Two miles east on Highway 78, both the pickup truck and the green Ford were stopped by the agents.

10. There had been no communication between the pickup truck and the green Ford.

There was absolutely no testimony about alien smuggling techniques. At oral argument counsel for the government asked us to take judicial notice of what he claimed was the familiar technique of using a “scout car” in front of the “load car” carrying the illegal aliens. See United States v. Baca, 368 F.Supp. 398, 407-408 (S.D.Cal.1973). Here, however, defendant’s car was following the truck with the aliens. Although we do not doubt that alien smugglers occasionally operate in this fashion, we refuse to take judicial notice of a smuggling modus o'perandi employing a scout car behind the load car.

In sum, on the record made here, we are unable to say that the agents had a founded suspicion to justify stopping the Ford sedan. The agents knew that the green Ford followed somewhat closely behind the red pickup truck on a weekday afternoon for approximately fifteen miles through two turns. There was no testimony as to other facts, if any existed, which might have elevated the suspicion of the agents to the founded suspicion required by our decisions. United States v. Jaime-Barrios, 494 F.2d 455 (9th Cir. 1974), cert. denied, 417 U.S. 972, 94 S.Ct. 3178, 41 L.Ed.2d 1143 (1974); United States v. Bugarin-Casas, 484 F.2d 853 (9th Cir. 1973), cert. denied, 414 U.S. 1136, 94 S.Ct. 881, 38 L.Ed.2d 762 (1974); United States v. Barron, 472 F.2d 1215 (9th Cir.), cert. denied, 413 U.S. 920, 93 S.Ct. 3063, 37 L.Ed.2d 1041 (1973); United States v. Roberts, 470 F.2d 858 (9th Cir. 1972), cert. denied, 413 U.S. 920, 93 S.Ct. 3071, 37 L.Ed.2d 1042 (1973); Wilson v. Porter, 361 F.2d 412 (9th Cir. 1966).

However, the government contends that even if the stop of Barragan-Marti-nez’s vehicle was illegal, that stop produced no evidence that was used against him, and there is nothing to suppress. The record belies this contention. Had the agents not detained Barragan-Marti-nez, they would not have had the opportunity, while he was still at the scene, to question the driver and passengers of the truck and to learn that the driver of the green Ford was part of the smuggling operation. The driver of the pickup truck first met the defendant two days before the arrest, and the passengers first met him at the drop house in Heber. Apparently, neither the driver nor the passengers knew the defendant’s full name nor would they have been able to direct the Border Patrol to him had he not been detained at the scene. They knew the defendant only by his appearance, and his appearance would not have been available for inspection had he not been rendered immobile. Hence, the on-the-scene identification of Barragan-Martinez, as well as the in-court identifications, were fruits of his illegal detention and must be suppressed.

Suppression here clearly serves the purpose of the exclusionary rule — to safeguard Fourth Amendment rights by deterring future unlawful police conduct. Terry v. Ohio, 392 U.S. 1, 29, 88 S.Ct. 1868, 20 L.Ed.2d 889 (1968); Mapp v. Ohio, 367 U.S. 643, 656, 81 S.Ct. 1684, 6 L.Ed.2d 1081 (1961); Elkins v. United States, 364 U.S. 206, 217, 80 S.Ct. 1437, 4 L.Ed.2d 1669 (1960). By denying the government the use of identifications of Barragan-Martinez which flowed directly from the illegal stop of his car, the government presumably will be encouraged not to stop vehicles without at least a founded suspicion that the vehicle’s occupants are or have been engaged in criminal conduct.

Reversed and remanded.


author: McCREE, Circuit Judge.

text:
    Thomas O. CAMPBELL, and Mary F. Campbell, Petitioners-Appellants, v. COMMISSIONER OF INTERNAL REVENUE, Respondent-Appellee.
    No. 73-2059.
    United States Court of Appeals, Sixth Circuit.
    Decided Oct. 23, 1974.

      William R. Bagby, Lexington, Ky., for petitioners-appellants.
    Lawrence B. Gibbs, Acting Chief Counsel, I. R. S., Scott P. Crampton, Asst. Atty. Gen., Meyer Rothwacks, Elmer J. Kelsey, Charles E. Anderson, Tax Div., Dept, of Justice, Washington, D. C., for respondent-appellee.
    Before EDWARDS, McCREE and MILLER, Circuit Judges.
   McCREE, Circuit Judge.

This is an appeal from a decision of the United States Tax Court sustaining certain deficiencies with respect to appellants’ income tax liability for the years 1962, 1963, and 1964. A number of issues are presented for our consideration, several requiring the interpretation and application of sections 165 and 1231 of the Internal Revenue Code, and two concerning the authority of the Commissioner to redetermine expenses and depreciation schedules. The tax court held in favor of the Commissioner on all issues and we affirm its judgment.

The significant facts may be stated briefly. Appellants Thomas 0. Campbell and Mary F. Campbell, husband and wife, filed joint income tax returns for their taxable years 1962, 1963 and 1964. During this time, appellants were in the business of growing tobacco and raising thoroughbred horses on farms that they owned and operated under the names, Home Farm, Haddix Farm, and Hibernia Farm.

Four boxwood and four magnolia trees located around taxpayers’ personal residence were destroyed by a hard freeze in 1963. None of the trees was insured. Although the taxpayers asserted they were entitled to deduct the $2300 loss as a casualty under section 165, the tax court held that under the then existing section 1231 the loss could only be used to offset gains from sales of property used in the trade or business.

During the taxable .year 1964, taxpayers, in connection with their business, purchased for $450 an interest in a thoroughbred race horse named West River. The horse had to be destroyed in the same year because of a painful bowed tendon. As a result of this event, taxpayers claimed a full casualty loss under section 165, but the tax court held that the loss could only be used to offset capital gains under § 1231.

Driftwood, a horse purchased by Mary F. Campbell in 19^1 for $6,000 as a personal riding and show horse, was destroyed by a veterinarian in 1962 because it suffered from laminitis. Taxpayers again claimed a casualty loss but the tax court held that they had failed to carry the burden of proof to establish their right to this deduction.

In addition to Driftwood, taxpayers, during the years in question, owned another horse for their personal use. These two horses (only one after Driftwood died in 1962) grazed and pastured on appellants’ farm during eight months of the year when the weather permitted. The tax court found that taxpayers had deducted from ordinary income the expenses for maintaining these horses kept for non-business purposes. From the fact that appellants boarded horses for others and charged as much as $125 per month in 1970, the tax court concluded that the expense of maintaining the two horses kept for personal use was at least $75 per month and that the total deduction claimed for horse maintenance should be reduced by that amount.

Appellants acquired the Home Farm in 1943, and in 1944 they placed a useful life of 25 years on the buildings. In 1957, appellants acquired Hibernia Farm and established a depreciation schedule for certain improvements on it. The Commissioner increased the useful life of these business assets, and the tax court sustained the Commissioner’s action.

The first question is whether a loss of $2300 from the destruction of taxpayers’ magnolia and boxwood trees is deductible in full under § 165(c)(3) or should be limited under § 1231 because of the gain from the conceded sale of other property used in their business.

The amount of such a casualty loss could be deducted in 1963 from ordinary income under § 165(c)(3) unless § 1231 applied. If it applied, the loss would have to be considered as a loss from the sale of a capital asset held for more than six months, and taxpayers would be limited to fifty percent of the $2300. Taxpayers contend that § 1231(a) required the offset of a personal casualty loss only against gains from an involuntary conversion of property used in business and that it need not be offset against gains from the sale of property used in business. Under taxpayers’ contention, only gains from involuntary conversions of business property or capital assets should be considered in determining whether personal casualty losses should be accorded capital asset treatment or be deductible as ordinary losses, and since they had no gains from involuntary conversions during the years in question, the entire $2300 should have been deductible under section 165.

This court had occasion to interpret § 1231(a) in Morrison v. United States, 355 F.2d 218 (6th Cir.), cert. denied, 384 U.S. 986, 86 S.Ct. 1887, 16 L.Ed.2d 1004 (1966). The taxpayer sustained a loss to her personal residence, including trees and shrubbery from an ice storm. In the same year, she realized a gain from the sale of an orange grove held by her for income producing purposes. We held that the taxpayer’s loss must be offset against the gain from the sale of the orange grove under section 1231(a), and refused to segregate the gains and losses resulting from the involuntary conversion of business or personal assets from the gains or losses from the sale of business property.

In E. Taylor Chewning, 44 T.C. 678 (1955), affirmed per curiam, 363 F.2d 441 (4th Cir. 1966), cert. denied, 385 U.S. 930, 87 S.Ct. 289, 17 L.Ed.2d 212 (1966), the taxpayers’ boxwood bushes were destroyed by a severe snowstorm. During the same taxable year, the taxpayers reported gains from the sale of breeding cattle in excess of the loss from the destruction of the boxwood bushes. They contended that they were entitled to deduct the loss from the destruction of the bushes from their ordinary income. The tax court determined that the loss was not deductible in full, and stated:

It is our conclusion that, except in the case of property used in the trade or business or capital assets held for the production of income, casualty losses are subject to the provisions of section 1231, as amended, whether or not compensated for by insurance in any amount.
We hold therefore, that the respondent properly determined that the loss sustained by the petitioners with respect to the boxwood bushes is not deductible as an ordinary loss under section 165(c)(3), but must be applied against the petitioners' gain from sale of breeding cattle, pursuant to the provisions of section 1231. 44 T.C. at 683.

In a second effort to avoid the application of § 1231 appellants argue that the present § 1231 would permit the taxpayer to take a deduction from ordinary income, and that the present statute is merely a clarification of the statute as it existed for the taxable years in quéstion. The present statute, as amended by P.L. 91-172, provides:

In the case of any involuntary conversion (subject to the provisions of this subsection but for this sentence) arising from fire, storm, shipwreck, or other casualty, or from theft, of any property used in the trade or business or of any capital asset held for more than 6 months, this subsection shall not apply to such conversion (whether resulting in gain or loss) if during the taxable year the recognized losses from such conversions exceed the recognized gains from such conversions.

Thus, had this case arisen under the new statutory language, taxpayers would be able to claim a full casualty loss against ordinary income because there was no involuntary conversion resulting in a gain in the years in question. However, the statute as it existed in 1964 did not set off involuntary conversion gains against involuntary conversion losses. Instead, it provided that a casualty loss was meant to be offset by gains resulting from both the sale and the involuntary conversion of other property used in the trade or business or capital assets held for the production of income.

Any doubt on this point is resolved by the Senate Committee Report concerning the 1969 amendment to § 1231(a):

Another problem which has arisen under Section 1231 involves the basic scope of the section; namely, whether it is applicable to casualty losses on uninsured personal assets, such as a taxpayer’s personal residence or nonbusiness automobile. The 1958 amendment does not apply if the destroyed property, whether or not completely uninsured, is a capital asset not held for the production of income or, in other words, a personal asset. In enacting this amendment, it appears Congress believed these uninsured casualty losses were subject to section 1281 and thus had, to offset capital gains under the section, rather than being fully deductible against ordinary income. In initiating the 1958 amendment excluding uninsured casualty losses on business property from Section 1231, this committee stated (S.Rept. 1983, 85th Cong., p. 204): “On the other hand, the amendment does not apply to loss arising from the destruction or theft of the taxpayer’s uninsured personal automobile.” This would indicate that it was felt such a loss was otherwise included under section 1231. (Emphasis added). 1969-3 Cum.Bul. at 553-54.

Accordingly, we affirm the tax court’s determination and hold that a personal casualty loss occurring in 1963 must be offset against gains from the sale of property used in the business.

The second issue presented is whether a $450 loss from the destruction of a horse, West River, because of severe pain caused by a bowed tendon is fully deductible against ordinary income under § 165(a) or is limited under § 1231 to reducing taxpayers’ capital gains from the sale of property used in their business. Because of a stipulation that the horse was property used in the trade or business of taxpayers, the sole issue is whether the destruction of the horse was a casualty. If it was a casualty, the loss would be deductible in full under § 1231(a) which provided for the year in question that:

In the case of any property used in the trade or business and of any capital asset held for more than 6 months and held for the production of income, this subsection shall not apply to any loss, in respect of which the taxpayer is not compensated for by insurance in any amount, arising from fire, storm, shipwreck, or other casualty, or from theft.

A casualty is defined as “an event due to some sudden, unexpected, or unusual cause,” Matheson v. Commissioner, 54 F.2d 537, 539 (2nd Cir. 1931), instead of a condition resulting from gradual deterioration or disease. Burns v. United States, 174 F.Supp. 203 (N.D.Ohio 1959), affirmed, 284 F.2d 436 (6th Cir. 1960).

Here, the cause of the bowed tendon is not known. Thomas Campbell testified that he did not know how the horse developed a bowed tendon and there is other testimony that the horse had a “weak leg”, a condition which hardly could be classified as a casualty. The tax court held there was no proof to show that the destruction of the horse constituted a casualty loss, and since the burden is upon the taxpayer to prove entitlement to a deduction, the claim was disallowed. We agree and affirm the tax court’s determination.

The next issue is whether the taxpayers may deduct as a casualty under § 165(c)(3) their $6,000 loss of a horse kept for personal use. This horse, Driftwood, was destroyed in 1962 because it developed a case of laminitis. The appellants’ expert witness, a veterinarian, characterized laminitis as an inflammation of the laminae which are the membranes located between the sensitive and insensitive structure of the hoof of a horse. The affliction is caused by overexertion on hard footing and often is secondary to conditions such as digestive disturbances and bio-chemical changes resulting from overeating or overdrink-ing. In this case, drugs did not halt the inflammation and the laminae began to separate. This in turn caused the coffin bone, which is the bone inside the hoof, to rotate and penetrate the sole of the hoof. Because of the severe pain from the exposure of this bone, the horse had to be destroyed.

On the basis of the veterinarian’s testimony classifying laminitis as a disease, the tax court held that its onset was not a casualty within the meaning of § 165(c)(3). The tax court observed that an argument very similar to taxpayers’ was rejected by this court in Burns v. United States, 284 F.2d 436 (6th Cir. 1960), affirming per curiam 174 F.Supp. 203 (N.D.Ohio 1959). In Burns, an elm tree that became infected with Dutch Elm disease was removed in obedience to a municipal ordinance. The taxpayer owners claimed a casualty loss, but then District Judge Paul C. Weick held against them stating:

While it is true that the tree was removed within a relatively short period of time, the reason for its removal was the disease which would have ultimately caused its death. The action of the disease is a progressive one
In my judgment, loss occasioned by disease, however contracted, is not a casualty within the meaning of the statute. 174 F.Supp. at 210.

There is ample evidence in the record to support a finding that Driftwood suffered from a disease which caused his demise, and there is no evidence that the cause was “sudden, unusual, or unexpected.” We agree with the statement that:

Were “other casualty” delimited in its application to include ordinary, commonplace forms of loss of personal property, the resulting administrative and practical difficulties would not be difficult to imagine. The judicial tendency to limit “other casualty” to sudden, unexpected and unusual events similar to fires, storms and shipwreck has the practical advantage of confining personal losses to somewhat dramatic settings which are susceptible to identification and verification by the administrative authorities. Ber-caw v. Commissioner, 8 T.C. 1361, affirmed, 165 F.2d 521 (4th Cir. 1948).

Since the laminitis did not occur in a “dramatic setting which [is] susceptible of identification and verification” we affirm the tax court’s decision.

Next we consider whether the tax court erroneously upheld the Commissioner’s disallowance of that portion of a claimed business deduction allocable to the maintenance of two horses kept for personal use. It is clear that the deduction of the expenses of maintaining animals kept for personal rather than business purposes is not permitted.

The tax court agreed with the Commissioner’s estimate of $2850 calculated at $75 for each month a personal horse was kept. This determination was based in part on the fact that the taxpayers charged as much as $125 per month for boarding horses in 1970. Taxpayers argue that “there is no evidence in the record that the personal horses received the same care as did taxpayers’ business horses.” The burden of proof to show the existence of legitimate expenses is on the taxpayer, and the tax court determined that appellant failed to prove the amount of the claimed lesser cost.

Taxpayers’ figure was based on $0.30 a day for feed during the winter when the horse(s) were unable to graze in the field. Appellants introduced no evidence that would indicate that none of the itemized business expenses (e. g., for watering, stabling, veterinary services and blacksmith services) should be attributable to the personal horses, and it is undisputed that Driftwood was treated for laminitis. Accordingly, we agree with the tax court that taxpayers failed to establish their claimed deduction.

Finally, we consider whether the Commissioner erred in redetermining the useful lives of certain farm buildings used in taxpayers’ business. The tax court upheld the Commissioner’s redeter-mination. On appeal, taxpayers contend that the revenue agent made the redeter-mination in 1966 without discovering if there had been repairs made to the buildings after the taxable years in question, and that the agent never saw one of the farms for which he redetermined the useful life.

When there is a significant change in the useful life of an asset and there is a clear and convincing basis for the redetermination of its useful life, a change in the useful life of the asset may be made. Cohn v. United States, 259 F.2d 371 (6th Cir. 1958), Reg. 1.-167(a)-l(b). However, a taxpayer who claims error in an IRS redetermination of his depreciation deduction must prove not only the error, but also that the deduction claimed by him is reasonable. In general, proof offered for that purpose must adequately show the cost or other basis of the property, its useful life, its salvage value, the extent to which it was previously depreciated, and the method and computation of the depreciation. Pohlen v. Commissioner, 165 F.2d 258 (5th Cir. 1948); Lightsey v. Commissioner, 63 F.2d 254 (4th Cir. 1933) ; 2 Prentice Hall Federal Taxes, Depreciation, ft 15,411, If 15,413(5).

With respect to taxpayers’ first contention that the agent considered repairs made after the taxable years in question, we hold that the burden of proof was on the taxpayers to show that the revenue agent erred in increasing the useful life of an asset. From the record, it appears that the revenue agent personally visited taxpayers’ properties, inspected the depreciation schedules and determined that the useful life of the farm assets should be extended. At this point, it was necessary for the taxpayers to show that the agent’s calculation was incorrect. If the taxpayers adduced no such proof, the tax court could property find that there was a clear and convincing basis for the redetermination.

However, taxpayers contend that the agent never saw one of the farms for which he determined the useful life. If this statement is true, then taxpayers would have shown that there was no “clear and convincing basis’’ to support the redetermination. However, the judge of the tax court heard the testimony of the agent, and although she made no express finding that the agent viewed the Hibernia Farm, the evidence would have supported such a finding. And her holding that the redetermination was not erroneous rests implicitly on a finding that the agent had a basis for making it. The tax court applied the correct standard and held that there was a clear and convincing basis for the re-determination. We affirm its decision.

The judgment in all respects is affirmed.

      . Section 1231(a) as it existed in 1964, provided :
      (a) General Rule — If, during the taxable year, the recognized gains on sales or exchanges of property used in the trade or business, plus the recognized gains from the compulsory or involuntary conversion (as a result of destruction in whole or in part, theft or seizure, or an exercise of the power of requisition or condemnation or the threat or imminence thereof) of property used in the trade or business and capital assets held for more than 6 months into other property or money, exceed the recognized losses from such sales, exchanges, and conversions, such gains and losses shall be considered as gains and losses from sales or ¿exchanges of capital assets held ■ for more" than 6 months. If such gains do not exceed such losses, such gains and losses shall not be considered as gains and losses from sales or exchanges of capital assets. For purposes of this subsection—
      (1) in determining under this subsection whether gains exceed losses, the gains described therein shall be included only if and to the extent taken into account in computing gross income and the losses described therein shall be included only if and to the extent taken into account in computing taxable income, except that section 1211 shall not apply ; and
      (2) losses upon the destruction, in whole or in part, theft or seizure, or requisition or condemnation of property used in the trade or business or capital assets held for more than 6 months shall be considered losses from a compulsory or involuntary conversion.
      In the case of any property used in the trade or business and of any capital asset held for more than 6 months and held for the j>roduction of income, this subsection shall not apply to any loss, in respect of which the taxpayer is not compensated for by insurance in any amount, arising from fire, storm, shipwreck, or other casualty, or from theft.

      . The pertinent part of Section 165 provides:

        (a) General rule. — There shall be allowed as a deduction any loss sustained during the taxable year and not compensated for by insurance or otherwise.

        (1)) Amount of deduction.- — For purposes of subsection (a), the basis for determining the amount of the deduction for any loss shall be the adjusted basis provided in section 1011 for determining the loss from the sale or other disposition of property.

        (c) Limitation on losses of individuals.— In tlie case of an individual, the deduction under subsection (a) shall be limited to—
      (1) losses incurred in a trade or business ;
      (2) losses incurred in any transaction entered into 1'or profit, though not connected with a trade or business ; and
      (3) losses of property not connected with a trade or business, if such losses arise from fire, storm, shipwreck, or other casualty, or from theft. A loss described in this paragraph shall be allowed only to the extent that the amount of loss to such individual arising from each casualty, or from each theft, exceeds $100. For purposes of the $100 limitation of the preceding sentence, a husband and wife making a joint return under section 6013 for the taxable year in which the loss is allowed as a deduction shall be treated as one individual. No loss described in this paragraph shall be allowed if, at the time of filing the return, such loss has been claimed for estate tax purposes in the estate tax return.

      . On direct examination, Agent Pullen testified :
      A The Hibernia farm, as of January of 1966, when my examination was conducted, some of the assets were fully depreciated at that time and some bad approximately two years remaining.
      On cross examination the following colloquy occurred:
      Q Which farm did you go to first?
      A The home farm.
      Q And then where did you go ?
      A To my knowledge, it was all around the home farm and then along Hume Road which — in which — at which time he pointed out the property that was sold to Mr. Raley. Whether or not the Hibernia farm was covered during that tour, I’m not certain at this time.
      Q And, then, you don’t know whether or not you went to the Hibernia farm?
      A It was my impression that the tour I had covered all of his farm properties.
      Q Did you drive over these farms?
      A I rode with Mr. Campbell in his car, yes.
      Q You say it’s júst an impression? That you took this tour?

        A Beg your pardon?
      Q Did you say you took the tour or is it just an impression you took the tour?
      A No, I took the tour. There’s no doubt about it.
      Q You said there was an impression. You had an impression about going to the Hibernia Farm.
      A No.
      Q Do you recall whether or not you went to the Hibernia Farm?
      A It was my impression, sir, that the tour that I had covered all of Mr. Campbell’s farm property. What I said was that this time I am not sure or certain that this plat that you have in evidence includes the Hibernia Farm. That’s what I said.
      Q But you don’t know whether or not you were on the Hibernia Farm, do you?
      A I thought I was on all of his farm property. If it’s on the plat, I’m sure I was.