author: LUMBARD, Circuit Judge:

text:
    SECURITIES AND EXCHANGE COMMISSION, Petitioner-Appellee and Cross-Appellant, v. BRIGADOON SCOTCH DISTRIBUTING CO., et al., Respondents-Appellants and Cross-Appellees.
    Nos. 832-835, Dockets 73-1395 and 73-1444 to 73-1446.
    United States Court of Appeals, Second Circuit.
    Argued March 30, 1973.
    Decided June 7, 1973.

      Walter P. North, Acting Gen. Counsel, S. E. C., Washington, D. C. (Michael A. Macchiaroli, Atty., S. E. C., Washington, D. C., on the brief), for applicant-appellee and cross-appellant.
    Bradley R. Brewer, New York City, for respondent-appellant Brigadoon Scotch Distributing Co.
    Arthur J. Homans, New York City, for respondent-appellant Milbank Trading Co., Inc.
    Irving A. Logue, Miller & Seeger, New York City, for respondent-appellant Leith-Moor Scotch Whiskey Co.
    Before LUMBARD and FRIENDLY, Circuit Judges, and THOMSEN, District Judge.

       Of the District of Maryland, sitting by designation.

   LUMBARD, Circuit Judge:

On January 26, 1972, the Securities and Exchange Commission (“SEC”) applied to the district court for the Southern District of New York for an order pursuant to section 22(b) of the Securities Act of 1933, 15 U.S.C. §§ 77v(b), and section 21(c) of the Securities Exchange Act of 1934, 15 U.S.C. § 78u(c), directing compliance with subpoenas duces tecum issued to Brigadoon Scotch Distributing Co. (“Brigadoon”), Mil-bank Trading Co., Inc. (“Milbank”), and Leith-Moor Scotch Whisky Co. (“Leith-Moor”). The district court in two memorandum decisions and an order, which was entered on February 14, 1973, granted enforcement of the subpoenas in part and denied enforcement in part. Brigadoon, Milbank, LeithMoor and the Commission have each appealed.

On March 13, 1973, a panel of this court ordered these appeals consolidated, granted a stay of the district court’s order, and ordered the appeals to be heard on an expedited basis. For the reasons stated below, we affirm so much of the district court order as enforces the Commission’s subpoenas, and reverse so much of the order as denies enforcement of the subpoenas.

I

Under section 20(a) of the Securities Act of 1933 (“Securities Act”), 15 U.S. C. § 77t(a), and section 21(a) of the Securities Exchange Act of 1934 (“Exchange Act”), 15 U.S.C. § 78u(a), the SEC is empowered to conduct investigations into possible violations of the federal securities laws. Pursuant to these provisions the Commission on February 4, 1971 issued an “Order Directing Private Investigation and Designating Officers to Take Testimony (the “Order”). The Order provided for the investigation of certain named persons, together with Brigadoon and Milbank, or “any other persons,” to ascertain whether they had engaged or were about to engage in any acts or practices in connection with the offer and sale of whisky warehouse receipts in violation of sections 5(a), 5(c) and 17(a) of the Securities Act, 15 U.S. C. §§ 77e(a), 77e(c) & 77q(a), and sections 10(b) and 15(a) of the Exchange Act, 15 U.S.C. §§ 78j(b) & § 78o(a), and Rule 10b-5, 17 C.F.R. § 240.10b-5 thereunder. The Order also provided, in accordance with section 19(b) of the Securities Act, 15 U.S.C. § 77s(b), and section 21(b) of the Exchange Act, 15 U.S.C. § 78u(b), for the appointment of several members of the Commission staff as officers of the Commission with the power, among other things, to subpoena witnesses and require the production of any books, papers, correspondence, memoranda or other records deemed relevant and material to the investigation.

On April 14, 1971, pursuant to the Commission’s Order a subpoena duces tecum was issued to Brigadoon Scotch Distributors, Ltd., which required Brigadoon to produce at the Commission’s New York Regional Office the following eight categories of documents:

“1. A list of all persons with their addresses who have purchased whisky warehouse receipts or whisky from Brigadoon Scotch Distributors, Ltd. or with the aid of Brigadoon Scotch Distributors, Ltd.
2. A list of all persons with their addresses who have been employed by Brigadoon Scotch Distributors, Ltd. on either a salary or commission basis for the purpose of selling ‘whisky warehouse receipts or whisky.
3. Copies of all literature sent by Brigadoon Scotch Distributors, Ltd. or its agents to prospective, purchasers of whisky warehouse receipts or whisky.
4. Copies of all advertisements placed in the news media by Brigadoon Scotch Distributors, Ltd. or its agents in connection with the sale of whisky warehouse receipts or whisky.
5. A list of all parents, subsidiaries or affiliates of Brigadoon Scotch Distributors, Ltd.
6. A list of all persons with their addresses who are or have ever been officers, directors, partners or shareholders of Brigadoon Scotch Distributors, Ltd.
7. Copies of any financial statements, income statements or balance sheets reflecting Brigadoon Scotch Distributors, Ltd.’s financial condition for any period from January 1, 1968.
8. A list of all banks, factors, lending institutions or other corporations or persons which Brigadoon Scotch Distributors, Ltd. has used from January 1, 1968 to date in connection with the financing of the business of buying or selling whisky warehouse receipts or whisky, including but not limited to, places where funds have been deposited, loans obtained and transfer facilities used.”

On April 14, 1971, a virtually identical subpoena was issued to Milbank Trading Company, Inc.; and on July 9, 1971, a subpoena, similar in all respects but one, was sent to Leith-Moor Scotch Whisky Co. The single difference in the LeithMoor subpoena consisted of the omission of a request for the information contained in item (7) of the Brigadoon and Milbank subpoenas. Thus item (7) of the Leith-Moor subpoena corresponded to item (8) of the Brigadoon and Mil-bank subpoenas. The three companies responded with varying amounts of information, but none complied fully with the subpoenas. As a result, the Commission commenced these proceedings to compel compliance.

Judge Tenney, relying on our decision in SEC v. Wall Street Transcript Corp., 422 F.2d 1371 (2d Cir.), cert. denied, 398 U.S. 958, 90 S.Ct. 2170, 26 L.Ed.2d 542 (1970), held in a memorandum decision dated September 5, 1972, that the information called for in items (1) through (6) of the three subpoenas should be produced. As to items (7) and (8) of the Brigadoon and Milbank subpoenas and item (7) of the Leith-Moor subpoena, Judge Tenney found that the information required would be irrelevant unless the Commission could demonstrate that respondents below were selling securities. To avoid “an unnecessary imposition on Respondents” that “possibly would damage their business” he denied enforcement of this portion of the subpoenas with leave to the SEC to renew its application upon a showing that the documents involved were in fact securities subject to regulation by the Commission. In addition, to lessen the impact on respondents’ business which might result from inquiries by the Commission directed to respondents’ customers and employees based upon the information supplied in items (1) and (2) of the subpoenas, Judge Tenney also provided that appropriate protective provisions should be entered in the final order.

Motions to reargue were made by the three respondents below and the SEC. Judge Tenney, in a memorandum decision dated January 10, 1973, granted the motions and adhered to his prior decision. The final Order, of February 14, 1973, required inter alia, that the Commission “recite to each and every business entity and person from whom documents, information, or testimony is requested” a statement to the effect that the SEC is conducting an investigation under the “authority and supervision” of the district court to determine whether the interests in whisky sold by appellants are securities; that the Commission has made no determination yet as to coverage under the federal securities laws; that no charges are pending; and that appellants contend that they sell “commodities” not subject to SEC regulation.

On this appeal, Brigadoon, Milbank, and Leith-Moor assert that the district court relied improperly on the Wall Street Transcript case, supra, and that they should not be forced to produce the information called for in items (1) through (6) of the subpoenas. The SEC contends that, to the contrary, the subpoenas should have been enforced in their entirety, including items (7) and (8) of the Brigadoon and Milbank subpoenas and item (7) of the Leith-Moor subpoena, and that the Commission’s investigators should not be required to recite the information contained in the protective provisions contained in the order entered below. We will consider each of these contentions.

II

Brigadoon, Milbank, and Leith-Moor have maintained throughout these proceedings that what they sell are documents of title to specific casks of scotch whisky aging in government bonded warehouses in Scotland, and not whisky warehouse receipts, as the Commission apparently maintains. These appellants contend that the SEC has no regulatory power over them because Congress in amending the Securities Act in 1934 to eliminate the phrase “certificate [s] of interest in property, tangible or intangible” from the definition of a “security” contained in section 2(1) of the Securities Act, 15 U.S.C. § 77b (1), intended to eliminate from coverage under the federal securities laws documents of title such as they sell. According to appellants the current definition of a security, which includes the term “investment contract,” cannot possibly be construed to cover either negotiable warehouse receipts (which they claim they do not sell) or non-negotiable documents of title (which they claim they do sell). Appellants argue, therefore, that before the Commission can subpoena information from them, the Commission must demonstrate that there is “reasonable, factual cause for a belief that the sales made by these three [appellants] may constitute the sale of ‘securities’ or ‘investment contracts’ within the meaning of Section 2(1) of the Securities Act.” In particular, they urge that the district court must make some initial determination as to statutory coverage and that the fourth amendment’s “probable cause” requirement demands that the Commission show enough facts to demonstrate that “reasonable grounds” exist for issuing subpoenas to appellants and compelling the production of documents.

Appellants raise serious questions about whether their activities are subject to regulation by the SEC. Should the Commission seek to exercise regulatory control over appellants’ business affairs at some future date, whether by means of a section 5 injunctive suit or otherwise, appellants will be entitled to a full hearing on their contentions. However, it has long been settled that such issues are not to be decided in subpoena enforcement actions. The Commission must be free without undue interference or delay to conduct an investigation which will adequately develop a factual basis for a determination as to whether particular activities come within the Commission’s regulatory authority.

In 1946 in Oklahoma Press Pub. Co. v. Walling, 327 U.S. 186, 66 S.Ct. 494, 90 L.Ed. 614 (1946), a case involving the administration of the Fair Labor Standards Act, 52 Stat. 1060, the Supreme Court stated what has since become the rule for interpreting regulatory statutes; namely, that it is for the agency rather than the district courts to determine in the first instance the question of coverage in the course of the preliminary investigation into possible violations. 327 U.S. at 214, 66 S.Ct. at 508. See Endicott Johnson Corp. v. Perkins, 317 U.S. 501, 63 S.Ct. 339, 87 L.Ed. 424 (1943). As to what showing of coverage, if any, an agency must make to secure judicial enforcement of a subpoena in light of the fourth amendment, the Court in Oklahoma Press stated that “any possible constitutional requirement of that sort was satisfied by the Administrator’s showing in this case, including not only the allegations concerning coverage, but also that he was proceeding with his investigation in accordance with the mandate of Congress and that the records sought were relevant to that purpose.” 327 U.S. at 215-216, 66 S.Ct. at 509. The Court said of the requirement of “probable cause” as applied to subpoena enforcement actions:

The requirement of “probable cause, supported by oath or affirmation,” literally applicable in the case of a warrant, is satisfied in that of an order for production by. the court’s determination that the investigation is authorized by Congress, is for a purpose Congress can order, and the documents sought are relevant to the inquiry. 327 U.S. at 209, 66 S.Ct. at 506.

Subsequently, the Supreme Court on several occasions has reaffirmed the doctrine enunciated in Oklahoma Press. See United States v. Morton Salt Co., 338 U.S. 632, 70 S.Ct. 357, 94 L.Ed. 401 (1950); F. T. C. v. Crafts, 355 U.S. 9, 78 S.Ct. 33, 2 L.Ed.2d 23 (1957); United States v. Powell, 379 U.S. 48, 85 S.Ct. 248, 13 L.Ed.2d 112 (1964). In United States v. Morton Salt Co., supra, the Court indicated that even if the agency request is motivated by “nothing more than official curiosity,” the subpoena is enforceable because agencies have a legitimate interest in seeing that the law and the public interest are maintained —assuming, of course, that the agency is acting within its authority and the information requested is relevant to the inquiry. 338 U.S. at 652, 70 S.Ct. at 369.

Summarizing this area of the law, this court stated in 1970 in SEC v. Wall Street Transcript Corp., 422 F.2d 1371, 1375 (2d Cir.), cert, denied, 398 U.S. 958, 90 S.Ct. 2170, 26 L.Ed.2d 542 (1970), which was relied on by the district court:

[I]t has long been established that the question of the inclusion of a particular person or entity within the coverage of a regulatory statute is generally for initial determination by an agency, subject to review on direct appeal, rather than for a district court whose jurisdiction is invoked to enforce an administrative subpoena. So long as an agency establishes that an investigation “will be conducted pursuant to a legitimate purpose, that the inquiry may be relevant to the purpose, that the information sought is not already within [its] possession, and that the administrative steps required * * have been followed,” no showing of probable cause need be made to the district court unless a statute indicates otherwise. United States v. Powell, 379 U.S. 48, 57-58, 85 S.Ct. 248, 255, 13 L.Ed.2d 112 (1964); FTC v. Crafts, 355 U.S. 9, 78 S.Ct. 33, 2 L.Ed.2d 23 (1957); Oklahoma Press Pub. Co. v. Walling, 327 U.S. 186, 66 S.Ct. 494, 90 L.Ed. 614, 166 A.L.R. 531 (1946); Endicott Johnson Corp. v. Perkins, 317 U.S. 501, 63 S.Ct. 339, 87 L.Ed. 424 (1948); 1 Davis, Administrative Law, § 3.12 (1958).

It is apparent from the SEC’s Order in this case that its investigation has the legitimate purpose of determining whether the whisky or warehouse receipts sold by appellants, in the context of the representations or understandings that may surround their sale, are securities covered by the securities acts, and, if so, of determining whether any securities violations have occurred. The Securities Act and the Exchange Act, as indicated above, clearly authorize such investigations, cf. Oklahoma Press Pub. Co., supra, 327 U.S. at 210 n. 47, 66 S.Ct. at 506 n. 47, and the information sought through the subpoenas is obviously relevant to the inquiry. There has been no suggestion that the SEC already has the information; nor have appellants raised any substantial claim that the SEC has failed to follow the appropriate administrative steps set out in the statute.

However, appellants argue that the decision of the Supreme Court in See v. Seattle, 387 U.S. 541, 87 S.Ct. 1737, 18 L.Ed.2d 943 (1967), a case decided three years prior to Wall Street Transcript, supra, requires a factual showing by an agency of “reasonable grounds” to issue subpoenas, not merely a demonstration that the inquiry is legitimate under the governing statute and that the documents requested are relevant to the inquiry. We do not agree. In See v. Seattle, supra, the Court did nothing to change the well-established principles associated with the judicial enforcement of agency subpoenas. The owner of a commercial warehouse was seeking reversal of his conviction for refusing “to permit a representative of the City of Seattle Fire Department to enter and inspect [his warehouse] without a warrant and without probable cause to believe that a violation of any municipal ordinance existed therein.” 387 U.S. at 541, 87 S.Ct. at 1738. The Court reversed, holding that the fourth amendment requires an administrative agency to obtain a warrant before searching commercial premises.

In See, there was governmental entry onto private property, action that is markedly different from issuing an administrative subpoena for the production of books and records, which has been termed a “constructive” search, Oklahoma Press Pub. Co., supra, 327 U.S. at 202, 66 S.Ct. at 502, and which certainly involves a minimal invasion of privacy Nevertheless, in See the Court referred approvingly to the standards associated with the judical enforcement of administrative subpoenas as evidence that a/ warrant requirement would impose onjy a “necessary and a tolerable limitation on the right to enter upon and inspect commercial premises.” 387 U.S. at 544, 87 S.Ct. at 1740. In a footnote the Court cited several cases, including Oklahoma Press Pub. Co. v. Walling, supra, and United States v. Morton Salt Co., supra, which stand for the proposition that for purposes of the fourth amendment’s probable cause requirement it is sufficient if an agency shows that an investigation is within its authority and the materials requested are reasonably relevant. Thus, it is apparent that in See v. Seattle, supra, the Court in no way modified its previous holdings that an agency need not demonstrate facts showing either the probability of coverage under the statute or the likelihood of violation of the statute to secure enforcement of a subpoena.

Accordingly, we affirm that portion of the district court’s order which requires appellants to produce items (1) through (6) listed in the subpoenas.

III

The SEC contends that it is also entitled to have the remainder of its subpoenas (items (7) and (8) of the Brigadoon and Milbank subpoenas and item (7) of Leith-Moor subpoenas) enforced on the same showing that the information requested is relevant to a legitimate aim of the investigation. We agree. Absent evidence of abuse by the Commission, United States v. Powell, 379 U.S. 48, 85 S.Ct. 248, 13 L.Ed.2d 112 (1964), it is entitled simultaneously to conduct a full inquiry into both potential coverage and potential violations. In aid of such investigation the Commission may issue subpoenas which will produce information on both issues. As we said in Newmark & Co. v. Wirtz, 330 F.2d 576, 578 (2d Cir. 1964):

Although it might well save time and expense for all concerned if the Administrator first examined such records as were relevant to coverage and then proceeded beyond that only if convinced that appellant were covered, the Oklahoma Press decision makes it plain that the course .of the investigation is for the Administrator to determine. If appellant believes that the nature of its operations is not such as to render it subject to the Act, it can properly litigate that issue if and when the Administrator attempts to enforce the Act’s substantive requirements against it after the completion of the administrative investigation.

That the materials requested in items (7) and (8) of the Brigadoon and Milbank subpoenas are relevant to the issue of possible violations of the securities laws is indisputable. Copies of the companies’ financial statements and a list of financial institutions involved in the “financing of the business of buying and selling whisky warehouse receipts or whisky” will assist the Commission in determining, for example, whether appellants have violated either the financial responsibility or anti-fraud provisions of the federal securities laws. Barring other compelling considerations, then, these portions of the subpoenas must also be enforced.

The district court did suggest in support of its denial of enforcement of items (7) and (8) of the Brigadoon and Milbank subpoenas and item (7) of the Leith-Moor subpoena that production of the material requested “possibly would damage” appellants’ business. It is unclear from the memorandum decisions of the district court to what extent it relied on this factor in refusing to order production of the requested materials. However, since appellants have been unable to show specifically how production of this information will result in harm to their business, it is apparent that the district court’s refusal to enforce these items cannot be upheld on this ground alone.

It is true that while the SEC is entitled to great freedom in conducting its investigations, it is not at liberty to act unreasonably, and in appropriate circumstances the court may inquire into the reasons for an investigation and into its effects. For example, if a subpoena were not issued in good faith but to harass or pressure the subject of an investigation, or for any other improper purpose, then the court would be bound not to enforce the subpoena as issued. United States v. Powell, 379 U.S. 48, 58, 85 S.Ct. 248, 255, 13 L.Ed.2d 112 (1964). Likewise, if it could be demonstrated that compliance with an agency subpoena would be unnecessarily burdensome, some limitation of the materials required would be warranted. But the burden of showing that an agency subpoena is unreasonable remains with the respondent, see United States v. Powell, supra, at 58, 85 S.Ct. at 255; United States v. Donaldson, 400 U.S. 517, 527, 91 91 S.Ct. 534, 540, 27 L.Ed.2d 580 (1971), and where, as here, the agency inquiry is authorized by law and the materials sought are relevant to the inquiry, that burden is not easily met. Cf. Adams v. F. T. C„ 296 F.2d 861 (8th Cir. 1961), cert, denied, 369 U.S. 864, 82 S.Ct. 1029, 8 L.Ed.2d 83 (1962). Thus the mere suggestion by appellants of possible damage to their business activities is not sufficient to block an’authorized inquiry into relevant matters. See Newmark & Co. v. Wirtz, 330 F.2d 576, 578 (2d Cir. 1964).

The Commission in its cross-appeal also asks that the order of the district court be modified by striking therefrom any requirement that there be given to every person from whom documents or testimony is requested the following statement:

“An inquiry is being conducted by the Securities and Exchange Commission relative to the offer and sale of Scotch whisky and/or whisky warehouse receipts as an investment for the purpose of determining whether or not the interests in whisky being sold are ‘securities’ subject to regulation by the SEC. This proceeding is only an inquiry and is being conducted under the authority and supervision of a Federal District Court. No charge of violation of the federal securities laws has been made against the party concerning whom documents or information is being requested. The SEC has made no determination as to whether such interests in whisky are, or are not, ‘securities’; such determination will ultimately be made by the Court. [Name of appropriate Respondent] contends that the whisky interests which it sells are ‘commodities’ and are not ‘securities’ subject to regulation by the Commission”.

We see no good reason to encumber the early stages of the Commission’s investigation with a requirement that each person from whom information is sought be advised of the nature and status of the inquiry and the contentions of the parties. To do so would be merely to invite controversy and litigation over the contents of the statement to be given. Furthermore, where an agency investigation is rapidly developing and changing, it would be difficult, if not impossible, accurately and completely to summarize the current status of the proceedings. Every person doing business and every investor knows that government agencies conduct investigations for a variety of reasons, and most of them feel the duty to respond to a proper inquiry. As for those whose practices are investigated, it is a necessary hazard of doing business to be the subject of inquiry by a government regulatory agency. Thus, we see no sound basis for imposing on the Commission the requirement of reciting such a statement.

Accordingly, we affirm so much of the district court’s order as granted enforcement of items (1) through (6) of the Brigadoon, Milbank, and Leith-Moor subpoenas.

We reverse the order of the district court insofar as it denies enforcement to items (7) and (8) of the Brigadoon and Milbank subpoenas and item (7) of the Leith-Moor subpoena, and imposes a requirement that the Commission supply certain specified cautionary material to those subpoenaed.

      . The Order contains the following statement of the underlying basis for its issuance :
      Members of its staff have reported information to the Commission which tends to show that:
      A. During the period from approximately January 1, 1969 to the present, Brigadoon, Highland, Edinburgh and Milbank, their officers, directors, employees, representatives, franchisees and others while engaged in the business of a broker-dealer in securities have been and are offering to sell, selling and delivering after sale to members of the public certain securities namely whisky warehouse receipts.
      B. While engaged in the offer and sale of such securities, such persons made to purchasers and prospective purchasers untrue statements of material facts and omitted to state material facts necessary to make tlie statements made, in the light of the circumstances under which they were made, not misleading, concerning, among other things :
      (1) The availability of a competitive public market for the purchase and sale of such securities;
      (2) The commission or mark-up taken by the sellers of such securities;
      (3) The background of persons selling such securities;
      (4) The profitability of investments in such securities; and
      (5) The risks of investment in such securities.

      . The Commission’s subpoena mistakenly refers to Brigadoon Scotch Distributing Co. . as- Brigadoon Scotch Distributors, Ltd.

      . It seems that at least up until July 6, 1967, the SEC took the position that certain ownership interests in whisky similar to those that respondents allege that they sell were not securities. See letter dated July 6, 1967, from Arthur P. Mathews, Chief, Branch of Criminal Reference and Special Proceedings, Division of Trading and Markets, SEC (by Peter J. Adolph, attorney) to Allen E. Bachman, Executive Vice-President, National Better Business Bureau, Inc. On the other hand, Securities Act Release No. 5018 (Nov. 4, 1969) indicates that it is also the Securities and Exchange Commission’s position that whisky warehouse receipts may indeed be securities within the meaning of the federal securities laws.

      . Although Brigadoon, Milbank and LeithMoor are not only appellants in this action but also cross-appellees, for the sake of clarity they will be referred to solely as “appellants,” while the Securities and Exchange Commission will be referred to by name as the SEC or the Commission.

      . Joint brief of respondents-appellants at 51.

      . Appellants also argue that the term “investment contract” contained in section 2(1) of the Securities Act, 15 U.S.C. § 77b (1), is void for vagueness. See Connally v. General Const. Co., 269 U.S. 385, 391, 46 S.Ct. 126, 70 L.Ed. 322 (1926). In light of the many Supreme Court decisions defining and applying the term, e. g., S.E.C. v. C. M. Joiner Leasing Corp., 320 U.S. 344, 64 S.Ct. 120, 88 L.Ed. 88 (1943) ; S.E.C. v. W. J. Howey Co., 328 U.S. 293, 66 S.Ct. 1100, 90 L.Ed. 1244 (1946) ; S.E.C. v. United Benefit Life Ins. Co., 387 U.S. 202, 87 S.Ct. 1557, 18 L.Ed.2d 673 (1967), we find such a position to be untenable.

      . Appellants do assert that the subpoenas issued to them do not stay within the investigative limits set out in the SEC’s order. The order calls for the investigation of the offer and sale of whisky warehouse receipts; the subpoenas ask for information in connection with appellants’ sales of “whisky warehouse receipts or whisky’’ (emphasis added). Although it is true that the investigative order does not use the term “whiskey,” any claim that the staff exceeded its authority in issuing the subpoenas cannot withstand analysis. The order itself specifically names appellants Brigadoon and Milbank and authorizes an inquiry into whether they have been selling securities, namely whisky warehouse receipts, in violation of the securities laws. Appellants have taken the position that they sell titles to specific, identifiable casks of scotch whisky which are neither whisky warehouse receipts nor securities. Nevertheless, since appellants do not contend that they sell more than one type of ownership interest in whisky, it is perfectly apparent that the current investigation, including the three subpoenas at issue here, concerns the same activities specified in the Commission’s order. A minor difference in nomenclature will not suffice to place the actions of the staff beyond its investigative authority.
      What appellants would have us decide, under the guise of determining whether the subpoenas were within the authority conferred by the Commission on the staff, is whether respondents sell whisky or whisky warehouse receipts. As stated above, that determination, which concerns the critical issue of whether respondents’ activities come within the coverage of the securities laws, is one that must be made initially by the SEC, not the court.

      . Section 15(c)(3) of the Securities Exchange Act, 15 U.S.C. § 78o (c)(3), and Rules 15c3-l through 15c3-3 thereunder, 17 CFR 240.15c3-l through 240.15c3-3.

      . Section 17(a) of the Securities Act of 1933, 15 U.S.C. § 77a(a), and sections 10(b) and 15 (c) (1) and (2) of the Securities Exchange Act, 15 U.S.C. §§ 78j(b), 78o(c)(l) & (2), and Rules 10b-5 and 15cl-l through 15c2-ll thereunder, 17 CFR 240.10b-5 and 240.15cl-l through' 240.15c2-ll.

      .- In addition, it must be noted that the protective provisions inserted by the district court in this case are in certain respects inaccurate and incomplete. For instance, the first sentence states that the investigation is being conducted to determine if the interests in whisky that are being sold are “securities” subject to SEC regulation. In fact, as has already been noted, the investigation is for a dual purpose : first, to determine if securities are involved and, second, to ferret out possible federal securities law violations. The following sentence further compounds the misleading quality of the notice by stating that the investigation “is being conducted under the authority and supervision of the Federal District Court.” Actually, the investigation is completely under the supervision and control of the SEC and the district court’s role is limited to enforcing subpoenas issued during the course of the inquiry.


source: Caselaw Access Project

author: PER CURIAM.

license: Public Domain

text:
    Eugene BARNES, Appellant, v. Sam Elmer DORSEY et al., Appellees.
    No. 73-1115.
    United States Court of Appeals, Eighth Circuit.
    Submitted May 15, 1973.
    Decided June 15, 1973.

      Eugene Barnes, pro se.
    A. Robert Belscher, St. Louis, Mo., for appellee, Percich. Counselor, St. Louis, Mo., for appellees, Hall and others.

      Robert C. McNicholas, City Counselor, and John J. Fitzgibbon, Associate City

      Before GIBSON, HEANEY and ROSS, Circuit Judges.
   PER CURIAM.

The plaintiff in this civil rights action under 42 U.S.G. §§ 1983 and 1985 is a Missouri prisoner whose appeal from a state conviction of burglary is pending, as of the latest notice to us, in the Missouri Supreme Court. In the meantime however, the plaintiff has filed a pro se complaint in forma pauperis in the United States District Court, Eastern District of Missouri, alleging deprivations of his civil rights.

Judge Wangelin, dismissed the complaint against all defendants, except Dr. Vargas, for failure to state a claim under Fed.R.Civ.P. 12(b)(6). Against Dr. Vargas, the complaint was dismissed for lack of personal jurisdiction, since service of process was not accomplished. Judge Wangelin denied the plaintiff’s request and defendants’ (Moss and Scott) motions for appointment of counsel since the dismissals as to all defendants rendered the question of appointment of counsel moot. The District Court also denied the plaintiff’s request for a reversal of a Missouri Supreme Court order denying the plaintiff a transcript of his state conviction, since federal courts do not have “subject matter jurisdiction to review on direct appeal such action by the Missouri Supreme Court.” We affirm the District Court.

The plaintiff was convicted of a burglary of the Living Room Lounge, St. Louis, Missouri, which occurred approximately at 4:00 a. m. on July 21, 1970. Sam Elmer Dorsey, owner of the tavern, told police that he was concealed in a closet inside the tavern when the plaintiff broke in the front door. Before the breakin, Dorsey had driven by his tavern at approximately 3:00 a. m. and had seen an officer investigating his tavern since the security alarm was sounding. Upon discovering a rear door window was broken, Dorsey told the officer that he planned to spend the rest of the night at the tavern. After the officer left, Dorsey noticed the plaintiff walking on the opposite side of the street and glancing frequently at the tavern. At that point, Dorsey hid in the closet and waited approximately one hour before the plaintiff broke in the front door. Dorsey told the police that he fired two shots at the plaintiff inside the tavern, that one shot struck the plaintiff in the thigh, and that the plaintiff got up off the tavern floor and walked outside where he fell to the ground. Dorsey called the police, and when they arrived, Barnes was arrested outside the tavern and taken to City Hospital No. 2. Barnes’ state conviction for burglary followed, and his appeal to the Missouri Supreme Court is now pending.

The defendants in this civil suit are: Honorable Michael Scott, Circuit Judge of Missouri in the Circuit Court, City of St. Louis, who presided at Barnes’ burglary trial; Neis C. Moss, Assistant Circuit Attorney for the City of St. Louis, who was the prosecuting' attorney at Barnes’ trial; James P. Lavin, Clerk of the Court of Criminal Corrections, City of St. Louis; A. L. Lark, Warden of the City Jail; Sheriff Percich, Sheriff of the City of St. Louis; J. Martin Hadican, the plaintiff’s court appointed attorney in the state conviction; Dorsey, the tavern owner and a witness in the state conviction; Dr. Vargas, who was employed at City Hospital No. 2 during the time of the alleged violations of the plaintiff’s civil rights; and Police Officers Harry Hall, Fred Smith, Sergeant Major Blancett, and Michael Dunn. For various reasons, the plaintiff claims that these individuals either individually or in concert deprived him of his federally protected rights in relation to his arrest, his recovery at the city hospitals, and his trial.

Although the defendants filed various motions in the District Court to dismiss this action, Judge Wangelin treated all motions, except as to Dr. Vargas, as a failure to state a claim upon which relief may be granted. We agree that this procedure was proper. Meredith v. Allen Co. War Memorial Hospital Commission, 397 F.2d 33, 35 (6th Cir. 1968). Further, the District Court accepted all material allegations in the complaint as true and liberally construed them in favor of the plaintiff. Jenkins v. McKeithen, 395 U.S. 411, 421, 89 S.Ct. 1843, 23 L.Ed.2d 404 (1969). Also, the general rule on dismissal of complaints apply to this complaint, and it will not be dismissed unless it appears that the plaintiff could “prove no set of facts in support of his claim which would entitle him to relief.” Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 102, 2 L.Ed.2d 80 (1957) (footnote omitted); Jenkins v. McKeithen, supra, 395 U.S. at 422, 89 S.Ct. 1843.

Plaintiff’s major contention concerning his alleged deprivation of his civil rights and defective arrest and trial is that medical evidence clearly could establish that it was impossible for the plaintiff who was suffering a gunshot wound to have moved from inside the tavern to outside and that Dorsey’s testimony was therefore improper and insufficient evidence on which to base an arrest and a conviction for burglary. Inferentially, the plaintiff wants us to conclude despite his conviction by a jury that he was outside the tavern when he was shot and therefore that no burglary occurred. In relation to his argument of deprivation of civil rights, the plaintiff alleges that defendants Judge Scott, Moss, Lavin, Hadican, Dorsey, Hall, Smith, Dunn, and Blancett either singularly or in concert allowed Dorsey’s testimony in a police report to go uneontradicted for the basis of an issuance of an arrest warrant but allowed the suppression of the police report at trial which would have provided, due to its improbability, a ground for arguing the plaintiff’s innocence.

We agree with Judge Wangelin that the plaintiff has alleged no cause of action against Judge Scott, since he was acting within the scope of his judicial authority. Pierson v. Ray, 386 U.S. 547, 554-555, 87 S.Ct. 1213, 18 L.Ed.2d 288 (1967); Mullins v. Oakley, 437 F.2d 1217, 1218 (4th Cir. 1971); Wilhelm v. Turner, 431 F.2d 177, ISO-181 (8th Cir. 1970), cert. denied, 401 U. S. 947, 91 S.Ct. 919, 28 L.Ed.2d 230 (1971). In regards to Moss, the plaintiff has alleged facts that purportedly demonstrate that Moss was not properly acting within his capacity as a prosecutor. Since we think that the facts alleged fall within acts that may be categorized as prosecutorial, rather than investigatory, functions, dismissal as to Moss was proper. When a prosecutor is acting within the scope of his proper prosecutorial capacity, these actions are cloaked with the same immunity granted to judges. Wilhelm v. Turner, supra 431 F.2d at 182-183. We specifically reserve the question of the liability of a prosecutor acting within an investigatory capacity.

In regards to the possible liability of Lavin, the court clerk, the plaintiff has failed to allege that the clerk was not properly performing his ministerial duties. Although Lavin has not pleaded a “good faith” defense that, if proven, would exonerate him from liability under McCray v. Maryland, 456 F.2d 1, 3-5 (4th Cir. 1972), such a plea is unnecessary due to the plaintiff’s failure to allege any facts that would support relief against Lavin. Conley v. Gibson, supra. The clerk’s actions were purely ministerial and there is no allegation of facts showing improper acts or how the plaintiff was injured by any illegal acts of the clerk. We affirm the District Court’s dismissal as to Lavin.

In regards to the possible liability of Hadican, the plaintiff’s court appointed attorney for the burglary charge, we hold, as did the District Court, that Hadican “acted only in his performance of his duties as Court appointed counsel in representing plaintiff” and “[s]uch actions are not performed under the color of state law.” Dyer v. Rosenberg, 434 F.2d 648, 649 (9th Cir. 1970); Sinclair v. Spatocco, 452 F.2d 1213 (9th Cir. 1972), cert. denied, 409 U.S. 886, 93 S.Ct. 102, 34 L.Ed.2d 142 (1972). Further we agree with the District Court that the plaintiff need not prove action under color of state law under § 1985, but must allege facts showing that the defendant conspired with the intended purpose of denying the plaintiff the equal protection of the law. The plaintiff has alleged no facts to show any concerted action by Hadican with any defendant to deprive the plaintiff of the equal protection of the law, and therefore dismissal is proper for failure to state a claim. Conley v. Gibson, supra; see Dieu v. Norton, 411 F.2d 761 (7th Cir. 1969).

In relation to defendant Dorsey, the tavern owner, the plaintiff claims that Dorsey fabricated the account of the shooting incident to the police and to the state court. No allegation has been made that Dorsey acted in concert with any public official, therefore Dorsey cannot be said to have acted under color of state law in violation of § 1983, nor to have acted as part of a conspiracy in violation of the Civil Rights Act. Dieu v. Norton, supra at 763.

The District Court also properly dismissed the complaint for failure to state a claim against the four police officers. The plaintiff claims that his arrest was unlawful and his conviction improper since the police officers must have known that the plaintiff could not have moved outside the tavern. The police officers counter by claiming that Dorsey’s account of the shooting and breakin gave them .probable cause to arrest the plaintiff. Since the facts alleged by the plaintiff show that the officers acted upon probable cause, dismissal was proper, Pierson v. Ray, 386 U.S. at 557, 87 S.Ct. 1213,18 L.Ed.2d 288.

The plaintiff also alleges that defendant Lark, Warden of the City Jail, contributed to aggravating the plaintiff’s injuries by taking the plaintiff’s walking cane and by requiring the plaintiff to re-use a disposable plastic syringe for the use of insulin. The plaintiff later became ill and was removed to a city hospital for oral insulin treatment. The District Court dismissed the plaintiff’s complaint by relying on Fear v. Pennsylvania, 413 F.2d 88 (3d Cir.), cert, denied, 396 U.S. 935, 90 S.Ct. 278, 24 L.Ed.2d 234 (1969) and United States ex rel. Gittlemacker v. County of Philadelphia, 413 F.2d 84 (3d Cir.), cert, denied, 396 U.S. 1046, 90 S. Ct. 696, 24 L.Ed.2d 691 (1969). Those cases broadly held that a prisoner’s complaint against a warden for alleged improper medical care is “legally insufficient to establish a denial of rights secured under the federal constitution or laws.” Fear v. Pennsylvania, supra 413 F.2d at 89 (citations omitted). The Eighth Circuit has not adopted the positive position of Fear and Gittlemacker that unqualifiedly denies a prisoner the right to prove allegations of improper medical care against a warden. In Cates v. Ciccone, 422 F.2d 926, 928 (8th Cir. 1970), we held that the District Court should provide a forum to hear factual allegations against a warden for medical treatment of “obvious neglect or intentional mistreatment.” The plaintiff’s allegations, however, do not indicate that there has been “obvious neglect or intentional mistreatment.” The Warden says that taking away the walking cane was necessary since it could have been used as a weapon. We think that such an action was prudent in this case. Also, the plaintiff by his own admissions says that he received medical care concerning his insulin treatment after he became ill. These allegations simply do not on their face constitute obvious neglect or intentional mistreatment.

Plaintiff also contends that Sheriff Percich of the City of St. Louis forced the plaintiff to leave City Hospital No. 2 to appear for a preliminary-hearing in the burglary charge before the plaintiff’s broken leg had healed. Sheriff Percich moved for a summary judgment since he took office on March 17, 1972, long after the alleged acts occurred. The plaintiff asked the District Court to join Sheriff Tozer, who preceded Sheriff Percich in office. The District Court denied the motion to add a party defendant. Obviously Sheriff Percich incurred no responsibility or liability to the plaintiff, and the District Court did not abuse its discretion in refusing to add Sheriff Tozer as a party defendant.

Plaintiff further argues that Dr. Vargas of City Hospital No. 2 contributed to the plaintiff’s leg injury due to improper medical care. Since Dr. Vargas was not properly served, the District Court dismissed the complaint for want of personal jurisdiction. The dismissal was obviously correct.

The plaintiff has asked us to compel the Missouri Supreme Court to supply the plaintiff with a transcript of his state conviction of burglary. Due to the death of the court reporter, the transcript’s preparation was delayed. Apparently according to a letter sent by the Clerk of the Missouri Supreme Court to the District Court, the transcript was, as of November 14, 1972, in the process of being prepared. As the District Court held, we have no power to compel the Missouri Supreme Court to supply the plaintiff with a transcript of his state conviction of burglary in this civil rights action. The request for appointment of counsel, as indicated by the District Court is now moot, in view of the dismissal as to all defendants.

The District Court is affirmed.

      . The Honorable H. Kenneth Wangelin presided. The opinion is published at 354 F.Supp. 179 (E.D.Mo.1973).


author: EUGENE A. WRIGHT, Circuit Judge: KOELSCH, Circuit Judge

text:
    SEATTLE-TACOMA NEWSPAPER GUILD, LOCAL #82, OF AMERICAN NEWSPAPER GUILD et al., Plaintiffs-Appellants, George Sing Louie et al., PlaintiffsIntervenors, v. Jacob J. PARKER, Warden, et al., Defendants-Appellees.
    No. 72-2330.
    United States Court of Appeals, Ninth Circuit.
    June 7, 1973.
    Rehearing Denied July 25, 1973.
    Koelsch, Circuit Judge, concurred specially and filed opinion.

      Croil Anderson (argued), of Schroeter, Jackson, Goldmark & Bender, William H. Neukom (argued), of MacDonald, Hoague & Bayless, Robert Czeisler, Office of Public Defense, Seattle, Wash., Stanley A. Bass of NAACP Legal Defense & Educational Fund, New York City, Joel Benoliel of MacDonald, Hoague & Bayless, Seattle, Wash., for plaintiffs-appellants.
    Leonard Schaitman, Atty., (argued), Harlington Wood, Jr., Asst. Atty. Gen., Dept. of Justice, Washington, D. C.; Stan Pitkin, U. S. Atty., Albert E. Stephan, Asst. U. S. Atty., Chief, Civil Section, Seattle, Wash., Morton Hollander, Atty., Dept. of Justice, Washington, D. C., for defendants-appellees.
    Before KOELSCH and WRIGHT, Circuit Judges, and BELLONI, District Judge.

       Of the District of Oregon.

   EUGENE A. WRIGHT, Circuit Judge:

This appeal presents essentially one question: Does the First Amendment compel the warden of a federal penitentiary to permit individual press interviews with prison inmates by representatives of the news media? Two aspects of the First Amendment are involved. Is the warden in violation of (1) the First Amendment rights of his prisoners or (2) the First Amendment right of press access to the news, when he prohibits press interviews with willing prisoners?

Suit was brought by the Guild (one-half of whose members are newspaper reporters) and two individuals, one of them a free-lance writer. Their complaint sought temporary and permanent injunctions enjoining the appellees from denying the plaintiffs

(a) The right to access to McNeil Island Federal Penitentiary,
(b) The right to interview prisoners and strike leaders,
(e) The right to take still and moving pictures inside the prison,
(d) The right to interview McNeil officials and employees, and
(e) The right of access to records and administrative directives at McNeil regarding prisoner treatment and prison life conditions.

There had been disruptions in the nature of a prisoner strike at McNeil in 1971 and emergency measures were taken by prison officials to restore order and to prevent recurrences. Members of the Guild sought to interview strike leaders among the more than 1,200 McNeil prisoners and to take statements from prison officials. Some Guild members went to the island by government vessel, accompanied by photographers. They met with Warden Parker, Daggett’s predecessor, and he refused permission for photographs, interviews with others or free access to prison records.

Until the disruptive strike, the policy of the prison had been to provide access to relatives, friends, attorneys, news media, social workers, interested citizens, members of charitable organizations and other visitors, usually at scheduled times. The policy was curtailed during the strike because many prisoners refused to report for regular duties and destroyed government property. Contemporaneously, a group of protestors gathered and demonstrated at the Government pier on the mainland, the terminus for the vessel which transported personnel and supplies to the island. These circumstances caused a deployment of prison forces to preserve order, protect government property and prevent bodily harm.

Intervenors are McNeil prisoners who joined in the suit on their own behalf and on behalf of others similarly situated. They, too, sought injunctive relief from the prison policy of prohibiting press interviews. They claimed the policy violated their First Amendment rights of free speech, free press and the right to petition for redress of grievances.

While the suit was pending, the Bureau of Prisons reviewed its policies concerning access to prisons by press personnel. In February 1972, it issued a revised Policy Statement which defined news media, recognized the right of inmates to have access to the media by correspondence, and provided for other confidential correspondence from inmates.

The Policy Statement further provided encouragement to press representatives to visit institutions for the purpose of reporting on facilities and programs but with some limitations. Specifically, press interviews with individual inmates were prohibited. It is this prohibition that is now challenged by both the press and the inmates.

Experience in other institutions, said the Bureau of Prisons, led it to conclude that inmate interviews would adversely affect prison discipline and administration.

The Bureau found that interviews had two separate damaging consequences: (1) disciplinary problems increased, following interviews with disruptive or non-cooperative prisoners, who encouraged others to adopt their hostile approach, and (2) prisoners interviewed because celebrities or “big wheels,” less subject to constructive rehabilitation. The Bureau believes that all prisoners should receive equal treatment, except for individual physical, mental and moral needs. Defendant Carlson, Bureau Director, supplied the district court with an affidavit on this subject.

In his oral decision, the district judge noted that McNeil is a “maximum security” institution, designated for detention of selected prisoners. Its officials face serious disciplinary and security problems because McNeil has few first offenders and many recidivists with multiple convictions of crimes of violence. Finding that the rule against. inmate interviews “is calculated to avoid a disruptive influence in the internal operation” of a federal prison, the court concluded that the Bureau regulation is not unconstitutional or oppressive but is “reasonable and is designed to give the administration of the institution some flexibility to adequately meet their responsibilities.”

All parties having moved for- summary judgment, the district court granted the motion of appellees and dismissed the action.

THE INMATES

It is axiomatic that prison inmates retain constitutional rights, and that “a prisoner does not shed his first amendment rights at the prison portals.” Brown v. Peyton, 437 F.2d 1228, 1230 (4th Cir. 1971). However, it is equally clear that “ . . . [1] awful inearceration brings about the necessary withdrawal or limitation of many privileges and rights, a retraction justified by the considerations underlying our penal system.” Price v. Johnston, 334 U.S. 266, 285, 68 S.Ct. 1049, 1060, 92 L.Ed. 1356 (1948).

As another Court of Appeals has pointed out:

“Imprisoned felons and inmates of such institutions * * * cannot enjoy many of the liberties, the rights and the privileges of free men. They cannot go abroad or mount the housetops to speak. They are subjected to rigid physical limitations and to disciplinary controls which would find no shred of justification in any other context. Even the disciplinary powers of military authorities are not so absolute.” McCloskey v. Maryland, 337 F.2d 72, 74 (4th Cir. 1964)

The Director of the Bureau of Prisons and the Warden at McNeil Island are responsible for the security of the prison and the safety and rehabilitation of its inmates, and accordingly they must be given wide discretion in formulating rules to govern prison life. In the instant case the Bureau of Prisons has given considerable study to the disruptive effects of prisoner interviews on prison administration, and has concluded that the ban on interviews is necessary to maintain the discipline, custody and control of the prison. We are unable to say that that conclusion “lacks support in any rational and constitutionally acceptable concept of a prison system.” Sostre v. McGinnis, 442 F.2d 172, 199 (2d Cir. 1971) (en banc). We find that the interview ban is reasonable action within the scope of the wide discretion of the prison administrators and that it does not violate the prisoners’ First Amendment rights. Smith v. Sehneckloth, 414 F.2d 680 (9th Cir. 1969).

In concluding that the institutional concerns override the interest of the individual inmate in talking face to face with a member of the news media, we note that such a deprivation will not allow any real complaint about the treatment of the inmate or the administration of the prison to go unredressed. Prisoners are allowed by Bureau regulation to confer freely with their counsel, to conduct unlimited confidential correspondence, to visit with relatives and friends, to counsel with clergymen of their faith, and most important, to have free access to the courts. This court, as others, gives prompt and careful attention to prisoner petitions alleging violations of civil rights and counsel is appointed to assist the prisoner in those cases where the need therefor is demonstrated.

THE PRESS

Federal prisons are public institutions, and their administration is a matter of concern to all citizens. Decisions recognizing “the paramount public interest in a free flow of information to the people concerning public officials, their servants,” are equally applicable in the realm of prison administration. The importance of the media in providing public information about the conduct of these institutions is undisputed. Indeed, it has often been through the zealous efforts of the news media that failures in a particular institution have been exposed.

We are acutely aware of the public’s need for information in this area. However, we do not accept the argument that the public interest in having its prisons secure and free from disruptive influences and in the rehabilitation of prisoners is insufficient to outweigh the uncertain burden on news reporting that allegedly results from prohibiting prisoner interviews.

We have already noted that the regulation in question is rationally related to the achievement of legitimate goals of prison administration. Appellant Newspapers Guild argues that despite the wide discretion allowed administrators in the formulation of rules and regulations governing prisons, there is nonetheless an absolute right to gather news, citing Branzburg v. Hayes, 408 U.S. 665, 92 S.Ct. 2646, 33 L.Ed.2d 626 (1972):

“We do not question the significance of free speech, press or assembly to the country’s welfare. Nor is it suggested that news gathering does not qualify for First Amendment protection; without some protection for seeking out the news, freedom of the press could be eviscerated.” At 681, 92 S.Ct. at 2656.

However, “. . . [t]he right to speak and publish does not carry with it the unrestrained right to gather information,” Zemel v. Rusk, 381 U.S. 1,17, 85 S.Ct. 1271, 1281, 14 L.Ed.2d 179 (1965), and accordingly the issue we must decide is whether the interview ban unduly restricts the flow of information to the public. In concluding that it does not we again call attention to the Bureau’s regulations giving news media extensive access to prison facilities and personnel, as well as the right to unlimited confidential correspondence with inmates. We are convinced that any hampering of the ability of the media to report. occasioned by the interview ban is more than justified by the persuasive reasons given for its formulation.

It should be noted, however, that in this suit the interview ban dictated by the regulation is being attacked only insofar as it is applied at McNeil Island Penitentiary, a maximum security institution. Our holding today does not concern the application of the regulation to the wide variety of other institutions employed in the incarceration and rehabilitation of federal offenders.

The order of the district court granting summary judgment is affirmed.

KOELSCH, Circuit Judge

(concurring specially).

As I read the record, the court below dismissed the actions on Rule 12(b)(6) grounds and did not, as the majority opinion seems to suggest, resort to nor pass upon the parties’ respective Rule 56 motions for summary judgment.

Had it been necessary for the court to consider the latter motions, then we should reverse, for plaintiffs tendered a number of counter-affidavits setting out facts purporting to support their allegations that the questioned provision of the revised “Policy Statement” of February 11, 1972, violated, and were being applied in a manner that violated, their First Amendment rights. However, upon inspection of those provisions, the conclusion is manifest to me that none of them have, or could have, such an effect. The provisions are narrowly drawn and prohibit specific conduct that would, at least arguably, infringe upon a substantial federal interest in protecting the federal penal system. In short, I am firmly convinced that plaintiffs neither stated, nor could they state, any actionable claim or claims, and that we need not, indeed should not, suggest otherwise.

I concur in the result.

      . “A newspaper entitled to second class mailing privileges; a magazine or periodical of general distribution; a national or international news service; a radio or television network or station.” (Policy Statement 1220.1A, ¶ 4a).

      . “A representative of the news media may initiate correspondence with a particular inmate. Incoming correspondence from the news media will be inspected solely for contraband, or for content which would incite conduct which is illegal. Rejected correspondence will be returned to the sender, with an explanation. Questions to the inmate may be presented through this correspondence, and the inmate may respond through the Prisoners Mail Box.” (Policy Statement 1220.1A, ¶ [4b(2)).

      . The prisoners may send confidential messages to:
      (1) The United States Courts;
      (2) Members of the United States Senate and the House of Representatives ;
      (3) The Director of the United States Bureau of Prisons;
      (4) The Attorney General of the United States;
      (5) The President and the Vice President of the United States;
      (6) Members of the United States Board of Parole;
      (7) The Pardon Attorney;
      (8) The Surgeon General, United States Public Health Service;
      (9) The Secretaries of the Army, Navy, and Air Force.
      Bureau of Prisons Policy Statement, No. 7300.2B.

      . “Representatives of the press are encouraged to visit Bureau institutions for the purpose of preparing reports about institutional facilities, programs and activities.” (Policy Statement 1220.1A, (5)).

      . “Press representatives will not be permitted to interview individual inmates. This rule shall apply even where the inmate requests or seeks an interview. However, conversation may be permitted with inmates whose identity is not to be made public, if it is limited to the discussion of institutional facilities, programs and activities.” (Policy Statement 1220.1A, ¶ 4b (6)). (The last sentence above permits only casual conversations held in the course of prison tours.)

      . “ * * * Prisons invariably have inmates drawn from all walks of life, including the rich and the poor, the prominent and the obscure, the celebrated and the unknown. Prison life is intended to provide an equality of living without echelons of strata based upon past civilian life. If publicity or renown were accorded individual prisoners by publicity, favorable or unfavorable, it would violate this principle and create further internal rivalries within the prison and tend to promote special treatment of such persons.
      “Limiting interviews would not eliminate and at best could reduce the adverse effect described above because it would still result in allowing special treatment for individuals of renown or who seek publicity. * * * ” (Tr. 230, 364)

      . See also, Sostre v. McGinnis, 442 F.2d 178 (2d Cir. 1971) (en banc); McDonough v. Director of Patuxent, 429 F.2d 1189 (4th Cir. 1970).

      . Prisoner petitions drawn pro se are also held to less stringent standards than formal pleadings drafted by lawyers. Haines v. Kerner, 404 U.S. 519, 92 S.Ct. 594, 30 L.Ed.2d 652 (1972).

      . Haines v. Kerner, 404 U.S. 519, 92 S.Ct. 594, 30 L.Ed.2d 652 (1972) (State prisoner appearing pro se is entitled to a hearing on his allegations that lie suffered injuries while being subjected to confinement without due process.)
      Wilwording v. Swenson, 404 U.S. 249, 92 S.Ct. 407, 30 L.Ed.2d 418 (1971) (State prisoners need not exhaust state remedies before bringing Civil Rights action to challenge living conditions and disciplinary measures.)
      Keeton v. Procunier, 468 F.2d 810 (9th Cir. 1972). (State prisoner is entitled to a hearing on his Civil Rights Act claim that state officials ran a kangeroo court inquisition before rescinding his parole recommendation).
      Wright v. McMann, 460 F.2d 126 (2d Cir. 1972) (State prisoners are entitled under Civil Rights Act to damages against warden for “barbarous and inhumane” treatment by deputy warden.)
      Bradley v. Nosser, 456 F.2d 835 (5th Cir. 1972) (10 CrL 2482) (Allegation of summary arrest and inhumane confinement states cause of action under Civil Rights Act.

      . Garrison v. Louisiana, 379 U.S. 64, 77, 85 S.Ct. 209, 217, 13 L.Ed.2d 125 (1964). See also Time, Inc. v. Hill, 385 U.S. 374, 87 S.Ct. 534, 17 L.Ed.2d 456 (1967), Grosjean v. American Press Co., 297 U.S. 233, 56 S.Ct. 444, 80 L.Ed. 660 (1936) and New York Times Co. v. United States, 403 U.S. 713, 91 S.Ct. 2140, 29 L.Ed.2d 822 (1971).

      . See also .Smith et al. v. Bounds, et al. (E.D.N.C. Mar. 10, 1972) ; contra, Washington Post, et al. v. Kleindienst, et al. (D.D.C., unreported memorandum opinion of April 5, 1972, as supplemented by opinion of Dec. 19, 1972). Cf. Yarish v. Nelson, 27 Cal.App.3d 893, 104 Cal.Rptr. 205 (1972), petition for rehearing denied by the California Supreme Court, November 16, 1972.


author: PER CURIAM:

text:
    In the Matter of Philip J. Goldberg, Bankrupt-Appellant. Philip J. GOLDBERG, Bankrupt-Appellant, v. Sidney B. WEINER et al., Creditors-Appellees.
    Nos. 72-1379, 72-2373.
    United States Court of Appeals, Ninth Circuit.
    June 29, 1973.

      Lawrence A. Diamant (argued), Gilbert Robinson, of Robinson & Wolas, Los Angeles, Cal., Fred R. Esser, of Corbet & Esser, Phoenix, Ariz., for bankrupt-appellant.
    Jeffrey B. Smith (argued), Jay M. Martinez, of O’Connor, Cavanagh, Anderson, Westover, Killingsworth & Beshears, Paul A. White, Sheldon Mitchell, Phoenix, Ariz., for creditors-appellees.
    Before BROWNING and GOODWIN, Circuit Judges, and CONTI, District Judge.

       Honorable Samuel Conti, United States District Judge, Northern District of California, sitting by designation.

   OPINION

PER CURIAM:

Appellant Goldberg appeals from two orders entered against him in an involuntary bankruptcy proceeding. One denied his motion to dismiss the proceedings ; the other held him in contempt for refusing to answer questions at an examination ordered under section 21(a) of the Bankruptcy Act, 11 U.S.C. § 44(a).

I

The involuntary petition was filed on October 8, 1970, in the United States District Court, Phoenix, Arizona. Appellant could not be found within the jurisdiction. The court therefore ordered service of process by publication as provided in 11 U.S.C. § 41(a). A notice was published on several dates in the Arizona Weekly Gazette. A copy of the notice and the petition in bankruptcy were left with appellant’s wife at an apartment leased by appellant in Beverly Hills, California. Appellant did not respond. On the basis of a showing by creditors of purported acts of bankruptcy and insolvency, the court adjudicated appellant a bankrupt on February 22, 1971.

On May 3, 1971, an order for Examination of Bankrupt was issued pursuant to section 21(a) of the Act, 11 U.S.C. § 44(a), and personally served on appellant in Los Angeles County. The date set for the examination was May 24, 1971. Fred Esser, identifying himself as appellant’s attorney “on another matter,” appeared on that date and requested a continuance. The examination was continued until June 22,1971.

On June 21 appellant moved to dismiss the proceedings. The sole ground asserted was that the district court for Arizona lacked jurisdiction under 11 U. S.C. § 11(a)(1), because appellant had not had his principal place of business, resided, or had his domicile within the district for the preceding six months, or for a longer portion of the preceding six months than in any other jurisdiction. The referee entered an order denying the motion. The district court affirmed. Appellant appealed.

Appellant has abandoned the contention that in view of 11 U.S.C. § 11(a) (1) jurisdiction was lacking because appellant did not have his principal place of business, residence, or domicile in the District of Arizona during the six months preceding filing of the petition -the only challenge to jurisdiction advanced below.

11 U.S.C. § 41(a) authorizes service by publication in appropriate circumstances. The bankruptcy court could obtain personal jurisdiction over appellant by this means (see Stegeman v. United States, 425 F.2d 984, 987 n. 4 (9th Cir. 1970) (in banc); Bookey v. King, 236 F.2d 871, 877 (9th Cir. 1956)), and purported to do so.

The only challenge appellant now raises to the adequacy of the publication is one of form: the published subpoena was addressed “To Clerk of the District Court” rather than to appellant.

We note that the subpoena also bore the heading, in boldface type, “In the matter of Phillip J. Goldberg Alleged Bankrupt”; and that recitals in the body of the subpoena (e. g., “if you fail to [appear], you may be adjudged a bankrupt by default”) obviously were not directed to the Clerk.

In any event, we need not and do not consider appellant’s contentions on the merits. This is an appropriate ease for application of the general rule that matters not raised below will not be considered on appeal. Questions relating to service of process do not affect the fundamental validity of a judicial proceeding, at least where, as here, the party has actual notice of a proceeding in time to preserve his rights.

On the same ground we decline to consider appellant’s contention, not raised below, that there was insufficient proof of an act of bankruptcy.

The order denying the motion to dismiss is affirmed.

II

At the section 21(a) examination appellant refused to answer a number of questions, claiming his Fifth Amendment privilege. The referee ordered him to answer; he refused. The referee certified the transcript to the district court. The district court found appellant in contempt. Appellant appealed.

Appellees’ position is that appellant could not refuse to testify on Fifth Amendment grounds because the immunity granted by section 7(a) (10) of the Bankruptcy Act, 11 U.S.C. § 25(a) (10), is “coextensive with the [Fifth Amendment] privilege and [sufficient] to supplant it.” Kastigar v. United States, 406 U.S. 441, 462, 92 S.Ct. 1653, 1666, 32 L.Ed.2d 212 (1972). This is the holding in United States v. Seiffert, 463 F.2d 1089,1091 (5th Cir. 1972).

Appellant contends that for various reasons the immunity granted by section 7(a) (10) is not as broad as that granted by 18 U.S.C. § 6002, considered in Kastigar, and is not coextensive with the privilege.

Appellant notes that 18 U.S.C. § 6002 bars use of the compelled testimony in a “criminal case” whereas section 7(a) (10) uses the term “criminal proceeding.” We see no significant difference, and the legislative history indicates that the language used in section 7(a)(10) was intended to grant immunity in conformity with the immunity provided in section 6002. H.R.Rep. No. 91-1188, 91st Cong., 2d Sess. 14 (1970).

In a more elaborate argument, appellant suggests that the closing clause of section 7(a) (10), admittedly not found in 18 U.S.C. § 6002, provides a means by which testimony compelled in a section 21(a) examination might be freed from the immunity bar of section 7(a) (10) and used against the bankrupt in a subsequent criminal proceeding. The clause referred to excludes from immunity “such testimony as may be given by him in the hearing upon objections to his discharge.” As appellant points out, the hearing on objections to discharge is not a “criminal proceeding,” and nothing in section 7(a) (10) would prevent the use at that hearing of testimony of the bankrupt compelled at the section 21(a) examination. Because of the final clause of section 7(a) (10), the argument runs, such testimony would then be excepted from the immunity granted by section 7(a) (10) and could be used against appellant in a later criminal proceeding.

The exclusionary clause of section 7(a) (10) is limited to “testimony' . given in the hearing upon objections to his discharge.” In view of the obvious purpose of the statutory scheme, this would not encompass a transcript of a bankrupt’s testimony given at a different hearing at which he had been compelled to testify under a statutory promise of immunity.

Appellant suggests that the immunity granted by section 7 (a) (10) is limited to answers to questions that are within the scope of examination authorized by the section. Appellant argues that testimony erroneously compelled outside the proper scope of the examination could be used against the bankrupt in subsequent criminal proceedings.

The statute provides that “no testimony” given by the bankrupt shall be used in subsequent criminal proceedings, not merely “relevant” testimony, or only testimony within the proper scope of examination authorized by statute.

Appellant argues that section 7(a) (10) does not apply to the examination of the bankrupt under section 21(a). We see no reason why such an examination does not fall within the class of examinations held “at such other times as the court shall order,” referred to in section 7(a) (10).

Finally, appellant argues that even if the immunity granted by section 7(a) (10) is coextensive with his Fifth Amendment privilege, Congress intended to permit the bankrupt to retain the options of claiming his privilege and refusing to testify. He relies primarily upon the presence in 18 U.S.C. § 6002 and absence from section 7(a) (10) of language stating that the witness may not refuse to testify on the basis of his privilege. He also points out that Congress imposed strict conditions upon compelling testimony and granting immunity under 18 U.S.C. § 6002 (see 18 U.S.C. § 6003), and suggests that it is unlikely that Congress intended to abrogate the privilege without these safeguards in the bankruptcy context.

We agree with appellee that other provisions of the Bankruptcy Act demonstrate that Congress intended to require the bankrupt to testify to the extent that he could be legally required to do so, 11 U.S.C. §§ 25(a), 44(a), 69(a)(4), and that, after Kastigar, the Fifth Amendment is no bar to the compulsion of immunized testimony.

Appellant’s claim that he was denied due process in his contempt hearing lacks substance.

The order holding appellant in contempt is affirmed.

      . Appellant conceded on oral argument that 11 U.S.C. § 11(a)(1) relates to venue rather than to jurisdiction. See In re Martinez, 241 F.2d 345, 346-349 (10th Cir. 1957) ; 1 Collier on Bankruptcy § 2.14, pp. 198-201 (14th ed.).

      . As we have noted, in October 1970, prior to publication or adjudication, a copy of the petition and the subpoena were left with appellant’s wife at an apartment leased in appellant’s name. In addition, aft order directing appellant to file schedules and a statement of affairs was served on appellant on February 24, 1971, two days after the adjudication of bankruptcy.
      On March 3, 1971, an attorney acting for appellant acknowledged receipt of the order. On May 22 appellant was personally served with the order to appear for examination. As appellant himself points out, under 28 U.S.C. § 1655, lie could have appeared at any time within a year of the default adjudication of bankruptcy on February 22, 1971, had the default judgment set aside, and pleaded any available defenses, including the absence of an act of bankruptcy, a defense he now seeks to raise for the first time in this appeal.
      Citing In re Mistrot, 147 F.Supp. 423, 424 (S.D.Tex.1956), aff’d sub nom. Hollywood Youths v. Mistrot, 246 F.2d 399, 400 (5th Cir. 1957), appellant also argues that in view of the final paragraph of 28 U.S.C. § 1655, the referee was required to set side the adjudication of bankruptcy when appellant filed his motion to dismiss. Appellant did not request such relief. Section 1655 does not impose an affirmative duty upon the referee to act stoa sponte; a debtor might not wish to have the adjudication set aside.

      . As amended in 1970, the relevant portion of § 7 (a) (10) reads: “No testimony, or any evidence which is directly or indirectly derived from such testimony, given by [a bankrupt] shall be offered in evidence against him in any criminal proceeding, except such testimony as may be given by him in the hearing upon objections to his discharge.”

      . Section 7 (a) (10) authorizes “an examination [of the bankrupt] concerning the conducting of his business, the cause of his bankruptcy, his dealings with his creditors and other persons, the amount, kind, and whereabouts of his property, and, in addition, all matters which may affect the administration and settlement of his estate or the granting of his discharge.”


author: NICHOL, District Judge.

text:
    MID-AMERICAN TRANSPORTATION COMPANY, INC., a corporation, Appellant, v. CARGO CARRIERS, INC., a corporation, Appellee.
    No. 72-1453.
    United States Court of Appeals, Eighth Circuit.
    Submitted Feb. 13, 1973.
    Decided June 29, 1973.

      Michael D. O’Keefe, St. Louis, Mo., for appellant.
    Eugene K. Buckley, St. Louis, Mo., for appellee.
    Before LAY and BRIGHT, Circuit Judges, and NICHOL, District Judge.

       Chief Judge, District of South Dakota, sitting by designation.

   NICHOL, District Judge.

Mid-American Transportation Company (Mid-American), plaintiff-appellant, timely appeals in this admiralty suit from a favorable decision rendered in the United States District Court for the Eastern District of Missouri. Mid-American Transportation Company v. Rose Barge Line, Inc., 344 F.Supp. 1278 (E.D.Mo.1972). Mid-American appeals that portion of the District Court’s decision denying it damages for both the loss of use of its damaged barge, MAT-38, and prejudgment interest. This court reverses and remands on these two issues.

On July 5, 1969, while en route from Cairo, Illinois, to New Orleans, Louisiana, Mid-American’s barge, MAT-38, fully loaded with grain and under the care, custody, and control of The M/V John H. MacMillan, Jr., owned by defendant Cargo Carriers, Inc., buckled amidship upon hitting the left bank of the lower Mississippi River near Flower Lake Bar. Mid-American had previously contracted for reciprocal tow services with Rose Barge Line, Inc., who, in turn, had the towing done by Cargo Carriers, Inc.

The District Court found defendants The M/V John H. MacMillan, Jr., and Cargo Carriers, Inc., negligent in the manner in which the barge MAT-38 was navigated through a bend in the Mississippi River. As a consequence, judgment was rendered for Mid-American and against these two defendants for $11,421.85. This sum represents $10,962 for repair costs, plus $459.85 for the cost of the survey. The trial court further stated that

(p)laintiff additionally asks for loss of use in the amount of $2,484, plus pre-judgment interest. The evidence does not sustain the award of loss of use or pre-judgment interest.

344 F.Supp. at 1279.

The appellant contends that it is entitled to recover for the loss of use of the barge during the period of repairs, that it has introduced competent evidence at trial to prove the actual loss of profits and, with reasonable certainty, the amount of that loss. Appellant further contends that the District Court erred in refusing prejudgment interest, that while the award of interest in admiralty cases is a matter within the court’s discretion, that discretion must be exercised with a view to the right of interest unless the circumstances are exceptional. Appellant submits that those exceptional circumstances do not exist in this case.

The appellee maintains that our review of the District Court’s determination is limited in scope by the “clearly erroneous” rule, and that the trial court’s findings were permissible considering that court’s ability to evaluate the credibility of witnesses and to weigh the evidence. In addition, appellee argues that Mid-American has failed to prove with reasonable certainty that a measurable loss was suffered as evidenced by appellant’s three different and inconsistent pre-trial positions with respect to the amount claimed for loss of use. Regarding prejudgment interest, it is the appellee’s position that Mid-American’s delay of almost one and one-half years from the date of the damages in filing its complaint, coupled with the good faith contest over appellee’s uncertain liability, provide such circumstances upon which the District Court could have based denial.

While the District Court’s findings of fact in admiralty proceedings will not be reversed unless clearly erroneous, Delta Marine Drilling Company v. M/V Baroid Ranger, 454 F.2d 128 (5th Cir. 1972), it remains that since the District Court has given this court no basis upon which to determine the factors the lower court took into consideration in making those findings, an independent determination of whether there is merit to appellant’s claim for loss of use is necessary.

An independent review of the evidence adduced at trial shows that Mid-American produced evidence establishing the activity and profitability of barge MAT-38 on towings subsequent to, and including the voyage in which the litigated damage was sustained. That evidence further discloses that it is the objective of Mid-American to complete as many trips from St. Paul, Minnesota, loaded with grain, to New Orleans, Louisiana, and return, as possible within an eight and one-half month interval. Barge movement on the northern portions of the Mississippi River is seasonally restricted due to the presence of ice from early December through the middle of March. Mid-American’s evidence specifically addressed itself to establishing the profitability of several MAT-38 towings based upon the weight, substance hauled, the number of journey days, and segment of the river traveled. Two grain trips from St. Paul to New Orleans were calculated for the trial court. Two coal deliveries from East St. Louis, Missouri, to Prescott, Wisconsin, were accounted for on the return trip north. Mid-American conceded that it experienced irregular success in obtaining loads from New Orleans north, but at St. Louis appellant could always secure a load of coal from the Peabody Coal Company to tow north. The months of July and August are very busy for appellant.

The settled rule in admiralty law concerning compensation to the owner of a damaged vessel during the period of repairs was expressed in The Potomac, 105 U.S. 630, 26 L.Ed. 1194 (1881).

In order to make full compensation and indemnity for what has been lost by the collision, restitutio in integrum, the owners of the injured vessel are entitled to recover for the loss of her use, while laid up for repairs. When there is a market price for such use, that price is the test of the sum to be recovered. When there is no market price, evidence of the profits that she would have earned if not disabled is competent; but from the gross freight must be deducted so much as would in ordinary cases be disbursed on account of her expenses in earning it; in no event can more than the net profits be recovered by way of damages; and the burden is upon the libellant to prove the extent of the damages actually sustained by him

Id., at 631-632.

The United States Supreme Court reiterated this principle in The Conqueror, 166 U.S. 110, 17 S.Ct. 510, 41 L.Ed. 937 (1897).

That the loss of profits or of the use of a vessel pending repairs or other detention, arising from a collision, or other maritime tort, and commonly spoken of as demurrage, is a proper element of damage, is too well settled both in England and America to be open to question. It is equally well settled, however, that demurrage will only be allowed when profits have actually been, or may be reasonably supposed to have been, lost, and the amount of such profits is proven with reasonable certainty.

Id., at 125,17 S.Ct. at 516.

The right to recover for loss of use as enunciated by the Supreme Court in the previous cases remains the law today. Delta Marine Drilling Company v. The M/V Baroid Ranger, 454 F.2d 128 (5th Cir. 1972).

A review of the entire evidence leaves this court with the definite and firm conviction that a mistake has been committed. United States v. United States Gypsum Co., 333 U.S. 364, 395, 68 S.Ct. 525, 542, 92 L.Ed. 746 (1948). It is clear that appellant is entitled to some compensation for the loss of profits during the period of repairs to MAT-38. The fact that the exact amount is difficult to determine should not deprive Mid-American of its right to recovery. Daniels Towing Service, Inc. v. Nat Harrison Associates, 432 F.2d 103 (5th Cir. 1970). Therefore, with regard to the District Court’s denial of damages for loss of use, the case is remanded for further findings and calculations by the District Court to adequately compensate the appellant on this valid claim.

Similarly, we find that the District Court has clearly erred in denying appellant prejudgment interest. This court has recently followed the recognized general rule in admiralty suits permitting, in the discretion of the trial court, the. award of prejudgment interest unless there are exceptional or peculiar circumstances. Mid-American Transportation Company v. Rose Barge Line, Inc., 477 F.2d 914 (8th Cir. 1973). The year and one-half period between the accident and the filing of a complaint is not exceptional or peculiar in light of the parties’ settlement negotiations. And, “the prompt assertion of a good faith defense is not a relevant factor in determining the compensatory aspects of an award of damages, including an award of prejudgment interest.” Id., 477 F.2d at 916. Thus, in keeping with this Circuit’s most recent decision on this element of damages, Mid-American, supra, we remand the ease to the District Court so that it may make an award for prejudgment interest. That interest shall be computed from the time the expenditures were actually made, i. e., the time of payment.

Reversed and remanded.


author: WEICK, Circuit Judge.

text:
    In re Raymond Cecil SCHMELZER, Bankrupt. Danny A. CESNER, Trustee-Appellant, v. Raymond Cecil SCHMELZER, Bankrupt-Appellee.
    No. 72-2118.
    United States Court of Appeals, Sixth Circuit.
    Argued April 19, 1973.
    Decided June 21, 1973.

      Larry E. Staats, Columbus, Ohio, for trustee-appellant.
    E. Bruce Hadden, Columbus, Ohio, for bankrupt-appellee; Jonathan A. Tarbox, Columbus, Ohio, on brief.
    Before WEICK, MILLER and LIVELY, Circuit Judges.
   WEICK, Circuit Judge.

The sole issue in this appeal is whether the title to the bankrupt’s unliquidated claim for damages for personal injuries sustained by him in an automobile accident, vested in his trustee under the provisions of Section 70(a)(5) of the Bankruptcy Act, 11 U.S.C. § 110 (a)(5).

The referee in bankruptcy held that the title to such claim vested in the trustee. He relied principally upon the opinion of a District Judge in his own District in the case of In re Borchers, 17 Ohio Misc. 146, 46 Ohio Op.2d 217 (1970). Upon a petition for review, which was heard by a different District Judge in the same District, the decision of the referee was reversed in a well-considered opinion, 350 F.Supp. 429, and the cause was remanded to the referee with instructions to grant the bankrupt’s application with respect to said claim. The trustee in bankruptcy appealed. We hold that the claim for personal injuries is not “property” within the meaning of Section 70(a) (5). We further hold that the trustee has not establishd that Ohio law permits such a claim to be subjected to judicial process.

Schmelzer, the bankrupt, sustained serious personal injuries in an automobile accident which occurred on December 16, 1968. He filed suit against the tort feasor for damages to his automobile and for personal injuries in the Court of Common Pleas of Franklin County, Ohio, on October 27, 1969, praying for judgment in the amount of $75,-000. As yet his suit has not been reached for trial. Schmelzer was adjudicated bankrupt on June 23, 1971.

Prior to 1938, Section 70(a) of the Bankruptcy Act provided in relevant part as follows:

“The trustee of the estate of a bankrupt . . . shall be vested . . . with the title of the bankrupt ... to all of the following kinds of property wherever located . . . (5) property, including rights of action, which prior to the filing of the petition he could by any means have transferred or which might have been levied upon and sold under judicial process against him, or otherwise seized, impounded or sequestered. . . .” (11 U.S.C. § 110(a)(5)).

By amendment in 1938, the following proviso was added thereto:

“Provided, That rights of action ex delicto for libel, slander, injuries to the person of the bankrupt or of a relative, whether or not resulting in death, seduction, and criminal conversation shall not vest in the trustee unless by the law of the State such rights of action are subject to attachment, execution, garnishment, sequestration, or other judicial process. "

It will be noted that the proviso, which is applicable to the present case, prohibited the title to a claim for injuries to the person from vesting in the trustee unless such rights of action by state law were subject to attachment, garnishment, sequestration, or other judicial process.

The trustee in bankruptcy must therefore establish that such a claim was property within the meaning of the Act and was subject to judicial process by the law in Ohio, which applies to this case.

We will discuss first the law of Ohio.

It was not contended that in Ohio such rights of action were subject to attachment or garnishment. The trustee contended that the right could be subjected in Ohio by a judgment creditor’s bill under the provisions of Revised Code of Ohio, Section 2333.01, which reads as follows:

“When a judgment debtor does not have sufficient personal or real property subject to levy on execution to satisfy the judgment, any equitable interest which he has in real estate as mortgagor, mortgagee, or otherwise, or any interest he has in a banking, turnpike, bridge, or other joint-stock company, or in a money contract, claim, or chose in action, due or to become due to him, or in a judgment or order, or money, goods, or effects which he has in the possession of any person or body politic or corporate, shall be subject to the payment of the judgment by action.”

The trustee contends that the bankrupt’s unliquidated claim for personal injuries is a “chose in action” within the meaning of the statute.

The Supreme Court of Ohio has never passed upon this question. The trustee relies upon dicta contained in the Supreme Court’s opinion in Cincinnati v. Hafer, 49 Ohio St. 60, 65, 30 N.E. 197, 198 (1892), which stated that the term chose in action “includes the right to recover pecuniary damages for a wrong inflicted either upon the person or property.” The trouble with that statement, however, is that Hafer involved only a claim for damages to property.

The first syllabus in Hafer is as follows :

“Where a judgment debtor has commenced an action against another, for unliquidated damages arising out of an injury to his real estate, and the judgment creditor of such debtor, thereafter, and while his judgment is alive, commences a suit under section 5464 of the Revised Statutes, in the nature of a creditor’s bill, against such debtor and the wrongdoer, to subject to the payment of his judgment, the debtor’s interest in the chose in action or claim for damages, the judgment creditor may acquire a lien in equity upon such interest of the debtor, from the commencement of his suit, where the demand of the judgment debtor for unliquidated damages is reduced to judgment during the pendency of the creditor’s bill.” (Syl. 1).

In Aetna Cas & Sur. Co. v. Hensgen, 22 Ohio St.2d 83, 258 N.E.2d 237 (1970), the Supreme Court of Ohio cited Hafer in support of the proposition that a cause of action to recover for fire damage to property, was assignable.

In Ohio only the syllabus of an opinion of the Supreme Court constitutes the law of the case. Perkins v. Benguet Consol. Mining Co., 342 U.S. 437, 441-442, 172 S.Ct. 413, 96 L.Ed. 485 (1952); 14 Ohio Jur.2d 681, 682 “Courts” § 247. Matters outside of the syllabus are not regarded as the decision. Haas v. State, 103 Ohio St. 1, 132 N.E. 158 (1921). There is no statement in the syllabus in Hafer that a claim for personal injuries is included in the definition of chose in action.

The trustee further relied on a decision of the Court of Appeals of Mahoning County, Ohio, in Strouss-Hirshberg Co. v. Davidson, 19 Ohio L.Abs. 225 (1935). That decision relied on dicta in Hafer, supra, which we have shown involved a claim for property damage, not a claim for personal injuries, and therefore it is not persuasive authority.

In Re Borchers, supra, also relied on Hafer and Strouss-Hirshberg.

We prefer to follow the more recent decision of the Court of Appeals of Summit County, Ohio, in Haines v. Public Finance Corp., officially reported in 7 Ohio App.2d 89, 218 N.E.2d 727 (1966), the syllabus of which case is as follows:

“A pending action for personal injury claimed to have arisen out of an invasion of the right of privacy is not subject to attachment, execution, garnishment, sequestration, or other judicial process, so as to vest such action in the trustee in bankruptcy of the plaintiff in that action under Section 70 of the Bankruptcy Act (Section 110, Title 11, U.S. Code).” (Syl.).

In Alms & Doepke Co. v. Johnson, 98 Ohio App. 78, 128 N.E.2d 250 (1954), the Court of Appeals of Hamilton County, Ohio, held that a creditor’s bill filed by a judgment creditor against a defendant who had an unliquidated claim against an automobile liability insurance company for personal injuries inflicted by its insured, could not reach the unliquidated claim because it was not a chose in action. The Court said that the creditor’s bill did not reach a debt due to a debtor of the debtor.

In Geiselman v. Wise, 137 Ohio St. 93, 28 N.E.2d 199 (1940), the Supreme Court of Ohio held:

“A mere inchoate right of dower cannot be reached by a creditor’s bill.” (Syl. 2).

In In re Anderson, 345 F.Supp. 840, 842 (E.D.Tenn.1972), aff’d 474, F.2d 1398 (6th Cir. 1973), the District Court held that under a Tennessee statute which permitted garnishment of all property, debts and effects, including “real estate and choses in action, whether due or not . . .” the bankrupt’s claim for damages for personal injuries was not “property” and did not pass to the trustee under Section 70(a)(5) of the Bankruptcy Act.

There is respectable authority that even prior to the passage of the proviso of Section 70 in 1938, a claim for personal injuries was not property and did not pass to the trustee. Saper v. Delgado, 146 F.2d 714 (2d Cir. 1945); Sibley v. Nason, 196 Mass. 125, 81 N.E. 887 (1907).

In In re Buda, 323 F.2d 748 (7th Cir. 1963), the Court held that under Wisconsin law such a claim did not pass to the trustee. The law of some states, however, does permit judicial process to reach personal injury claims. Carmona v. Robinson, 336 F.2d 518 (9th Cir. 1964); In re Calestini, 321 F.Supp. 1313 (N.D.Cal.1971).

We hold that under the law of Ohio the claim for personal injuries is not subject to judicial process.

In Lines v. Frederick, 400 U.S. 18, 91 S.Ct. 113, 27 L.Ed.2d 124 (1970), the Supreme Court held that a wage earner’s vacation pay, accrued but unpaid at the time of filing his petition in bankruptcy, does not pass to the trustee as “property” under Section 70(a)(5) of the Bankruptcy Act. The Court said:

“The most important consideration limiting the breadth of the definition of ‘property’ lies in the basic purpose of the Bankruptcy Act to give the debtor a ‘new opportunity in life and a clear field for future effort, unhampered by the pressure and discouragement of pre-existing debt. . . ’ Local Loan Co. v. Hunt, 292 U.S. 234, 244-245, 54 S.Ct. 695, 78 L.Ed. 1230 ...” (Id. at 19, 91 S.Ct. at 113).

These goals of the Bankruptcy Act can hardly be achieved if the trustee is permitted to take over the bankrupt’s unliquidated claims for serious personal injuries including claims for future pain and suffering, continued disability, and loss of earnings in the future. It seems almost against public policy to permit the trustee in bankruptcy to prosecute such as action in his own name.

The judgment of the District Court is affirmed.

      . This decision was not reported in the official Ohio Appellate Reports. Ohio Rev.Code § 2503.20 requires that an opinion be reported in the official reports before it is recognized by and given the official sanction of any court.
      This statute, however, does not seem to be enforced by the Ohio Courts, 14 Ohio Jur.2d 680 “Courts” § 243, or by our Court. Gustin v. Sun Life Assur. Co. of Canada, 154 F.2d 961 (6th Cir. 1946).