author: KUNZIG, Judge:

text:
    Anthony J. RICCI v. The UNITED STATES.
    No. 398-71.
    United States Court of Claims.
    Dec. 18, 1974.

      Edwin J. McDermott, Philadelphia, Pa., attorney of record for plaintiff.
    Thomas W. Petersen, Washington, D. C., with whom was Asst, Atty. Gen. Carla A. Hills, for defendant.
    Before SKELTON, KASHIWA and KUNZIG, Judges.
   OPINION

KUNZIG, Judge:

In this civilian pay case, the question before us is whether plaintiff’s discharge from his position as a welder at the Philadelphia Naval Shipyard for taking numbers bets from his fellow employees was supported by substantial evidence and not arbitrary or capricious. We must-also decide whether the Navy complied with applicable procedural requirements in effecting plaintiff’s removal on a charge of “Conduct Unbecoming a Government Employee.” Finally, we must decide the further question whether Navy regulations prohibiting “Gambling or unlawful betting on Navy premises” (gambling) and “Promotion of gambling on Navy premises” (promotion of gambling) are sufficiently clear and distinct to withstand a “void for vagueness” challenge under the due process clause of the fifth amendment to the Constitution.

We hold for defendant. The dismissal was supported by substantial evidence; the procedures followed by the Philadelphia Naval Shipyard in removing plaintiff were in accordance with appropriate Civil Service regulations; and the distinction between “gambling” and “promotion of gambling” is sufficiently clear to withstand constitutional challenge, particularly in light of plaintiff’s acknowledged awareness of the distinction prior to his dismissal.

This case is before us on exceptions by both parties to the trial judge’s report. After a full hearing, Trial Judge C. Murray Bernhardt resolved both the substantial evidence and procedural issues against plaintiff. Nevertheless, he found for plaintiff on the ultimate question of defendant’s liability for wrongful termination of plaintiff’s employment. This paradoxical result was made possible by the conclusion that Navy civilian personnel regulations forbidding “gambling” and “promotion of gambling” lacked sufficient clarity to distinguish one from the other and were, accordingly, void for vagueness under the due process clause of the fifth amendment. While agreeing with the trial judge’s determination on the first two issues, we find the record before him to be supportive of an opposite result on this constitutional issue. Accordingly, on review, aided by the findings of fact as modified and by the briefs and arguments of the parties, we reach the opposite result and hold that plaintiff’s removal was entirely proper and not constitutionally infirm.

Factual Background

Anthony J. Ricci was charged as an employee of the Philadelphia Naval Shipyard (Shipyard) in 1968 for “Conduct Unbecoming a Government Employee.” The charge was accompanied by three specifications of misconduct, the first two relating to instances of Ricci’s accepting numbers bets from two of his co-workers at the Shipyard, namely:

a. Information has been received from Mr. Stanley J. Polite, a Shipyard employee, that he placed $1.00 numbers bets with you in the cafeteria, Building # 570, in May 1967.
b. Mr. Walter L. Mason, another Shipyard employee, has reported that he has also placed numbers bets with you in the amounts of $.25 to $1.00 during a six-week period between August 1967 to on or about 1 October 1967, in the employees’ cafeteria, Building # 570.

After plaintiff made written reply to the Notice of Proposed Removal, a letter dated July 16, 1968 from the Shipyard production officer informed plaintiff that specifications 2a and 2b, supra, were found to be sustained. Plaintiff was discharged from his position, effective July 19, 1968. At an administrative appeal hearing held September 16, 1968, Shipyard employees Polite and Mason corroborated the evidence implicating plaintiff, which they had earlier given to an FBI special agent. The officer who presided at plaintiff’s administrative appeal provided a report of his findings to the Commander of the installation. This document noted that the Standard Schedule of Disciplinary Offenses and Penalties for Civilian Employees in the Naval Establishment (Standard Schedule), posted on the bulletin board of every shop at the Philadelphia Naval Shipyard, specified “promotion of gambling on Navy premises” (promotion of gambling) as an offense for which removal was within the permissible range of penalties for a first infraction. Finding that the evidence proved plaintiff had, in fact, been involved in “promotion of gambling,” the hearing officer concluded plaintiff’s dismissal on a charge of “Conduct Unbecoming a Government Employee” was warranted.

On May 29, 1969, the Civil Service Commission’s Acting Philadelphia Regional Appeals Officer (the Region) found all procedures required by Civil Service regulations had been followed, the evidence sustained the charge, and the penalty of removal was justified. Plaintiff subsequently appealed to the Civil Service Commission Board of Appeals and Review (CSC BAR) which, by decision issued July 18, 1969, again sustained plaintiff’s removal.

In his petition, plaintiff seeks back pay, alleging simply that his removal was arbitrary, capricious, and not based upon substantial evidence. Our standard of review in a civilian personnel dismissal action is two-fold. This court will both

[make certain that the] administrative agency has complied with the prescribed procedural requirements * * [and] * * * review the action to determine whether the officials who effected the dismissal acted arbitrarily, capriciously or were so grossly erroneous as to be in bad faith, as for instance where they may have acted without substantial evidence or where they exceeded their authority.

Morelli v. United States, 177 Ct.Cl. 848, 858 (1966). Accord, Grover v. United States, 200 Ct.Cl. 337, 343 (1973).

I. Substantial Evidence

Plaintiff alleges his discharge was improper because he was not involved in “promotion of gambling” for which removal was an authorized penalty for a first infraction. He claims following his perception of the distinction between “promotion of gambling” and “gambling” we made in Reil v. United States, 456 F.2d 777, 197 Ct.Cl. 542 (1972), to have been simply wagering his own money and paying winners out of his own pocket rather than taking numbers bets on behalf of a numbers bank connected with organized crime. This, plaintiff says, was simply “gambling” and not “promotion of gambling” within the meaning of Reil.

The record before us completely repudiates plaintiff’s contention. In considering issues of arbitrariness and lack of substantial evidence, this court is entitled to review all available evidence, including both the administrative record and de novo evidence taken before the trial judge. Schlegel v. United States, 416 F.2d 1372, 1375, 189 Ct.Cl. 30, 36 (1969). After receiving testimony from both of the Shipyard employees who had previously given written statements implicating plaintiff to the FBI, the Navy hearing officer found the charges against plaintiff supported by the weight of available evidence. This official’s findings were approved by the Region, the CSC BAR, and the trial judge.

Furthermore, at the hearing before Trial Judge Bernhardt, plaintiff admitted taking numbers bets from his coworkers at the Shipyard over a period of time. The trial judge rejected as inherently implausible plaintiff’s claim that he did not turn bets over to a numbers writer or so-called “house” or “bank,” but simply pocketed the bets and personally assumed the risk he would have to make payment in the event of a “hit” by one of his customers. The trial judge did not believe that plaintiff’s personal financial resources or daily take (4 to 11 bets a day for a period of 6 weeks) were adequate for plaintiff to run the risk of having to pay off at 400 to 1 or 500 to 1 odds. Significantly, the trial judge who saw and heard the witnesses, observed that plaintiff’s “demeanor on the stand produced the ineluctable impression that plaintiff was lying.”

After reviewing the evidence presented both at the administrative and trial levels, aided by the briefs and arguments of the parties, and in the absence of evidence to the contrary, we cannot say the decision to remove plaintiff was so lacking in factual support that it must be characterized as arbitrary or capricious.

II. Procedural Requirements

In his presentation before the Philadelphia Civil Service Region and the CSC BAR, plaintiff contended his removal was procedurally defective because the charge “Conduct Unbecoming a Government Employee” was too broad, the proper offense with which plaintiff should have been charged being “Promotion of Gambling on Navy Premises.” The Region and the CSC BAR rejected this argument, finding all of plaintiff’s mandatory procedural rights had been preserved. All that is necessary in a proceeding of this nature, the agency concluded, is for sufficient information to be set forth in the Advance Notice of Proposed Removal to enable the employee to understand the charges against him and prepare his reply. Any possible defect in the charge had been cured by the two specifications of misconduct enumerated above.

We agree.

The requirements for notice of proposed adverse action in the Federal Personnel Manual, 752-6(2 — 2), (1969) are:

(1.) “General Standard.” The notice must state the reasons supporting the proposed action, specifically and in detail, including names, times, and places. The notice should be self contained, so that a person unacquainted with the facts and circumstances involved can obtain from the notice a clear understanding of the reasons for the proposed action.
(2.) It is necessary to state the factual reasons in sufficient detail to afford the employee a clear understanding of the reasons so that he can prepare an answer. Mere statements of conclusion such as “you are guilty of immoral conduct,” without supporting details, do not meet the requirements for specificity.

Plaintiff’s removal notice met all of the above requirements. It informed him precisely what accusations had been leveled against him and who his accusers were. As in Schlegel v. United States, 416 F.2d at 1376, supra at 38, also a case in which a general charge (“immoral and indecent conduct”) was accompanied by specifications of particular incidents (homosexual behavior), “[t]here can be no doubt that the plaintiff was informed with specific certainty of the nature of the conduct for which his removal was contemplated.”

We sustain the finding of the CSC BAR that plaintiff was furnished with sufficient information to enable him to defend against the charge of “Conduct Unbecoming a Government Employee.”

We reject the contention that the “Conduct Unbecoming a Government Employee” charge does not provide sufficient notice. Plaintiff conveniently overlooks the fact that the specifications of misconduct accompanying the general charge were in themselves violations of a particular Navy rule against “promotion of gambling” by its civilian employees. A similar attack upon the charge “Conduct Unbecoming an Officer and a Gentleman” was rejected recently in a military context by the Supreme Court in Parker v. Levy, 417 U.S. 733, 94 S.Ct. 2547, 41 L.Ed.2d 439 (1974). The Levy Court held that judicial constructions by the Court of Military Appeals and other military authorities had sufficiently narrowed the broad reach of the literal language of Articles 133 (“Conduct Unbecoming an Officer and a Gentleman”) and 134 (“All disorders and neglect to the prejudice of good order and discipline in the armed forces”) of the Uniform Code of Military Justice that the articles could withstand a void for vagueness attack. The Court added that content could be supplied to the articles even by “less formalized custom and usage.” A fortiori, where, as here, the general charge is accompanied by instances of conduct violating specific, published regulations, a vagueness assault must fail.

The standard of review used by the Supreme Court in Levy is that which the Court normally applies to criminal statutes regulating economic affairs rather than within the area of protected first amendment expression. (Slip. op. p. 22). We find no reason to employ a stricter test here. Nor are we persuaded that the Levy standard is inapplicable because plaintiff is a civilian rather than a military employee of the Government. The conduct proscribed by the regulations at bar in no way infringes on the exercise of free expression; only illegal conduct is proscribed. “[Only] [w]here a statute’s [or regulation’s] literal scope, unaided by a narrowing * * * court interpretation, is capable of reaching expression sheltered by the First Amendment, [does] the [void for vagueness] doctrine demand a greater degree of specificity than in other contexts.” Smith v. Goguen, 415 U.S. 566, 573, 94 S.Ct. 1242, 1247, 39 L.Ed.2d 605 (1974). Thus, in either a military or civilian setting, the regulations at bar would be subject to the Levy standard.

Since the “Conduct Unbecoming” charge in Levy was sustainable even in the absence of regulations as specific as the ones violated by plaintiff here, we find that under the circumstances of this case, the “Conduct Unbecoming a Government Employee” charge leveled against plaintiff must be upheld.

III. Void For Vagueness

Up to this point, our decision is in harmony with the findings of the trial judge. However, at this juncture, the trial judge marched to the beat of a different drummer and arrived at a decision which we find inconsistent with the evidence presented.

After finding the evidence sufficient to warrant a violation of regulations prohibiting “promotion of gambling,” after finding that the Navy had followed proper procedures in terminating plaintiff, and after finding plaintiff knew he could be discharged upon discovery by Shipyard officials of his extracurricular activities, the trial judge nevertheless ruled that plaintiff be awarded back pay because the regulations defining “gambling” and “promotion of gambling” lack sufficient clarity to distinguish one from the other. Stating that “[i]t is the province and the obligation of those who fashion offenses to define them clearly and unambiguously, whether a criminal statute, a municipal ordinance, or even an employment regulation • proscribing, on pain of publicized penalties, certain conduct on the job,” the trial judge found the above-mentioned regulations in violation of the “void for vagueness” doctrine.

We disagree.

We find sufficient delineation between the offenses of “gambling” and “promotion of gambling” properly to forewarn an individual of the consequences of his actions in participating in either activity, and therefore reject the conclusion that these regulations are impermissibly vague.

In arriving at his conclusion, the trial judge apparently utilized the following reasoning. He rejected the contention that plaintiff was acting as his own bank. But, relying on his interpretation of the holding in Reil v. United States, 456 F.2d 777, 197 Ct.Cl. 542 (1972), i. e., to be guilty of “promotion of gambling,” one must be acting on the behalf of another, the trial judge speculated it would be possible for someone to act on his own behalf in this banking capacity and not be in violation of “promotion of gambling.” In the above hypothetical situation, a civilian employee acting on the behalf of another would be subject to dismissal for a first offense, while another civilian employee doing exactly the same thing, but acting on his own behalf would be subject only to a 10-day suspension under the offense of “gambling.” The possibility of such a result led the trial judge to conclude that a reasonable man would not be properly forewarned by the regulations in question of the potential consequences of his conduct.

Our understanding of the distinction between “gambling” and “promotion of gambling” which the Reil court made does not coincide with the interpretation of the trial judge. In Reil, the plaintiff had been discharged for allegedly taking bets on horse races and, in one instance, allegedly accepting one numbers bet in the amount of $.05 or $.10. Unlike the plaintiff in this suit, Reil denied under oath having taken the bets in question. Unlike the witnesses in the present case, the witnesses against Reil who participated in the transactions involved never testified under oath. The Reil court found for plaintiff on alternative grounds: (1) the meager evidence presented, when weighed against plaintiff’s strong denials, was not sufficient to meet the substantial evidence test required to sustain the agency’s determination, 456 F.2d at 780, 197 Ct.Cl. at 549, and (2) the evidence presented in a rather skimpy record did not clearly indicate that plaintiff was guilty of the more serious “promotion of gambling” offense. Id. 456 F.2d at 781, at 549-550.

The trial judge erroneously presumes that the Reil court requires a person to be an agent for some undisclosed third party in order to be in violation of the regulation prohibiting “promotion of gambling.” To support this interpretation, the following was quoted from the Reil opinion:

The record does not directly explain why activity accessory to gambling was to be dealt with more severely than gambling itself. In the absence of a better explanation, we suppose the framers of the Schedule viewed “promotion of gambling” as making gambling transactions on behalf of others, such others being thought to be typically engaged in organized crime. The offender might not be wagering his own money or paying winners out of his own pocket. On the other hand, “gambling” pure and simple might be a personal peccadillo of some but little significance to the management of the Shipyard, (emphasis added)

Id. 456 F.2d at 778-779, at 545.

Had the trial judge read further in the same paragraph, we are certain he would have perceived the true distinction between “promotion of gambling” and “gambling” which Judge Nichols adroitly made:

The record reflects that such a distinction was in the minds of the participants in the case. Pennsylvania law * * * made conducting a lottery a crime and 18 U.S.C. § 13 made this law apply within the Naval shipyard. The FBI agent who took the * * * statement advised * * * that one who placed a “numbers” bet did not violate Federal or State criminal law but one who was “involved in the operation of a numbers lottery" did. (emphasis added)

Id. 456 F.2d at 779, at 545.

The true import of the Reil decision can only be found in its total context, and not in a single phrase as the trial judge presumes. This distinction, as we understand it, is that the necessary element to be in violation of “promotion of gambling” is involvement in the business of gambling, be it as principal or agent.

The logic of this distinction and the more severe penalty for “promotion of gambling” from the Naval Shipyard’s standpoint is clear. Gambling at Government facilities (and in private industry as well) can and does have a deleterious effect on the morale and efficiency of the work force, be it civilian or military. Thus, regulations aimed at discouraging employees from participating in gambling serve a useful purpose to curtail employee involvement and, for first offenders, warrant a penalty less severe than dismissal. But when an employee elevates his activity from the placing of an individual bet to that of serving as an outlet for his fellow employees’ gambling proclivities, be it on his own account or as an agent for others, his effect on overall morale and efficiency becomes multiplied, thus justifying the more serious first offender penalty of possible discharge.

In addition, plaintiff has admitted that he was involved in the business of gambling, taking from 4 to 11 bets a day from fellow employees during the period in question. He further acknowledged awareness that if caught by Shipyard officials he would be discharged. Accordingly, the vagueness issue raised by the trial judge has no realistic factual foundation.

Relevant case law supports this conclusion. The Supreme Court has held that regulations set out in terms ordinary people exercising common sense can understand and comply with are not impermissibly vague. United States Civil Service Comm. v. Nat’l. Assoc. of Letter Carriers, 413 U.S. 548, 93 S.Ct. 2880, 37 L.Ed.2d 796 (1973). Even in the area of criminal law, where courts are traditionally most vigilant to insure fair application, the Supreme Court has held, “no more than a reasonable degree of certainty can be demanded. Nor is it unfair to require that one who deliberately goes perilously close to an area of proscribed conduct shall take the risk that he may cross the line.” Boyce Motor Lines v. United States, 342 U.S. 337, 340, 72 S.Ct. 329, 331, 96 L.Ed. 367 (1952). In Jordan v. De George, 341 U.S. 223, 71 S.Ct. 703, 95 L.Ed. 886 (1951), the Court noted:

We have several times held that difficulty in determining whether certain marginal offenses are within the meaning of the language under attack as vague does not automatically render a statute unconstitutional for indefiniteness. * * * Impossible standards of specificity are not required. * * * The test is whether the language conveys sufficiently definite warning as to the proscribed conduct when measured by common understanding and practices. [citations omitted] (emphasis added). Id. at 231-232, 71 S.Ct. at 708.

These standards obviously do not demand mathematical precision in delineating areas of proscribed conduct.

The dictionary is one reliable repository of the “common understanding and practices” which are the measure of language. Webster’s Third New International Dictionary, Unabridged Edition (1971), defines “promote” as

[T]o contribute to the growth, enlargement, or prosperity of: FURTHER, ENCOURAGE * * * to bring or help to bring (as a business enterprise) into being * * * to present (merchandise) for public acceptance through advertising and publicity * * *

Certainly, plaintiff was a “promoter” of gambling as the word is commonly understood. Plaintiff indicated at trial that he had a sizable numbers clientele, at least four to eleven persons strong each working day. On either characterization of plaintiff’s activities, be it as agent or principal, plaintiff promoted gambling. ■ If one installs himself as an agent' for a gambling principal whose money is wagered against that of others and solicits, collects and turns bets in to his principal, the agent promotes gambling by being a cog in the gambling machine of the principal. In this capacity, one promotes gambling even though he is not himself the principal nor is his own capital at stake. Should an individual, acting on his own account and not as an agent for another, similarly take bets from all comers at stated odds on the happening of a contingent event (the role professed by Ricci), he is at least as culpable as a principal- as he would be as an agent doing precisely the same thing.

A final consideration supporting our view that plaintiff knew he was engaged in “promotion of gambling” is that plaintiff himself urged throughout his administrative appeal that the proper offense with which he should have been charged was “promotion of gambling” rather than “Conduct Unbecoming a Government Employee.” It certainly would be quixotic for us to introduce an element of uncertainty about what plaintiff was doing when plaintiff himself never was in doubt.

We hold the distinction between “gambling” and “promotion of gambling” to be sufficiently clear to withstand any “void for vagueness” challenge.

In conclusion, we find the CSC BAR decision sustaining plaintiff’s removal is neither arbitrary nor capricious, nor unsupported by substantial evidence, and that the Philadelphia Naval Shipyard and the Civil Service Commission Region and BAR have complied with all of the prescribed procedural safeguards due plaintiff. Moreover, the Navy regulations prohibiting “Gambling or unlawful betting in Navy premises” and “Promotion of gambling on Navy premises” are sufficiently clear and distinct to withstand a “void for vagueness” challenge under the due process clause of the fifth amendment to the Constitution.

In light of the foregoing, we conclude that plaintiff is not entitled to recover. The petition is hereby dismissed.

       We are indebted to Trial Judge C. Murray Bernhardt for his findings of fact, which have been adopted in their near entirety, and for his recommended opinion, though we have substituted our own in reaching a different result.

      . It should be noted that plaintiff never raised the “void for vagueness” issue with regard to the distinction between “gambling” and “promotion of gambling.” Rather, this issue was injected sua sponte by the trial judge. Although the propriety of such action is questionable in this case, we decline to reverse the trial judge on the technical grounds offered by defendant in its brief. We reverse the trial judge’s recommended opinion on the merits, opting for this course because we feel our recent decision in Reil v. United States, 456 F.2d 777, 197 Ct.Cl. 542 (1972), distinguishes the two offenses with sufficient clarity to withstand any void for vagueness challenge. Although we would not preclude a trial judge in an appropriate situation from raising an issue sua sponte, this is not such a case.

      . The third specification, relating to Ricci’s possession of an Irish Sweepstakes ticket when he was arrested by FBI agents at the Shipyard on March 15, 1968, was dropped.

      . When the penalty chosen by an agency is within the range of sanctions provided by applicable disciplinary regulations, the severity of the sanction imposed is within the discretion of the agency. De Nigris v. United States, 169 Ct.Cl. 619, 625 (1965); Grover v. United States, 200 Ct.Cl. 337, 353 (1973). This doctrine is firmly rooted in precedents of this court. In Grover, we held that a penalty authorized by regulation may be overturned if the sanction is so harsh that there is “an inherent disproportion between offense and punishment.” 200 Ct.Cl. at 353, citing Hef-fron v. United States, 405 F.2d 1307, 1312, 186 Ct.Cl. 474, 484 (1969). We cannot say as a matter of law that the penalty of dismissal is in this instance inherently disproportionate to the offense “promotion of gambling” nor has the severity of the penalty been challenged by plaintiff on this ground.

      . Six months after the CSC BAR decision upholding the dismissal, plaintiff was convicted (January 13, 1970) by a United States District Court in a non-jury proceeding of “unlawfully erect[ing], set[ting] up, openpng], mak[ing] and drawpng] a lottery and [being] unlawfully concerned in the management, conduct and carrying on a lottery” on a Federal reservation in violation of 18 U.S.C. § 13. The facts on which plaintiff was convicted were the same as those which had provided the basis for his removal from his job.

      . Even if we were to accept plaintiff’s statements as to his serving as his own bank for the numbers bets placed with him, this factor alone would not preclude a finding of “promotion of gambling” within the meaning of Reil. A full discussion of the distinction between “gambling” and “promotion of gambling” can be found in point III infra as it relates to the “void for vagueness” theory offered by the trial judge.

      . Plaintiff’s subsequent conduct lends support to this observation. To bolster his claim that his removal was not based upon substantial evidence, plaintiff alleges that he was acquitted of the charges brought against him in the United States District Court for the Eastern District of Pennsylvania. We note this is not the case. The trial judge found plaintiff was, in fact, convicted of one count of setting up an illegal lottery in violation of 18 U.S.C. § 13.

      . As pointed out in notes 4 and 6 supra, plaintiff was convicted in United States District Court of setting up an illegal lottery on a Federal reservation in violation of 18 U.S.C. § 13. The fact of this conviction was not before the CSC BAR when it sustained plaintiff’s removal because the criminal proceedings had not yet taken place. Nevertheless, the conviction, which was based upon the same evidence which led to plaintiff’s removal, provided an acid test for that evidence and, therefore, suggests strongly that plaintiff did, in fact, engage in the proscribed conduct with which he was charged by the Shipyard. We need not decide whether plaintiff is now collaterally estopped by his subsequent conviction from asserting he did not take numbers bets on behalf of others. We note only the outcome of plaintiff’s criminal trial lends additional credibility to the evidence upon which plaintiff’s removal was sustained.

      . As noted supra, this offense was listed as Item 19 of the Standard Schedule posted in every shop at the Philadelphia Naval Shipyard, for which removal was a permissible penalty.

      . Though plaintiff was a non-veteran, he was afforded all procedural rights that have been provided by Congress to veterans. See 5 U.S.C. §§ 7501, 7511, 7512, 7701 (1970).

      . In fact, plaintiff argued orally that the standards applied in Parker v. Levy, 417 U.S. 733, 94 S.Ct. 2547, 41 L.Ed.2d 439 (1974), should be the same as those employed here. Only after the Supreme Court decision in the Levy case adverse to military plaintiffs did plaintiff in this suit seek to distinguish between military and civilian settings. It should be noted that a reason given by the Levy Court for different treatment of military and civilian personnel is that “unlike the civilian situation, the Government is often employer, landlord, provisioner and law giver rolled into one. That relationship also reflects the different purposes of the two communities.” (417 U.S. p. 751, 94 S.Ct. p. 2559). Thus, in military settings, the less strict “economic affairs” standard can be applied to all cases, whereas in civilian settings, a stricter test is mandated in certain (first amendment) situations. Clearly, a proscription against gambling on a military installation by a civilian employee does not require a stricter standard.

      . In his exceptions to the trial judge’s report, plaintiff for the first time raised the further procedural argument that his removal without a prior trial-type hearing contravened due process. In his supplemental brief filed August 16, 1974, it is conceded that this issue has been conclusively decided, adversely to plaintiff, by the Supreme Court in Arnett v. Kennedy, 416 U.S. 134, 94 S.Ct. 1633, 40 L.Ed.2d 15 (1974). Therefore, this argument has been abandoned as futile.

      . The trial judge justified his conclusion in his report at page 16:
      “In reality the two offenses in question are partially fused, and the fade-point where one ends and the other begins is at best opaque. In a sense one ‘promotes’ gambling in the very act of gambling, whether he risks his own money or that of another, for without his participation the wager would not occur or, if it did, would not involve him. If one installs himself as an agent for a gambling principal whose money is wagered against that of others which is solicited, collected, and turned in to the principal by the agent, the agent promotes gambling in that he is a cog in the gambling machine of his principal, and in this capacity is not himself the principal nor is his capital at stake. Should this individual, acting on his own account and not as agent for a principal, take bets from all comers at stated odds on the happening of an event (the role professed by Ricci), he is both promoting and engaging in gambling at the same time, for whether those whose wagers he takes are one, a few, or many the effect of his conduct remains.”


source: Caselaw Access Project

author: RICH, Judge.

license: Public Domain

text:
    HYDRA MAC, INC., Appellant, v. MACK TRUCKS, INC., Appellee.
    Patent Appeal No. 74-559.
    United States Court of Customs and Patent Appeals.
    Jan. 9, 1975.

      Herman H. Bains, Minneapolis, Minn., attorney of record, for appellant.
    Donald W. Canady, Beverly Hills, Cal., G. Cabell Busick, Washington, D. C., attorneys of record, for appellee.
    Before MARKEY, Chief Judge, and RICH, BALDWIN, LANE and MILLER, Judges.
   RICH, Judge.

This appeal is from the decision of the Patent Office Trademark Trial and Appeal Board, 180 USPQ 147 (1973), sustaining the opposition by appellee, registrant of MACK for motor trucks and related goods since 1921, to the registration of appellant’s mark MITEY MAC for front-end loaders, first use of which was in 1970. Familiarity with the board’s opinion is assumed. We affirm.

We find no error in the board’s findings of fact or in its conclusion that concurrent use of the marks on the goods of the parties is likely to cause confusion or mistake, or to deceive. We add in support of the board decision only that the commercial impression intended by the user of a mark is entitled to very little consideration in resolving the issue of likelihood of confusion, etc., where, as the board here found, the actual impression created by the mark is different from the impression allegedly intended by the user; and that the high cost of the goods does not necessarily decrease the likelihood of confusion where the confusion found to be likely is not as to the products but as to their source. Contour Chair-Lounge Co. v. Englander Co., 324 F.2d 186, 51 CCPA 833 (1963). Here the goods of the parties are such as might reasonably be expected to emanate from the same source.

The decision of the board is affirmed.

Affirmed.


author: MILLER, Judge.

text:
    Application of SOCCER SPORT SUPPLY COMPANY, INC.
    Patent Appeal No. 74-550.
    United States Court of Customs and Patent Appeals.
    Jan. 9, 1975.

      Evelyn M. Sommer, New York City, atty. of record, for appellant; Murray Schaffer, New York City, of counsel.
    Joseph F. Nakamura, Washington, D. C., for the Commissioner of Patents; R. V. Lupo, Washington, D. C., of counsel.
    Before MARKEY, Chief Judge, and RICH, BALDWIN, LANE and MILLER, Judges.
   MILLER, Judge.

This appeal is from a decision of the Trademark Trial and Appeal Board, abstracted at 180 USPQ 527 (1973), affirming the refusal of registration on the principal register of appellant’s design mark for soccer balls:

We affirm.

The board based its decision on the mark being mere ornamentation, finding that appellant had not promoted its design as a trademark and that others used similar designs for their soccer balls.

Appellant’s evidence includes copies of advertisements in sales brochures, catalogs, and various publications; a portion of a license agreement with Rexall Drug and Chemical Company; three affidavits of college or public school soccer coaches; and one affidavit of a retailer of soccer equipment. Each affidavit recites that the affiant “has been familiar with the appearances and designs by which various producers have sold soccer balls” and associates appellant’s design only with appellant. Some of the advertisements and the license agreement indicate that appellant has a design patent on at least a related design, but the design patent is not of record.

Appellant argues that the mark consists of differently colored pentagons, while the solicitor urges that only black and white are indicated. We find it unnecessary to decide this issue, but note appellant’s statements in the record that the mark is a black and white design and point out that it would have been a simple matter for appellant to have clearly stated its intentions in the application. See In re Data Packaging Corp., 453 F.2d 1300, 59 CCPA 776 (1972); TMEP 807.06(a).

OPINION

An ornamental design can be inherently distinctive if it is arbitrary and distinctive and if its principal function is to identify and distinguish the source of the goods to which it is applied, ornamentation being merely incidental. In re Swift & Co., 223 F.2d 950, 42 CCPA 1048, (1955); In re Esso Standard Oil Co., 305 F.2d 495, 49 CCPA 1351 (1962). However, a design which is a mere refinement of a commonly-adopted and well-known form of ornamentation for a class of goods would presumably be viewed by the public as a dress or ornamentation for the goods. In re General Tire & Rubber Co., 404 F.2d 1396, 56 CCPA 867 (1969). Especially would this be so when such design is applied repetitively to the entire surface of the goods.

The record does not establish that appellant’s design is arbitrary and distinctive. Rather, it demonstrates that similar, if not identical, designs are used as ornamentation on soccer balls manufactured by others; also, that appellant’s design is a repetitive one applied to the entire surface of a soccer ball. Accordingly, we conclude that the design is not inherently distinctive.

Appellant’s design patent, without more, does not alter our conclusion. See In re World’s Finest Chocolate, Inc., 474 F.2d 1012 (CCPA 1973). Nor do we agree with appellant’s argument, citing that case, that it was error for the board to rely upon advertisements of competitors because appellant had no burden to negative or overcome the fact that other sellers use similar designs. That case merely held that an applicant has no burden to ascertain whether others employ a similar design, “at least in the absence of some probative evidence to the effect that they are.” Here, the evidence submitted by the examiner is probative.

Although appellant’s mark is not inherently distinctive, it would nevertheless be registrable under section 2(f) if it “has become distinctive” of appellant’s goods. However, the evidence is not persuasive of such a conclusion. The advertisements of record do not support an inference of distinctiveness inasmuch as the evidence fails to disclose information from which the number of people exposed to the design could be estimated — -such as circulation of the publications in which the advertisements appear, advertising expenditures, number of advertisements published, volume of sales of the soccer balls, and the like. Also, as noted by the board, such advertisements show appellant’s design coupled with the marks “WORLD DOT,” “WORLD CUP,” or “TEL-STAR.” Appellant makes the point that two trademarks can be used together, but appellant’s problem is that the advertisements (e. g., those with appellant’s soccer balls pictured alongside others having a different design) provide no indication of a nexus between appellant’s design per se and a single source. See In re Data Packaging Corp., supra.

Appellant argues that the license agreement with Rexall shows that the design is actively promoted as a trademark and is so viewed by the trade. The license agreement is of little probative value, however, inasmuch as it is incomplete and does not indicate the extent and manner of use of the design by Rexall.

Finally, appellant relies heavily upon the affidavits, arguing that the affiants are both purchasers of soccer balls and “professionals” whose voices are equivalent to a large class of purchasers. The solicitor responds that the affidavits are entitled to little weight because they are “form paragraph affidavits” and are not from the “purchasing public.” That the affidavits were obviously drafted by appellant’s attorney does not justify ignoring them. In re Data Packaging Corp., supra. Moreover, the soccer coaches would be expected to be purchasers of soccer balls and, therefore, do constitute a segment of the purchasing public. The affidavit of the retailer, which states that he associates appellant’s design only with appellant, should also be considered for what might be inferred about consumer reaction. See In re Hollywood Brands, 214 F.2d 139, 41 CCPA 1001 (1954). However, we cannot agree with appellant that the affiants are equivalent to a large class of purchasers. Giving due consideration to the four affidavits, they do not establish an association of appellant’s design with a single source by other than a small number of purchasers.

In view of the foregoing, we hold that appellant’s design mark was properly refused registration on the principal register.

The decision of the board is affirmed.

Affirmed.

      . Application serial No. 268,106, filed March 31, 1967, alleging first use in commerce in January, 1963.

      . Neither the opinion nor the briefs of the parties specify what section(s) of the statute is relied upon. However, both parties argue the issues of whether the mark is inherently distinctive or has acquired secondary meaning. If the mark is neither inherently distinctive nor possessed of secondary meaning (i. e., has become distinctive), it would not be a “trademark” which the owner may register in the Patent Office under section 1 of the Lan-ham Act (15 U.S.C. § 1051). Nor would it meet the requirements of the preamble of section 2 (15 U.S.C. § 1052)—
      No trade-mark by which the goods of the applicant may be distinguished from the goods of others shall be refused registration on the principal register on account of its nature unless . . .. [Emphasis supplied.]
      and of the definition of “trademark” in section 45 (15 U.S.C. § 1127)—
      The term “trade-mark” includes any word, name, symbol, or device or any combination thereof adopted and used by a manufacturer or merchant to identify his goods and distinguish them from those manufactured or sold by others.
      Section 2(f) (15 U.S.C. § 1052(f)) permits registration of a mark which, although not inherently distinctive, “has become distinctive of the applicant’s goods in commerce.”

      . This court has pointed out that the judicially developed concept of “secondary meaning,” codified by section 2(f) (15 U.S.C. § 1052(f)), relates to descriptive, geographically descriptive, or surname marks which earlier had a primary meaning which did not indicate a single source and were, therefore, unregistra-ble because of section 2(e). Coca-Cola Co. v. Seven-Up Co., 497 F.2d 1351 (CCPA 1974). Additionally, section 2(f) has been applied to permit registration of a mark consisting solely of a design and, therefore, not within the purview of section 2(e). In re Schenectady Varnish Co., 280 F.2d 169, 47 CCPA 1156 (1960). This is not to suggest that generic and functional marks which have become distinctive are registrable under section 2(f) since registration of such marks is barred for reasons of public policy. In re Deister Concentrator Co., 289 F.2d 496, 503-504, 48 CCPA 952, 965-966 (1961).


text:
    The CONDE NAST PUBLICATIONS, INC., Appellant, v. MISS QUALITY, INC., Appellee.
    Patent Appeal No. 74-554.
    United States Court of Customs and Patent Appeals.
    Jan. 16, 1975.
    Alex Friedman, New York City, atty. of record, for appellant. Blum, Mosco-vitz, Friedman & Kaplan, New York City, of counsel.
    Leon Edelson, Philadelphia, Pa., atty. of record, for appellee. Edelson & Udell, Philadelphia, Pa., of counsel.
    Before MARKEY, Chief Judge, and RICH, BALDWIN, LANE and MILLER, Judges.
   MILLER, Judge.

This appeal is from the decision of the Trademark Trial and Appeal Board dismissing appellant’s opposition No. 50,338, filed December 31, 1969, against application serial No. 309,312, filed October 9, 1968, by Stylecraft Frocks, Inc., for registration of COUNTRY VOGUES as a trademark for ladies’ and misses’ dresses, use since September 20, 1968, being alleged. Appellee is assignee of Stylecraft Frocks, Inc. Appellant is owner of the trademark VOGUE for a magazine and alleges continuous use and registration thereof since 1908. We affirm.

The issue is whether appellee’s mark so resembles appellant’s mark as to be likely, when applied to appellee’s goods, to cause confusion or mistake, or to deceive for purposes of 15 U.S.C. § 1052(d).

From the parties’ stipulation of facts, it is recognized that VOGUE magazine is and always has been a leading fashion magazine; that it is distributed throughout the United States and Canada, usually at seventy-five cents a copy; that average circulation from 1960 through 1971 ranged from 423,000 to over 508,000 per month; and that appellant’s annual promotion costs for the magazine have increased from $467,340 for 1960 to over $1 million for 1968 through 1971.

Appellant’s 1948 registration indicates that VOGUE magazine is published twenty times yearly. An examination of the March 15, 1972, issue exhibited by appellant shows that about half its pages are devoted to advertising or discussion of women’s apparel and that the “FASHION” section comprises displays of apparel for “The Weekend Spirit,” “City Weekend,” “Sun Weekend,” and “Country Weekend.” Outfits pictured for “Country Weekend” have “Vogue Pattern” numbers, and approximate prices at various stores are indicated for clothes shown for all the “Weekends.” Exhibits of promotional material for the magazine include a special VOGUE issue (“The New York Collections Issue”), showing advertisements consisting of window displays, predominantly of dresses and women’s outer apparel; a brochure advertising a December issue of the magazine and stating that it will include “a panorama of fashion and its accessories”; and a Fabric Chart for Resort-Spring-Summer 1970 from VOGUE.

Appellant argues that “the public would be reasonably likely to believe that applicant’s dresses have some association or connection with opposer’s well-known VOGUE fashion magazine ..” It cites several cases to support its contention that a natural relationship exists between a fashion magazine and wearing apparel, such as dresses, but only one of these is apposite, namely: In re Montreal Dress & Sportswear Mfrs.’ Guild, 166 U.S.P.Q. 278 (TTAB 1970). There the board affirmed a refusal to register ELAN, which it considered an “arbitrary” mark, for a fashion magazine because of likelihood of confusion with a virtually identical mark (ELAN in script) registered for women’s apparel. In Jos. S. Cohen & Sons Co., v. Hearst Mags., Inc., 220 F.2d 763, 42 CCPA 836 (1955), the court affirmed the Patent Office decision granting a petition by the owner of Good Housekeeping magazine to cancel registration of Good Housekeeper, for women’s misses’, and children’s dresses, frocks, pajamas, etc. Nowhere did the court mention any relationship between a fashion magazine and wearing apparel, and the court was persuaded by the fact that the well-known Good Housekeeping Guarantee Seal (applied to articles, including dresses, advertised in the magazine) was applied to goods identical in kind with those of Good Housekeeper. In Conde Nast Publications, Inc. v. American Greetings Corp., 329 F.2d 1012, 51 CCPA 1176 (1964), the court reversed the board and sustained the opposition to registration of VOGUE for greeting cards. Conde Nast Publications, Inc. v. Vogue School of Fashion Modelling, Inc., 105 F.Supp. 325 (S.D.N.Y.1952), was a suit against a modeling school which was employing the word “Vogue.” The statement of the court, “In the world of fashion, plaintiff [owner of VOGUE magazine] has acquired a common law right to its exclusive use,” is followed by the statement: “The extent and boundaries of that use covers the range of ordinary associations that is formed in the public mind; it includes fashion modeling and schools where fashion modeling is taught.” Neither of these statements would necessarily hold today, so many years later. See Old Grantian Co. v. William Grant & Sons, Ltd., 361 F.2d 1018, 53 CCPA 1257 (1966).

Appellee argues that the term VOGUE is “weak” as applied to wearing apparel and cites various cases for the proposition that protection accorded “weak” or “descriptive” marks is “narrow.” Although this court has often referred to the “scope of protection,” “degree of protection,” and “latitude of protection” to be accorded marks — “limited” in the case of “weak” marks and “broad” or “wide” in the case of “strong” marks, it has, nevertheless, made it clear that the decisive question is whether there is a likelihood of confusion, mistake, or deception for purposes of 15 U.S.C. § 1052(d). Therefore, if there is such likelihood, that ends the matter whether appellant’s mark be termed “weak” or “strong.” In Standard International Corp. v. American Sponge and Chamois Co., 394 F.2d 599, 600, 55 CCPA 1155, 1156 (1968), this court pointed out that “a mark which is initially a weak one may, by reason of subsequent use and promotion, acquire such distinctiveness that it can function as a significant indication of a particular producer as a source of the goods with which it is used.” Proof is needed to persuade that such distinctiveness has been attained, however; whereas no such proof is required where the initial mark is arbitrary and distinctive. Here, as related above, there is substantial proof of a relationship between VOGUE magazine and ladies’ and misses’ wearing apparel.

Appellee relies heavily on Conde Nast Publications, Inc. v. Glamorise Foundations, Inc., 171 U.S.P.Q. 174 (TTAB 1971). Unfortunately, this is án unpublished opinion, reported only in digest form, and is not of record. In its opinion below, the board merely stated:

“GLAMOR — X” for foundation garments was held not to conflict with “GLAMOUR” for a fashion magazine.

Appellee further relies on some sixty-nine third party registrations of marks in which “Vogue” appears in one form or another as evidence showing “ordinary usage” of the word “Vogue.” However, most of these registrations either have been canceled or expired. There is no evidence of actual use, and this court has made it clear that, without such evidence, third party registrations are entitled to little weight on the question of likelihood of confusion. Stana-dyne, Inc. v. Lins, 490 F.2d 1396 (CCPA 1974). Appellant argues that “most” of the third party registrations relied on by appellee were cited in Conde Nast Publications, Inc. v. American Greetings Corp., supra, but analysis indicates that only four of the sixty-nine were cited there. Appellant further argues that the board erred in giving undue weight to the third party registrations and took no cognizance of the fact that all of them issued after the issue date of appellant’s first registration of VOGUE. However, it appears that the board cited the third party registrations primarily to show the meaning of “Vogue” in the same way that dictionaries are used. See Hancock v. American Steel & Wire Co., 203 F.2d 737, 40 CCPA 931 (1953). Also, we have been given no reason, and no authority has been cited, why such registrations would carry any less weight in assessing the meaning of VOGUE because they issued after 1908.

In its opinion, the board said:

It is our opinion that persons encountering misses’ and ladies’ dresses under the mark “COUNTRY VOGUES” in the marketing environment generally surrounding the sale of goods of this type would in the context in which it is used attribute to the term “VOGUES” its normal and well-known meaning and would not, in any way, associate this apparel with the publisher of “VOGUE” magazine.

We agree. According to Webster’s Third New International Dictionary (1971), “vogue” has a meaning of “something in fashion at a particular time,” as a noun, or “being currently or temporarily in vogue: FASHIONABLE,” as an adjective. Obviously VOGUES is not an adjective. COUNTRY VOGUES and VOGUE do not look or sound alike. The only similarity between them is that VOGUE is part of the mark COUNTRY VOGUES, and the dissimilarities between the marks, viewed in their entireties, outweigh this similarity sufficiently to leave no doubt.

Having considered the entire record, along with the briefs and arguments of the parties, we hold that COUNTRY VOGUES does not so resemble VOGUE as to be likely, when applied to appellee’s ladies’ and misses’ dresses, to cause confusion or mistake, or to deceive.

The decision of the board is affirmed.

Affirmed.

      . 180 U.S.P.Q. 149 (1973).

      . Registration No. 69,530, issued June 16, 1908, and twice renewed; registration No. 504,006, issued November 16, 1948, and renewed.

      . Appellee makes the point that the record contains no evidence of actual confusion, but we note that only about one year elapsed between the alleged date of first use of COUNTRY VOGUES and filing of the opposition. Also, evidence of actual confusion is not required by 15 U.S.C. § 1052(d). In re Calgon Corp., 435 F.2d 596, 58 CCPA 830 (1971).

      . For example Sure Fit Products Co. v. Saltz-son Drapery Co., 254 F.2d 158, 45 CCPA 856 (1958); J. Kohnstam, Ltd. v. Louis Marx & Co., 280 F.2d 437, 47 CCPA 1080 (1960). Ap-pellee stresses Vogue Co. v. Thompson-Hudson Co., 300 F. 509 (6th Cir. 1924), where the court refused to grant relief for trademark infringement based merely on defendant’s use of the word “Vogue” in “Vogue Hats” and said that “Vogue” was a word which “all are at liberty to use.” This could scarcely bind events occurring over the past fifty years. See Old Grantian Co. v. William Grant & Sons, Ltd., supra. Moreover, this case involved a law different from that with which we are here concerned.

      . Appellee argues that doubt is resolved in favor of the applicant, but here the opposite is true since appellee is the newcomer. In re Pneumatiques, Caoutchouc Manufacture, 487 F.2d 918 (CCPA 1973). Appellee also argues that dismissal of a cancellation proceeding brought by appellant against appellee is res judicata, citing Conde Nast Publications, Inc. v. Miss Quality, Inc., 170 U.S.P.Q. 364 (TTAB 1971); but the trademark involved there, JUNIOR VOGUES, is not the same as COUNTRY VOGUES, so that res judicata is inapplicable.


author: NICHOLS, Associate Judge.

text:
    LAWYERS’ TITLE GUARANTY FUND, Plaintiff-Appellant, v. UNITED STATES of America, Defendant-Appellee.
    No. 74-1835.
    United States Court of Appeals, Fifth Circuit.
    Feb. 14, 1975.
    Fletcher G. Rush, Orlando, Fla., Randolph W. Thrower, Atlanta, Ga., Kenneth Liles, Laurens Williams, Washington, D. C., for plaintiff-appellant.
    Scott P. Crampton, Asst. Atty. Gen., Daniel Perri, Atty., Meyer Rothwacks, Chief, Appellate Sec., Bennet N. Hollander, Atty., Tax Div., Dept, of Justice, Washington, D. C., Kendell W. Wherry, Asst. U. S. Atty., Orlando, Fla., Richard Farber, Donald H. Olson, Attys., Tax Div., Dept, of Justice, Washington, D. C., John L. Briggs, U. S. Atty., Jacksonville, Fla., for defendant-appellee.

      Before GEWIN and SIMPSON, Circuit Judges, and NICHOLS, Associate Judge.

       Of the U. S. Court of Claims, sitting by designation.

   NICHOLS, Associate Judge.

Appellant, Lawyers’ Title Guaranty Fund, (hereinafter Fund) sued in the United States District Court after proper requests for refund, to recover United States income taxes alleged to have been overpaid for the short taxable period September 1, 1966 through December 31, 1966, and for calendar 1967. The District Judge upheld the Internal Revenue Service position and dismissed the action with costs. We reverse.

The single issue is whether sums credited by appellant as commissions to member lawyers for writing policies of insurance, are deductible when credited in face of the fact they are not normally payable for seven years, and possibly not then. Appellant is on the accrual basis and the issue may also be said to be whether:

* * * all the events have occurred which determine the fact of the liability and the amount thereof can be determined with reasonable accuracy. * * * (Treasury Regulation on Income Tax, § 1. 461 — 1 (a)(2)). See, United States v. Anderson, 269 U.S. 422, 441, 46 S.Ct. 131, 70 L.Ed. 347 (1926).

The pertinent rule of law is not seriously in dispute, but the problem is how to apply it to a set of facts which, though largely stipulated below, is nevertheless new to the reported case law, and quite intricate.

Appellant commenced business on January 1, 1948, having been set up under a declaration of trust by a group of Florida lawyers engaged in the examination and approval of title to real estate. Membership is open to any Florida lawyer who meets requirements as to his qualifications. He is authorized to issue in the name of the Fund guarantees of opinions rendered by him with respect to real estate titles. By accepting such a guarantee or policy, the client, i. e., the insured, agrees to look solely to the Fund for satisfaction of any claim based on a title defect, not to the lawyer member individually. Members must make an initial contribution to capital, latterly $200, when admitted, and thereafter, each must contribute additional sums, based on the amount of risk to which he has committed the Fund. At one time this contribution was set at 25% of each attorney’s fee earned, more recently a percentage of the policy amount. Apparently there is no provision for payment of a premium directly by the client, but of course it is passed on to him as part of the fee.

The appellee originally treated appellant as a business corporation for income tax purposes. It regarded all the above contributions as made to capital, restricting taxable income to investment income. Reporting under this system, appellant always showed a loss and had no income tax liability. Appellant repeatedly initiated discussions with the IRS as to its tax status, resulting finally in a ruling effective September 1966, reflecting that from that date appellant would be taxed as an insurance company and the additional contributions described above would be deemed premium income under IRC of 1954, § 832(b). Up to a point specified, amounts withdrawn by members would be dividends. The remainder above this point would be deductible as commissions paid to members in their capacity as independent sales representatives.

Sections 35-41 of the Trust Instrument, as amended October 4, 1966, effective September 1, are vital to the controversy and are appended as Exhibit A. It will be noted that Sec. 35 set up the formula by which the so-called commissions are to be calculated, the “Current Allowance Accounts”. Sec. 37 tells how Fund losses due to members’ negligence shall be offset. The offset applies first against the Current Allowance Account, commencing with the oldest credit. Next the Capital Account and next the Deferred Allowance Account are to be tapped. By Sec. 39 no payment to a member is permitted that would reduce the Fund assets below the amount it is required to maintain by law, plus $1,000,000. Sec. 40 is the controversial provision for payment after seven years of the “unimpaired credit balance” of the Current Allowance Account.

Payments out of the Current Allowance Account were delayed for 1966, ’67 and ’68, one year in each case, because of Sec. 39.

As of December 31, 1966, the Fund had 2,911 active members and 3,213 in all. As of December 31, 1967, the figures were 2,967 and 3,296. In the whole history of the Fund up to December 31, 1971, 83 members had charges made against their accounts for negligence and the total number of claims was 108. One membership was terminated due to negligence or misconduct. This member was also disbarred. Four memberships were terminated for non-payment of bar dues. The Fund substantially reinsures its own risks. It had aggregate losses in excess of the Lloyd’s reinsurance deductible amount of $100,000 in only one year. This was a claim in 1963 because of a forgery, and it was closed in 1971 by payment of $40,474 by Lloyds. The Fund has never suffered a net overall economic loss and on December 31, 1966, and December 31, 1967, the aggregate net credits to members’ Capital Accounts were $475,482 and $554,353, respectively. The trial court agreed with appellant that any chance “of the Fund being exhausted by the demands upon it is indeed remote.” The losses charged to members’ accounts due to their negligence up through December 31, 1969, to-talled $42,900, only 1.08 per cent of the amounts accrued in the same period for members’ Current Allowance Accounts— $3,975,200. The Fund does not pay any selling commissions or have any other selling expenses except the above described so-called commissions.

Though the record does not furnish details, it is apparently assumed as vital to the soundness of the plan above described that under Florida rules relating to prescription and adverse possession, the likelihood is remote that any title defect will cause serious pecuniary loss if it surfaces more than seven years after a transfer of paper title.

The essentials of the IRS position were set out in their National Office’s Technical Advice Memorandum of August 12, 1966:

The provisions of subchapter L of the Code provide that in general all insurance companies shall be on the accrual method of accounting. Under an accrual method, deductions are allowable for the taxable year in which all events have occurred which establish the fact of the liability giving rise to such deduction and the amount thereof can be determined with reasonable accuracy. See section 1.446— l(c)(ii) of the Income Tax Regulations; and United States v. Anderson, 269 U.S. 422 [46 S.Ct. 131, 70 L.Ed. 347] (1926) * * *.
In the instant case, the amounts credited to a member lawyer’s account are subject to reduction for payment of losses due to the member’s negligence. Such amounts are also in effect subject to reduction pro rata for losses not due to a member’s negligence, and for operating expenses of the Fund, in the absence of other funds from which such obligations could be paid, (i. e., in a loss year). Amounts returnable to members clearly cannot be fixed or determinable as long as they remain subject to reduction by payment of outstanding obligations of the Fund. Since this contingency attaches as long as particular amounts are not withdrawable from the Fund, amounts in the members’ accounts cannot constitute accrued items until actually paid or become payable to the members.

When one gives the IRS position the careful consideration it deserves, it will be apparent that, according to the IRS, the Fund is not liable to pay the commissions at all events, because of contingencies of two entirely different kinds. One set rises out of the possibility the member may have been negligent and made the Fund liable to pay losses caused by his own negligence. The other set rises out of the possibility that losses from any other cause may so impair the assets of the Fund that the commissions will not be paid.

With regard to the contingency of losses due to the member’s own negligence, they are offset directly against the Current Allowance Account, including the amount of it not yet payable. The trial court found that the intent of the 1966 amendments were that in case of such a loss, the obligation to pay the member would be accelerated to include moneys in the Account for less than seven years, and the member would be paid pro tanto by applying these moneys to satisfy the indebtedness due to his negligence.

We may note that the incurrence of this offset liability is entirely within the control of the member, since he can refrain from negligence or he can obtain malpractice insurance, or both. He will never confront an offset due to circumstances beyond his control. •

We also note that the offset is not an intrinsic defect in the claim to the commission itself. The member may fully earn a commission by non-negligent performance, and yet may not be paid it because of his real or alleged negligence in other wholly unrelated transactions. In this regard the Fund’s offset claim appears to be a true offset and not a partial or complete defeasance of the commission right itself. Appellant rightly calls our attention to the right which belongs to every creditor, to apply the unappropriated moneys of his debtor, in his hands, in extinguishment of the debts due to him. United States v. Munsey Trust Co., 332 U.S. 234, 239, 67 S.Ct. 1599, 91 L.Ed. 2022 (1947); United States v. Cohen, 389 F.2d 689, 690 (5th Cir. 1967). Appellant represents itself as subrogated to the client’s claim against a negligent lawyer, but it would seem the members of the fund, in the circumstances in which they have placed themselves, owe just as high a duty of care to the Fund as they do to their clients. Whether the Fund latches on to unpaid commissions as subrogee to the injured client, or directly, appears to us an academic issue we do not advance ourselves very far by debating. The decisive thing is, the member’s claim to his commissions is not a contingent claim dependent on perfection by the happening of the contingency. Rather, it is perfect and vested from the beginning or at least from the calculation of the credit at the close of the fiscal year per Sec. 35. Then if a loss results from the member’s negligence, most likely in a wholly unrelated transaction, the credit is divested to make the loss good, not first the credit for the commission negligently earned, but “beginning with the oldest credit.” (Emphasis supplied). Sec. 37(b) 1. It is a pure offset, and absent any Sec. 37 in the agreement, we would suppose some such offset right would have been implied by law. We will demonstrate infra, the significance of the difference between an imperfect right subject to later perfection, a condition precedent, and a vested right subject to divestment, in the application of the “all events” test.

With respect to costs and losses not due to the member’s negligence, or not recoverable from the negligent member, we note that so far as incurred in the year the commission was earned, they are deducted from the Fund’s income in calculation of the aggregate of member’s Current Allowance, per Sec. 35. Once the figure is so fixed, it cannot be deemed to be still subject to partial or entire defeasance by the same costs and losses. Those of other years will normally come before the commissions for those years in the same manner. The entire scheme requires the creation of a Fund which is enormously solid and strong with respect to possible losses not covered by reinsurance. Behind the scheme, too, stands the integrity of the Bar. The normal unwillingness of lawyers to do shoddy work for their clients is here strongly reinforced by the large sums members have in practical effect pledged to secure their faithful performance of their duties in title examination. Members can reasonably expect that hitherto, as in the past, losses due to negligence will be the rare exception. We think the possibility that a non-negligent member will lose his commissions once credited under the See. 35 procedure, by reasons of losses, is too remote to be noticed under accrual accounting, but if it should occur it is still of the nature of a condition subsequent. The prohibition in Sec. 39 against payouts to members that would reduce assets below what it is required to maintain by law, plus $1,000,-000, by its own terms effects merely a deferral of payment, not a cancellation of liability.

The parties stipulated that the amount claimed as a deduction for the short period ending December 31, 1966 — $21,-613.46, represented fair and reasonable compensation for the underwriting services performed by members for that period. Similarly, the amount claimed for 1967 — $104,473.93, was fair and reasonable compensation for that period.

Section 832(c)(1) of the IRC of 1954, provides that insurance companies may deduct “all ordinary and necessary expenses incurred as provided in section 162 * * * ” Section 162(a)(1) includes as a deduction for business expenses:

a reasonable allowance for salaries or other compensation for personal services actually rendered; * * *

The legal issue therefore is, whether the taxpayer could deduct the so-called commissions here involved, under the accrual system of accounting, in face of the delays and restrictions upon actual payment, analyzed above. By the regulation quoted at the beginning of this opinion, this turns on whether all the events have occurred which determine the fact of liability, and the amount can be ascertained with reasonable accuracy. We turn to the case law.

In Comm’r of Internal Revenue v. Hansen, 360 U.S. 446, 79 S.Ct. 1270, 3 L.Ed.2d 1360 (1958), the taxpayers were automobile dealers on the accrual basis, who sold their customers’ installment paper to finance companies. The latter withheld a portion of the purchase price of the paper, usually 5%, to secure the dealers obligation to make the finance company whole in case of non-payment by the buyer of the car, and to repurchase the car from the finance company if it had to be repossessed. Such sums were put in reserve accounts in the dealer’s name and paid over when no longer needed for the finance company’s security. The dealers would have excluded money in these reserve accounts from their gross income when not actually paid in the taxable year. The Commissioner’s long established policy was to the contrary. The Supreme Court sustained him. It pointed out that the money when put in the account was going to be received in all events and “w[as] vested in and belonged to the respective dealers * * * ”, (at 463, 79 S.Ct. at 1280). The dealers were deemed to have agreed to accept payment either in cash or in offset of liabilities.

The relationship of this case to the issues before us hardly needs to be pointed out.

In W. S. Badcock Corp. v. Commissioner of Internal Revenue, 491 F.2d 1226 (5th Cir. 1974), the taxpayer sold furniture through dealers on consignment, generally on credit. It accrued the purchase prices, when unpaid, and the selling commissions also. The IRS would have disallowed the latter while letting the former stand. This court held for accrual of the commissions in face of language in the dealer contract, seeming to say that commissions were not “earned or due” until the furniture was paid for. It viewed the language as not meaning exactly what it said, for reasons that need not here concern us, and relied on the course of dealing between the parties showing that the dealers customarily dealt with the unpaid commissions as their own property. The court rejected the view that the right to commissions was “contingent” on collections. The court cites, among other authorities, Central Cuba Sugar Co. v. Commissioner of Internal Revenue, 198 F.2d 214, 217 (2d Cir.), cert. denied, 344 U.S. 874, 73 S.Ct. 167, 97 L.Ed. 677 (1952). This case involved accrual of brokerage commissions that might be forfeited but this was viewed as a “condition subsequent.” See other cases cited in Badcock, 491 F.2d fn. 4 at 1228. The “all events” test is recognized but regarded as not failed merely because a “condition subsequent” may interfere with actual payment.

In those cases, unlike here, the “condition subsequent” that thwarts payment of the commission may be something outside the control of the payee. Moreover, the offsets here involved may be regarded as not even conditions subsequent inasmuch as they do not necessarily relate at all to the transactions in which the commissions were earned. These differences make the instant case a fortiori after Badcock.

In all these cases the decision for accrual is aided by the fact that only by accruing the selling expense can the cost of selling be matched up with the sales price, and only by such matching up can we achieve an accurate reflection of the taxpayer’s income on an annual basis. Gillis v. United States, 402 F.2d 501 (5th Cir. 1968).

Appellee in this case may be troubled by the long time the Fund detains the commissions and their use meanwhile as security to hold the Fund harmless in case of negligence of the member. It has not, however, cited any regulation or case authority that requires a difference of treatment on this account. In Hansen, supra, delay in payout times of up to 60 months is treated as of no concern. In Washington Post Co. v. United States, 186 Ct.Cl. 528, 405 F.2d 1279 (1969), it was held that the Post could accrue accounts it set up for its dealers as a group, though payment would not be made for many years and the time of payment was uncertain. Individual dealers could forfeit their interests, but then they were divided among other dealers, and did not revert to the paper. Since the liability was fixed, it was held that possible delays in payment were not fatal under the “all events” test, which was, as in all well considered cases in this area, assumed as the starting point of analysis. That case is followed and cited under somewhat similar facts in Lukens Steel Co. v. Commissioner of Internal Revenue, 442 F.2d 1131 (3rd Cir. 1971).

In summary, we think the case law is that the tax accrual of a liability to pay commissions to a selling agent is not defeated by the right of the principal to defer actual payment to secure payment of liabilities the selling agent may incur to the principal in unrelated transactions, and to offset the commissions with such liabilities if incurred. The law also is that a bare possibility of non-payment or delay in payment because of the principal’s financial condition does not defeat accrual either. We see this result as sound beyond question, under accrual accounting.

It follows that the decision below must be and is reversed. Because of other adjustments, the amount of the disallow-ances here dealt with are not claimed as lump sums and the case must be remanded for further proceedings in light of the conclusions stated herein, including determination of the amounts due and owing by appellee to appellant, for the taxable years involved, and interest as provided by law.

Reversed and remanded.

APPENDIX

EXHIBIT A

Section SS. CURRENT ALLOWANCE ACCOUNTS: Each Member shall have a Current Allowance Account to which shall be credited annually an amount in respect to his Additional Contributions for that year, determined as follows. The aggregate of all Members’ Current Allowances for each year shall be an amount equal the excess of (a) the sum of The Fund’s income for the year from all sources, including amounts released during the year from The Fund’s unearned premium reserve, but excluding the unearned portions of Additional Contributions on guarantees and policies written during the year which have been added to The Fund’s unearned premium reserve, over (b) the sum of (1) The Fund’s expenses for the year, including all amounts computed under Section 36 (whether or not credited to Members’ Deferred Allowance Accounts) but excluding the Members’ Current Allowances provided for in this Section, (2) The Fund’s claim losses for the year, (3) such percentage of the aggregate net credits to Members’ Capital Accounts at the end of the year as the Trustees from time to time shall have determined but which shall not be less than seven percent (7%) nor more than ten percent (10%), and (4) the net gain or loss realized by The Fund on disposition of any assets during the year. The aggregate amount of all Members’ Current Allowances for such year as so determined shall be allocated among and credited to the Members’ respective Current Allowance Accounts in the proportion which each Member’s Additional Contributions for guarantees and policies written by him during the year bears to the aggregate of all such Additional Contributions.

Section 36. DEFERRED ALLOWANCE ACCOUNTS: Each Member shall have a Deferred Allowance Account to which shall be credited, as of the close of each year, an amount equal to the proportion of the aggregate amounts released during the year from The Fund’s unearned premium reserve which said Member’s Additional Contributions for guarantees and policies written by him during the year in respect of which such released amounts originally were added to said reserve bears to the aggregate of all Additional Contributions of all Members for guarantees and policies written during the year in which such released amounts originally were added to such reserve.

NOTE: (a) The statutory reserve period at the time of adoption of this Section 36 is ten years.
(b) Although the amount of Deferred Allowances will be determined each year commencing with the year 1966 for the period September 1, 1966, through December 31, 1966, and for each year thereafter for The Fund’s accounting purposes and the purposes of Section 35(B)(1), no Deferred Allowances will be credited to Members’ Deferred Allowance Accounts under this Section until December 31, 1976, at which time the unearned premium reserve for the period September 1, 1966, through December 31, 1966, will be released, because the statutory unearned premium reserve period is 10 years and amounts reflecting the unearned premium reserves for all periods prior to September 1, 1966, already, prior to the effective date of this Section 36, either have been refunded to Members or credited to other, previously existing, accounts of Members.

Section 37. LOSSES:

(a) If a loss occurs from a cause that would not result in civil liability of the Member who wrote the guarantee or policy under which the loss occurs, and the Claim Committee so finds, the entire loss shall be borne by The Fund.

(b) If a loss occurs from a cause other than set forth in (a) above, the loss shall be offset against the credits in the various Accounts of the Member who wrote the guarantee or policy in the following sequence:

1. Member’s Current Allowance Account beginning with his oldest credit.
2. Member’s Capital Account.
3. Member’s Deferred Allowance Account.

(c) If the Claim Committee determines that a loss occurred from a combination of causes set forth in (a) and (b) above, it may apportion the loss between The Fund and the Member.

(d) Any recovery of a loss, by subrogation or otherwise, less the expense of the recovery, shall be applied, in inverse sequence to that stated in paragraph (b) above, to restore any amount charged against the Member on account of the loss, and any excess shall belong to The Fund; provided, if a loss has been apportioned under (c) above, recoveries shall be applied in the same ratio as they were apportioned under (c) above.

Section 38. ALLOCATION OF NET EARNINGS: DIVIDENDS: As of the end of each year, the net earnings of The Fund for the year shall be allocated among the Members in proportion to their net credit balances in their respective Capital Accounts. The amounts so allocated to the Members either shall be distributed to the Members as dividends, in whole or in part, or shall be credited to the Members’ respective Capital Accounts, as the Trustees annually shall determine; provided, if any amount so to be credited would increase any Member’s Capital Account beyond any maximum which the Trustees may have established, such excess shall be distributed to such member.

NOTE: The term “net earnings of The Fund” means the excess of (A) The Fund’s income from all sources (including amounts released during the year from the unearned premium reserve but excluding the unearned portions of Additional Contributions on guarantees and policies written during the year which have been added to The Fund’s unearned premium reserve) over (B) all of The Fund’s claims losses and expenses for the year, including all amounts credited to Members’ Current Allowance Accounts and all amounts computed under Section 36 (whether or not credited to Members’ Deferred Allowance Accounts).

Section 39. INTEGRITY OF FUND: The integrity of The Fund must be maintained. Any payment to or withdrawal by any Member, which, if made, would reduce The Fund’s assets below the amounts which it is required by law to have and maintain plus one million dollars ($1,000,000) shall be deferred until making it will not reduce The Fund’s assets below such sum. Any discretionary authority in the Trustees to make any payments or distributions or to allow any withdrawals shall be exercised by the adoption from time to time of procedural policies applicable to all similar circumstances while they are in effect, and shall be subject to the above limitation.

Section 40. PAYMENT OF MEMBERS’ CURRENT ALLOWANCES: The Trustees may, of their own accord, pay to the Members all or any portion of the credit balances that have existed in their Current Allowance Accounts for seven years; provided, subject only to Section 39, if the Trustees do not cause the same to be promptly paid, any Member, former Member, or the legal representatives, heirs, legatees or distributees of any deceased Member, may at any time withdraw all or any part of any unimpaired credit balance that existed in such Member’s Current Allowance Account seven years before the application for withdrawal is made.

Section 41. PAYMENT OF MEMBERS’ DEFERRED ALLOWANCES: The Trustees may at any time, of their own accord, pay to the Members all or any portion of the credit balances in their Deferred Allowances Accounts; provided, subject only to Section 39, if the Trustees do not cause such credit balances to be promptly paid, any Member, former Member, or the legal representatives, heirs, legatees or distributees of any deceased Member, may at any time withdraw all or any part of any unimpaired credit balance in such Member’s Deferred Allowance Account.


author: WILLIAM E. DOYLE, Circuit Judge.

text:
    UNITED STATES of America, Plaintiff-Appellee, v. Joseph B. McDEVITT, Defendant-Appellant.
    No. 74-1182.
    United States Court of Appeals, Tenth Circuit.
    Argued Oct. 23, 1974.
    Decided Dec. 26, 1974.

      Don J. Svet, Asst. U. S. Atty., Albuquerque, N. M., for plaintiff-appellee.
    Frank Oliver, Chicago, 111., for defendant-appellant.
    Before SETH, BARRETT and DOYLE, Circuit Judges.
   WILLIAM E. DOYLE, Circuit Judge.

Defendant was convicted of possession of marijuana with intent to distribute it in violation of 21 U.S.C. § 841(a)(1). The defendant moved to suppress the large quantity, 800 pounds, which in the course of a subsequent search, had been discovered in the bed of the rented truck which he had been driving.

The trial court after hearing arguments denied the motion to suppress and this is our problem on appeal. The evidence presented in the motion to suppress is virtually undisputed. An Officer Olson, who made the arrest and search, was the only witness. From his .testimony it was established that on December 1, 1973, at about 11:00 a. m. the officer followed a U-Haul truck which was then being driven by the defendant along the highway near Tucumcari, New Mexico. The officer did not notice anything unusual about the truck, but he said he stopped it because he wanted to ascertain whether or not it was carrying goods for hire contrary to the New Mexico Statutes Annot., 64-27-5 and 64-27-8. It turned out that appellant’s papers were in order and there was no basis for detention or confinement of appellant. At the request of the officer appellant joined him in the police car. The officer then made an inquiry to his headquarters which communicated with a Washington, D. C. computer service, part of the National Crime Information Center, to ascertain whether appellant was wanted on any charge. Almost immediately the National Crime Information Center notified the officer that McDevitt was subject to being arrested as a Navy deserter. Thereupon, Officer Olson conducted a search of appellant’s person and advised him that he was under arrest. The total time between the stopping of the truck and the formal arrest took approximately 20 minutes.

Following this initial encounter, appellant was taken to State Police headquarters which were nearby. He was placed in the custody of Officer Boarman, a narcotics agent. Subsequently, the truck was towed to the headquarters. An effort was made to obtain a warrant to search the truck, but because it was Saturday the officers were unable to locate a magistrate. The aid of the County District Attorney and his assistant was obtained and these two individuals approached the truck for the purpose of inventorying its contents, but before they could carry out this effort Officer Boarman told them that the truck had 800-900 pounds of marijuana in it. It turned out that this was true.

I.

The stopping of the truck must have been the result of impulse on the part of the officer because appellant was not, to the knowledge of the officer, violating the law. It is appellant’s contention that the illegality of this arrest contaminated the subsequent acts of Officer Olson and the attorneys and that as a consequence the search of the vehicle was also illegal.

The ruling of the trial court was that this search was incident to a valid arrest and hence a warrant was not necessary and the search itself was legal. The trial court based this on its view that the original arrest was justified and on the further fact that defendant was wanted by the United States as a deserter from the Navy.

In order for an officer to stop and search a vehicle there must exist some basis for suspicion, at least, that the driver has violated the law even though the facts need not be sufficient to establish probable cause. See Terry v. Ohio, 392 U.S. 1, 88 S.Ct. 1868, 20 L.Ed.2d 889 (1968); Stone v. Patterson, 468 F.2d 558 (10th Cir. 1972); United States v. Self, 410 F.2d 984 (10th Cir. 1969). Cf. Adams v. Williams, 407 U.S. 143, 92 S.Ct. 1921, 32 L.Ed.2d 612 (1972).

Similarly, an automobile may be stopped for inspection without probable cause, but the act of stopping may not be arbitrary. Thus, our court has said that “even an investigatory detention must be based on reasonable ground, if not probable cause.” See United States v. Fallon, 457 F.2d 15, 18 (10th Cir. 1972).

The relatively recent decision of the Supreme Court in Almeida-Sanchez v. United States, 413 U.S. 266, 93 S.Ct. 2535, 37 L.Ed.2d 596 (1973) involved a stopping by a border patrol officer and the discovery of a large quantity of marijuana.

As in the case at bar, there was no probable cause or even reasonable suspicion to justify the stop. The prosecution sought to support its position by resorting to the border decisions. The Supreme Court, however, differentiated those checkpoint and stop cases involving as they did some semblance of probable cause. It condemned the arrest before it as arbitrary since the stopping and detention was not based on either probable cause or reasonable suspicion.

Long ago the Supreme Court in Carroll v. United States, 267 U.S. 132, 153-154, 45 S.Ct. 280, 69 L.Ed. 543 (1925), recognized that the arbitrary and unreasoned stopping of a vehicle is prohibited under the Fourth Amendment. In that case the Court said:

It would be intolerable and unreasonable if a prohibition agent were authorized to stop every automobile on the chance of finding liquor, and thus subject all persons lawfully using the highway to the inconvenience and indignity of such a search.

267 U.S. 132, 153-154, 45 S.Ct. 280, 285 (1925).

Unless the police officer was empowered to stop and search every truck regardless of cause or suspicion, it is not possible to justify the original stopping at bar because it does not qualify as a justified temporary inspection incident. Cf. Terry v. Ohio, supra. The problem is further complicated by the fact that the obtaining of the information from the National Crime Information Center is not separable from the original stopping and detention. Indeed, the information obtained from the Crime Center appears to us to be the product of the original stopping. Since, then, it is clear that there was not a search incident to a valid arrest, the only possible salvation for the search of the truck lies in the existence of an independent basis for the search of the truck and the discovery of the enormous cache of marijuana.

The government’s theory is that there was no arrest until word came through from the Crime Center that appellant was wanted as a deserter. We disagree. Appellant was taken to Officer Olson’s car and his papers were impounded. The duration of the stay was fifteen to twenty minutes. There is not the slightest evidence suggesting that he was free to go, and it is highly unlikely that he was.

Our Circuit has had several relatively recent cases involving preliminary detentions such as that in Terry v. Ohio, 392 U.S. 1, 88 S.Ct. 1868, 20 L.Ed.2d 889 (1968). See for example United States v. Bowman, 487 F.2d 1229 (10th Cir. 1973); United States v. McCormick, 468 F.2d 68 (10th Cir. 1972), cert. denied, 410 U.S. 927, 93 S.Ct. 1361, 35 L.Ed.2d 588 (1972); United States v. Lepinski, 460 F.2d 234 (10th Cir. 1972); United States v. Fallon, 457 F.2d 15 (10th Cir. 1972); United States v. Sheppard, 455 F.2d 1081 (10th Cir. 1972); United States v. Granado, 453 F.2d 769 (10th Cir. 1972); United States v. Saldana, 453 F.2d 352 (10th Cir. 1972); United States v. Sanchez, 450 F.2d 525 (10th Cir. 1971); United States v. Self, 410 F.2d 984 (10th Cir. 1969).

In the Bowman and McCormick cases the. officer detected the odor of marijuana emanating from the defendant’s automobile.

In Lepinski and Fallon the accused did not have an automobile registration certificate. In Sheppard the defendant produced a stack of counterfeit bills.

In Granado the occupants of the vehicle said that they were from Mexico. This was the condition also in Saldana. There, one of the occupants stated that he had “swum the river.”

In Sanchez defendant threw a sack into the woods.

In Self the defendant did not have an automobile registration certificate.

In each of the above cases the original stopping of the vehicle and the temporary detention were not invalid. The present case, however, stretches the Terry doctrine to the breaking point. The Terry concept cannot apply to an arbitrary stopping of a vehicle for the purpose of possible discovery of a law violation. Nor can a stopping together with a lengthy detention be upheld as a valid arrest on the ground that there was no physical seizure; and the fact that it is a routine type of action does not improve the condition. Cf. United States v. Robinson, 414 U.S. 218, 94 S.Ct. 467, 38 L.Ed.2d 427 (1973); Cady v. Dombrowski, 413 U.S. 433, 93 S.Ct. 2523, 37 L.Ed.2d 706 (1973). Repetition of an unlawful act does not render it valid.

More recent decisions of our court have, consistent with the Almeida-San-chez doctrine, taken a more guarded or cautious view of arrest and detention such as we have here. See United States v. King, 485 F.2d 353 (10th Cir. 1973); United States v. Maddox, 485 F.2d 361 (10th Cir. 1973).

II.

We now consider the final stage of this unusual sequence of events. The record discloses that when Officer Olson took appellant to the police station he delivered him to the custody of an Officer Boarman. Olson’s testimony at the hearing on motion to suppress was to the effect that Boarman questioned McDev-itt “in a sense.”

The testimony sheds little light on the happenings at the police station. We gather that appellant was turned over to Officer Boarman. We also learn that Boarman came out the front door of the police office and advised the District Attorney that appellant had informed them that marijuana was in the vehicle. We are not told whether appellant’s statement was a spontaneous type of utterance or whether it was a confession which was laboriously obtained from him. If it was a spontaneous statement it might be sufficiently independent of the illegal arrest to furnish probable cause for the search. See Chambers v. Maroney, 399 U.S. 42, 90 S.Ct. 1975, 26 L.Ed.2d 419 (1970). If the material was in plain view and was thus readily obtained in an inventory of the vehicle, again the discovery might be valid.

The testimony at the hearing on motion to suppress leaves some unanswered questions. At a subsequent trial or hearing the testimony of Officer Boar-man should be obtained so as to clarify the evidence as to the appellant’s admission. Also, further information should be obtained from Officer Olson as to the location and condition or position of the marijuana in the truck in relation to the taking of inventory. Thus, was it in plain view and subject to ready discovery in the course of inventory?

The case at bar is a serious one involving as it does a violation of great magnitude. It deserves careful preparation and presentation together with specific findings on the crucial issues of fact. Because of that, the cause must be remanded for further proceedings or a new trial.

The judgment is, then, reversed and the cause is remanded for a new trial or other proceedings consistent with the views which are expressed herein.

      . The latter provision requires that all common carriers have a certificate of public convenience and necessity.
      Section 64-27-5 provides as follows:
      No common motor carrier of property or passengers shall operate any motor vehicle for the transportation of either persons or property for hire on any public highway in this state except in accordance with the provisions of this act.
      We fail to see that this contributes anything to the validity of the original arrest.

      . The questions by the defense lawyer were as follows:
      Q. And did you then — did Mr. Boarman then question him:
      A. First of all.
      Q. Well, just did he or didn’t he, first of all?
      A. In a sense, yes, sir.
      Q. Were you questioning Mr. McDevitt at the time?
      A. I believe I asked one question of him.
      Q. Were you present at all times while Mr. Boarman was talking to Mr. McDevitt?
      A. Not at all times.
      Later, on cross-examination by the prosecutor, Officer Olson testified that as he and the two district attorneys were walking to the truck to inventory it, Officer Boarman told them that McDevitt had just told him that there was marijuana in the truck.
      Q. Now as you went to the vehicle, what happened?
      A. Agent Boarman came out the front doors of the state police office and he advised the district attorney and myself that Mr. McDevitt had just informed him there was marijuana in the vehicle.
      Q. Okay. Were you already unlocking the vehicle at that time?
      A. We were approaching the vehicle at that time.

      . Cf. United States v. Ducker, 491 F.2d 1190 (5th Cir. 1974); United States v. Kelehar, 470 F.2d 176 (5th Cir. 1972); United States v. Edwards, 441 F.2d 749 (5th Cir. 1971); United States v. Pennington, 441 F.2d 249 (5th Cir. 1971); United States v. Boyd, 436 F.2d 1203 (5th Cir. 1971). Several of the above Fifth Circuit cases rely on Cady v. Dombrow-ski, 413 U.S. 433, 93 S.Ct. 2523, 37 L.Ed.2d 706 (1973) and Harris v. United States, 390 U.S. 234, 88 S.Ct. 992, 19 L.Ed.2d 1067 (1968) for these rulings.
      In Harris the police found a registration certificate in an impounded auto. The policeman was attempting to roll up the window so as to protect the auto when he discovered a registration certificate in plain view. A police regulation demanded that impounded vehicles be inventoried. The Court upheld the admissibility of the registration certificate. The Court, however, stated that:
      The admissibility of evidence found as a result of a search under the police regulation is not presented by this case. The precise and detailed findings of the District Court, accepted by the Court of Appeals, were to the effect that the discovery of the card was not the result of a search of the car, but of a measure taken to protect the car while it was in police custody.
      Harris v. United States, supra, at 236, 88 S.Ct. at 993.

      . It is difficult to understand why the officers would proceed without seeking a warrant in these complex circumstances.