author: LEVIN H. CAMPBELL, Circuit Judge.

text:
    UNITED STATES of America, Appellee, v. Geoffrey HONNEUS, Defendant-Appellant.
    No. 74-1112.
    United States Court of Appeals, First Circuit.
    Argued Oct. 7, 1974.
    Decided Dec. 24, 1974.
    Certiorari Denied April 28, 1975.
    See 95 S.Ct. 1677.

      Daniel Klubock, Boston, Mass., with whom Kirk Y. Griffin and Featherston, Homans, Klubock & Griffin, Boston, Mass., on brief, for appellant.
    Lawrence P. Cohen, Asst. U. S. Atty., with whom James N. Gabriel, U. S. Atty., Boston, Mass., on brief, for appel-lee.
    Before COFFIN, Chief Judge, ALD-RICH and CAMPBELL, Circuit Judges.
   LEVIN H. CAMPBELL, Circuit Judge.

After a jury trial Geoffrey Honneus was convicted in the district court upon charges arising from his participation in a scheme to buy marihuana in bulk in Jamaica and transport it back to New England in an auxiliary yacht chartered for the purpose. His contentions on appeal, and the facts material to them, are discussed below.

I

Honneus contends that it was improper to convict and sentence him under three conspiracy counts all stemming from the same conspiracy. In the six count indictment Honneus and others were charged with three substantive offenses and three counts of conspiring to accomplish the substantive offenses. The substantive counts were for importing marihuana in violation of 21 U.S.C. § 952(a); distributing and possessing marihuana with intent to distribute in violation of 21 U.S.C. ,§ 841(a)(1); and smuggling marihuana in violation of 18 U.S.C. § 545. The count charging a conspiracy to import and that charging a conspiracy to distribute and possess were brought under separate drug conspiracy statutes, respectively 21 U.S.C. § 963 and 21 U.S.C. § 846. The count charging a conspiracy to smuggle was brought under the general federal conspiracy statute, 18 U.S.C. § 371.

Identical overt acts were listed in the indictment under each conspiracy count; and Honneus argues that since the evidence disclosed but a single agreement, the fact that the objects of the agreement amounted to three distinct crimes did not transform one conspiracy into three. In Braverman v. United States, 317 U.S. 49, 53, 63 S.Ct. 99, 102, 87 L.Ed. 23 (1949), the Supreme Court said:

“Whether the object of a single agreement is to commit one or more crimes, it is in either case that agreement which constitutes the conspiracy which the statute punishes. The one agreement cannot be taken to be several agreements and hence several conspiracies because it envisages the violation of several statutes rather than one.”

In Braverman the defendant had been sentenced upon each of several conspiracy counts brought under § 37 of the then Criminal Code charging a conspiracy to violate different provisions of the Internal Revenue laws. The Supreme Court held that only a single sentence could be imposed and remanded for re-sentencing.

In Braverman, where all counts violated but a single conspiracy statute, it could without difficulty be said that the single conspiracy differed “from a single act which violates two statutes.” Id. at 54, 63 S.Ct. at 102. In the present case, each conspiracy count was brought under a different federal conspiracy statute. In addition, the statutory penalties vary slightly as between statutes, and there appears to be some difference as to standards of proof respecting overt acts. The Government contends that these factors turn the one criminal agreement into a trilogy of crimes.

We disagree. While undoubtedly Congress meant to attack the drug trade with severity, see Gore v. United States, 357 U.S. 386, 78 S.Ct. 1280, 2 L.Ed.2d 1405 (1957), we doubt that it meant to authorize, or could authorize, a court to impose three punishments for one conspiracy. Congress may treat different aspects of the same conduct as separate crimes only if there is a meaningful distinction between the elements constituting each offense. See id.; American Tobacco Co. v. United States, 328 U.S. 781, 66 S.Ct. 1125, 90 L.Ed. 1575 (1946); Blockburger v. United States, 284 U.S. 299, 304, 52 S.Ct. 180, 76 L.Ed. 306 (1931). Here, unlike in American Tobacco, the agreement was identical in all three alleged conspiracies; the Government concedes as much. In Braverman the Court held that all separate criminal objects are “embraced” within the single continuing agreement. “The conspiracy is the crime, and that is one, however diverse its objects.” 317 U.S. at 54, 63 S.Ct. at 102, quoting from Frohwerk v. United States, 249 U.S. 204, 210, 39 S.Ct. 249, 63 L.Ed. 561 (1918) (Holmes, J.). We hold that charging a single illicit agreement under several statutes does not make it more than one conspiracy. United States v. Noah, 475 F.2d 688 (9th Cir. 1973); United States v. Mori, 444 F.2d 240 (5th Cir. 1971).

We do not question Congress’ power to enact the three statutes nor the Government’s power to charge under them; but we find only one crime for which only a single sentence could be imposed. , We therefore disagree with Honneus that he is entitled to a new trial. Cf. Braverman, supra, 317 U.S. at 55, 63 S.Ct. 99; Mori, supra, 444 F.2d at 246. An election was required in connection with sentencing, but not before. For practical reasons, we think the Government was entitled to request separate verdicts under all three statutes. The conspiracy with its several objects could, it is true, have been charged in a single count, Braverman, supra, 317 U.S. at 54, 63 S.Ct. 99. But had this been done, the court would not have known whether Honneus was found by the jury to have conspired to achieve all or only some of the illegal objects, and thus would not have known which of the statutory sentences were available. Other problems could perhaps have arisen had the court provided for special verdicts or asked special questions. See United States v. Spock, 416 F.2d 165 (1st Cir. 1969). Alternatively, if the Government had been forced to elect before trial, it would have had to gamble on proving one illegal object when there were, in fact, several, any one of which would have supported a finding of the agreement’s illegality.

We thus find no error, nor do we believe there was prejudice, in submitting all three counts to the jury. But since there was but one crime, only one sentence could be imposed. We accordingly vacate the separate concurrent sentences under Counts 1, 3 and 5 and remand for sentencing upon any of the three counts the United States may select. Surplus counts are to be dismissed.

II

Respecting Count 4, which charged the distribution and possession of marihuana with intent to distribute, Honneus makes several arguments about venue and jurisdiction. First he says that the indictment was defective for failure to allege where the offense took place. But it is well established that an indictment is not legally insufficient for failure to include such an allegation. See, e.g., United States v. Branan, 457 F.2d 1062 (6th Cir. 1972); Carbo v. United States, 314 F.2d 718 (9th Cir. 1963), cert. denied, 377 U.S. 953, 84 S.Ct. 1625, 12 L.Ed.2d 498 (1964). Honneus would have been entitled to the information had he sought a bill of particulars. He did not do so. Our attention is directed to a co-defendant’s motion for particulars which was allowed and to which, Honneus now argues, the Government responded inadequately. This is of no assistance to Honneus. His sole connection with the motion is a paper filed later by his attorney purporting to join in “each and any and all of the co-defendant’s motions, requests and petitions.” Apart from the fact that it was “denied” by the court, the shotgun joinder obviously did not alert the court that Honneus was seeking information as to the place of possession, or that he was dissatisfied with information in the Government’s bill of particulars filed in response to a co-defendant’s motion.

Also in conjunction with Count 4, Honneus argues that he was entitled to an instruction on “venue”. There was evidence that Honneus, who lived in Massachusetts, flew to Jamaica and, with others, purchased the marihuana there and arranged to have it loaded on a vessel which had been sailed from Duxbury, Massachusetts to Jamaica expressly to make the pickup. After the vessel was loaded, it sailed back to Massachusetts, where its owner contacted Honneus and arranged to have the marihuana off-loaded in Maine coastal waters. Finally there was evidence from which the jury could have found that Honneus had in his possession and sold some of the marihuana in Massachusetts prior to his arrest in that state. The latter evidence of illicit possession and distribution within Massachusetts was ample to support both the jury’s verdict under Count 4 and venue within the District of Massachusetts, F.R.Crim.P. 18; see 18 U.S.C. § 3237.

But Honneus argues that since the jury may have rested its conviction only upon the evidence of possession within Jamaica, the court erred in not instructing that possession had to be found in Massachusetts. The premise of this argument is doubtful. One might question whether a jury which found Honneus guilty on all counts, including ones for smuggling and conspiracy, was likely to have rejected the evidence of possession and distribution within Massachusetts. It is also quite possible, although we do not decide the question, that possession in Jamaica by a U.S. resident intending to distribute within the United States and later doing so, is within the reach of United States criminal jurisdiction and was prosecutable in the district of Massachusetts where Honneus was arrested. 18 U.S.C. § 3238.

But even if it is assumed that Honneus would have been entitled upon appropriate request to an instruction requiring a finding of possession within the geographical confines of Massachusetts, we are not convinced that it was plain error for the court not to have given one. A failure to instruct on venue is not normally plain error. See United States v. Guy, 456 F.2d 1157, 1163 (8th Cir. 1972); Bellard v. United States, 356 F.2d 437 (5th Cir. 1966). Honneus was tried in the district both where he was living and where the criminal plans were laid and took effect. Cf. Travis v. United States, 364 U.S. 631, 81 S.Ct. 358, 5 L.Ed.2d 340 (1960). We see in this instance no reason that would exempt him from the usual, salutory requirement that one complaining about an omitted instruction must have tendered a request and objected to its omission. United States v. Lachman, 469 F.2d 1043 (1st Cir. 1972). We note that the Government had proposed an instruction permitting conviction for possession outside the jurisdiction. The court declined to give it, and Honneus might have concluded that any instructions on the subject could only be to his detriment. Not only did he not assert lack of venue or jurisdiction as a ground for acquittal in motions made during the trial, but his only request for instruction arguably raising the matter seemed to focus on a different issue — namely, whether the marihuana had to be Cannabis sativa L. See Part IV infra. This request might have been enough had Honneus objected after the court had instructed the jury. Instead, Honneus’ counsel, although he raised other objections, indicated no dissatisfaction on the ground at issue. The case bears little resemblance to one cited by appellant, United States v. Rodriguez, 465 F.2d 5 (2d Cir. 1972), in which the counsel’s failure to object to the charge was offset by his other actions and by the court’s own recognition of venue as a prime issue.

We hold that no instruction was required. We find no merit in the different venue argument addressed to Count 2.

III

Appellant argues that rulings of the court excluding certain responses of witnesses were erroneous in that they reflected a mechanical application of the so-called “federal” rule limiting cross-examination to matters presented during direct. See 6 J. Wigmore, Evidence §§ 1885 — 91 (3d ed. 1940). The most serious complaint of this nature stems from circumstances relating to Honneus’ claim that he was approached before trial by one Martha Snyder on behalf of a government witness, William Helliesen, with an offer that Helliesen would keep silent for $10,000. Honneus’ counsel reported the alleged solicitation to the Government, whose agents thereafter interrogated Helliesen. It was after these events, which were made known to the court, that, prior to his cross-examination of Helliesen, Honneus’ counsel announced an intention to ask Helliesen “if he knew one Martha Snyder, in fact, his girl friend.” Although counsel said the question was for impeachment purposes, the court insisted that the “scope of the cross-examination is set by the scope of the direct examination,” and that “your alleged purpose does not set the rules of the ballgame.” From the court’s remarks, counsel could understand that he was to make no inquiry of Helliesen about the purported bribe solicitation. The district court erred. Counsel was entitled to inquire whether Helliesen knew Martha Snyder and whether Hel-liesen had asked her to communicate an offer on his behalf to Honneus. The ■“federal” rule, even in its most draconian form, does not deny to a cross-examiner reasonable latitude to inquire into relevant matters that may show a witness’s bias or prejudice or otherwise impeach his credibility. Alford v. United States, 282 U.S. 687, 51 S.Ct. 218, 75 L.Ed. 624 (1931); Smith v. Illinois, 390 U.S. 129, 88 S.Ct. 748, 19 L.Ed.2d 956 (1967). Whether Helliesen had sought to sell his testimony was such a matter. The court had broad discretion, of course, to control the extent of examination and to decide when a particular subject was exhausted. Once Helliesen denied communicating any offer through Martha Snyder, it could have curtailed further inquiry, and dampened any improper effort by counsel to ask questions framed so as to inform the jury of the supposed bribe attempt. But it should not have shut off all inquiry.

The denial of cross-examination upon a proper subject for cross-examination is a ground for reversal “if the denial appears to have been harmful.” Wheeler v. United States, 351 F.2d 946, 947 (1st Cir. 1965). In Wheeler, defense counsel made an offer of proof that the witness would, if permitted to answer, have given an answer favorable to the defense. Here, on the other hand, counsel never outlined the questions he proposed to ask, nor did he say that he had reason to believe that Helliesen would admit participating in the bribe solicitation. This fact alone does not discharge the Government’s burden. The right having been erroneously denied, the burden was upon the Government to establish the harmlessness of the denial; Honneus need not show “that the cross-examination, if pursued, would necessarily have brought out facts tending to discredit . . . .” Alford, supra, 282 U.S. at 692, 51 S.Ct. at 219. On the other hand the error, serious as it was, is not to be viewed in isolation in determining whether it was harmful. Later in the trial the Assistant United States Attorney, in the presence of defense counsel, detailed the steps taken to investigate Honneus’ story. He represented that Helliesen, when interrogated by federal agents, had flatly denied having made any such solicitation and had termed the story a defense ploy; he also stated that Martha Snyder had declined to discuss the matter and would claim her privilege against self incrimination. Honneus’ attorney, who was free to interview Helliesen, never challenged the representation that Helliesen denied the story nor suggested any reason that Hel-liesen would admit to it or that there were facts with which to confront him. And later, when Martha Snyder was subpoenaed by the defense, her attorney informed the court that she would claim her privilege against self incrimination and she was excused without testifying. Bearing in mind also that Helliesen’s direct testimony was strongly corroborated by other witnesses and evidence, and that Honneus’ counsel was permitted an otherwise searching cross-examination of Helliesen who, the jury learned, was in jail and had received inducements from the Government to testify, we are satisfied that the error was harmless.

Honneus’ other complaints of limitations upon cross-examination are less substantial. It is true that the so-called “federal” rule, if useful as a general guide, should never be rigidly applied. A cross-examiner has a right to reasonable leeway for inquiry into facts which modify or explain away other facts developed on direct examination. But most of the disputed rulings were justified apart from a mechanistic application of the “rule”. Some questions were of marginal relevancy or went into matters already explored. The court had discretion to exclude them, at least without an offer of proof or other indication where they would lead. In several instances the excluded questions were asked on recross, not cross. More strictly than with cross-examination, a court may limit recross to the subject matter of redirect and may exercise extensive discretion over its scope.

Honneus further attacks the exclusion of questions put to Richard Thurlow, a former confederate turned government witness. Counsel was allowed to bring out that Thurlow had been a user of many types of drugs, but was stopped when he inquired, “And you told me that you had a nervous breakdown, didn’t you?” Also excluded was the question, “Were you in the Jackson Memorial Hospital in Miami, Florida?” The court indicated that it would not permit such impeachment without a “hospital record”.

The court acted within its discretion. By revealing the dates and condition for which treatment was provided, a hospital record would at least have provided a basis for gauging the materiality of the inquiry. While insanity or abnormality at the time of observing the facts testified to or at the time of testimony are provable, a “nervous breakdown” at some unspecified time is too remote. Cf. Sinclair v. Turner, 447 F.2d 1158, 1162-1163 (10th Cir. 1971); 3A J. Wigmore, Evidence § 935 (3d ed. 1970). No offer of proof was made that Thurlow’s condition could be shown to relate to his competency or qualifications as a witness. The court was entitled to weigh the potential unfairness of a free wheeling inquiry intended to stigmatize the witness against whatever materiality the evidence might have. While of course a hospital record is not the only proper way to establish mental impairment, see 3A Wigmore, supra, §§ 878, 879, the court could impose the requirement in this instance since it could exclude the inquiry, as made, altogether.

Appellant complains that the court’s impatience created a hostile atmosphere for the cultivation of a successful cross-examination. We are not persuaded that this was so. The Government presented a strong case, and a factual defense was virtually nonexistent. In such circumstances it may be especially hard to detect the threshold beyond which legitimate cross-examination becomes an idle fishing expedition. A court must allow inquiry that is germane and probative, but it need not bend over backwards to encourage the structuring of fanciful defenses. While the court’s rulings here were on the side of strictness, we cannot say (except in the one respect already mentioned) that they improperly cut off any material avenues of inquiry, nor does it appear that the court’s deportment was lacking in essential fairness. We therefore find no abuse of discretion.

IV

Honneus has persistently insisted that the Government never proved him guilty of dealing in “Cannabis sativa L.”. The offenses in Counts 1 — 4 all have to do with dealings in “marihuana”, listed as a controlled substance in § 182 schedule I(c)(10). Marihuana is defined in § 802(15) as certain parts of “the plant Cannabis sativa L.”.

Honneus sought to introduce testimony by Dr. Richard Schultes that the Cannabis plant is a genus having three species, sativa, indica, and ruderalis, and that both sativa and indica presently grow in Jamaica. As the Government recovered no marihuana for analysis, there was no proof that the type or types of Cannabis Honneus purchased in Jamaica and later shipped to the United States were not indica rather than sati-va.

Dr. Schultes testified during a voir dire that the disputed nomenclature could be traced back - to Linnaeus’ famous eighteenth century botanical compendium which listed under the genus Cannabis only a single species, sativa. A generation later, Lamarck named a Cannabis specimen collected in India, “indi-ca”, and in the 1920’s Russian botanists published in their native country a study naming a third variant “ruderalis”. Nonetheless, according to Dr. Schultes, the “usually accepted view” (which he himself “echoed”) until a few years ago was that there was only one species of Cannabis. Now, after more study, Dr. Schultes believes there are three. Compare Schultes, Random Thoughts and Queries on the Botany of Cannabis, in C. Joyce & S. Curry, The Botany and Chemistry of Cannabis 11 — 38 (1970), with Schultes, Klein, Plowman & Lockwood, Cannabis: An Example of Taxonomic Neglect, 23 Harv. Botanical Museum Leaflets 325 (1974). See also R. Schultes & A. Hoffman, The Botany and Chemistry of Hallucinogens 58 (1973).

The district court, ruling in a Memorandum and Order that Congress meant to include any and all marihuana-producing Cannabis in specifying “Cannabis sativa L.”, excluded Dr. Schultes’ testimony and denied Honneus’ motions for acquittal and for jury instructions. Courts in three circuits have similarly held, based upon the statutory history of the 1970 Act’s predecessor, the marihuana Tax Act of 1937, 26 U.S.C. § 4761, from which the definition of marihuana was taken. United States v. Rothberg, 351 F.Supp. 1115 (E.D.N.Y.1972), aff’d, 480 F.2d 534 (2d Cir. 1973), cert. denied, 414 U.S. 856, 94 S.Ct. 159, 38 L.Ed.2d 106; United States v. Moore, 330 F.Supp. 684, 686 (E.D.Pa.1970), aff’d, 446 F.2d 448 (3d Cir. 1971), cert. denied, 406 U.S. 909, 92 S.Ct. 1617, 31 L.Ed.2d 820; United States v. Gaines, 489 F.2d 690 (5th Cir. 1974). In testimony on the Marihuana Tax Bill before the House Committee on Ways and Means, Commissioner of Narcotics Anslinger in 1937 stated that “Cannabis indica, or marihuana, has as its parent the plant known as Cannabis sativa”. The Commissioner went on to say,

“It’s popularly known in India as Cannabis indica; in America, as Cannabis American; in Mexico as Cannabis Mexicana, or marihuana.
“It is all the same drug, and is known in different countries by different names. It is scientifically known as Cannabis sativa. . . . ”

Hearings on H.R. 6385 before the Comm, on Ways & Means, 75th Cong., 1st Sess. at 37-38 (1937).

Dr. Lyster Dewey, a botanist formerly in charge of the Agriculture Department’s fibre division, also testified that there was “only one species known as hemp.” Id. at 55. Honneus argues that this certainty as to only one species is misleading, that others concerned with the 1937 Act were much less clear that sativa included other types if there were any others. There is indeed evidence of confusion over terminology, but none that Congress meant to exclude from regulation any type of the plant producing the hallucinogenic material popularly known in this country as “marihuana”. See H.R.Rep.No.792, 75th Cong., 1st Sess. at 3-4 (1937); 81 Cong.Rec. 1440 — 41 (June 11, 1937) (appendix); 81 Cong.Rec. 5689-90 (June 14, 1937). Appellant’s suggestion that sativa was selected because of an intention to deal only with the type most commonly grown in America is not borne out by the legislative record. Such an approach would have amounted to exemption of material from easily procurable plants having the same properties as the ones regulated. See generally 81 Cong.Rec. 5690 (June 14, 1937). We are persuaded that Congress adopted “Cannabis sativa L.” believing it to be the term that scientists used to embrace all marihuana-producing Cannabis; the other named sorts were not seen as separate Cannabis species. Linnaeus had listed but the one species, and appellant’s own expert concedes that until recently the monotypic view has been the “usually accepted” one. This is not to try to refute Dr. Schultes’ present view. The issue is not whether marihuana is monotypic or polytypic but what Congress meant when it used the term “Cannabis sativa L.”. We hold that the district court’s ruling and exclusion of Dr. Schultes’ testimony were correct.

A remaining question is whether the definition was adequate to forewarn Honneus of the crimes for which he was later charged. We think it was. Right or wrong, the monotypic classification has had considerable currency until very recently at least; use of “Cannabis sativa L.” was, we think, sufficient to put a procurer on notice that he acted at his peril, see Rothberg, supra, and of course there is no evidence whatever that Honneus sought only “indica” rather than “sativa” or believed that he was acting legally. To the contrary, the venture was clandestine, and its participants clearly recognized its illegality. Had the question arose in connection with a drug less widely publicized than marihuana, the definition might take on greater importance. Here we find it too obvious for discussion that Honneus understood in advance that the importation and distribution were crimes.

V

Honneus argues that his former associates, Robert Puffer and Helliesen, should not have been permitted to give opinion testimony concerning a resemblance between the material they handled in 1972 and marihuana. Puffer testified that a sack brought from Jamaica contained darkish-green, leafy plant material that appeared similar to marihuana (which he testified to having smoked and seen growing before). Helliesen said the material was “greenish material resembling marihuana”. (Helliesen further testified to having smoked marihuana on numerous occasions.) A third associate, Richard Thurlow, gave similar testimony to which appellant does not, however, object, since it merely described the material as “a greenish-brown vegetable matter”, similar to “material” he had previously smoked. The witnesses, though without scientific expertise, had personal experience with marihuana. Their comparisons with the material at issue, based on personal observations, did not involve inferences which the jury could have equally well made from the witnesses’ descriptions absent the comparison to marihuana. See generally 7 J. Wigmore, Evidence § 1918 (3d ed. 1940). Nor, on the other hand, did the witnesses’ testimony purport to be definite representations that the material was marihuana; we thus need not consider whether they would have been competent to express such a definite opinion. Cf. People v. Kenney, 30 N.Y.2d 154, 331 N.Y.S.2d 392, 282 N.E.2d 295 (1972). We think it was within the discretion of the court to have allowed the comparisons that were made.

The more basic question is whether, absent a report of laboratory analysis, there was ample evidence to support findings that the material was marihuana. We believe there was. The circumstantial and direct evidence when added together was extremely strong. This is not a case where the nature of a drug is sought to be established merely by a naive subject’s reaction to a puff or two on a cigarette. It was testified that the parties, including Honneus, constantly spoke of the material as “marihuana” or “grass”. The sole object was to purchase and distribute marihuana. There was extensive direct evidence of Hon-neus’ negotiations with sellers in Jamaica resulting in the purchase of what Honneus plainly believed to be marihuana. The same substance was later resold in Massachusetts at prices of $175 — $250 a pound and Honneus admitted it was “grass” in conversations. The material was smoked, produced a high, and had the outward appearance of marihuana.

We need not consider whether in different cases the absence of a specific and conclusive laboratory report would be fatal. Much depends on the totality of the evidence. A user’s report, standing alone, might in some cases be a shaky reed, but that question is not before us. The evidence here was compelling that the substance was marihuana; indeed, barring an unlikely hoax fooling Hon-neus and his experienced associates, and those to whom they later sold, the substance had to be marihuana.

VI

Honneus makes one final complaint, namely, the court’s failure to give promptly adequate limiting instructions with respect to hearsay conspiracy testimony. Early in the trial (as a precedent for a number of occasions thereafter) the Government asked a witness whether he had had a conversation with one of the defendants (in this instance Honneus) relating to the others. Counsel for another defendant objected. Before receiving the testimony the court instructed the jury that declarations affecting other alleged members of the conspiracy, not present at the time the statements were made, were not to be considered against them unless the jury was satisfied that they were in fact members of the conspiracy. The court failed, however, to instruct as to the second aspect of this matter, that the existence of the conspiracy and defendant’s participation therein had to be established by independent non-hearsay evidence before the jury could consider against defendant a co-conspirator’s hearsay statement. No counsel pointed out this omission, although later Honneus made a request— of an incorrect nature — as to the first aspect. The court did not cover the second aspect until the charge, and Hon-neus says that this was too late. To sustain this contention he must show plain error. F.R.Crim.P. 52(b).

The limiting instruction that the court did give initially is perhaps the more important of the two conditions. Cf. Lut-wak v. United States, 344 U.S. 604, 618-619, 73 S.Ct. 481, 97 L.Ed. 593 (1953). The other, however, is of importance as well. It is to be borne in mind that a jury has no experience in, or presumably knowledge of, the hearsay rule. Unguided, it would be most natural for the jury, in endeavoring to ascertain whether the defendants were in fact members of the conspiracy, to consider all evidence that apparently bore thereon. We must agree with United States v. Apollo, 476 F.2d 156, 163 (5th Cir. 1973), where the court said that there is a “minimum obligation on the trial judge in a conspiracy case in which extrajudicial statements of alleged co-conspirators are proffered to give a cautionary instruction on the limited uses of hearsay testimony, explaining clearly to the jury the requirement that the conspiracy itself and each defendant’s participation in it must be established by independent non-hearsay evidence which must be given either prior to the introduction of any evidence or immediately upon the first instance of such hearsay testimony.” [Emphasis added.]

No previous case in this circuit has established that it may ever be plain error not to charge, priori, on this second aspect. Moreovf , in the present case the independent non-hearsay evidence tying Honneus to the conspiracy was adequate by any standard. We thus do not find plain error. The Apollo rule should, however, be observed in conspiracy cases hereafter tried in this circuit. Failure to do so will result in reversal in any case where we believe the omission to have affected substantial rights.

We affirm the judgment of the district court except for the separate concurrent sentences under Counts 1, 3, and 5. We vacate those sentences and remand the case for sentencing upon any one of the three conspiracy counts the United States may select, and for dismissal of the other two conspiracy counts.

So ordered.

      . In future cases of this nature, a district court may after verdict enter concurrent sentences on the multiple counts with the proviso that all except one of the counts and sentences shall be dismissed upon appellate af-firmance of the specified count and sentence.
      We do not endorse charging the same conspiracy in several counts unless there are different conspiracy statutes with different statutory sentences.

      . We by-pass as without merit the contention that Count 3, as worded, failed to state an offense.

       Honneus’ counsel on appeal did not represent him at trial.

      . See Kawakita v. United States, 343 U.S. 717, 72 S.ct. 950, 96 L.Ed. 1249 (1952); United States v. Flores, 289 U.S. 137, 53 S.Ct. 580, 77 L.Ed. 1086 (1933); Ford v. United States, 273 U.S. 593, 47 S.Ct. 531, 71 L.Ed. 793 (1927); cf. Travis v. United States, 364 U.S. 631, 81 S.ct. 358, 5 L.Ed.2d 340 (1960); Hall, et al., Modem Criminal Procedure 867 n. 3; Rivard v. United States, 375 F.2d 882, 885-888 (1967); Empsom, The Application of Criminal Law to Acts Committed Outside the Jurisdiction, 6 Am.Crim.L.W. 32 (1967); 18 U.S.C. § 7.

      . Honneus requested the following instruction:
      “The court instructs the jury that, as to Count Four, the burden is on the government to prove beyond a reasonable doubt that defendant, Geoffrey Honneus, possessed Cannabis Sativa L., in the District of Massachusetts. If the government fails to satisfy you beyond a reasonable doubt that the defendant, Honneus, possessed that substance, then you shall find him not guilty of Count Four.”

      . Professor of Natural Sciences and Director, Botanical Museum, Harvard University.

      . See also Hearings on H.R. 6906 before the Senate Comm, on Finance, 75th Cong., 1st Sess. at 23 (“botanists now recognize hemp as consisting of only one specie”).

      . Dr. S. Hilton of the American Pharmaceutical Association referred to Cannabis indica throughout his testimony. Hearings on H.R. 6385 before the Comm, on Ways & Means, 75th Cong., 1st Sess. at 121-22 (1937). See generally 81 Cong.Rec. 5575 (June 10, 1937) (remarks by Rep. Vinson).
      Early drafts of the Uniform Narcotics Act of 1938 used multiple species nomenclature, and one court has relied heavily on this fact in concluding that the drafters of the 1938 Act made a conscious choice with complete awareness that “botanical literature reflect the possible existence of more than one species.” United States v. Collier, 14 Crim.L. Rept. 2501 (D.C.Sup.Ct.1974). We do not follow the Superior Court in Collier because we believe the use of various names is consistent with the explanation given to Congress in 1937 that there was only one species, though many local names.

      . C. Linnaeus, Special Plantarum, A Facsimile of the First Edition 1753, at 1027 (1959 ed.). Although Linnaeus gave India as the country of origin of Cannabis sativa, he apparently based his original description on hemp grown in northern Europe in 1737, which he knew in a living state. See Stern, Typification of Cannabis Sativa L., 23 Harv. Botanical Museum Leaflets 325, 330 (1974). Linnaeus’ use of diagnostic phrase names under Cannabis sati-va may indicate that he believed other species of the genus might possibly exist and would need to be contrasted with this species, id., but his use of only one species could nevertheless have persuaded botanists and lawmakers that varieties were derivative from the sole species, Cannabis sativa.


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author: LUMBARD, Circuit Judge:

license: Public Domain

text:
    Robert R. FELTON and Edward J. Egan, Plaintiffs-Appellants, v. WALSTON AND CO., INC., et al., Defendants-Appellees.
    No. 210, Docket 74-1581.
    United States Court of Appeals, Second Circuit.
    Argued Oct. 30, 1974.
    Decided Dec. 23, 1974.

      Robert R. Felton, Mineóla, N. Y., for plaintiffs-appellants.
    Richard G. Lyon, New York City (William E. Willis, and Sullivan & Cromwell, New York City, on the brief), for defendants-appellees Marine Midland Bank — New York and Brownstein.
    Geoffry R. Handler, New York City (Bruce A. Hecker, and Shea, Gould, Cli-menko & Kramer, New York City, on the brief), for defendants-appellees Stitching Excerpta Medica (Excerpta Medica Foundation), Medische Referan-tan (Excerpta Medica) N. V., Infonet (Excerpta Medica-Rescona) N. V., and Eltrac (Infonet) N. V.
    Jerold Oshinsky, New York City (Anderson, Russell, Kill & Olick, P. C., New York City, on the brief), for defendants-appellees Riesenbach, Elias, and Sher.
    Allan M. Pepper, New York City (Milton Kunen, and Kaye, Scholer, Fierman, Hays & Handler, New York City, on the brief), for defendant-appellee Main, La-frentz & Co.
    Before LUMBARD, WATERMAN and MANSFIELD, Circuit Judges.
   LUMBARD, Circuit Judge:

On May 17, 1973, plaintiff Robert R. Felton filed a class-action complaint against defendants Walston & Co., Inc. (Walston), James Nissan (Nissan), Marine Midland Bank — New York (Marine Midland), Joel Doe (Brownstein) and 3 I Co./Information Interscience, Inc. (3 I Co.). In his complaint Felton alleged that Walston, Nissan and Brownstein “employed manipulative and deceptive devices” for the purpose of inducing plaintiff to purchase 3 I Co. stock. There were further allegations, but they too were of a very general nature. Judge Bonsai granted a motion to dismiss this first complaint for .failure to comply with rule 9(b) on August 2, 1973, with leave to file an amended complaint.

Plaintiff filed his first amended complaint on August 14, 1973, naming fifteen new defendants in addition to the original five. This complaint went on for thirty-seven pages and contained much evidentiary material. It was answered by each of the original defendants and by new defendants Stitching Excerpta Medica (Stitching) and Main, Lafrentz & Co. (Main, Lafrentz). Following the filing of this complaint Fel-ton, Nissan, and Brownstein were deposed. On November 5, 1973, Felton filed a motion seeking leave to amend his complaint in order to add several new allegations and the parent and the brother-sister companies of Marine Midland. On November 9, 1973, Felton filed a motion seeking leave to add Edward J. Egan as a coplaintiff. After hearing argument on these motions, the district judge sua sponte dismissed the ■first amended complaint and the proposed second and third amended complaints for failure to comply with rules 9(b) and 8 of the Federal Rules of Civil Procedure. Plaintiffs then filed their fourth amended complaint on November 29, 1973. Thereafter Main, Lafrentz moved to dismiss the complaint under rule 9(b) and alternatively for summary judgment under rule 56. Elias, Riesen-bach, and Sher; Marine Midland and Brownstein; Stitching; and 3 I Co. also moved for dismissal of the complaint for failure to comply with rule 9(b). In an order dated March 29, 1974, the district court dismissed the complaint, without leave to amend, for failure to satisfy the requirements of rule 9(b). The district court, in reaching its decision, focused on plaintiffs’ over-use of such words as “fraud”, “conspiracy”, and “worthless”. It also noted that plaintiffs’ complaint was based on information and belief, that no specific dates and amounts of stock purchases were alleged, and that no reliance was alleged.

Rule 9(b) provides that “[i]n all aver-ments of fraud or mistake, the circumstances constituting fraud or mistake shall be stated with particularity.” We have recently interpreted this rule in Shemtob v. Shearson, Hammill & Co., 448 F.2d 442 (2 Cir. 1971), and Segal v. Gordon, 467 F.2d 602 (2 Cir. 1972). In Shemtob we held that “mere conclusory allegations to the effect that defendant’s conduct was fraudulent or in violation of Rule 10b-5 are insufficient.” Shemtob v. Shearson, Hammill & Co., supra, 448 F.2d at 444. In Segal we again stressed that conclusory statements are not enough.

The complaint at issue here first details the relationships between 3 I Co., a publicly held corporation whose stock is traded in the over-the-counter market, and the other defendants. Specifically it alleged that Walston is a stock brokerage firm that made a market for 3 I Co. stock, that Nissan was a vice-president of Walston and a 3 I Co. stockholder and creditor and a co-guarantor of several 3 I Co. bank loans, that Marine Midland and associated companies were 3 I Co. creditors and traded in 3 I Co. stock, and that Brownstein was employed as a securities analyst by Marine Midland and that in the course of his employment wrote reports on the prospects of 3 I Co.

Elias, Riesenbach and Sher were alleged to be officers, directors, and shareholders of Information Company of America and related companies when 3 I Co. purchased these companies on June 30, 1971. After the purchases the complaint alleges that these defendants became officers of 3 I Co.

With respect to Stitching the complaint alleges that it sold a data bank license to 3 I Co. for 3 I Co. stock. Main, Lafrentz is simply said to be engaged in the practice of accounting. The alleged misdeeds of these defendants were specified as follows:

I. ELIAS, RIESENBACH & SHER

Elias, Riesenbach and Sher are alleged to have sold “worthless” companies to 3 I Co., and to have “falsely and deceptively declare[d] to the investing public that [3 I Co.’s purchase of these companies] was a major viable acquisition.” Such statements clearly fail to allege “the circumstances constituting fraud . . with particularity” as is required by rule 9(b). One of the main purposes of the rule is to apprise a “defendant of the claim against him and of the acts relied upon as constituting the fraud charged.” 5 C. Wright & A. Miller, Federal Practice & Procedure § 1297, at 404 (1969). These allegations are merely conclusory and clearly do not apprise the defendants of the claims made against them. Simply denominating unspecified statements as “deceptive” and corporations as “worthless” is not enough. Some further explanation of the allegations is necessary to indicate how they constitute fraud. The district court correctly concluded that these allegations failed to satisfy rule 9(b). Segal v. Gordon, supra, 467 F.2d at 608.

II. STITCHING EXCERPTA MEDICA

Stitching is alleged to have sold a “worthless” data bank license to 3 I Co. In addition, Stitching is alleged somehow to have conspired with 3 I Co. to inflate the value of the data bank license. Why the license was worthless and what was fraudulent about selling assets (even worthless assets) to another corporation are never explained. Allegations such as these scarcely inform a defendant what the plaintiff is talking about, let alone satisfy the standards required by rule 9(b). Hence as to Stitching, we affirm the ruling of the district court.

III. MAIN, LAFRENTZ AND 3 I CO.

The complaint alleges that Main, La-frentz failed to follow generally accepted accounting principles when it audited the books of 3 I Co. Specifically it alleged that Main, Lafrentz reviewed three specific agreements between 3 I Co. and other individuals or corporations and that it failed accurately to reflect the effect of those agreements on 3 I Co.’s financial statements with the result that 3 I Co.’s assets were substantially inflated. For example, the complaint claims that the value of the stock used to purchase a data bank license was inflated so as to increase the assets of 3 I Co. and that Main, Lafrentz failed to disclose this fact. Since 3 I Co. initially established the values assigned to the assets in question, it is alleged to be a party to the misrepresentation of its assets.

While the allegations here are not as specific as might be desired, they do specify the agreements and amounts involved in the alleged misrepresentation. They cannot be characterized as merely conclusory since they clearly are much more than a bald assertion that Main, Lafrentz engaged in fraudulent acts. It may well be that plaintiffs have no claim against Main, Lafrentz but the proper manner in which to determine whether a claim exists is to require an answer, and, if necessary, a trial of those issues. This result is especially appropriate since in applying rule 9(b) we must not lose sight of the fact that it must be reconciled with rule 8 which requires a short and concise statement of claims. See 5 C. Wright & A. Miller, Federal Practice & Procedure § 1298, at 406-410 (1969).

We realize that one purpose of rule 9(b) is to protect reputations of accountants and other professionals from scurrilous and baseless allegations of fraud. Segal v. Gordon, supra, 467 F.2d at 607. However, rule 9(b) does not insulate professionals from claims of fraud where a complaint alleges the fraudulent acts with particularity, and this complaint does so. In any event, defendants may, in appropriate situations, be spared the expense and delay of a trial by moving for summary judgment.

As we find that the complaint with respect to Main, Lafrentz and 3 I Co. does sufficiently particularize the circumstances of the alleged fraud, the order of the district court dismissing the complaint as to Main, Lafrentz and 3 I Co. is' reversed.

IV. MARINE MIDLAND AND BROWNSTEIN

The complaint alleges, among other things, that Brownstein (and his employer, Marine Midland) circulated a report about 3 I Co. that projected significant increases in 3 I Co.’s future earnings and that Brownstein failed to correct that projection in subsequent reports on 3 I Co. even though the president of 3 I Co., Gerald Brodsky, expressly disavowed the earnings projections in a letter to Brownstein. The complaint also alleges, albeit in general terms, that plaintiffs purchased stock in reliance upon the various actions taken by defendants. While it can hardly be said that the plaintiff’s charges are a well-pleaded complaint, it is clearly sufficient with respect to Marine Midland and Brownstein. The complaint alleges specific acts and omissions on the part of these defendants which, if true, might well be found, after a trial, to constitute fraudulent conduct on their part. The allegations are not merely conclusory and these defendants cannot argue that they have not been apprised of the acts that are alleged to constitute fraud. Thus we reverse the order of the district court dismissing plaintiffs’ complaint with respect to Marine Midland and Brownstein.

In light of the fact that plaintiffs are both lawyers and have had several opportunities to draft a satisfactory complaint against Stitching, Sher, Elias, and Riesenbach, we will not disturb that part of the district court’s order that denies plaintiffs leave to amend their complaint against those defendants. Mooney v. Vitolo, 435 F.2d 838, 839 (2d Cir. 1970).

We find it unnecessary to consider plaintiffs’ other arguments, e. g., whether a defendant waives a rule 9(b) objection to one amended complaint if he has answered a prior complaint in the same action.

The district court’s order is affirmed with respect to defendants Stitching, Sher, Elias and Riesenbach, and reversed as to all other defendants.

      . All subsequent complaints in this proceeding were also denominated class actions. Judge Bonsai never formally decided whether to allow the suit to proceed as a class action although he indicated in the order appealed from that he had intended to require the plaintiffs to proceed as individuals. However, since he never actually ruled on the class-action question, we feel that that issue is not properly before us.

      . Later identified as Joel Brownstein.

      . The fifteen new defendants were Gerald L. Brodsky, Maurice Brodsky, Arthur W. Elias, Marvin S. Riesenbach, Marvin Schiller, Irving H. Sher, Stitching Excerpta Medica (Excerpta Medica Foundation), Medische Referantan (Excerpta Medica) N. V., Infonet (Excerpta Medica-Rescona) N. V., Eltrac (Infonet) N. V., Peter Warren, Main, Lafrentz and Co., Fred von Eugen, S. Kim Kessler, and Geraldine Kessler.

      . These companies were Marine Midland Banks, Inc., Marine Midland Bank-Western, Marine Midland Bank-Rochester, Marine Midland Bank-Central, Marine Midland Bank-Southern, Marine Midland Bank of Southeastern New York, N. A., Marine Midland Bank-Northern, Marine Midland Bank-Eastern National Association, Marine Midland Bank-Chautaqua, National Association, Marine Midland-Tinker National Bank, Inc., Dreyfus-Marine Midland, Inc. This last named company is only a half brother of Marine Midland Bank-New York as only one-half of its stock is owned by Marine Midland Banks, Inc.

      . Rule 8 requires that a pleading consist of “a short and plain statement of the claim.”

      . The district court appears to be in error when it asserts that no reliance was alleged. The district court also stressed the failure of plaintiffs to specify when and for what price they bought and sold 3 I Co. stock. Since purchases were alleged in general, we do not think that this omission merits the dismissal of plaintiff’s complaint. Likewise, we do not find the fact that the complaint was pleaded on information and belief to be a reason for dismissing the complaint.

      . After argument of this case, another panel of this court expressed views in full accord with the position we have taken here, that, while mere conclusory or general statements alleging fraud and deceit in violation of Rule 10b-5 fail to satisfy the particularity requirements of Fed.R.Civ.P. 9(b), a complaint is sufficient if it alleges that securities fraud was committed in connection with identified acts or omissions. Schlick v. Penn-Dixie Cement Corp., 507 F.2d 374 (2d Cir., 1974).

      . Our decision should not be construed as approving plaintiff’s motion for class action designation except to note our apprehension, for the reasons stated by Judge Bonsai in his opinion, regarding plaintiff Felton’s qualifications to protect the interest of the class which he seeks to represent.


author: DANAHER, Senior Circuit Judge:

text:
    OGDEN DEVELOPMENT CORPORATION and the Dwight Building Company, Plaintiffs-Appellants, v. FEDERAL INSURANCE COMPANY, Defendant-Appellee.
    No. 171, Docket 74-1604.
    United States Court of Appeals, Second Circuit.
    Argued Oct. 17, 1974.
    Decided Dec. 9, 1974.
    William W. Owens, New York City (Rogers & Wells, New York City), for plaintiff s-appellants.
    Cecil F. Holland, Jr., New York City, Hart & Hume, New York City, for defendant-appellee.
    Before DANAHER, FEINBERG and MULLIGAN, Circuit Judges.

       Senior Circuit Judge for the District of Colum iia Circuit, sitting by designation pursuant to 28 U.S.C. § 294(d) (1970).

   DANAHER, Senior Circuit Judge:

The appellants (herein Ogden/ Dwight, a joint venture), sued on an obligation in which Charles Pankow, Inc. (herein Pankow) a competing contracting company, was principal, and appellee, Federal Insurance Company (herein Federal) was surety. Ogden/Dwight relying upon Rule 56(c), had sought summary judgment, interlocutory in character, on the issue of liability, or, in the alternative, pointing to Rule 56(d), had moved for an order specifying facts appearing to be without substantial controversy. Federal cross-moved for summary judgment dismissing the complaint. District Judge Tenney concluded that the bond in suit had prescribed a penalty rather than a legally enforceable provision for liquidated damages. Accordingly he ruled as a matter of law that a complete legal defense had been presented, and so Ogden/Dwight’s motion was denied in its entirety. Thereupon Federal’s motion was granted and the complaint was dismissed.

We affirm.

The University of Vermont in 1971 inaugurated a contest among selected contracting firms who were invited to submit proposals for the design and construction of a residential and educational complex on University property in Vermont. Over the period pertinent to our consideration Mr. Melvin A. Dyson was Chief Financial Officer of the University. His letter in the front of a pre-qualification “Brochure” had notified the prospective contestants that the University ultimately would select a single proposal according to quality and design, with the project cost fixed in the neighborhood of $5,750,000. A “Request” for proposals would be issued on June 21, 1971, only to those who had qualified in all respects. Each Design/Build Team, so-called, was informed further that the posting of an acceptable Proposal Performance Bond was a prerequisite to establishing eligibility for further consideration.

As of June 18, 1971, Pankow as Princi-. pal and Federal as Surety had entered into and forwarded to the University the required Proposal Performance Bond in the penal sum of $20,000 in favor of the University of Vermont as promisee. The obligation submitted by Pankow was expressly subject to the following condition:

Now, Therefore, if the said Principal shall notify the University in writing before July 2, 1971, that they [sic] cannot prepare an adequate proposal or shall submit on or before 2 o’clock p. m., August 23, 1971, a complete Design/Build Proposal, then this obligation shall be void; otherwise the bond will be forfeited unto the University of Vermont as liquidated damages.

Pankow was later to be informed by Mr. Dyson’s letter dated July 7, 1971, that the Pankow firm and two other qualified contestants, Ogden/Dwight and The Carlson Corporation, had been chosen to proceed, and that the University would look forward to receipt of their Design/Build Proposals not later than September 6, 1971 (a date later extended to September 13, 1971).

All three Design/Build Teams submitted their respective proposals on the due date. Pankow had tendered a cost overrun of $392,000. Where the University had contemplated five housing clusters, Pankow had proposed to design and to construct only four. Pankow planned an average of 150 students to each cluster which, according to Mr. Dyson’s affidavit, would have permitted the housing of too few students at the Center. Yet other variances were the subject of controversy, apparently unresolved by exchanges of correspondence and telegraphic communications. Mr. Dyson’s affidavit of record further attested his meeting with the Chairman of the Evaluation Committee, the University’s counsel and three professional architects in whose opinion the Pankow proposal as amended could not be evaluated and was deemed not in compliance with the specifications in the Request. Without our enumeration of yet other aspects of dissatisfaction, Mr. Dyson as of September 23, 1971, wrote Pankow demanding payment under the bond. Receiving no response, then or thereafter, the University, acting by its board of trustees, on October 7, 1972, assigned to Odgen/ Dwight any claim the University might have against Pankow and Federal. This action was thereafter instituted by complaint dated December 6, 1972.

I.

Against the background of the foregoing facts, we must discern applicable law in this diversity case under New York choice of law rules, pursuant to which New York courts would probably look to Vermont law. The briefs of the parties in this court ignored Vermont law entirely. In our own analysis, and since we have found no contrary authority, we will assume that Vermont law does not differ from New York law on the issues before us. Accordingly we have here relied almost completely on general authorities and on decisions construing New York law.

Turning now to the contract in suit, supra, there was to be no liability if before July 2, 1971, the University should receive written notice from Pankow that Pankow could not prepare an adequate proposal. However, we also may perceive that Pankow agreed that its bond (with Federal as surety) would be forfeited to the University as “liquidated damages” unless performance was accomplished by the dates the University prescribed.

It seems beyond peradventure that the University desired specifically to know by July 2, 1971, just exactly what Design/Build Teams were to continue in the competition. Additionally, the University had prescribed a time schedule as it sought assurance of being able to evaluate completed Design/Build Proposals from each of the respective contestants.

The performance sought clearly was intended for the benefit of the University, and the promise of Pankow and Federal ran directly to the University alone. The University had disavowed in advance any intention to profit from a possible forfeiture, indeed the University envisioned only slight damage if a participant should submit an incomplete proposal.

Assuming a forfeiture, had the University itself instituted action on that bond, Federal would have been entitled to judgment unless the University could have shown that the penal sum of $20,-000 represented a reasonable forecast of just compensation because of Pankow’s alleged failure to submit a complete proposal. ' Under such circumstances, the agreement before us is not enforceable as a contract, What we have here is an agreement which constitutes a “penalty.”

Perhaps even though the Court had before it a government contract, we may profitably consider the general principles discussed in Priebe & Sons v. United States, 332 U.S. 407, 68 S.Ct. 123, 92 L.Ed. 32 (1947). There Mr. Justice Douglas identified the question of whether a provision for “liquidated damages” should be denied enforcement on the ground that it constitutes a “penalty.” There had been a failure of promised performance by a date certain whereupon “liquidated damages” had been sought.

The opinion speaks of delays by contractors creating no damaging interference with continuance of the procurement program, and then goes on to say:

Under these circumstances this provision for “liquidated damages” could not possibly be a reasonable forecast of just compensation for the damage caused by a breach of contract. It might, as respondent suggests, have an in terrorem effect of encouraging prompt preparation for delivery. But the argument is a tacit admission that the provision was included not to make a fair estimate of damages to be suffered but to serve only as an added spur to performance. It is well-settled contract law that courts do not give their imprimatur to such arrangements. See Kothe v. R. C. Taylor Trust [280 U.S. 224, 226, 50 S.Ct. 142, 74 L.Ed. 382]; Restatement, Contracts § 339. All provisions for damages, are, of course, deterrents of default. But an exaction of punishment for a breach which could produce no possible damage has long been deemed oppressive and unjust. 332 U.S. at 413, 68 S.Ct. at 126. (Citations omitted.) (Emphasis added.)

It fairly may be observed that there is no suggestion that Ogden/Dwight suffered in any way or changed its position on any account because of anything Pan-kow did or failed to do. The same is true of the University itself. Thus the specification of the penal sum of $20,000 seems so disproportionate to any damage reasonably to have been anticipated, that the provision under consideration must be viewed as one for an unenforceable penalty. We do not here see a situation where the parties really meant to treat that sum as the equivalent of “estimated and ascertained” damages.

Judge Tenney so interpreted the language of the instrument before him and correctly applied the law.

II.

It may well seem that we are not called upon to go further but in view of the earnestness with which Ogden/ Dwight has advanced its claim, we will consider its status. Judge Anderson points out in Hylte Bruks Aktiebolag v. Babcock & Wilcox Co., 399 F.2d 289, 292 (2 CA 1968), quoting from 10 N.Y.Jur., Contracts, § 239, at 162:

“It is essential not merely that the contract shall operate for the benefit of the third person but that it shall have been so intended.”

Restatement, Contracts, Section 133, delineates third-party beneficiaries as of three classes, (1) the donee beneficiary and (2) the creditor beneficiary but then in (3) defines as an incidental beneficiary a party which does not come within classifications (1) or (2). Illustration 9, applicable here, may be transposed to read: We see no basis on the present record for our going further than did the Court in Tomaso, Feitner & Lane, Inc. v. Brown, 4 N.Y.2d 391, 175 N.Y.S.2d 73, 74-75, 151 N.E.2d 221 (1958) (per curiam) and authorities cited therein.

If B, Pankow, promises to pay A, the University, in order that the University may be provided with money to pay C, D, and E, the latter “are at most incidental beneficiaries.”

It was the University which here proffered its own undertaking to qualifying contestants who failed to receive the contract. The University had represented its intention to cover its own expenses and thereafter to distribute the remaining balance to qualifying contestants such as Ogden/Dwight. What the University might have chosen to do following a forfeiture represented in no way a promise by Pankow to confer a direct benefit upon Ogden/Dwight or to the six other contestants who originally had submitted parallel obligations and who likewise might have qualified had they not withdrawn. The instant contract contained no promise to make such contestants direct beneficiaries of Pan-kow’s obligation.

In sum, the law of New York contemplates that suit may not be maintained by those who are merely incidental beneficiaries. Rather, a contract is to be enforced only by those who are parties to it and by those. who are its direct beneficiaries. Thus is reflected the general law discussed in Ger. Alliance Ins. Co. v. Home Water Co., 226 U.S. 220, 230, 33 S.Ct. 32, 57 L.Ed. 195 (1912):

Before a stranger can avail himself of the exceptional privilege of suing for a breach of an agreement, to which he is not a party, he must, at least show that it was intended for his direct benefit. For, as said by this court, speaking of the right of bondholders to sue a third party who had made an agreement with the obligor to discharge the bonds, they “may have had. an indirect interest in the performance of the undertakings, but that is a very different thing from the privity necessary to enable them to enforce the contract by suits in their own names.” (Citations omitted.)

We are satisfied that Judge Tenney correctly discerned the problem herein presented.

The judgment is affirmed.

      . Ogden Development Corporation, a Delaware corporation, and the Dwight Building Company, a Connecticut corporation.

      . Pankow is a California corporation, and Federal is a New Jersey corporation with its principal place of business in New York City.

      . Not a party to this action.

      . The University had specified that if a Design/Build Team notified the University in writing before July 2, 1971, that it could not prepare an adequate proposal, its Proposal Performance Bond or check would be returned. Six of the nine Design/Build Teams which had met prequalification requirements and accordingly had received the University’s “Request” document prescribing guidance details and specifications decided after consideration to withdraw from the competition, and their Proposal Performance Bonds were returned to them.

      . The University additionally had assured the return of a Proposal Performance Bond if a complete Design/Build Proposal were submitted to the University by September 13, 1971. However, the Request continued: “If for any reason a Design/Build Team fails to submit a [timely] proposal . . . the bond or check will be forfeited to the University as liquidated damages.”
      The University further explained:
      It is not the intention of the University to profit from such forfeiture; the money will be used to cover any expenses incurred by the University because of the failure of any Design/Build Team to submit a complete Design/Build Proposal and the remainder distributed among those Design/Build Teams who have submitted unsuccessful proposals.
      In reference to the foregoing, Mr. Dyson in his affidavit in support of the Ogden/Dwight motion asserted:
      It should have been obvious to each prospective contestant that the University could suffer only slight damage if a participant submitted an incomplete proposal. (See note 7, infra.)

      The contract was ultimately awarded to The Carlson Corporation.

      . Pankow pleaded various defenses controverting the University’s claims of justification for its declaration of forfeiture. In the view we take of this case we need not consider the factual conflict. Neither did Judge Tenney.

      . See note 5, supra. There is no evidence of record that the University sought recovery of any expenses on its own account.

      . There is no apparent reason why this action could not have been brought in the state courts of Vermont or New York or in the Vermont federal court. Apparently the Southern District of New York was chosen primarily as a matter of convenience for plaintiffs’ lawyers.

      . If our views of governing law shall appear mistaken when eventually assessed by the state courts, either of New York or of Vermont, appropriate correction will follow. Of course, any such possible clarification will not benefit the parties now before us, but as noted, they had chosen not to utilize a more authoritative forum for pronouncement of state law.

      . On the face of the instrument there was no promise to render performance to any third person.
      In this circumstance we do not agree with the contention of Ogden/Dwight that the bond together with the “Request,” supra note 5, constituted a single contract, to which Ogden/Dwight and Pankow were parties. We recognize that writings which form part of the same transaction and are designed to effectuate a common purpose may in some situations be read together even though they are not all between the same parties, see, e. g., Kurz v. United States, 156 F.Supp. 99, 103-104 (S.D.N.Y.1957), aff’d, 254 F.2d 811 (2 CA 1958), and authorities there cited.
      Here, however, we cannot find that the writings sought to be read as a single contract were sufficiently closely related to come within the rule. In any event, as we point out in the text, infra, Ogden/Dwight suffered no loss occasioned by Pankow’s conduct. When Ogden/Dwight entered the competition, it plainly accepted the risk of possible loss of its own expenses in the preparation of its proposal if it should fail to submit a better plan than that of the successful competitor, The Carlson Corporation. Thus, even if Ogden/Dwight could have sued directly on the alleged “contract,” it still would have been seeking to enforce a penalty, a course which must fail for the reasons discussed in our text, infra.

      . Supra, note 5.

      . Restatement of Contracts, Section 339(1) (1932)
      (1) An agreement, made in advance of breach, fixing the damages therefor, is not enforceable as a contract and does not affect the damages recoverable for the breach, unless
      (a) the amount so fixed is a reasonable forecast of just compensation for the harm that is caused by the breach, and
      (b) the harm that is caused by the breach is one that is incapable or very difficult of accurate estimation.

      . And see the opinion of Mr. Justice Frankfurter, who, dissenting because a Government contract was involved, nevertheless observed: “Accordingly, if this contract were an ordinary commercial contract subject to the ordinary rules of the law of contract, I should have to find against the Government.” Id. at 419, 68 S.Ct. at 129.
      Incidentally, on the brief for the successful petitioner was Samuel Williston.

      . See the excerpt from Mr. Dyson’s affidavit, supra note 5.

      . Kothe v. R. C. Taylor Trust, 280 U.S. 224, 226, 50 S.Ct. 142, 143, 74 L.Ed. 382 (1930) where the Court made the point thus:
      [A]greements to pay fixed sums plainly without reasonable relation to any probable damage which may follow a breach will not be enforced. This circumstance tends to negative any notion that the parties really meant to provide a measure of compensation — “to treat the sum named as estimated and ascertained damages.”
      What really appears from the instant record is the University’s purpose to secure “an added spur to performance,” Priebe & Sons v. United States, supra, 332 U.S. at 413, 68 S.Ct. 123, 92 L.Ed. 32.

      . See City of Rye v. Public Serv. Mut. Ins. Co., 42 App.Div.2d 749, 346 N.Y.S.2d 163, 165-166 (2d Dep’t 1973); Big Top Stores, Inc. v. Ardsley Toy Shoppe, Ltd., 64 Misc.2d 894, 315 N.Y.S.2d 897, 904 (Sup.Ct.1970), aff’d, 36 A.D.2d 582, 318 N.Y.S.2d 924 (2d Dep’t 1971); Restatement of Contracts § 339, supra note 12; cf. J. Weinstein & Sons, Inc. v. City of New York, 264 App.Div. 398, 35 N.Y.S.2d 530, 532 (1st Dep’t), aff’d, 289 N.Y. 741, 46 N.E.2d 351 (1942).

      . Judge Anderson observed, id., 399 F.2d at 293, n.6, that Professor Corbin is more liberal than the New York courts. See, e: g., Judge Friendly in Rey v. Penn Shipping Co., Inc., 277 F.2d 905, 906-907 (2 CA 1960) citing with approval Pennsylvania Steel Co. v. New York City Railway Co., 198 F. 721, 749 (2 CA 1912) where the court said “It must appear that the parties intend to recognize [the third person] as the primary party in interest and as privy to the promise.” Compare Associated Flour Haulers & Warehousemen, Inc. v. Hoffman, 282 N.Y. 173, 180, 26 N.E.2d 7, 9-10 (1940); DeGioia v. United States Lines Company, 205 F.Supp. 627, 630 (E.D.N.Y.1961). See generally 4 A. Corbin, Contracts §§ 779D, 790-791; 2 S. Williston, (3d ed. W. Jaeger 1959) § 402; 17 Am.Jur.2d § 307, at 732.

      . Ogden/Dwight argues that a different outcome would result were we to adopt the “intended beneficiary-incidental beneficiary” analysis of Restatement Second of Contracts § 133 (Tent. Draft 1973). However, Illustration 9 of First Restatement § 133, discussed in the text, is retained in the Restatement Second as Illustration 3, indicating that application of the new Restatement here probably would not change the result.

      . See footnote 5, supra.

      . Haran v. Hand, 37 App.Div.2d 291, 324 N.Y.S.2d 556, 558 (1st Dep’t 1971); cf. Shaw v. E. I. DuPont De Nemours & Co., 124 Vt. 304, 204 A.2d 159, 161 (1964) citing Seaver v. Ransom, 224 N.Y. 233, 120 N.E. 639 (1918); and see Fosmire v. National Surety Co., 229 N.Y. 44, 48, 127 N.E. 472 (1920).

      . See reference to Ger. Alliance Ins. Co., supra and discussion by Cardozo, J., in Moch Co. v. Rensselaer Water Co., 247 N.Y. 160, 168, 159 N.E. 896, 898-899 (1923); Quirke v. Chessie Corp., 368 F.Supp. 558, 561 (S.D.N.Y.1974); DeGioia v. United States Lines Company, supra note 17; compare Johnson Farm Equipment Company v. Cook, 230 F.2d 119, 124 (8 CA 1956).


author: PER CURIAM:

text:
    UNITED STATES of America, Plaintiff-Appellee, v. Mitchell MILLER, Susan McDuffie Weeks, and John Henry McDuffie, Defendants-Appellants.
    No. 73-2405.
    United States Court of Appeals, Fifth Circuit.
    Jan. 15, 1975.
    D. L. Rampey, Jr., Warner Robins, Ga., for Miller.
    W. W. Larsen, Jr., Dublin, Ga., for Weeks and McDuffie.
    William J. Schloth, U. S. Atty., Ronald T. Knight, O. Hale Almand, Asst. U. S. Attys., Macon, Ga., Ivan Michael Schaef-fer, Appellate Sect., Crim. Div., Dept, of Justice, Washington, D. C., for plaintiff-appellee.
    ON PETITION FOR REHEARING AND PETITION FOR REHEARING EN BANC
    Before GEWIN, GOLDBERG and CLARK, Circuit Judges.
   PER CURIAM:

The Petition for Rehearing filed on behalf of Appellee (U.S.A.) is denied and the Court having been polled at the request of one of the members of the Court and a majority of the Circuit Judges who are in regular active service not having voted in favor of it, (Rule 35 Federal Rules of Appellate Procedure; Local Fifth Circuit Rule 12) the Petition for Rehearing En Banc is also denied.

Before BROWN, Chief Judge, and WISDOM, GEWIN, BELL, THORN-BERRY, COLEMAN, GOLDBERG, AINSWORTH, GODBOLD, DYER, SIMPSON, MORGAN, CLARK, RONEY and GEE, Circuit Judges.

SIMPSON, Circuit Judge, joined by BROWN, Chief Judge, and BELL, AINSWORTH, DYER, RONEY and GEE, Circuit Judges, dissenting:

With deference, we here enter our vigorous dissent from the full court’s failure, by a narrow 8 — 7 vote, to grant the Petition of the United States for Rehearing en Banc. Our dissent is dictated by two basic reasons.

In the first place, the panel opinion departs radically from prior decisions denying to bank customers the standing to challenge subpoenas of bank records of their accounts. We disagree with the panel holding that such a result is either required or supported by California Bankers Association v. Shultz, 1974, 416 U.S. 21, 94 S.Ct. 1494, 39 L.Ed.2d 812. Neither may the panel decision be justified under the copying and reporting requirements of the Bank Secrecy Act of 1970, 12 U.S.C., §§ 1829b, 1730d, 1951-1959, and its implementing regulations, 31 C.F.R. § 103.34(b)(3) (1973) and 31 C.F.R. § 103.36 (1973). The panel opinion appears to be oblivious to the momentous change it would put in motion by its cursory treatment of the question of standing and its bland assumption that the depositor-appellant Miller had standing here to attack the subpoenas duces tecum directed to the banks.

Secondly, if the presence of standing on the part of the depositor is assumed arguendo, and the merits of the panel decision are considered, we disagree that the process involved here was so infirm as to dictate reversal of the district court. Finding the process faulty, the panel reverses without determining whether the alleged error is of such a nature as to require reversal. The implication is that faulty process per se is reversible error. We do not at all agree that the process below was faulty, but assuming that it was, prejudice to the appellant from such defect was not shown to have resulted and hence reversal is not indicated.

The following facts emerge from the panel opinion and from the briefs of the parties before the panel and the petition for rehearing en banc of the United States.

The appellant Miller and four others were indicted for conspiracy to defraud the United States in connection with the manufacture and possession of non-tax-paid distilled spirits, 18 U.S.C. § 371 and 26 U.S.C. § 5601 et seq., and corresponding related substantive offenses. Miller was the hub of the conspiracy, its source of necessary operating funds, its guiding intelligence and the director of its operations. At a second trial, following a mistrial, he was convicted by a jury of conspiracy and of the three substantive charges for which he was tried. Concurrent three year confinement sentences were imposed on him. Miller’s conviction is reversed for retrial by the panel decision.

The alleged trial error with which we are concerned on the Petition of the United States for Rehearing en Banc is the admission into evidence of microfilm copies of Miller’s bank checks kept pursuant to the record-keeping provisions of the Bank Secrecy Act and obtained by grand jury subpoenas duces tecum directed to two banks at which he conducted banking business. On appeal, Miller challenged the legality of the subpoenas as not issued under the direction of the court, because no return was made on them, and because they were returnable to a date when the grand jury was not scheduled to be in session. The two banks allowed inspection by revenue agents on the bank premises; the bank representatives were then relieved of any obligation to appear before the U. S. Attorney or before the grand jury.

The panel accorded to Miller the requisite standing to complain of the claimed illegality of the subpoenas duces tecum, and held that the subpoenas were fatally defective. The bank’s waiver of defects was held not to bind the depositor Miller because of his protected interest in bank records kept pursuant to the Bank Secrecy Act and pertaining to his account.

The panel’s grounds for this decision are unclear. Language in the opinion indicates both that the panel considered Miller to have an ownership interest and a cognizable privacy interest. But the new interest is recognized in the customer in order to prevent the copying requirements of the Bank Secrecy Act from being used as a means of circumventing the protection accorded an individual’s “private papers” by the Fourth Amendment. See Boyd v. United States, 1886, 116 U.S. 616, 6 S.Ct. 524, 29 L.Ed. 746. Once a protected right in the bank records is established, a depositor’s standing follows.

Ruling sub silentio that a depositor has standing to challenge a grand jury subpoena of bank records of his account, the panel renounces earlier case law and accords to a depositor rights that he never enjoyed prior to passage of the Bank Secrecy Act. With unanimity the earlier cases denied to a depositor the standing to challenge IRS subpoenas of bank records pertaining to his banking transactions, including microfilm copies of checks. See Harris v. United States, 9 Cir. 1969, 413 F.2d 316; Galbraith v. United States, 10 Cir. 1968, 387 F.2d 617; O’Donnell v. Sullivan, 1 Cir. 1966, 364 F.2d 43, cert. denied 385 U.S. 969, 87 S.Ct. 501, 17 L.Ed.2d 433; Application of Cole, 2 Cir. 1965, 342 F.2d 5, cert. denied 381 U.S. 950, 85 S.Ct. 1803, 14 L.Ed.2d 723; DeMasters v. Arend, 9 Cir. 1963, 313 F.2d 79, cert. dism. 375 U.S. 936, 84 S.Ct. 341, 11 L.Ed.2d 269; Foster v. United States, 2 Cir. 1959, 265 F.2d 183, cert. denied 360 U.S. 912, 79 S.Ct. 1297, 3 L.Ed.2d 1261. Such records were deemed to be the property of the bank, and the cases denied recognition of any depositors’ rights to them, whether sought under an ownership theory, see Harris, supra, Galbraith, supra, O’Donnell, supra, Application of Cole, supra, DeMasters, supra, Foster, supra, or by virtue of an agency theory, see Harris, supra, and Schulze v. Rayunec, 7 Cir. 1965, 350 F.2d 666, cert. denied Boughner v. Schulze, 382 U.S. 919, 86 S.Ct. 293, 15 L.Ed.2d 234. Accordingly, as the Ninth Circuit held in DeMasters, supra, if any right was violated, the right was that of the bank, not the customer, and the bank could waive any right it might have to resist production under subpoena. 313 F.2d at 85.

While we have not located any case in which a depositor claimed a cognizable privacy interest sufficient to confer standing under Katz v. United States, 1967, 389 U.S. 347, 88 S.Ct 507, 19 L.Ed.2d 576, at least one post-Katz case which denied standing recognized that a cheek cannot be considered a confidential communication. See Harris, supra. When a customer writes a check, he “set[s] the check afloat on a sea of strangers”, and knows when he does so that it

will be viewed by various employees at the bank where it is cashed or deposited, at the clearing house through which it must pass, and at his own bank to which it will eventually return.

413 F.2d at 319 — 320. It is a negotiable instrument in commerce. See Harris, supra; California Bankers, 416 U.S. at 48-49, 94 S.Ct. at 1511, 39 L.Ed.2d at 833. A drawer has no assurance that his payee will not endorse, nor that the en-dorsee will not further endorse. Nor can he prevent this. In drawing a check, he does not exhibit an actual expectation of privacy which society is prepared to accept as reasonable. See Katz, 389 U.S. at 361, 88 S.Ct. at 516, 19 L.Ed.2d at 588 (Harlan, J., concurring).

The question presented by the government petition, which this Court by a one-vote margin declines to consider en banc, is whether the intervening statutory requirement of the Bank Secrecy Act of 1970 that banks compile and retain records of transactions with their customers, including microfilming, held constitutional in California Bankers, conferred standing upon depositors where it was not previously recognized. Our position is that standing was not so conferred.

The fact that the United States by statute now requires banks to microfilm checks and other records of dealings with customers makes such records no more the property of the customer than they were when the banks microfilmed voluntarily. As the Supreme Court noted in California Bankers, the bank is not a disinterested bystander, but is a party to the transaction. 416 U.S. at 48-49, 94 S.Ct. at 1511, 39 L.Ed.2d at 833. It pays for the records and stores them. It could not be seriously contended that a customer has a right to them sufficient to obtain and retain possession of them. While of course the records pertain to customers’ accounts, they do not ipso facto become the depositors’ records.

Nor is it any more reasonable now than heretofore to have a “reasonable expectation of privacy”. Indeed it is less reasonable, because the records are now required to be maintained by statute, whereas prior to the passage of the Act microfilms were kept at the business discretion of banks, and customers were not informed of the practices of their own bank, or of other banks involved in the collecting process. See Harris, supra. Any one of the checks in the instant case might as easily have been endorsed by the payee to a third party. The privacy which is alleged to exist actually rests not in the expected confidentiality of communications with one’s bank but in the belief that a party to a check will remain anonymous because viewers of the instrument will not know who he is, attach significance to the transaction, or remember its details. We consider it an anomaly that a statute designed to grant greater government access to bank records results here in a restriction on government access to such records. The result reached stands the statutory scheme on its head.

The Supreme Court decision in California Bankers does not compel a different result. The precise issue before the panel of this Court was there reserved for decision. See n. 6, supra. But the Supreme Court noted expressly that:

We decided long ago that an Internal Revenue summons directed to a third-party bank was not a violation of the Fourth Amendment rights of either the bank or the person under investigation by the taxing authorities. See First National Bank v. United States, 267 U.S. 576, 45 S.Ct. 231, 69 L.Ed. 796 (1925), aff’g 295 F. 142 (S.D.Ala.1924); Donaldson v. United States, 400 U.S. 517, 522, 91 S.Ct. 534, 538, 27 L.Ed.2d 580 (1971). “[I]t is difficult to see how the summoning of a third party, and the records of a third party, can violate the rights of taxpayer, even if a criminal prosecution is contemplated or in progress.” Donaldson v. United States, supra, at 537, 91 S.Ct. at 545 (Douglas, J., concurring). 416 U.S. at 53, 94 S.Ct. at 1513, 39 L.Ed.2d at 835.

Although the Court recognized that the bank acts under compulsion of the statute in taking checks and making the microfilms, “it is equally clear that in doing so it neither searches nor seizes records in which the depositor has a Fourth Amendment right.” 416 U.S. at 54, 94 S.Ct. at 1513, 39 L.Ed.2d at 836 (emphasis added). We find trouble in understanding the process by which a depositor acquires a greater Fourth Amendment right in the copies produced. See dissenting opinion of Mr. Justice Marshall, 416 U.S. at 97, 94 S.Ct. at 1535, 39 L.Ed.2d at 861, in which he points out that the majority opinion intimates a lack of standing on the part of customers respecting copies. This Court’s panel in Miller confuses the rights of the banks with the rights of their depositors.

Going to our second objection to the panel holding, and assuming that appellant Miller had standing to challenge the validity of the subpoenas, we do not agree that they were defective. And even if the subpoenas were defective, no prejudice is shown such as to require their suppression. This court at a minimum should remand for hearing and determination by the district court as to whether the government was preparing in good faith for presentment of pertinent records to the grand jury or was merely on a “fishing expedition”.

The process referred to by the Supreme Court in California Bankers is “existing” legal process. 416 U.S. at 52, 94 S.Ct. at 1513, 39 L.Ed.2d at 835. That case imposed no stricter standard where bank records are the object demanded for production than for production of any other type of record.

The Miller panel’s finding of defectiveness apparently stems from three circumstances: (1) the delay of nineteen days between the issue date of the subpoenas and the scheduled grand jury meeting, (2) the lack of a return on the process, and (3) the fact that the U. S. Attorney, rather than the court or the grand jury, initiated the process. We are persuaded nonetheless that the subpoenas were not faulty so long as the U. S. Attorney was preparing in good faith for the grand jury session. Morton Salt, infra.

The panel finds merit in Miller’s objection that the subpoenas were not issued at the direction of the court or at the instance of the grand jury, but solely at the discretion of the U. S. Attorney. There is no basis for valid objection to this practice. It is entirely normal and usual, has been repeatedly upheld, is necessary to the efficient investigation of crime by conserving a grand jury’s time, and is authorized by F.R.Crim.P. 17(a). See United States v. Culver (D.Md.1963) 224 F.Supp. 419; In Re Subpoena Duces Tecum (E.D.Tenn.1916) 248 F. 137.

United States v. Morton Salt Co. (D.Minn.1962), 216 F.Supp. 250, aff’d 382 U.S. 44, 86 S.Ct. 181, 15 L.Ed.2d 36, is closely in point. In Morton Salt the U. S. Attorney procured a subpoena duces tecum issued from the office of the clerk of the court on December 28, 1959, although the grand jury was not to be impaneled until February 17, 1960. The defendants contended that this procedure was improper. The court termed this argument “patently unsound”. 216 F.Supp. at 257. The special prosecutor, an attorney from the Anti-Trust Division of the Department of Justice, was duly authorized to conduct the investigation, and acted under his authority in procuring the issuance. Id.

The Miller panel opinion also relies on the circumstances that no grand jury was in session when the subpoenas issued and that no returns were made of service thereon.

We stated in United States v. Hedge, 5 Cir. 1972, 462 F.2d 220, 223 that a witness subpoena for a trial was properly returnable only at the place of trial, and that a subpoena directing witnesses to appear at the U. S. Attorney’s office on the Sunday before trial was improper, citing Rule 17(a) F.R.Crim.P., but refused to find prejudice to the appellant in the violation of the rule. Accord, United States v. Standard Oil Co., 7 Cir. 1963, 316 F.2d 884. We find no conflict between the position we take and the view announced in Hedge, supra. It bears emphasis that Hedge dealt with a trial situation, in contrast to the grand jury investigation involved in Miller. In our judgment, the difference is controlling. To the extent if any, that Hedge announces a rule at variance with the Supreme Court’s holding in Morton Salt, supra, it should go without saying that we must follow the Supreme Court.

The U. S. Attorney is the guiding arm of the grand jury, concerned with the orderly presentation of information before that body. It is customary practice in the courts for documents and witnesses to be subpoenaed in advance to eliminate unnecessary material, allow for the orderly presentation of evidence, and save the time of grand jurors. See United States v. Johns-Manville Corp., E.D.Pa.1962, 213 F.Supp. 65, n. 20 at 73-74. To refuse the U. S. Attorney power to subpoena documents before the grand jury actually meets in situations where he is preparing in good faith to make a presentation to the grand jury substantially interferes with the orderly operation of that body.

The grand jury in the instant case did in fact meet nineteen days after the subpoenas duces tecum were issued. There should be no suspicion of prosecutorial bad faith on the sole basis of production being sought at a time prior to the date when the grand jury was to meet. We do not read Miller’s allegations of a “fishing expedition” to urge that the records were not sought on behalf of the grand jury for an investigation by that body. If they are to be so construed, a remand is in order for a hearing as to whether the U. S. Attorney was or was not preparing in good faith to present relevant matters to the grand jury.

Finally, even if it is held that the process was defective because the grand jury was not in session, we indicated in Hedge, supra, that a showing of prejudice was necessary before corrective action should be ordered. It is impossible to read prejudice as present ipso facto on the basis of the grand jury being out of session, or the failure to endorse a return on the process.

For the foregoing reasons, we dissent from the failure of the court to consider this case en banc. This decision, now permitted to stand, will impose severe handicaps to the orderly conduct of official business by U. S. Attorneys throughout this Circuit.

      . The subpoenas issued at the request of the United States Attorney on January 23, 1973 and ordered production of the bank records before the grand jury on January 24. The grand jury did not meet, however, until February 12.

      . We note in this connection the panel’s reliance upon Boyd v. United States, 1886, 116 U.S. 616, 6 S.ct. 524, 29 L.Ed. 746, dealing with the compulsory production of an individual’s “private papers”, and reference to “their [i. e. the depositors’] records”, 500 F.2d at 757, along with the statements that “an unlawful invasion of Miller’s privacy” occurred, Id. at 756 (emphasis added) and that “he whose rights are threatened by the improper disclosure here was a bank depositor, not a bank official.” Id. at 758 (emphasis added).

      . [The government]
      may not cavalierly circumvent Boyd's precious protection by first requiring a third party bank to copy all of its depositors’ personal checks and then, with an improper invocation of legal process, calling upon the bank to allow inspection and reproduction of those copies.
      500 F.2d at 757.

      . The panel opinion glides over the standing issue. At a minimum a more detailed explanation of the panel’s reasons for its action should be accorded to the United States.

      . The records in the cases cited in the text encompassed books, papers, records, memos, and included signature cards, ledger sheets, deposit slips, credit files, applications for loans, financial statements, loan ledger sheets, memos relating to secured or unsecured commercial and personal loans, microfilms of checks and of debit memos charged to an account.

      . It should be pointed out that this precise issue was expressly reserved by the Supreme Court:
      Claims of depositors against the compulsion by lawful process of bank records involving the depositors’ own transactions must wait until such process issues.
      416 U.S. at 51-52, 94 S.Ct. at 1512, 39 L.Ed.2d at 835.

      . Of course, the customer may reasonably expect that the bank will not release information pertaining to his affairs indiscriminately, to any chance person off the street making inquiries. This expectation may rest upon contract or fiduciary concepts, and may even be enforceable against the bank under state law. Fear of suit or the desire to retain or increase deposits may well impel a bank to contest a faulty subpoena, to give notice to the depositor that records of his account are sought, and to protect the customer’s interests otherwise to the extent legally permissible. None of this however would suffice to protect a customer from a lawfully issued subpoena directed to a bank nor would it give him standing to contest it. See McMann v. Securities and Exchange Commission, 2 Cir. 1937, 87 F.2d 377, cert. denied 301 U.S. 684, 57 S.Ct. 785, 81 L.Ed. 1342.

      . Cf. Couch v. United States, 1973, 409 U.S. 322, 93 S.Ct. 611, 34 L.Ed.2d 548; United States v. White, 5 Cir. 1973, 477 F.2d 757, aff'd en banc, 5 Cir. 1973, 487 F.2d 1335.

      . The Supreme Court’s concern as to limiting access to records “by existing legal process” alluded to by the panel opinion, 500 F.2d at 757, is not inconsistent with this position. Under existing legal process only the banks have standing to object.

      . Mr. Justice Powell, in his concurring opinion joined by Mr. Justice Blackmun, expressed concern over the potential for abuse should the regulation’s reporting requirements be significantly extended. 416 U.S. at 78-79, 94 S.Ct. at 1526, 39 L.Ed.2d at 850-851. This concern arises because
      the legislative scheme permits access to this information without invocation of the judicial process. In such instances, the important responsibility for balancing societal and individual interests is left to unre-viewed executive discretion, rather than the scrutiny of a neutral magistrate.
      416 U.S. at 79, 94 S.Ct. at 1526, 39 L.Ed.2d at 850-851. But the Miller panel of this Court faced an entirely different situation. The reporting provisions are not involved in this case. Access was sought by means of “judicial process”, i.e. grand jury subpoena, to copies of bank records. Further, the subpoena when issued was subject to scrutiny by a neutral magistrate should its validity be challenged by individuals with standing. See F.R. Crim.P. 17(c).

      . See the statement, 500 F.2d 757-758:
      Surely a purported grand jury subpoena, issued not by the court or by the grand jury, but by the United States Attorney’s office, for a date when no grand jury was in session, and which in effect compelled broad disclosure of Miller’s financial records to the government, does not constitute sufficient “legal process” within the meaning of the majority opinion.
      This ad hominem statement, together with a footnote (n. 6, at p. 758 of 500 F.2d) and accompanying text, revisiting Mr. Justice Powell’s caveat (416 U.S. at 78-79, 94 S.Ct. at 1526, 39 L.Ed.2d at 850-851), represents the closest approach of the Miller panel to a statement of reasons for finding the process defective.

      . Miller argues on brief that the subpoenas did not issue under an order of court, an apparent basis in part for the court’s decision. We assume in this dissent that Miller’s complaint — that the subpoenas did not issue when the grand jury was in session — includes a claim of defectiveness because not issued at the grand jury’s request.

      . In Morton Salt, supra, an impounding order was issued by the court on January 25, 1960, after the subpoena was issued. The trial court held that the right of government counsel to inspect the documents before presenting them to the grand jury fell within the scope of F.R.Crim.P. 17(c). 216 F.Supp. at 257. Whether a court order is mandatory was not addressed. Our tendency would be to hold that it is not. Interpretations of F.R. Crim.P. 17(c) indicate that the provision for court order was designed to apply, not in situations as in Miller, but to pretrial production of documents in order to expedite trials and avoid delays while parties search for and read documents before offering them into evidence. See 8 Moore’s Fed.Prac. 17.07; 1 Wright, Fed.Prac. and Proc. § 274 at 550-51. Even in this situation, the jurisprudence is unclear as to whether the court’s discretion must be invoked. See 1 Wright, Fed.Prac. and Proc. § 274 at 551.