author: SETH, Circuit Judge.

text:
    KOCH INDUSTRIES, INC., Appellant, v. Irwin Lyon VOSKO, Appellee, and Arthur Young & Company, a partnership, et al., Appellee.
    Nos. 73-1159 to 73-1161.
    United States Court of Appeals, Tenth Circuit.
    Submitted Nov. 13, 1973.
    Decided April 8, 1974.

      Thomas W. Hill, Jr., New York City (Donald Stuart Bab, Robert E. DeRight, Jr., New York City, Joseph W. Kennedy, Robert I. Guenthner, and Oliver A. Witterman, Wichita, Kan., with him on the brief), for appellant.
    Malcolm Miller, Wichita, Kan. (George B. Powers, and Foulston, Sief-kin, Powers & Eberhardt, Wichita, Kan., with him on the brief), for appellee, Irwin Lyon Vosko.
    David Hartfield, Jr., New York City (Paul R. Kiteh and John E. Matson, Wichita, Kan., Fredric S. Newman and Carl D. Liggio, New York City, with him on the brief), for appellee, Arthur Young & Co.
    Before SETH, ALDISERT  and DOYLE, Circuit Judges.

       Of the Third Circuit, sitting by designation.

   SETH, Circuit Judge.

This action was commenced by Koch Industries, Inc., a Kansas corporation, against Irwin Lyon Vosko and Arthur Young & Company. The suit sought damages for fraud, for negligence, for violation of the Securities Act, and punitive damages.

Defendant Vosko denied the allegations in the complaint and filed a counterclaim against Koch Industries for breach of contract and for fraud and deceit. The defendants Vosko and Arthur Young both filed third party claims against Atlas Petroleum, Ltd.

The case was tried to the United States District Court for the District of Kansas without a jury. The trial took about ten weeks, and the transcript consists of some 6,400 pages and 411 exhibits.

The trial court made 186 Findings of Fact. It entered judgment on the counterclaim of defendant Vosko against Koch Industries in the gross amount of $4,822,601.00, as compensatory damages, less a setoff of $2,230,651.00. The court also awarded punitive damages to defendant Vosko against Koch Industries in the amount of $250,000.00, and indemnity for costs and expenses in the amount of $124,600.00. Also the court gave judgment in indemnity to Arthur Young in the amount of about four hundred thousand dollars. The plaintiff Koch appealed (No. 73-1159), and both defendants filed cross-appeals (Vosko, No. 73-1161; Arthur Young, No. 73-1160).

The litigation arose out of the sale by Irwin Vosko of all the capital stock of Atlas Petroleum, Ltd., a Bahamian company, to Koch Industries, Inc., the subsequent employment of Vosko by Atlas, and his retained interests therein and obligations in regard to certain accounts due the company.

Atlas Petroleum was engaged in the international oil trading business. It was also a holding company with subsidiaries having heating oil sales and gasoline sales businesses in Canada and Europe. There were also other subsidiary corporations, with activities unrelated to the oil business or indirectly concerned with it.

Vosko was well into negotiations to sell all the stock in Atlas Petroleum to Occidental Petroleum when representatives of Koch Industries approached him seeking to buy the stock. The negotiations with Occidental did not result in a final agreement, and negotiations between Koch and Vosko commenced. After intensive consideration, the parties entered into a preliminary agreement followed by a stock purchase agreement. This agreement was later modified in important particulars.

Arthur Young was in partnership with accountants in the Bahamas engaged in preparing an audit statement for Atlas Petroleum to be used in the sale to Occidental. The statement, addressed to Atlas shareholders, was completed, but was delivered instead to Koch Industries. Much of the dispute centers around this financial statement and whether certain accounts shown thereon to be due Atlas Petroleum were properly stated and were valid.

As indicated above, the trial court found for Vosko. The findings, a few of which are hereinafter set out, were in effect that Koch Industries was the one and the only one guilty of fraud and the only one which had breached the contract. The Memorandum Opinion of the trial court clearly sets out the facts and the sequence of events in detail, thus we will not repeat them here.

The appellant’s position in this appeal is somewhat unusual in that it asks this court to reverse the trial court and direct entry of a judgment for the appellant, but it does not challenge the findings of fact made by the trial court. In its brief the appellant says of itself: “KI does not generally dispute the trial court’s findings of fact, only the inferences and conclusions which are in no way supported by necessary intermediate findings of fact.” The appellant further urges, as to this same point, that the trial court ignored its own findings which supported KI’s fraud claim, and drew erroneous and unsupported inferences from its findings. The further point appellant urges is that the findings of the trial court “and the record” establish the liability of Vosko and Arthur Young for common law fraud and under the Securities Act.

Thus the appellant would have us use the trial court’s findings, refer to the record, and reach a conclusion opposite to that reached by the trial court; then to direct entry of judgment for the full amount claimed by KI as damages, order the judgment to include the full amount claimed by KI as punitive damages, and “grant such other and further relief as to the court seems appropriate.”

As indicated above, the trial court made findings of fact which cover the details of the many transactions over a period of several years. The trial lasted some ten weeks, and many witnesses were heard, and exhibits received. These findings cover about one hundred pages in the Appendix, and reference is made to them for a more detailed description of the facts. It is sufficient for these purposes to quote several of the findings of fact which summarize the details. These are findings relating to the basic fraud issue. The trial court found in findings numbers 146, 147, 148, and 166 as follows:

“146. From the documentary evidence and testimony concerning events which transpired within the Koch organization from August, 1969 through February, 1970 — and in light of what transpired thereafter, the Court is of the opinion, and so finds, that beginning in August, 1969, Koch wilfully and intentionally embarked upon a tax scheme and plan to operate Atlas Pete for its own purposes, with a total and contemptuous disregard for the rights of Vosko under the Purchase Contract and Agreement of June 13, 1969, including his rights in the fixed asset companies, and to deprive him of a reasonable good faith expectation of continued employment and enjoyment of his stock rights, so long as he conducted himself in accordance with fair and honest instructions of his employer, Koch.
“147. In arriving at the foregoing findings of bad faith conduct on the part of Koch, the Court has considered testimony and documents concerning Koch’s plan to obtain a tax write-off of its total investment in Atlas Pete, to write down the assets of Atlas Pete and its subsidiaries, to write off accounts receivable and other alleged losses in as great an amount as possible for the year 1969, and finally, to ‘finish-off’, or liquidate Atlas Pete in 1970, all necessary steps in the plan to substantiate Koch’s claimed tax losses and to avoid its obligations to Vosko.
“148. In particular, the Court finds, with respect to the documents [TE 323 and TE 406] that:
“a) On October 1, 1969, Koch had no intention whatsoever of sharing any portion of Atlas Pete’s income with Vosko;
“b) On or before that date, Koch had determined that it would assure, to every extent possible that Atlas Pete would have no income during 1969-1970;
“c) Koch induced Vosko to release his option and veto rights in the fixed asset companies, in bad faith, and with the intent to deal with these companies in its own interests, and for its own purposes, and not, as represented and promised, for the mutual benefit of Koch and Vosko;
“d) On October 1, 1969, Koch had no intention of honoring its promise not to sell or dispose of the fixed assets if such sale would materially affect the value of Atlas Pete as an operating entity; and
“e) On October 1, 1969, when Koch reaffirmed and re-adopted all provisions of the Stock Purchase Agreement, not otherwise amended, it did so in bad faith, intentionally concealing its real intent to dispense with Vos-ko’s services at the first opportunity, in utter disregard of his employment rights and expectations under his employment agreement with Koch.”
* * * * -x- *
“166. The Court concludes and finds, that any representations or warranties made by Vosko concerning the 1968 Financial Statement, or matters contained in the Memorandum of Intent of May 22nd, or matters contained in the Purchase Agreement on June 13, 1969, were in good faith, and without intent to defraud, cheat, or mislead Koch as those terms are understood in the Securities Act of 1933, 1934, and Rule 10b-5, or in the common law of fraud and deceit, all as alleged by plaintiff in the Pre-Trial Order, Dkt. No. 152, pp. 11-17, 20-23; 16, 20. [Counts I, II, III, and IV, Complaint].”

These are the findings as to the active fraud practiced by Koch Industries on Vosko. They are clear, direct, and leave no room for any inferences. They contain all the elements of common law fraud. These elements are contained in the findings quoted above. See Young v. Taylor, 466 F.2d 1329 (10th Cir.), and Venture Investment Co., Inc. v. Schaefer, 478 F.2d 156 (10th Cir.). These findings cannot be avoided, ignored, or explained away by the appellant. There is no assertion that they are not supported by the evidence, and indeed they are supported. They are based on the combination of testimony of the witnesses heard by the trial court, together with the exhibits. There were no findings that Vosko was guilty of fraud in any respect, nor in misleading appellant.

With this state of the record, it is difficult to find any validity whatever in appellant’s point in its argument and brief that: “The findings of the trial court and the record establish the liability of both AY and Vosko to KI under the Federal Securities laws and the common law of fraud and deceit, both individually and as conspirators,” or that the trial court erred “in ignoring its own findings which suppport KI’s fraud claims.”

Little more need be said as to fraud as it was established that Koch Industries was the only wrongdoer, and without any qualifications or conditions.

The initial relationship, rights, and duties of the parties were established by a written agreement which was later modified by an arm’s length negotiation and also by amendments negotiated by appellant with a fraudulent purpose.

The trial court made a series of findings of fact as to the breach of contract issue. There are detailed findings, but we quote those which summarize the transactions:

“149. In addition to the foregoing actions which breached the Purchase Agreement, and amendments thereto, Koch proceeded to dispose of the fixed asset companies during 1970 for its own purposes, as discussed infra.
“During the entire trial, the Court listened carefully, but was unable to discover any evidence whatsoever that Vosko had breached the June 13, 1969 Purchase Agreement in any way. It is true that he had warranted various items on the 1968 balance sheets, but Vosko was not accountable on these warranties until the final adjustment date — a date which never came in this instance. . . . ”
“174. When Koch sold to itself the fixed asset companies having an actual value of $5,000,000 for a token payment of $16,477, it breached j[ 4.8.-2 of the Purchase Agreement by failing to pay over to Atlas Petroleum, and into escrow, for Vosko’s benefit, the true value of said assets.”

The trial court also found that the “tax plan” of Koch Industries as to Atlas Petroleum, the discussions of which began in October 1969, was directed to making a shell of Atlas Petroleum which would thereby eliminate the contractual rights of Vosko which were dependent upon Atlas Pete as a going concern. The court, as to this plan, found:

“136.....No one from Koch advised Vosko of Koch’s tax plan for Atlas Pete, and insofar as the Court-is able to determine, Vosko was simply oblivious to Koch’s real intentions with regard to his place in the Koch organization, or Koch’s plan to strip all assets from Atlas Pete for its own purposes and get rid of Vosko. ff

Thus again the findings are clear as to breach of contract by Koch Industries, with a further finding of no breach by Vosko. The court said, as quoted above: “During the entire trial, the Court listened carefully, but was unable to discover any evidence whatsoever that Vosko had breached the June 13, 1969 Purchase Agreement in any way.” These findings are equally direct on the absence of an attempt to mislead or conspiracy with regard to a violation of the Securities Act. The trial court found as to the financial statement and the Securities Act:

“166. The Court concludes and finds, that any representations or warranties made by Vosko concerning the 1968 Financial Statement, or matters contained in the Memorandum of Intent of May 22nd, or matters contained in the Purchase Agreement on June 13, 1969, were in .good faith, and without intent to defraud, cheat or mislead Koch as those terms are understood in the Securities Acts of 1933, 1934, and Rule 10b-5, or in the common law of fraud and deceit, all as alleged by plaintiff in the Pre-Trial Order, Dkt. No. 152, pp. 11-17, 20-23; 16, 20. [Counts I, II, III, and IV, Complaint].”

As to the fraud issue, the Securities Act issue, and breach of contract, the appellant can find no comfort in the findings of fact, and there need be no inferences drawn from them.

Much of appellant’s brief is concerned with the valuations and methods used by the trial court to fix the damages awarded to Vosko. The argument in the brief begins on this point, and the assertion is made that the trial court used improper methods and figures to determine the value of the fixed asset companies or their assets. Under the agreements Vosko was to receive, in addition to a purchase price otherwise established, proceeds from the sale of the fixed assets, good will, and deferred charges of “fixed asset companies” to the extent such price exceeded the book value thereof, and did not exceed five million dollars.

In awarding damages to Vosko, it was necessary for the trial court to value the fixed assets and good will of these companies because under Koch’s direction they were sold for a nominal consideration ($16,477.00) to Koch Industries as part of the fraud practiced on Vosko and as part of the diversion of earnings to them from Atlas Pete to make it worthless. See Finding of Fact No. 146 quoted above. The court made a finding of fact as to the values to be used in computing the damages suffered by Vosko in connection with the handling of the fixed asset companies. It found the value of the fixed assets and good will of such companies to be $5,000,000.00 in 1970; from this it deducted the book value of $2,423,568.00 and found Vosko’s damages as to this item to be $2,576,432.00.

The appellant complains that the court valued the “companies,” and not the assets, and further that this was improperly done by a capitalization of earnings. The agreement provided for the valuation to include good will. The parties throughout the period had attempted to sell the companies to others as going concerns, and the trial court considered the contractual terms of “fixed assets, good will, and deferred charges” as the equivalent to going concern value. This was a permissible and reasonable reading of the agreement and conclusion from the testimony as to the acts of the parties. There is no basis for appellant’s contention that the physical assets only were to be sold. Capitalization of earnings was likewise a reasonable method to establish value. The court used a figure of ten per cent, and then reduced the product by one-half. The best evidence was used, the going concern value was proper, and the correct companies were included. Koch had prepared a letter amendment signed by Vosko on October 1, 1969, which refers to the fixed asset companies as those listed in exhibit A to the basic agreement. This exhibit lists the companies used by the court in reaching its finding.

Again the trial court made a finding of fact; this was the value of the assets and good will of the companies, and the appellant does not urge that this finding was not supported by the evidence. See United States v. 79.95 Acres of Land, Etc., 459 F.2d 185 (10th Cir.), and Stoody Co. v. Ryer, 374 F.2d 672 (10th Cir.). The appellant urges that erroneous inferences were drawn from the findings of fact, but we find none. There was again no need to draw any inferences.

The appellant also urges that it was error to award damages to Vosko for termination of his employment agreement with Koch Industries. These damages amounted to $440,000.00. Under the agreements, Vosko was to be employed for a ten-year period, and be paid $100,000.00 per year. He entered on his duties and performed without any complaints until he was summarily fired, as the trial court found, and this suit against him was commenced. Vosko had been given stock rights which were dependent upon his continued employment. The trial court found that when the agreement was modified on October 1, 1969, and the employment and stock rights of Vosko in prior agreements were reaffirmed, Koch Industries had no intention of keeping its bargain, and had already decided to fire Vosko. The trial court found:

“[148] e) On October 1, 1969, when Koch reaffirmed and re-adopted all provisions of the Stock Purchase Agreement, not otherwise amended, it did so in bad faith, intentionally concealing its real intent to dispense with Vosko’s services at the first opportunity, in utter disregard of his employment rights and expectations under his employment agreement with Koch.”

The June 13th contract provided that Koch Industries could terminate Vosko’s employment “for any cause upon thirty days written notice.” The trial court found that the discharge of Vosko was part of the fraudulent scheme of Koch Industries. This is supported by the record. Thus the reaffirmance of the employment arrangement and the subsequent discharge were all done as part of the fraud on Vosko. With the discharge a step in the fraudulent course of conduct, it constituted a breach of the employment contract by Koch Industries. Under these circumstances, the employee is entitled to damages for such a breach, and the court so award.ed what is really a lump sum. The finding of liability is in accordance with Lucas v. Whittaker Corp., 470 F.2d 326 (10th Cir.); Odell v. Humble Oil & Refining Co., 201 F.2d 123 (10th Cir.); and Rench v. Hayes Equipment Mfg. Co., 134 Kan. 865, 8 P.2d 346 (1932). The dollar figure was a reasonable finding under the proof.

The appellant in its pleadings and initial proof sought to establish a cause of action against Vosko and Arthur Young & Company based upon a financial statement prepared by the accountants in connection with a prospective sale by Vosko to another purchaser, Occidental Petroleum. The appellant received this statement after making an intensive investigation itself in April 1969 and subsequently into the affairs of Atlas Pete, but complains that the statement did not separately show the receivables from certain Canadian subsidiaries. These receivables were explained to the representatives of Koch on several occasions and the facts appeared in other documents all before the initial Memorandum of Intent of May 22, 1969. After May 22d Koch made further investigations and obviously knew all the facts and circumstances. Arthur Young had been assisting Koch in gathering the data to prepare the June 13th contract. On June 2, 1969, Koch proceeded and drew the purchase agreement which was executed on June 13th. Vosko warranted the financial report and monies were set aside in the initial payments to protect Koch. The proof at trial showed that the receivables in question were valid. Similar ones had been paid in past periods. The record shows, and the trial court found, that full disclosure was made to Koch, and further that Koch did not rely on the statement anyway. The findings also show that Koch proceeded with the sale, assumed control, operated the companies,- encouraged Vosko in his duties with the company for a period of six or seven months, and made no complaint whatsoever to Vosko or Arthur Young about any of the issues sought to be raised in its complaint. The first indication whatever that Koch had some objection was when Vosko was served with a copy of the complaint in this suit and a letter of dismissal at the New York Airport as he and Charles Koch landed on a return from South America where Vosko had been familiarizing this officer with the important company activities and contacts there. This was February 20, 1970. The trial court found:

“143. The Court finds that the allegations set out in the complaint in this action were the first notice to Vosko or to Arthur Young of any complaint that Koch had concerning the 1968 Financial Report or its purchase of the Atlas Pete stock.
“144. Upon service of process, and notice of termination, Koch changed the locks on the doors of the Nassau office, refused to pay Vosko any salary or allowances clearly due to him under the provisions of the June 13th Purchase Agreement, and refused to pay expenses he incurred in connection with his services as an employee of Koch. [See TE 402].
“145. Koch also immediately filed suit in Nassau to foreclose on Vosko’s home in an attempt to collect the account receivable due from the Samantha Trust. Inasmuch as this debt was not due until the ‘final adjustment date’, such action by Koch constituted a flagrant breach of the Purchase Agreement, and an intentional, wilful act in total and contemptuous disregard of Vosko’s rights under that Agreement. Vosko was able to raise the money to pay the Samantha account and avoid foreclosure on his home.”

During this interval before suit was filed, Koch had been negotiating further with Vosko, of course without indicating any problem; additional modifications of the basic agreement were signed which reaffirmed the transaction. The trial court found:

“104. By June 2d, 1969, Koch was aware of all of the hazards connected with operating Vosko’s business enterprises, the limitations of the AY report and other statements of Vosko’s companies. Knowing this, Koch still wanted to purchase Atlas Pete as an entree into the international oil business and determined to protect itself from anticipated losses in the final purchase contract. [As suggested by AY (McCloud’s letter) infra}.”

The silence by Koch plus the reaffirmance of the initial arrangement is within the rule stated in Security Underground Storage, Inc. v. Anderson, 347 F.2d 964 (10th Cir.):

“If a party to a contract remains silent as to a claimed invalidity of a contract and continues to treat property as his own which was the subject of the contract, he will be deemed to have waived his objection and will be bound by the instrument. Morse v. Kogle, 162 Kan. 558, 178 P.2d 275; Lichter v. Goss, 7 Cir., 232 F.2d 715; Jack Mann Chevrolet Co. v. Associates Inv. Co., 6 Cir., 125 F.2d 778; American Mannex Corp. v. Huffstutler, 5 Cir., 329 F.2d 449.”

In J. C. Nichols Co. v. Meredith, 192 Kan. 648, 391 P.2d 136 (1964), the court said:

“ . . .It was further stated that ordinarily an express ratification is not necessary in order to defeat the remedy of rescission. Acts or conduct, inconsistent with an intention to avoid it, or in recognition of the contract, have the effect of an election to affirm it.”

The trial court awarded punitive damages to Vosko. This is challenged by the statement of the appellant that it is instead entitled to compensatory damages and punitive damages, not Vosko. The conclusions and findings of fact however support the award of punitive damages to Vosko.

The appellee Vosko has taken a cross-appeal from the portion of the judgment which allowed the appellant an offset against the damages found due appellee, an amount representing the guarantees Vosko made in the Purchase Agreement. These were for the most part the Canadian receivables due Atlas Pete, and were also items which were the basis of the criticism of the Arthur Young financial statement. The guarantees undertaken by Vosko were in part the suggestion of Arthur Young & Company to Koch Industries in its drafting of the June 13th agreement. This cooperation was not disclosed to Vosko by Arthur Young, but it resulted in a draft which protected Koch in all respects as to the matters Koch here complains of, and demonstrates the knowledge of Koch as to all relevant facts.

The trial court in its Conclusions said in part:

“4.....
“c) In any event, the Court has found that Koch was fully aware, or should have been fully aware of the nature of the Canadian receivables by May 30th, and certainly by June 13, 1969, and therefore it may not complain about any omissions in the 1968 financial report relating to these Canadian receivables.
“d) With full knowledge of the questionable status of the Canadian accounts, Koch elected to proceed with the purchase of Atlas Pete, and prepared the final purchase contract in such manner that it would be fully protected with respect to them by the warranties of Vosko, all as suggested to Koch by AY.
“5.....
“The Court concludes that in view of the numerous breaches of contract attributable to Koch, many of which prevented Vosko from attempting to meet his warranty obligations, and in view of the fact that Koch has never, to this date, delivered to Vosko the certified audit and certificate required by If 6 of the Purchase Agreement, or permitted him to object to same in writing, the Court is of the opinion, and so concludes that Vosko is chargeable with only five of the provable disputed accounts.
“In this connection, Koch will be allowed the following sum [sic] which are ascertainable to the Court’s satisfaction as an offset to the judgment to be entered herein in favor of Vosko:
“The Court further concludes that by reason of Koch’s breach of contract, Vosko is relieved of all further obligation to perform under the contract of June 13, 1969, as amended, including any obligation he may have had to deliver title to Velva Terminal, South Shields, England.”
The court then found as to the damages suffered by Vosko:
“1. From the foregoing findings of fact, the Court concludes that Vosko sustained actual damages by reason of Koch’s various breaches of contract, and wrongful, intentional conduct. In particular, the Court concludes that Vosko has sustained the following damages subject to off-sets noted supra by reason of Koch’s wrongful conduct, and is entitled to recover the same in the following amounts:
a) Funds deposited in escrow at closing, June 13, 1969
Interest on above at 8%, 6/13/69 to 11/1/72
b) Salary and living expenses, per j[ 8.4.1.1 Purchase Agreement
c) Payment due for decrease of payable to British Petroleum, as of 12/31/69
d) Damages arising from Koch’s deceitful conduct on October 1, 1969, its failure to perform employment agreement in good faith; discharge of Vosko without notice, without cause, and with the intent to deprive him of stock rights:
Salary and allowance at $110,000 per annum, 4 years
e) Reasonable value of stock rights over 4-year period; Stock valued by Koch at 17% times earnings — each 154 shares valued at $200,000.00:
308 shares - 12/31/70 $400,000
154 shares - 12/31/71 200,000
154 shares - 12/31/72 200,000
154 shares - 12/31/73 200,000
154 shares - 12/31/74 200,000
373.000. 00
100.000. 00
83.333.00
49.836.00
440,000.00
1,200,000.00
f) Damages arising from Breach of if 4.8.2, of Purchase Agreement, as amended by Letter Agreement, October 1, 1969; Sale of fixed asset companies :
Actual value, 1970 $5,000,000
Less Book value, per Purchase Agreement 2,423,568
2.576.432.00
4.822.601.00 '
2.230.651.00 $2,591,950.00”
Less Off-set:
Vosko’s Net Actual Damage

Thus the court reduced the amount of damages due Vosko by the items quoted above — the warranties. The appellant asserts that under the findings of fact, no such setoff should have been made. What were these findings? The trial court found that the warranties were to be effective at a time fixed in the June 13th agreement which was described as the “final adjustment date.” This was a time or event when Koch was to have submitted a certified audit to Vosko, then to allow time for his objections to the audit, and then proceed to arbitration if no agreement could be reached. The timing was pretty much within Koch’s control. Vosko had over a year and a half under the arrangement to see that the receivables were paid to Atlas Pete and to otherwise see that the warranted events would take place in the regular course of business. The trial court found, in Finding No. 149, quoted in part above, that Vosko did not breach the June 13th agreement in any way. Also: “It is true that he had warranted various items on the 1968 balance sheets, but Vosko was not accountable on these warranties until the final adjustment date — a date which never came in this instance.” The court also made findings as to Koch’s interference with relations in Argentina in 1970 which resulted in a failure by Atlas to collect claims against YPF — a subsequent proposal was refused by Koch. The actions of Koch also prevented the orderly collection of the Canadian receivables, and of course the firing of Vosko prevented any further opportunity to collect the receivables. The business of Atlas Pete was dispersed among the subsidiaries. The trial court found that the receivables due from the Canadian companies which appear in the Atlas Pete statements were representative of actual transactions, were owing to Atlas, were not fictitious, and in business years before had been paid to Atlas. The findings show that Koch- prevented Vosko from performing on the warranties; there were specific findings that Vosko committed no breach of contract, but that many acts of Koch Industries constituted breach of contract as to Vosko in addition to the fraud. Under these findings there was no basis for applying the setoff for the nonperformance of the warranties. The nonperformance was due, under the specific findings, to the acts of Koch Industries and not Vosko. Thus the warranties must be considered to have been fulfilled and no setoff applied. We have considered the receivables, the subsidy claim, and the advances to the Canadian companies to be in the same category for this purpose. Thus the judgment of the trial court is reversed as to the setoff applied against the damages due Vosko in the amount of $2,230,651.00, and the case is remanded with directions to increase the judgment awarded appellee Vosko as to this element of the judgment to the full amount which the trial court found Vosko to be damaged.

We have examined the contention of Vosko that the trial court erred in not awarding Vosko all of the amount to which he was entitled for the stock rights. Here again, as the court did in regard to compensation for services, a lump sum was used as compensation for this element. This is in accordance with the findings of fact by the trial court. The contention of Vosko in this respect we find to be without merit.

To continue with the Koch-Vosko aspect of this appeal, we must consider the award by the trial court of indemnification to Vosko for losses and expenses he incurred by reason of this suit. These expenses were assessed against Koch Industries by the trial court because Koch had reduced “the assets of Atlas Pete to zero by December 1970.” The provision for indemnification of corporate officers appears in Article 84 of the Articles of Association of Atlas Pete. The provision covers acts done in the execution of the officer’s duties. As to Vosko this provision is not applicable because the litigation arose by reason of his acts as an individual and not in the execution of his official duties. The origin of the expenses is simply not within the charter provisions. If the provision does not come within the charter of the Bahamian corporation, there would seem to be no basis for the award under any other law to a person in Vosko’s position. The judgment must be reversed as to this item, and upon remand it is directed that the indemnification in the amount of $124,600.00 allowed to appellee Vosko be removed from the judgment as thereafter entered.

We have not yet considered some of the points raised by the appellant as to the appellee, Arthur Young & Company. The appellant urges that both Vosko and Arthur Young are liable under the Securities Act and in common law fraud; that the appellees conspired to defraud Koch Industries; and that Arthur Young is liable under common law rules as to the liability of accountants under the English Law for negligence. We have outlined above the Koch-Vosko relationship and the findings and conclusions relative to the fraud issue. The court also found there was no conspiracy by Vosko and Arthur Young to defraud or to violate the Securities Act. The standard under the Securities Act is set out in Mitchell v. Texas Gulf Sulphur Co., 446 F.2d 90 (10th Cir.). See also Financial Industrial Fund, Inc. v. McDonnell Douglas Corp., 474 F.2d 514 (10th Cir.). The findings referred to also stated that the financial report in issue was not fraudulently prepared or issued. The main issue pertaining to the financial report was again the inclusion, without separation, of the receivables from the Canadian companies. The timing of the report and its preparation for the ongoing Occidental sale were factors. Again, as described above, Koch knew the pertinent facts and no reliance on the statement was shown. The trial court found the facts to be contrary to Koch’s claims as to fraud, conspiracy, or an attempt to mislead.

The appellant asserts also that Arthur Young should be held liable by reason of its negligence. On this point Koch urges factors in the financial report other than those relating to the Canadian receivables, and thus for these errors and misleading material Arthur Young was liable to Koch.

The trial court found that the accounts generally were “fairly stated in accordance with generally accepted accounting principles.” The form of the report was criticized, but, as indicated above, the trial court found there was no attempt by Arthur Young to mislead Koch. Contrary to the arguments advanced by Koch, the trial court made no finding of fact which would serve as a basis for a conclusion that Arthur Young was negligent. The court did conclude that Arthur Young did not follow standard accounting principles in not separately stating the Canadian receivables, but the court also concluded that there could be no recovery against Arthur Young “if this be ‘negligence.’ ” The record shows that the report was prepared in connection with Vosko’s proposed sale to Occidental, and this was the only purchaser known to Arthur Young when the report issued. Thus Koch was a complete stranger to Arthur Young at the issuance of the report. The trial court applied Kansas law on this point, thus holding that E. T. Arnold & Co. v. Barner, 91 Kan. 768, 139 P. 404, and Mallory v. Ferguson, 50 Kan. 685, 32 P. 410, expressed the present rule in Kansas. Both parties and the trial court cite and discuss Ul-tramares Corp. v. Touche, 255 N.Y. 170, 174 N.E. 441 (1931). It also appears from the record that the law in the Bahamas is basically the same. Hedley, Byrne & Co., Ltd. v. Heller & Partners, Ltd., [1964] A.C. 465, [1963] 2 All E.R. 575. Arthur Young & Company had appended qualifying notes as to the non-Canadian “receivables” (Safari, Hess, and the Italian claim).

As to the claim against Arthur Young, the same consequences follow from the subsequent acts of Koch, its silence, its work with Arthur Young, and the reaffirmance of the initial agreement in subsequent modifications.

This leaves the challenge by Koch to an award by the trial court to Arthur Young, a “servant” of Atlas Pete, as indemnity for the costs and expenses of litigation. This award was in the amount of $466,260.65, and was entered directly against Koch Industries. The appellant argues that such an award is against public policy in Kansas, also under the Securities Act, and that Arthur Young was not the “auditor” or a servant of Atlas Pete, and thus not entitled to indemnity under Article 84 of the Charter of Atlas Pete.

The award of indemnity to Arthur Young is in accord with Kansas law. Talley v. Skelly Oil Co., 199 Kan. 767, 433 P.2d 425; Hunter v. American Rentals, Inc., 189 Kan. 615, 371 P.2d 131; K.S.A. § 17-6305 (1972 Cum. Supp.).

As to federal law relating to the Securities Act claims, we find no policy contrary to an award to a party for legal expenses in successfully defending. Glo-bus v. Law Research Service, Inc., 418 F.2d 1276 (2d Cir.), is not contrary. The court there said: “Thus it is important to emphasize at the outset that at this time we consider only the case where the underwriter has committed a sin graver than ordinary negligence.” This issue was tried as an indemnification matter only, and the Bahamian law permits such recovery against a company there organized under these circumstances. Arthur Young & Company conducted the audit for the preparation of this report for Occidental, and they were formally engaged to do so. They were thus within the scope of the indemnity provision in the charter. Again there was no finding or conclusion that Arthur Young & Company was negligent. Since the award was not against public policy in the forum, was in accordance with Bahamian law, and no challenge was made to the fact that the costs were incurred, it must be upheld on this appeal. Proof was introduced to support the claimed amount. The award was against Koch Industries, and this is also proper in view of the manipulation by Koch of Atlas Pete -assets and statements made during trial as to the judgment.

We find no -merit in Arthur Young’s cross-appeal for prejudgment interest. Arthur Young in its cross-appeal seeks a holding that it is entitled to a continuing guarantee to include its expenses on this appeal. We have held it entitled to indemnity and this would extend to the conclusion of the litigation; however, in view of the amount awarded by the trial court, and as compared to that awarded Vosko, any additional amount would be nominal.

The case is reversed and remanded only to eliminate the indemnity to defendant Vosko, and to eliminate the set-off applied to the damages otherwise awarded defendant Vosko. The judgment is in other respects affirmed. It is so ordered.


source: Caselaw Access Project

author: FORMAN, Circuit Judge.

license: Public Domain

text:
    BETHLEHEM MINES CORPORATION v. UNITED MINE WORKERS OF AMERICA et al., Appellants.
    No. 72-1767.
    United States Court of Appeals, Third Circuit.
    Argued Sept. 21, 1973.
    Decided March 20, 1974.

      Donald B. Heard, Kathleen A. Merry, Reed Smith Shaw & McClay, Pittsburgh, Pa., for appellees; Daniel C. Mills, Bethlehem, Pa., of counsel.
    Joseph A. Yablonski, Washington, D. C., Lloyd F. Engle, Jr., Melvin P. Stein, Kuhn, Engle, Blair & Stein, Pittsburgh, Pa., for appellants; Eugene A. Creany, Engelhart, Creany, Engelhart & Leahey, Ebensburg, Pa., of counsel.
    Before FORMAN, ALDISERT and GARTH, Circuit Judges.
   OPINION OF THE COURT

FORMAN, Circuit Judge.

Bethlehem Mines Corporation (Bethlehem), a corporation of West Virginia, filed a complaint against United Mine Workers of America (UMWA), W. A. Boyle, President; United Mine Workers of America, District No. 2 (District No. 2), Owen F. Slagle, President; United Mine Workers of America, Local Union No. 1368 (Local 1368), William A. Ris-bon, President; Frank Claypool, Vice President, George W. Commons, Recording Secretary, Charles D. Neff, Committeeman, in the United States District Court for the Western District of Pennsylvania seeking a declaratory judgment and an injunction under the Declaratory Judgment Act, 28 U.S.C. § 2201 et seq. and the Labor-Management Relations Act of 1947, as amended, 29 U.S.C. § 141 et seq. Bethlehem alleged that it was in an industry affecting commerce as defined in the Labor-Management Relations Act, that through its Cambria Division in Cambria County, Pennsylvania, it mined and processed coal for its parent, Bethlehem Steel Corporation; that an actual controversy of a justiciable nature existed between the parties at Mine 33, one of six comprising the Cambria Division of Bethlehem; that the UMWA, District No. 2 and Local 1368 are unincorporated labor organizations and through their officers and agents represent 450 employees of Bethlehem within the Western District of Pennsylvania for the purposes of collective bargaining and have entered into a labor agreement covering wages, hours of work, and other conditions of employment; that the most recent agreement is the National Bituminous Coal Wage Agreement of November 12, 1971, expiring November 12, 1974 (the 1971 Agreement). The litigation chiefly revolves around Article XVII thereof, a compulsory grievance and arbitration provision.

Bethlehem’s complaint further alleged that a preliminary injunction was issued by the District Court, which compelled Bethlehem and the UMWA parties to abide by the provisions of Article XVII for the settlement of all disputes at Mine 33; that on March 21, 1972 a further illegal work stoppage occurred over a job bid and assignment involving John Rafaez, an employee-member of Local 1368; that following a hearing in the said District Court for a citation of contempt, the difference was submitted to Bethlehem under Article XVII of the collective bargaining Agreement; that on April 4, 1972 Owen F. Slagle, President, District No. 2, wrote Larry Bellot-ti, Superintendent of Bethlehem’s Cam-bria Division, as follows:

“On March 23, 1972 John Rafaez, employee at Mine 33, filed a grievance with your company and failed to resolve said grievance. The grievance was properly processed by Local Union 1368, United Mine Workers of America under the terms of the National Bituminous Coal Wage Agreement of 1971. The grievance was heard in Third Step on March 28, 1972, and no agreement was reached.
“Therefore, I notify you that I must insist that this grievance be processed with immediate dispatch provided for in Article XVII of said agreement. To this end, I am demanding that your company now agree to the orderly process of this grievance as provided in Article XVII, Article I, and Article XIV (sic), Section B of the wage agreement.
“Therefore, with the fervent hope that you will comply with my request, I am setting April 10, 1972 at 10:00 a. m. at the Candlelight Motel, Ebens-burg, Pennsylvania to which place and time we shall be present with necessary Union staff and our witnesses to present our case as provided for in the wage agreement as required to above. Please confirm.
“Sincerely yours,
“,/s/ Owen F. Slagle “Owen F. Slagle, District President, United Mine Workers of America”

Bethlehem further alleged that on the same day Mr. Slagle telephoned Mr. Bel-lotti that Maurice Shadden should be present at the Fourth Step meeting and thereafter act as Umpire in the Fifth Step in accordance with the custom and practice followed by the UMWA and Bethlehem under the terms of the 1968 National Agreement, as amended, between District No. 2 and the Central Pennsylvania Coal Producers Association (CPCPA), of which Bethlehem insisted that it was never a member of CPCPA nor a signatory to the agreement, and that, in any event, the agreement was duly terminated prior to .its expiration date in 1968 by the CPCPA. Bethlehem alleged that Mr. Bellotti replied to Mr. Slagle on April 5, 1972 as follows:

“Dear Mr. Slagle:
“This will acknowledge your letter of April 4, 1972, and confirm our subsequent telephone conversation that afternoon.
“We are, of course, anxious to proceed with the Joint Board meeting in the Rafacz grievance, pursuant to provisions of Article XVII (b) (4) of the National Bituminous Coal Wage Agreement of 1971. As you know, the Third Step was completed on March 28, 1972, and the procedure requires that the Joint Board meet on or before April 7, 1972; however, under the circumstances, we are agreeable to the extension of time to April 10, 1972, which you have requested, but without establishing a precedent for such extentions [sic], because it is essential in such matters that they be handled expeditiously in accordance with the specific terms of the National Agreement.
“You indicate that you intend to present the evidence all over again. As you know, the record is already complete and closed, all evidence having been taken at the Third Step. I see no need to rehash it again, however, if you have further evidence, or if there is some new evidence, we certainly agree that it should be heard, and we propose that Step Three be reconvened for this purpose. In this regard, the Fourth Step should be limited to consideration of the evidence already in the record. It is the very essence of the grievance machinery, as it has been substantially amended in the 1971 agreement, that grievance matters be handled expeditiously and within specific time limits, and in this regard, the repetition of evidence at the Fourth Step can only slow down the procedure.
“With respect to your insistence on having an umpire present on April 10, 1972, we respectfully suggest that no useful purpose would be served by his presence, and conversely, his presence at the Joint Board meeting would usurp the function of the Joint Board. An umpire is not required unless the Joint Board disagrees, at which time, an umpire should be selected and the matter should be referred to him within the required 10 days, which is consistent with the terms of the grievance procedure as set forth in Article XVII (Section b).
“To reiterate, we shall be pleased to attend the Joint Board meeting on April 10, 1972 as you have requested, but without prejudice or precedent concerning the delayed scheduling, at which time the evidence already presented should be refused by the Joint Board but without further evidence being presented at that Step.
“I suggest that you call me at your earliest convenience if you disagree, in order that we may further discuss this matter.
“Very truly yours,
“/s/ L. F. Bellotti
“L. F. Bellotti
“Division Superintendent”

Bethlehem also alleged that nothing in Article XVII of the Agreement provides for the presence of an umpire at the Fourth Step nor does it provide for the continuance of a permanent umpire under the expired agreement; that under the terms of the current collective bargaining agreement Article XVII provides for “a committee to select a permanent or chief umpire and/or a panel of umpires,” but that although a committee representing the Bituminous Coal Operators Association (BCOA) and the UMWA has met twice, no agreement has been reached concerning such selection.

Bethlehem further alleged upon information and belief that in the event it continues to refuse to permit the presence of Mr. Shadden at the Fourth Step and/or to select him as the umpire under the Fifth Step, the UMWA and Local 1868 and their members will engage in an illegal work stoppage, to its irreparable harm.

The complaint prayed for the entry of a declaratory judgment which shall determine among other things “whether plaintiff is legally obligated under Article XVII of the 1971 Agreement, . to accept the services of Maurice Shadden as Umpire on a permanent basis, or otherwise; . . . . ”

The complaint also prayed
“That a temporary restraining order be issued forthwith, and that after hearing, a preliminary injunction be issued, to be made permanent on final hearing, enjoining defendants, their officers, representatives, and members, and all persons acting in concert with them or in their behalf from:
-X- -x- * * * -X-
“engaging in a strike or work stoppage at plaintiff’s Mine No. 33 and/or its adjacent Preparation Plant in Cambria County, Pennsylvania, to enforce their demand that Arbitrator Shadden be appointed as the Umpire.”

The complaint further requested that steps Four and Five of the grievance procedure be suspended without prejudice to either party pending determination of the issues raised above and that if representatives of the UMWA and Bethlehem were unable to mutually agree upon an umpire to hear the Ra-facz grievance at the Fifth Step, arbitrators from the Federal Mediation and Conciliation Service should be requested.

The answer of UMWA, District No. 2 and Local 1368 admitted some of the allegations of the complaint, denied others, and was grounded on the defense that the District Court was without jurisdiction in the case on account of lack of service. It also relied on the defense that the “National labor policy and law developed thereunder required arbitration of issues in the manner in which they were agreed to be arbitrated and further required that procedural arbitration disputes be decided by arbitration and not by resort to the courts.”

The case came to a hearing before the District Court without a jury. Testimony was taken and briefs were submitted. After consideration thereof, the District Court filed “Findings and opinion” in which, among other things, it held that a justiciable issue exists between Bethlehem and UMWA, District No. 2 and Local 1368 and that a declaratory judgment was necessary to settle the legal obligations of the parties and to permit them to abide by the order of the District Court issued December 15, 1972 concerning the grievance of John Rafacz, and that failure to resolve the difference could result in a work stoppage to the irreparable damage of Bethlehem.

The Court further found that Bethlehem and the union parties were obligated to settle disputes subject to the procedure set forth in Article XVII of the National Agreement of 1971, Step 5 of which called for final arbitration by an umpire selected by mutual agreement of the parties; that Bethlehem is not obligated under Article XVII of the Agreement of 1971 to accept the services of Mr. Shadden as a permanent umpire in the grievance of John Rafacz; that the umpire shall be a person selected by mutual agreement of the parties, and in the event of their failure to do so, the District Court would designate the manner of selection of the umpire.

The UMWA, District No. -2 and Local 1368 were permanently enjoined by the District Court from engaging in a strike or work stoppage at Bethlehem’s Mine 33 to enforce the demand that Mr. Shad-den be appointed umpire. Subsequently, finding that the parties were unable to agree on the selection of an umpire, the Court set forth the procedure to be followed in the selection of an arbitrator. The UMWA, UMWA District No. 2 and Local 1368 thereupon took this timely appeal from the orders of the District Court.

I

The appellants reiterated their arguments here as they had submitted them to the District Court, maintaining that on June 19, 1941 the Central Pennsylvania Coal Producers’ Association and many other producers’ and operators’ associations and operators had entered into a national agreement with the International UMWA, District No. 2 and eleven other UMWA districts, in which the associations recognized the UMWA as the exclusive bargaining agency representing their employees in Pennsylvania, Michigan, Ohio, Maryland, West Virginia, Virginia, Northern Tennessee and part of Kentucky. The agreement was known as the Appalachian Agreement. It contained, among others, a provision entitled “Settlement of Disputes,” which set forth a system for the settlement of disputes by representative organs of the contracting parties. If the dispute failed of settlement by any of them, it was provided finally that

“. . . the matter shall be referred to an umpire selected by said Board [two of whom shall be designated by the Mine Workers and two by the Operators]. Should the Board be unable to agree on the selection of an umpire, he shall be designated by the International President of the United Mine Workers of America and the President of the Operators’ Association affected.”

Bethlehem was neither a member of or represented by the CPCPA nor was it otherwise a signatory to the Appalachian Agreement.

Another agreement was entered into on October 22, 1941 between CPCPA and the UMWA, District No. 2, in which the Appalachian Agreement was incorporated by reference. This agreement also provides in its Rule 16 Arbitration for a method of the settlement of differences by various organs of the parties up to a Fourth Step in which it is agreed that

“. . . district conferences may establish an intermediate board consisting of two (2) commissioners, one representing the Operators and one representing the Mine Workers with such powers as said conferences may delegate.
“Should the fourth method fail, the matter shall be referred to a permanent Board of Arbitration, consisting of two Mine Workers or their representatives and two Operators or their representatives. They jointly failing to agree shall refer the matter to a permanent umpire to be selected jointly by the Operators and the United Mine Workers of America, District No. 2.”

Again there is no contention that CPCPA represented Bethlehem or that it was a signatory to this agreement.

In 1968 and 1971 Bituminous Coal Operators Association (BCOA) in which Bethlehem was a member, executed National and District contracts. Bethlehem was represented by BCOA.

Appellants buttressed their contention that the District Court erred in exonerating Bethlehem from the acceptance of Mr. Shadden as permanent umpire by citing Schlecht v. Hiatt and Calhoun v. Bernard. In Schlecht the court compelled a single small contractor to contribute to trust funds designated in a provision in a building trades agreement to which he was a signatory which specifically referred to the “Trust or Fund Agreement of each respective Union” to which the contractor was not a signatory. In Calhoun, the court directed a contractor to contribute to a pension fund created by a master agreement to which the contractor had formerly been a signatory and which was specifically referred to in a subsequent memorandum agreement between the contractor and the union. The Schlecht and Calhoun agreements were local, not related to any national agreements, and protective of a significant employee interest. They are not analogous to the situation in the instant case where the national agreement speaks in generalities of the district agreements and asserts its superiority in case of conflicts.

When examined in the light of the totality of circumstances prevailing in the case at bar, the foregoing references give no significant support to appellants’ argument.

Next appellants assert that there had been permanent umpires since 1934 so that before and since the 1941 Agreement exclusively, permanent arbitrators decided not only the grievances arising from CPCPA organizations but also those arising from other operators in District No. 2; and that, in fact, Bethlehem itself had accepted Mr. Shadden without objection in a number of instances. Hence appellants argued that Bethlehem had bound itself to continue to accept Mr. Shadden as permanent umpire until the expiration of the 1971 Agreement, at which time only could it attempt to change the provision for a permanent umpire by an exercise of the collective bargaining process.

Appellants cited a number of cases to support their position that Bethlehem was bound by practice amounting to the “law of the shop,” among them: United Steelworkers of America v. Warrior and Gulf Navigation Co., insofar as it holds generally that a collective bargaining agreement encompasses more than the writing signed by the parties; United Furniture Workers of America Local 395 v. Virco Manufacturing Corp. holding that “in determining what the contract is, so as to properly interpret it, an arbitrator or court should properly consider not only the formal written agreement but the actual practices prevailing between the parties as well.” American Machine & Foundry Company v. UAW, Local 116 was named by appellants as demonstrating error on the part of the District Court in failing to apply the “law of the shop” to the conduct of Bethlehem in this case.

Appellants also claim support for their contentions in NLRB v. Local 825, Operating Engineers, asserted by them to hold “that a written contract though signed by only one party is nevertheless binding if the second party accepts the contract and both parties rely on it.”

The appellants also • pointed to Tor-rington Company v. Metal Products Workers Union Local 1645 (Torrington I) for a general proposition that the broad scope of matters encompassed in a collective bargaining agreement was recognized by the court, and Torrington Company v. Metal Products Workers Union Local 1645 (Torrington II) as additional authority that a collective bargaining agreement can include terms not explicitly contained within it. But appellants ignore the majority opinion in Torrington II which twice states the general rule that a labor contract ordinarily recites affirmative agreements and not discontinued practices.

Appellants relied on Smith v. Pittsburgh Gage and Supply Co., Hamilton Foundry and Machine Co. v. International Molders and Foundry Workers, and Philadelphia Marine Trade Association v. ILA to support their position that Bethlehem’s past acceptance of Mr. Shadden bound Bethlehem.

The foregoing cases submitted by the appellants have been reviewed and their salient features noted in the margin hereof. Contrary to appellants’ contention, they simply do not support their position. All miss the target formed by the pattern of the case at bar. None relates to the course of conduct pursued by Bethlehem in this case insofar as it never became a signatory to any contract recognizing a permanent umpire. Indeed, United Furniture Workers appears to support Bethlehem’s position rather than that of the appellants, since Bethlehem did in fact give oral notice of its objection to Mr. Shadden as an arbitrator.

It is also significant that Article XVII of the 1971 Agreement provides therein for an umpire and not a permanent umpire. The only mention of permanent umpire occurs in Article XVII where it looks to a committee of representatives “of the employees and union to study the feasibility of a permanent . . . umpire” and on ex-animation of “methods of selection, tenure, compensation and related matters will complete its report and recommendations no later than April 1, 1972.” The rendition of the report has been deferred indefinitely.

Appellants claim that Bethlehem is bound to recognize Mr. Shadden as permanent umpire because provisions of preceding contracts relating to arbitration were incorporated by reference in the succession of contracts including the National Bituminous Coal Wage Agreements of 1968 and 1971 to which Bethlehem was a party.

The National Bituminous Coal Wage Agreement of 1968 in its opening paragraph states:

“. . . This agreement (subject to the amendments, modifications and supplements hereinafter provided) carries forward and preserves the terms and conditions of the Appalachian Joint Wage Work Week Agreement, the National Bituminous Coal Wage Agreement (dated April 11, 1945) effective April 1, 1945, and all the various district agreements executed between the United Mine Workers of America and the various operators and coal associations (based upon the aforesaid basic agreements) as they existed on March 31, 1946, subject to the terms and conditions of this agreement and as amended, modified and supplemented by this agreement as herein set out.” (Plaintiff’s Exhibit 7 at 1.)

In the article therein entitled “Settlement of Local and District Disputes,” the 1968 Agreement reads in pertinent part:

“5. Should the board fail to agree the matter shall, within twenty (20) days after decision by the board, be referred to an umpire to be mutually agreed upon by the operator or operators affected and by the duly designated representatives of the United Mine Workers of America, and the umpire so agreed upon shall expeditiously and without delay decide said case. . . .” (Plaintiff’s Exhibit 7 at 10.)

On its face that agreement fails to mention a permanent Umpire.

The 1971 Agreement, currently operative, in its opening paragraph, specifies that it “carries forward and preserves the terms and conditions of all the various district agreements executed between the United Mine Workers of America and the various operators and coal associations subject to the terms and conditions of this agreement . . . .” (Plaintiff’s Exhibit A attached to the Complaint at 1.)

Bethlehem concedes that if it were a member of CPCPA it would be bound by any agreement into which that organization entered on its behalf, but there is no evidence that Bethlehem has ever been a member of CPCPA. The incorporation by reference of one or more CPCPA contracts where there was mention of a permanent umpire as well as the many agreements other than by District No. 2 presented a recital of documents too vague and uncertain to obligate Bethlehem to acceptance of Mr. Shadden as permanent arbitrator.

In any event for whatever effect it may be contended the contracts of the CPCPA with UMWA District No. 2 had on obligating Bethlehem to accept the services of Mr. Shadden as arbitrator or permanent umpire, it is clear that CPCPA gave timely written notice that it would no longer accept him before the close of the 1968 Agreement and prior to the execution of the 1971 Agreement. Bethlehem, too, gave such notice, although it was not in writing but made orally. It would therefore appear, as the District Court ruled, since Bethlehem was not committed to any written contractual undertaking with District No. 2, Bethlehem was under no duty to formally notify in writing District No. 2 of its objection to Mr. Shadden as arbitrator, and that its verbal notification was adequate to terminate Bethlehem’s recognition of Mr. Shadden. The reference by incorporation could not survive the expiration of any obligation contained in the CPCPA agreements.

The argument of appellants that Bethlehem was bound to accept Mr. Shadden regardless of any written contract obligation because Bethlehem was obligated to conform to the custom and practice in the industry carries no greater weight. Unquestionably Mr. Shadden had served as arbitrator in resolving differences under preceding contracts of UMWA District No. 2 and CPCPA. Bethlehem had itself, indeed, accepted him in several cases. In a matter preceding the dispute at the base of the instant ease, prior to the execution of the 1971 contract, Bethlehem had already made known its objection to Mr. Shadden’s services as arbitrator, and acceded to his acting only after its counsel agreed thereto as a compromise in that particular case.

The agreements in this case provided for arbitration of disputes and, prior to the 1971 Agreement, for the mutual choice of the parties through their respective designated organs of a permanent arbitrator or chairman of arbitrators. Bethlehem was never shown to have contracted for or agreed to the appointment of Mr. Shadden as permanent arbitrator and its acceptance of him as arbitrator in a few cases was not shown to be such a participation in a universal custom and practice of the industry as to bind it to the acceptance of Mr. Shad-den as permanent umpire. In this connection the evidence was clear that District No. 2 was unique in encouraging the settlement of disputes by arbitration commissioners representing each party to the agreement, and if Mr. Shadden enjoyed a long and continuous tenure as umpire or arbitrator, it was as a result fortuitously of his selection case by case rather than by reason of his induction into a permanent office as such. Such interpretation is fortified by the 1971 contract, which went no further than to provide for a committee consisting of representatives of the parties to study the feasibility of the appointment of a permanent umpire. But in no way was Bethlehem burdened with the acceptance of Mr. Shadden as arbitrator against its choice. Appellants’ theories that either contractual obligation or custom or practice committed Bethlehem to the acceptance of Mr. Shadden as arbitrator under its current agreement are not sustained, and the District Court did not err in so holding.

II

Appellants assert that the District Court violated the provisions of the Norris-LaGuardia Act, 29 U.S.C. § 101 et seq., and the mandate of the Supreme Court in Boys Markets, Inc. v. Retail Clerks Union Local 770, by permanently enjoining the UMWA, District No. 2, and Local 1368 from engaging in a strike or work stoppage to enforce the demand that the permanent umpire should be utilized.

At best the record discloses the prayer of the complaint in the Dis-only an oblique reference to this issue in trict Court for an injunction. Ordinarily an issue not raised by the pleadings or otherwise in the District Court will not be heard on appeal absent exceptional circumstances. Kappel v. United States. It is obviously important that the parties here achieve a final determination of the issue as early as possible, since delay is susceptible of blocking the disposition of other disputes and grievances. A remand of the issue for amendments of pleadings and initial consideration by the District Court appears now to be wholly impracticable, considering the time which would elapse until a decision could be rendered. Since the question has been fully briefed by the parties, it is deemed that a present disposition here and now is consistent with the decision in Kappel v. United States, supra.

Recognizing that the Supreme Court in Boys Markets limited the scope of the Norris-LaGuardia Act and expanded the jurisdiction of the federal courts “in certain limited circumstances,” appellants urged that Boys Markets was inapplicable to the instant case because of the absence of a “no strike obligation” in the 1971 contract and because none of the appellants had struck to force Bethlehem to submit the grievance to a permanent umpire. Appellants presented an analysis of a number of the previous agreements and called particular attention to the absence of an express no-strike clause in the 1971 Agreement. The appellants contended that if such an obligation is to be found in the contract, it must be implied from the presence of an arbitration provision and from Article XX, the integrity clause.

Appellants relied heavily upon United Mine Workers of America v. NLRB, wherein the Court of Appeals for the District of Columbia Circuit analyzed the 1941 Appalachian Agreement and the Agreements of 1945, 1947 and 1952, and concluded that the 1952 Agreement was not to be read as imposing a no-strike obligation upon the union parties.

Appellants conceded that since United Mine Workers v. NLRB, supra, the integrity clause of the National Bituminous Coal Wage Agreement has been construed as constituting a no-strike obligation in Lewis v. Benedict Coal Corp. and Mile Branch Coal Co. v. NLRB. Appellants sought to distinguish those decisions from the present case and argued that they ignored the admonition that a contract must be “read as a whole.” Appellants contended that United Mine Workers v. NLRB, supra, is the better reasoned decision and should be followed, arguing vigorously that otherwise the indispensable strike weapon of unions would be rendered powerless.

Appellants also stressed that Boys Markets affords no basis for avoiding the clear restrictions of the Norris-La-Guardia Act on the jurisdiction of the District Court in this case.

The position of the appellants that the District Court transgressed the Norris-LaGuardia Act and Boys Markets in issuing its injunction is untenable. Rather than the support appellants claimed Boys Markets supplied, that case appears to give firm foundation to the contentions of Bethlehem. It expressly overruled Sinclair v. Atkinson in the opening paragraph of its opinion, declaring:

“In this case we re-examine the holding of Sinclair Refining Co. v. Atkinson, 370 U.S. 195, [82 S.Ct. 1328, 8 L.Ed.2d 440] (1962), that the anti-injunction provisions of the Norris-La-Guardia Act preclude a federal district court from enjoining a strike in breach of a no-strike obligation under a collective-bargaining agreement, even though that agreement contains provisions, enforceable under § 301(a) of the Labor Management Relations Act, 1947, for binding arbitration of the grievance dispute concerning which the strike was called. . Having concluded that Sinclair was erroneously decided and that subsequent events have undermined its continuing validity, we overrule that decision and reverse the judgment of the Court of Appeals.” (Pages 237, 238, 90 S.Ct. page 1585 (footnotes omitted).)
The Court went on to say:
“From the time Textile Workers Union of America v. Lincoln Mills, 353 U.S. 448, [77 S.Ct. 912, 1 L.Ed.2d 972] (1957), was decided, we have frequently found it necessary to consider various substantive and procedural aspects of federal labor contract law and questions concerning its application in both state and federal courts. Lincoln Mills held generally that ‘the substantive law to apply in suits under § 301(a) is federal law, which the courts must fashion from the policy of our national labor laws,’ 353 U.S. at 456, [77 S.Ct. at 918], and more specifically that a union can obtain specific performance of an employer’s promise to arbitrate grievances. We rejected the contention that the anti-injunction proscriptions of the Norris-LaGuardia Act prohibited this type of relief, noting that a refusal to arbitrate was not ‘part and parcel of the abuses against which the Act was aimed,’ id., at 458, [77 S.Ct. at 918], and that the Act itself manifests a policy determination that arbitration should be encouraged. See 29 U.S.C. § 108. Subsequently in the Steelworkers Trilogy [United Steelworkers of Am. v. American Mfg. Co., 363 U.S. 564, 80 S.Ct. 1343, 4 L.Ed.2d 1403; United Steelworkers of America v. Warrior & Gulf Nav. Co., 363 U.S. 574, 80 S.Ct. 1347, 4 L.Ed.2d 1409; United Steelworkers of America v. Enterprise Wheel & Car Corp., 363 U.S. 593, 80 S.Ct. 1358, 4 L.Ed.2d 1424] we emphasized the importance of arbitration as an instrument of federal policy for resolving disputes between labor and management and cautioned the lower courts against usurping the functions of the arbitrator. [Pages 242, 243, 90 S.Ct. page 1588 (footnotes omitted).]
# * * * -X- *
“As we have previously indicated, a no-strike obligation, express or implied, is the quid pro quo for an undertaking by the employer to submit grievance disputes to the process of arbitration. See Textile Workers Union v. Lincoln Mills, supra, 353 U.S. at 455, [77 S.Ct. at 917]. Any incentive for employers to enter into such an arrangement is necessarily dissipated if the principal and most expeditious method by which the no-strike obligation can be enforced is eliminated. [Pages 247, 248, 290 S.Ct. page 1591, (footnote omitted).]
* -x- * * * *
“Even if management is not encouraged by the unavailability of the injunction remedy to resist arbitration agreements, the fact remains that the effectiveness of such agreements would be greatly reduced if injunctive relief were withheld. Indeed, the very purpose of arbitration procedures is to provide a mechanism for the expeditious settlement of industrial disputes without resort to strikes, lockouts, or other self-help measures.
This basic purpose is obviously largely undercut if there is no immediate, effective remedy for those very tactics that arbitration is designed to obviate. [Page 249, 90 S.Ct. page 1591]
* -X- -X- * -X- *
“The Sinclair decision, however, seriously undermined the effectiveness of the arbitration technique as a method peacefully to resolve industrial disputes without resort to strikes, lockouts, and similar devices. Clearly employers will be wary of assuming obligations to arbitrate specifically enforceable against them when no similarly efficacious remedy is available to enforce the concomitant undertaking of the union to refrain from striking. On the other hand, the central purpose of the Norris-LaGuardia Act to foster the growth and viability of labor organizations is hardly retarded — if anything, this goal is advanced — by a remedial device that merely enforces the obligation that the union freely undertook under a specifically enforceable agreement to submit disputes to arbitration. We conclude, therefore, that the unavailability of equitable relief in the arbitration context presents a serious impediment to the congressional policy favoring the voluntary establishment of a mechanism for the peaceful resolution of labor disputes, that the core purpose of the Norris-LaGuardia Act is not sacrificed by the limited use of equitable remedies to further this important policy, and consequently that the Norris-LaGuardia Act does not bar the granting of injunctive relief in the circumstances of the instant case. [Pages 252, 253 [90 S.Ct. page 1593] (footnote omitted).]
* -X- -X- * * *
“The dissenting opinion in Sinclair suggested the following principles for the guidance of the district courts in determining whether to grant injunc-tive relief — principles that we now adopt:
“ ‘A District Court entertaining an action under § 301 may not grant injunctive relief against concerted activity unless and until it decides that the case is one in which an injunction would be appropriate despite the Norris-LaGuardia Act. When a strike is sought to be enjoined because it is over a grievance which both parties are contractually bound to arbitrate, the District Court may issue no injunctive order until it first holds that the contract does have that effect; and the employer should be ordered to arbitrate, as a condition of his obtaining an injunction against the strike. Beyond this, the District Court must, of course, consider whether issuance of an injunction would be warranted under ordinary principles of equity — whether breaches are occurring and will continue, or have been threatened and will be committed; whether they have caused or will cause irreparable injury to the employer; and whether the employer will suffer more from the denial of an injunction than will the union from its issuance.’ 370 U.S., at 228, [82 S.Ct., at 1346], (Emphasis in original.)” (Page 254, 90 S. Ct. page 1594.)
Just as in Boys Markets, so, too, here “. . . there is no dispute that the grievance in question was subject to adjustment and arbitration under the collective-bargaining agreement and that the petitioner was ready to proceed with arbitration at the time an injunction against the strike was sought and obtained. The District Court also concluded that, by reason of respondent’s violations of its no-strike obligation, petitioner ‘has suffered irreparable injury and will continue to suffer irreparable injury.’ ” (Page 254, 90 S.Ct. page 1594.)

A review of the contracts in evidence in the case at bar can leave no doubt that the parties named therein inexorably followed a path for disposition of disputes and grievances leading to arbitration rather than by litigation in the courts. In the National Bituminous Coal Wage Agreement of 1971, while there was no specific provision to refrain from strikes, the determination to arbitrate differences was clearly and distinctly defined in Article XVII.

Indeed, the Court very recently in Gateway Coal Co. v. United Mine Workers of America, et al., took occasion to underscore its decision in Boys Markets in construing the National Bituminous Coal Wage Agreement of 1968, the predecessor of the 1971 Agreement, which governs the case at bar. The section of the 1968 Agreement entitled “Settlement of Local and District Disputes” differs only in small details from Article XVII of the 1971 Agreement.

Gateway involved a safety dispute which a majority of our court concluded should be treated sui generis. We held, among other things, that there was a public policy disfavoring compulsory arbitration of safety disputes and that absent an express provision of the collective bargaining agreement, the union had no contractual duty to submit the controversy to arbitration and hence there was no implied obligation not to strike.

The Supreme Court took a different view. It held that the arbitration provision in the 1968 Agreement “appears sufficiently broad to encompass the instant dispute” and that the presumption of arbitrability announced in United Steelworkers of America v. American Manufacturing Co. and its associated cases applies to safety disputes and that the arbitration clause in the parties’ collective bargaining agreement covered the dispute in the case before the Court.

Whether the District Court had authority to enjoin the work stoppage was considered in Gateway in the light of the holding in Boys Markets. In this regard the Court concluded that “Although the collective bargaining agreement in Boys Markets contained an express no-strike clause, (footnote omitted) injunctive relief also may be granted on the basis of an implied undertaking not to strike.” Absent an explicit expression of the parties that although they agreed to a broad arbitration provision yet negated any implied no-strike obligation, the agreement to arbitrate and the duty not to strike should be “construed as having coterminous application.” The Court finally determined that “injunctive relief was appropriate . . . under the equitable principles set forth in Boys Markets

The test thus imposed by Boys Markets and approved in Gateway has been fully satisfied by the District Court in the case at bar. It specifically found that there was a work stoppage at Mine No. 33 due to the objection of Bethlehem to Mr. Shadden as arbitrator, which dispute was subject to arbitration under Article XVII of the 1971 Agreement; that there was likelihood of irreparable harm to Bethlehem and that although the 1971 Agreement contains no express no-strike clause, it does provide for mandatory arbitration under Article XVII of the 1971 Agreement in terms sufficient to imply a no-strike obligation under the law as set forth herein. We can find no fault in the District Court’s order of June 21, 1972 in which it, among other things, “permanently enjoined [the appellants] from engaging in a strike or work stoppage at [Bethlehem’s] Mine 33 and/or its adjacent Preparation Plant in Cambria County, Pennsylvania, to enforce their demand that Umpire Maurice Shadden be appointed umpire under Step 5 of the Grievance Procedure of Article XVII it

III

To implement its determination of this case, the District Court in its order of June 21, 1972, provided:

“(5) The said umpire shall be a person selected by mutual agreement of the parties within ten days of the date of this Order; or in the event of their failure to do so the court, upon application of either party, will designate the manner of selection by the parties;”.

The parties being unable to agree on the selection of an umpire under the District Court’s order of June 21, 1972, it ordered on July 17, 1972 that the arbitrator be selected in accordance with the procedure noted heretofore.

The District Court, in fashioning the procedure for choosing the umpire, where, as here, the parties had failed to agree, acted well within its province. Indeed, it is expected that the District Court in a situation such as this will exercise its judicial inventiveness to devise a method for carrying out the policy designed to preserve labor peace and to foster systems of voluntary arbitration. Textile Workers Union v. Lincoln Mills; Boys Markets, Inc. v. Retail Clerks Union Local 770, supra; Textile Workers Union v. American Thread Co.

Hence the orders of the United States District Court for the Western District of Pennsylvania of June 21, 1972 and July 17, 1972 will be affirmed.

      . UMWA, District No, 2 and Local 1368 are collectively referred to as appellants at times hereinafter.

      . On their motion, the District Court dismissed the action as to the defendants W. A. Boyle, Owen F. Slagle, William A. Risbon, Frank Claypool, George W. Commons and Charles D. Neff, because it had no jurisdiction over individual members of a labor organization under § 301 of the Labor-Management Relations Act.

      . District No. 2 is in the nature of an administrative organization.

      . Article XVII of 1971 Agreement reads :
      “Article XVII — SETTLEMENT OF DIS-
      PUTES

        “Section (a) Mine Committee “A committee of three employees shall be elected at each mine by the employees at such mine. Each member of the mine committee shall be an employee of tlie mine at which he is a committee member, and shall be eligible to serve as a committee member only so long as he continues to be an employee of said mine. The duties of the mine committee shall be confined to the adjustment of disputes arising out of this agreement that the mine management and the employee or employees have failed to adjust. The mine committee shall have no other authority or exercise any other control, nor in any way interfere with the operation of the mine; for violation of this section any and all members of the committee may be removed from the committee. (1941)

        “Section (i) Grievance Procedure “Should differences arise between the Mine Workers and the Employer as to the meaning and application of the provisions of this agreement, or should differences arise about matters not specifically mentioned in this agreement, or should any local trouble of any kind arise at the mine, an earnest effort shall be made to settle such differences at the earliest practicable time. (The parties will not be represented by legal counsel at any of the steps below.) :
      * * * * *
      “(5) Should the Board fail to agree the matter shall, ... be referred to an umpire who shall expeditiously and without delay decide said case. The decision of the umpire shall be final. . . .
      “ * * * The decision shall be binding on both parties and shall not be subject to reopening except by mutual agreement.

        “Section (c) Joint Committee on Arbitration Procedure
      “A committee of equal representation from the Employers and the Union will be appointed immediately after the execution of this agreement to study the feasibility of a permanent or chief umpire and/or a panel of umpires to arbitrate disputes which may arise under the terms of the agreement.
      “The committee will examine methods of selection, tenure, compensation and related matters and will complete its report and recommendations no later than April 1, 1972.”

      . See note 4.

      . See note 4.

      . The following guidelines were laid down in the Order of the District Court of July 17, 1972:
      “1. The Federal Mediation and Conciliation Service will supply a list of three qualified arbitrators to this court, and send copies of that list to the counsel for the parties to this action in accordance with the terms of a letter of request from this Court attached to this Order.
      “2. The Defendant shall first strike one name from that list, and advise Plaintiff of the name which has so been stricken.
      “3. The Plaintiff shall then strike one name from the list, and report the name of the remaining arbitrator to Defendant and to this Court. The Court will notify
      the Federal Mediation and Conciliation Service of the selection of this arbitrator as Umpire and the parties shall subsequently proceed to complete the proceedings under Step 4 of the procedure as set forth in Article XVII — Settlement of Disputes, of the National Bituminous Coal Wage Agreement of 1971, and to submit the grievance of employee John Bafacz, a member of Local 1368, United Mine Workers of America, and District #2, United Mine Workers of America, to said Umpire in accordance with Step 5 of said Article.” App. at 158.

      . Defendant’s Exhibit A at 14.

      . Defendant’s Exhibit A at 118.

      . 271 F.Supp. 644 (D.C.Or.1967), rev’d on other grounds, 400 F.2d 875 (9th Cir. 1968).

      . 333 F.2d 739 (9th Cir. 1964), aff’d on rehearing after remand, 359 F.2d 400 (9th Cir. 1966).

      . 363 U.S. 574, 80 S.Ct. 1347, 4 L.Ed.2d 1409 (1960). One of the noted trilogy in which the Supreme Court took a broad view of the scope of the arbitrator’s source of the law and held it was not to be confined to the express provisions of the contract but that the “industrial common law — the practices of the industry and the shop — is equally a part of the collective bargaining agreement although not expressed in it.” 363 U. S. at 581, 582, 80 S.Ct. at 1352.

      . 257 F.Supp. 138 (E.D.Ark.1962). While permitting the inclusion of specific practice in the interpretation of a contract, the court specifically indicated that the employer by giving notice could alter current practice, thereby unilaterally changing the contract.

      . 256 F.Supp. 161, 163 (S.D.N.Y.1963), aff’d, 329 F.2d 147 (2d Cir. 1964). The latter opinion fails to disclose the specific “past practice of the parties.” The court upheld an arbitrator’s decision to affirm the employer’s right to require overtime work and to discipline individual employees for refusal to work overtime.

      . 315 F.2d 695, 699 (3d Cir. 1963), in which a Union held by the NLRB to have engaged in unlawful secondary activity, sought to evade responsibility for its acts on the ground that it failed to sign a contract notwithstanding its acceptance and action upon it in every way as if it had signed. This court upheld the finding of the Board that the absence of the signature of the Union did not excuse it from complying therewith. However, in the instant case Bethlehem was not a party to the District No. 2 agreement.

      . 347 F.2d 93 (2d Cir. 1965), cert, den., 382 U.S. 940, 86 S.Ct. 394, 15 L.Ed.2d 351 (1965). Torrington I does indeed contain dicta that “custom or common understanding” may have the effect of applying a collective bargaining agreement to a matter not specifically provided for within that agreement. The basic issue decided, however, was tliat the district court is required to consider disputed issues of fact before granting summary judgment in declaratory judgment actions on the arbitrability of grievances.

      . 362 F.2d 677 (2d Cir. 1966). Torrington II held that an arbitrator exceeded his authority by implying a past practice into a new agreement.

      . 464 F.2d 870 (3d Cir. 1972) in which the court dealt with the application of res adju-dicata to a redrafted complaint.

      . 193 F.2d 209 (6th Cir. 1951) holding a contract enforceable where it expresses the mutual agreement of the parties but was unsigned by one of the parties.

      . 78 L.R.R.M. 2610 (Pa.C.P. of Phila.Cty. 1971) (oral opinion) in which the court held a contract existed, though unsigned, due to estoppel resulting from both parties’ knowledge of a press release signifying that an agreement had been reached.

      . See note 13.

      . See note 4 (section (b) (5)).

      . See note 4 (section (c)).

      . See e. g. agreement between CPCPA and the UMWA, District No. 2, of October 22, 1941, Rule 16, which provides:
      “Should the fourth method fail, the matter shall be referred to a permanent Board of Arbitration, consisting of two
      Mine Workers or their representatives and two Operators or tlieir representatives. They jointly failing to agree shall refer the matter to a permanent umpire to be selected jointly by the Operators and the United Mine Workers of America, District No. 2.” Defendants’ Exhibit A, p. 118.

      . See note 4.

      . 437 F.2d 1222, 1224 (3d Cir. 1971).

      . 398 U.S. 235, 90 S.Ct. 1583, 26 L.Ed.2d 199 (1970).

      . “Article XX — MAINTAIN INTEGRITY OF CONTRACT
      “Tlie United Mine Workers of America and the Employers agree and affirm that they will maintain the integrity of this contract and that all disputes and claims which are not settled by agreement shall be settled by the machinery provided in the ‘Settlement of Disputes’ article of this agreement unless national in character in which event the parties shall settle such disputes by free collective bargaining as heretofore practiced in the industry, it being the purpose of this provision to provide for the settlement of all such disputes and claims through the machinery in this contract and by collective bargaining without recourse to the courts.” Plaintiff’s Exhibit A (attached to the complaint) , at 54, 55.

      . 103 U.S.App.D.O. 207, 257 F.2d 211 (1958).

      . 259 F.2d 346 (6th Cir. 1958) which relied on United Construction Workers v. Haislip Baking Co., 223 F.2d 872 (4th Cir. 1955) and W. L. Mead, Inc. v. International Bhd. of Teamsters, D.C., 126 F.Supp. 466, aff’d, 230 F.2d 576 (1st Cir. 1956), and the dissenting opinion in United Mine Workers v. NLRB, 103 U.S.App.D.C. 207, 257 F.2d 211 (1958).

      . 109 U.S.App.D.C. 265, 286 F.2d 822 (1961), cert, denied, 365 U.S. 871, 81 S.Ct. 905, 5 L.Ed.2d 861 (1961).

      . 370 U.S. 195, 82 S.Ct. 1328, 8 L.Ed.2d 440 (1962).

      . Of significant interest, too, is the title sheet of the National Bituminous Coal Wage Agreement of 1971, officially directed to be attached as a foresheet of the contract, on the reverse side of which appears :
      “NOTE:
      “The National Bituminous Coal Wage Agreement of 1971 contains those provisions in effect September 30, 1971 of the
      “Appalachian Joint Wage Agreement (1941)
      “Supplemental Six Day Work Week Agreement (1943)
      “National Bituminous Coal Wage Agreement (1945)
      “National Bituminous Coal Wage Agreement of 1968
      “Not included in the 1971 National Agreement, but noted here as a matter of historical interest, is the following provision which had been in the National Bituminous Coal Wage Agreement of 1968:
      “ ‘Any and all provisions in either the Appalachian Joint Wage Agreement of June 19, 1941, or the National Bituminous Coal Wage Agreement of April 11, 1945, containing any “no strike” or “penalty” clause or clauses or any clause denominated “Illegal Suspension of Work” are hereby rescinded, cancelled, abrogated and made null and void.’
      “This printing of the 1971 National Agreement has been arranged for through the cooperative efforts of the Bituminous Coal Operators’ Association, Inc. and the United Mine Workers of America.” Plaintiff’s Exhibit A (attached to the complaint) at ii.

      . 414 U.S. 368, 94 S.Ct. 629, 38 L.Ed.2d 583 (1974).

      . 363 U.S. 564, 80 S.Ct. 1343, 4 L.Ed.2d 1403 (1960).

      . 94 S.Ct. at 638.

      . 94 S.Ct. at 641.

      . Id. See Local 174, Teamsters Union v. Lucas Flour Company, 369 U.S. 95, 82 S.Ct. 571, 7 L.Ed.2d 593 (1964).

      . See note 7.

      . 353 U.S. 448, 77 S.Ct. 912, 1 L.Ed.2d 972 (1957).

      . 113 F.Supp. 137, 142 (D.C.Mass.1953).


author: PER CURIAM.

text:
    UNITED STATES of America, Plaintiff-Appellee, v. Percy Lee CAGE, Jr., Defendant-Appellant.
    No. 73-1593.
    United States Court of Appeals, Tenth Circuit.
    April 11, 1974.

      Stephen K. Lester, Asst. U. S. Atty. (Robert J. Roth, U. S. Atty., and Thomas A. Hamill and E. Edward Johnson, Asst. U. S. Attys., on the brief), for plaintiff-appellee.
    Martin L. Lipp, Boulder, Colo., for defendant-appellant.
    Before BREITENSTEIN, SETH and DOYLE, Circuit Judges.
   PER CURIAM.

On trial to the court without a jury, defendant-appellant was found guilty of possession of an unregistered sawed-off shotgun in violation of 26 U.S.C. §§ 5861(d) and 5871.

While on a routine patrol during the early morning hours, two Kansas City police officers received by radio a pickup order on a described automobile, the occupants of which had reportably been involved in an assault. The pick-up stated that the occupants were armed with a sawed-off shotgun and that the officers should proceed with caution. Later, and .about 4:30 A.M., the officers found the described car in a parking lot. Defendant was in the driver’s seat and a man and a woman were in the back seat, all apparently asleep. The officers got all three out of the car, told them of the pick-up order, and gave them the Miranda warning. One officer observed a bloody towel in the car. At the request of an officer, defendant opened the trunk. The officer saw and seized a sawed-off shotgun. Defendant was then placed under arrest for state offenses. Later defendant was questioned by an agent of the Bureau of Alcohol, Tobacco, and Firearms and told the agent that he had gotten the gun from Tommy Diggs because he wanted to go hunting. Efforts to locate Diggs proved fruitless.

One of the occupants of the car testified at the trial to an altercation between two women with whom he and the defendant were riding. One of the women was hurt. Defendant got a towel and sawed-off shotgun from the trunk, gave the towel to the injured contestant to wipe her face, tendered her the gun which she rejected, and later threw the towel on the front.seat and put the shotgun back in the trunk. The two men and the other woman then drove to the parking lot where the police found them.

Defendant filed a motion to suppress both the gun and the statement to the federal agent. Hearing was deferred until the trial without a jury. The officers testified that defendant was cooperative, consented to the search, and opened the trunk. Defendant said that he had driven to the parking lot to get his wife when she left work and had given her the keys so that she could drive the car to her home. He also testified that the officers had gotten the keys from his wife after a threat to arrest her. The trial court found that defendant consented to the search.

Chambers v. Maroney, 399 U.S. 42, 90 S.Ct. 1975, 26 L.Ed.2d 419, recognizes the “moving vehicle” exception to the usual requirements for a search warrant: In that case the car was searched after it had been moved to the police station from the place where the officers had stopped it. The Court held that there was probable cause for both the arrest and the search, Ibid, at 47-48, 90 S.Ct. 1975, and that the probable cause factor still obtained at the police station. Ibid, at 52, 90 S.Ct. 1975. We followed Chambers in United States v. Pollard, 10 Cir., 466 F.2d 1, 4-5, but there the car search came after the arrest and here it preceded it.

Policemen are entitled to act on the strength of a radio bulletin. Whiteley v. Warden, 401 U.S. 560, 568, 91 S. Ct. 1031, 28 L.Ed.2d 306. In that case a search was held improper because probable cause did not exist for the issuance of the arrest warrant which furnished the basis of a radio bulletin. Whiteley says that when the impetus is an informer’s tip, information gathered by the arresting officers can be used to sustain a probable cause finding not adequately supportable by the tip alone. Ibid, at 567, 91 S.Ct. 1031.

Adams v. Williams, 407 U.S. 143, 92 S.Ct. 1921, 32 L.Ed.2d 612, says, Ibid, at 146, 92 S.Ct. at 1923, that “A brief stop of a suspicious individual, in order to determine his identity or to maintain the status quo momentarily while obtaining more information, may be most reasonable in light of the facts known to the officer at the time.” In the instant case the report of a street crime was carried in a radio bulletin. The response of the officers was reasonable in the light of the known facts.

Another statement in Adams v. Williams, is particularly applicable to the case at bar, Ibid, at 147, 92 S.Ct. at 1924.

“But in some situations — for example, when the victim of a street crime seeks immediate police aid and gives a description of his assailant, or when a credible informant warns of a specific impending crime — the subtleties of the hearsay rule should not thwart an appropriate police response.”

In the instant case the patrol officers, acting on the radio bulletin, found the described car with occupants who fitted the sex and ethnic descriptions of the bulletin. The bulletin had also reported that the occupants had been engaged in an assault and had a sawed-off shotgun. The observation of the bloody towel was compatible with the report of an assault. It gave sufficient support to the radio bulletin to sustain probable cause for the search.

Be that as it may, the officers proceeded reasonably and asked defendant for permission to search the trunk. Although the testimony of the officers that the defendant consented, and his version of what occurred, are different, the conflict was for determination by the trier of the facts. The trial court held that consent had been given. Defendant now argues that the consent was not voluntary because he had not been told that consent could be withheld. In Schneckloth v. Bustamonte, 412 U.S. 218, 93 S.Ct. 2041, 36 L.Ed.2d 854, the Court was concerned with the consented search of a car stopped for a traffic violation. There was no warning that consent could be withheld. The Court said, Ibid, at 248-249, 93 S.Ct. at 2059:

“Voluntariness is a question of fact to be determined from all the circumstances, and while the subject’s knowledge of a right to refuse is a factor to be taken into account, the prosecution is not required to demonstrate such knowledge as a prerequisite to establishing a voluntary consent.”

When all of the factors are considered in the case before us, we are convinced of the validity of the finding of consent. Whether the issue is approached from the probable cause standpoint or from that of consent, the search was reasonable and violated no constitutional right of the defendant.

The remaining issue relates to the statement which defendant gave to the federal agent. It is enough to say that the record sustains the trial court’s finding that the statement was given voluntarily after an appropriate Miranda warning.

Affirmed.