author: CASTLE, Senior Circuit Judge.

text:
    In re SPECIAL FEBRUARY 1971 GRAND JURY, Howard Jachimowski, et al., Petitioners-Appellants. v. James B. CONLISK, Jr., Superintendent of Police, Respondent-Appellee.
    No. 73-1207.
    United States Court of Appeals, Seventh Circuit.
    Argued Sept. 18, 1973.
    Decided Dec. 20, 1973.

      Anna R. Lavin, George F. Callaghan, Edward J. Calihan, Jr., Martin S. Gerber, Chicago, Ill., for petitioners-appellants.
    Richard L. Curry, Corp. Counsel, Daniel Pascale, William R. Quinlan, Asst. Corp. Counsels, James R. Thompson, U. S. Atty., William T. Huyck, Asst. U. S. Atty., Chicago, Ill., for respondent-appellee.
    Before SWYGERT, Chief Judge, CASTLE, Senior Circuit Judge, and SPRECHER, Circuit Judge.
   CASTLE, Senior Circuit Judge.

This is an appeal from an order of the district court denying the motion of plaintiffs, five Chicago policemen, to vacate two prior district court orders authorizing the disclosure to the Superintendent of Police of grand jury minutes pertinent to the policemen’s appearances before the grand jury and permitting court reporters to testify at a Chicago Police Department inquiry on matters occurring before the grand jury. On appeal, the policemen contend that the orders sought to be vacated constitute a violation of rule 6(e) of the Federal Rules of Criminal Procedure, which provides for the secrecy of grand jury proceedings. Finding no abuse of discretion in the court’s granting of the two orders relative to the disclosure, we affirm the order of the court denying the policemen’s motion to vacate those orders.

The policemen appeared before a federal grand jury investigating allegations of criminal conspiracy and corruption among members of the Chicago Police Department. Subsequently, the men were summoned to appear before the Police Department’s board of inquiry. The men were charged with violating certain departmental rules. The Superintendent of Police and defendant, James B. Conlisk, Jr., thereafter petitioned the court for the orders authorizing disclosure of the grand jury minutes and permitting the court reporters to testify. The court granted the orders, and the Department formally notified the policemen that at their hearing it intended to call the court reporters as witnesses to testify and to produce transcripts of the policemen’s testimony before the grand jury. The men then filed a motion to vacate the orders, which the court denied.

From earliest times, grand jury proceedings have been traditionally secret. In re April 1956 Term Grand Jury, 239 F.2d 263, 269 (7th Cir. 1956). The interests on which this tradition rest are numerous: the interest of the government against disclosure of criminal investigation which might forewarn the intended objects of the inquiry or inhibit future witnesses; the interest of a witness against disclosure of others’ testimony which he has had no opportunity to cross-examine or rebut, or of his own testimony where he may have been subjected to prosecutorial intimidation without the protestation of counsel; the interest of those unfavorably mentioned in prosecutors’ questions or witnesses’ answers; and the protection of witnesses and grand jurors against reprisals. In re Biaggi, 478 F.2d 489, 491-492 (2d Cir. 1973) (Friendly, J.); Pittsburgh Plate Glass Co. v. United States, 360 U. S. 395, 405, 79 S.Ct. 1237, 3 L.Ed.2d 1323 (1959). The secrecy of grand jury proceedings is not absolute, however. The Federal Rules of Criminal Procedure provide three exceptions in rule 6(e) to the secrecy requirement. Disclosure of matters occurring before the grand jury “may be made to the attorneys for the government for use in the performance of their duties.” The court may grant the request of a defendant for access to grand jury minutes “upon a showing that grounds may exist for a motion to dismiss the indictment because of matters occurring before the grand jury.” Finally, matters may be disclosed “when so directed by the court preliminarily to or in connection with a judicial proceeding.”

Failing to give evidence before the Grand Jury, Coroner’s inquest, in court, or before any governmental body, including the
Police Board, when properly called to do so, or refusing to testify on the grounds that it might incriminate the member.

Respecting the first exception, while the rule refers to attorneys for the government, this phrase has been construed to include only attorneys for the United States government and not municipal, county or state attorneys. In re Holovachka, 317 F.2d 834 (7th Cir. 1963), United States v. Downey, 195 F.Supp. 581 (S.D.Ill.1961). The second exception is patently inapposite. We must therefore determine whether the testimony was sought preliminarily to or in connection with a “judicial proceeding.” That depends, first, on whether the police board hearings are “preliminary” to judicial review of findings of misconduct, and second, on whether review by the Illinois courts is a “judicial proceeding” within the meaning of the rule.

An elaboration of the Illinois statutory scheme is necessary to a resolution of this question. The Superintendent is empowered to enforce Departmental discipline through the placing of charges against members of the force. When the disciplinary remedy sought is dismissal or suspension for more than thirty days, the policeman is entitled to a hearing before a Departmental board of inquiry. The policeman may appear with counsel of his choice to present witnesses and evidence in his own behalf, and he may cross-examine witnesses giving evidence against him. Ill.Rev. Stat. ch. 24, sec. 10-1-18.1 (1969). The formal or technical rules of evidence do not apply, Id.; however, a record of the hearing is made. If the board orders the penalty sought, the policeman is entitled to judicial review of the decision by the Circuit Court of Cook County, with an appeal as of right to the Appellate Court of Illinois.

This statutory scheme resembles that found in In re Grand Jury Transcripts, 309 F.Supp. 1050 (S.D.Ohio 1970), in which the Columbus, Ohio Chief of Police was granted disclosure of grand jury testimony for use in a proceeding before the city’s director of public safety, at which the Chief sought the suspension of several policemen. The City Charter provided “with respect to a judgment of the Director of Public Safety on the suspension of a police officer, for appeal to the City Civil Service Commission and thereafter to the [Ohio] Court of Common Pleas.” Id. at 1052. The court found that the director’s acts in inquiring into the charges for which suspension was sought and in rendering judgments were quasi-judicial in nature and therefore within the purview of rule 6(e). Citing Doe v. Rosenberry, 255 F.2d 118 (2d. Cir. 1958). That case holds that disclosure of grand jury minutes to the New York City Bar’s Grievance Committee for investigation as to whether disciplinary proceedings should be instituted before the Appellate Division of the New York Supreme Court was “preliminary to a judicial proceeding.” But that determination was not framed simply on the Grievance Committee’s quasi-judicial nature, but rather on the fact that judicial action on charges predicated on the Committee’s findings necessarily followed the Committee’s hearings. Nonetheless, the principle was followed, even if not stated, in In re Grand Jury Transcripts, supra. The court found, “[Rjesort to judicial review is clearly contemplated with respect to the hearings before the Director of Public Safety.” 309 F.Supp. at 1052. The court properly ignored the formalistic distinction (in this context) as to which party bears the burden of presenting the quasi-judicial findings of culpability to the court, the board (Doe v. Rosenberry, supra) or the individual after sentence has been imposed but not executed (In re Grand Jury Transcripts, supra), so long as the statute envisioned that the findings are subsequently presented to the court. We similarly decline the policemen’s invitation to distinguish their appeal on the ground that, unlike In re Grand Jury Transcripts, supra, their sentence is executed prior to their appeal to the state courts. The statutory scheme involved here plainly contemplates judicial review of the board’s findings, and we must therefore conclude, in answering the first question, that the police board hearing is “preliminary” to judicial review.

The second question is whether the judicial review envisioned by the statute is within the ambit of the term “judicial proceeding” found in rule 6(e). Judge Learned Hand articulated the classic definition of that term in Doe v. Rosenberry:

[T]he term “judicial proceeding” includes any “proceeding” determinable by a court, having for its object the compliance of 'any person, subject to judicial control, with standards imposed upon his conduct in the public interest, even though such compliance is enforced without the procedure applicable to the punishment of crime. 255 F.2d at 120.

The power of the Illinois courts on review of the board’s findings is vast. It extends to all questions of law and of fact presented in the record. The court may affirm or reverse the decision in whole or part, or it may remand the decision for further consideration or the taking of additional evidence. Ill.Rev. Stat. ch. 110, sec. 274-275 (1945). Where the power of the reviewing court is so immense, we find that the proceeding is in fact “determinable” by the court. The court clearly seeks the individual’s compliance with standards imposed on his conduct in the public interest, for, like Doe v. Rosenberry, supra, at 120, this proceeding is designed to preserve the good name and uprightness of public officers. Finally, the Circuit Court of Cook County’s decision is subject to further judicial review, with an appeal as of right to the Appellate Court of Illinois. We conclude therefore that the requirement of a judicial proceeding is satisfied by this statutory scheme.

Even if the literal requirements of the rule are met, “the indispensible secrecy of grand jury proceedings must not be broken except where there is compelling necessity. There are instances when that need will outweigh the countervailing policy. But they must be shown with great particularity (citations omitted)” United States v. Proctor & Gamble Co., 356 U.S. 677, 682, 78 S. Ct. 983, 987, 2 L.Ed.2d 1077 (1958), In re Holovachka, supra, 317 F.2d, at 837. In In re Bullock, 103 F.Supp. 639 (D.C., 1952), the court released grand jury minutes to the Commissioners of the District of Columbia in connection with a proceeding to determine whether Bullock had been derelict in his duties as a supervisory police officer. The court found that the Commissioners had a duty and a responsibility to supervise the police and to take necessary steps to maintain its good name and that this public interest warranting disclosure was superior to that mandating grand jury secrecy. Id. at 643. The testimony sought by the Superintendent was given before a grand jury investigating alleged crimes committed by police officers. The effectiveness of the police as an instrument of law enforcement is directly related to public confidence and cooperation. Because the maintenance of police integrity and credibility is essential to public confidence, the disclosure of testimony by policemen to a police board in order to discipline those abusing public offices is a sufficient public interest to override the policy of shielding the grand jury from public scrutiny. Accord, In re Bullock, supra Cf., United States v. Skurla, 126 F.Supp. 711 (D.C.Pa.1954); United States v. Smyth, 104 F.Supp. 279 (D.C.Cal.1952). Moreover, the purpose of rule 6(e) is to facilitate efficient adjudication for the protection of the public. Certainly, the release of grand jury testimony to a police board seeking to prevent those who may be perpetrators of crime from clothing themselves in the trappings of the law can only redound to the protection of the public with whom such figures of authority come into contact.

Since disclosure effectuates the policy of the rule and since the literal requirements of the rule are satisfied, we find that the trial court did not abuse its discretion in ordering the disclosure of grand jury minutes. See, Pittsburgh Plate Glass Co. v. United States, supra (Brennan, J., dissenting), United States v. Berata, 343 F.2d 469, 2d Cir. 1965, cert, den, 382 U.S. 812, 86 S.Ct. 28, 15 L.Ed.2d 60 (1965). We note that our decision does not preempt either quasi-judicial or judicial bodies from determining in their proceedings the relevancy or the materiality of the grand jury testimony. We note further that this decision relates solely to the narrow question of the release of grand jury testimony. Such testimony cannot, of course, be used in a manner violative of the policemen’s constitutional rights. This court has ruled, in a case arising out of the same factual situation, that the police board inquiry must be an accounting of public faith with policemen advised that their answers would not be used against them in criminal proceedings and with questions specifically, directly and narrowly related to their official duties. Confederation of Police v. Conlisk, 489 F.2d 891, at 894, 896 (7th Cir.) (1973).

Affirmed.

      . The charges included violating rule 51, which prohibits:

      . The court further held, “Rule 51, to the extent that it denies police officers the privilege against self-incrimination where there is a threat of criminal prosecution, is constitutionally invalid.” Id. at 896.


source: Caselaw Access Project

author: MULLIGAN, Circuit Judge:

license: Public Domain

text:
    Hans P. KRAUS and Hanni Z. Kraus et al., Appellants, v. COMMISSIONER OF INTERNAL REVENUE, Appellee.
    Nos. 182-187, Dockets 73-1814-73-1819.
    United States Court of Appeals, Second Circuit.
    Argued Nov. 21, 1973.
    Decided Jan. 3, 1974.

      William A. Friedlander, Atty., Dept, of Justice, Washington, D. C. (Scott P. Crampton, Asst. Atty. Gen., Myer Roth-wacks, Stephen Schwarz, Attys. Tax Div., Dept, of Justice, Washington, D. C.), for appellee.
    Martin A. Roeder, New York City (Guggenheimer & Untermyer, New York City, Harold Manheim, Raymond W. Mitchell, Edward First, New York City, on the brief), for appellants.
    Before LUMBARD, MANSFIELD and MULLIGAN, Circuit Judges.
   MULLIGAN, Circuit Judge:

These are consolidated appeals from decisions of the United States Tax Court which involve deficiencies in the taxpayers’ federal income tax for the year 1965 in the aggregate amount of $274,886.78. The findings of fact of the Tax Court and the opinion of Hon. Samuel B. Ster-rett were entered on February 26, 1973 and are reported at 59 T.C. 681. The taxpayers filed notices of appeal on May 18, 1973 and the parties thereafter filed a stipulation of venue providing for review of all the decisions by this court.

On July 30, 1965 each of the taxpayers sold part of the common shares which he held in Kraus Reprint, Ltd. (KRL), a Liechtenstein corporation, realizing a substantial gain. Section 1248(a) of the Internal Revenue Code provides that a gain realized by United States shareholders on the sale of foreign stock shall be treated as a dividend (rather than as a capital gain) “to the extent of the earnings and profits of the foreign corporation attributable . to such stock which were accumulated in taxable years of such, foreign corporation beginning after December 31, 1962, and during the period or periods the stock sold . . . was held by such person[s] while such foreign corporation was a controlled foreign corporation.” The taxpayers reported the entire gain on the sale of their stock as a long-term capital gain. The Commissioner of Internal Revenue found, however, that KRL had been a “controlled foreign corporation,” and therefore, determined that the proportion of the gain equal to all the earnings and profits accumulated by KRL and attributable to the stock during the relevant period should be treated as a dividend.

A “controlled foreign corporation” is defined in section 957(a) of the Internal Revenue Code as “any foreign corporation of which more than 50 percent of the total combined voting power of all classes of stock entitled to vote is owned . by United States shareholders on any day during the taxable year of such foreign corporation.” (emphasis added). It is conceded that 50% of the voting stock of KRL was held by the common stockholders, all of whom were United States shareholders. The other 50% was owned by preferred stockholders, none of whom were United States shareholders. The Tax Court held that the voting preferred stock was merely a device utilized to give the appearance of compliance with section 957(a) and that KRL was in fact a controlled foreign corporation. Affirmed.

I

The taxpayers here are Hans B. Kraus, his wife, Hanni, and their five children, who acquired all of the outstanding stock of Scientific Periodicals Enterprises, Ltd., a Liechtenstein corporation engaged in the business of reprinting and selling foreign out-of-print materials. The acquisition occurred on or about October 31, 1962 and on November 9, 1962, the corporate name was changed to Kraus Reprint, Ltd. The original capital consisted of 100,000 Swiss francs (SFr.) divided into 100 common shares, each duly issued with a par value of SFr. i,000 per share. On December 12, 1962, KRL held an extraordinary general meeting for the primary purpose of altering its capitalization.

At the meeting, KRL’s authorized capital was increased from SFr. 100,000 to SFr. 200,000, represented by 1,000 common shares in bearer form, each with a par value of SFr. 100, and 100 registered 8% cumulative preferred shares, each with a par value of SFr. 1000. The articles of incorporation were amended to provide that 10 common shares were entitled to one vote, and each preferred share was entitled to one vote. As a result, the taxpayers here, who were the common shareholders, and the new preferred shareholders each held 50% of the voting stock.

At the same meeting, the articles of incorporation were amended as follows:

1) Preferred stock could be transferred “only with the approval of the Board of Directors” and approval could be denied “on the basis of important reasons.” If preferred stock was acquired pursuant to an act of law (e. g., inheritance, matrimonial regime, bankruptcy), the board could deny registration if the corporation or its shareholders declared that they would acquire the shares at the real value at the time the application for registration was made.

2) The preferred shares could be repaid or redeemed by the corporation after not less than three months’ notice at par value, plus any past due and current dividends to the day of redemption.

On or about December 12, 1962, the newly created preferred shares were acquired by subscription from KRL at their par value by the following persons in the amounts shown:

Person No. of Shares Amount
Emka Foundation 45 SFr. 45,000
Julia Zeller de Mozer 10 10,000
Kurt Winter 18 18,000
E. V. D. Wight, Jr. 9 9,000
Herbert Kingsbury Wight 9 9,000
Thiele & Co., A.G. 3 3,000
Braunschweig & Cie 3 3,000
Jacques Bloch 3 3,000

During the three fiscal years following the acquisition of KRL by the Kraus family, the corporation’s net worth increased from $250,169.34 as of November 30, 1962 to $2,788,538.18 as of November 30, 1965. The annual profits increased from $226,967.49 for fiscal 1962 to $1,217,014.20 for fiscal 1965.

On April 1, 1965, all of the preferred shareholders simultaneously sold all of their shares to Bank und Finanz Insti-tuí, A.G. (Bank und Finanz), with the approval of the KRL board, at their par value. On July 2, 1965, the articles of incorporation of KRL were amended to authorize a split of the 100 preferred shares into 1,000 preferred shares, each with a par value of SFr. 100. On July 16, 1965, the taxpayers agreed to sell 51% of their KRL common stock to a Canadian corporation, Thomson International Corporation, Ltd. (Thomson). The agreement further provided that Hans and Hanni Kraus would cause the owner of the KRL preferred stock (Bank und Finanz) to sell 51% of that stock to Thomson concurrently with the closing, and that the Krauses would buy the remaining 49% of preferred stock at the same price and terms as Thomson. On July 30, 1965, pursuant to the agreement, the taxpayers sold 51% of their common stock to Thomson, realizing the gain which gives rise to the present controversy. At the same time, Bank und Finanz sold 51% of the KRL preferred stock to Thomson and the remaining 49% to the Krauses.

There is no dispute here with respect to the amount of accumulated earnings and profits of KRL during the relevant period or the computation of the taxes which may be due and owing. The basic question before this court is whether the Tax Court correctly held that KRL was a “controlled foreign corporation” within the meaning of section 957(a) of the Internal Revenue Code during the period of December 31, 1962 through July 30, 1965, so that the gain realized upon the sale of its common stock by the taxpayers resulted in the receipt of dividend income as provided by section 1248(a) of the Code.

II

The main contention of the appellant taxpayers is that they did not own more than 50% of the combined voting power of all the classes entitled to vote. It is urged that, under the clear and unambiguous language of section 957(a), we must simply apply a mechanical test of stock ownership irrespective of actual voting power. The precise question has recently been determined adversely to the contentions of the taxpayers by a panel of this court in Garlock, Inc. v. Commissioner, 489 F.2d 197 (1973). This court in that case interpreted section 957(a) consistently with Treasury Regulation section 1.957-1(b)(2) — '“that it is ‘real’ voting power and not the mere mechanical number of votes with which Congress was concerned.” 489 F.2d at 201-202. The Regulation provides in pertinent part:

Any arrangement to shift formal voting power away from United States shareholders of a foreign corporation will not be given effect if in reality voting power is retained. The mere ownership of stock entitled to vote does not by itself mean that the shareholder owning such stock has the voting power of such stock for purposes of section 957.

The facts in this case compel the conclusion reached by the Tax Court:

[T]he petitioners never intended to part with any voting control in KRL, nor did the preferred shareholders intend to use the voting power nominally carried by their stock. 59 T.C. at 696.

In determining whether “real” voting power was surrendered, we look to the actualities stressed in Garlock and in Treasury Regulation section 1.957-1(b)(2).

The creation of the new class of preferred stock took place on December 12, 1962 just before the new regulations were to become effective for taxable years beginning after December 31, 1962. While we agree that it is entirely legal to arrange one’s affairs so as to minimize taxes, we must here look behind the facade to determine whether a real transfer of voting power to the preferred stockholders took place, or whether the purpose of the arrangement was simply to avoid the appearance of KRL as a “controlled foreign corporation.” At the very outset, it defies credulity that the taxpayers who owned 100% of KRL, a corporation which at the end of the fiscal year 1962 had a net worth in excess of $250,000, and "was then making annual profits in excess of $225,000, would surrender 50% of the control of their corporation to new shareholders who were making a capital contribution of SFr. 100,000, less than $25,000.

The new preferred stockholders were carefully selected, moreover, so that no rocking of the corporate boat could be anticipated. The Emka Foundation, which purchased 45 shares, was represented legally by one Hans Kolb, who also represented other companies owned by Hans Kraus. The official administrator (Stiftungsrat) of Emka was E. V.D. Wight, who was also the chief executive officer of KRL from its formation until July, 1965. Wight’s two infant sons (E.V.D. Wight, Jr. and Hubert Kingsbury Wight) each purchased nine shares and under Liechtenstein law, their father had the right to represent them at stockholder meetings and to vote their stock. The opinion of the Tax Court establishes in considerable detail that all the other new preferred stockholders were either relatives, close personal friends or business associates of the Kraus family. 59 T.C. at 685-686.

Even with a presumably acquiescent and amenable preferred shareholder class, further restrictive protections were provided. Although the common stock was in bearer form and freely transferable, the preferred stock was registered and transfer was permitted only with the approval of the board of directors. Transfer could be prohibited for “important reasons” and there was no definition or suggestion as to what such reasons might be. Even shares passing by operation of law could be denied registration if the corporation itself desired to purchase the shares. More significantly, the board of directors had the right to redeem the preferred shares at par value, plus past due and current dividends, on three months’ notice. (This is an indicium of retention of control which was not present in Garlock, even though the corporation there initially considered a similar callability provision (489 F.2d at 199)). There was no arrangement for the breaking of a deadlock in voting, and in view of the call provisions, the redemption of any dissident stockholder’s shares at par value provided an obvious solution to any problem.

While it is true that the preferred stockholders were represented at all of the meetings held during the relevant period (on three occasions the representation was 100%), it was also the fact that at all five meetings the common stock was represented 100%. Moreover, at only one meeting was a preferred stockholder present in person to express his views. The record is barren of any indication of dissent or disapproval of any preferred stockholder in person or by proxy at any meeting. It is urged that KRL was a successful, well-managed corporation, and that preferred stockholders with an assured 8% return on their investment could hardly be expected to be unruly. Whatever force this argument possesses evanesces when we examine the orchestrated demise of the preferred stockholders, which was marked with the same complacency and obeisance which characterized their brief tenure as shareholders in KRL.

On April 1, 1965, the preferred stockholders simultaneously sold all of their stock in this successful corporation to Bank und Finanz at par value. In the taxpayers’ agreement of July 16, 1965 to sell their common stock to Thomson, Section 5 of the contract provided that Mr. and Mrs. Kraus would cause the owner of all the outstanding preferred stock of KRL (Bank und Finanz) “to sell 51% of such stock to Thomson . at an aggregate price not exceeding 52,020 Swiss francs plus an amount equal to the dividends accrued and unpaid thereon at the rate of 8% per annum from November 30, 1964 to the Closing Date.” The agreement further provided that Mr. & Mrs. Kraus would “buy the remaining 49% of such preferred stock from [Bank und Fin-anz] at the same time and at the same price and terms as Thomson.” Hans Kraus, moreover, promised to reimburse Bank und Finanz for all stock transfer taxes levied in connection with the sale of the preferred stock.

While the record does not reveal in any detail the corporate structure or control of Bank und Finanz, its function as a device manipulated by Hans Kraus is clear. It is interesting to note that its KRL preferred stock was voted at the July 2, 1965 meeting by two American lawyers who represented Hans Kraus. The wholesale elimination of the initial preferred stockholders, the substitution of Bank' und Finanz in April, 1965; and the sale of its KRL stock in turn to Thomson and the Kraus family in July, 1965, inevitably lead to the conclusion that the taxpayers never surrendered any real voting power to the preferred stockholders. While no single factor set forth here might in itself be sufficient to establish that KRL was a “controlled foreign corporation” within the meaning of Section 957(a) of the Internal Revenue Code, the sum total establishes beyond any doubt that the conclusion of the Tax Court was sound.

Affirmed.

      . Prior to 1962 most foreign corporations, even though controlled by American stockholders, were exempt from United States taxes on their foreign-source income. United States shareholders were taxed on their share of the earnings only when received by them through distribution or as proceeds from transfer of their stock. Earnings could be accumulated and then repatriated by liquidation or sale at preferential capital gains tax rates. To remedy these abuses, President John F. Kennedy recommended in his 1961 Tax Message to Congress that such tax haven devices be eliminated. See H.R.Doc.No.140, 87th Cong., 1st Sess., in 1961 U.S.Code Cong. & Admin.News, pp. 1129, 1133-1134. As a result, a series of provisions was made applicable to United States shareholders of “controlled foreign corporations,” devised not only to tax current income but also, under section 1248 of the Internal Revenue Code, to govern sale or exchanges of stock in such corporations.

      . The average rate of exchange during the relevant period herein was SFr. 4.31 to 1 U.S. dollar.

      . The board of directors of KRL was the incumbent board perviously elected solely by the taxpayers. The only changes were on January 9, 1963, when the taxpayer Mary Ann Mitchell (formerly Kraus) was elected, and on August 19, 1963, when Ilans P. Kraus was elected, as well as Prince Heinrich of Liechtenstein. That the Kraus family dominated the board does not appear to be questioned.


author: WEBSTER, Circuit Judge.

text:
    UNITED STATES of America, Appellee, v. Dana Rudolph PEEP, Appellant.
    No. 73-1293.
    United States Court of Appeals, Eighth Circuit.
    Submitted Sept. 12, 1973.
    Decided Jan. 14, 1974.

      Curtis H. Foster, Minneapolis, Minn., for appellant.
    Joseph T. Walbran, Asst. U. S. Atty., Minneapolis, Minn., for appellee.
    Before HEANEY, STEPHENSON and WEBSTER, Circuit Judges.
   WEBSTER, Circuit Judge.

Dana Rudolph Peep was convicted of unlawful possession of heroin and hashish in violation of 21 U.S.C. § 844(a). In this appeal, he challenges the war-rantless search of his person which produced the evidence of his guilt.

On August 25, 1972, law enforcement officers assigned to the Federal Drug Abuse Enforcement Program obtained a warrant to search the premises at 3445 Second Avenue, South, in Minneapolis. The warrant authorized a search of the premises and the persons of one “Larry Conley” and one “John L/N/U” for “narcotic drugs and controlled substances possessed without authority of law.” The officers were investigating the source of narcotics believed to have caused the death of Thomas Mueller the day before. The officers proceeded to the house at 3445 Second Avenue, South, where one John Pickus was identified as the “John L/N/U” named in the warrant. Pickus was searched and the officers found a silver bullet containing a small spoon of the type employed by narcotics users in “snorting” heroin. A search of the basement revealed other narcotics equipment, including a gram weighing scale and squares of white paper used for measuring out and wrapping quantities of narcotics. It was conceded by defense counsel that this was a place where narcotics were being dispensed.

While the officers were conducting their search, two men entered by the back door and dropped a sack of narcotics on the floor. Thereafter, another man entered the apartment with a plastic baggie of marijuana hanging from his breast pocket. A search of this man produced six more identically wrapped packets of heroin.

The search had commenced about 2:30 p. m. At about 3:45 p. m., Larry Conley (named in the search warrant), appellant Dana Rudolph Peep and a third man entered together through the rear door. Officer Walter Cecil identified himself as a police officer and informed them that he had a search warrant and would like to have identification. At the same time, he summoned Officer Johnson from the basement. Officer Cecil observed a large bulge in Peep’s front pants pocket. He reached over to pat it to determine if it was a weapon. As he did so, Peep slapped his hand away, at which point Officers Johnson and Cecil seized Peep’s hands and Johnson reached into Peep’s pocket and removed a large roll of money, approximately $3,800.00. Johnson then conducted a more thorough search and removed two matchboxes from Peep’s shirt pocket. The boxes contained the narcotics which were the subject of the charge.

The officers conducting the search had no prior knowledge of Peep, and he was not described in the warrant. Appellant contends that the search was unlawful because it was not (1) eu search incident to a lawful arrest, (2) a proper “stop and frisk” protective search, or (3) a proper search pursuant to a search warrant.

At the time of the search of Peep’s person, the officers had the following information: (1) that equipment for the distribution of narcotics was located in the apartment; (2) that three men had previously entered the apartment carrying or concealing on their persons substantial quantities of narcotics; (3) that” in a prior search of an apartment occupied by Larry Conley a hand grenade and a .45 caliber automatic had been seized; and (4) that “John” had been heard to brag about having shot a police officer.

It does not seem to be disputed that the officers were on the premises by authority of a validly issued state search warrant. The search of Peep, however, must be justified on other grounds, because the applicable Minnesota statute does not authorize a general search and the warrant did not name Peep as one of those authorized to be searched.

We find no difficulty in holding that the original pat down which produced the large roll of currency was justified as weapons search under the “stop and frisk” doctrine of Terry v. Ohio, 392 U. S. 1, 88 S.Ct. 1868, 20 L.Ed.2d 889 (1968). See Glick v. Erickson, 488 F.2d 182 (8th Cir. 1973); United States v. Unverzagt, 424 F.2d 396 (8th Cir. 1970). The specific and articulable facts summarized above, taken with the rational inferences from those facts, clearly and reasonably warranted that protective intrusion. However, the ensuing search which revealed the narcotics inside the matchboxes requires closer scrutiny, for even Terry requires that the intrusion be “reasonably related in scope to the circumstances which justified the interference in the first place.” Terry v. Ohio, supra, 392 U.S. at 20, 88 S.Ct. at 1879.

It may be argued that the search of Peep’s breast pocket which produced ten matchboxes which in turn contained narcotics exceeded the outer limits of a weapons search. See Sibron v. New York, 392 U.S. 40, 88 S.Ct. 1889, 20 L. Ed.2d 917 (1968); United States v. Del Toro, 464 F.2d 520 (2d Cir. 1972). We need not make this determination, however, for at that point the officers had probable cause to arrest Peep and to conduct a full search of his person.

Experienced police officers were present in a residence which was obviously being used for the distribution of narcotics and where narcotics were in open display by persons entering the apartment. Under the circumstances above described “[i]t is plainly unreasonable to infer that anyone else other than a participant would be allowed on the premises.” United States v. Pentado, 463 F.2d 355, 363 (5th Cir. 1972), cert, denied, 410 U.S. 909, 93 S.Ct. 963, 35 L.Ed.2d 271 (1973). In such a pervasive setting probable cause existed to search all present. See United States v. Johnson, 154 U.S.App.D.C. 393, 475 F.2d 977, 980 (1973) (Bazelon, C. J., concurring in part and dissenting in part); State v. De Simone, 60 N.J. 319, 288 A.2d 849 (1972). It is important to distinguish the search in this ease from the search of companions in a public place. Cf. United States v. Di Re, 332 U.S. 581, 68 S.Ct. 222, 92 L.Ed. 210 (1948). While a man is entitled to know that wherever he may be “he will remain free from unreasonable searches,” Katz v. United States, 389 U.S. 347, 359, 88 S.Ct. 507, 515, 19 L.Ed.2d 576 (1967), the test of reasonableness will include considerations of place and circumstance.

In this case two additional facts developed from the original pat down. First, although the police officers had been identified and the reason for their presence had been disclosed, Peep nonetheless resisted the pat down by brushing the officer’s hands aside. “[Deliberately furtive actions * * * at the approach of * * * law officers are strong indicia of mens rea * * Sibron v. New York, 392 U.S. 40, 66, 88 S.Ct..1889, 1904, 20 L.Ed.2d 917 (1968), and have supported proloable cause in several eases. See Cupp v. Murphy, 412 U.S. 291, 93 S.Ct. 2000, 36 L.Ed.2d 900 (1973) (where there is a high risk of loss of evanescent evidence); United States v. Parham, 458 F.2d 438 (8th Cir. 1972); United States v. Jones, 452 F.2d 884 (8th Cir. 1971); Dupree v. United States, 380 F.2d 233 (8th Cir. 1967), cert, denied, 392 U.S. 944, 88 S.Ct. 2289, 20 L.Ed.2d 1407 (1968); United States v. Cisneros, 448 F.2d 298 (9th Cir. 1971); Walker v. United States, 117 U.S.App.D.C. 151, 327 F.2d 597 (1963), cert, denied, 377 U.S. 956, 84 S.Ct. 1635, 12 L.Ed.2d 500 (1964).

Second, the disclosure of the substantial cash in Peep’s possession gave added force to the officers’ belief that Peep was indeed a part of the drug operation. See United States v. Riggs, 474 F.2d 699 (2d Cir.), cert, denied, 414 U.S. 820, 94 S.Ct. 115, 38 L.Ed.2d 53 (1973).

We assess probable cause in terms of the eyes of a reasonably cautious and prudent peace officer in the circumstances of the moment. Bell v. United States, 102 U.S.App.D.C. 383, 254 F.2d 82, 84-86 (D.C.Cir.), cert, denied, 358 U.S. 885, 79 S.Ct. 126, 3 L.Ed. 2d 113 (1958). Probable cause to arrest depends “upon whether, at the moment the arrest was made, * * * the facts and circumstances within [the arresting officers’] knowledge and of which they had reasonably trustworthy information were sufficient to warrant a prudent man in believing that the [suspect] had committed or was committing an offense.” Beck v. Ohio, 379 U.S. 89, 91, 85 S.Ct. 223, 225, 13 L.Ed.2d 142 (1964). See also Brinegar v. United States, 338 U.S. 160, 69 S.Ct. 1302, 93 L.Ed. 1879 (1949). And in making this assessment we do not isolate for independent analysis each factual circumstance, but rather we view the action of the arresting officers on the basis of the cumulative effect of such facts in the totality of the circumstances. Jackson v. United States, 408 F.2d 1165 (8th Cir.), cert, denied, 396 U.S. 862, 90 S.Ct. 135, 24 L.Ed.2d 114 (1969); Wangrow v. United States, 399 F.2d 106 (8th Cir.), cert, denied, 393 U.S. 933, 89 S.Ct. 292, 21 L.Ed.2d 270 (1968); United States v. Williams, 143 U.S.App.D.C. 16, 442 F.2d 738 (1970). Here the arrest took place as Peep resisted the pat down. We hold the search was incident to a lawful arrest made upon probable cause.

In so holding we need go no further. The Supreme Court has recently held that a law enforcement officer’s authority to make a full search incident to a lawful custodial arrest requires no justification beyond the fact of the arrest itself. United States v. Robinson, 414 U.S. 218, 94 S.Ct. 467, 38 L.Ed.2d 427 (1973). Writing for the Court, Justice Rehnquist said:

A police officer’s determination as to how and where to search the person of a suspect whom he has arrested is necessarily a quick ad hoe judgment which the Fourth Amendment does not require to be broken down in each instance into an analysis of each step in the search. The authority to search the person incident to a lawful custodial arrest, while based upon the need to disarm and to discover evidence, does not depend on what a court may later decide was the probability in a particular arrest situation that weapons or evidence would in fact be found upon the person of the suspect. A custodial arrest of a suspect based on probable cause is a reasonable intrusion under the Fourth Amendment; that intrusion being lawful, a search incident to the arrest requires no additional justification. It is the fact of the lawful arrest which establishes the authority to search, and we hold that in the case of a lawful custodial arrest a full search of the person is not only an exception to the warrant requirement of the Fourth Amendment, but is also a “reasonable” search under that Amendment. Id. at 235, 94 S.Ct. at 477.

Affirmed.

      . A motion to suppress was denied by the trial judge, Honorable Miles W. Lord, on March 19, 1973, and the case was thereafter tried to the court without a jury.

      . “A search warrant cannot be issued but upon probable' cause, supported by affidavit, naming or describing the person, and particularly describing the property or thing to be seized and particularly describing the place to be searched.” Minn.Stat.Ann. Sec. 626.08 (Supp. 1073).

      . A point raised incidentally in appellant’s brief, but not argued, was the allegedly late filing of the return on the search warrant. Minn.Stat.Ann. Sec. 626.15 (Supp.1973) requires a return within 10 days. The warrant was issued August 25, 1972 but the return was not filed until September 5, 1972, 11 days after its issuance. The issuance of the warrant clothed the officers with authority to enter the apartment. Since the search of Peep’s person was not made pursuant to the warrant, we need not consider the effect of this apparent defect under state law.

      . Given probable cause for arrest before the search, it is immaterial if the formalities are deferred until afterward. United States v. Skinner, 412 F.2d 98 (8th Cir.), cert, denied, 396 U.S. 967, 90 S.Ct. 448, 24 L.Ed.2d 433 (1969).


author: DUNIWAY, Circuit Judge:

text:
    UNITED STATES of America, Plaintiff-Appellee, v. Buddy Joe BARNARD et al., Defendants-Appellants.
    Nos. 72-3168, 73-1201, 73-1202 and 73-1203.
    United States Court of Appeals, Ninth Circuit.
    Dec. 10, 1973.
    Rehearing Denied Jan. 29, 1974.
    Certiorari Denied April 22, 1974.
    See 94 S.Ct. 1976.

      Philip A. DeMassa, Thomas J. Ryan (argued), DeAnne D. Fisher (argued), James P. Hagerstrom (argued), San Diego, Cal., for defendants-appellants.
    James Brannigan, Asst. U. S. Atty. (argued), Harry D. Steward, U. S. Atty., James W. Brannigan, Jr., Atty. (argued), Dept, of Justice, San Diego, Cal,, for plaintiff-appellee.
    Before DUNIWAY and CHOY, Circuit Judges, and MURRAY, District Judge.

       The Honorable William D. Murray, Senior United States District Judge, District of Montana, sitting by designation.

   OPINION

DUNIWAY, Circuit Judge:

In December of 1972, the four appealing defendants, Buddy Joe and Jerry Robert Barnard, Low, and Remley, were convicted on five counts: conspiracy to import marijuana in violation of 21 U.S.C. §§ 952, 960 and 963 (one count); attempted importation and importation of marijuana in violation of 21 U.S.C. §§ 952, 960 and 963 (two counts); and possession of marijuana with intent to distribute in violation of 21 U.S.C. § 841(a) (two counts). The indictment was returned and trial was held in the Southern District of California. We affirm.

Appellants do not claim that the evidence is not sufficient to sustain the convictions. We therefore state, in connection with their various contentions, only so much of the facts as are necessary to elucidate their contentions.

1. Venue

Appellants argue that, as to all counts, venue was improperly laid in the Southern District of California.

a. The Conspiracy Count

The defendants conspired among themselves and with others to smuggle marijuana by airplane into California from Mexico. Two successful plane trips were made from Mexico to Palmdale, in the Central District of California, before the scheme was uncovered and stopped by law enforcement officials. On the second trip, the plane stopped in Banning, in the Central District of California, for refueling. The first flight was made nonstop from Mexico to Palmdale.

Six overt acts were alleged as part of the conspiracy. One of them, which was used to establish venue in the Southern District, was that on one of the trips defendant Low (and the pilot, Mason), while en route to Mexico, landed at the Borrego Valley Airport, Borrego Springs, in the Southern District of California, for refueling and to make a telephone call concerning whether all was in order at their pickup point in Mexico. The gist of defendants’ argument is that this nexus with the District was too tenuous to justify venue there.

Article III, Section 3, of the Constitution and the Sixth Amendment fix venue “in the State” and “district wherein the crime shall have been committed.” See Johnston v. United States, 1956, 351 U.S. 215, 224, 76 S.Ct. 739, 744, 100 L.Ed. 1097. We recognize that “Questions of venue in criminal cases . . . are not merely matters of formal legal procedure. They raise deep issues of public policy in the light of which legislation must be construed.” United States v. Johnson, 1944, 323 U.S. 273, 276, 65 S.Ct. 249, 251, 89 L.Ed. 236.

Nevertheless, although defendants would have us hold otherwise, the law is that an overt act committed in the course of a conspiracy which occurs in a district gives rise to jurisdiction to prosecute the conspirators in that district. Hyde v. United States, 1912, 225 U.S. 347, 367, 32 S.Ct. 793, 56 L.Ed. 1114; Brown v. Elliott, 1912, 225 U.S. 392, 400, 32 S.Ct. 812, 56 L.Ed. 1136; Grigg v. Bolton, 9 Cir., 1931, 53 F.2d 158, 159-160; Dedmore v. United States, 9 Cir., 1963, 332 F.2d 938, 946-947; United States v. Phillips, 8 Cir., 1970, 433 F.2d 1364, 1368. The only remaining question raised by defendants as to venue on the conspiracy count is whether the refueling of the airplane in Borrego Springs and the telephone calls placed there are of sufficient import to constitute an overt act. It is clear that they are. See United States v. Trenary, 9 Cir., 1973, 473 F.2d 680, 682.

b. The Substantive Counts

Defendants were charged with two counts each of attempted importation and importation of marijuana in violation of 21 U.S.C. §§ 952, 960 and 963, and possession of marijuana with intent to distribute in violation of 21 U.S.C. § 841(a). The basis for venue in the Southern District as to these counts is the flights of defendants’ airplane over that district as it progressed from Mexico to its landing in the Central District of California.

Surprisingly, in their brief, appellants do not differentiate between the substantive counts and the conspiracy count as to venue, nor do they stress that more serious venue problems may inhere in the former. The government does make this distinction, but (not surprisingly) gives it short shrift. We consider the issue sufficiently raised to merit our treating it on appeal. The question we face is whether airplane overflight of a district may properly give rise to venue in that district with respect to the crimes charged here. Apparently this question is one of first impression.

Certain crimes may be considered as “continuing” crimes. Typically, a “continuing” crime involves movement, or conduct occurring in more than one place. Kidnapping is an example. Venue may lie in any district in which the continuing conduct has occurred. In 1948, Congress passed a general multiple venue statute, codified as 18 U.S.C. § 3237, which provides in pertinent part:

“(a) Except as otherwise expressly provided by enactment of Congress, any offense against the United States begun in one district and completed in another, or committed in more. than one district, may be inquired of and prosecuted in any district in which such offense was begun, continued, or completed.
Any offense involving use of the mails, or transportation .in interstate or foreign commerce, is a continuing offense and, except as otherwise expressly provided by enactment of Congress, may be inquired of and prosecuted in any district from, through, or into which such commerce or mail matter moves.”

Any crime which the court determines to have continued in more than one district is subject to multiple venue, under the provisions of the statute. The Supreme Court long ago gave its imprimatur of approval to multiple venue for continuing crimes. Armour Packing Co. v. United States, 1908, 209 U.S. 56, 71-77, 28 S.Ct. 428, 52 L.Ed. 681; United States v. Johnson, supra.

The decisions do not limit the statute to crimes which necessarily involve movement. Crimes which involve a continuing condition, or status, may also be subject to multiple venue. Thus in United States v. Cores, 1958, 356 U.S. 405, 78 S.Ct. 875, 2 L.Ed.2d 873, the Supreme Court determined that an alien who “remained” in the United States after his permit had expired was guilty of a continuing crime, and could be brought to trial either in the district where he was found or in the district where he was when the permit expired. We think it significant that in Cores the Court said: “Given the element of willfulness, we believe an alien ‘remains,’ . until he physically leaves the United States. . . . [V]enue . lies in any district where the crewman wilfully remains after the permit expires.” 356 U.S. at 409, 78 S.Ct. at 878. And in Armour Packing Co., supra, which dealt with shipments in interstate commerce, the Court said (209 U.S. at 77, 28 S.Ct. at 433): “To say that this construction may work serious hardship in permitting prosecutions in places distant from the home and remote from the vicinage of the accused is to state an objection to the policy of the law, not to the power of Congress to pass it. Hyde v. Shine, 199 U.S. 62, 78, [25 S.Ct. 760, 50 L.Ed. 90.] But this is a large country, and the offense under consideration is one which may be constantly committed through its length and breadth. This situation arises from modern facilities for transportation and intercommunication in interstate transportation, and considerations of convenience and hardship, while they may appeal to the legislative branch of the government, will not prevent Congress from exercising its constitutional power in the management and control of interstate commerce.”

Within this framework we focus on the two crimes charged here.

(i) Importation. As it relates to the second paragraph of 18 U.S.C. § 3237(a), the crime of importation of marijuana obviously involves both “transportation” and “foreign commerce.” Thus by statute Congress has defined this crime as a “continuing” one. Congress has also explicitly provided that prosecution may be had in “any district from, through . . . which such commerce . moves.” We have no doubt that, if the defendants had imported marijuana from Mexico on foot or on horseback or by wagon or a bicycle or car, and had taken it across the Southern District and into the Central District, venue would lie in either district. The only difference here is that they did it by flying across the Southern District. But the navigable airspace above that district is a part of the district. What the Court said in Armour Packing Co., supra, is applicable here. See also United States v. Jackson, 10 Cir., 1973, 482 F.2d 1167-at 1178.

(ii) Possession. Under the authority of United States v. Cores, supra, we have no difficulty in treating the crime of possession of- marijuana with intent to distribute, 21 U.S.C. § 841(a), as a continuing one. When the plane was loaded with marijuana in Mexico and began its flight, it and its contents were in the actual or constructive possession of defendants, or at least a jury could so find. The quantity of marijuana was such as to give rise to an inference that all of the defendants intended to distribute it. A jury could find that the possession and the intent existed when the plane crossed the border into the Southern District of California, and continued while the plane crossed that district and flew into the Central District, where it landed. Thus, venue could be laid in either district.

2. The Witness Dillon

Dillon was a co-defendant in the case. He testified for the government. After the trial was over, he pled guilty to count 3 and was given five years’ probation. The other two counts were dismissed.

a. Expert Testimony as to Dillon’s Competency to Testify

On November 5, 1972, two days before the beginning of trial, it came to the attention of the defendants that Dillon had had psychiatric problems which had led to his discharge from the United States Army in 1960. The defendants asked the court to order a psychiatric examination of Dillon to determine whether he would be a competent witness. The court conducted its own voir dire examination of Dillon outside the presence of the jury, and, satisfied that Dillon would be a competent witness, denied the defendants’ request.

When a question is raised as to the competency of a witness to testify, it is for the judge to decide. He may call to his aid the testimony of expert witnesses. This was done in District of Columbia v. Armes, 1882, 107 U.S. 519, 2 S.Ct. 840, 27 L.Ed. 618. See also United States v. Hiss, S.D.N.Y., 1950, 88 F. Supp. 552. Neither these cases, nor any others that have come to our attention, require that he call or hear experts on the question. Necessarily, the judge must have, and does have, considerable discretion in the matter. It has been held not to be an abuse of discretion to refuse to hear such evidence under circumstances quite similar to those before us: United States v. Skillman, 8 Cir., 1971, 442 F.2d 542, 560; United States v. Lee Wan Nam, 2 Cir., 1960, 274 F.2d 863, 864-865. We find no abuse of discretion here.

b. Expert Testimony as to Dillon’s Credibility

Defendants offered the testimony of a psychiatrist and a psychologist, who were called to testify as to their opinions of Dillon’s competency and reliability as a witness. Each had read over the record of Dillon’s Army psychiatric evaluation and his grand jury testimony, and had-observed Dillon for part of the time when he was testifying in court. On the basis of this familiarity with Dillon, each had formed the opinion that Dillon was a sociopath who would lie when it was to his advantage to do so. The offer was rejected.

As we have seen, competency is for the judge, not the jury. Credibility, however, is for the jury — the jury is the lie detector in the courtroom. Judges frequently instruct juries about factors that the jury may or should consider in weighing the veracity of a witness. In this respect it can be said that judges assume that they have certain expertise in the matter, and that juries have less of that expertise than judges. It is now suggested that psychiatrists and psychologists have more of this expertise than either judges or juries, and that their opinions can be of value to both judges and juries in determining the veracity of witnesses. Perhaps. The effect of receiving such testimony, however, may be two-fold: first, it may cause juries to surrender their own common sense in weighing testimony; second, it may produce a trial within a trial on what is a collateral but still an important matter. For these reasons we, like other courts that have considered the matter, are unwilling to say that when such testimony is offered, the judge must admit it. See United States v. Rosenberg, S.D.N.Y., 1952, 108 F. Supp. 798, 806, aff’d, 2 Cir., 1952, 200 F.2d 666; United States v. Daileda, M.D.Pa., 1964, 229 F.Supp. 148, 153-154.

The admissibility of the proffered testimony was for the judge, and in deciding whether to admit expert testimony, “the trial judge has broad discretion and his action is to be sustained unless manifestly erroneous.” Salem v. United States Lines, 1962, 370 U.S. 31, 35, 82 S.Ct. 1119, 1122, 8 L.Ed. 2d 313. Here we find no abuse of discretion. The experts’ knowledge about Dillon was limited, to say the least. Dillon’s credibility was otherwise suspect, as a co-defendant testifying for the government, and as having perjured himself before the grand jury. We have grave doubt that the expert testimony would have helped the jury. Under the Constitution, Article III, § 3, trial of criminal cases in Federal courts is by jury, not by experts. We think that the testimony of the type offered in this case should be received only in unusual cases, such as United States v. Hiss, supra. And by referring to that case we are not saying that it would have been error to exclude the testimony there offered and received.

c. Exclusion of a Medical Record as Related to Dillon’s Credibility

Defendants argue that Dillon’s Army psychiatric evaluation should have been admitted into evidence, so that the jury might consider it in assessing Dillon’s credibility. After conducting its voir dire of Dillon, the court excluded the report on the grounds that it was of dubious probative value because it reflected proceedings occurring some twelve years before trial, and that the report dealt with a personality disorder which was not severe enough to bear upon the question of competency. The court felt that any probative value the report might have would be offset by its prejudicial effect on the jury.

The court did not abuse its discretion. See, III A Wigmore, Evidence, § 932 (Chadbourn rev. 1970); Rule 403, Proposed Federal Rules of Evidence.

3. The Telephone Toll Records

Defendants argue that the court erred in admitting certain telephone toll records, on the ground that the records were disclosed to the government in violation of 47 U.S.C. § 605, in that customs agents inspected them before a subpoena had been issued for their production. It appears that one, and perhaps two sets of records were inspected by customs agents before a subpoena was issued.

We need do no more than state that we agree with the decisions of the second and seventh circuits that garden variety telephone toll records such as these do not fall within the scope of 47 U.S.C. § 605. In United States v. Covello, 2 Cir., 1969, 410 F.2d 536, Judge Waterman wrote:

“[T]he keeping of toll records is a necessary part of the ordinary course of the telephone company’s business and is necessary in order that the company may substantiate its charges to its customers. Toll records are kept for all telephone subscribers and are not kept just for subscribers being investigated by officers of the law, or ones suspected of criminal proclivities. The subscriber is fully aware that such records will be made, United States v. Gallo, 123 F.2d 229, 231 (2 Cir. 1941), and the records of the telephone company so kept in the ordinary course of the company’s business are entitled to the same evidentiary treatment as the records of other businesses. See Federal Business Records Act, 28 U.S.C. § 1732 (1964). Section 605 was not designed to render evidentially inadmissible the records made in the ordinary course of the telephone company’s business and which are essential to the ordinary operation of that business.” Id. at 542.

We adopt Judge Waterman’s reasoning and conclusion as the rule of this circuit. Accord, United States v. Cerone, 7 Cir., 1971, 452 F.2d 274, 289. Compare DiPiazza v. United States, 6 Cir., 1969, 415 F.2d 99; see also Nolan v. United States, 10 Cir., 1969, 423 F.2d 1031; Bubis v. United States, 9 Cir., 1967, 384 F.2d 643; United States v. Baxter, 9 Cir., 1973, 492 F.2d 150, 165-168.

4. Untimely and Inadequate Discovery

Defendants’ final point is that they were prejudiced because, as to certain items, discovery provided by the government was both untimely and inadequate.

On November 16, the government learned of a report compiled by the Bureau of Narcotics and Dangerous Drugs, which related to an interview with Mason. On November 17, the report was provided to the defendants. The court found that the material contained in the report was covered in other Jencks Act material that had been turned over to the defendants. In addition, Mason was made available for cross-examination upon the report.

On November 17, a report of Customs Agent Walley’s interview with Mason was furnished to defendants. Walley was withdrawn as a witness so that he could be examined upon the report, which he subsequently was.

At one point in his testimony, Dillon produced a pocket phone book which he used to refresh his recollection as to certain telephone numbers he had called. Assuming arguendo that the government erred in not earlier producing a copy of this pocket phone book, the error was harmless.

On November 8, 1972, the government provided the court with notes taken by customs agents of their conversations with witness Dillon, and two draft reports based on conversations with witness Mason. On November 9 and 10, the court made these notes and reports available to the defendants, with the exception of a portion of one of the Mason draft reports. The appellants contend that they should have been given the excised portion. We have examined the excised material, and we agree with the trial court that it did not relate to the subject matter of Mason’s testimony. 18 U.S.C. § 3500(c).

We. can find no prejudice arising from any of these events.

Affirmed.

      . To be distinguished from “continuing crimes” are crimes begun in one district and completed in another. For a thorough treatment of the multiple venue question generally, see Abrams, Conspiracy and Multi-Venue in Federal Criminal Prosecutions: The Crime Committed Formula, 9 U.C.L.A, L.Rev. 751 (1962).

      . The second paragraph of section (a) was passed in response to the Supreme Court’s decision in United States v. Johnson, 1944, 323 U.S. 273, 65 S.Ct. 249. Johnson, involved “using” the mails for the purpose of “sending” a denture into a state in violation of the Federal Denture Act. The Court ruled that venue did not lie in the district of receipt, relying, inter alia, on the absence of any specific venue provision in the act.


author: HILL, Circuit Judge.

text:
    UNITED STATES of America, Plaintiff-Appellee, v. Michael Allen SWIGART, Defendant-Appellant.
    No. 73-1228.
    United States Court of Appeals, Tenth Circuit.
    November, 1973, Term.
    Dec. 26, 1973.

      John E. Stumbo, Topeka, Kan., for defendant-appellant.
    E. Edward Johnson, Asst. U. S. Atty. (Robert J. Roth, U. S. Atty., and Adrian M. Farver, Asst. U. S. Atty., Topeka, Kan., on the brief), for plaintiff-appel-lee.
    Before LEWIS, Chief Judge, HILL, Circuit Judge, and O’CONNOR, District Judge.

       Of the District of Kansas, sitting by designation.

   HILL, Circuit Judge.

Appellant was charged in an indictment and convicted by a jury of failing to perform the duty required of him under the Military Service Act of 1967, that is, failure to comply with an order of his local draft board in violation of 50 U.S.C. Appendix § 462(a). He was sentenced to three years’ imprisonment; but by the court’s order, the execution of the sentence was stayed ten days. During this stay appellant absconded the jurisdiction and apparently fled to Canada. Subsequently appellant’s bond was forfeited, and a bench warrant was issued for his arrest. This warrant is now outstanding.

Appellant’s counsel timely filed a motion for new trial, and after hearing oral arguments the motion was denied. Appellant thereafter properly filed his notice of appeal. The government promptly filed with the district court its motion to dismiss the appeal on the grounds that appellant had failed to abide by the lawful order of that court. The government’s motion to dismiss was denied.

In determining whether this appeal should be dismissed, we note that an appeal from a judgment of a federal district court is a matter of right. Coppedge v. United States, 369 U.S. 438, 82 S.Ct. 917, 8 L.Ed.2d 21 (1962). This right, however, is not without exception. Starting as far back as 1876, the Supreme Court determined that when a convicted party sues out of writ of error, it is within the court’s discretion to refuse to hear the case unless the convicted party is where he can be made to respond to any judgment the court renders. The reasoning behind this is that if the case were affirmed, appellant probably would not appear to submit to his sentence. If it is reversed, he will probably appear only if it is in his interest. Hence the court is reluctant to decide what may prove to be a moot case. Smith v. United States, 94 U.S. 97, 24 L.Ed. 32 (1876). Bonahan v. Nebraska, 125 U.S. 692, 8 S.Ct. 1390, 31 L.Ed. 854 (1887); see also Molinaro v. New Jersey, 396 U.S. 365, 90 S.Ct. 498, 24 L.Ed. 2d 586 (1970). Although there is a difference between discretionary writs of certiorari and appeals to this court, we believe any court has the inherent discretion to refuse to hear the claim of a litigant who is willing to comply with that court’s decree only if it is favorable. Johnson v. Laird, 432 F.2d 77 (9th Cir. 1970).

We therefore tentatively dismiss the appeal. Should appellant surrender himself to the custody of the United States Marshal for the District of Kansas within thirty days of the filing of this opinion, we shall reinstate his appeal ; if after the allotted time appellant has not surrendered under the terms we have prescribed, the tentative dismissal will be changed to a final dismissal. Schneider v. Laird, 453 F.2d 345 (10th Cir. 1972); United States v. Tremont, 438 F.2d 1202 (1st Cir. 1971); see also United States v. Press, 401 F.2d 499 (3d Cir. 1968); United States v. Dawson, 350 F.2d 396 (6th Cir. 1965).


author: PER CURIAM:

text:
    KRIVO INDUSTRIAL SUPPLY COMPANY, Morgan Precision Parts, Inc., et al., Plaintiffs-Appellants, v. NATIONAL DISTILLERS AND CHEMICAL CORPORATION, Defendant-Appellee.
    No. 72-1710.
    United States Court of Appeals, Fifth Circuit.
    March 8, 1974.
    Samuel G. McKerall, James L. Shores, Birmingham, Ala., Lewis & Burns, Robert E. Lewis, Hawkins, Rhea, Keener & Cusimano, Gadsden, Ala., for plaintiffs-appellants.
    Reid B. Barnes, Robert McDavid Smith, Birmingham, Ala., for defendant-appellee.
   ON PETITION FOR REHEARING AND PETITION FOR REHEARING EN BANC

(Opinion August 7, 1973, 483 F.2d 1098 (5th Cir. 1973))

Before GEWIN, GODBOLD and RONEY, Circuit Judges.

PER CURIAM:

The petition for rehearing in this case points out certain factual errors in the opinion of the Court. A careful review has revealed that the errors are not substantial and do not concern controlling facts in the case. In order to clarify the facts in the opinion, however, we note the following matters.

1. Brad’s Machine Products, Inc. is not a reorganized company but is insolvent, so that the first line in the opinion should be amended to read “an insolvent” corporation.

2. The defendant produced no evidence, the case having been decided on a directed verdict after the close of the plaintiffs’ case, so that the second sentence of the second full paragraph on page 34 of the slip opinion [483 F.2d at page 1114] should begin “Plaintiffs’ evidence.”

3. The facts stated in the last paragraph on page 34 of the slip opinion as extended to page 35 [483 F.2d at page 1114] are confused but of no controlling significance and the paragraph should be deleted. Even if Brad's had the contractual right referred to in this and the preceding paragraph, the transaction would not be sufficient to make a jury question as to domination and control. The brass was purchased at the price for bidding the Government contract. We do not decide whether the transaction would give rise to a claim on behalf of Brad’s, but merely that evidence of such a transaction was not sufficient to establish liability to Brad’s creditors under the instrumentality rule.

4. Petitioner notes our reliance on Chicago Mill & Lumber Co. v. Boatmen’s Bank, 234 F. 41 (8th Cir. 1916), and contends that our decision is in conflict with this Court’s decision in Portsmouth Cotton Oil Refining Corp. v. Fourth Nat’l Bank, 280 F. 879 (M.D.AIa.), aff’d, 284 F. 718 (5th Cir. 1922). We do not conceive that our decision does any damage to the authority of Portsmouth, however, because Portsmouth involved a subsidiary corporation of the defendant, which was formed by defendant and controlled and managed by it. Portsmouth is inapplicable to the facts of this case.

The petition for rehearing is denied and no member of this panel nor Judge irregular active service on the Court having requested that the Court be polled on rehearing en banc, (Rule 35 Federal Rules of Appellate Procedure; Local Fifth Circuit Rule 12) the petition for rehearing en banc is denied.


author: DENNIS R. KNAPP, District Judge

text:
    WILLIAM F. WILKE, INC., a Maryland corporation, Appellant, v. DEPARTMENT OF the ARMY OF the UNITED STATES of America et al., Appellees. WILLIAM F. WILKE, INC., Plaintiff-Appellee, v. DEPARTMENT OF the ARMY OF the UNITED STATES of America and Robert F. Froehlke, Secretary of the Army, Defendants-Appellants, A & M Gregos, Inc., Intervenor-Defendant. WILLIAM F. WILKE, INC., a Maryland corporation, Appellee, v. DEPARTMENT OF the ARMY OF the UNITED STATES of America and Robert F. Froehlke, Secretary of the Army, Defendants, A & M Gregos, Inc., Appellant.
    Nos. 73-1483, 73-1484, 73-1497.
    United States Court of Appeals, Fourth Circuit.
    Dec. 17, 1973.
    For opinion of Court see 4 Cir., 485 F.2d 180.
   DENNIS R. KNAPP, District Judge

(dissenting):

I respectfully dissent from the conclusions of the majority in affirming the District Court’s denial of injunctive relief to the plaintiff herein.

The finding of the District Court that the Gregos’ bid was “untimely, nonre-sponsive, contrary to the terms of the invitation, void and of no effect” was clearly right. Such finding clearly encompassed a determination by the District Court that the Army violated the applicable statutes and the regulations promulgated thereunder. This means that a clear legislative mandate was flaunted with impunity by an agency of government charged with the duty to observe the law. The Army proceeded to award the bid to Gregos even after notice that legal action had been instituted, and in fact before the issue was determined by the District Court. Such action was not only illegal but was arbitrary, capricious and an affront to the established processes of the government of which it was a part.

It is clear beyond question that the unilateral action of the Army in awarding the bid to Gregos ignored the law to which it was committed and in effect amounted to an award of a contract by negotiation when there was no compelling reason so to do. Under the facts here, there was no emergency nor any circumstance requiring hasty action. To comply with the regular procurement requirements under the facts and circumstances was the clear duty of the Army, and it should have been required to exercise that duty by the District Court.

The majority concluded that the granting of injunctive relief was discretionary, relying on the case of M. Steinthal & Co. v. Seamans, 147 U.S. App.D.C. 221, 455 F.2d 1289 (1971). I do not agree that Steinthal supports such conclusion. In my opinion it is clearly distinguishable. Furthermore, I do not agree that the facts support the statement of the majority that a situation is here presented where the “granting of any relief is unusual.” Finally, I do not agree that Wilke’s right to recover bid costs provides a sufficient remedy.

The case of M. Steinthal & Co. v. Sea-mans, supra, as previously indicated is clearly inapplicable to the facts and the issues raised in the instant case. In Steinthal each of the three bidders interpreted differently the provisions of the amended information for bidders with respect to the required delivery dates of parachutes. The contracting officer then submitted to the Air Force Logistics Command a statement of facts and findings. Subsequently, he received a list of comments which contained certain basic rules that must be adhered to in formal advertising. Need was stressed to preserve competitive bidding by solicitations permitting competition on an equal basis without deviation from the delivery provisions through waiver of reservation by the contracting officer or freedom to determine whether delivery time should be a factor in the award. The contracting officer then reevaluated his findings and determined that the invitation should be cancelled because of the ambiguity in the delivery schedule. Suit was then filed by Stein-thal alleging that the cancellation of the amended IFB was arbitrary and capricious and requesting injunctive relief to prevent the opening of bids on IFB No. 2. The court found that the cancellation of bids was reasonable. The regulations permit the contracting officer to cancel bids if he determines that one of certain factors is present including “inadequate or ambiguous specifications cited in the invitation.” The court then went on to find that peculiar circumstances of each case must be reviewed with a regard toward limiting the instances of unnecessary judicial intervention in the procurement process. The court did not reverse the holding in Scanwell Laboratories v. Shaffer, 137 U.S.App.D.C. 371, 424 F.2d 859, but rather called for greater discretion in the presence of overriding public interest considerations in refusing to enter declaratory or injunctive action in a preproeurement context. Instead, the court found thait Scanwell and its pro-geney imposed a responsibility upon the courts to study the cases attentively and exercise restraint with the power to enjoin a procurement program. The relevant language in Steinthal is as follows: “The Court is obligated to restrict its inquiry to a determination of whether the procurement agency’s decision has a reasonable basis. This inquiry must fully take into account the discretion that is typically accorded officials and the procurement agencies by statutes and regulations. Such discretion extends not only to the evaluation of bids submitted in response to a solicitation but also to determination by the agency with respect to the application of technical, and often esoteric, regulations to the complicated circumstances of individual procurements.”

As indicated above, the court does not extend its function to those matters which are by the regulations not within the discretion of the officials. The court goes on further to talk about a prolonged period of time which it might take in settling such claims when contracts are vital to functions performed by the state. However, there is no time element involved in the instant case to bring this particular objection into play.

As hereinbefore indicated, a careful comparison of Steinthal and the instant case will clearly reveal significant differences. In Steinthal there is ambiguity in the invitation for bids. In Wilke there is none. In Steinthal the regulations vest discretion in the contracting officer to refuse the bids where an ambiguity exists in the invitation for bids. In Wilke the bid officer has no discretion to vary the time for receipt of bids. The cases cited by both parties clearly indicate that the only discretion which the bid officer has with respect to time is in case there is a discrepancy in the time in more than one clock. In such a case he may determine which clock is to be used. However, when there is no question as to the proper time, there is no discretion to be vested in the officer. More alarming, however, is the conduct of both the government and Gregos in the face of possible court action by Wilke. Although the government was well aware of the pending court action, on the very day that a hearing was set for the issuance of a temporary restraining order the government notified Gregos of its award of the contract. Said notice was sent by telegram. Moreover, after issuance of the temporary restraining order by the district judge on that same day the government sent notice to Gregos by letter. This gave Gregos ample opportunity to enter into a number of sub-contracts in somewhat questionable good faith prior to receipt of the letter. This action by the Government and Gregos, coupled with the government’s weak argument that the method of closing the time for receipt of bids was customary for the last twenty years should not be sanctioned or condoned.

I am of the firm opinion that the cases relied on by the district court and by the majority here establish only that in-junctive relief may be withheld in cases where unusual circumstances exist, such as an emergency or where some ambiguity or special situation dictates a relaxation of the requirements of the procurement processes established by law. No such facts are here presented. There was no discretion to be exercised by the Army. Consequently, the court had no basis in law or in equity for the exercise of discretion.

While I agree that judicial intervention in the procurement processes of agencies of government should be limited and that the peculiar circumstances of a particular case should be weighed in favor of nonintervention, the concept should not be extended beyond its obvious purpose. Certainly the courts should not refrain from granting relief when, as here, the governmental agency arbitrarily transgressed statutory limits and defied its own regulations and particularly where there were no exigent circumstances and no emergency to warrant it. In my opinion the law set out in the cases relied upon by the district court was misapplied. I do not believe that under any view of the facts of this case the denial of an injunction can be justified. In fact, to do so is to exercise a discretion that is at best illusory and transcendent.

It follows that I would reverse.

      . Section 2-301 (a) of the Armed Forces Procurement Regulation provides in part that a bid must comply with the invitation for bids both as to method and timeliness of submission. Section 2-303.1 provides : “Bids which are received . . . after the exact time set for opening bids are ‘late bids’ even though received only one or two minutes late. Late bids shall not be considered for award except as otherwise authorized.”


author: PER CURIAM.

text:
    MISSOURI PACIFIC RAILROAD CO., Appellee, v. HEART OF AMERICA SHIPPERS ASSOCIATION, INC., Appellant.
    No. 73-1295.
    United States Court of Appeals, Eighth Circuit.
    Submitted Nov. 13, 1973.
    Decided Dec. 11, 1973.
    Ronald N. Cobert, Washington, D. C., for appellant.
    Kent Snapp, Kansas City, Mo., for ap-pellee.
    Before LAY and HEANEY, Circuit Judges, and HARPER, Senior District Judge.

       ROY L. HARPER, Senior District Judge, Eastern District of Missouri, sitting by designation.

   PER CURIAM.

Defendant, Heart of America Shippers Association, Inc., a nonprofit shipper’s association, appeals from a judgment of $125,112.93 which allegedly accrued for. tariff undercharges due the Missouri Pacific Railroad Co. for the movement of trailers in piggy-back service. Jurisdiction is premised under 49 U.S.C. §§ 6(1) — (11) and 28 U.S.C. § 1337. The case was tried to the district court and the district judge found against the defendant shipper and entered judgment accordingly. The defendant appeals on the ground that the Interstate Commerce Commission tariff is ambiguous and müst be strictly construed against the carrier who framed the tariff and that estoppel should apply under the facts existing. We affirm the judgment of the district court for the reasons set forth in the trial judge’s memorandum opinion. See Quincy R.R. v. Ready Mixed Concrete Co., 487 F.2d 1263 (8th Cir., 1973).

Judgment affirmed.

      . The shipper urges that a recent decision of the ICC, Jersey Shippers Pooling Ass’n v. The Alton & Southern R. R., No. 35499 (Sept. 17, 1973), supports its argument that the tariff is ambiguous and should accordingly be construed in favor of the shipper. The facts in the ICC decision are clearly distinguishable. Furthermore, the tariff involved there was a “carrier convenience rule,” whereas in the instant case the erroneous practices of the carrier and shipper benefited the shipper as well as the carrier. The record also demonstrates that the illegal practices involved here were orally initiated by the parties and their continuance was insisted upon by the shipper, Heart of America Shippers Association, Inc.,