author: STEPHENSON, Circuit Judge.

text:
    James E. KOLLS and Life Investors, Inc., Appellants, v. AETNA CASUALTY AND SURETY COMPANY, Appellee.
    No. 74-1195.
    United States Court of Appeals, Eighth Circuit.
    Submitted Sept. 12, 1974.
    Decided Oct. 16, 1974.
    Max Putnam, Des Moines, Iowa, for appellants.
    Eugene Davis, Des Moines, Iowa, for appellee.
    Before MATTHES, Senior Circuit Judge, and HEANEY and STEPHENSON, Circuit Judges.
   STEPHENSON, Circuit Judge.

This is a diversity cause of action for recovery of benefits under a fire insurance policy. The appellants, James E. Kolls and Life Investors, Inc., sued ap-pellee Aetna Casualty and Surety Company for additional benefits over and above the stipulated cash value of the lost property, $631,955.00, which Aetna had previously paid. The trial court found for Aetna holding that it had previously paid all agreed sums under the policy. Summary judgment was entered in favor of Aetna. We affirm.

The insurance policy in question covered loss by fire to a certain shopping center property located in Denver, Colorado. Fire destroyed a major portion of the shopping center structure on December 20, 1965. Thereafter Aetna paid to the insureds the agreed cash value of the loss, $631,955.00. Aetna argues here as it did below that the $631,955.00 was all that it was required to pay under the policy and, indeed, was all it ever agreed to pay. Appellants argue that they are entitled to recover an additional $54,920.-00. They support their thesis with two arguments: First, that the insurance policy’s “Replacement Cost Endorsement” entitles them to that additional sum; and second, that Aetna agreed to pay $686,875.00 and therefore the additional $54,920.00 is due because of contract by estoppel.

Replacement Cost Endorsement

The basic policy of insurance insures the “actual cash value of the property at the time of loss.” The replacement cost endorsement provides for the insured to make an initial claim for the actual cash value of the loss and to later claim an additional sum so that the total recovery equals the full replacement cost of the loss. The insured must meet certain conditions if he wishes to claim any amount pursuant to the replacement cost endorsement. We set out those conditions directly from the policy endorsement. Paragraph 4 provides:

This Company’s liability for loss under this policy including this endorsement shall not exceed the smallest of the following amounts (a), (b) or (c)
a) The amount of this policy applicable to the damaged or destroyed property;
b) The replacement cost of the property or any part thereof, identical with such property on the same premises and intended for the same occupancy and use;
c) The amount actually and necessarily expended in repairing or replacing said property or any part thereof on the same premises and intended for the same occupancy and use.

Paragraph 5 of the endorsement provides further:

This Company shall not be liable under this policy including this endorsement for any loss—
a) Occasioned by enforcement of any local or state ordinance or law regulating the construction, repair or demolition of buildings, unless such liability has been specifically assumed under this policy;
b) Unless and until the damaged property is actually repaired or replaced with due diligence and dispatch, and, in no event, unless repair or replacement is completed within a reasonable time after such loss.

The facts as established by the documents admitted by stipulation of the parties show that the insureds expended $510,759.88 in partially repairing and replacing the structure. Aetna has already paid to the insureds $631;955.00.

Appellants claim that neither full replacement of the property nor an expenditure of more than the cash value of the loss is necessary in order for the replacement cost endorsement to come into play. The trial court disagreed and concluded as a matter of law that the insureds were not entitled to recover under the replacement cost endorsement of the insurance policy.

We agree with the trial court’s well reasoned discussion in finding that the dispute between the parties on this issue must be resolved by an application of the undisputed facts to the law. Appellants did not comply with the conditions precedent to recovery under the replacement cost endorsement. They failed to repair and replace the property and expend an amount in excess of the agreed cash value of the loss. The applicable law is properly stated and applied in the trial court’s opinion. Further discussion on our part would not be useful.

jEstoppel

Appellants’ primary contention is that regardless of the terms of the replacement cost endorsement Aetna agreed to pay $686,875.00 and is therefore estopped to deny full payment of that amount. Judge Hanson carefully reviewed the 270-plus documents submitted by the parties along with the other facts in this case. For us to again set out and discuss those stipulated facts would serve no useful purpose.. All of the issues and sub-issues raised by appellants here were ably considered and answered by the trial court. The court concluded:

* * * [T]hat there was no contract by estoppel as set forth by the plaintiffs for the payment of $686,955.00. At all times, as indicated by the documentary evidence submitted by the plaintiffs and the defendant, the plaintiffs understood the settlement agreement to be in accordance with the provisions of the insurance policy and the Replacement Endorsement. According to the plain terms of the contract, the plaintiffs were required to spend an amount in excess of $631,955.00 in repairing and replacing the damaged structures before they would be entitled to recover an amount due them under the Replacement Cost Endorsement. The undisputed facts in this case establish that an amount less than $600,000.00 was spent in the repair and replacement of this shopping center. Therefore, there is no amount due the plaintiffs under the Replacement Cost Endorsement.

We have carefully examined the facts, the exhibits and appellants’ contentions. We affirm on the basis of Judge Hanson’s well reasoned opinion.

Affirmed.

      . The Honorable William O. Hanson, United States District Court for the Southern District of Iowa. The trial court’s opinion is reported at 378 F.Supp. 392 (S.D. Iowa 1974).

      . Judge Hanson made his determination based upon the voluminous record consisting of over 270 letters and documents admitted by stipulation of the parties. Appellants conceded on oral argument that Judge Hanson had properly set out the facts of the case in his memorandum opinion.


source: Caselaw Access Project

author: CHOY, Circuit Judge: WALLACE, Circuit Judge DAVID W. WILLIAMS, District Judge

license: Public Domain

text:
    UNITED STATES of America, Plaintiff-Appellee, v. Christina Marie CHASE, Defendant-Appellant.
    No. 73-2490.
    United States Court of Appeals, Ninth Circuit.
    May 3, 1974.
    Wallace, Circuit Judge, concurred specially and filed opinion.
    David W. Williams, District Judge, filed dissenting opinion.

      Joseph A. Milchen (argued), of Mc-Inerney, Milchen & Frank, San Diego, Cal., for defendant-appellant.
    Thomas M. Coffin, Asst. U. S. Atty. (argued), Harry D. Steward, U. S. Atty., San Diego, Cal., for plaintiff-appellee.
    Before CHOY and WALLACE, Circuit Judges, and WILLIAMS, District Judge.

       The Honorable David IV. Williams, United States District Judge for the Central District of California, sitting by designation.

   CHOY, Circuit Judge:

The appellant, Christine Chase, was convicted of illegally importing three pounds of cocaine. She contends on appeal that the narcotics were discovered as the result of an unlawful strip search conducted at the border. We affirm.

On December 13, 1972 appellant, upon entering the United States from Mexico, was halted at the Calexico, California point of entry. After preliminary questioning, a search of her car and luggage, and a Customs Bureau computer check all revealed reason to be suspicious of her, she was taken to a secondary inspection room to be personally searched by a matron.

What happened there is the subject of much dispute. Appellant contends that a strip search was conducted for which the requisite “real suspicion,” see, e. g., United States v. Guadalupe-Garza, 421 F.2d 876, 879 (9th Cir. 1970), was lacking. The government counters that contraband was initially discovered in her right sock, before any of her other clothing had been shed, when one of appellant’s boots was removed. This, the government urges, was not a strip search, but merely a conventional border search for which no particular showing of cause is required. The trial court agreed that the first batch of cocaine was found in appellant’s sock, prior to her undressing, after her boot was taken off, and that this was not a strip search.

We must first determine if the factual finding that the boot was initially removed is clearly erroneous. At the suppression hearing the matron, Linda Jiminez, testified on direct examination that Chase had first taken off her right boot, revealing a package of cocaine in her sock, following which she removed her left boot disclosing two more packets of cocaine. Then, Jiminez said, she pulled off her sweater and pulled up an “undergarment” (apparently a body suit) revealing packages of cocaine taped around her waist. On cross-examination and again on redirect, however, Jiminez became confused and stated she could not recall whether Chase’s sweater was removed — and thus whether she was partially undressed — before the boots were removed or whether her clothing was intact when the cocaine was found in the boots. Jiminez continued to insist, though, that the first packages of cocaine were discovered in appellant’s boots and not underneath her sweater.

Appellant contradicted Jiminez’s story. Chase averred that she had, at the outset of the search, partially disrobed by pulling both her sweater and her body suit up to her shoulders. At that time, appellant claimed, the matron had discovered the packages taped around her waist. Only after that, she testified, were her boots removed.

We cannot say that the district court clearly erred in finding that the search commenced with the removal of appellant’s boots. First, while the matron’s testimony is somewhat contradictory, her testimony on direct does provide support for the trial judge’s conclusion.

Second, in certain restricted circumstances — where, for example, a witness’ story is implausible — disbelief of testimony on a certain point can support the truth of what the witness denies. See, e. g., United States v. Castro, 476 F.2d 750, 753 (9th Cir. 1973); United States v. Barham, 466 F.2d 1138, 1140-1141 (9th Cir. 1972), cert. denied, 410 U.S. 926, 93 S.Ct. 1356, 35 L.Ed.2d 587 (1973); Anderson v. Knox, 297 F.2d 702, 726 (9th Cir. 1961), cert. denied, 370 U.S. 915, 82 S.Ct. 1555, 8 L.Ed.2d 498 (1962); Ege v. United States, 242 F.2d 879, 881 (9th Cir. 1957).

A trier of fact is not compelled to accept and believe the self serving stories of vitally interested defendants. Their evidence may not only be disbelieved, but from the totality of the circumstances, including the manner in which they testify, a contrary conclusion may be properly drawn.

United States v. Cisneros, 448 F.2d 298, 305 (9th Cir. 1971); see also, United States v. Hood, 493 F.2d 677 (9th Cir. 1974). We think this is one of those situations. Appellant had an obvious motive to falsify. Moreover, her story contrasted with that of the matron not only with respect to appellant’s state of undress when she took off her boots, but also as to which items of contraband were discovered first. From the latter conflict the district judge could have concluded other portions of her narrative were the opposite of what she claimed as well. Finally, the record shows appellant to have been undergoing methadone treatment for narcotics addiction and to have been a frequent user of tranquilizers at the time of the suppression hearing. The trial judge, who was very concerned with the effect of these conditions upon the guilty plea she entered on the same day as the suppression hearing, could well have concluded they affected her ability to recall the search.

Accepting the trial judge’s finding, we simply cannot say that the mere removal of a boot is the type of “serious invasion of privacy” which the real suspicion standard, applicable to strip searches, was designed to limit. See United States v. Guadalupe-Garza, 421 F.2d at 879. The origin of the real suspicion test is, of course, in the fourth amendment’s proscription of unreasonable searches. Since a strip search involves an embarrassing imposition upon the victim, we have reasoned, it would be unreasonable to conduct such searches without real suspicion. See, e. g., Henderson v. United States, 390 F.2d 805, 807-808 (9th Cir. 1967). Real suspicion should, therefore, limit searches only when there is a similar danger of embarrassment: where, in short, the suspect is forced to disrobe to a state which would be offensive to the average person. Judged by this standard, the removal of a boot is surely not a “strip.” Rather, it is like one removing an overcoat or a suit jacket — relatively innocuous. See Shorter v. United States, 469 F.2d 61 (9th Cir. 1972), cert. denied, 411 U.S. 918, 93 S.Ct. 1555, 36 L.Ed.2d 310 (1973); Murray v. United States, 403 F.2d 694, 697 (9th Cir. 1968) (both: removing a coat not a strip search).

Nor can we say that a strip search commences with the order to a suspect to remove her clothing. While the record is not entirely clear on this point, it is possible that the matron first ordered Chase to remove all her clothing, not merely her boots. Assuming this is true, it should not vitiate the search. Cf. United States v. Stornini, 443 F.2d 833 (1st Cir.), cert. denied, 404 U.S. 861, 92 S.Ct. 162, 30 L.Ed.2d 104 (1971) (appellant stripped, but contraband found independently in coat; since it was proper to search the suspect’s clothing, evidence was not discovered via a strip search). The reason real suspicion is required to conduct a strip search is not because the command to strip is intrusive but because the actual search of a stripped person is. It is, after all, the stripping which is offensive to privacy, not the words which order the strip search. Thus, whether a strip search occurred should be measured by what the subject objectively did.

There was, then, no strip search in this case when the initial batch of cocaine was found. The subsequent strip search was supported by probable cause —that initial batch of contraband.

Affirmed.

WALLACE, Circuit Judge

(specially concurring):

I concur with my Brother Choy except for the restrictions I believe he places on our language in United States v. Cis-neros, 448 F.2d 298, 305 (9th Cir. 1971). In that case we indicated that the trier of fact’s disbelief of a defendant’s testimony may, in part, provide the basis for a finding contrary to that which the defendant has stated. See opinion of Judge Choy, page 573 and n. 4. I would go no further than to state what was held in United States v. Hood, 493 F.2d 677 (9th Cir. 1974) :

Further, both Hoods testified, denying any knowledge of the heroin. Disbelief of their sworn testimony, along with other evidence, can be the basis of a finding that they in fact possessed the requisite knowledge. See United States v. Cisneros, 448 F.2d 298, 305 (9th Cir. 1971).

Whether the testimony of a defendant or any other witness has a ring of genuineness or not often becomes most significant in finding where the truth lies. That this touchstone is difficult to review on appeal does not militate against its fundamental importance in ascertaining what the actual facts are. I would, therefore, not restrict the applicability of Cisneros as I feel Judge Choy has.

As this difference does not affect the outcome of this particular case and as I am in harmony with the remainder of Judge Choy’s opinion, I concur.

DAVID W. WILLIAMS, District Judge

(dissenting) :

In the face of confusing and contradictory testimony as to where the contraband was first discovered about the body of appellant, I will agree that the trial court finding that the first batch of cocaine was found in appellant’s sock, prior to her completely undressing is not clearly erroneous. However, irrespective of the sequence of disrobing, I respectfully disagree with the conclusion of the majority that the facts of the search indicate that a mere border search occurred. To the contrary, I would characterize the instant search as a strip search, thus requiring the government to provide a more stringent justification therefor. I do not believe that this has been shown.

The record clearly shows that Chase was ordered to take off all her clothing by a customs inspectress, and that contraband was discovered shortly after she began to carry out the order. This Court has previously held that “the forced disrobing of a person entering the country violated the Fourth Amendment unless there was ‘at least a real suspicion, directed specifically to that person.’ ” United States v. Johnson, 425 F.2d 630, 632 (9th Cir. 1970), cert. dismissed, 404 U.S. 802, 92 S.Ct. 38, 30 L.Ed.2d 35 (1971). If a party “is to be required to strip,” a strict justification of real suspicion must be demonstrated. Henderson v. United States, 390 F.2d 805, 808 (9th Cir. 1967).

The facts here are demonstrative of a strip search as we have previously defined the term. Chase was not merely requested to remove a boot or a coat; she was ordered to remove all her clothes. Thus I believe that the majority misplaces reliance upon cases in which a party was merely asked to remove an overcoat, Shorter v. United States, 469 F.2d 61 (9th Cir. 1972), cert. denied, 411 U.S. 918 (1972), and Murray v. United States, 403 F.2d 694 (9th Cir. 1968). Even if it is assumed that contraband was first found on Chase after the removal of her right boot, the facts in this case indicate a far more serious intrusion into her bodily privacy than in Shorter or Murray. Chase was not asked merely to remove a boot. The record is clear that Customs Inspector Ward ordered a strip search of Chase. Customs Inspectress Jiminez testified that she instructed Chase, “[T]ake off all your clothing.” (Tr. 15). In the course of removing her clothing, contraband was discovered.

No previous case has directly confronted this factual situation. Whether the contraband was first discovered when Chase removed her boot or her blouse is irrelevant. The sequence of disrobing should not be determinative of the invasion of privacy. At the point in time when Chase began to undress in obedience to an order to “take off all her clothing,” her right to expect privacy of her body had been invaded. The instant search is precisely the “forced disrobing” which is referred to in United States v. Johnson, supra.

I am of the opinion that the officers had no basis upon which to reach the decision that appellant should be subjected to a strip search or to order her to an enclosure where it could be conducted. There must first be made a determination whether in this case any kind of personal search was called for after the initial search of the car and interrogation of its occupants.

In December, 1972, Special Agent Beaulieu placed appellant’s name and vehicle license number into the Customs CADPIN system because he had received information from an informant that Christine Chase was going to travel to Bogota, Colombia on November 28, 1973 on Avianca Airlines. Beaulieu had also learned that certain suspected cocaine couriers were to be on the same flight and that these couriers had been driven to the airport by a convicted narcotics violator. Colombia is well-known as the point of origin of cocaine. The agent was also aware that appellant’s husband was a convicted narcotics violator (possession of marijuana) and that he had recently been arrested in the Los Angeles area on charges of possession of cocaine. The informant had given information to Beaulieu on two prior occasions, neither of which resulted in an arrest. Neither Chase nor any of the other suspects on the flight had a prior criminal record and there is no evidence of any connection or association between Chase and the other suspected cocaine couriers.

Two weeks later, appellant, her son and a male companion entered the United States from Mexico at Calexico, California. Appellant told the customs inspector that they were coming from Mexico where they had spent four hours. A pat-down of Chase and her companion and a search of her purse proved negative. A search of the car and luggage done with the assistance of a trained dog also failed to turn up contraband. The agent did find a hotel ashtray from Colombia and a Colombian magazine in the automobile which indicated a recent visit to that country, but there is no evidence that the parties were queried about this. Customs Inspector Ward fed the license number of the vehicle into the CADPIN system and a positive response or “hit” was received. Ward then ordered a strip search of appellant and she was taken to an enclosure where an inspectress performed the search. The only reasons given for the strip search were the discovery of the two items from Colombia and the “hit” on the CADPIN system. Ward testified that he did not believe that Mrs. Chase was concealing anything or that she was lying about anything or trying to mislead him. When she told him she was coming from Mexico, he asked no further questions about her travels. (Tr. 62).

The best that can be said is that Ward had a hunch that appellant had contraband concealed on or in her body despite the fact that the earlier search produced nothing. It is true that his hunch in this ease was correct and contraband was found concealed about her person. But should such a lucky hunch be the guideline in a determination of which females should or should not be called upon to undress and yield to a skin and/or cavity search? Admittedly this approach would frustrate the detection of contraband on the person of many couriers, but when we weigh the damage that can be done psychologically to many hundreds of innocent strip search victims against the amount of contraband that may enter the United States via body strapping or cavity concealment, I would favor a rule that would require a great deal more than a hunch.

It is settled that even though probable cause is not required to initiate a border search (Henderson v. United States, 390 F.2d 805, 808 (9th Cir. 1967)), “mere suspicion” of contraband does not justify initiating a strip search. This Court has required that a strip search be supported by real suspicion. Henderson, supra at 808. Such suspicion has been defined as subjective suspicion supported by objective, articulable facts that would lead an experienced, prudent customs official to suspect that a particular person seeking to cross the border is concealing something on his body for the purpose of transporting it into the United States contrary to law. United States v. Guadalupe-Garza, 421 F.2d 876, 879 (9th Cir. 1970); United States v. Johnson, 425 F.2d 630, 632 (9th Cir. 1970). In addition, the objective arti-culable facts must bear some reasonable relationship to suspicions that something is concealed on the body of the person to be searched; otherwise, the scope of the search is not related to the justification for its initiation as it must be to meet the reasonableness standard of the Fourth Amendment. Guadalupe-Garza at 879.

The “real suspicion” test is not “mere suspicion” or a hunch. It is clear from the record that the search of appellant was based on the computer “hit” which the customs officials received from the CADPIN system and the Colombian artifacts which were found in the car. Although the artifacts may have been some indication that the appellant did not declare the full extent of her foreign travel, Ward did not question appellant concerning these items.

A computer report on an individual can supply the necessary real suspicion to justify a strip search so long as the official originating the report has such information as would have justified him in personally conducting the search. United States v. Williams, 459 F.2d 44 (9th Cir. 1972). When agent Beaulieu placed appellant’s name and vehicle number into the CADPIN system all he knew concerning her was that she intended making a trip to Bogota aboard the same flight that was carrying other persons whom he suspected of being cocaine couriers. He had no information that Chase’s trip was for the purpose of obtaining contraband or that she had any connection whatsoever with the other suspects aboard. Appellant’s relationship to the suspected couriers was not in any respect different from any of the other passenger relationships to those suspects. If the information which Beaulieu possessed at the time he submitted appellant’s name and number into the computer system constitutes the requisite “real suspicion,” then virtually every passenger on the flight to Bogota would legally have been a candidate for a strip search upon their return to the United States.

The very purpose of this Court’s stringent requirements for a strip search is to protect innocent men and women from the degradation and humiliation which such a search entails. There is no question that a vast number of innocent individuals are subjected to strip searches when crossing the border.

I find it difficult to accept the conclusion that Beaulieu’s facts, although objective and articulable, bore some reasonable relationship to a suspicion that contraband would be concealed on the body of appellant. I therefore must conclude that the officer originating the computer report did not have “such information as would have justified him in personally conducting the search” of appellant. In precisely the same situation this Court reversed a conviction founded upon evidence procured incident to a search which was triggered by an unreliable computer report. United States v. Williams, supra.

I would reverse because the denial of appellant’s motion to suppress was erroneous.

      . The conviction was for violating 21 U.S.C. §§ 952 and 960.

      . Appellant does not dispute that a search short of a strip was justified. See Henderson v. United States, 390 F.2d 805, 808 (9th Cir. 1967). Nor does appellant dispute that if contraband was first found in other than a strip search, a subsequent full strip search was proper.

      . Findings of fact made at a suppression hearing will only be overturned on appeal if clearly erroneous. See, e. g., United States v. Welp, 469 F.2d 688 (9th Cir. 1972); Jackson v. United States, 122 U.S.App.D.C. 324, 353 F.2d 862, 864-865 (1965); United States v. Page, 302 F.2d 81, 85 (9th Cir. 1962).

      . We emphasize that the use of denials to support opposite propositions is limited. It could not be used to support a finding of fact where, for example, the only basis for drawing the opposite inference was demean- or. Otherwise, a fact finder’s decision would be unreviewable. See Dyer v. MacDougall, 201 F.2d 265, 268-269 (2d Cir. 1952) (L. Hand, J.) There must be other objective evidence on the record which buttresses the fact finder’s drawing of the opposite inference. See United States v. Cisneros, 448 F.2d 298, 306 n. 10 (9th Cir. 1971) (“It should be noted that Judge Hand [in Dyer] carefully circumscribed the limitations of his quoted statement. We also subscribe to those limitations.”)

      . At the suppression hearing, the matron first testified that she initially asked Chase to remove her boots. (Tr. at 9.) Later, she testified she orderd Chase to undress completely. (Tr. at 15.)

      . It is true that in both Shorter v. United States, 469 F.2d 61 (9th Cir. 1972) and Murray v. United States, 403 F.2d 694, 697 (9th Cir. 1968), the suspects were not ordered to take off all their clothing. Neither panel, however, regarded the command to remove the clothing as the equivalent of a strip search, as the dissent here intimates, infra, text at p. 575 n. 1, since that question was not before them.

      . In Shorter the defendant was escorted to a secondary examination room after a customs agent noticed his nervous behavior, as well as the fact that “Shorter’s face was perspiring heavily and that despite the warm humid weather Shorter was bulkily dressed wearing an overcoat, a suit coat, and a dress shirt open at the neck exposing a turtle neck . sweater underneath.” 469 F.2d at 62. Shorter was requested to remove his overcoat and his suit coat and to empty his pockets onto the table, and then asked if he had failed to declare anything. Shorter then claimed, “you got me," and lifted the front of his shirt exposing a waist girdle containing packages of heroin. Shorter was arrested and it was only at this point that a strip search was ordered — revealing additional heroin. The Court noted that the heroin was first discovered before any strip search occurred:
      “He was not subjected to either a skin or a body search until after the first packets of heroin were discovered. Therefore, the ‘real suspicion’ test is not applicable and this search comes well within the regular border search standard.” id. at 63-64.
      Similarly, in Murray the defendant was merely “told to empty everything from his pockets and to remove his coat.” 403 F.2d at 695. As the defendant removed his coat, a customs agent observed rubber contraceptives containing heroin attached to his arm. No strip search was ordered and thus the Court held that the mere request to remove one’s coat does not constitute a strip search.

      . Agent Ward testified that “We went ahead and searched the car, every conceivable place that we could find, all of the compartments. We went through all of the souvenir items which was (sic) in the car, and when we came up with nothing, we went back into the office for a personal search on the passengers of the car, and we requested that Mrs. Chase be searched.” (Tr. 61).

      . See Judge Ely’s dissenting opinion in United States v. Holtz, 479 F.2d 89 (9th Cir. 1973).


author: BARTELS, District Judge:

text:
    UNITED STATES of America, Appellee, v. Ernest MALIZIA, Defendant-Appellant.
    No. 1132, Docket 74-1389.
    United States Court of Appeals, Second Circuit.
    Argued June 18, 1974.
    Decided Sept. 17, 1974.
    Certiorari Denied Jan. 27, 1975.
    See 95 S.Ct. 834.

      Bancroft Littlefield, Jr., Asst. U. S. Atty. (Paul J. Curran, U. S. Atty. S.D. N. Y., S. Andrew Schaffer, Asst. U. S. Atty., of counsel), for appellee.
    J. Jeffrey Weisenfeld, New York City (Goldberger, Feldman & Breitbart, New York City, on the brief), for defendant-appellant.
    Before SMITH and MANSFIELD, Circuit Judges, and BARTELS, District Judge.

      Of the Eastern District of New York, sitting by designation.

   BARTELS, District Judge:

After a three-day trial in the Southern District of New York before Constance Baker Motley, District Judge, and a jury, Ernest Malizia was convicted on February 15, 1974, of a one-count indictment which charged him with the sale of 995 grams of cocaine in violation of 21 U.S.C. §§ 173 and 174. He was sentenced to ten years imprisonment and a $20,000 fine.

On appeal Malizia raises several errors, the most important of which was the admission of testimony that informant Stanley Gerstenfeld stated that he would not testify because of fear of death, and that Malizia’s fingerprints were taken from the files in the office of the Bureau of Narcotics and Dangerous Drugs.

The record reveals that at about 6 P. M. on February 17, 1971, Group Supervisor Leonard Vecchione of the Federal Bureau of Narcotics and Dangerous Drugs (B.N.D.D.) and Investigator Edward Kayner of the New York State Police proceeded to the area of Park Place and Church Street where they met with Stanley Gerstenfeld, the Government’s informant, whom they instructed to enter an undercover taxicab driven by State Police Investigator George Gross, to whom Vecchione then delivered a paper bag containing $16,500 in advanced Government funds. Gross and Gersten-feld proceeded in the taxicab to Christine’s Luncheonette at 349 Pleasant Avenue in Manhattan, followed by Vec-chione and Kayner in an unmarked police vehicle and by B.N.D.D. Agent John Maltz in a second vehicle.

At approximately 9:15 P.M. they arrived in front of Christine’s Luncheonette, whereupon Gross handed Gersten-feld the paper' bag containing the $16,500 and Gerstenfeld then exited the cab and entered Christine’s. The luncheonette was located below the level of the sidewalk and was enclosed by two large glass windows on both sides of a glass door. A serving counter ran from front to back, perpendicular to- the street. Gerstenfeld entered the luneh-eonette and delivered the bag of money to Malizia who was standing alone behind the counter. Malizia then removed the money from the bag and after thumbing through the bills, came from behind the counter, lifted up the back of Gerstenfeld’s three-quarter length leather jacket and stuck a yellowish package inside Gerstenfeld’s belt in the small of his back and pulled the jacket down over the package. Gross observed the entire transaction from his taxicab and Vec-chione and Kayner who stopped momentarily also witnessed Malizia counting the money. After the sale Gerstenfeld hailed a passing cab which took him to 86th Street and York Avenue where he transferred to Investigator Gross’ cab. Gross then drove Gerstenfeld to 89th Street and York Avenue where they met Vecchione and Gerstenfeld delivered to Vecchione the yellowish package, which upon analysis contained 995 grams of cocaine. Ten minutes after Gersten-feld’s departure, Malizia was observed leaving Christine’s and proceeding to 118th Street and Pleasant Avenue where he placed a brown paper bag in the trunk of a blue Pontiac registered in the name of Rose Malizia, his sister-in-law.

One week later, on February 24, 1971, agents attempted unsuccessfully to locate and arrest Malizia in New York City and also at his house in Nanuet, New York. They interviewed Malizia’s wife and children concerning his whereabouts but without success. They maintained surveillance at Malizia’s home on a regular basis for the next two years and also on the homes of his relatives during Christmas and Thanksgiving, all without success.

Malizia was not arrested until December 18, 1973, when he was apprehended in the vicinity of 236th Street and Johnson Avenue in the Bronx, after he had given the false name of Harry Luppes, which was the name on a driver’s license found in his possession. This was the second time Malizia had given false identification while he was being sought; the first being when he was arrested for a traffic violation in Rockland County on December 5, 1971. At that' time he claimed he was John Conite, the name on a forged driver’s license then held by him.

I

We turn first to the most troublesome issue concerning the admission of testimony relative to the state of mind of Stanley Gerstenfeld. Ordinarily one of the most important witnesses called by the Government in a narcotics case is the purchaser. Here the purchaser was not a Government agent but the informant Gerstenfeld, who from the beginning indicated to the Government agents that he would not testify. Nevertheless an exhaustive search was made by the Government for Gerstenfeld without success. After testimony of the search was adduced, the Government stopped and approached the bench for a conference relative to its offer of proof to show that Gerstenfeld had told Vecchione that he would never testify because he was in fear of being killed. Realizing the importance of the testimony of the informant in this case and at the same time the prejudicial effect of the informant’s stated reason for failing to appear, Judge Motley, outside of the jury’s presence, indicated to the defendant’s counsel that if he did not intend to comment adversely on the Government’s failure to produce the informant, the testimony as to the reason for the failure of the witness to appear would be excluded. Instead of accepting this suggestion, counsel replied that he would raise the question in his summation in the context of the Government’s failure to sustain “its burden of producing all witnesses.” Only after defendant’s rejection of the suggestion did Judge Motley allow the Government to explain why Gerstenfeld was not produced at the trial on the premise that the probative value of the testimony was sufficient to outweigh its prejudicial effect. “Informants in drug cases are not Brahmins, nor are they noted for long-term occupancy of well-tended premises. Their disappearance, voluntary or otherwise, is not extraordinary.” United States v. Super, 492 F.2d 319, 322 (2d Cir. 1974).

We have, under cautionary instructions, upheld the testimony of a witness explaining his own prior failure to testify for the Government or his prior contradictory or inconsistent statements because of fear of threatened retaliation. United States v. Place, 263 F.2d 627 (2d Cir.), cert. denied, 360, U.S. 920, 79 S.Ct. 1439, 3 L.Ed.2d 1535 (1959); United States v. Cirillo, 468 F.2d 1233 (2d Cir. 1972), cert. denied, 410 U.S. 989, 93 S.Ct. 1501, 36 L.Ed.2d 188 (1973); United States v. Berger, 433 F.2d 680 (2d Cir. 1970), cert. denied, 401 U.S. 962, 91 S.Ct. 970, 28 L.Ed.2d 246 (1971); United States v. Scandifia, 390 F.2d 244 (2d Cir. 1968), vacated on other grounds, 394 U.S. 310, 89 S.Ct. 1163, 22 L.Ed.2d 297 (1969). While these cases permit an impeached witness to explain the circumstances concerning his own state of mind, they do not extend to the explanation for the failure of a presumably favorable witness to testify. A much more serious risk of prejudice exists in such a case because the witness is not present to be cross-examined, even though the testimony concerning his state of mind falls within the hearsay exception.

Vecchione, while on the stand, testified that Gerstenfeld was not in the custody of the Government, that he was not in any way under the control of the Government, that efforts to locate him were unsuccessful, and that Gerstenfeld had told Vecchione that he would never' testify because “he was .in fear of being killed.” It was a general statement which did not point to Malizia as a potential killer and, in fact, on cross-examination Vecchione testified that Gerstenfeld never told him that he heard that Malizia was trying to kill him and further, that Gerstenfeld had worked for Vecchione in other cases prior to making the purchase from Malizia. Malizia claims that the explanation was unnecessary and that all the Government was entitled to was testimony to show that it had attempted without success to find Gerstenfeld. See United States v. Young, 150 U.S.App.D.C. 98, 463 F.2d 934, 939-940 (1972); Wynn v. United States, 130 U.S.App.D.C. 60, 397 F.2d 621, 625 (1967). This, however, may not be sufficient. An adverse inference is likely to arise if a party fails to call a key witness who is expected to give favorable testimony to his cause. “It would present an anomaly in the law if, while one party may comment upon the absence of an opposing party’s witness, the opposing party were not permitted to introduce evidence to excuse the absence of such witness.” Schumacher v. United States, 216 F.2d 780, 788 (8th Cir. 1954), cert. denied, 348 U.S. 951, 75 S.Ct. 439, 99 L.Ed. 743 (1955). On the other hand, such testimony predicated upon fear of retaliation, is so prejudicial that it should be excluded in the absence of exceptional circumstances.

In this case Malizia had an option to exclude the testimony but he rejected that option and chose instead to exploit the absence of the witness, emphasizing upon summation that Gerstenfeld was “not here to tell you what happened.” From these exceptional circumstances arose the necessity to anticipatorily rebut the claim that the Government should have produced the witness. While we believe that cautionary instructions would have been advisable in this case, we conclude that on balance defendant was treated fairly and that the admission of the prejudicial testimony was not sufficient to warrant a reversal, particularly in view of the overwhelming nature of the evidence by the seven agents who had participated in the surveillance of the sale of February 17, 1971.

Malizia next challenges the admission of the testimony of Investigator Kayner to the effect that he brought three fingerprint cards from the Federal Bureau of Narcotics, among which was Malizia’s fingerprint, to the State Police Laboratory to compare with a fingerprint located on the innermost plastic bag containing the cocaine sold to the informant. Kayner testified that no prints at all had been readable from the outer two wrappings around the cocaine; that the partial print removed from the innermost plastic bag had been compared with known parts of Malizia’s prints but the print on the bag was not Malizia’s print. The theory of Malizia’s objection is that reference to Malizia’s fingerprints from the Bureau of Narcotics carried the implication that he was a narcotics violator. It is well known that the Government has in its files fingerprints of most Government officers and employees as well as those who had ever been in any branch of the military service and those who have voluntarily offered their prints. It would have been sufficient without causing any prejudice had the Government’s witness simply testified that the fingerprint cards had been produced from the Government files instead of the Bureau of Narcotics files. However, no card was introduced into evidence and no objection was made to the testimony which, in fact, absolved Malizia, whose counsel exploited the issue on both cross-examination and summation. Cf. United States v. Schwartz, 398 F.2d 464 (7th Cir. 1968), cert. denied, 393 U.S. 1062, 89 S.Ct. 714, 21 L.Ed.2d 705 (1969); United States v. Dichiarinte, 385 F.2d 333, 337 (7th Cir. 1967), cert. denied, 390 U.S. 945, 88 S.Ct. 1029, 19 L.Ed.2d 1133 (1968). We find no reversible error.

II

Malizia raises three other claims of error, which are of a substantial nature. In connection with establishing proof that Malizia was a fugitive, the Government attempted to show that Malizia was aware of the fact that he was being sought for arrest by introducing evidence that on February 24, 1971 agents stopped an automobile and advised the driver, Malizia’s brother John, that they were looking for Malizia. In examining Investigator Gross the prosecutor asked “What brought you to John Malizia exactly?” and he replied “Well, the night of the Operation Flanker — ,” and when Investigator Pinto was asked what happened on February 24 and 25 he replied that “It was an operation of the federal government called Flanker, .” The reference to the code word “Flanker” was a passing innocuous reference and did not indicate that Malizia was the target of the operation. No objection was made to the use of the phrase and no curative instruction was sought. We find no error. See United States v. Cioffi, 493 F.2d 1111, 1119 (2d Cir. 1974).

Malizia also claims error in the admission of evidence of his flight, on the ground that he was not informed personally of the charge and no evidence was introduced as to exactly when he fled. The existence of a warrant or proof of defendant’s knowledge that he is being charged with a crime is not a prerequisite to the admissibility of the evidence of flight, United States v. Ayala, 307 F.2d 574 (2d Cir. 1962), and it is also proper to establish flight by showing unsuccessful efforts by the police to locate the defendant. United States v. Waldman, 240 F.2d 449 (2d Cir. 1957); Kanner v. United States, 34 F.2d 863, 866 (7th Cir. 1929). Evidence of flight, like any other circumstantial evidence, has consistently been admissible as evidence of guilt if considered with other facts of the case. United States v. Ayala, supra; United States v. Miles, 468 F.2d 482 (3d Cir. 1972). The evidence here was amply sufficient to be admitted and justified Judge Motley’s instructions to the jury on flight, which adequately protected Malizia’s rights..

Finally, Malizia objects to the trial court’s charge as being coercive. He claims that the trial judge gave what he characterizes as an improper Allen charge in the original charge to the jury. In her instructions to the jury the trial judge stated, among other things: “As we have already pointed out, I think Government counsel and defense counsel have, and I will now point it out, that this is an important case to both the Government and defendant, and therefore since it is an important case, it must be decided. You are not to single out any one instruction alone as stating the law, but you have to consider these instructions as a whole.” She also stated that the jurors were not to surrender their honest convictions and that the verdict must reflect the conscientious conviction of each and everyone of them. Malizia claims that the statement that the case “must be decided” was coercive. The charge was given at 6:15 P.M. on Friday, February 15, 1974, on the eve of a holiday, and the remark was perhaps a slip better left unsaid. But it was not said after a disagreement or deadlock on the part of the jury but before submission of the case to the jury. Taken into consideration with other portions of the charge, this remark could hardly be deemed coercive. As a matter of fact, the charge as a whole was eminently fair to the defendant. See Nick v. United States, 122 F.2d 660, 674 (8th Cir.), cert. denied, 314 U.S. 687, 62 S.Ct. 302, 86 L.Ed. 550 (1941); United States v. McNeil, 140 U.S.App.D.C. 3, 433 F.2d 1109 (1969); United States v. Martinez, 446 F.2d 118, 119 (2d Cir.), cert. denied, 404 U.S. 944, 92 S.Ct. 297, 30 L.Ed.2d 259 (1972).

Affirmed.

      . Appellant does not on appeal contest the district court’s ruling that the statement was not barred by the hearsay rule “since it was limited to bringing out the informant’s state of mind” (Tr. 43-44). Frank v. United States, 220 F.2d 559, 564 (10th Cir. 1955); Mattox v. News Syndicate Co., 176 F.2d 897, 903-904 (2d Cir.), cert. denied, 338 U.S. 858, 70 S.Ct. 100, 94 L.Ed. 525 (1949); see also Case v. New York Central Railroad Co., 329 F.2d 936 (2d Cir. 1964); VII Wigmore, Evidence § 1790 (3d 1940).


author: CASTLE, Senior Circuit Judge.

text:
    NATIONAL LABOR RELATIONS BOARD, Petitioner, v. HI-TEMP, INC., et al., Respondents. PRODUCTION WORKERS UNION LOCAL 10, etc., Petitioner, v. NATIONAL LABOR RELATIONS BOARD, Respondent. HI-TEMP, INC., et al., Petitioners, v. NATIONAL LABOR RELATIONS BOARD, Respondent.
    Nos. 73-2022 to 73-2024.
    United States Court of Appeals, Seventh Circuit.
    Argued Sept. 9, 1974.
    Decided Oct. 10, 1974.

      Peter G. Nash, Gen. Counsel, Richard A. Cohen, Atty., N.L.R.B., Washington, D. C., Peter J. Hurtgen, Washington, D. C., for N.L.R.B.
    Arnold E. Charnin, Chicago, 111., for intervenor.
    George E. Preonas, Chicago, 111., Sherman M. Carmell and William A. Wid-mer, III, Chicago, 111., for Hi-Temp and Production Workers Union Local 10.
    Before SWYGERT, Chief Judge, CASTLE, Senior Circuit Judge, and CUMMINGS, Circuit Judge.
   CASTLE, Senior Circuit Judge.

The National Labor Relations Board petitions this Court to enforce its order against Hi-Temp, Inc., Tru Temp, Inc., and Steel Treating, Inc. (“the Company”), and against the Production Workers Union, Local 10, AFL-CIO (“the Production Workers” or “the Union”) for violations of the National Labor Relations Act, 29 U.S.C. § 151 et seq. (1970).

The Company is composed of three affiliated corporations comprising an integrated business enterprise. In December 1971, the Production Workers instituted a campaign to organize the Company’s employees. Two of its organizers visited employees’ homes and secured signatures on Production Workers authorization cards. The United Steelworkers of America, AFL-CIO (“the Steelworkers”), who previously had attempted to organize the Company’s employees and failed, protested this encroachment on its “territory,” and began another drive for employee support.

Subsequently, the Production Workers demanded recognition, and the Company agreed to a card check to determine if a majority of the Company’s employees had signed Production Workers authorization cards. The card count established that forty-six of the eighty-six employees signed cards for the Production Workers. Although during the card count the Company received and read a letter from the Steelworkers expressing their continuing organizational interest in the Company’s employees, the Company, on the basis of the card check, recognized the Production Workers on January 19, 1972, and on February 25, 1972, agreed to a collective bargaining contract containing union-security and check-off clauses.

The NLRB determined, however, that the forty-six cards accepted as a basis for the Production Workers’ majority status included cards signed by eight employees who had also signed authorization cards for the 'Steelworkers. The Board, therefore, excluded these eight “dual” cards from the Production Workers’ total, and the remaining thirty-eight valid cards were insufficient to establish majority status. Accordingly, the Board found that the Company, by recognizing and contracting with a minority union, had violated Sections 8(a)(2) and 8(a) (3) of the Act, and that the Union had correspondingly violated Sections 8(b)(1)(A) and 8(b)(2).

The Company and the Production Workers contest the Board’s conclusion that the Union was a minority union at the time of recognition on January 19. They argue that the evidence demonstrates that six of the eight employees who signed both Production Workers and Steelworkers cards signed their Steelworkers cards after the date of the recognition agreement. If those cards were in fact signed after January 19, then the Union had majority status at the time of recognition and the Act would not be violated. We are satisfied, however, that there is substantial evidence on the record considered as a whole to support the Board’s conclusion. Universal Camera Corp. v. NLRB, 340 U.S. 474, 71 S.Ct. 456, 95 L.Ed. 456 (1951).

The Company and Union rely on testimony that Luis Torres, one of the eight signers of dual cards, signed his Steelworkers card at a Sunday meeting with Steelworkers’ organizer Alicea, and that he signed his Production Workers card (dated January 17, a Monday) several days before the Steelworkers card. The Company and Union, therefore, assert that Torres actually signed his Steelworkers card on Sunday, January 23, four days after the recognition agreement was signed, and that his card and the cards which he subsequently passed out to his fellow employees were backdated.

It is true that Torres and Alicea testified that the signing took place on a Sunday, and it is apparently uneontested that Torres signed his Production Workers card on January 17. Torres also testified, however, that he signed both the Steelworkers card and the Production Workers card on the same day — Monday, January 17. In addition, employees Portillo, Samano, Marquina, and Castrejon, who also signed dual cards, testified that Torres gave them Steelworkers cards at work on Monday evening, January 17. Portillo, Samano, and Marquina also testified that they signed their cards that same night, while Castrejon stated that he took his home and signed it the following day. Since it is undisputed that Torres did not distribute the other Steelworkers cards until after he had signed his own, the testimony of Torres and his fellow employees amply supports the Board’s finding that Torres and his co-workers signed their Steelworkers cards prior to January 19, and that on that date the Production Workers were a minority union.

The Company and the Union next claim that even if the eight employees executed both authorization cards prior to recognition, the Board erred in excluding the dual cards in determining the majority status of the Production Workers. They argue that the cards should be counted because the Company acted in good faith and had no knowledge of the Steelworkers’ organizational activities. We cannot agree.

In NLRB v. Fishermen’s & Allied Workers’ Union, Local 33, 483 F.2d 952 (9th Cir. 1973) and Intaleo Aluminum Corp. v. NLRB, 417 F.2d 36 (9th Cir. 1969), authorization cards of employees who had signed cards both for the union seeking recognition and for a competing union were excluded in ascertaining majority status, the underlying rationale being that such cards do not reflect a clear and unambiguous selection of a collective bargaining representative. In Playskool, Inc. v. NLRB, 477 F.2d 66, 71 (7th Cir. 1973), we did not question the applicability of that procedure.

Although in those cases there may have been knowledge of organizational activities which would cast doubt on the employer’s good faith recognition of the union asserting a card majority, we find an employer’s good faith to have no effect on the exclusion of the dual cards, because it is employer support of a minority union that the Act condemns. International Ladies’ Garment Workers’ Union, AFL-CIO v. NLRB, 366 U.S. 731, 81 S.Ct. 1603, 6 L.Ed.2d 762 (1961). The Supreme Court held in International Ladies’ Garment Workers’ Union, supra, at 738-739, 81 S.Ct. at 1608, that:

To countenance such an excuse [of good faith] would place in permissibly •careless employer and union hands the power to completely frustrate employee realization of the premise of the Act — that its prohibitions will go far to assure freedom of choice and majority rule in employee selection of representatives. We find nothing in the statutory language prescribing scienter as an element of the unfair labor practices here involved. The act made unlawful by § 8(a)(2) is employer support of a minority union. Here that support is an accomplished fact. More need not be shown, for, even if mistakenly, the employees’ rights have been invaded. It follows that prohibited conduct cannot be excused by a showing of good faith. [Footnotes omitted.]

The Board, therefore, properly excluded the eight dual cards regardless of the Company’s good faith, and correctly found that the Company and Union violated the Act.

Finally, the Company and the Union, relying on Intaleo Aluminum Corp., supra, challenge that portion of the Board’s order requiring them jointly and severally to reimburse the Company’s employees for all dues or fees paid to the Union pursuant to the union-security and check-off clauses of the February 25 collective bargaining agreement. We find the Board’s order to be proper.

Pursuant to Section 10(c), the Board has been accorded broad authority to fashion remedies to effectuate the policies of the Act. NLRB v. District 50, UMW, 355 U.S. 453, 468, 78 S.Ct. 386, 2 L.Ed.2d 401 (1958); NLRB v. Link-Belt Co., 311 U.S. 584, 600, 61 S.Ct. 358, 85 L.Ed. 368 (1941). One policy as declared in Sections 1, 7, and 9 is that employees have complete and unfettered freedom to select by majority rule their collective bargaining representative. Virginia Electric & Power Co. v. NLRB, 319 U.S. 533, 589, 63 S.Ct. 1214, 87 L.Ed. 1568 (1943); NLRB v. Link-Belt Co., supra, 311 U.S. at 588, 61 S.Ct. 358. Thus, in Virginia Electric & Power Co. v. NLRB, supra, the Court upheld a reimbursement order of the Board where a company-dominated union received funds pursuant to a union security agreement on the ground that the employees were supporting a union not of their own free choice. The Court stated :

The result [of the union-security and check-off clauses] was that the employees . . . had to authorize wage deductions for dues to remain members . . ., and they had to remain members to retain their jobs. Thus, as a price of employment they were required by the Company to support an illegal organization which foreclosed their rights to freedom of organization and collective bargaining. To hold that the Board is without power here to order reimbursement of the amounts so exacted is to hold that an employer is free to fasten firmly upon his employees the cost of maintaining an organization by which he effectively defeats the free exercise of their rights to self-organization and collective bargaining. That this may pervert the purpose of the Act is clear. [Footnote omitted.]

Id. 319 U.S. at 540, 63 S.Ct. at 1219.

Here there is no company-dominated union. Nonetheless, when a minority union is recognized in violation of § 8(a)(2) of the Act, and in accordance with union-security and check-off provisions employees are forced to support and contribute to that union to retain their jobs, we believe the employees’ freedom to select and support a collective bargaining representative of their own choosing is similarly defeated, regardless of the employer’s intentions. The Board’s remedial order effectuates the policy of the Act because it fully restores the employees’ freedom to select and support only that union which has achieved majority status. Virginia Electric & Power Co. v. NLRB, supra; Sheraton-Kauai Corp. v. NLRB, 429 F.2d 1352, 1357-1358 (9th Cir. 1970).

The Company and the Union rely on statements by the Court in International Ladies’ Garment Workers’ Union, supra, 366 U.S. at 740, 81 S.Ct. at 1608, that when an employer violates § 8(a),(2), the employer is subject only to a “remedial order requiring him to conform his conduct to the norms set out in the Act. No further penalty results.” That reliance is misplaced because there the contract did not contain union-seeu-rity clauses, and the Court did not have before it a dues reimbursement remedy.

The petition for enforcement is granted.

Enforced.

      . 29 U.S.C. §§ 158(a)(2), (a)(3) (1970) provide in part:
      (a) It shall be an unfair labor practice for-an employer—
      (2) to dominate or interfere with the formation or administration of any labor organization or contribute financial or other support to it. .
      (3) by discrimination in regard to hire or tenure of employment or any term or condition of employment to encourage or discourage membership in any labor organization.

      . 29 U.S.C. §§ 158(b)(1)(A), (b)(2) (1970) provide in part:
      (b) It shall be an unfair labor practice for a labor organization or its agents—
      (1) to restrain or coerce (A) employees in the exercise of the rights guaranteed in section 157 of this title. .
      (2) to cause or attempt to cause an employer to discriminate against an employee in violation of subsection (a) (3) of this section.

      . Of the six employees whose dual card signings are contested, only Marquez was unavailable to testify. Steelworkers’ organizer Alicea testified, however, that Marquez signed the Steelworkers card in his presence on Monday, January 17, and the card bears that date.


author: JOHN W. PECK, Circuit Judge.

text:
    Gordon M. GUILBERT, Plaintiff-Appellee, v. PHILLIPS PETROLEUM COMPANY, Defendant-Appellant. Gordon M. GUILBERT, Plaintiff-Appellant, v. PHILLIPS PETROLEUM COMPANY, Defendant-Appellee.
    Nos. 73-2138, 73-2139.
    United States Court of Appeals, Sixth Circuit.
    Argued April 12, 1974.
    Decided Sept. 20, 1974.

      Raymond R. Murphy, Jr., Chattanooga, Tenn., on brief, for appellant.
    Ray H. Moseley, Humphreys & Hutch-eson, Chattanooga, Tenn., on brief, for appellee.
    Before PECK and McCREE, Circuit Judges, and CECIL, Senior Circuit Judge.
   JOHN W. PECK, Circuit Judge.

The plaintiff, Gordon M. Guilbert, instituted this action against Phillips Petroleum Company (hereinafter “Phillips”) for damages, both in contract and in tort for misrepresentation, stemming from Phillips’ refusal to grant Guilbert an oil jobbership in the Chattanooga, Tennessee area. A jury trial in this diversity case resulted in a verdict in favor of Guilbert for $40,000 compensatory and $30,000 punitive damages on the combined contract and tort claims. Phillips filed a motion for a new trial or, alternatively, to amend the judgment. The district court, treating the motion to amend the judgment as a motion for judgment notwithstanding the verdict, set aside the judgment for punitive damages but sustained the judgment for compensatory damages. The court also set aside the verdict of the jury that Guil-bert was entitled to recover upon a theory of contract. Each party perfected an appeal from the final judgment of the district court and the appeals were consolidated in this court.

In July of 1969 Guilbert was an accountant employed as a manager for the national accounting firm of Ernst & Ernst in their local office in Chattanooga, Tennessee. He had been employed by Ernst & Ernst continuously for a period of thirteen years and was one to three years away from potential partnership with the firm. Elevation to partner would most likely have involved a transfer to another location. Guilbert did not want to leave the Chattanooga area, however, because he and his wife had just had a mongoloid child and they were advised that the Siskin Foundation and the Orange Grove Center facilities in Chattanooga could provide much needed assistance with this child.

In early July of 1969, Mr. Bill Mayes, district manager for Phillips in the Chattanooga area, contacted Guilbert to inquire as to whether he might be interested in taking over an oil jobbership for Phillips in the Chattanooga area. Phillips had been attempting to operate its stations in the area on a direct basis since 1966 but had, according to Mayes, come to the conclusion that it would be more profitable to operate through a jobber. Although initially dubious about his lack of experience in the oil business, Guilbert told Mayes that he was interested.

At one of their early meetings Mayes prepared and gave to Guilbert a document purporting to reflect what Guilbert could expect to be the first year monthly operating income and expenses as well as projected operating income and expenses for the third year. According to the figures in that document, Guilbert could expect to earn $2,500 per month or approximately $30,000 the first year before taxes and his salary, and the anticipated earnings in the third year before taxes and owner’s salary would be over $100,000. However, in a similar document sent to Phillips’ home office at about the same time for the purpose of justifying a jobbership operation, Mayes projected that the cash flow would only be about $4,100 the first year. Mr. Cherry, one of Mayes’ superiors in the home office, later calculated that Guil-bert would lose $39,000 the first year rather than make $30,000. The apparent reason for the variance between the projection that Mayes handed Guilbert and the one sent to his home office was that the former was based on gallonage figures through December 31, 1968, while the latter was based on the lesser gallon-age actually being pumped during July of 1969. Guilbert was never advised of the difference between the cash flow projections.

On the strength of Mayes’ representations concerning projected income and Phillips’ commitment to a jobber operation, Guilbert arranged for the capital necessary to purchase the jobbership ($100,000), formed a corporation for the purpose of taking over the jobbership, and prepared and submitted a personal financial statement to Mayes. Guilbert testified that Mayes led him to believe that all that he had to do was to meet the financial requirements and submit a formal application to Phillips to obtain the jobber contract. Guilbert also notified Ernst & Ernst of his intention to terminate and began to turn over his accounts to other members of the firm. The date set for termination was November 30, 1969. During October and November 1969 he took two weeks vacation to attend a jobbership dealer school sponsored and held by Phillips. On November 18, 1969, just two weeks before the jobbership was to commence, Mayes called Guilbert to advise him that Phillips was not going to convert to a jobbership arrangement, but was going to continue to operate on a direct basis.

Guilbert demanded to know the name of the man in the home office who had made the decision and was referred to Mr. Cherry. Cherry told him that Mayes had not been told to look for a jobber and that Phillips had never been committed to a jobber operation in Chattanooga. Guilbert was assured by Cherry that he was not turned down because of his qualifications, either personal or financial.

Guilbert raises three issues on appeal: (1) He argues that the district court erred in setting aside the verdict of the jury that he was entitled to recover on a contractual theory; (2) that the court similarly erred in setting aside the punitive damages award; and (3) that the court erred in refusing certain instructions on punitive damages arising from gross negligence. We will consider the above contentions in order.

Guilbert’s contract arguments were based upon the theory that Phillips made a unilateral offer to him to enter into a jobber contract based upon the single condition that his financial and sáles ability be approved at the home office. He asserts that he met this condition as evidenced by his forming a corporation, arranging necessary financing, and. attending jobbership school. He also alleged that Mayes told him that approval was “more or less automatic.” The district court found, however, that there was no unilateral offer by Phillips because “approval by the defendant’s home office was essential to the award of a distributorship contract” and that approval was not forthcoming.

Although it is true that Guilbert did complete a number of acts necessary for obtaining the jobber contract, his own testimony reveals that Phillips reserved the right to approve his application.

“Q. Did anyone at Phillips ever tell you that if you formed a corporation, they would give you the jobbership?
“A'. No.
“Q. Did anyone at Phillips ever tell you that if you went and saw Ansley Moses [the banker through whom Guil-bert arranged the loan], asked for a commitment, they would give you a jobbership?
“A. No.
“Q. Did anyone ever tell you that if you went to school for two weeks, they would give you the jobbership?
“A. No, that’s not the reason they suggested I go to the jobber school.”

Under Tennessee law, contracts subject to a condition precedent do not come into being unless the condition is performed. Real Estate Management v. Giles, 41 Tenn.App. 347, 293 S.W.2d 596, 599 (1956). Phillips’ approval was necessary to the formation of a binding contract in this case, and that approval was not given. Guilbert’s application constituted no more than an offer which Phillips had the right to reject. We conclude, therefore, that the district court acted properly in setting aside the jury verdict on the contractual issue.

Guilbert’s second contention is that the district court erred in setting aside the award of punitive damages. In stating its reasons for so doing, the court said:

“With respect to the jury award of damages, the Court is of the opinion that there was no evidence upon which the jury could have made an award of punitive damages. To permit an award of punitive damages the jury would have been required to find not only that the defendant had been guilty of a fraudulent and intentional misrepresentation, but that the misrepresentation was gross, wanton, aggravated or oppressive in nature. [Citations omitted.] There is no evidence in this case of an aggravated or malicious misrepresentation on the part of the defendant. The evidence presented upon the trial of the case would at most reflect that the representatives of the defendant, in negotiating with the plaintiff, were either negligent or recklessly careless in providing the plaintiff with information regarding the projected income and with regard to the defendant’s commitment to convert their operation in Chattanooga to a jobber or contract distributorship.”

Guilbert takes the position that the jury’s verdict was supported by ample evidence of gross negligence upon which an awárd of punitive damages could have been based. A thorough review of the record leads us to believe, however, that the district court’s action in this regard did not constitute an abuse of discretion.

Tennessee law provides for punitive damages where there is evidence of fraud, malice, gross negligence or oppression. Bryson v. Bramlett, 204 Tenn. 347, 321 S.W.2d 555 (1959); Bland v. Smith, 197 Tenn. 683, 277 S.W.2d 377 (1955). What is required is a showing that the party being “punished” acted with total disregard for the consequences of his acts. Lazenby v. Universal Underwriters Ins. Co., 214 Tenn. 639, 383 S.W.2d 1 (1964). In the instant case there is evidence that Phillips’ agent, Mr. Mayes, acted negligently in his dealings with Guilbert. Mayes assured Guilbert that Phillips intended to employ a jobber when in fact the home office was not committed to that course of action. Further, Mayes used six month old gallonage figures in preparing a projected income flow chart for Guilbert. But Guilbert himself 'testified that Mayes had, on more than one occasion, warned him not to “burn his bridges” because the deal was subject to home office approval. This is hardly indicative of the gross negligence that Guilbert alleged, and it is clear that the district court acted within its discretion in setting-aside the award of punitive damages.

The final assertion made by Guilbert is that the district court erred in refusing to give instructions with reference to the allowance of punitive damages arising from gross negligence. In view of the fact that we found no error in the court’s conclusion that there was insufficient evidence to support an award of punitive damages, it is clear that the refusal to give instructions on punitive damages was not erroneous.

Phillips appeals from the $40,-000 judgment against it on the grounds that Tennessee does not recognize negligent misrepresentation as a cause of action, and that if it does, the amount of damages awarded was not supported by the evidence. Neither point is well taken. In Tartera v. Palumbo, 224 Tenn. 262, 453 S.W.2d 780 (1970), the Supreme Court of Tennessee was asked to decide if a cause of action for negligent misrepresentation existed under Tennessee law. Justice Dyer answered that question in the affirmative in his opinion.

“We have noted in our" research in actions for negligent misrepresentation the courts have had difficulty in determining the nature of the action and the procedure to be used. There is an excellent article on this subject in Harvard Law Review, Vol. 42, p. 733 (April 1929), entitled ‘Misrepresentation as Deceit, Negligence, or Warranty.’ We view the action as one in tort determined by the general principles of the law of negligence subject to the normal defenses to such action." 224 Tenn. at 272-273, 453 S.W.2d at 784.

As to the amount of the award, we are satisfied that the evidence supports the amount determined by the jury.

For the reasons hereinabove set forth, the judgment of the district court is affirmed.


author: MOORE, Circuit Judge: LEWIS, Chief Judge WILLIAM E. DOYLE, Circuit Judge

text:
    Dewey C. MacKAY et al., Appellees, v. UNITED STATES of America, Appellant.
    No. 73-1915.
    United States Court of Appeals, Tenth Circuit.
    Argued July 10, 1974.
    Decided Sept. 23, 1974.

      Lewis, Chief Judge, and William E. Doyle, Circuit Judge, concurred in result and filed opinions.
    Richard Farber, Atty., Tax Div., Dept, of Justice, Washington, D. C. (Scott P. Crampton, Asst. Atty. Gen., Meyer Roth-wacks, Bennet N. Hollander, Attys., Washington, D. C., C. Nelson Day, U. S. Atty. for the District of Utah, Salt Lake City, Utah, of counsel), for appellant.
    Michael Gottfredson, Salt Lake City, Utah (Nielsen, Conder, Hansen & Hen-riod, and Arthur H. Nielsen, Salt Lake City, Utah, of counsel), for appellees.
    Before LEWIS, Chief Judge, MOORE  and DOYLE, Circuit Judges.

       Honorable Leonard P. Moore, Senior Judge, United States Court of Appeals, Second Circuit, New York, New York, sitting by designation.

   MOORE, Circuit Judge:

United States of America (the government) appeals from a judgment awarding plaintiffs the sum of $8,669.22 plus interest allegedly erroneously assessed and collected by the government for their taxable year 1967. Jurisdiction exists through 28 U.S.C. § 1291.

No opinion was written by the court below. At the close of the testimony, the district court merely said: “The judgment in this case will be for the doctors and against the United States.” Findings of Fact and Conclusions of Law were thereafter entered.

•The sole issue on appeal is whether the gift by plaintiffs-taxpayers of certain notes owned by them to a hospital (a charitable organization) entitled them to a deduction as a charitable contribution upon the particular facts of this case. Consideration must primarily be given to the bona fides of the transaction; the circumstances and purpose under, and for, which the notes were issued; their real value; and the effect, if any, upon the financial condition of the respective donors after the alleged gift.

Taxpayers (frequently referred to as “the doctors”) are physicians practising in Bountiful, Utah. Prior to 1960 they, with others, desirous of having a hospital in Bountiful (the hospitals in Salt Lake City being some 20 miles distant), decided to construct a hospital. For this purpose, they formed a partnership, the South Davis Medical Center (the Center). A corporation, South Davis Hospital Development, Inc. (Development), created to finance, construct and operate the hospital, was incorporated on November 23, 1960. The total construction cost was $791,158.68. By 1967 normal depreciation of $118,843.91 gave the physical plant an adjusted basis of $672,314.77. However, appraisal figures justified an appraised value in excess of $800,000 as of January 1967.

In an attempt to gain additional backing from the community, a non-profit corporation, South Davis Community Hospital, Inc. (Community) was organized by the doctors to operate the hospital. Development then leased the hospital to Community for $6,000 a month under a 20-year lease. Prior to October 1966 these loans had not been evidenced by notes.

On or about October 1, 1966, notes were issued to the doctors to reflect their respective advances and', thereupon, these amounts were transferred to the notes payable ledger.

The doctors believed that it would be advantageous from their viewpoint and that of the community to transfer ownership of the hospital from Development to Community. Negotiations ensued for this purpose between representatives of both organizations. Apparently Development wanted to receive $800,000 as the purchase price. Community could pay only $675,000. To enable Community to pay the $800,000, the doctors gave to Community the notes evidencing Development’s obligations to them, having a face value of $125,000, which in turn Community used as a $125,000 down payment in the purchase. The doctors then treated these transfers to Community as charitable contributions on their income tax returns.

To defeat what otherwise would be a deductible charitable contribution, the government makes several unwarranted factual and legal assumptions and reaches the conclusion that the transaction was, in effect, a sham. The case, however, will not lend itself to any Procrustean treatment. The facts are undisputed and disclose that:

1. The doctors advanced over $125,000 out of their own or controlled funds to Development.

2. On October 1, 1966, these advances were evidenced by 6% notes. (No claim is made that these notes were without consideration or that they were issued as a first step in the subsequent sale.)

3. The fair market value of the notes was $125,000.

4. The sale price of the hospital demanded by Development was $800,000.

5. A fair appraisal value of the hospital was at least $800,000.

6. Community was either unwilling or unable (it matters not) to pay more than $675,000.

7. To enable Community to pay the $800,000, the doctors gave Community their $125,000 in notes for this purpose.

8. After the gift the doctors no longer had any claim on Development for the payment of their notes or for the re-coupment of their original advances.

The government takes an artificial seven-league step by arguing that the sale and the price was pre-arranged (as indeed it was); that the sale was in reality only for $675,000; that the contribution was “purported” and “illusory” ; and that “Community, Inc., derived no economic benefit from its temporary ownership of these notes.” It then makes the additional assumptions that Community would not have purchased the hospital but for the additional $125,000 contributed by the doctors and that the gift was for the purpose of creating tax deductions for the doctors.

In making this argument, the government would appear to be transgressing its own “form over substance” theory. If it had established that the $125,000, which the doctors contributed, immediately found its way back into the doctors’ own pockets, then a warning flag would definitely have been raised. However, except for the statement that the notes were used in part payment to Development, “their [the doctors] controlled corporation,” there is nothing to indicate that Development was not a separate legal entity or that the doctors by a liquidating dividend or distribution of capital would have been able to recoup themselves for the full amount of their gift. Short of such proof, the transaction would seem to have been on the same footing as a gift of the notes to any charitable organization — a Salt Lake City hospital, for example.

Both parties cite many cases in support of their respective positions but it is usually the best policy not to be diverted by the different fact situations presented in such cases unless some particularly applicable principle of law may be derived therefrom. Therefore, staying within the confines of this record and looking carefully for any fraud, sham, deception or tax evasion (in contrast to proper avoidance), we find that the gift of the respective notes was an allowable deduction under the provisions of section 170, Internal Revenue Code of 1954, 26 U.S.C. § 170.

Judgment affirmed.

LEWIS, Chief Judge

(concurring).

I join in affirming the judgment for the basic reasons set out by Judge MOORE but do so without the seeming ease of reasoning reflected in his opinion. However, any elaboration of the government’s argumentative position leads only to the conclusion that such position rises no higher than the premise, which I accept, that the late characterization of the subject monies as charitable contributions was specifically and deliberately made to obtain maximum tax benefits for the doctors. Although the amount of the purchase price was apparently molded to the situation (and the buyer perhaps surprised to find itself established as a recipient of contributions) still the procedure initially serves only to trigger the legal caution light of probing for tax evasion from the totality of the transaction. The proof of the government fails to show evasion for there is no evidence of fraud or long term basic sham or artifice. The core of the transaction is the original divestiture of $125,000 in cash by the doctors and the ultimate divestiture of these monies as completely as if traditional gifts had been made. This is tax avoidance at its best or worst.

WILLIAM E. DOYLE, Circuit Judge

(concurring).

I concur in the result, but in reaching this conclusion I would stress the dearth of factual material to rebut the testimony of the appellees. Inasmuch as I do not find the case to be an open and shut one, I must express some of my reservations based on the facts.

1. The payments giving rise to the charitable deductions in question had their origin in sums advanced by the doctors to South Davis Community Hospital Development, Inc. evidenced by notes later executed and given to South Davis Community Hospital for payment of part of the purchase price of the hospital to Development. These transactions ought to be considered in light of the fact that the doctors were stockholders in the Development company.

2. The advances were made by the doctors 'to Development during the six years prior to 1966 and they totaled approximately $125,000, finally.

As indicated, the notes were not given at the time of the advances nor was interest paid on these advances. The records which would have indicated whether the advances were charged to the doctors’ accounts had been destroyed prior to suit.

Doctors Belnap and Brown, when asked whether the advances were loans or contributions to capital, said they did not know the difference. This, notwithstanding that Dr. Brown was sophisticated, being licensed to sell and buy stock.

The notes in question were not signed as evidence of the supposed indebtedness until October 1966, just three to four months prior to the donation to Community. Counsel for the plaintiffs said that the notes were prepared in connection with negotiations for sale of the hospital by Development to Community.

3. The evidence as to the value of the notes is far from satisfactory. True, the parties testified that their notes were worth face value but they did not give any underlying reasons for these opinions.

A qualified appraiser testified that the notes were worth face value. He had been hired to appraise them for purposes of suit some three years after the notes had been donated. His appraisal was based in part on the fact that the notes were given over with full recourse and regarded the assets of the doctors as being adequate, even though he had made no investigation of their finances. Also, he was a personal friend of the doctors. But the government offered no countervailing evidence.

4. At no time during the entire history of these advances was there an effort on the part of the doctors to collect the “debts.”

5. The question whether the statute of limitations had run on the underlying obligations was never inquired into. See Utah Code Ann. § 78-12-25 (1953).

6. The evidence as to the value of the hospital was, to say the least, weak. One of the doctors said that in his opinion it was worth about $850,000. But there is evidence that Community, the buyer, could not pay more than $675,000. One circumstance suggesting that it was not worth anything like the sale price is that when Community was leasing the hospital from Development it had difficulty making the rental payments.

In the final analysis, my concurrence results from the fact that the government utterly failed to introduce any evidence dealing with the issues that are mentioned. It was content to put the taxpayers on their proof and to expect to discover a seam in the taxpayers’ case.

In sum:

The mentioned lack of evidence on behalf of the government is a justification for the trial court’s findings and judgment. I do not subscribe to giving the taxpayer the benefit of every doubt. I do not believe that the government should have a further opportunity by way of a remand. It is obligated to present its ease at the trial, and where it fails to do so it is not entitled to a second go around, so to speak.

      . Plaintiffs, doctors and wives, are: Dewey C. MacKay and Lorraine MacKay; W. Dean Belnap and Mary Elen Belnap; Roger A. Brown (for some reason Beverly A. Brown was not joined as a plaintiff, although she and Roger filed a joint return) ; Hubert C. Burton and Elaine Burton; Lloyd R. Hicken and Alice C. Hicken; David II. Wray and Norene Wray.

      . The assets of the jiartnership were subsequently transferred to South Davis Medical Center, Inc., a professional corporation, incorporated, December 30, 1924.

      . Over a period of some six years from 1960 to 1966, the doctors individually and through organizations in which they were partners (South Davis Investment Company, South Davis Medical Center, Inc.), had made loans to Development, the amounts thereof being in an aggregate amount in excess of $128,000. The accountant-witness stated that tiiese advances were reflected “in the accounts payable or loans payable ledger” of Development,

      . The notes, found by the district court to reflect the amounts of the contributions were:
      Dewey C. MacKay and Lorraine MacKay ..................$17,251.00
      W. Dean Belnap and Mary Elen Belnap......................$17,251.00
      Roger A. Brown .........................................$17,251.00
      Hubert C. Burton and Elaine Burton........................$15,870.00
      Lloyd R. Hicken and Alice C. Hicken ....................$17,251.00
      David H. Wray and Norene Wray..........................$17,251.00
      The district court correctly listed the notes given to each of the plaintiffs in this case. However, the discrepancy between the amount itemized by the district court ($102,125) and the $125,000 figure discussed in the case is accounted for as follows:
      Non-plaintiff creditors, whose notes were also given to Community, consisted of:
      Thomas A. Halverson........$ 4,875.
      William S. Dunford..........$ 2,875
      K. Ross Tucker..............$ 6,875
      Calvin MacKay..............$ 8,250
      Total.......................$22,875
      plus notes issued to Xilaintiffs $102,125
      EQUALS $125,000

      . As a result of the disallowance of these contributions, deficiencies were assessed as follows against the plaintiffs:
      Dewey C. MacKay and Lorraine MacKay....................$1,392.04
      W. Dean Belnax) and Mary Elen Belnap ....................$1,559.32
      Roger A. Brown...........................................$1,529.23
      Hubert C. Burton and Elaine Burton ........................$1,485.35
      Lloyd R. Hicken and Alice C. Hicken ........................$ 614.02
      David H. Wray and Norene Wray ..........................$2,089.26

      . As Dr. Belnap testified in his deposition, the gift of the $125,000 in notes was intended to give to Community enough money to enable it to meet the $800,000 purchase price and give the doctors a charitable contribution tax benefit.


author: PER CURIAM.

text:
    NISSHO-IWAI CO., LTD., Plaintiff-Appellee, v. STAR BULK SHIPPING CO. and Buchanan Shipping Co., Defendants-Appellants. NISSHO-IWAI CO., LTD., Plaintiff-Appellee, v. AMERICAN MAIL LINE LTD., Defendant-Appellant.
    Nos. 73-3171, 73-3158.
    United States Court of Appeals, Ninth Circuit.
    June 11, 1974.

      David M. Salentine (argued), Bogle, Gates, Dobrin, Wakefield & Long, Seattle, Wash., for defendants-appellants.
    Dwight L. Guy (argued), Detels, Draper & Marinkovich, Seattle, Wash., for plaintiff-appellee.
    Before MERRILL and WALLACE, Circuit Judges, and BURNS, District Judge.

       Honorable James M. Burns, United States District Judge, District of Oregon, sitting by designation.

   OPINION

PER CURIAM.

Four substantially similar and consolidated maritime claims for cargo damage were brought by Nissho-Iwai Co., Ltd. (Nissho) as consignee against appellants Star Bulk Shipping Co., A/S, owner of, and Buchanan Shipping Co., charterer of, the M.S. Star Clipper and appellant American Mail Line Ltd., owner of the S.S. Indian Oregon Mail. The appeal was taken from a judgment in favor of Nissho for damages to cargo and for costs of a unilateral survey. We affirm the former but reverse the award for the survey fee.

Appellants contracted to carry cargo to Japan. The cargo was carried to the Japanese ports of discharge and delivered to Nissho. There, the cargo was discharged from the vessels into lighters or barges hired by Nissho. At the time of discharge to Nissho’s lighters, two sets of cargo checkers were aboard each ship: A.N.C.C. acting fpr Nissho and J. C.T.C. acting for the carriers. The A. N.C.C. and J.C.T.C. checkers tallied the cargo being discharged and checked its condition. Both sets of checkers prepared cargo boat notes listing the amount of cargo discharged to Nissho’s lighters and the condition of the cargo. The pairs of boat notes contain the same tally. Thereafter, Nissho arranged to have the lighters towed away and at a later date or dates, Nissho arranged to have the cargo landed at one or more shoreside warehouses. After the landing, Nissho’s warehouseman appointed a surveyor, N.K.K.K., to survey the cargo. The latter survey showed substantially greater cargo damage than the joint survey. The district court relied on the N.K.K.K. survey and assessed the survey fee to appellants.

Four questions are presented by appellants. Relying on United States v. El Paso Natural Gas Co., 376 U.S. 651, 657, 84 S.Ct. 1044, 12 L.Ed.2d 12 (1964), they argue that the trial court’s findings and conclusions must be rejected because they were mechanically adopted and “do not reveal the discerning line for decision of the basic issues in the case.” They contend that “[t]he practice of announcing a general decision in favor of one party and then turning over the fact-finding to that party’s counsel is not to be approved,” and cite a footnote in El Paso Gas. Id. at 657 n. 4, 84 S.Ct. at 1047. That footnote contains a suggestion made by a judge at a seminar to the effect that judges delegating the initial draft of findings to a party should not abdicate their judicial responsibility to make sure that the ultimate findings comport with the judges’ actual determinations. Nor do we believe that Rincon Band of Mission Indians v. County of San Diego, 495 F.2d 1, 11 (9th Cir. 1974), states anything more illuminating. We are aware that busy judges sometimes request attorneys to prepare the first draft of proposed findings and conclusions. The vice is when the district judge fails to study them and make such changes as are necessary to be sure they reflect his opinion.

But if appellants are correct that the district judge failed to make necessary modifications', we still would have to conclude, as did the Supreme Court in El Paso Gas, that such “findings, though not the product of the workings of the district judge’s mind, are formally his; they are not to be rejected out-of-hand, and they will stand if supported by evidence.” 376 U.S. at 656, 84 S.Ct. at 1047. The findings in this case are supported by evidence.

Next, appellants argue that the findings of fact are clearly erroneous because they were based on the N.K.K. K. “secret survey and completely disregarded the A.N.C.C. and J.C.T.C. joint survey. They contend that a presumption exists that “secret surveys” are to be viewed with utmost suspicion. Therefore, they argue that because such a “secret survey” is the basis for the findings of fact, the findings are clearly erroneous. Although the joint check had the benefit of mutual observation, it was limited by the extent of observation as the cargo came overhead in slings. The subsequent survey does not have the mutual observation but there was a greater opportunity for detailed analysis of damage. Given the two, we cannot say the trial judge must accept the former as a matter of law nor that the acceptance of the latter was clearly erroneous.

Third, appellants wish us to draw an inference because Nissho did not call and depose A.N.C.C. employees. That argument could have been addressed to the trial judge at the time he decided the merits of the case. Its existence does not make the findings clearly erroneous.

Finally, appellants raise the issue of the assessment of survey fees against them. They are correct in stating that the law requires, before survey fees can be awarded to one party, that notice of the survey be given to the other party and that the other party be given a chance to attend the survey. It does not appear that appellants were given sufficient notice and, therefore, the judgment should be reduced by the amount of the N.K.K.K. survey fee. The notice which was given would not alert appellants that a survey was to be undertaken, merely that a claim was to be made. Appellants could properly assume that the claim would be based upon the off-loading check and they were under no duty to make further inquiry. If Nissho wanted to be sure of reimbursement, it should have given specific notice.

Affirmed in part; reversed in part.


author: NEILL, District Judge:

text:
    UNITED STATES of America, Plaintiff-Appellee, v. Elgie ROBERTS, Defendant-Appellant,
    No. 73-3349.
    United States Court of Appeals, Ninth Circuit.
    Sept. 19, 1974.
    Certiorari Denied Jan. 13, 1975.
    See 95 S.Ct. 791.

      Howard B. Frank (argued), of Mc-Inerney, Milchen & Frank, San Diego, Cal., for defendant-appellant.
    Michael E. Quinton, Asst. U. S. Atty., (argued), San Diego, Cal., for plaintiff-appellee.
    Before HUFSTEDLER and GOODWIN, Circuit Judges, and NEILL, District Judge.

       Honorable Marshall A. Neill, United States District Judge, Eastern District of Washington, sitting by designation.

   OPINION

NEILL, District Judge:

The principal issue raised in this appeal is the refusal of the trial court to permit a co-defendant to take the witness stand at defendant’s behest after the co-defendant Mr. Miller advised the court in chambers that he would exercise his Fifth Amendment rights and refuse to testify.

Defendant and a Mr. Miller were jointly charged in a six-count indictment. Prior to selection of the jury the court was advised that defendant intended to call Mr. Miller as defense witness. Mr. Miller’s counsel informed the court that Mr. Miller would refuse to testify. In chambers, Mr. Miller’s counsel advised the court that his client desired to enter a guilty plea to count 3 of the indictment. Mr. Miller was then interrogated pursuant to Rule 11, Federal Rules of Criminal Procedure, and the plea accepted. Mr. Miller was severed from the case and the trial proceeded against defendant alone. Mr. Miller persisted in his refusal to testify and the court upheld his claim of privilege. All this occurred outside the presence of the jury.

Defendant asserts he was denied his Sixth Amendment right to compulsory process to obtain a witness in his favor arguing that Mr. Miller’s severance and guilty plea removed his Fifth Amendment privilege. See Washington v. Texas, 388 U.S. 14, 87 S.Ct. 1920, 18 L.Ed. 2d 1019 (1967); United States v. Hoffman, 385 F.2d 501 (7th Cir. 1967). Ap-pellee counters that as Mr. Miller still faced prosecution on the other five counts of the indictment which had not been dismissed, he was entitled to assert his Fifth Amendment privilege. Defendant further contends that the Sixth Amendment right distinguishes cases holding that the government is not entitled to call a witness when it is clear that the witness will\claim his privilege. See Fletcher v. United States, 118 U.S. App.D.C. 137, 332 F.2d 724 (1964) and Sanders v. United States, 373 F.2d 735 (9th Cir. 1967).

This Circuit has previously held that a defendant may not call as a witness a co-defendant who has indicated his assertion of his privilege against incrimination. United States v. Beye, 445 F.2d 1037 (9th Cir. 1971); United States v. McKinney, 453 F.2d 1221 (9th Cir. 1972). Accord: United States v. Young, 488 F.2d 1211 (1st Cir. 1973); Bowles v. United States, 142 U.S.App.D.C. 26, 439 F.2d 536 (1970); Commonwealth v. Greene, 445 Pa. 228, 285 A.2d 865 (1971). Defendant herein relies heavily on the position of the dissents in Bowles and Beye.

However, before discussing the basic rules as set forth in Beye, supra, there is a threshold question, to-wit: Did Mr. Miller have a Fifth Amendment privilege following his guilty plea? The record does not disclose any motion by the government to dismiss the remaining five counts as to Mr. Miller at the time of the taking of the guilty plea on count 3; neither is there disclosed any plea bargain giving rise to the guilty plea. Therefore, contends appellee, Mr. Miller remained vulnerable on the remaining counts and eligible to exercise his privilege. (In fact, the government’s motion to dismiss counts 1, 2, 4, 5 and 6 as to Mr. Miller was made at the time defendant was sentenced on the jury verdicts). Count 1 of the indictment is a conspiracy charge relating to the overt acts charged in the other 5 counts. It is inconceivable that testimony by Mr. Miller on count 3 could be given without implicating him on count 1 to which he was then still vulnerable. It follows that Mr. Miller was entitled to assert his privilege had he been called to the stand by defendant.

The rule is well established that the government may not call a witness knowing that the witness will refuse to testify. The essence of the defendant’s argument in distinguishing the rule is that a defendant, unlike the government, has the constitutional right to call witnesses in his behalf and that this right includes the right to place a witness on the stand who, in the presence of the jury, refuses to testify, thereby permitting the jury to infer the culpability of the witness.

The Sixth Amendment right to call a witness must be considered in the light of its purpose, namely, to produce testimony for the defendant. Washington v. Texas, supra. Calling a witness who will refuse to testify does not fulfill the purpose and the ruling of the trial court was mandated under Beye. Defendant asserts that Beye and Bowles are distinguishable, but devotes his argument only to the support of the dissenting opinions in those cases. We find no meaningful difference between Beye and this case.

We have examined defendant’s remaining assignments of error and find no merit therein.

Affirmed.

      . We note parenthetically that defendant did not request an instruction to the effect that the co-defendant was unavailable as a witness and that no inference should be drawn from his failure to testify. See Federal Jury Practice and Instructions, Devitt & Blackmar, § 11.33; Wagner v. United States, 264 F.2d 524 (9th Cir. 1959).