text:
    Cornell TAHDOOAHNIPPAH et al., Plaintiffs-Appellees, v. John W. THIMMIG et al., Defendants-Appellants, UNITED STATES of America, Plaintiff-Appellee, v. STATE OF COLORADO, Defendant-Appellant.
    No. 72-1811.
    United States Court of Appeals, Tenth Circuit.
    Argued and Submitted May 24, 1973.
    Decided July 10, 1973.
    John E. Bush, Deputy Atty. Gen. (John P. Moore, Atty. Gen., with him on the brief), for defendants-appellants.
    Peter R. Steenland, Atty., Dept, of Justice (Kent Frizzell, Asst. Atty. Gen., James L. Treece, U. S. Atty., and Edmund B. Clark, Atty., Dept, of Justice, with him on the brief), for plaintiff-appellee United States.
    Harris D. Sherman, Denver, Colo., for plaintiffs-appellees Cornell Tahdooahnippah, and others.

      Before SETH, Circuit Judge, LARA-MORE, Senior Judge, United States Court of Claims, and HOLLOWAY, Circuit Judge.

       Sitting by designation.

   SETH, Circuit Judge.

This action arises from a grant of land by the United States to Colorado in 1910 (36 Stat. 269). The Congressional Act included two tracts, one known as the Hesperus site consisting of several thousand acres near Durango, Colorado, on which was then located the Fort Lewis School; the second tract was near Grand Junction, Colorado. A condition in the grant as so made was that:

“ . . . [S]aid lands and buildings shall be held and maintained by the State of Colorado as an institution of learning, and that Indian pupils shall at all times be admitted to such school free of charge for tuition and on terms of equality with white pupils. ...”

The Act required express acceptance of the provisions by Colorado, and this was done by an Act of the Legislature in 1911 and by consent of the Governor.

Thereafter the state operated a school on the Hesperus site, Fort Lewis School, which was tuition free for Indian students. In 1956 the school was moved to a new campus at Durango, Colorado, about twelve miles distant. The school has there been a four-year college, and tuition free to Indian students until the Colorado Legislature by statute limited free tuition at the school to Indian students who were Colorado residents and who needed such financial assistance. This Act gave rise to this litigation. The Hesperus site from which the school was moved has since been used only by the state as an agricultural experiment station.

One suit was commenced by the United States and the other by Indian students. The trial court found in favor of the United States and enforced the grant as a contract. The trial court did not rule on the action brought by the students. The state of Colorado has taken this appeal.

Congress’ passed further legislation in 1916 referring to the Act granting the two tracts, and confusion arose as to whether this referred to both tracts or just to the one at Grand Junction. This legislation changed the permitted or directed uses to which the land could be put. The trial court found this referred only to Grand Junction.

The plaintiff, the United States, in its suit (No. C-3846), asserted that a contractual relationship between it and the state of Colorado arose from the acceptance by the state of the grant of land made in 1910 and known as the Hesperus site, and further that the contract could be enforced in this action. The state takes the position that instead the grant vested title in the tract subject to conditions subsequent, and in the event of breach could only be enforced by an action for reentry.

Several individuals who are Indians accepted for admission to the Fort Lewis College brought a separate suit (No. C-3265), also asserting that a contract arose from the grant. They alleged that as nonresidents of Colorado they were also entitled to free tuition. The individuals thus sought by an injunctive remedy to enforce the contract. The trial court held that its disposition of the action brought by the Government would dispose of both cases, and thus did not reach the additional questions arising from the suit by the individuals. These additional questions are, of course, not before us, and we will consider only the action by the Government.

The case brought by the United States (No. C-3846) was decided by the trial court on motions for summary judgment. The court decided that a contract did exist which could be enforced under the proof submitted; further, that under this contract the state had undertaken the obligation to admit to the Fort Lewis School, now Fort Lewis College at Durango, Colorado, all Indian students tuition free who were otherwise qualified.

The only issue therein tried by the United States or the state was whether a contract arose from the acceptance of the grant or land or instead whether a fee with conditions subsequent was created. There were no pleadings nor direct proof to raise any other issue or defense. The proof did establish a contract as the trial court concluded, and the action of the state in attempting to modify the contract unilaterally was not effective.

We agree with the legal conclusions reached by the trial court as to the nature of the grant. These basic conclusions are that there was not a grant by the United States in praesenti, but instead title did not pass until an express acceptance was made by the state; that there was reserved no right of reverter or right to reenter upon breach of the conditions; and that the obligation pertained also to the school at its new location not on the original grant.

The grant is somewhat unusual in that it did not purport to pass title upon its execution or delivery, although the words, “ . . . there is hereby granted ... on the . . . conditions . . . ” are used. Instead it provided the grant be effective if the state filed an acceptance of the property by the Governor and the Legislature “ . . . upon the terms and conditions herein prescribed, . . . ” before July 1st, 1911. It provided further that if it was not so accepted it would be sold at public auction. Colorado did accept the grant as it provided. This provision for an express acceptance of conditions by the state serves to distinguish this grant from the one considered in Schulenberg v. Harriman, 21 Wall. 44, 88 U.S. 44, 22 L.Ed. 551 and in Spokane & British Columbia Ry. v. Washington & Great Northern Ry., 219 U.S. 166, 31 S.Ct. 182, 55 L.Ed. 159. The state argues that grants of land usually require acceptance, and we agree, but the acceptance here expressly required was acceptance upon the “terms and conditions” therein prescribed. This to us indicates that an express agreement by the state to be bound by the conditions was required. This is sufficiently different from a bare acceptance of the conveyance to give rise to different consequences. This factor, when combined with the absence of an express reverter or right to reenter, is sufficient reason to hold that this was not a grant in pmesenti with conditions subsequent. See ALI Restatement of Property § 45.

The Supreme Court has on occasion directed a forfeiture when a right of way acquired from the Government has not been used, and it is impossible to use it for the purpose for which it was granted. Kern River Co. v. United States, 257 U.S. 147, 42 S.Ct. 60, 66 L. Ed. 175. Application was there made for the right of way for irrigation purposes under a particular statute for such use, and under such conditions the implication was clearly warranted. However, no such basis for an implied reversion exists in the case before us. See 4 Thompson, Real Property (1961) § 1878. Thus we hold that the trial court was correct in holding that there was a contractual relationship established by the grant so accepted by the state, and further, that the obligations arising therefrom could be enforced in this action by the United States.

As indicated above, the Fort Lewis School was initially operated on the Hesperus site, but was moved from the tract granted to the state to a new location about twelve miles distant about 1963. The trial court found that “moved” was the correct term, as the school near Durango, now Fort Lewis College, was essentially the same school as had been on the Hesperus site. The old site was thereafter, and is, used as an agricultural experiment station. The trial court found, and we agree, that this use of the tract granted was not shown by the state to be within the purposes of the grant.

The further argument is made by the state that legislation in 1916 changed the purposes for which it could use the Hesperus site and so modified the conditions in the 1910 Act. There is some confusion caused by references to the 1910 Act or grant which covered the tract here in issue and another at Grand Junction, Colorado. The reference does require some interpretation, but the exhibits, and especially the letters, attached to the various motions support the conclusion reached by the trial court. This conclusion was that the 1916 Act related only to the Grand Junction tract to accommodate a needed change in the permitted use. We agree.

There was no period of time for performance expressed in the grant-contract. This would, of course, not be expected, and is a factor which we have considered above on the contract vs. fee issue. However, we do not consider that this factor alone, nor with the others, leads to a different conclusion as to the nature of the relationship. It does, however, give rise to other considerations in view of the “contract” conclusion.

The apparent duration of the contract in perpetuity does not render it invalid. Such a contract may be enforced for a reasonable time viewed in the light of conditions existing when it was entered into, what could be foreseen, and as this relates to conditions prevailing at the time performance is sought to be terminated. The ordinary rules of law relating to contracts prevail as to this one, but this aspect of the case, or issue, has not been tried and apparently could not have been under the pleadings. In any event this issue was not raised, tried, nor decided since the contentions were directed only to the contract vs. fee issue.

We affirm the judgment of the trial court on the basis of the record made, but we do not thereby hold, nor did the trial court hold, that the contract can never be terminated in accordance with the prevailing doctrines of the law of contracts, or proceedings commenced by these parties to raise such issues.

As stated above, the trial court did not consider the issues raised in the suit brought by the individuals (No. C-3265), and, of course, we do not.

The judgment in United States v. State of Colorado (No. C-3846 in the District Court) is affirmed.


source: Caselaw Access Project

author: THORNBERRY, Circuit Judge:

license: Public Domain

text:
    Harriet HYMAN, Plaintiff-Appellee, v. LIFE INSURANCE COMPANY OF NORTH AMERICA, Defendant-Appellant.
    No. 72-3576
    Summary Calendar.

    United States Court of Appeals, Fifth Circuit.
    July 19, 1973.
    Rehearing Denied Aug. 23, 1973.

      Adolfo Del Castillo, Coral Gables, Fla., for defendant-appellant.
    Philip Freidin, Arthur W. Tifford, Ronald B. Gilbert, Strauss & McCormick, P. A., Miami, Fla., for plaintiff-appellee.
    Before THORNBERRY, GOLDBERG and RONEY, Circuit Judges.

       Rule 18, 5th Cir.; see Isbell Enterprises, Inc. v. Citizens Casualty Co. of New York, et al., 5th Cir. 1970, 431 F.2d 409, Part I.

   THORNBERRY, Circuit Judge:

Mrs. Hyman sued appellant in the court below on a life insurance policy covering the life of her deceased husband. Over appellant’s contention that Mr. Hyman had made material misrepresentations and omissions in the mail-order application for the policy, the jury awarded recovery to Mrs. Hyman, and this appeal followed.

The allegation of material misrepresentations and omissions was based on Mr. Hyman’s answers to questions three and four on the application. The first question was “Have you in the last 5 years, consulted a physician for any illness?” Mr. Hyman answered “Yes” and, in accordance with an instruction to explain any affirmative answers, wrote “inflamed nerve in spine. Dr. Sherif Shafey”. His explanation failed to state that he had been treated by several other physicians, and had recently been hospitalized, for a condition diagnosed as “cervical root compression,” which was causing him pain in his back and weakness in his extremities. The second question on the application was as follows: “Are you presently retired or restricted in your full-time employment?”. Mr. Hyman answered this question “No”. On the day he completed the application, however, Dr. Shafey had certified that he “continued to be severely incapacitated” by the painful nerve. Furthermore, several months before applying for the policy, Mr. Hyman had claimed and received total disability benefits; and less than one month before making application he had claimed benefits for two-thirds disability (this claim had been rejected because his disability insurer could not verify it). At trial, however, Mrs. Hyman and another witness testified that during September, 1970, when he applied for the life insurance policy, he resumed his normal work activities as a general contractor.

The policy became effective on November 1, 1970. Less than two weeks later, Mr. Hyman died of lung cancer metastasized throughout the entire body. According to the deposition of Dr. Robert Clark, M.D., Chief of the Laboratory of the Veteran’s Administration Hospital to which Mr. Hyman was admitted before he died, a tumor of such size, which not uncommonly manifests itself as a nerve impingement, had probably been present for at least a year. None of the doctors whom Mr. Hyman had consulted concerning the "inflamed nerve,” however, had diagnosed his condition as cancer.

Appellant’s first contention is that the trial court erroneously denied its motions for summary judgment, directed verdict, and judgment notwithstanding the verdict. A Florida statute provides that misrepresentations or omissions in applications for insurance shall not defeat recovery on the policy, unless they are either fraudulent, material to the acceptance of the risk or hazard assumed by the insurer, or are such that the insurer would not have issued the policy, or would have issued it at a different premium, if it had known the facts. Fla.Stat.Ann. § 627.409. Florida courts interpret this statute to mean that even an innocent misrepresentation by the insured can bar recovery if it is material to the acceptance of the risk or if the insurer in good faith would not have issued the policy under the same terms had it known the truth. Life Ins. Co. of Virginia v. Shifflet, 201 So.2d 715 (Fla.1967). We believe that the evidence made the truth of the insured’s answers and the materiality if any omissions a question for the jury. The treatment by doctors other than Dr. Shafey, and the periods of hospitalization, related either to nonrecurring symptoms or to the same “inflamed nerve” referred to in the application. In addition, evidence that Dr. Shafey had certified that the insured “continued to be severely incapacitated” and that he had recently received disability benefits was countered by testimony that Mr. Hyman had resumed normal work activities during September 1970. Accordingly, we decline to disturb the trial court’s denial of appellant’s motions for summary judgment, directed verdict, and judgment notwithstanding the verdict.

Secondly, appellant argues that the trial court erroneously instructed the jury that the words “any illness” in the third question on the application meant “any appreciable disorder.” Relying on the holding of Shifflet, supra, that even innocent misstatements can preclude recovery under an insurance policy, appellant argues that “illness” should be defined objectively to include conditions unknown to an insured, and that by defining the term as he did, the trial judge improperly gave it a subjective meaning. At the time Mr. Hyman completed the application, he apparently had cancer, although evidently neither he nor his doctors had discovered the condition. If “illness” means only those disorders “appreciated” by an insured, then Mr. Hyman’s failure to say that he suffered from cancer did not result in an incorrect statement on the application. But if, under the rigorous rule of Shifflet, “illness” must be defined to include all conditions whether known to an insured or not, then Mr. Hyman’s “nondisclosure” of so plainly a material condition would defeat recovery under the policy.

To apply Shifflet in a case in which, as here, neither the insured nor his doctors were aware that he suffered from a serious illness when he made application for the policy would, in our view, result in the grossest injustice. Fortunately, the Florida Supreme Court has recognized that Shifflet can produce harsh results in some cases. In a concurring opinion joined by three other Justices in National Standard Life Ins. Co. v. Permenter, 204 So.2d 206 (Fla.1967), Justice Ervin suggested a case-by-case approach to avoid injustice in situations in which “an applicant may express an erroneous opinion concerning a specific question relating to his health of which he has no medical knowledge and which could only be answered by a medical expert after diagnosis or examination.” 204 So.2d at 207. To apply Shifflet strictly in such cases, observed Justice Ervin, would ignore the statutory provision that statements in an insurance application “shall be deemed to be representations and not warranties.” Fla. Stat.Ann. § 627.409.

The instant case puts the problem in even sharper focus than did the case posed by Justice Ervin, for here the record shows not only that persons suffering from Mr. Hyman’s condition often are unaware that they have a tumor (Deposition of Dr. Robert Clark), but also that none of the physicians who had treated Mr. Hyman had discovered that the “inflamed nerve” mentioned in the application was a symptom of a massive tumor. In view of the fact that the Florida Supreme Court has recognized the unjust results that Shifflet can spawn, we have no doubt that the Florida courts would not apply Shifflet to the facts of the instant case. In accordanee with Justice Ervin’s suggested ease-by-case approach, we hold that the trial court pi’operly defined “any illness” to mean “any appreciable disorder.”

Appellant’s remaining contentions may be quickly disposed of. First, the insurance company argues that the trial court erroneously refused to instruct the jury that, in order for Mrs. Hyman to recover, Mr. Hyman’s health on the date the policy issued (less than two weeks before his death) must have been as described in the application completed some two months earlier. Both of the cases relied on in support of the requested instruction, however, are distinguishable on their facts from the instant case. In Disposable Services, supra, note 3, the insured was informed by his doctor that his health had deteriorated since completion of the application; and in Wolk v. Lamar Life Ins. Co., 202 So.2d 617 (Fla.App.1967), the insured was himself a physician who could be expected to know that his health was not as described in the application.

Secondly, appellant argues that a comment by the judge during trial, amplified by appellee’s counsel in jury argument, entitled it to a mistrial. Appellant neither objected nor moved for a mistrial at the time the statements were made, however, and in our view the statements did hot constitute plain error. Finally, appellant insists that the trial judge erroneously overruled its motion for new trial. Besides urging several points that have been adequately treated above, appellant contends that the trial court unduly limited the number of expert witnesses for the defense, altered the normal order of proof, and refused to allow appellant to impeach two of its expert witnesses. We find no merit to any of these contentions.

Affirmed.

      . Appellant’s brief suggests, but does not specifically assign as error, that the trial court improperly instructed the jury that a misrepresentation must be dishonestly made before it can defeat recovery under the policy. From our review of the court’s charge, however, we find no support for that suggestion.

      . “Have you in the last 5 years, consulted a physician for any illness? If answer to question 3 is ‘yes,’ explain here and on the reverse.”

      . In Disposable Services, Inc. v. ITT Life Ins. Co., 5th Cir. 1971, 453 F.2d 218, a panel of this court, faced with a set of facts that was clearly outside Justice Ervin’s hypothetical case in Fermenter, supra, properly reserved the question whether Shifflet had been narrowed by the concurring opinion in Permenter. The time has now come to answer that question, and we answer it affirmatively.


author: ESTES, District Judge:

text:
    HOLIDAY INNS, INC., Plaintiff-Appellant, v. HOLIDAY OUT IN AMERICA and Holiday Out in America at St. Lucie, Inc., Defendants-Appellees.
    No. 72-2830.
    United States Court of Appeals, Fifth Circuit.
    June 13, 1973.
    Rehearing Denied July 11, 1973.

      James L. Kurtz, Washington, D. C., Richard A. Zachar, Chicago, 111., Theodore P. Mavrick, Fort Lauderdale, Fla., James B. St. John, Jr., Liskow & Lewis, New Orleans, La., for plaintiff-appellant.
    Karl Vance-Hart, Miami, Fla., Robert S. Swecker, Washington, D. C., for defendants-appellees.
    Before COLEMAN and DYER, Circuit Judges, and ESTES, District Judge.
   ESTES, District Judge:

Plaintiff, Holiday Inns, Inc. (hereinafter Holiday Inn), seeks damages and injunctive relief against the defendants, Holiday Out in America and Holiday Out in America at St. Lucie, Inc., for using the service marks Holiday Out, Holiday Out in America, and The Nation’s Campground in connection with their campground services business.

Holiday Inn has an international reputation for operating a chain of uniformly high-quality motels, of which it owns approximately one-fifth, with the remainder operating under franchise agreements. Plaintiff owns the following registered service marks, which are used in connection with its motel services: Holiday Inn (arcuate script), Holiday Inn (linear script), a design for a distinctive “Great Sign” bearing the name “Holiday Inn” in script, Holiday Inn of America, Holiday Inns of America, and The Nation’s Innkeeper. Plaintiff carefully supervises the use of its service marks by the facilities within its chain. Plaintiff and its franchisees have extensively advertised their motel facilities on radio and television and in .newspapers and magazines. In 1970 (more than three years after defendants’ first use of their own marks), plaintiff expanded into the business of owning and franchising campground facilities, using the service mark Holiday Inn Trav-L-Park.

Defendant Holiday Out in America is a partnership consisting of Hazen H. Kreis and Robert A. Epperson. Defendant Holiday Out in America at St. Lucie, Inc., is a corporation initially organized by Kreis and Epperson. Defendants built and operate campground facilities at Tansi, Tennessee, and at St. Lucie, Florida. These facilities are divided into small lots, containing parking' slabs and connections for electricity, water, and sewage. The defendants sell the lots on a condominium basis and serve as rental agents for the lot owners desiring to rent their lots to transients. Defendants' facilities accommodate persons having travel trailers or recreational vehicles; they provide no motel accommodations. Since 1966, defendants have used the marks Holiday Out and Holiday Out in America. During 1967, defendants also used the mark The Nation’s Campground, the use of which was then terminated.

On January 23, 1967, Holiday Out in America filed an application in the United States Patent Office for registration of its mark Holiday Out for services described as “maintaining and operating campground facilities for campsite owners.” The examiner found there was no likelihood of confusion between the mark Holiday Out and any other registered mark. The mark was then published in the official Gazette for the purpose of opposition. Holiday Inn filed an opposition to the registration on July 23, 1968. The marks Holiday Inn of America and Holiday Inns of America were not registered in the Patent Office until June 25, 1968, almost two years after defendants’ first use of Holiday Out. The Trademark Trial and Appeal Board dismissed the opposition because the contemporaneous use of plaintiff’s marks and defendants’ mark “is not reasonably calculated to cause confusion or mistake or to deceive.”

Pursuant to 15 U.S.C. § 1071(b)(1), by this civil action filed in the district court, plaintiff sought review of the Trademark Trial and Appeal Board’s decision. Plaintiff also claimed service mark infringement, unfair competition, deceptive trade practices, injury to its business reputation, and dilution of its marks. After hearing the evidence, the trial court found there was no likelihood of confusion, mistake, deception, “palming off” of plaintiff’s established reputation, or dilution of its marks. The court upheld the Trademark Trial and Appeal Board’s decision which dismissed plaintiff’s opposition to defendants’ registration of Holiday Out and denied any relief to the plaintiff on its other claims. We agree.

The central issue regarding plaintiff’s trademark infringement claim is whether the marks used by the defendants cause the likelihood of confusion or misunderstanding as to the source of defendants’ services. See B. H. Bunn Co. v. AAA Replacement Parts Co., 451 F.2d 1254 (5 Cir. 1971); Sears, Roebuck and Co. v. Johnson, 219 F.2d 590 (3 Cir. 1955). Likelihood of confusion or misunderstanding is' a question of fact. Hence, the trial court’s findings will not be set aside unless clearly erroneous. Rule 52(a) F.R.Civ.P.; John R. Thompson Co. v. Holloway, 366 F.2d 108 (5 Cir. 1966); Sun-Maid Raisin Growers of California v. Sunaid Food Products, Inc., 356 F.2d 467 (5 Cir. 1966).

Plaintiff’s evidence to show the likelihood of confusion or misunderstanding begins with a comparison of the three marks Holiday Out, Holiday Out in America; and The Nation’s Campground used by the defendants with three of its own service marks, Holiday Inn, Holiday Inn of America, and The Nation’s Innkeeper. Other evidence introduced by plaintiff included nine letters and a memorandum of a telephone call purporting to evidence actual confusion, the results of -a survey, and the video deposition of an expert philologist and lexicographer. The trial judge considered all of this evidence but concluded it merited little weight. Plaintiff contends that a proper analysis of this evidence required a finding of infringement.

The results of the survey conducted for Holiday Inn were admitted to show the state of mind of people when shown a placard bearing the words “Holiday Out.” Although this circuit once held evidence of a poll to be inadmissible as hearsay, Sears, Roebuck & Co. v. All States Life Insurance Co., 246 F.2d 161 (5 Cir. 1957), the district court properly admitted the survey evidence in this case, leaving the format of the questions and the manner of conducting the survey for consideration as to the weight of this evidence. See Zippo Mfg. Co. v. Rogers Imports, Inc., 216 F.Supp. 670 (S.D.N.Y.1963); Manual for Complex Litigation, §§ 2.71 and 2.712; and Vandenburgh, Trademark Law and Procedure, § 5.52 (2 ed. 1968). In this ease the trial court found that the survey degenerated into a mere word-association test entitled to little weight because the format failed to account for the number of responses attributable to use of the word “Holiday” as distinguished from the service mark Holiday Out.

Plaintiff admits that the word “Holiday” is used, alone or in combination with words other than “Inn,” throughout the United States, including the states of.Tennessee and Florida, to designate motels and restaurants not affiliated in any way with plaintiff. The common word “Holiday” is of weak trademark significance. E. g., El Chico, Inc. v. El Chico Cafe, 214 F.2d 721, 725 (5 Cir. 1954). Indeed, in a footnote in its opinion denying Holiday Inn’s opposition, the Trademark Trial and Appeal Board noted that in a civil action against plaintiff’s use of Holiday Inn by the owner of the service mark Holiday Motor Hotels, Holiday Inn defended that suit “on the ground that ‘Holiday is a common word and it has been and is widely used by others’ for motel services.”

However, due to plaintiff’s extensive advertising and its success in developing a large chain of motels throughout the United States, it is likely that many persons asked to associate a business organization with the word “Holiday” would think of “Holiday Inn.” We agree with the trial court that the failure of the survey to consider the effect that the word “Holiday” alone had on the responses and the techniques employed in conducting the survey rendered this evidence of slight weight. For a similar situation, see Miles Laboratories, Inc. v. Frolich, 195 F.Supp. 256 (S.D.Cal.), aff’d, 296 F.2d 740 (9 Cir. 1961), cert. denied, 369 U.S. 865, 82 S.Ct. 1030, 8 L. Ed.2d 84 (1962).

Plaintiff relies heavily upon the testimony of a noted lexicographer that the words “in” and “out” are intertwined in their meanings, so that one is normally defined with respect to the other. The contention is that a person seeing or hearing the word “out” will echo in his mind the word “in,” which is pronounced the same as “inn.” Thus, it is asserted that a person seeing the words “Holiday Out” would think of the words “Holiday Inn.” However, the lexicographer’s testimony clearly shows that the context of words must be considered and that the word “out” would not necessarily evoke the word “in” except in certain contexts. The trial court correctly found that the manner of advertising and use of the defendants’ marks would not be likely to cause a prospective customer to conclude that the defendants were in any way affiliated or connected with plaintiff.

The trial court heard testimony of a former manager for more than two years of the only Holiday Inn motel near one of defendants’ campground facilities that he could not recall a single instance of mail coming to Holiday Inn which was addressed to Holiday Out, and he did not testify to a single instance of indications that anyone confused the services of plaintiff and defendants. If confusion existed, this would have been one of the more likely places for it to become known. It is also significant that plaintiff, in its memorandum opposing a change of venue from Florida requested by defendant Holiday Out in America, argued that many witnesses from Florida, including various employees at the Holiday Out at St. Lucie facility, would be called to testify concerning the likelihood of confusion; however, at the trial plaintiff failed to call any witness to testify to confusion due to the marks involved. Instead, plaintiff relied upon the testimony of a vice president of Holiday Inn, to the effect that he had received inquiries concerning Holiday Out and upon the introduction of nine letters and a memorandum of that vice president concerning a phone call which he had received. Although the defendants failed to insist upon plaintiff’s authenticating the letters by their authors, the trial court found that in view of their brevity, the lack of available cross-examination of the writers, and the unsubstantiated legitimacy of the letters and lack of corroborating evidence, it would be rank speculation to find actual confusion created by defendants’ use of their marks. Under the peculiar circumstances attending the evidence given by Holiday Inn’s vice president, we agree with the trial court that it was of insufficient probative value to rise to the level of showing actual confusion caused by a similarity in the marks.

Holiday Inn also contends that a comparison of the marks used by the defendants with its own will adequately demonstrate the intent of the defendants to adopt a colorable imitation of the marks. While acknowledging that intent is not a necessary element of infringement, it asserts that such evidence compels a finding of infringement, citing National Ass’n of Blue Shield Plans v. United Bankers Life Ins. Co., 362 F. 2d 374 (5 Cir. 1966), and Aetna Casualty & Surety Co. v. Aetna Auto Finance, Inc., 123 F.2d 582 (5 Cir. 1941). However, in those cases, the court held that the actions of the parties clearly indicated an effort on the part of the offending parties to confuse the public. Here, as the trial court found, defendants’ business and advertising was not conducted in a manner to suggest a connection between the two businesses. Furthermore, plaintiff’s argument is circular. It argues that confusing similarity of the marks is proved by the defendants’ intent to confuse the public and that the defendants’ intent to confuse the public is proved by the confusing similarity of the marks. The obvious flaw in the argument is that it requires the court to assume that which is to be proved.

Considering all of the evidence adduced, this court holds that the trial court correctly rejected plaintiff’s contention that there was a likelihood of confusion as to the source of the services involved.

Plaintiff also contends that the trial court erred in not finding unfair competition on the part of the defendants. While the law of unfair competition extends beyond the law of trademark infringement, the acts of defendants of which plaintiff complains fall substantially within the areas of trademark infringement. Having upheld the trial court’s ruling of no service mark infringement and agreeing with the trial court that defendants are not “palming off” their own services as those of the plaintiff, B. H. Bunn Co. v. AAA Replacement Parts Co., 451 F.2d 1254 (5 Cir. 1971), we find that the trial court’s finding that there was not unfair competition was correct.

Likewise, the prior holding that there was no likelihood of confusion or misunderstanding as to either the services supplied or the source of the services involved disposes of the contention that the defendants were in violation of Florida Statutes §§ 817.69-817.72, F.S. A., dealing with deceptive trade practices.

No evidence was offered to show any injury to Holiday Inn’s business reputation. Since defendants are not engaged in any advertising or activities that undermine Holiday Inn’s reputation, such as was the case in Chemical Corp. of America v. Anheuser-Busch, Inc., 306 F.2d 433 (5 Cir. 1962), any injury to plaintiff’s reputation due to defendants’ activities would be based upon the eon-fusion of defendants’ patrons as to the source of the services. Since there is no likelihood of confusion or misunderstanding, there is no likelihood of damage to plaintiff’s reputation by defendants’ conducting their activities under their present marks.

Plaintiff’s last significant contention is that defendants’ marks dilute plaintiff’s marks in violation of Florida Statutes 495.151, F.S.A. Dilution is a concept most applicable where a subsequent user uses the trademark of a prior user for a product so dissimilar from the product of the prior user that there is no likelihood of confusion of the products or sources, but where the use of the trademark by the subsequent user will lessen'the uniqueness of the prior user’s mark with the possible future result that a strong mark may become a weak mark. It is not applicable in this situation, however, because it has been determined that the marks themselves are not confusing. See Alberto-Culver Co. v. Andrea Dumon, Inc., 466 F.2d 705 (7 Cir. 1972).

Plaintiff has complained that the trial court’s findings of fact dwell on the mark Holiday Out but ignore the marks Holiday Out in America and The Nation’s Campground. The bulk of the evidence in the case focused upon the mark Holiday Out, leading the trial court to make more extensive findings regarding this mark. However, the trial court states, in Finding of Fact No. 29, that a review of the “marks herein involved” and the manner in which they are used convinced the court that plaintiff failed to show the likelihood of confusion between the “marks” of the respective parties. Thus, this contention is unmeritorious.

The trial court’s findings of fact on all of the issues presented for review are supported by ample evidence, and no reversible error was committed. We find all of plaintiff’s contentions lacking in merit; the judgment of the trial court is right, and it is

Affirmed.

      . Plaintiff’s Exhibits Nos. 1057, 1059, 1070, 1072, 1075, 1076, 1077, 1080, 1081, and 10S4 (also included as part of 1056).

      . Cited in the Advisory Committee’s Note to Rule 703 of the proposed Federal Rules of Evidence for United States Courts and Magistrates (approved Nov. 20, 1972, and transmitted to Congress), 56 F.R.D. 383, 283.

      . Two letters addressed to the Gulf Oil Corporation Executive Offices are suspiciously similar. Both were dated in December, 1970, after the suit was filed, both purportedly came from residents of Richland, Washington, and both refer to an article which had appeared in the Wall Street Journal nine months previously. The memorandum concerning a telephone inquiry received by plaintiff’s vice president is even more tenuous than the letters, but it has been included with the letters for considering the value of this evidence.

      . It is not necessary to show actual confusion in a trademark infringement suit; however, plaintiff was attempting to shift the burden of proof on the likelihood of confusion to the defendants. World Carpets, Inc. v. Dick Littrell’s New World Carpets, 438 F.2d 482 (5 Cir. 1971).


author: MOORE, Circuit Judge:

text:
    TOWN OF NEW WINDSOR et al., Plaintiffs-Appellees, v. William J. RONAN et al., Defendants-Appellants. METROPOLITAN TRANSPORTATION AUTHORITY et al., Defendants-Appellants, v. John A. VOLPE, United States Secretary of Transportation, and John H. Shaffer, Administrator of the Federal Aviation Administration, Defendants-Appellees.
    Nos. 866, 867, Dockets 73-1442, 73-1472.
    United States Court of Appeals, Second Circuit.
    Argued May 30, 1973.
    Decided June 28, 1973.

      John R. Hupper, New York City (Cravath, Swaine & Moore, and Norman J. Itzkoff, New York City, of counsel), for defendants-appellants Metropolitan Transp. Authority and the members thereof.
    Daniel M. Cohen, Asst. Atty. Gen., New York City (Louis J. Lefkowitz, Atty. Gen., of N. Y., of counsel), for defendants-appellants Theodore W. Parker, Richard Dunham, and Arthur Levitt.
    David Sive, New York City (Winer, Neuburger & Sive, and John S. Stillman, New York City, of counsel), for plaintiff s-appellees Town of New Windsor and others.
    Daniel Riesel, Asst. U. S. Atty., New York City (Whitney North Seymour, Jr., U. S. Atty., S. D. N. Y., and Daniel H. Murphy, II, Asst. U. S. Atty., New York City, of counsel), for defendantsappellees John A. Volpe and John H. Shaffer.
    Counties of Orange, New York and Dutchess, New York, by Peter G. Striphas, Atty., County of Orange, Goshen, N. Y., and John M. Kennedy, Atty., County of Dutchess, Poughkeepsie, N. Y., as amici curiae.
    Before MOORE, FRIENDLY and FEINBERG, Circuit Judges.
   MOORE, Circuit Judge:

I.

Defendant-appellant New York State Metropolitan Transportation Authority and the individual members thereof, both as members and individually (hereinafter, “MTA”), appeal from a judgment of the United States District Court for the Southern District of New York, Sylvester J. Ryan, Judge, entered on February 14, 1973, as subsequently amended on March 8, 1973. This judgment, inter alia, granted summary judgment to defendants-appellees, John A. Volpe, United States Secretary of Transportation, and John H. Shaffer, Administrator of the Federal Aviation Administration (hereinafter, “Federal defendants”) and dismissed MTA’s cross-claim against the Federal Aviation Administrator.

By its cross-claim the MTA sought a declaration that Paragraph 7L of a deed, by which the United States transferred ownership of most of the former Stewart Air Force Base (Stewart AFB) to the MTA, does not require that the Federal Aviation Administration (FAA) must make any determination before the MTA can lawfully proceed with the proposed extension of Stewart Airport runway 9-27. The cross-claim further sought a determination that in case of a dispute between the FAA and the MTA as to whether a proposed alteration in the airport which, in the language of Paragraph 7L, “might adversely affect the safety, utility or efficiency of the Airport,” the dispute should be decided in court, not unilaterally by the FAA. Finally, the cross-claim requested a ruling that any determination concerning the proposed runway extension would not constitute major federal action within the meaning of the National Environmental Policy Act of 1969. The cross-claim further sought a determination that the proposed extension of Stewart Airport runway 9-27 did not require the prior approval of the FAA.

Defendants-appellants Theodore W. Parker, individually and as Commissioner of the Department of Transportation of the State of New York, Richard Dun-ham, individually and as Director of the Budget of the State of New York, and Arthur Levitt, individually and as Comptroller of the State of New York (the “State defendants”), also appeal from the amended judgment.

In July, 1971, four individuals who own land in the vicinity of Stewart Airport, several environmental groups, and certain towns also in the vicinity of the airport commenced this action seeking preliminary and permanent injunctive relief enjoining the appropriation in the name of the People of the State of New York of approximately 9,000 acres of land adjacent to Stewart Airport for use in the proposed expansion and development of that facility.

In an opinion dated August 12, 1971, the district court, per Judge Marvin E. Frankel, denied plaintiffs’ motion for a preliminary injunction. 329 F.Supp. 1286 (S.D.N.Y.1971). On August 13, 1971, appellants caused title to this land to vest in the People of the State of New York.

In September, 1971, the MTA moved for an order dismissing all seven claims contained in plaintiffs’ complaint on the ground that none of them states a claim upon which relief can be granted. The Federal defendants made a similar motion in December, 1971.

In January, 1972, before any decision had been reached on these motions, plaintiffs moved for leave to add an additional claim to their complaint (the “Eighth Claim”). This Eighth Claim sought injunctive relief to block the allegedly unlawful extension of Stewart Airport runway 9-27 by the MTA. MTA an,d the State defendants opposed this motion, which was referred to Judge Ryan, before whom the motions to dismiss the first seven claims were pending.

In February, 1972, the FAA formally announced that under its interpretation of Paragraph 7L of the deed dated October 16, 1970, which transferred Stewart Airport to the MTA, the MTA was required to seek FAA approval for all proposed changes to the airport which might adversely affect the facility’s safety, utility, or efficiency. The FAA specifically noted that the proposed extension of runway 9-27 was an airport alteration which would require such approval. The FAA further declared that such determinations generally, and the determination with respect to the runway extension in particular, would be actions subject to the requirements of the National Environmental Policy Act, and that the determination must therefore be accompanied by an environmental impact statement. Representations have been made (Appellee’s Brief, p. 30) that such a statement is being or has been prepared for presentation shortly.

By order entered April 12, 1972, Judge Ryan granted plaintiffs leave to file their Eighth Claim and stayed all proceeding's on the first seven claims until a determination had been made on the Eighth Claim. MTA then answered the Eighth Claim and cross-claimed against the FAA seeking a judicial construction of the disputed language contained in Paragraph 7L of the deed.

In August, 1972, the MTA moved for summary judgment on so much of plaintiffs’ Eighth Claim and its cross-claim as present the question of whether Paragraph 7L requires that the FAA make “certain determinations before the MTA can proceed with planned changes or alterations to Stewart Airport, including its plans to extend runway 9-27 at that airport.” After answering the Eighth Claim and the MTA’s cross-claim, the Federal defendants also moved for summary judgment, as did plaintiffs; oral argument was heard in October, 1972. Judge Ryan’s decision granted summary judgment for the Federal defendants and plaintiffs; Judge Ryan also certified this judgment for immediate appeal under F.R.Civ.P. 54(b).

II.

The facts with which we are concerned are uncomplicated. Stewart Airport is located in Orange County, New York, fifty-five miles north of New York City. From 1930 to 1942 it was operated as a municipal airport by the city of Newburgh, New York. From 1942 to March, 1970, it was operated as a military airfield; prior to its transfer to the MTA, this facility was known as Stewart AFB.

In the fall of 1969 the Department of Defense (DOD) announced that Stewart AFB would be closed and the military units stationed there would be relocated or deactivated. Shortly thereafter, the MTA requested that DOD transfer Stewart AFB to it so that the facility might be developed as a public airport. On February 12, 1970, DOD executed a revocable license permitting MTA to operate Stewart AFB as a public airport pending formal transfer of the property.

On June 4, 1970, the MTA submitted its formal application to the General Services Administration (GSA) requesting the transfer of Stewart AFB. Pursuant to the Surplus Property Act of 1944, the application was referred to the FAA. The FAA subsequently issued a report recommending that Stewart AFB be transferred for no monetary consideration to the MTA for public airport use.

The actual transfer took place on October 16, 1970, when GSA conveyed the property to the MTA by quitclaim deed.

The dispute among the parties involves the interpretation of the following language from the October 16, 1970, deed:

7L. And, that the grantee will keep up to date at all times an airport layout map of the Airport at which the property described herein is located showing:
[airport boundaries, structures, and facilities, including all proposed changes to such boundaries, structures, and facilities, and all nonaviation areas and structures and their uses]

and such airport layout map and each amendment, revision, or modification thereof, shall be subject to the approval of the FAA, which approval shall be evidenced by the signature of a duly authorized representative of the FAA on the face of the airport layout map, and the grantee will not make or permit the making of any changes or alterations in the Airport or any of its facilities other than in conformity with the airport layout map as so approved by the FAA, if such changes or alterations might adversely affect the safety, utility, or efficiency of the Airport. Notwithstanding the foregoing, the Grantee shall provide the Department of Defense with one copy of any preliminary and subsequently approved airport layout plan, or associated Master Plan or land use plan and obtain through the FAA the prior concurrence of the Department of Defense for any proposed airport development, improvement, or modification which concurrence shall relate only to protection of the interests of the United States in National Defense involving the United States Military Academy.

III.

MTA disputes the FAA’s interpretation of Paragraph 7L which was upheld in the district court. The MTA asserts that there is no language in the deed which, by its terms, confers upon the FAA the power to disapprove changes or alterations in the airport which might affect the safety, utility, or efficiency of the airport.

The MTA concedes that Paragraph 7L requires that it keep the Stewart Airport layout map up-to-date and that “each amendment, revision, or modification thereof shall be subject to the approval of the FAA which approval shall be evidenced by the signature of a duly authorized representative of the FAA.” To this point the MTA and the FAA are in full agreement on the meaning of Paragraph 7L.

It is with respect to the provisions immediately following the above-quoted language that this case has arisen. Paragraph 7L provides that:

the grantee will not make or permit the making of any changes or alterations in the Airport or any of its fa-, cilities other than in conformity with the airport layout map as * * * approved by the FAA, if such changes or alterations might adversely affect the safety, utility, or efficiency of the Airport, (emphasis added)

The MTA urges that Paragraph 7L means that while all changes to the airport layout map must be approved by an FAA official, changes to the airport itself are not subject to such approval. It is the MTA’s position that when the FAA believes that a planned MTA airport alteration will adversely affect the facility’s safety, utility, or efficiency, the FAA must seek a judicial determination that such change will, in fact, have such adverse effect on the airport. The MTA’s argument turns on the fact that the phrase “if such changes * * * might adversely affect * * * the Airport” stands alone and does not include words like “as determined by the FAA” or other words which would indicate that the FAA alone is the party which is to decide if a proposed change in the airport will be “adverse.”

The MTA does not contend that the deed empowers it to make alterations in the airport which will in fact adversely affect its safety, etc.; rather, its position is that since the deed does not give the FAA the power to make this determination, such determinations must be made by a court. The crux of the MTA position is that with respect to Stewart Airport, the FAA is merely the agent of the grantor responsible for insuring that the terms of the deed are fully observed. The role of the FAA in this situation, says the MTA, is not the same as its role as the federal agency charged with regulation of the technical aspects of domestic aviation. Thus, with respect to disputes over the impact of changes proposed for the airport, the MTA asserts that the FAA simply stands in the shoes of the grantor and has only the status of an ordinary grantor, who may raise questions, but not decide them. This means, according to the MTA, that the FAA must utilize the courts and not its internal decision-making machinery, to reconcile differences which arise out of the MTA’s plans for developing the airport.

The MTA interpretation of Paragraph 7L is that where that paragraph mentions FAA approval, it is referring solely to the obligation of the MTA to keep up-to-date the airport layout map. This requirement, says the MTA, is merely a notice requirement included in the deed by the FAA so that it may fulfill the advisory role regarding airport construction which Congress has created for it with respect to non-federally financed airport improvements. The maintenance of an up-to-date layout map and strict conformity with it are requirements of the Congressionally enacted Federal Aid Airport Program (FAAP), but the MTA stresses that Stewart is now funded solely by New York State and does not participate in any way in FAAP. Therefore, concludes the MTA, there is no statutory requirement that an up-to-date airport layout map be maintained by it.

MTA further argues that the FAA interpretation of Paragraph 7L does not reflect the intention of the parties, since the MTA would not have agreed to give the FAA control of MTA plans for the development of Stewart Airport. As evidence of its intention to avoid provisions granting such “veto powers”, the MTA asserts that it specifically rejected an attempt by the Department of Defense to insert such a clause in the deed. In a letter written just nine days before the scheduled transfer of Stewart AFB, the MTA’s Secretary and Counsel, Robert R. Prince, notified DOD that its proposed addition to the deed was “so extreme * * * that the transfer of title by the 15th of this month is virtually impossible.” Prince’s letter contained an enumeration of Prince’s view of some of the unacceptable aspects of the proposed addition and concluded, “We cannot possibly abide by these conditions.”

The Prince letter had been prompted by the proposal to include the following language at the end of Paragraph 7L:

Notwithstanding the foregoing, the Grantee shall provide the Department of Defense with one copy of any preliminary and subsequently approved airport layout plan, or associated Master Plan or land use plan and obtain through the FAA the prior concurrence of the Department of Defense for any proposed airport development, improvement, or modification.

The ultimate resolution of this dispute was achieved by adding to the above sentence the following clause:

which concurrence shall relate only to protection of the interests of the United States in National Defense involving the United States Military Academy.

While there can be little question that Prince strenuously opposed what he characterized as the DOD’s proposed right of “veto”, the argument that the MTA specifically rejected such a veto is weakened considerably when the added language is analyzed. The deed, as finally accepted by the MTA, did not bar the DOD from exercising “veto” authority ; it simply limited the interests which could be raised in justifying such a veto to those relating to the nearby Military Academy at West Point. Moreover, objections to a veto by DOD do not necessarily imply similar objection to a requirement of approval by a civilian agency which presumably would share MTA’s interest in commercial development of the airport.

The MTA presents a somewhat more substantial argument when it points out that when the drafters of the deed did intend to give the FAA a veto power, they were able to do so in very unambiguous language, 'there are a number of clauses throughout the deed which grant the FAA the exclusive authority to make certain decisions. These provisions include such phrases as the following, all of which refer to the FAA: “in the opinion of”, “as determined by”, “[with] the consent of”, “as deemed reasonably necessary by”, and “unless authorized by.” Each of these phrases unquestionably grants to the FAA the exclusive power to make a particular decision. The MTA claims that since no such phrase was used in Paragraph 7L, that provision should not be read to grant similar power to the FAA with respect to changes in the airport.

As an additional point, the MTA notes that during the six month period from March, 1970, when Stewart AFB was vacated by the Air Force, until October', 1970, when title was formally transferred to New York State, the MTA operated Stewart Airport as a licensee. One of the conditions of such operation, which was to be complied with “for the period prior to delivery of the instrument or instruments of transfer conveying legal title,” reads as follows:

b. Limitations on Major Structural Changes
The transferee shall not make, permit or suffer any addition, improvements, or alterations to the airport property which constitute any major structural change or changes unless such change or changes * * * are made with the prior written consent of the Administrator of the [FAA].

The MTA notes that this provision, which by its terms was applicable only until the MTA took title to Stewart Airport, leaves no doubt as to its meaning. Since no similar language is found in the documents of title, the MTA argues, it is obvious that the FAA itself did not intend to retain this approval authority.

IV.

It is certainly true that Paragraph 7L of the form deed could have been phrased more precisely. We conclude, however, that the disputed language means what the FAA and the district court have said that it means.

Paragraph 7L imposes upon the MTA the clear duty not to

make or permit the making of any changes in the Airport or any of its facilities other than in conformity with the airport layout map as * * * approved by the FAA

As for the clause

if such change or alteration might adversely affect the safety, utility, or efficiency of the Airport

we conclude that this clause refers to an administrative determination by the FAA regarding the adverse effects of the proposed change or alteration. Implicit in this language is the further provision that FAA approval shall not be unreasonably withheld. There is no support for the MTA’s position that where the parties differ over the impact of a change, no map approval is required and the FAA must obtain a preliminary injunction to prevent the MTA from proceeding.

The MTA interpretation of the deed wholly ignores the function of the layout map. Its purpose is not to be a decorative object hanging on the wall at the airport so that the public may view it and obtain information therefrom as to the nature and extent of the airport. To the contrary, it serves the definite purpose of showing what airport layout has been approved by the FAA as well as which “proposed changes” have been so approved. The necessity for the signature of a duly authorized representative is to evidence FAA approval of such proposed changes.

The layout map shows changes approved by FAA. As to changes “other than in conformity with the airport layout map,” the MTA has agreed not to make them if they might have an adverse effect.

As discussed supra, the MTA is correct in saying that there is no statutory requirement that the FAA approve changes at Stewart Airport. Nevertheless, it is clear that such an approval requirement has been included as a condition of the deed which transferred the airport to New York State.

Authority for imposing such a condition is found in the Surplus Property Act of 1944:

In making any disposition of surplus property under this subsection, the disposal agency is authorized, upon the request of the Administrator of the Federal Aviation Administration * * * to include any additional terms, conditions, reservations and restrictions, if the Administrator * * * determines that such omission or inclusion is necessary to protect or advance the interests of the United States in civil aviation or for national defense.

50 U.S.C. App. § 1622(g)(3)

Thus, although Congress has not required that the FAA approve alterations to Stewart Airport, it has authorized the inclusion of such a clause in the deed of transfer as a condition of the transfer of surplus airport property. And it is very clear that the FAA has included such a clause in the quitclaim deed of October 16, 1970.

The MTA would place upon the courts the burden of determining in the first instance whether there might be adverse effects from proposed changes to the airport.

There can be no question that by creating the FAA, Congress has established what it believes to be an “expert” agency. It has granted that agency broad powers to regulate the technical aspects of aviation — ranging from aircraft design and maintenance to airport certification and airways navigation.

In this context it is clear that the FAA is well able to make the initial determination as to the adverse impact of any of the MTA’s plans for Stewart Airport.

Furthermore, as a practical matter, advance approval by the FAA would seem desirable. Were the MTA to be allowed to proceed without approval, millions of dollars might be wasted in the event that its modifications were disapproved.

Review by the courts should be limited to complaints after agency action that the agency has acted in contravention of the Administrative Procedure Act.

We express no view on the question of whether the administrative decisions of the FAA under Paragraph 7L of the deed should be deemed “major Federal actions significantly affecting the quality of the human environment,” within the meaning of the National Environmental Policy Act (42 U.S.C. § 4332(2) (C)).

The decision of the district court is affirmed.

      . The individual members of the Metropolitan Transportation Authority include William J. Ronan, Lawrence R. Bailey, Leonard Braun, William L. Butcher, Don-aid H. Elliot, Justin N. Feldman, Harold L. Fischer, Mortimer J. Gleeson, Frederic B. Powers, Eben W. Pyne, and William A. Shea.

      . The individual landowners are John A. Flannery, Agnes Schibanoff, Walter Strassburg, and William Shafer.

      . The environmental groups include Stewart Area Protective Association, Rock Tavern Rod and Gun Club, Stop-The-Jetport Committee, and Hudson River Valley Council.

      . The original plaintiff towns include New Windsor, Cornwall, and Montgomery. Intervening plaintiffs include the Towns of Newburgh, Waywayanda, and Green-ville, and the Village of Maybrook.

      . The MTA was authorized to proceed with the Stewart Airport expansion by the New York State Legislature in June, 1971. See Chapters 472-73, New York Session Laws, 1971.

      . The MTA was served with a summons and complaint in a New York State court action on August 10, 1971. That suit also sought preliminary and permanent injunctive relief enjoining appellants from appropriating ' this land. Appellants’ cross-motion to dismiss for failure to state a cause of action was granted by Supreme Court, Orange County. That decision was affirmed by the Appellate Division, Second Department. County of Orange v. Metropolitan Transportation Authority, 71 Misc.2d 691, 337 N.Y.S.2d 178 (Sup.Ct.Orange County 1971), aff’d without opinion, 39 A.D.2d 839, 332 N.Y.Supp. 2d 420 (2d Dep’t. 1972).

      . These motions remain sub judice.

      . Runway 9-27 was 7,000 feet long when the MTA acquired Stewart. It was effectively lengthened 1,000 feet before the FAA made its position on such changes at Stewart known to the MTA.

      . 42 U.S.O. § 4321 et seq.

      . After the FAA formally declared its position on the interpretation of Paragraph 7L, the MTA withdrew its opposition to plaintiff’s motion to add the Eighth Claim so that the issue could be expeditiously considered by the court.

      . Surplus Property Act of 1944, 58 Stat. 765 as amended:
      50 U.S.C. App. § 1622
      (1) Notwithstanding any other provisions of this Act [former sections 1611-1614, 1615-1622, 1623-1632 and 1633-1646 of this Appendix], and [any?] disposal agency designated pursuant to this Act [such sections] may, with the approval of the Administrator of General Services, convey or dispose of to any State, political subdivision, municipality, or tax-supported institution, without monetary consideration to the United States, but subject to the terms, conditions, reservations, and restrictions hereinafter provided for, all of the right, title, and interest of the United States in and to any surplus real or personal property (exclusive of property the highest and best use of which is determined by the Administrator of General Services to be industrial and which shall be so classified for disposal without regard to the provisions of this subsection) which, in the determination of the Administrator of the Federal Aviation Agency, is essential, suitable, or desirable for the development, improvement, operation, or maintenance of a public airport as defined in the Airport and Airway Development Act of 1970 [section 1701 et seq. of Title 49] or reasonably necessary to fulfill the immediate and foreseeable future requirements of the grantee for the development, improvement, operation, or maintenance of a public airport, including property needed to develop sources of revenue from nonaviation businesses at a public airport.
      (2) Except as provided in paragraph (3) of this subsection, all property disposed of under the authority of this subsection shall be disposed of on and subject to the following terms, conditions, reservations, and restrictions:
      (3) In making any disposition of surplus property under this subsection, the disposal agency is authorized, upon the request of the Administrator of the Federal Aviation Agency, the Secretary of the Army, or the Secretary of the Navy, to omit from the instrument of disposal any of the terms, conditions, reservations, and restrictions required by paragraph (2) hereof, and to include any additional terms, conditions, reservations, and restrictions, if the Administrator of the Federal Aviation Agency, the Secretary of the Army, or the Secretary of the Navy determines that such omission or inclusion is .necessary to protect or advance the interests of the United States in civil aviation or for national defense.

      . See, FAA Advisory Circular AC-150/5310-2, September 19, 1968.

      . FAA Handbook 5150.2, Federal Surplus Property for Public Airport Purposes, contains in its appendix 3 the standard form deed used to transfer such property. Paragraph 7L of that deed is identical to Paragraph 7L of the Stewart Airport deed, except that the Stewart deed includes the additional sentence added by DOD regarding the United States Military Academy, discussed supra.

      . 49 U.S.C. § 1421(a)(1) (1970).

      . 49 U.S.C. § 1421(a)(3) (1970).

      . 49 U.S.C. § 1432 (1970).'

      . 5 U.S.C. § 551 et seq. (1970).

      . 49 U.S.C. § 1348 (1970).


author: PER CURIAM.

text:
    Chester PARSON, Plaintiff-Appellee, v. ILLINOIS BELL TELEPHONE COMPANY, an Illinois corporation, et al., Defendants-Appellants. ILLINOIS BELL TELEPHONE COMPANY, an Illinois corporation, and William R. Cooper, Third Party Plaintiffs-Appellants, v. ALLIED ASPHALT PAVING CO., an Illinois corporation, Third Party Defendant-Appellee.
    No. 72-1361.
    United States Court of Appeals, Seventh Circuit.
    Argued April 11, 1973.
    Decided June 25, 1973.

      Robert V. R. Dalenberg, Alan N. Baker, Daniel M. Schuyler, Chicago, 111., for appellants.
    Alvin G. Hubbard, Frederick W. Temple, Robert J. Cooney, David J. Santori, Chicago, 111., for appellee.
    Before SWYGERT, Chief Judge, BARNES, Senior Circuit Judge, and KILEY, Circuit Judge.

       Honorable Stanley N. Barnes, Senior Circuit Judge for the Ninth Circuit, sitting by designation.

   PER CURIAM.

This is a personal injury action by Chester Parson, an Arkansas resident and employee of Allied Asphalt Paving Co. (Allied), an Illinois corporation, against Illinois Bell and its employee William R. Cooper, alleging common law negligence. Illinois Bell and Cooper filed a two count third party complaint against Allied, in Count I claiming indemnity from Allied under a common law theory, and in Count II claiming indemnity under the Illinois Roads and Bridges Statute, Sm.-Hurd Stat.Ann. ch. 121, § 314.1 et seq. (Cum.Supp. 1973-74).

The evidence shows that on October 14, 1969, at about 9:00 a. m., Allied was resurfacing Illinois Route 19, an east-west country road near Elgin, Illinois. Parson was acting as Allied’s flagman for eastbound traffic, since only one lane of traffic was in use during the road work. He was using a sign on a staff which read “Stop” for eastbound and “Slow” for westbound traffic. Parson flagged down a ear being driven east by Albert Vucsko. Vucsko’s ear was halted about 200 feet beyond the crest of a small hill. Cooper, an employee of defendant-third party plaintiff Illinois Bell, at that time was driving an Illinois Bell repair van eastbound. He knew that intermittent construction was being done on Route 19, and often used the road. The day was clear.

No warning signs had been posted by Allied at the construction area. As Cooper passed over the crest of the hill at approximately 45 miles per hour, the posted speed limit, he saw the road repair machinery, did not see Vucsko’s car at a stop until he was 50 feet from it, and did not reduce his speed until he saw it. He could not stop in time to avoid hitting Vucsko’s car. Parson, standing near Vucsko’s car, saw Cooper coming and jumped onto the right shoulder of the road. Cooper did not see Parson until after he applied his brakes and was leaving the road. He was unable to avoid hitting Parson.

At the close of all the evidence the trial court granted Allied’s motion for a directed verdict as to Count I of the third party complaint on the ground that Cooper was the “active” tortfeasor and that he and Illinois Bell were barred from indemnity. The court reserved ruling on the motion as to Count II. The jury returned a general verdict against Illinois Bell and Cooper and in favor of Parson in his suit; also returned a special verdict finding that Allied had willfully and knowingly violated the Illinois Roads and Bridges Statute in failing to give proper warnings; and that its violation of the Statute was the proximate cause of Parson’s injuries. The court entered judgment in favor of Parson on the general verdict, and entered judgment — notwithstanding the special verdict — in favor of Allied on Count II.

Illinois Bell and Cooper contend that the court erred in instructing the jury with respect to the question of Cooper’s duty to reduce speed under certain circumstances contained in Sm.Hurd Stat.Ann. ch. 95%, § 146 (1967), as amended, ch. 95%, § 11-601 (Cum. Supp. 1973-74). We see no merit in the contention that the effect of the instruction placed upon Illinois Bell and Cooper the “absolute duty” to decrease speed when approaching the crest of the hill. In Kanousis v. Lasham Cartage Co., 332 Ill.App. 525, 541-542, 76 N.E.2d 239, 246 (1947), the Illinois court approved the use of a similar instruction which provided that “speed shall be decreased as may be necessary to avoid colliding. . . . ” In the case before us the use of the modified phrase “speed must be decreased” in the instruction was not erroneous. The test of instructions is not how the meaning can be changed by the ingenuity of counsel’s interpretation, but what the ordinary man acting as a juror will, in the context of all the instructions understand. Hulke v. International Manufacturing Co., 14 Ill.App.2d 5, 52-53, 142 N.E.2d 717 (1957).

Neither do we see error in the giving of an instruction with respect to a driver’s duty to obey warning signals on highways or bridges. Illinois Bell and Cooper argue that the evidence did not warrant the instruction and that Parson’s performance in the circumstances of the occurrence violated the Illinois Manual of Uniform Traffic Control Devices, thereby failing to provide a condition precedent contemplated for calling the statute into play. We think the evidence as to Parson’s position and equipment and Cooper’s lookout presented questions of fact which justified instructing the jury as to Cooper’s performance of his duty as a driver under the Roads and Bridges Statute.

We have not been persuaded that the district court erred in directing verdict for Allied on the ground that Illinois Bell and Cooper were “active” tortfeasors. We think the court was entitled to find as a matter of law that Cooper was an “active” tortfeasor. And the court was justified in deciding that Illinois Bell and Cooper, and not Allied, should bear the loss. See Sears Roebuck & Co. v. Employers Mutual Ins., 6 Ill.App.3d 10, 13, 284 N.E.2d 386 (1972).

Illinois Bell and Cooper contend that the district court erred in setting aside the verdict of the jury as to Count II which alleges a cause of action under the Illinois Roads and Bridges Statute, Sm.Hurd Stat.Ann., ch. .121, § 314.1 et seq. (Cum.Supp.1973-74). Count II alleges that Allied failed in its duty to place warning signals in advance of Parson’s station at the construction site.

The district court found that the special verdict — that Allied was guilty of willful violation of the Roads and Bridges Statute — was amply supported by the evidence. The court concluded, however, that nevertheless Illinois Bell and Cooper, the “active” tortfeasors, may not recover indemnity under either the statute or the Manual of Uniform Traffic Control Devices. Illinois Bell and Cooper argue that this conclusion was erroneous because the court’s conclusion was based upon the active-passive tortfeasor doctrine; and because the court failed to recognize the duty of Allied to Illinois Bell and • Cooper under the Roads and Bridges Statute.

We have studied the reasoning in the Judgment Order of the district court on this contention. We are persuaded by that reasoning. We adopt that Judgment Order, appended to this opinion, as the basis of our decision that the court did not err in entering judgment for Allied notwithstanding the special verdict for Illinois Bell and Cooper.

The judgment for Allied is affirmed.

JUDGMENT ORDER

This cause comes on to be heard on the Post-Trial Motion of the Third Party Defendant Allied Asphalt Paving Co. for a new trial or, in the alternative, for a judgment in its favor against Illinois Bell Telephone Company, defendant and Third Party Plaintiff. The court at the close of all the evidence granted the Third Party Defendant’s Motion for a directed verdict as to Count I of the Amended Third Party Complaint on the ground that the Third Party Plaintiff was clearly guilty of active negligence and therefore was barred from indemnification as to the theory of active-passive negligence.

The court reserved ruling on the Motion for a directed verdict as to Count II of the Amended Third Party Complaint. Therein the Third Party Plaintiff seeks recovery on the theory that the Third Party Defendant wilfully or knowingly violated the Illinois Roads and Bridges Statute or the Manual of Uniform Traffic Control Devices by failing to post warning signs at the approaches of its work, and that any negligence of the Third Party Plaintiff was irrelevant under this theory. Over objection of the Third-Party Defendant, this alternative cause of action was submitted to the jury on a Special Verdict, along with the principal case of plaintiff Chester Parson against Illinois Bell Telephone Company for negligence. Parson was an employee of Allied Asphalt and therefore could not sue it.

The Illinois Roads and Bridges Act provides in part as follows:

Section 314.4 Any portion of highway or bridge which is closed to all traffic shall be marked at each place where vehicles have accessible approach to such portion of highway .or bridge, and at a sufficient distance from the closed portion of such highway or bridge shall be marked with an adequate number of safe, suitable, and proper warning signs, signals or barricades as set forth in the Manual of Uniform Traffic Control Devices for Streets and Highways published by the Department of Public Works and Building so as to give warning to approaching motorists that such portion of bridge or highway is closed and unsafe for travel.
Section 314.6 Any contractor, subcontractor, or his authorized agent or driver of any motor vehicle who knowingly or wilfully violates any provision of the Act, shall be responsible for any injury to person or property occasioned by such violation, and a right of action shall accrue to any person injured for any damages sustained thereby; . . [Ill.Rev.Stat. Chapter 121, Section 314.4 and Section 314.6]

The jury returned a verdict in favor of Parson against the defendant Illinois Bell Telephone Company and also returned a special verdict supporting Illinois Bell’s theory on Count II of the Amended Third Party Complaint against Allied. The Special Verdict was as follows :

1. Did Allied Asphalt Paving Co. knowingly or wilfully violate any provision of the Roads and Bridges Statute or of the Manual of Uniform Traffic Control Devices as quoted to you in these instructions ?
Yes x
No
2. If your answer to the foregoing question is “yes”, was that violation a proximate cause of the injury to Chester Parson?
Yes x
No

Third Party Defendant now seeks a new trial or alternatively to set aside the special verdict and to have judgment entered in its behalf on Count II. Third Party Plaintiff resists this motion and, without specifically so moving, seeks a judgment against the Third Party Defendant on the special verdict as indemnification for the damages awarded to Parson on his Complaint. The verdict and judgment entered in favor of Parson is not contested.

The court is of the opinion that the special verdict is amply supported by the evidence and that the instructions complained of in the Post Trial Motion were properly given or refused, as the case may be, if the cause of action in Count II was legally well founded. Therefore there is no grounds for a new trial on the Amended Third Party Complaint.

There remains, however, the question of whether Count II should have been submitted to the jury at all or whether a motion for a directed verdict should have been granted in favor of the Third Party Defendant as a matter of law. This is governed by a single question: does the Illinois Roads and Bridges Statute, or the Manual of Uniform Traffic Control Devices which is ancillary to the statute, create a cause of action by which an active tortfeasor may recover indemnification from a party who violated the statute or its rules?

The parties have cited several Illinois decisions on indemnification, particularly under the Illinois Dram Shop Act and the Structural Work Act. No decisions have been found under the Roads and Bridges Statute, however so it must be applied by the federal court in the light of whatever guidelines can be found in the statute itself and in decisions under similar Illinois statutes.

When the Roads and Bridges Statute was enacted in 1959, Illinois had a common law policy against indemnification between tortfeasors. This policy allowed an exception in the case of a “passive” tortfeasor’s action against an active tortfeasor. Chicago, Burlington & Quincy Railroad Co. v. Admiral-Merchants Motor Freight, Inc., 397 F.2d 472 (7th Cir., 1968). The Illinois Courts have been refining and defining the distinction between active and passive tortfeasors for several years and have also applied it to third party indemnification actions when the original plaintiff could not sue the third party indemnitor. Throughout this process, however, the Illinois Courts have not abandoned their basic common law policy against indemnification between tortfeasors.

An application of this principle is found under the Dram Shop Act which has no provision either permitting or forbidding indemnification. Thus an intoxicated automobile driver, after being sued for negligence, cannot obtain indemnification by means of a suit under the Dram Shop Act against the persons who caused his intoxication, since the driver himself was an active wrongdoer. McDonald v. Trampf, 49 Ill.App.2d 106, 198 N.E.2d 537 (1st Dist., 1964).

The active-passive concept has also been applied to indemnification actions under the Illinois Structural Work Act. If a passive contractor has been held liable to an injured plaintiff, for example, the contractor can recover indemnification against an active wrongdoer even if the latter is the employer of the injured plaintiff and could not have been sued directly. Sack v. Arcole Midwest Corp. etc., 33 Ill.App.2d 344, 179 N.E.2d 441 (1st Dist., 1961). Cf. Miller v. DeWitt, 37 Ill.2d 273, 226 N.E.2d 630 (1967). However, an active violator of that Act cannot recover indemnification from third parties under any theory. Linder v. Kelso Burnett Electric Co., et al., Ill. App., 273 N.E.2d 196 (1st Dist., 1971).

Third Party Plaintiff relies on cases permitting direct recovery by injured plaintiffs under the Dram Shop and Structural Work Acts, where contributory negligence of the plaintiff is no defense. Quatrano v. Marrocco, 61 Ill.App. 2d 1, 208 N.E.2d 632 (1st Dist., 1965); Vykruta v. Thomas Hoist Co., 75 Ill. App.2d 291, 221 N.E.2d 99 (1st Dist., 1969). This result is presumably reached because of a legislative policy to afford a statutory remedy to persons who are directly damaged by the activities covered by the statute, namely causing intoxication or failing to safeguard workmen. There is no Illinois precedent for authorizing a tortfeasor defendant to utilize either statute for indemnification from a third party, however, except under the active-passive theory of Count I (which was disposed of in the case at bar by a directed verdict).

Third Party Plaintiff argues that a “wilful or knowing” violation of the Roads and Bridges Statute constitutes a higher degree of culpability than mere negligence of the vehicle operator. The statutory language herein does not seem intended to cover wilful and wanton acts as such, but merely denotes “intentional” acts constituting negligence. Cf. Schultz v. Ericsson Co., 264 Ill. 156, 106 N.E. 236 (1914). It would put too fine a point on the active-passive distinction to try to differentiate between levels of negligence. Spivack v. Hara, 69 Ill.App. 2d 22, 216 N.E.2d 173 (1st Dist., 1966). Furthermore, from the facts of this case, it is obvious that the statutory violation by the Third Party Defendant road contractor was not a different degree of negligence than was the Third Party Plaintiff’s operation of its vehicle.

Third-Party Defendant seeks to generalize by saying that the vehicle operator is not in the class of persons enabled to sue under this statute. This is true in the sense that the quoted language of Section 314.6 seems to indicate merely an intention to create a cause of action for persons directly damaged by a wilful or knowing violation of the statute. There is no language to indicate that the legislature intended to create a cause of action for persons seeking indemnity for their own negligence or to carve out another exception to the basic Illinois common law policy against contribution between tortfeasors. The distinction is in the gist of the Third Party Plaintiff’s action, not its form. Therefore the Third Party Defendant’s Motion for a Directed Verdict on Count II should have been granted.

It Is Hereby Ordered, Adjudged And Decreed that the motion for a new trial by Allied Asphalt Paving Company, Third Party Defendant, is denied and judgment is entered on its behalf and against the Illinois Bell Telephone Company, Third Party Plaintiff, on the Amended Third Party Complaint, notwithstanding the special verdict. F.R. Civ.P. 58(2).

Enter:

/s/ Thomas R. McMillen Judge, U.S. District Court

Jan. 31, 1972

      . The trial was upon the liability issue only. The issue of damages was tried later,'and the jury awarded Parson $39.-500 damages.

      . The instruction said, in pertinent part:
      The fact that the speed of a. vehicle does not exceed the applicable maximum speed limit does not relieve the driver from the duty to decrease speed . when approaching a hill crest . . . or by reason of highway conditions. Speed must be deceased as may be necessary to avoid' colliding with any person or vehicle in compliance with the duty of all persons to use due care.


author: TRASK, Circuit Judge:

text:
    James D. HODGSON, Secretary of Labor, United States Department of Labor, Plaintiff-Appellee, v. CACTUS CRAFT OF ARIZONA and Carlos E. Velasco, Defendants-Appellants. James D. HODGSON, Secretary of Labor, United States Department of Labor, Plaintiff-Appellant, v. CACTUS CRAFT OF ARIZONA and Carlos E. Velasco, Defendants-Appellees.
    Nos. 26919, 26877.
    United States Court of Appeals, Ninth Circuit.
    June 26, 1973.

      Edith Barnett, Washington, D. C., Atty., (argued) Richard F. Schubert, Sol. of Labor, Dept, of Labor, Washington, D. C., Richard Burke, U. S. Atty., Tucson, Ariz., Gennaro J. Ingénito, U. S. Dept, of Labor, San Francisco, Cal., Carin Ann Clauss, Associate Sol., Donald S. Shire, Sylvia S. Ellison, Atty., Dept, of Labor, Washington, D. C., for appellant.
    R. Lamar Couser (argued), Tucson, Ariz., for appellee.
    Before ELY, CARTER, and TRASK, Circuit Judges.
   TRASK, Circuit Judge:

Following an investigation of the labor practices of Cactus Craft of Arizona, the Secretary of Labor brought this action under 29 U.S.C. § 217, alleging violations of the Fair Labor Standards Act (FLSA), 29 U.S.C. § 201 et seq., with respect to minimum wage, overtime compensation, child labor,.record keeping and shipping provisions of the Act. The district court’s judgment enjoined further violations of the Act and restrained Cactus Craft and Carlos E. Velasco, as the company’s principal officer, from continuing to withhold from certain employees unpaid wages due them under the FLSA.

Cactus Craft appeals and the Secretary appeals from a rejection of his contention that Carlos E. Velasco should be individually subject to the trial court’s judgment.

Cactus Craft manufactures and distributes novelty and souvenir gift items including cactus lamps, jewelry and numerous other items. Its plant is in Tucson, Arizona. The company is almost solely owned by Velasco and his family. More than two hundred employees have worked for the company during the years 1967-1969, including a number of house workers employed on a piece rate basis. The majority of workers are Mexican-Americans.

Of the 87 persons named as employees in the complaint, Cactus Craft admitted that they had been employed but claimed that 57 of them were involved exclusively in producing and packing orders for intrastate shipments and were not covered by the FLSA provisions. The court ruled that Cactus Craft had failed to prove that its operations were adequately segregated to insure that the intrastate and interstate orders were processed and filled by distinct groups of employees. The Act’s minimum wage requirements were therefore held to be applicable to all the employees. The testimony on this issue was conflicting but there was substantial evidence that Cactus Craft’s employees worked on various types of goods interchangeably and that there was no separation of tasks on the basis of the ultimate destination of the goods. It was stipulated, furthermore, that since March 1967, Cactus Craft has shipped and sold 80 percent of its products to out-of-state gift shops. We conclude that there was sufficient evidence to support the judge’s ruling.

Cactus Craft further asserts that two employees were exempt from the Act’s protection as bona fide executives under 29 U.S.C. § 213(a)(1). That section removes from the Act’s minimum wage and overtime compensation protection “any employee employed in a bona fide executive ... capacity” as that term is “defined and delimited ... by regulations of the Secretary.” A “long” and a “short” test for this executive exemption are set forth in 29 C.F.R. § 541.1 (1967). See Wainscoat v. Reynolds Electrical & Engineering Co., Inc., 471 F.2d 1157 (9th Cir. 1973). It is clear under either test that the employee must be compensated on a salary basis, which is defined in 29 C.F.R. § 541.118. Notwithstanding the assertions that the two alleged “executive” employees were designated as Supervisor and Production Manager and that they had power to hire and fire, to assign work and supervise other employees, the company was unable to prove that the two men were paid on a salary basis as required by the regulations. There is evidence that both men were required to punch a time clock and that they were paid a straight hourly rate although they regularly worked more than 40 hours in a week. This court has previously disposed of the argument that the salary vs. hourly wage distinction should not be determinative so long as the employee is paid more than the required amount per week. Craig v. Far West Engineering Co., 265 F.2d 251, 257-60 (9th Cir.), cert. denied, 361 U.S. 816, 80 S.Ct. 57, 4 L.Ed.2d 63 (1959). Cactus Craft did claim that one of the two alleged “executives” was guaranteed a minimum weekly salary of $180 for 60 hours, “it having been explained to him that he was paid a straight rate for forty hours and time and one-half for the extra twenty hours per week.” The trial court, however, based on the conflicting testimony of the employer and the employee determined that the employee was paid on an hourly basis and that he was not given the required overtime compensation. These findings will not be set aside as clearly erroneous. Apart from Cactus Craft’s failure to meet the required “salary” test, there was also conflicting evidence as to the percentage of time the. two employees spent on supervisory duties. There is some basis for the government’s position that the two employees were “working foremen” who were outside the scope of the regulation’s definition of an “executive” employee, because their regular tasks included substantial time devoted to production work which was unrelated or only remotely related to supervisory activities. We conclude that the district court’s holding denying Cactus Craft’s executive exemption defense for two of its employees should be affirmed.

Cactus Craft also objects to the district court’s findings regarding the amounts due to its employees because of the company’s minimum wage and overtime violations. The court determined that the company should pay overtime compensation to eight employees amounting to a total of $4,391.65. The court rejected as too high the computations of unpaid overtime compensation submitted by the compliance officer who made the investigation for the Secretary of Labor. The compliance officer concluded on the basis of his investigation that weekly overtime hours had been reduced by a third on Cactus Craft’s payroll sheets. Although the trial court refused to find overtime violations based on the compliance officer’s reconstructed hours, it did find overtime violations for the eight employees who testified that they were paid straight time rates for overtime work. These findings were supported by the evidence and were not clearly erroneous. As to unpaid amounts due to employees because of minimum wage violations, the court did not limit its determination to those employees who testified. Rather, the court concluded that there had been underpay-merits of minimum wages with respect to six employees who testified that they were paid below the minimum wage, with respect to another 52 employees based on Cactus Craft’s records, and with respect to seven homeworkers, three of whom testified, because the records showed that such homeworkers earned approximately $1.00 an hour at piece rates. Cactus Craft conceded that it paid its employees, who were allegedly engaged exclusively in interstate commerce, from 30 to 60 cents less than the statutory minimum. C.T. at 26. The evidence also showed that the homeworkers, who were paid for each piece of work produced, were paid amounts designed to yield approximately $1.00 per hour. The statutory minimum during this period, however, ranged from $1.40 to $1.60 per hour. It is well established that the minimum wage provisions of the FLSA may apply to homeworkers paid on a piece rate basis. Goldberg v. Whitaker House Coop., 366 U.S. 28, 31, 81 S.Ct. 933, 6 L.Ed.2d 100 (1961). We agree with the court’s findings that Cactus Craft has withheld payments which must be paid to its employees under the overtime and minimum wage provisions of the Act totaling $10,613.12 plus interest.

Cactus Craft challenges the court’s determination that a child labor violation occurred. The court found that a minor was engaged in the operation of a power driven machine based in part on Cactus Craft’s admission through its attorney that “it is true that the boy . . . did work [at the plant] part of the time under his father’s supervision and did use some power drills.” R.T. at 58. Cactus Craft contends, however, that power drills are not specifically proscribed for use by minors under 29 C.F.R. § 1500.55 (as amended, 29 C.F.R. § 570.55 (1973)), the regulation issued by the Secretary pursuant to the authority conferred by 29 U.S.C. § 203(1), which provides:

“ ‘Oppressive child labor’ means a condition of employment under which any employee between the ages of sixteen and eighteen years is employed by an employer in any occupation which the Secretary of Labor shall find and by order declare to be particularly hazardous for the employment of children between such ages or detrimental to their health or well-being; . . . .”

Under that authority the Secretary has by regulation proscribed employment of minors between 16 and 18 years of age in the operation of power-driven woodworking machines. Such machines are defined in 29 C.F.R. § 1500.55(b) as “all fixed or portable machines or tools driven by power and used or designed for cutting, shaping, forming (or) surfacing . wood. . . .” Although the use of a power tool for drilling is not specifically mentioned in the regulation, the use of the drill in Cactus Craft’s operations included shaping and forming of pieces of wood so they could be used for lamps. We agree with the district court’s determination that operation of a power drill fits within the hazardous operation criteria set by the Secretary as a form of prohibited child labor.

Cactus Craft’s final contention is that the normal two year statute of limitations should have been applied to this case. The court, however, allowed the action because it was commenced within the three year period set as the statute of limitations for “a cause of action arising out of a willful violation.” 29 U.S.C. § 255. There was a sufficient basis for the court’s finding that Cactus Craft’s violations were willful. Two previous investigations of Cactus Craft’s labor practices had resulted in warnings against further violations of the FLSA. Pursuant to a third investigation leading to the present action it was evident that promises of future compliance had not been kept. We agree that Cactus Craft’s violations were willful and that the three year statute of limitations was properly applied.

The Secretary contends on his cross-appeal that Carlos E. Velasco should have been held jointly liable, along with the corporation for the established violations. The court’s injunction applies to Velasco as the principal officer of Cactus Craft but the court refused to enjoin Velasco in his individual capacity. We conclude that the bond which has been furnished by Cactus Craft during the pendency of this appeal is sufficient to render moot the question of the personal liability of Velasco to provide unpaid back wages.

The injunction may issue to Cactus Craft of Arizona and to Carlos E. Velasco as its managing agent to restrain against future violations and against any withholding of payments of minimum wages and overtime ■ compensation found to be due to Cactus Craft’s employees.