author: MARKEY, Chief Judge.

text:
    Tony WILLIAMS, Appellant, v. The FIVE PLATTERS, INC., Appellee.
    Patent Appeal No. 74-614.
    United States Court of Customs and Patent Appeals.
    Feb. 20, 1975.
    Greene & Durr, New York City, attorneys of record, for appellant.
    George Gottlieb, Michael I. Rackman, Gottlieb, Rackman, Reisman & Kirsch, New York City, attorneys of record, for appellee.
    Before MARKEY, Chief Judge, RICH, LANE and MILLER, Judges, and ALMOND, Senior Judge.
   MARKEY, Chief Judge.

Williams appeals from a decision of the Trademark Trial and Appeal Board, 181 USPQ 409 (1974), denying his motion to vacate its earlier decision which granted the motion of appellee (Platters) for summary judgment and dismissed with prejudice Williams’ petition to cancel Platters’ registration No. 959,115 of the mark THE PLATTERS. We affirm.

The Facts

Williams filed an opposition to registration of the mark, alleging fraud in that the applicant was not in fact incorporated at the time the application was filed. Platters moved for dismissal with prejudice, citing a default judgment of the Supreme Court of New York against Williams and in favor of Platters. The board gave Williams time to show cause why the motion should not be granted. Williams filed no response. The opposition was dismissed on February 13, 1973, with prejudice. That the Supreme Court of New York had vacated its judgment just five days earlier was not brought to the board’s attention. Registration of the mark issued on May 15, 1973. In October 1973 Williams filed a petition to cancel that registration, relying on a redrafted version of the same fraud allegation. Platters moved for summary judgment on the ground that the dismissal of the opposition was res judicata. Williams failed to respond. The board, under Rule 2.127(a), treated the motion as conceded and dismissed the petition with prejudice. Williams then moved, pursuant to Fed.R.Civ.P. 60(b), to vacate that decision, arguing that his failure to file a brief was due to “inadvertence, accident or mistake.” The board denied the motion to vacate. Williams requested reconsideration of that decision. The board, on April 2, 1974, adhered to its decision denying the motion to vacate. One hundred and eight days after the board’s decision dismissing the petition and 65 days after the board’s decision denying the motion to vacate, but within SO days of the board’s decision on reconsideration, Williams filed this appeal.

The Issue

The sole issue before us is whether the board abused its discretion in denying the motion to vacate.

Though both parties argue the propriety of the decision dismissing the petition, the motion to vacate did not preserve the correctness of that decision as an issue on this appeal. Smith v. Stone, 308 F.2d 15 (9th Cir. 1962). More than 60 days having transpired following that decision, Williams’ appeal must be restricted to review of the board’s decision denying the motion to vacate. 15 U.S.C. § 1071(a)(2).

OPINION

Appellant argued before the board that his failure to file a brief in answer to the motion for summary judgment was, as set forth in the affidavit of his attorney, due to the attorney’s absence from his office, pressure of other work in the attorney’s office, omission of the matter from the attorney’s docket, and inability of the attorney to contact Williams. The board characterized, correctly we think, the reasons given as “carelessness and inattention on the part of counsel.” The board did not consider the reasons given as constituting the “excusable neglect” referred to in Rule 60(b)(1). Nor do we.

Williams’ default on his duty to file a brief in response to the motion for summary judgment was his third, following his defaults in the opposition and in the court action before the Supreme Court of New York. The reasons given by counsel are such as to evidence neglect, but not excusable neglect. Absence from one’s office and pressure of work are common phenomena. Lawyers who sit constantly in their offices with little to do are unlikely to be dealing with Rule 60(b)(1). No reason was offered in justification for omitting the matter from the attorney’s docket. The alleged “inability” to contact Williams rested on one letter which went unanswered. If Williams was a traveling entertainer who left no forwarding addresses, that fact only serves to indicate Williams’ personal neglect of the matter. Counsel’s neglect of duty is not, per se, excusable neglect sufficient to entitle Williams to a fourth day in court under Rule 60(b)(1). Nor is ignorance of due dates. See, e. g., Nugent v. Yellow Cab Co., 295 F.2d 794 (7th Cir. 1961), cert. denied, 369 U.S. 828, 82 S.Ct. 844, 7 L.Ed.2d 793 (1962).

Williams emphasizes in his brief here that an affirmance of the board’s decision would result in the condoning of Platters’ “fraud.” There is, however, on this record, no fraud to be “condoned.” Though Williams twice alleged fraud and was provided two opportunities to prove it, he declined to do so. That the fraud issue was decided on default is of no moment, such decisions being as binding as those on the merits. Riehle v. Margolies, 279 U.S. 218, 49 S.Ct. 310, 73 L.Ed. 669 (1929); Last Chance Mining Co. v. Tyler Mining Co., 157 U.S. 683, 15 S.Ct. 733, 39 L.Ed. 859 (1895).

The board carefully considered the affidavit and briefs before it on the motion to vacate. Our sole function is to determine whether it abused its discretion in denying the motion. Nederlandsche Handel-Maatschappij, N. V. v. Jay Emm, Inc., 301 F.2d 114 (2d Cir. 1962). We hold that it did not. Its decision is therefore affirmed.

Affirmed.

      . Opposition No. 52,746.

      . Counsel’s affidavit states that the motion should have appeared on his December docket for reply by December 18th. In fact, it was due for reply on November 27th. Whether the motion was also omitted from counsel’s November docket does not appear.

      . The state court action in New York is currently pending. Its outcome can have no effect on our decision respecting the board’s decision on the motion to vacate.


source: Caselaw Access Project

author: RONEY, Circuit Judge:

license: Public Domain

text:
    Jimmy ALLEN, Plaintiff, v. TEXACO, INC., Defendant-Appellee, North-West Insurance Company, Intervenor-Appellant.
    No. 74-1902.
    United States Court, of Appeals, Fifth Circuit.
    April 7, 1975.
    Abraham Gerber, Gen. Counsel, New Orleans, La., for intervenor-appellant.
    Robert M. Contois, Jr., Robert B. Acomb, Jr., New Orleans, La., for Texaco, Inc.
    Richard C. Baldwin, New Orleans, La., for American Casing Crews.

      Before BELL, AINSWORTH and RO-NEY, Circuit Judges.
   RONEY, Circuit Judge:

This is a case of first impression. An employee was injured on the job and received compensation benefits under the Longshoremen’s and Harbor Workers’ Compensation Act. The compensation carrier had waived rights of subrogation as to any claim the employee might have against a third party who caused the injury. The employee sued the third party and a settlement was reached. Does the waiver of subrogation rights by the compensation carrier bar a lien against and participation in the proceeds of the settlement between the employee and the third party, to which the carrier would otherwise be legally entitled? The district court held there to be a bar and dismissed the carrier’s claim. The compensation carrier argues that the waiver only bars it from filing a suit against the third party as subrogee of the employee’s claim, but does not bar its lien against the suit proceeds or settlement proceeds where the employee pursues the claim against the third party and receives a settlement or judgment. We decide the workmen’s compensation carrier waived any claim to the 'settlement between the third party and the employee. We affirm the district court.

In 1972, Texaco, Inc. and American Casing Crews, Inc. entered into a miscellaneous work agreement whereby American, as an independent contractor, was to furnish labor and equipment to Texaco at the latter’s request. American was also required by the specific terms of the agreement to procure from its insurer, North-West Insurance Company, a waiver of subrogation rights against Texaco, or to have Texaco named in its insurance policy as an additional co-assured. American chose the former alternative and, in consideration of an additional premium, obtained from North-West the required waiver of subrogation rights against Texaco.

Jimmy Allen, the original plaintiff in this matter, was employed by American and sustained an accidental injury on August 16, 1972, while working aboard Texaco’s movable drilling barge. NorthWest, as the compensation insurer of American, paid Allen $2,660 in compensation benefits and $230 for medical bills on American’s behalf in fulfillment of the employer’s responsibility under the Longshoremen’s and Harbor Workers’ Compensation Act, 33 U.S.C.A. § 901 et seq. The payments by North-West were made voluntarily, without a formal award of compensation benefits being entered by the Department of Labor.

Allen then brought this action against Texaco . for damages. North-West sought and obtained permission from the district court to intervene as plaintiff “in order to assert a claim of subrogation.” It asserted a lien on any recovery Allen might obtain for the amount of compensation payments it had advanced and for the medical expenses it had incurred. Texaco, in turn, impleaded American as a third-party defendant seeking indemnity under the provisions of the contract between Texaco and American.

Before trial, Texaco reached a settlement agreement with Allen and with American. Pursuant to that agreement, Texaco paid Allen $15,000, and further agreed to pay him any additional amount which might be owed on the subrogation claim asserted by NorthWest. American agreed to reimburse Texaco for a portion of the amount which was to be paid to Allen. Thus, the only issue before the district court was whether or not North-West’s waiver of subrogation rights against Texaco affected its compensation lien claim. The district court, after reviewing the depositions, stipulations, documents and memoranda submitted, rendered an opinion in which it held that North-West was barred by the specific waiver of subrogation in favor of Texaco in the insurance policy.

In the main policy issued by NorthWest, under the heading “Conditions”, it is stated:

12. Subrogation: In the event of any payment under this policy, the company shall be subrogated to all rights of recovery therefor of the insured and any person entitled to the benefits of this policy against any person or organization, and the insured shall execute and deliver instruments and papers and do whatever else is necessary to secure such rights. The insured shall do nothing after loss to prejudice such rights.

This provision was modified by Endorsement No. 13 of the policy which provides:

In consideration of an additional premium as shown above [$103.00], based on 10% of the premium developed in operations performed by the assured for TEXACO, INC. and subject to a minimum premium of $100.00, it is agreed that the Company hereby waives its rights of subrogation of claims coming under this policy against: TEXACO, INC.

Throughout the course of this litigation, North-West has asserted that the language in Endorsement No. 13, along with the testimony of the underwriter, demonstrates that no waiver of NorthWest’s right to join a lawsuit to protect its compensation lien was requested, nor was such a waiver given. What was given, North-West argues, was a waiver of its right to sue Texaco under 33 U.S.C.A. §§ 933(b) and (h). These sections provide, in effect, that if a compensation carrier makes payments under a formal order and if the claimant does not institute an action against a third party tortfeasor within six months, then the carrier shall have the right to sue the third party. The parties agree on the validity of the waiver but do not agree on whether the rights waived include the right to proceed against a claimant’s recovery fund in a suit against Texaco as a third party tortfeasor.

Section 33(h) of the Longshoremen’s and Harbor Workers’ Act, 33 U.S.C.A. § 933(h), provides that the compensation insurance carrier shall be subrogated to all the rights of the employer under § 933 if it has assumed the payments of compensation to the injured employee:

(h) Where the employer is insured and the insurance carrier has assumed the payment of the compensation, the insurance carrier shall be subrogated to all the rights of the employer under this section.

Among the rights of the employer to which the carrier is subrogated is the right provided in section 33(b) of the Act, 33 U.S.C.A. § 933(b), for an assignment of an employee’s claim against a third party to his employer in those instances where payments are received pursuant to a compensation award:

(b) Acceptance of such compensation under an award in a compensation order filed by the deputy commissioner or Board shall operate as an assignment to the employer of all right of the person entitled to compensation to recover damages against such third person unless such person shall commence an action against such third person within six months after such award.

See 33 U.S.C.A. §§ 919, 921. Section 33(e) of the Act, 33 U.S.C.A. § 933(e), governs the distribution of the recovery when an employer or a subrogated insurer institutes a § 933(b) action, and specifically provides for reimbursement for all compensation and medical payments advanced.

There is no statutory counterpart of § 933(e) where payments are made to an employee without a formal award of compensation being entered. The subrogation right where there is no award is a judicial creature with the statute as a rationale. In cases such as this one, where the employee himself sues the third party tortfeasor, the courts have long recognized a right of subrogation to the extent of payments made, and have permitted the employer or its insurer to intervene in the employee’s suit to protect its right, even where compensation was paid without the entry of a formal compensation award. The Etna, 138 F.2d 37 (3d Cir. 1943); Hugev v. Dampskisaktieselskabet International, 170 F.Supp. 601 (S.D.Cal.1959), aff’d sub nom. Metropolitan Stevedore Co. v. Dampskisaktieselskabet International, 274 F.2d 875 (9th Cir.), cert. denied, 363 U.S. 803, 80 S.Ct. 1237, 4 L.Ed.2d 1147 (1960); Fontana v. Pennsylvania R.R., 106 F.Supp. 461 (S.D.N.Y.1952), aff’d sub nom. Fontana v. Grace Line, Inc., 205 F.2d 151 (2d Cir.), cert. denied, 346 U.S. 886, 74 S.Ct. 137, 98 L.Ed. 390 (1953). Thus, in The Etna, the leading case involving compensation without an award, the court stated:

We find no intent indicated by the Act to take away from the employer who pays compensation without an award his right to reimbursement out of his employee’s recovery from third persons. On the contrary, we think that the intent and scheme of the Act requires that the employer’s right to subrogation for compensation payments made in the circumstances here shown be recognized wholly apart from and without regard for the assignment provided for in Sec. 33(b) of the Act. It is only the right of control of the employee’s right of action against third persons which an employer foregoes by paying compensation without an award. His right to reimbursement out of the recovery for the employee’s injury remains unaffected.

138 F.2d at 41 (emphasis added). NorthWest claims that in its contract with American only the right “of control of the employee’s right of action against third persons [Texaco]” under § 933(b) of the Act was waived, and that the right to a lien against the recovery fund remains intact.

Although North-West cites no case in which a lien has been allowed absent a right of subrogation, it contends that The Etna and its progeny, Fontana v. Pennsylvania R.R., supra; see Nacirema Operating Co. v. Oosting, 456 F.2d 956 (4th Cir.), cert. denied, 409 U.S. 980, 93 S.Ct. 313, 34 L.Ed.2d 243 (1972); Joyner v. F & B Enterprises, Inc., 145 U.S.App. D.C. 262, 448 F.2d 1185 (1971); International Terminal Operating Co. v. Waterman Steamship Co., 272 F.2d 15 (2d Cir. 1959), cert. denied, 362 U.S. 919, 80 S.Ct. 671, 4 L.Ed.2d 739 (1960), support the proposition that a waiver of subrogation does not waive a compensation lien against the recovery fund. We believe that the above-quoted language from The Etna refutes this argument. The court in establishing a compensation lien against the recovery fund does so only in terms of the employer’s right to subrogation for compensation payments made to the employee. The only right North-West has to third party liability is this subrogation right to which it succeeded as the employer’s insurer. There is no indication that any independent right, i. e., other than a right of subrogation, was created in favor of the employer or its insurer. The decision in The Etna merely recognizes that the employer’s right is one of subrogation to be asserted through the procedure of intervention in the employee’s suit for the purpose of obtaining a lien on the recovery fund.

By Endorsement No. 13, North-West waived its rights of subrogation arising under the Longshoremen’s and Harbor Workers’ Act and under the main policy. The cases relied upon by North-West do not involve situations where the insurer specifically waived subrogation. For instance, in International Terminal Operating Co. v. Waterman Steamship Co., 272 F.2d 15 (2d Cir. 1959), cert. denied, 362 U.S. 919, 80 S.Ct. 671, 4 L.Ed.2d 739 (1960), an injured stevedore, after receiving compensation payments from his employer without award, brought suit against the owner of the vessel which he was unloading when he was injured. While this action was pending, his employer notified the shipowner that it had made compensation payments to the employee and that it would look to the shipowner for reimbursement of the amount of such payments should the employee obtain judgment or reach settlement. Pursuant to a plan of settlement devised by the trial judge in the employee-third party action, a judgment was entered against the third party and, at the explicit directions of the trial judge, a check for the full amount of the judgment was immediately paid over to the employee. The employer then filed an action for reimbursement against the third party. Since the third party was ordered by a state court of competent jurisdiction to turn over the entire amount of judgment to the employee, the court held that the employer could look only to its employee for satisfaction of its claim for reimbursement. In that case the employer had an unquestioned right to subrogation and the court settled the question as to how and against whom it should be asserted. This is not analogous to the question we decide here.

In Joyner v. F & B Enterprises, Inc., 145 U.S.App.D.C. 262, 448 F.2d 1185 (1971), another case relied upon by North-West, an injured employee was paid compensation benefits by his employer’s compensation insurance carrier, without formal award being entered. The employee then sued a third party allegedly responsible for his injuries, and joined the third party’s employer as defendant. The defendants then sought to join the compensation insurance carrier as a named party plaintiff in the action. The controversy between the parties was whether the carrier must be joined as a “real party in interest” under F.R.Civ.P. 17(a). After considering 33 U.S.C.A. § 933(b) and the cases interpreting that section, including The Etna, the court held that the insurance carrier was not a real party in interest in the employee’s suit against the third party tortfeasor. There was no waiver of subrogation issue in the case. The carrier had its right of subrogation and could assert it by intervening in the employee’s suit if it chose to do so.

Another case cited to us by NorthWest, Nacirema Operating Co. v. Oosting, 456 F.2d 956 (4th Cir.), cert. denied, 409 U.S. 980, 93 S.Ct. 313, 34 L.Ed.2d 243 (1972), concerned the proper computation of a 33 U.S.C.A. § 933(f) deficiency award, which arises when the amount of money an injured employee receives in a suit against a third party tortfeasor is less than the amount paid under the provisions of the Longshoremen’s and Harbor Workers’ Act. After examining § 933(e) and its judicially created counterpart, the court held that the deficiency should be computed without deduction for the longshoreman’s attorney’s fees and litigation expenses incurred in his action against the third party. Again in this case, as in all of the other cases relied upon by North-West, there was no waiver of subrogation rights by the insurer against a third party. Although the cases cited by North-West illustrate the variety of problems which arise under the Longshoremen’s and Harbor Workers’ Act, they do not materially aid in the solution of the problem at hand.

North-West argues that it waived only its right to subrogation and not its right to a lien on the plaintiff’s recovery fund. It is fundamental, however, that a lien does not exist without a right or obligation to support it. A lien is simply a claim against property for the payment of a debt or the fulfillment of some obligation. At the time NorthWest made- the payments for compensation and for medical expenses in this case, it had already agreed in its contract with American for a premium and for the express benefit of Texaco that its right of subrogation against Texaco would be waived. When North-West waived subrogation, it necessarily waived the lien which it claims to assert bottomed on the right of subrogation.

In its brief North-West has quoted language from several cases to support its contention that the courts have established the compensation lien to prevent double recovery by the plaintiff. See Nacirema Operating Co. v. Oosting, supra; The Etna, supra; Fontana v. Pennsylvania R.R., supra. In circumstances where no waiver has been given, the possibility of double recovery by the plaintiff provides justification for creating an equitable lien in favor of a party making compensation payments to the injured workman. But if the right to subrogation has been waived, there is no debt for which an equitable lien can be created. Having waived its rights to subrogation, North-West has no standing to protest the plaintiff’s possible double recovery.

It should be noted that under the terms of the settlement agreement in this case there could be no double recovery by the injured employee. Allen received $15,000 net, regardless of the disposition of the compensation claim. Texaco agreed to pay in addition the claim of North-West if found valid. The nature of the settlement robs the double recovery argument of all vitality. As a practical matter, the waiver of subrogation rights by the compensation insurer permits the third party to achieve the kind of settlement arrived at here and precludes double recovery to the third party’s advantage.

The additional premium of $103 paid to North-West for Endorsement No. 13, waiving its subrogation rights against Texaco, deprives North-West of the equity it asserts in claiming an equitable lien on . Allen’s settlement fund from Texaco. The very purpose of the waiver of subrogation provision in the American-North-West contract was to assure Texaco that, in the event it was sued as a third party, it would not have to pay the elements of damage for which North-West had already compensated the injured employee. The money Texaco paid American for the services of its employees of necessity included consideration of the required additional insurance premiums paid to North-West. Under these circumstances, North-West is not in a position to argue equities.

Affirmed.


text:
    Marvin E. STEWART, Plaintiff, v. CRAN-VELA RENTAL CO., INC., Third-Party Defendant-Appellant, SHELL OIL COMPANY, Defendant-Third-Party Plaintiff-Appellee. XYZ Insurance Co., Defendant, State Automobile & Casualty Underwriters, Intervenor.
    No. 74-1107.
    United States Court of Appeals, Fifth Circuit.
    April 7, 1975.

      Geoffrey H. Longenecker, for defendant-appellant.
    Abraham Gerber, New Orleans, La., for North West Ins. Co., amicus curiae.
    Edward J. Koehl, Jr., John R. Peters, Jr., New Orleans, La., for defendant-appellee.
    Phillip T. Hager, New Orleans, La., for Stewart.
    Before BELL, AINSWORTH and RO-NEY, Circuit Judges.
   RONEY, Circuit Judge:

In Allen v. Texaco, Inc., 510 F.2d 977 (5th Cir. 1975), we held that a workmen’s compensation insurance carrier’s waiver of subrogation rights as to a third party precludes the carrier from asserting a right to a compensation lien against the settlement proceeds received by the injured employee when he sues the third party for damages because of his injuries. This case presents this same issue in a slightly different context. Here the employer was obligated by contract to obtain a waiver of subrogation in favor of a third party from its workmen’s compensation insurance carrier, but failed to do so. The dispute in this case is over the effect of that breach as between the employer and the third party. Following Allen, we hold that as damages for the breach of contract the third party would be able to recover from the employer the amounts paid to the compensation carrier on the subrogation claim. We affirm the district court’s judgment for such damages in favor of the third party against the employer.

Cran-Vela Rental Company contracted to furnish Shell Oil Company labor and equipment. The contract between them required Cran-Vela to maintain on the employees furnished Shell compensation insurance coverage under the Longshoremen’s and Harbor Workers’ Act, the Outer Continental Shelf Lands Act, and the Jones Act, and to see that the policies included a waiver of subrogation by the insurers in favor of Shell. In the alternative, Shell could be named as a co-assured in each policy. Despite these contract provisions with Shell, the compensation policy issued by State Automobile & Casualty Underwriters to CranVela neither contained a waiver of subrogation nor named Shell as a co-assured. The district court found that Shell had not waived its contractual right by silent receipt of the insurance certificate and in its findings of fact stated:

I cannot draw from the certificates of insurance . . . any inference that Shell has waived its rights. There is nothing in this document to call to Shell’s attention that no waiver has been secured. Even if we assume that the delivery of this document were sufficient to put Shell on notice that it was not a co-assured, it certainly says nothing to put Shell on notice that the waiver of subrogation has not been obtained. ... I could not find from receipt of this verification of insurance any intentional relinquishment of a right clearly specified in the agreement.

This finding is not clearly erroneous under F.R.Civ.P. 52(a).

Marvin Stewart sued Cran-Vela and Shell for personal injuries sustained while Stewart was employed by CranVela and working offshore on a Shell job as a roustabout. Stewart claimed to have been injured aboard a Shell work-boat when the boat’s operator, a Shell employee, backed it into an offshore structure causing Stewart to fall to the deck. His cause of action was based on allegations of Jones Act negligence, unseaworthiness, and maritime tort. Both Shell and Cran-Vela denied any liability for Stewart’s injuries but filed cross-claims against each other seeking indemnity on various theories. State Auto intervened in the suit seeking recovery of the compensation benefits paid to Stewart on behalf of 'Cran-Vela.

Immediately after a jury had been impanelled in the case, and with the approval of the district court, the claims of Stewart and State Auto were settled by Shell. As part of the settlement Shell paid State Auto the sum of $4,940.65, approximately one-half of the compensation paid by State Auto to Stewart. Shell specifically reserved its right to pursue Cran-Vela under its cross-claim. The district court entered a judgment incorporating the terms of this settlement.

Following the settlement, Shell asserted against Cran-Vela the breach of contract claim reserved by the judgment for failure to obtain a waiver of subrogation in Shell’s favor in its policy with State Auto. The only issue tried by the district court and to be decided on this appeal involves the effect of this admitted breach of contract.

Cran-Vela’s principal issue presented for review on appeal is the same as that presented in Allen v. Texaco, Inc., 510 F.2d 977 (5th Cir. 1975). It argues that even if a waiver of subrogation had been secured in Shell’s favor, State Auto could have recovered its compensation payments from the plaintiff’s recovery fund. Therefore, Cran-Vela contends, Shell was not damaged by Cran-Vela’s breach of contract in not securing the waiver of subrogation. Since the issue is decided adversely to Cran-Vela by Allen, there is no need for further discussion as to this point. By holding that a waiver of subrogation precludes assertion of a. lien against the plaintiff’s recovery fund, we necessarily determine that Cran-Vela’s breach did in fact cause Shell to pay moneys it would not otherwise have owed.

Cran-Vela seeks reversal on certain other points not governed by Allen. Stewart was a borrowed servant of Shell at the time of the accident, Cran-Vela argues, so that Shell was the party responsible for compensating him under the terms of the Longshoremen’s and Harbor Workers’ Act and cannot complain about Cran-Vela’s failure to obtain a waiver of subrogation. The district court did not make any findings concerning Stewart’s status as a borrowed servant of Shell. Likewise we do not need to address this factual issue. Even if Stewart had been a borrowed servant of Shell, Cran-Vela cannot now argue that Shell was Stewart’s employer for compensation purposes. At the time of the accident Stewart was a payroll employee of Cran-Vela, doing longshoreman’s work on account of and on behalf of Shell pursuant to Shell’s agreement with Cran-Vela. In addition, Shell had required as a contract obligation of CranVela that it provide insurance coverage under the Longshoremen’s and Harbor Workers’ Act to all employees. CranVela even asserted the exclusivity of State Auto’s compensation payments as a defense in its answer to Stewart’s original complaint. Under these circumstances, we find no merit to Cran-Vela’s borrowed servant argument.

Cran-Vela next argues that Shell’s claim. against it is contradictory to the payments Shell made to State Auto. Because State Auto’s rights are only as a subrogee of Cran-Vela, the argument goes, Shell’s payment to State Auto is equivalent to payment to CranVela. What Cran-Vela overlooks is that in this case, Shell was legally liable to State Auto, but not to Cran-Vela. By the contract, Cran-Vela gave up any right it might have had to be subrogated to the employee’s claim against Shell by its agreement to obtain insurance with a waiver of subrogation. Cran-Vela could not have recovered against Shell even if it had failed to get any insurance and been required to pay the compensation itself. But Cran-Vela’s contracting away of its subrogation rights was not binding on State Auto. Thus, State Auto can assert a greater right against Shell as a subrogee of Cran-Vela than Cran-Vela itself would have had. In the legal realities of the case, there is nothing contradictory in Shell’s actions.

Finally, Cran-Vela challenges Shell’s action in entering into the settlement with State Auto. Cran-Vela asserts that the district court erred in limiting the inquiry on the cross-claim to the reasonableness of the settlement. It claims that since Cran-Vela was not a party to the settlement, it is not bound by the results of the settlement and the judgment of approval and it should have been allowed to litigate the merits of Shell’s liability to State Auto. It contends that if Shell had, in fact, no liability to Stewart or State Auto, any settlement with these parties would have been unreasonable.

Much of Cran-Vela’s argument is misguided in that it attacks the settlement in an indemnity context rather than on breach of contract principles. Shell voluntarily dismissed its claim against Cran-Vela for indemnity and pursued only its claim for damages resulting from Cran-Vela’s breach of contract. We agree with the district court that under these circumstances “the real issue is whether Shell acted reasonably and prudently in disposing of the matter and minimizing its damages.” CranVela has no right to pursue to ultimate determination the issue of Shell’s liability to Stewart or State Auto. There was no need for the district court to determine whether Shell was or was not, in fact, liable. The purpose of the settlement and the judgment entered approving it was to dispose of the liability claim without such a conclusive determination. The district court was correct in deciding that all “the law requires is a determination by the Court that there has been a reasonable and fair payment by the party who asserts a breach of contract.” The conclusion that “there has been a reasonable and fair payment by Shell” is not clearly erroneous. As a result of Cran-Vela’s breach of contract, Shell was exposed to liability to the compensation insurer, State Auto, for the $9,741.30 of compensation paid to Stewart. The settlement for one-half this amount cannot be said to be unreasonable as a matter of law.

Shell has proceeded in this litigation on the theory that Cran-Vela breached its contract in not effecting a waiver of subrogation as to Shell, rather than in not having Shell named as a co-assured. Where the option of fulfilling one of two alternative promises rests with the promisor who is in default, the measure of damages is the loss caused by reason of the promisor failing to perform the. promise with the lesser value. Western Oil & Fuel Co. v. Kemp, 245 F.2d 633, 640 (8th Cir. 1957); Williston on Contracts § 1407 (3d ed. W. Jaeger 1968). Since the parties have not seen fit to contest the issue of whether a waiver of subrogation has the same legal affect as naming a party as a co-assured, we do not consider it on this appeal.

Affirmed.


author: LEWIS R. MORGAN, Circuit Judge:

text:
    John WILSON and Jeffery A. Wilson, Plaintiffs-Appellants, v. I.B.E. INDUSTRIES, INC., a Texas Corporation, et al., Defendants-Appellees.
    No. 74-1570.
    United States Court of Appeals, Fifth Circuit.
    April 3, 1975.

      Darrell L. Keith, Hurst, Tex., for plaintiffs-appellants.
    Patrick F. McGowan, Dallas, Tex., for defendants-appellees.
    Before MORGAN and CLARK, Circuit Judges, and RUBIN, District Judge.
   LEWIS R. MORGAN, Circuit Judge:

In this case we are called upon to determine whether, the lessor/supplier of a gasoline station may unilaterally refuse to deal with its lessee/purchaser because the lessee continues to do business with certain customers disliked by the lessor. Finding that the lessor’s actions in this case did not amount to a violation of Section 1 of the Sherman Act, we affirm the judgment of the district court. .

I.

Plaintiffs John Wilson and Jeffery A. Wilson operated a Texaco service station in Denton, Texas, as tenants-at-will under an agreement with the local Texaco distributor, I.B.E. Industries, Inc. I.B.E. owned the building, the underground storage tanks, gasoline pumps, and racks at the Texaco station. The Wilsons purchased gasoline and oil products from I.B.E. and sold them to the general public. Two of the Wilsons’ largest customers were local automobile dealerships, Utter Ford and Wyatt Volkswagon, for whom the Wilsons provided cleanup and “make ready” business and to whom the Wilsons sold gasoline and related products.

According to the testimony of John Wilson, the Wilsons were visited on July 12, 1971, by Ed Keniff, general manager of I.B.E. Allegedly, Keniff said that I.B.E. and the Wilsons would have to “part company” unless the Wilsons gave up the automobile dealerships’ business because “it clutters up the station too much.” The Wilsons refused to comply with this demand and I.B.E. subsequently discontinued gasoline deliveries to the Wilsons’ station. The Wilsons then moved to a nearby Arco station, but the volume of their business dropped off and they were eventually forced to give up the service station business entirely.

The Wilsons sued I.B.E. seeking damages under § 1 of the Sherman Act (15 U.S.C. § 1 (1973)). At trial I.B.E. maintained that the Wilsons were asked to leave the station solely because three checks they tendered to I.B.E. in June, 1971, as payments for gasoline were returned marked “insufficient funds.” The Wilsons did not deny that these checks were returned, but contended that they were forced to leave because they would not stop servicing the two car dealerships. In spite of the fact that subsequent tenants at the station serviced the two car dealerships, the trial resulted in a hung jury. The district court then entered judgment for I.B.E., in accordance with a motion for directed verdict made prior to the submission of the case to the jury. The court based the decision upon its finding that the evidence revealed no contract, combination, or conspiracy in restraint of trade. The Wilsons appeal. Of course, in considering the propriety of the district court’s order we consider the evidence in a light most favorable to the appellant. See Boeing Co. v. Shipman, 411 F.2d 365, 374 (5th Cir. 1969) (en banc).

II.

I.B.E. is a wholesale distributor that does not compete with its own retailers for customers. Appellants have neither alleged nor proven any anti-competitive animus on I.B.E.’s part, nor any anti-competitive effect of the distributor’s actions. Nevertheless, appellants allege that I.B.E.’s actions violated the Sherman Act under the “per se” rule of United States v. Arnold, Schwinn & Co., 388 U.S. 365, 87 S.Ct. 1856, 18 L.Ed.2d 1249 (1967).

In the Schwinn case the Supreme Court held that a manufacturer’s method of franchising dealers and confining their sales to specific territorial areas was not an unreasonable restraint of trade as long as the manufacturer retained all indicia of ownership and dealers were indistinguishable in function from agents or salesmen. Id. 411 F.2d at 381. However, once the manufacturer has parted with dominion over the product, his efforts to restrict persons to whom the product could be transferred— “whether by explicit agreement or by silent combination or understanding with his vendee” — is a per se violation of § 1 of the Sherman Act. Id. at 382. Appellants therefore argue that where a manufacturer or distributor sells a product to a retailer subject to restrictions on its transfer, a per se violation of the Sherman Act results. See id. at 379.

The language of the Schwinn case is quite broad. However, the Court in that case was considering a complex scheme in which a manufacturer developed an entire distribution system for its product by parceling out exclusive territories to each of its distributors. Hence, in Schwinn, as well as those cases upon which it relies, see id. at 371 — 73, a manufacturer not only assigned territories or customers to its distributors, but also articulated resale restrictions. Moreover, most of those eases which have relied upon Schwinn’s language have considered precisely the same type of vast retail distribution network reinforced by customer or territorial resale restrictions. See, e. g., Hobart Bros. Co. v. Malcolm T. Gilliland, Inc., 471 F.2d 894 (5th Cir.1973), cert. denied, 412 U.S. 923, 93 S.Ct. 2736, 37 L.Ed.2d 150 (1973); Cook v. Ralston Purina Co., 366 F.Supp. 999 (M.D.Ga.1973). We therefore believe that Schwinn requires proof of something more than an agreement to cut off one or two customers for reasons that have nothing to do with the supplier’s pattern of distribution or the demands of competition. Since the record reveals, at best, only a one-time demand that the appellant stop dealing with two of its customers, we hold the per se rule of Schwinn inapplicable. Accordingly, the situation before us is simply a distributor’s refusal to deal with a retailer, and it therefore lacks any anti-trust overtones. See Anaya v. Las Cruces Sun News, 455 F.2d 670 (10th Cir. 1972).

I.B.E. was also the appellants’ lessor; it owned all the property the appellants used in their business except the gas they sold. I.B.E. thus had a legitimate interest in maintaining the premises, because they would revert to it at the end of the lease term, and in maintaining the appellants’ business, since I.B.E. might well need to operate the station itself or find another lessee in the future. It was entitled to protect this interest by refusing to deal with a tenant who “cluttered up” the station.

The weight of precedent clearly indicates that a distributor may discontinue dealing with a particular retailer for business reasons which are sufficient to the distributor, and adverse effect on the business of the retailers is immaterial in the absence of any arrangement restraining trade. Bushie v. Stenocord Corp., 460 F.2d 116, 119 (9th Cir. 1972); Ricchetti v. Meister Brau, Inc., 431 F.2d 1211, 1214 (9th Cir. 1970), cert. denied 401 U.S. 939, 91 S.Ct. 934, 28 L.Ed.2d 219 (1971). Since the record does not reveal any anti-competitive effects of I.B.E.’s actions, the Wilsons’ arguments fail to present a violation of the anti-trust laws. See Bushie v. Stenocord Corp., supra; Anaya v. Las Cruces Sun News, supra.

The appellants rely upon Sahm v. V—1 Oil Co., 402 F.2d 69 (10th Cir. 1968), but their reliance is misplaced. In that case, the plaintiff had a written agreement which provided for a one-year lease of a service station in Salt Lake City, Utah, with the right to terminate on 30 days written notice. At the time the parties entered into the lease, the plaintiff orally agreed to sell gasoline consigned to him by the defendant at prices set by the defendant. A few months later, the plaintiff raised the price of the gas he sold. The defendant gave 30 days written notice of termination but indicated that it would not terminate the lease if plaintiff would adhere to the pricing-agreement. The plaintiff, however, remained adamant and the lease was can-celled. In reversing the dismissal of the plaintiff’s complaint, the Tenth Circuit held that § 1 of the Sherman Act was violated because the resale price maintenance agreement was tied to and enforced by related agreements between the parties, and the related agreements were used by one of the parties in an attempt to reinstate the price-fixing agreement. Hence, the 30-day termination clause was construed as an agreement supporting a § 1 clause of action. See id. at 72.

The Sahm case deals with resale price-fixing, a concept not present here. Hence, the holding of that case is based upon precedents and policy reasons wholly inapplicable to the situation before us. We therefore believe Sahm inapposite and we do not reach the issues presented there.

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

      . In fact, appellant John Wilson conceded at trial that he could think of no reason for I.B.E.’s alleged decision to terminate sales to two such valuable customers.

      . Although the challenged activity in this case is I.B.E.’s alleged attempt to “cut off” the car dealers, the suit here is brought by the retail outlet rather than the car dealers or the government. It would therefore appear that the appellants are trying to fit their case into a “territorial restriction” or “resale price maintenance” analysis, rather than a mere refusal to deal.

      . There is no evidence in the record of an attempt by I.B.E. to coerce the Wilsons or to cut off the car dealerships by pressuring other retail outlets. The parties in this case never entered into any type of agreement to limit sales, nor did I.B.E. enter into an agreement with any other party in order to limit the appellants’ sales.

      . Vertical resale price-fixing has long received hostile treatment by the Supreme Court. See United States v. Parke, Davis & Co., 362 U.S. 29, 80 S.Ct. 503, 4 L.Ed.2d 505 (1966); Dr. Miles Medical Co. v. Park & Sons, 220 U.S. 373, 31 S.Ct. 376, 55 L.Ed. 502 (1966). However, from its first consideration of the question, the Supreme Court has recognized that vertical territorial and customer restrictions have different, and perhaps less onerous, effects upon competition than does vertical price-fixing. See White Motor Co. v. United States, 372 U.S. 253, 83 S.Ct. 696, 9 L.Ed.2d 738 (1963). Indeed, the Court in Schwinn specifically distinguished unlawful price-fixing from the vertical territorial and customer restrictions before it. See United States v. Arnold, Schwinn & Co., 388 U.S. 365, 372-73, 87 S.Ct. 1856, 18 L.Ed.2d 1249 (1967).


author: COLEMAN, Circuit Judge. ROSENN, Circuit Judge

text:
    UNITED STATES of America, Plaintiff-Appellee, v. Rex Stidham WINDOM, Defendant-Appellant.
    No. 74-2935.
    United States Court of Appeals, Fifth Circuit.
    April 7, 1975.
    Rehearing and Rehearing En Banc Denied June 2, 1975.

      Harry E. Claiborne, Las Vegas, Nev., for defendant-appellant.
    Gerald J. Gallinghouse, U. S. Atty., Robert L. Livingston, Mary W. Cazalas Asst. U. S. Attys., New Orleans, La., for plaintiff-appellee.
    Before THORNBERRY, COLEMAN and ROSENN , Circuit Judges.

       Of the Third Circuit, sitting by designation.

   COLEMAN, Circuit Judge.

Rex Windom appeals his conviction of publishing and uttering as true eight government checks bearing forged endorsements knowing the endorsements to have been forged. We affirm.

The direct evidence against Windom was supplied by three witnesses — Raymond Starns, James Maxwell, and George Boyd.

Starns’ Testimony

At the time of the trial, Raymond Starns was serving a sentence in federal penitentiary arising out of some of the same criminal activities with which defendant was charged. Starns testified that in February of 1972 he was attempting to sell his bankrupt business, the Mechanical Maintenance and Manufacturing Company. On February 16, 1972, a business associate introduced him to the defendant. Windom represented himself to be George Boyd, President of the prosperous Missouri corporation, Tri State Motor Transit. He told Starns that he was planning to invest in a Louisiana business and might be interested in buying the Mechanical Maintenance and Manufacturing Company.

During the discussion of the proposed sale, defendant told Starns that he wanted to open an account in a Louisiana bank. Starns recommended the First National Bank of Denham Springs, where he did his banking business, and agreed to take Windom to that bank.

When they got to the bank, Starns and Windom talked with James Maxwell, the bank president. Defendant again represented himself to be George Boyd, and explained his desire to open an account. To open the account, he produced eight U. S. Government checks, made out to Tri State Motor Transit, the Missouri corporation he claimed to represent. Since defendant said he did not have the company's stamp with him, Maxwell had Tri State’s endorsement typed on the checks. The representation that the endorsements were true and authorized is the criminal act for which Windom stands convicted.

Starns testified that he and defendant had two other meetings for the purpose of discussing the proposed Mechanical Maintenance sale. One occasion was a brief meeting at a Baton Rouge coffee shop. The other took place at the offices of Starns’ attorney. The law office meeting was the occasion on which Windom first drew on the account he had fraudulently established in the Denham Springs Bank. He drew a $35,000 check, gave it to Starns, who gave it to one of the lawyers, who, in turn, gave it to a secretary for cashing. The secretary returned with the cash; defendant put it in his briefcase.

The meeting ended with no finalization of the sale of the business. Starns drove defendant to the airport. On the way, for reasons left unclear by Starns’ testimony, defendant gave Starns $5000 in cash, plus some checks which Starns later discovered to have been stolen.

Contact between Starns and defendant terminated with their arrests.

Maxwell’s Testimony

James Maxwell, President of the Den-ham Springs First National Bank, corroborated Starns’ testimony to the effect that defendant had come to the bank, had represented himself to be George Boyd, and had deposited the government checks made out to Tri State Motor Transit. He testified that he had cashed, a $35,000 check signed “George Boyd”, delivered by the secretary. He further testified that Starns had given him a $110,000 check signed “George Boyd”. The $110,000 check was payable to another bank and was drawn for a transfer of funds. He honored this fraudulent check, but the money was recovered.

George Boyd’s Testimony

The real George Boyd testified that he is president of Tri State Motor Transit, that he does all his banking in Missouri, that he has never been in Denham Springs, Louisiana, and that he does not know how the defendant obtained the government checks made payable to his company.

The Appellate Arguments

Defendant makes no claim that the above recited evidence is insufficient to sustain the conviction. Instead, he urges various alleged evidentiary, procedural, and instructural errors:

I. Did the Judge err in admitting evidence supplementing facts stated in a written stipulation?

The government took a handwriting specimen from defendant. It had an F.B.I. handwriting expert compare this handwriting with the signatures on checks and other documents signed by the person calling himself “George Boyd”. The government hoped to show that the individual who had signed the checks as “George Boyd” was the defendant.

The handwriting expert could reach no definite conclusion as to. whether or not the signatures on the checks were made by defendant. Consequently, the government and the defendant entered the following stipulation:

“[0]n the basis of the analysis and comparison, it was not determined that the handwriting on the exhibits was the handwriting of Rex Windom.”

Some time prior to the trial, the government advised Windom’s counsel that it planned to call its handwriting expert to testify. The government attorney specifically invited defense counsel to question the expert so that he would be prepared to cross examine. The invitation was declined.

At the trial, over objection, the handwriting expert testified in detail about the procedures used in signature analysis. He further testified that although he had formed no conclusion, the defendant possibly “could have” signed the checks.

Defendant says the admission of the expert’s testimony was reversible error since “a written stipulation may not be commented on, nor testimony taken, once the parties have agreed to the stipulation”.

How this factor was allowed to creep into the case seems incomprehensible. Windom was not on trial for uttering handwritten endorsements. The charge was that he had falsely represented himself to be the president of the company to whom the checks were issued and had falsely represented that he had authority to cause typewritten endorsements to be affixed to the checks. That he did cause the endorsements to be typed on the checks was proven by the eye witness testimony of both Starns and the bank president. If it can be said that the forgery of the real Boyd’s signature on checks drawn on the account would tend to show that Boyd was guilty of the original forgery, the answer is that the forgery had already been proven by direct, rather than secondary evidence, as had the delivery of the $30,000 check to the attorney.

On the other hand, we are equally skeptical that the episode in any way prejudiced Windom. The testimony of the witness did not contradict the stipulation. Indeed, it confirmed it. It nailed down the proposition that the handwriting expert could not conclude that Windom did the handwriting in question. This should have been to Windom’s advantage. True, the witness was allowed to say that Windom could have done it, but that was not what the case was about. The issue was, did he utter forged typewritten endorsements? Furthermore, defense counsel had been on adequate notice that the handwriting expert would be called to testify.

In view of the eye witness testimony, in view of no contradiction of the basic premise of the stipulation, in consideration of the fact that the expert witness admitted that he could not say that the writings were Windom’s, and in further consideration that defense counsel knew all along that the expert was going to be called to testify, our appraisal of this skirmish is that if error existed it was harmless beyond a reasonable doubt.

We are similarly unimpressed by appellant’s complaints concerning the instructions of the Court which conceded, although unnecessarily, that the government would have to prove by the evidence beyond a reasonable doubt that Windom had “obtained possession of a genuine obligation of the United States.” The indictment charged this, but this was pure surplusage. The offense was uttering a forgery, not possessing a stolen government check. The end result of all this is that the government assumed and, by the instructions of the Court, was required to carry a burden which was not properly assignable to it. Instead of being prejudiced, Rule 52, Fed.R.Crim.P., the defendant was handed a windfall. It was a sham issue in any event. Obviously, the defendant had to come into the possession of the checks, else he could not have offered them to the bank president.

The assignment about the instruction on aiding and abetting, 18 U.S.C. § 2, must be consigned to a similar fate. The appellant argues that this instruction was wholly improper because there was no evidence that Windom aided another to commit the offense charged; in other words, by the government’s proof, Windom was himself the principal. Even so, Starns had testified that on one occasion prior to the time he and Windom deposited the government checks in the Denham Springs bank, he, Starns, the close associate of Windom in depositing the checks, had deposited $300,000 in stolen U. S. Treasury notes in the same bank as collateral for a loan he was arranging for some associates. This testimony could have given rise to an inference, if the jury saw fit to accept it, that if Windom was not acting on his own behalf when he deposited the checks he was aiding and abetting Starns in his various activities associated with stolen government checks and securities.

The appellant additionally complains of the failure of the District Court to give the customary accomplice in-, struction, that such testimony must be received with great caution. The problem with this is that the defense requested no such instruction, so the point is of no moment unless it amounted to plain error. The failure to give such an instruction where the testimony of the accomplice is the only direct evidence against the accused is plain error, Tillery v. United States, 5 Cir., 1969, 411 F.2d 644; Williamson v. United States, 5 Cir., 1964, 332 F.2d 123.

To the contrary, in a case where the defendant was convicted on the uncorroborated testimony of two convicted accomplices we declined, in the absence of a close evidentiary situation, to reverse for failure to give a cautionary instruction, United States v. Clark, 5 Cir., 1973, 480 F.2d 1249.

We are next met with the assertion that the trial court should not have charged the jury in the following language:

The writing of a payee’s endorsement on a United States Treasury Check by any person other than the payee, if done willfully and without authority, and with intent to defraud, constitutes a forgery within the meaning of Section 495 of Title 18 of the United States Code.

We agree with what the 8th Circuit said in Cummings v. United States, 8 Cir., 1968, 398 F.2d 377, 382: the reference to forgery was merely explanatory of the actual charge, uttering the forgery, and in giving the instruction the trial court did not submit an additional charge not contained in the indictment.

Finally, we are told that the District Judge committed reversible error when he declined to declare a mistrial after the prosecutor in the course of argument referred to the defendant as a “con artist”. We resist the temptation to present a recapitulation of the many cases dealing with this subject. In general, prosecuting attorneys are no longer permitted to indulge themselves, or their audiences, in unrestrained, abusive histrionics, giving their personal evaluations of what a low-down fellow the defendant really is. Nevertheless, the law remains that unflattering characterizations of a defendant will not provoke a reversal when such descriptions are supported by the evidence. See, e. g., Walker v. Beto, 5 Cir., 1971, 437 F.2d 1018, in which the prosecutor referred to the appellant as a “professional criminal.”

Appellant complains that since all eight checks were uttered at the same time to the same recipient he should not have been prosecuted, convicted, and sentenced on eight counts, charging each check as the basis for an individual count. We disagree. Each check was a separate document, requiring a separate endorsement, and thus was uttered individually. Besides, the appellant received concurrent sentences. See United States v. Hale, 5 Cir., 1972, 468 F.2d 435, which deals with both aspects of this argument.

Affirmed.

ROSENN, Circuit Judge

(concurring).

Although I concur in the majority’s affirmance of defendant’s conviction, I would vacate his sentence and remand for sentencing on only one count.

The statute under which defendant was convicted provides in part:

Whoever utters or publishes as true any such false, forged, altered, or counterfeited writing, with intent to defraud the United States, knowing the same to be false, altered, forged, or counterfeited [shall be fined or imprisoned].

18 U.S.C. § 495 (1970). The Government relies upon the word “any” in the statute for its contention that each check uttered constituted a separate offense. I believe this reliance is misplaced. The representation that the check endorsements were true and authorized constituted only a single transaction, and thus only one offense.

In United States v. Driscoll, the defendant was convicted on six counts under a statute making it unlawful to cause the interstate transportation of “any falsely made, forged, altered, or counterfeited securities . . ..” 454 F.2d 792 (5th Cir. 1972); 18 U.S.C. § 2314 (1970). Although six checks were placed in evidence, the defendant passed these checks on only three separate occasions. 454 F.2d at 801. The court concluded that only three violations of section 2314 occurred and the Government apparently so conceded. Id.

The Supreme Court’s decision in Bell v. United States, although dealing with a criminal statute in a different substantive area, lends strong support to the position adopted in Driscoll. 349 U.S. 81, 75 S.Ct. 620, 99 L.Ed. 905 (1955). The defendant in Bell was convicted of two counts under the Mann Act for transporting two women on the same occasion. The Mann Act provides in part:

Whoever knowingly transports in interstate or foreign commerce . any woman or girl .

18 U.S.C. § 2421 (1970). The Supreme Court held that only one offense had been committed.

It is not to be denied that argumentative skill, as was shown at the Bar, could persuasively and not unreasonably reach either of the conflicting constructions. About only one aspect of the problem can one be dogmatic. When Congress has the will it has no difficulty in expressing it — when it has the will, that is, of defining what it desires to make the unit of prosecution and, more particularly, to make each stick in a faggot a single criminal unit. When Congress leaves to the Judiciary the task of imputing to Congress an undeclared will, the ambiguity should be resolved in favor of lenity. And this not out of any sentimental consideration, or for want of sympathy with the purpose of Congress in proscribing evil or antisocial conduct. It may fairly be said to be a presupposition of our law to resolve doubts in the enforcement of a penal code against the imposition of a harsher punishment. This in no wise implies that language used in criminal statutes should not be read with the saving grace of common sense with which other enactments, not cast in technical language, are to be read. Nor does it assume that offenders against the law carefully read the penal code before they embark on crime. It merely means that if Congress does not fix the punishment for a federal offense clearly and without ambiguity, doubt will be resolved against turning a single transaction into multiple offenses, when we have no more to go on than the present case furnishes.

349 U.S. at 83-84, 75 S.Ct. at 622.

I am unable to distinguish the present case from either Driscoll or Bell. Both section 495 which is involved here arid the statutes construed in Driscoll and Bell contain the word “any” in the same syntactical context. As was the statute in Bell, section 495 is criminal in nature. Thus, because we are confronted with an expression of congressional intent no more clear than in Bell, we should resolve the ambiguity concerning punishment “in favor of lenity” and hold that defendant committed only one offense.

Because defendant could have been convicted of but one offense, the district court erred in sentencing him under each of the eight counts. The majority, however, would treat any such error as harmless since the sentences pronounced by the district court are to run concurrently. I cannot agree that the error in sentencing was harmless.

The so-called concurrent sentence “doctrine,” if it ever was recognized, has been eroded substantially in recent years. The Supreme Court decided in Benton v. Maryland that concurrent sentencing on multiple counts does not preclude, as a matter of jurisdiction, consideration of errors alleged on one count if another count leads to a valid conviction. 395 U.S. 784, 787-91, 89 S.Ct. 2056, 23 L.Ed.2d 707 (1969).

It may be that in certain circumstances a federal appellate court, as a matter of discretion, might decide (as in Hirabayashi) [320 U.S. 81 (1943)] that it is “unnecessary” to consider all the allegations made by a particular party. The concurrent sentence rule may have some continuing validity as a rule of judicial convenience.

Id. at 791, 89 S.Ct. at 2060 (footnote omitted).

In the Fifth Circuit, one line of cases has employed the “discretionary” concurrent sentence rule since Benton. United States v. Hendrix, 487 F.2d 893 (5th Cir. 1973) (per curiam); United States v. Lee, 483 F.2d 968 (5th Cir. 1973) (per curiam); United States v. Payne, 467 F.2d 828 (5th Cir. 1972); United States v. Dumenigo, 444 F.2d 253 (5th Cir. 1971) (per curiam); United States v. Varner, 437 F.2d 1195 (5th Cir. 1971) (per curiam). Only Varner cites Benton. 437 F.2d at 1197. Other cases in the Fifth Circuit, however, have held that concurrent sentencing does not cure conviction on more than the permissible number of counts. United States v. White, 440 F.2d 978, 981 & n. 4 (5th Cir. 1971); Holland v. United States, 384 F.2d 370, 371 (5th Cir. 1967) (pre-Benton); see United States v. Mori, 444 F.2d 240, 245 (5th Cir. 1971) (dictum).

I agree with Judge Goldberg, writing in Driscoll, that multiple sentencing is prejudicial. 454 F.2d at 801.

[S]everal sentences arising from what should have been a lesser number of offenses, even if the sentences are concurrent, would be prejudicial to the defendant by reducing his opportunities for earlier parole or pardon ....

Id. This harm was recognized prior to Driscoll in the White and Holland cases, supra.

I would vacate the sentences imposed by the district court and remand the case for resentencing on one count.

      . The first count of the indictment reads:
      Count I
      That on or about the 16th day of February, 1972, at Denham Springs, Louisiana, in the Eastern District of Louisiana, Rex Stidham Windom and Raymond Starns having obtained possession of a genuine obligation of the United States, to wit, a United States Treasurer’s Check No. 6287421, dated February 1, 1972, and payable to Tri-State Motor Transit Company in the amount of $10,-394.42, did then and there utter and publish as true and genuine a false and forged writing, that is, the falsely forged endorsement of Tri-State Motor Transit Company on the back of said check, with intent to defraud the United States, well and truly knowing the said writing to be false and forged; all in violation of Title 18, United States Code, Section 495 and Section 2.
      There were seven additional counts, identical to the first, except for the check number.
      18 U.S.C. § 495, Par. 2, is the statute under which defendant was indicted. It reads:
      Whoever utters or publishes as true any such false, forged, altered, or counterfeited writing, with intent to defraud the United States, knowing the same to be false, altered, forged, or counterfeited;
      ******
      Shall be fined not more than $1,000 or imprisoned not more .than ten years, or both.

      . 18 U.S.C.A. § 2 provides:
      (a) Whoever commits an offense against the United States or aids, abets, counsels, commands, induces or procures its commission, is punishable as a principal.
      (b) Whoever willfully causes an act to be done which if directly performed by him or another would be an offense against the United States, is punishable as a principal.


text:
    In the Matter of LUDLUM ENTERPRISES, INC., Bankrupt. AMERICAN INDUSTRIAL LEASING COMPANY, Appellant, v. David S. SEARLES, Trustee, Appellee.
    No. 74-1270.
    United States Court of Appeals, Fifth Circuit.
    April 7, 1975.

      Jeanne Heyward, Miami, Fla., Eugene L. Heinrich, Ft. Lauderdale, Fla., Donald E. Egan, Chicago, 111., for appellant.
    Jeffry R. Jontz, Orlando, Fla., for I.B.M., amicus curiae.
    Herb Stettin, Miami, Fla., for appellee.

      Before BELL, AINSWORTH and RO-NEY, Circuit Judges.
   RONEY, Circuit Judge:

The bankruptcy court decreed the Trustee in bankruptcy of a bankrupt lessee to be the owner of leased restaurant equipment for bankruptcy purposes against the claim of ownership by the lessor, where the lease had not been recorded and possession had been with the bankrupt over two years. The court relied on Florida Statutes § 726.09 concerning fraudulent loans. Since this district court is the first state or federal court ever so to apply this 150-year old Florida statute to a lease of personal property, this case is of first impression in this Court. Holding that Florida Statutes § 726.09 does not apply to bona fide leases of personal property and does not operate to cut off the ownership interest of the owner who fails to record the lease, we reverse.

There is no material controversy as to the controlling facts and for the purpose of this opinion we can simplify them by omitting details that might otherwise be favorable to the appellant but which are not relevant to our decision. American Industrial Leasing Company leased certain restaurant and kitchen equipment to the bankrupt. At the time of bankruptcy, the equipment had been installed for more than two years on the Ramada Inn premises owned by the bankrupt. The written lease agreement was not recorded in any public records.

An involuntary petition in bankruptcy was filed on December 10, 1971, against Ludlum Enterprises, Inc., and thereafter an adjudication in bankruptcy was entered, based upon an amended involuntary petition in bankruptcy filed on May 18, 1972. The Trustee filed his report as required by the local rules for a determination of the validity, priority, and amount of liens claimed by creditors against the estate. American Industrial Leasing Company asserted a claim of ownership against the restaurant property it had leased, which was in possession of the bankrupt by virtue of the lease agreement.

The bankruptcy judge held, first, that the agreement was in fact a lease rather than a security agreement and second, that because the property had remained in the possession of the bankrupt for a period of two years prior to the filing of the petition in bankruptcy and there had been no recordation of the lease agreement itself, the provisions of § 726.09, Florida Statutes, had been violated. The Trustee as “strong-arm” creditor was, therefore, entitled to assert a superior interest in the property to that claimed by American. See 11 U.S.C.A. § 110(c).

On review the district court agreed with the bankruptcy judge deciding first, that Florida Statutes § 726.09 applied to leases of personal property, second, that § 726.09 as it related to leases, was not impliedly repealed by the Florida version of the Uniform Commercial Code, and third, that certain financing statements filed by American did not satisfy the recording requirements of § 726.09.

There being no doubt as to possession being with the bankrupt for two years and that the lease was not recorded, the controlling question is whether Florida Statutes § 726.09 applies to the lease of personal property. The statute provides: 726.09 Fraudulent loans void

When any loan of goods and chattels shall be pretended to have been made to any person with whom or those claiming under him, possession shall have remained for the space of two years without demand and pursued by due process of law on the part of the pretended lender, or where any reservation or limitation shall be pretended to have been made of a use or property by way of condition, reversion, remainder or otherwise in goods and chattels, and the possession thereof shall have remained in another as aforesaid, the same shall be taken, as to the creditors and purchasers of the persons aforesaid so remaining in possession, to be fraudulent within this chapter, and the absolute property shall be with the possession, unless such loan, reservation or limitation of use or property were declared by will or deed in writing proved and recorded.

Appellant American, the lessor of the property, contends that Florida Statutes § 726.09 applies to “loans,” not leases, and therefore, the “absolute property” does not go with the possession but remains with the owner. Neither party was able to cite this Court to any reported Florida court decision applying or refusing to apply this ancient statute to a lease of tangible personal property. Our own independent research uncovered one short Florida Supreme Court case which arguably appeared to apply this section to a lease of personal property, Dixon Lumber Co. v. Jennings, 63 Fla. 405, 57 So. 615 (1912). But there the lease was a vehicle of actual fraud and the case is only moderately instructive on the precise issue we face here: whether a pure lease, unattended by any incidents of actual fraud, is subject to Florida Statutes § 726.09 (1973).

Although the Trustee is given the status of a hypothetical lien creditor under the so-called “strong-arm” clause of the Bankruptcy Act, he must look to state law for a definition of his rights as such creditor. Our role in this case is to define state law. In deciding that Florida law does not defeat the lessor’s right to the leased property in this case, we construe § 726.09 by considering first, the wording of the statute itself; second, the title of the statute and the Florida Constitutional provision pertinent to the title; and third, the interpretation given to similar statutes in other states.

Section 726.09 basically provides that when “any loan of goods and chattels” is made and the possession of the goods has remained in the borrower “for the space of two years without demand,” or where “any reservation or limitation” is made of a use or property “by way of condition, reversion, remainder or otherwise in goods and chattels” and the possession is similarly in one other than the owner for two years, the goods “shall be taken, as to the creditors and purchasers of the persons aforesaid so remaining in possession, to be fraudulent” and “the absolute property shall be with the possession, unless such loan, reservation or limitation of use or property were declared by will or deed in writing proved and recorded.” It is easy to see why the Florida courts have consistently applied this statute to conditional sales contracts. The parties and amicus curiae cited us many Florida cases concerning conditional sales and chattel mortgages. See Dillon v. Mizell Live Stock Co., 66 Fla. 425, 63 So. 824 (1913); Onyx Soda Fountain Co. v. L’Engle, 53 Fla. 314, 43 So. 771 (1907); Hudnall v. Paine, 39 Fla. 67, 21 So. 791 (1897); Campbell Printing Press & Manufacturing Co. v. Walker, 22 Fla. 412, 1 So. 59 (1886); White v. County Mortgagee Corp., 211 So.2d 254 (Fla. App.1968); Rood v. Miami Air Conditioning Co., 193 So.2d 216 (Fla.App.1966); Maas Brothers, Inc. v. Guaranty Federal Savings & Loan Assoc., 180 So.2d 195 (Fla.App.1965); Dade National Bank of Miami v. University Transfer & Storage, Inc., 151 So.2d 868 (Fla.App.1963); Richardson Tractor Co. v. Square Deal Machinery & Supply Co., 149 So.2d 388 (Fla. App.1963). Such contracts clearly fall within the statute’s second prescription. Such a contract is a “reservation . made of property by way of condition, . . . [to] goods and chattels, and the possession thereof” has remained, when the statute has been found to apply, in a person other than the title holder. It is equally clear to us that a lease does not involve such a condition on the title to the property, nor does it involve a reversion, remainder or any other similar future interest, legal or equitable. See Templeman v. Gibbs, 86 Tex. 358, 24 S.W. 792 (1894); Black’s Law Dictionary 1483, 1456 (rev. 4th ed. 1968). The lessor owns the only legal and equitable title in the property, subject only to the lessee’s right to possession for the lease term. This right to possession does not give the lessee any legal or equitable title in the property subject to the lease, and under no circumstance can the lessee himself cut off the lessor’s interest in the property. A lease simply is not an interest of the same character as conditional title, reversions or remainders, and the portion of the statute covering those type interests does not apply to a lease. Templeman v. Gibbs, 86 Tex. 358, 24 S.W. 792 (1894). Consequently, if a lease transaction is to be brought within the statute, it must be under the first clause relating to “any loan of goods and chattels.”

The Florida legislature, when it intended to declare a lease fraudulent as against creditors, used the term “lease.” See Fla.Stat. §§ 726.01, 726.07 (1973). Yet in § 726.09 it referred to a “loan” not a “lease.” The words are not coextensive and it seems only reasonable that had the Florida legislature intended § 726.09 to apply to a lease it would have said so. The fundamental difference between conditional sales contracts and leases has been noted in the Uniform Commercial Code, Fla.Stat. 671.1 — 201(37) (1973).

The only Florida case we found shedding any light on this question, Dixon Lumber Co. v. Jennings, 63 Fla. 405, 57 So. 615 (1912), appears . to support the conclusion that this statute does not apply to leases. In Dixon Lumber, Perkins, the original owner of a locomotive engine, sold it to Dixon Lumber Co., but retained possession under a lease-back “for more than two years after its alleged sale to Dixon Lumber Company, with apparently no visible indicia of ownership or right in another.” 63 Fla. at 407, 57 So. at 616. The lease had not been proved for record in. accordance with the statute. Perkins subsequently executed a chattel mortgage to Jennings. Jennings foreclosed his mortgage, and Dixon Lumber Co. sought to claim the locomotive as its property.

The Florida Supreme Court noted that there was a presumption of actual fraud whenever the vendor of personal property retains possession of it after sale and the vendee had the burden of rebutting that presumption. The court, examining whether the burden had been met, discussed whether the chattel mortgagee had actual knowledge of ownership or knowledge of any facts which should have made him inquire as to the ownership. One of the cases cited by the Florida Supreme Court, Volusia County Bank v. Bertola, 44 Fla. 734, 33 So. 448 (1902) makes clear the analysis which the court was following in Dixon Lumber. The court discussed the standard of review of a chancellor’s findings and conclusions, concluding:

The only real question presented is whether Jennings had any actual notice that the title to the engine was, at the time he took the mortgage, in the Dixon Lumber Company. The testimony is quite voluminous, and in some respects conflicting; but there is evidence to sustain the finding of the chancellor in favor of Jennings, and the finding does not clearly appear on the whole evidence to be erroneous. Therefore the decree will not be reversed, but is hereby affirmed.

63 Fla. at 408, 57 So. at 616.

Although Dixon Lumber discusses the predecessor of § 726.09 in connection with a lease, the Florida court’s use of the statute supports the conclusion that it does not have the controlling effect asserted by the Trustee here. Had the statute applied, the court would have stopped once it concluded that the lessor had not complied with the statute. Even actual knowledge on the part of the mortgagee would not have prevented the statute from operating in his favor. See Hudnall v. Paine, 39 Fla. 67, 75, 21 So. 791, 794 (1897). The applicability of the statute would have rendered unnecessary any discussion of a presumption of actual fraud and the burden of overcoming that presumption, whereas the court’s discussion of the statute was aimed at analyzing its possible impact on the mortgagee’s actual knowledge of the ownership of the property, not its possible application as the sole grounds for recovery by the creditor mortgagee.

The application of the statute to a lease runs contrary to the spirit of the Florida Constitution, Article III, § 6, which provides in part:

Every law shall embrace but one subject and matter properly connected therewith, and the subject shall be briefly expressed in the title ....

Numerous Florida Supreme Court decisions indicate that the basic requirement of a constitutional act is that the title “must be sufficiently informative to obviate the surprise or fraud that would spring from hidden provisions not indicated in the title.” Knight & Wall Co. v. Bryant, 178 So.2d 5, 7 (Fla.1965) citing State v. Florida State Turnpike Authority, 80 So.2d 337 (Fla.1955); see 30 Fla. Jur., Statutes, §§ 48 — 49 (1974). The title to § 726.09 reads very simply, “Fraudulent loans void.” There is a significant difference between a loan and a lease, and the application of this “loan” statute to a lease, after one hundred and fifty years of nonapplication, could certainly be a “surprise” to those who would fall prey to the trustee’s strong arm. Lessors appear to have relied, and we think rightly so, on the fact that this title addressed loans and not leases. To allow the statute now to be utilized to gain a creditor advantage would seem to contravene the basic purpose of the Florida Constitutional provision. The Florida Supreme Court has itself suggested a strict construction of this statute. See Dillon v. Mizell Live Stock Co., 66 Fla. 425, 427, 63 So. 824, 825 (1913). We note that the indices and reference tables to Florida Statutes, Florida Statutes Annotated and Florida Jurisprudence do not reflect this statute as applying to leases of personal property. The argument that loans and leases are identical for the purpose of validating the title to the statute fights against the traditional distinctions that are firmly embedded in Florida law and the general common law.

Other states have construed statutes similar to Florida’s contrary to the Trustee’s position. At least three states with statutes substantially identical to Florida Statutes § 726.09 have construed them to exclude a “hiring” of goods. The Supreme Court of Mississippi in Armstrong v. Stovall, 26 Miss. 275 (1853), held the predecessor to Miss.Code § 15-3-3 not to apply to “a hiring of goods,” i. e. a lease transaction. The Supreme Court of Texas, likewise construing a virtually identical Texas statute, Revised Statute article 2468, the predecessor of Vernon’s Ann. Civ.Stat. art. 3999, held that a “loan” was a transaction “in which the owner places some specific thing in the hands of a borrower, to be used by him without compensation, but at some future time to be returned; . . . .” Templeman v. Gibbs, 86 Tex. 358, 361, 24 S.W. 792, 793 (1894). That court likewise refused to apply the statute to such a lease. See Hunstock v. Roberts, 65 S.W. 675, 676 (Tex.Civ.App.1901). The Court of Appeals of Virginia has also held that its statute, identical to § 726.09, does not apply to situations where the property is bona fide and actually on hire, as opposed to on loan, to the one in possession. M’Kenzie v. Macon, 46 Va. 379, 384 (1849).

At least one authority has considered the Florida fraudulent loan statute and concluded that the statute was not intended to apply to leases. 3 Jones, The Law of Chattel Mortgages and Conditional Sales, section 1016, (6th ed. 1933), cites the fraudulent loan statute as a recording statute of the state of Florida. Later in the treatise at section 1072, Jones comments on recording statutes in general, presumably including the Florida fraudulent loan statute, by saying:

“It is one of the hardships of the recording statutes that they thus place upon a layman, upon pain of the possibility of losing his property, the burden of making a legal decision as to the necessity of recording a particular contract, as to which the courts themselves often falter. However, the statutes are with us, and the chief province of the present day writer is to note the constructions which the precedents lay down. On the principle that these statutes are provided for conditional sales only, they do not, of course, operate far enough to require the recording of bailment contracts, leases, unless they are in legal contemplation conditional sales merely parading in the dress of leases, consignments, but even as to these kindred transactions the lines are drawn dangerously near together, nor trust receipts, nor assignment for the benefit of creditors.” (emphasis added)

We have noted the argument that the legislature has the power to enact a statute requiring precisely what the Trustee here contends, and that the evil which it intended to prevent is the same with a lease as with a conditional sales contract. In an opinion involving a conditional sales contract, Onyx Soda Fountain Co. v. L’Engle, 53 Fla. 314, 43 So. 772 (1907), the Florida Supreme Court said:

. The prolonged separation of the title in one party from the open possession in another, upon which he may acquire a false credit or delude a purchaser, is the mischief aimed at by the legislation, and the policy thus declared should receive the favor of judicial interpretation.

In both a lease and a conditional sales contract there is a prolonged separation of possession from the true owner. The property is placed in the open possession of another, clothing the possessor with the indicia of ownership thereby enabling him to commit mischief, such as transferring to a bona fide purchaser for value or pledging the property to an innocent lender as collateral. Thus, the argument goes, there would appear to be no logical reason why a distinction should be made between a conditional sales contract to which the statute clearly applies and a chattel lease to which we are asked to apply it. This argument urges us to make a legislative decision. Just as the legislature has the power to make the statute apply to leases, it has the power to make it apply only to loans or conditional sales contracts, and not to leases. It is not the office of the courts, state or federal, to carry legislation beyond its intended scope, merely on the grounds of logic. More particularly, it is not the office of the federal courts to carry state legislation beyond the range that the state courts are willing to go. The state court having indicated the propriety of a strict construction of this statute, see Dillon v. Mizell Live Stock Co., 66 Fla. 425, 63 So. 824 (1913), such is the correct course for the federal courts.

Deciding that § 726.09 does not apply to the lease of personal tangible property, we need not consider the argument that it was superseded or impliedly repealed by the adoption of the Uniform Commercial Code in Florida. Fla.Stat. 671.1-101 et seq. (1973).

The proper application of' Florida law •to the claims of the Trustee in bankruptcy seems clear enough to us to find nothing to be gained by certifying the question to the Supreme Court of Florida under Florida Statutes § 25.031, as requested by American. The motion for certification is denied.

On December 2, 1974, two days before this case was orally argued before the panel, American filed a pleading in this Court styled “Motion to Determine Bankruptcy Jurisdiction, Motion to Correct or Supplement the Record, and Motion to File Additional Briefs on Jurisdiction of Bankruptcy Court.” By this motion American sought to have this Court examine the sufficiency of the Amended Petition in Bankruptcy upon which Ludlum was adjudicated a bankrupt some two years ago. Under the Bankruptcy Act, American, as only a creditor of Ludlum, has no standing to challenge the sufficiency of the petition. See 11 U.S.C.A. § 41(b). Congress has decided that to allow such a challenge is antithetical to the purposes of the Act, and we have enforced that decision without retreat. A creditor may not attack the petition in bankruptcy, even when he alleges that the petition is so inadequate as to deprive the bankruptcy court of jurisdiction. In re Jack Kardow Plumbing Co., 451 F.2d 123, 128-131 (5th Cir. 1971); Abramson v. Boedeker, 379 F.2d 741 (5th Cir.), cert. denied, 389 U.S. 1006, 88 S.Ct. 563, 19 L.Ed.2d 602 (1967). The motion to determine jurisdiction is denied for lack of standing.

The decision of the district court giving the Trustee in bankruptcy superior rights over American to the property subject to lease by virtue of § 726.09 is reversed and the cause is remanded for further proceedings.

Reversed and remanded.


author: PER CURIAM:

text:
    UNITED STATES of America, Plaintiff-Appellee, v. Jose Nabor CANTU, Defendant-Appellant.
    No. 74-3537
    Summary Calendar.

    United States Court of Appeals, Fifth Circuit.
    April 7, 1975.
    Homer Salinas, Mercedes, Tex., for defendant-appellant.
    Anthony J. P. Farris, U. S. Atty., James R. Gough, Asst. U. S. Atty., Houston, Tex., for plaintiff-appellee.
    Before GEWIN, GOLDBERG and DYER, Circuit Judges.

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

   PER CURIAM:

Appellant Jose Nabor Cantu seeks reversal of his conviction of importation and possession with intent to distribute 192 pounds of marijuana. He alleges that the search was illegal and that the marijuana should have been suppressed. He also argues that the marijuana should have been introduced into evidence at trial. We have reviewed the record and find these contentions to be without merit and affirm.

Appellant and a female passenger were stopped at the Sarita checkpoint at about 11:40 p. m. on January 31, 1974. They stopped at the stop sign and waited for the border patrolman to come out of the office. As he approached the vehicle, the officer detected the odor of marijuana, a smell which increased when the passenger rolled down the window. The officer asked Cantu to open the trunk. When the trunk was opened it revealed a footlocker, several suitcases, and some loose bricks or packages of marijuana. Appellant was arrested and advised of his rights. He then admitted to the Drug Enforcement Administration agent on the way back to Corpus Christi that the marijuana was his and that he had arranged to import it from Mexico.

Appellant was tried before the court. At trial several stipulations were entered into by appellant and the government. They stipulated that the substance was marijuana and that there was 192 pounds of it. Appellant’s motion to suppress was denied, the court finding that Almeida-Sanchez had no applicability, and that this search was at the functional equivalent of the border. Searches by the Border Patrol at permanent checkpoints were upheld by us in United States v. Hart, 506 F.2d 887 (5th Cir. 1975).

However, the search here was valid even under pre-Hart and pre-Almeida-Sanchez law. In United States v. Cantu, 504 F.2d 387 (5th Cir. 1974), we reviewed that law and concluded the Border Patrol had authority to stop cars for border-searches under 8 U.S.C. § 1357 and 8 C.F.R. § 287.1. Once they had stopped the car, they were empowered to search for aliens.

As soon as the investigatory stop was made, the officer had reasonable suspicion, ripening into probable cause that the vehicle contained contraband. Given the existence of probable cause, there were sufficient exigent circumstances to justify a warrantless search. The search here was valid. The motion to suppress was properly denied. United States v. Wooldridge, 508 F.2d 802 (5th Cir. 1975).

Appellant’s argument that the marijuana should have been introduced at trial as the “best evidence” is without merit. Appellant stipulated to chain of custody, amount, and chemical analysis that the substance seized was marijuana. He is bound by his stipulation. See United States v. Graham, 464 F.2d 1073 (5th Cir. 1972), which holds that the contraband need not be introduced when there is other reliable evidence which establishes the nature of the contraband.

Affirmed.

      . Almeida-Sanchez v. United States, 413 U.S. 266, 93 S.Ct. 2535, 37 L.Ed.2d 596 (1973).