author: MULLIGAN, Circuit Judge: MANSFIELD, Circuit Judge: LUMBARD, Circuit Judge:

text:
    John R. SHARKEY, Sr., Plaintiff-Appellee, v. PENN CENTRAL TRANSPORTATION COMPANY, Defendant-Appellant.
    No. 163, Docket 73-1611.
    United States Court of Appeals, Second Circuit.
    Argued Nov. 20, 1973.
    Decided March 1, 1974.

      Mulligan, Circuit Judge, dissented in part.

      Jesse C. Sable, New York City (Arnold B. Elkind, New York City, on the brief), for plaintiff-appellee.
    John F. Scully, Hartford, Conn. (Coo-ney, Scully & Dowling, Joseph P. Coo-ney, David T. Ryan, Hartford, Conn, of counsel), for defendant-appellant.
    Before LUMBARD, MANSFIELD and MULLIGAN, Circuit Judges.
   MULLIGAN, Circuit Judge:

This is an appeal from an order of the United States District Court, District of Connecticut, Hon. Robert C. Zampano, Judge, denying the defendant’s motion for a new trial. The plaintiff has sued for damages pursuant to the Federal Employers’ Liability Act (FELA), 45 U.S.C. §§ 51-60, because of injuries sustained on August 20, 1969, while he was employed as a ticket collector-conductor by the defendant. After a jury trial, a verdict in favor of the plaintiff in the-sum of $125,000 was returned on May 16, 1972. In his ruling below on defendant’s motion for a new trial, Judge Zam-pano directed that the jury verdict be set aside and a new trial be granted unless within 15 days the plaintiff filed a remittitur of all sums in excess of $93,750. The plaintiff thereupon filed a consent on March 22, 1973. This appeal by the defendant followed. The judgment of the District Court is hereby reversed and a new trial is ordered.

On August 20, 1969, plaintiff conductor was working on the New York Division of the Penn Central R.R., on train N48 running between New York, Stamford and New Canaan, Connecticut. On the run from Stamford to New Canaan, N48 was scheduled to meet train N49, a nine-car train which was proceeding south from New Canaan. N48 was ordered to pull into the Dale siding just north of Springdale Station to permit N49 to pass. The engineer of N48 was given appropriate orders by the tower operator at Stamford. However, N48 did not pull into the siding but in fact collided head on with train N49 at 8:19 p. m. some 710 feet past the Hoyt Street crossing which is located north of the Dale siding. Four people were killed and 40 people sustained injuries as a result of the collision. The defendant has raised no questions here with respect to its liability.

Plaintiff at the time of the accident was 53 years old and had been employed by the railroad for some 28 years. He was confined to the Stamford Hospital for 25 days following the incident. His final hospital diagnosis was as follows:

(1) Concussion, Multiple Abrasions, and Contusions of Both Legs, Chest, and Abdomen.
(2) Traumatic Myositis, Cervical, Lumbosacral, and Dorsal Spine.
(3) Anxiety Reaction.

The plaintiff suffered no broken bones, and his hospital treatment consisted primarily of bed rest, medication and tranquilizing drugs.

After his discharge from the hospital in February, 1970, the plaintiff reported to a company doctor for an examination in an effort to return to work, but was found to have a left inguinal hernia. This had not been detected in his initial medical examination and the plaintiff submitted to an operation to correct the hernia. In May, 1970, he was certified as fit to return to work, but on May 17, when he actually reported, he was advised that he was being held out of service pending an investigation into his responsibility for the train wreck on August 20, 1969. The plaintiff testified that this news upset him, that it “hit me kind of hard,” and there was psychiatric evidence of a “post-traumatic conversion hysteria,” sometimes called a post-traumatic anxiety neurosis with conversion symptoms. The plaintiff was provided a hearing by the railroad to determine his responsibility for the accident and he was represented at the hearing by the union. As a result of the hearing, he was discharged. An administrative appeal has apparently been taken from that decision.

I

The principal argument raised on appeal relates to the question of the responsibility of the defendant for the aggravation of the plaintiff’s post-traumatic anxiety neurosis by reason of his discharge by the railroad. It seems clear that in an FELA action for damages the plaintiff is not entitled to recover for wages lost solely by reason of his discharge. His appropriate remedy for this monetary loss is an administrative proceeding pursuant to the Railway Labor Act, 45 U.S.C. § 153 First (i). Andrews v. Louisville & N. R. R. Co., 406 U.S. 320, 92 S.Ct. 1562, 32 L.Ed.2d 95 (1972). In such a proceeding, the National Railroad Adjustment Board (Board) may direct reinstatement as well as lost wages. However, it does not appear to be disputed that any mental distress created by an improper firing is not compensable in the administrative proceeding. Cf. St. Clair v. Teamsters Local 515, 422 F.2d 128, 132 (6th Cir. 1969); Brady v. Trans World Airlines, Inc., 244 F.Supp. 820 (D.Del.1965), aff’d, 401 F.2d 87 (3d Cir. 1968), cert. denied, 393 U.S. 1048, 89 S.Ct. 680, 21 L.Ed.2d 691 (1969).

The court below recognized that the plaintiff could not recover for lost wages, such claim being within the jurisdiction of the Board, and the jury was instructed that this was “not a case involving a breach of contract action for a wrongful discharge of employment.” However, the court did permit admission of evidence that the plaintiff had in fact been discharged “to let the jury know why this man did not go back to work.” The jury should have been more forcefully instructed that the fact that the plaintiff did not return to work for the railroad was not their concern in this case and that no damages for lost earnings were to be awarded. Having brought the fact of discharge to the attention of the jury during the direct examination of the plaintiff, counsel for the plaintiff on summation not only emphasized his loss of wages, which admittedly was not the concern of the jury, but also went to great lengths to underscore the fact that the railroad had made a scapegoat of a faithful employee of 28 years.

It is apparent that the verdict here was unconscionable and reflected a prejudice against the carrier, exacerbated by an intemperate summation which resulted in a punitive verdict. The damages originally awarded totalled $125,000. Plaintiff suffered no broken bones or permanent physical disability as a result of the accident. The final diagnosis of plaintiff’s physician, Dr. Moriarty, referred to above, indicates that his physical injuries were not severe. A hernia resulting from the accident was later discovered and corrected without difficulty. Plaintiff’s mental condition had substantially improved by the time of trial. Finally, plaintiff was hospitalized for his injuries for less than four weeks. Under the circumstances, the verdict was clearly excessive. While the trial court recognized this, the remittitur was nonetheless totally unrealistic. In fact, it is difficult to understand on what basis it was computed. We are therefore convinced that the judgment here must be reversed and a new trial ordered. Kelly v. New York, N.H. & H. R.R., 138 F.Supp. 82 (D.Mass.1956).

Since the district court will be confronted on retrial with a number of questions now raised by the appellant, we deem it advisable to resolve them on this appeal.

II

Appellant claims that it was improper for trial counsel for the plaintiff to indicate to the juiJy the amount of money which should be awarded for the damages suffered by his client. In FELA cases, the law to be applied concerning the propriety of counsel’s argument to the jury is federal law rather than the law of the state. See Eaton v. Long Island R.R., 398 F.2d 738 (2d Cir. 1968); Kodack v. Long Island R.R., 342 F.2d 244, 247 (2d Cir. 1965); Lanni v. Wyer, 219 F.2d 701 (2d Cir. 1955). Chicago, St.P., M. & O. R.R. v. Arnold, 160 F.2d 1002 (8th Cir. 1947). Cf. McDonald v. United Airlines, Inc., 365 F.2d 593 (10th Cir. 1966); Yeargain v. National Dairy Products Corp., 317 F.2d 779 (8th Cir. 1963). We believe that the matter of estimating damages for the guidance of the jury is best left largely to the discretion of the trial judge, and that, if he decides to permit the argument, no error will be committed at least where counsel makes clear that his figures are only suggestions, and the court instructs the jurors that the suggestions are not binding on them. See Waldron v. Hardwick, 406 F.2d 86, 89 (7th Cir. 1969); Baron Tube Co. v. Transport Ins. Co., 365 F.2d 858 (5th Cir. 1966); Rush v. Cargo Ships & Tankers, Inc., 360 F.2d 766, 769 (2d Cir.), cert. denied, 385 U.S. 842, 87 S.Ct. 96, 17 L.Ed.2d 75 (1966). However, the “suggestion” by trial counsel here that the jury could compensate Sharkey for his lost wages until he was 65 years of age was clearly inappropriate and should not be permitted on retrial.

Ill

Appellant also argues that the trial court improperly permitted Dr. Lawrence I. Kaplan to testify to the medical history given by Sharkey to this physician some 19 months after the accident. It is urged that Dr. Kaplan was consulted by plaintiff, not for the purpose of receiving treatment, but in order to obtain an opinion which was later to be used in the trial of this case. It is urged that the evidence is hearsay, which, in these circumstances, is particularly unreliable since there exists an incentive to a patient to exaggerate in statements to a physician who is employed merely to testify on his behalf. Brown v. Blauvelt, 152 Conn. 272, 205 A.2d 773, 774 (1964).

However, it should be noted that the trial judge here made an initial finding that Sharkey had established at least a prima facie foundation that he went to see Dr. Kaplan for medical purposes on advice of Dr. Moriarty, the examining physician. This finding cannot be reversed on appeal if it is fairly supported by the evidence. Gila Valley, G. & N. Ry. v. Hall, 232 U.S. 94, 103, 34 S.Ct. 229, 58 L.Ed. 521 (1914); Steward v. Atlantic Refining Co., 240 F.2d 715, 719 (3d Cir. 1957) ; Ramming Real Estate Co. v. United States, 122 F.2d 892, 894 (8th Cir. 1941); Morton Butler Timber Co. v. United States, 91 F.2d 884, 886-887 (6th Cir. 1937); Crowell v. Middletown Sav. Bank, 122 Conn. 362, 189 A. 172, 176 (1937); C. McCormick, Evidence § 53, at 121 (2d ed. E. Cleary ed. 1972). Here Sharkey testified that he sought psychiatric assistance at the suggestion of Dr. Moriarty and only obtained approval from his counsel. We therefore deem it appropriate to defer to Judge Zampano’s ruling, particularly since he had the opportunity of gauging Sharkey’s credibility. See Martin v. Morse Boulger Destructor Co., 256 F.2d 675 (2d Cir. 1958); Mazzella Blasting Mat Co. v. Vitiello, 250 F.2d 935 (2d Cir. 1957) (per curiam); United States v. Aluminum Co. of America, 148 F.2d 416, 433 (2d Cir. 1945). Had Dr. Kaplan been consulted solely because the plaintiff sought to obtain an expert medical opinion for use at trial, he would be precluded from giving the testimony in question. See Fed.R.Civ.P. 43(a); Padgett v. Southern Ry., 396 F. 2d 303, 308 (6th Cir. 1968); Atlantic Coast Line R.R. v. Dixon, 207 F.2d 899, 902 (5th Cir. 1953); Meaney v. United States, 112 F.2d 538 (2d Cir. 1940); Brown v. Blauvelt, supra. But this was not the case. •

IV

This part of the opinion represents only the views of the author and is thus a dissent on this troublesome aspect of the appeal.

The plaintiff argues that while damages for lost wages as such are not recoverable in this action, the fact of Sharkey’s discharge did aggravate the initial anxiety created by the negligence of the defendant and so was a proper matter for the jury to consider in estimating the pain and suffering proximately caused by the defendant’s negligence. The defendant urges that, while the discharge may be wrongful, this is not for the jury to consider in an FELA case. Apparently, the only authority in point is Beanland v. Chicago, R.I. & P.R.R., 480 F.2d 109 (8th Cir. 1973), which holds that any mental distress damage relating to the discharge may not be recovered in the FELA action. The only rationale supplied is the comment: “Damages resulting from intentional acts, such as the discharge, have no place in a personal injury F.E. L.A. action which deals exclusively with negligence.” 480 F.2d at 113 (emphasis in original).

This is at odds with the generally applied rule in negligence cases. A person who negligently injures a party is usually responsible for certain kinds of aggravation of the injuries at the hands of third parties. Thus, the original tortfeasor is held responsible if the injury caused by him is aggravated by the negligent acts of a physician who attempts to treat the victim for his injury. Texas & P. Ry. v. Hill, 237 U.S. 208, 35 S. Ct. 575, 59 L.Ed. 918 (1915); Harris v. Brian, 255 F.2d 176 (10th Cir. 1958); Lange v. Hoyt, 114 Conn. 590, 159 A. 575 (1932); Wagner v. Mittendorf, 232 N.Y. 481, 134 N.E. 539 (1922); 2 F. Harper & F. James, The Law of Torts § 20.3, at 1124 (1956). Even if the medical treatment is properly administered) recovery is possible if aggravation occurs. Simmons v. Lollar, 304 F.2d 774 (10th Cir. 1962); Lane v. Southern Ry., 192 N.C. 287, 134 S.E. 855 (1926). The test usually applied is whether or not the cause of the aggravation is a “normal intervening cause,” that is, one which is reasonably foreseeable in the light of ordinary human experience, one which is the natural and probable result of the original wrong, or one which the defendant had reason to anticipate under the particular circumstances. W., Prosser, Torts § 44 (4th Ed. 1971); Restatement (Second) of Torts §§ 447 & 457 (1965). Here it would seem that the carrier could have reasonably foreseen that Sharkey would face a company investigation and that his discharge could be a consequence. The only distinction between this case and those cited above is that here the aggravation was created not by a third party but by the initial tortfeasor. If anything, the distinction would suggest a fortiori that damages for the second injury should be granted.

My brothers argue that if the Board should sustain Sharkey’s discharge, it follows that he was properly removed from service and that the damages for the aggravation of the psychic injury now sought were due to his own fault. He should not be compensated for what amounted to a self-inflicted injury. It is, in effect, damnum absque injuria. The flaw in this argument is, I believe, that the body to determine the damages for the foreseeable consequences of the carrier’s tort is the jury in the FELA action and not the Board. The Board’s only function is to determine whether or not Sharkey was properly dismissed, and, if he was, its sanction is to deny him reinstatement and a recovery for lost wages. Sharkey presumably could be discharged if he violated a safety rule or regulation, even though he was not primarily liable for the collision. This might well be justified in view of the carrier’s obligation to provide the public with safe transport. However, in the FELA action the rule of comparative negligence applies (45 U.S.C. § 53), and Sharkey therefore is entitled to recover for his injuries, even though he might be partially at fault.

He concededly cannot recover for lost wages, however, since that determination rests upon considerations not before the jury, but is entrusted to the carrier and the Board, which cannot award him any recovery for mental distress even if his discharge was unwarranted under any criterion. In my view, therefore, if the jury on retrial should find that the carrier was primarily responsible for the collision and thus that Sharkey is entitled to recover for his injuries arising therefrom, I would permit him to recover for the aggravation of the psychic injury he suffered from the firing, just as he recovers for all his other traumae. He has no other place to go.

Reversed and remanded for retrial in accordance with the views of the majority of this panel.

MANSFIELD, Circuit Judge:

I concur in Parts I, II and III of Judge Mulligan’s thorough and thoughtful opinion. However, in my view Sharkey, if found to have been properly discharged for cause, would not be entitled to an award of damages for the aggravating effect of the discharge upon his mental condition. Assuming the jury upon retrial found that the discharge and its aggravating effect was reasonably foreseeable — and this issue would first have to be resolved — I fail to perceive any logical basis for permitting recovery for its aggravating effect unless the discharge was improper and not the result of wrongful conduct on Sharkey’s part. The final determination of the propriety of the discharge rests with the Railroad Retirement Board.

Should the Board find that the discharge was proper and for good cause, to permit recovery for its aggravating effect would be no different than to allow a plaintiff.'to recover for a self-inflicted injury which he could have avoided by acting lawfully and reasonably, or by observing his own duty to mitigate. Ordinarily a plaintiff is pre-eluded from recovering for consequential harm caused by his own negligent conduct. S. S. Kresge Co. v. Kenney, 66 App.D.C. 274, 86 F.2d 651 (1936); Matter of Sullivan v. B & A Constr., Inc., 307 N.Y. 161, 120 N.E.2d 694 (1954); Yarbrough v. Polar Ice & Fuel Co., 118 Ind.App. 321, 79 N.E.2d 422 (1948). See generally, Vance, Liability for Subsequent Injuries, 42 Tex.L.Rev. 86 (1963). Absent proof that the circumstances giving rise to Sharkey’s discharge were not within his control or not attributable to his own fault or misconduct, the defendant should not be held liable for the proximate results of plaintiff’s own independent misconduct. To guard against such a possibility I would defer retrial until the Board had ruled upon the propriety of the discharge and, if the discharge is upheld, preclude any recovery for its aggravating effect.

The effect of treating a proper discharge as a “normal intervening cause” is to erode the strong public policy in favor of safe operation of railroads by competent personnel, which is reflected in the strict standards to which public carriers are held. A railroad faced with liability for a proper discharge for cause would be discouraged from acting, even though retention of the employee might endanger the public. Assuming, as does our brother Judge Mulligan, that the railroad here was primarily negligent and that it discharged Sharkey because his misconduct or negligence was secondarily' the cause of the accident, the railroad’s right to discharge him for cause should not be inhibited by a wooden-like application of the doctrine of comparative negligence to hold it liable for aggravation caused by the discharge. In the conflict between the policy in favor of comparative negligence and that in favor of safe operation of public carriers, the latter should prevail.

LUMBARD, Circuit Judge:

I concur in Judge Mansfield’s opinion.

      . For example, in his summation, Sharkey’s counsel stated:
      You know, when we were children we used to do this little rhyme about sticks and stones, you know, will hurt my bones, and so forth. But this is not true. When your name is besmirched, when you are accused, after faithful service . . . and suddenly, after all of that time, you are disgraced, I do not think there is a way of compensating a person any more. You cannot restore to him his name, you cannot restore to him the respect of his friends and his neighbors and his community, because they made their judgment a long time ago when the railroad made theirs.
      So now he is asking to be vindicated by you, and your vindication is shown by your verdict, and you do justice in this case by your verdict.

      . It is also to be noted that the jury’s original verdict of $125,000 was precisely the sum twice suggested to them by plaintiff’s counsel in summation, based on his prognosis of the plaintiff’s loss of earnings through age 65.


source: Caselaw Access Project

author: FRED M. TAYLOR, District Judge: CHAMBERS, Circuit Judge

license: Public Domain

text:
    Charles W. COUSINEAU, Plaintiff, v. UNITED STATES of America, Defendant, Third-Party Plaintiff and Appellee, v. AGRICULTURAL INSURANCE COMPANY, Third-Party Defendant and Appellant.
    No. 71-2664.
    United States Court of Appeals, Ninth Circuit.
    Feb. 14, 1974.

      Arthur Tuverson (argued), Burton, Blodgett, Halloran & Drapkin, Anaheim, Cal., David L. Jolliffe, Kinkle, Rodiger, Graf, Dewberry & Spriggs, Los Angeles, Cal., for appellant.
    Philip S. Malinsky, Asst. U. S. Atty. (argued), William D. Keller, U. S. Atty., Frederick M. Brosio, Jr., Asst. U. S. Atty., Los Angeles, Cal., for appellee.
    Before CHAMBERS and HUFSTEDLER, Circuit Judges, and TAYLOR, District Judge.

       Of the District of Idaho, sitting by designation.

   OPINION

FRED M. TAYLOR, District Judge:

Agricultural Insurance Company (Agricultural) issued a motor vehicle liability policy to Wesley B. Gibson, doing business as Continental Leasing Company as the named insured, from June 6, 1968 to June 6, 1969. A 1961 Plymouth automobile, owned by Gibson, was expressly included as one of the insured vehicles. The Plymouth was subsequently leased by Gibson to the United States Post Office for a period in excess of 30 consecutive days. In order to exempt the vehicle from licensing fees, it was registered with the California Department of Motor Vehicles in the name of the Post Office.

On July 13, 1968, a Post Office employee, driving the Plymouth in the course of his employment, became involved in an accident with the plaintiff, Charles Cousineau. Plaintiff Cousineau brought an action against the United States under the Federal Tort Claims Act. The defendant and third-party plaintiff, United States of America, filed a third-party complaint against the third-party defendant Agricultural Insurance Company seeking a judgment for any damages it might become obligated to pay to plaintiff, plus reasonable attorney’s fees in defending plaintiff’s action.

The plaintiff’s action against the United States was compromised for $8,250.00 with the consent and approval of Agricultural and the matter went to trial on the third-party complaint. On April 9, 1971, the District Court entered a judgment in favor of the United States on its third-party complaint against Agricultural, and the insurance company appealed to this court from said judgment.

We believe the decision in this case is controlled by Metz v. Universal Underwriters Insurance Company, 10 Cal.3d 45, 109 Cal.Rptr. 698, 513 P.2d 922 (1973) and, accordingly, the judgment of the District Court is affirmed.

CHAMBERS, Circuit Judge

(dissenting) :

Agricultural Insurance Company (Agricultural) issued a motor vehicle liability policy to Wesley B. Gibson (Gibson), doing business as Continental Leasing Company, as the named insured from June 6, 1968, to June 6, 1969. A 1961 Plymouth owned by Gibson was expressly included as one of the insured vehicles. The Plymouth was subsequently leased by Gibson to the United States Post Office for a period in excess of 30 consecutive days. In order to exempt the vehicle from licensing fees, it was registered with the California Department of Motor Vehicles in the name of the Post Office.

On July 13, 1968, a post office employee driving the Plymouth in the course of his employment became involved in an accident with the plaintiff, Charles Cousineau. Plaintiff’s suit against the United States was compromised for $8,250.00, with the consent and approval of Agricultural.

The insurance contract insured the named insured “and any person or organization legally responsible for the use [of the automobile], provided the actual use of the automobile is . with the permission of either [the named insured or his spouse]The United States, believing it was insured under this omnibus clause as a permissive user, requested Agricultural to defend it against plaintiff. When Agricultural refused, the United States filed a third party complaint for indemnity.

The issue presented is whether the omnibus clause of Gibson’s insurance contract is operative for the purpose of insux-ing the United States as a permissive user of the Plymouth. The majority relies upon Metz v. Universal Underwriter’s Ins. Co., 10 Cal.3d 45, 109 Cal. Rptr. 698, 513 P.2d 922 (1973), to hold that the United States was insured. As demonstrated below, that reliance is misplaced for two reasons.

California Insurance Code, § 11580.-1(d) prohibits the issuance of any automobile liability insurance policy unless it contains a clause insuring the named insured and, “to the same extent,” insuring “any other person using or legally responsible for the use of said motor vehicles, provided the motor vehicles are being used by the named insured or with his permission, express or implied.” When interpreting this statute and its predecessors, California courts have consistently held that insurance contract clauses excluding coverage for classes of permissive users are void as against public policy. See Metz, supra; Interinsurance Exchange of the Auto Club v. Ohio Cas. Ins. Co., 58 Cal.2d 142, 23 Cal. Rptr. 592, 373 P.2d 640 (1962); Wildman v. Government Employees’ Ins. Co., 48 Cal.2d 31, 307 P.2d 359 (1957); Bohrn v. State Farm Mut. Auto. Ins. Co., 226 Cal.App.2d 497, 38 Cal.Rptr. 77 (1964). For this reason, the United States argues that its exclusion from coverage under Gibson’s policy would violate the public policy of California.

The bounds of § 11580.1(d), however, are not without limitation. In Uber v. Ohio Cas. Ins. Co., 247 Cal.App.2d 611, 617, 55 Cal.Rptr. 720, 724 (1967), the California Court of Appeal interpreted this statutory requirement thusly;

“The elements of ownership and permission essential to coverage under an omnibus clause have been specialized by case law. The ownership of the offending automobile by the named insured must be that which subjects him to liability under Vehicle Code § 17150. . . . The rules prescribing these specialized types of ownership and permission are the product of court decisions effectuating the purpose of the statutes imposing liability incident to ownership and requiring omnibus insurance coverage.” (Emphasis added.)

The element of ownership is the first point that distinguishes the present case from Metz, supra. The party seeking recovery from a person who was not operating the vehicle has the burden of proving that the person was the owner of the vehicle at the time of the accident. Scollan v. Government Employees’ Ins. Co., 222 Cal.App.2d 181, 184, 35 Cal.Rptr. 40, 41-42 (1963); Vallejo v. Montebello Sewer Co., 209 Cal. App.2d 721, 732, 26 Cal.Rptr. 447, 454 (1962). In Metz the trial court had specifically found that the named insured was the owner of the vehicle for purposes of imposing liability. The Supreme Court of California simply adopted that finding. Metz, supra, 10 Cal.3d at 49, 109 Cal.Rptr. at 700, 513 P.2d at 924. The district court made no such finding in this case. Nowhere in the findings of fact or conclusions of law is there any indication of who owned the vehicle at the time of the accident. If the district court’s decision is to be affirmed, therefore, this court must be able to determine, from the record before it, that Gibson’s ownership of the vehicle, at the time of the accident, was such that he was subject to liability under § 17150. The record will not support such a finding.

Section 17150 simply states that ''[e]very owner of a motor vehicle” is liable for the negligent misuse of his motor vehicle by permissive users. “No portion thereof deals with the meaning or definition of the word ‘owner’. . ” Borjesson v. Simpson, 177 Cal.App.2d 365, 368 n.l, 2 Cal.Rptr. 366, 367 n.l (1960). Among the definitions applicable to the Vehicle Code, though, are those contained in §§ 370, 460 and 505 of the Vehicle Code, defining “Legal Owner,” “Owner” and “Registered Owner,” respectively. A “legal owner” is a person holding a security interest in the vehicle “or the lessor of a vehicle to [a state political entity] or to the United States, under a lease . . . which grants possession of the vehicle to the lessee for a period of 30 consecutive days or more.” Vehicle Code § 370. An “owner” is a “person having all the incidents of ownership, including the legal title of a vehicle whether or not such person . . . rents . . . the vehicle; . . . or [a state political entity] or the United States, when entitled to the possession and use of a vehicle under a lease . . . for a period of 30 consecutive days or more.” Vehicle Code § 460. “A ‘registered owner’ is a person registered by the department as the owner of a vehicle.” Vehicle Code § 505.

In this case, Gibson is the “legal owner” of the Plymouth, while the United States is both the “owner” and “registered owner.” The question to be answered is whether Gibson’s mere legal ownership is sufficient to subject him to liability under § 17150.

Numerous California cases have stated that the term “owner” as used in § 17150 generally refers to the registered owner. Travis v. Southern Pacific Co., 210 Cal.App.2d 410, 431, 26 Cal.Rptr. 700, 712 (1963); Irvine v. Wilson, 137 Cal.App.2d 843, 848, 289 P.2d 895, 898 (1955); Helmuth v. Frame, 46 Cal.App. 2d 372, 377, 115 P.2d 846, 850 (1941); Collard v. Love, 17 Cal.App.2d 72, 73, 61 P.2d 458, 459 (1936); Bunch v. Kin, 2 Cal.App.2d 81, 85, 37 P.2d 744, 746 (1935). Another line of cases has stated that the “actual owner” or “true owner is responsible whether he was the registered owner or not.” McClary v. Concord Ave. Motors, 202 Cal.App.2d 564, 566, 21 Cal.Rptr. 1, 2 (1962). See Stoddart v. Peirce, 53 Cal.2d 105, 115, 346 P.2d 774, 779 (1959); Rody v. Winn, 162 Cal.App.2d 35, 39, 327 P.2d 579, 581 (1958); Logan v. Serpa, 91 Cal.App.2d 818, 822, 206 P.2d 70, 72 (1949); McCalla v. Grosse, 42 Cal.App.2d 546, 549, 109 P.2d 358, 360 (1941). In each case where a California court has found that a nonregistered owner was or might be proven to be the actual or true owner, however, the court has also found that the person was or was alleged to have been exercising acts of dominion and control over the vehicle customarily exercised by actual owners: i. e., at the time of the accident, each party had the incidents of ownership referred to in Vehicle Code § 460. 3 Rody v. Winn, supra, 162 Cal.App.2d at 38, 327 P.2d at 581; Logan v. Serpa, supra, 91 Cal. App.2d at 822-823, 206 P.2d at 73; Nash v. Wright, 82 Cal.App.2d 467, 473, 186 P.2d 686, 690 (1947); McCalla v. Grosse, supra, 42 Cal.App.2d at 549, 109 P.2d at 360; Walker v. Nelson, 11 Cal. App.2d 297, 301, 53 P.2d 977, 978 (1936). Here no such facts have been established in regard to Gibson.

There has been no California case allowing recovery against a person whose only connection with the vehicle was that of “legal owner” as defined in Vehicle Code § 370. There are two reasons. First, California Vehicle Code § 17156 states, in effect, that those who are mere legal owners by reason of a security interest shall not be deemed an owner for purposes of imposing liability. See Oppenheimer v. Gordon, 141 Cal.App.2d 833, 297 P.2d 808 (1956). Second, no reported case has involved a party who was a mere legal owner by virtue of leasing a vehicle to the government.

The decision to be made is whether the California legislature intended to grant immunity to those leasing vehicles to the government when the legislature chose to group such lessors with legal owners holding security interests and then to grant immunity to the latter. Klein v. Leatherman, 270 Cal.App.2d 792, 76 Cal.Rptr. 190 (1969), gives good cause to believe that immunity for the former group was intended. There the court held that the lessor in a vehicle lease whereby the lessee agreed to pay a sum substantially equivalent to the value of the vehicle and had the option of purchasing the vehicle for nominal consideration was not liable as the owner for injuries inflicted by the lessee’s employee. In the court’s opinion, the lease was equivalent to a conditional sale and the lessor should, therefore, be granted the same immunity as a conditional vendor under § 17156. If immunity is to be granted upon the court’s finding that certain lessors are tantamount to conditional sellers, then certainly immunity must be granted upon the legislature’s determination that other lessors are tantamount to mortgagees, who are also granted immunity under § 17156.

The second major distinction between Metz, supra, and the present case is that, unlike Metz, here excluding the United States from coverage is completely consistent with the policies of the California courts in interpreting Insurance Code § 11580.1(d) and Vehicle Code § 17150.

Although no actual negligence need be shown on the part of the owner, “the liability which [§ 17150] imposes upon the owner of a motor vehicle is predicated upon a theory of imputed negligence in cases where the principle of respondeat superior is inapplicable." Glens Falls Ins. Co. v. Consolidated Freightways, 242 Cal.App.2d 774, 778, 51 Cal.Rptr. 789, 792 (1966). Burgess v. Cahill, 26 Cal.2d 320, 323, 158 P.2d 393, 394 (1945). Surely the government does not seriously argue that the negligence of the United States Government ought to be imputed to private citizens. Moreover, since § 17150 creates a liability unknown at common law, it is to be strictly construed in favor of the person sought to be held liable. Exchange Cas. & Sur. Co. v. Scott, 56 Cal.2d 613, 619, 15 Cal.Rptr. 897, 900, 364 P.2d 833, 836 (1961) ; Heves v. Kershaw, 198 Cal. App.2d 340, 346, 17 Cal.Rptr. 837, 840 (1962) .

Nor does excluding the United States from coverage violate the policies followed in interpreting § 11580.1(d). As stated by the Supreme Court of California in Wildman v. Government Employees’ Ins. Co., supra,, 48 Cal.2d at 39, 307 P.2d at 364, “The substantive law of [California] cannot be enlarged, circumvented, defeated, or modified by any provision which the insurer may have elected to place in its contract in derogation of or in conflict therewith.” 'The exclusion in this case results not from any action by the insurer but from the substantive law of California itself. More importantly, because the exclusion is limited to those situations involving the leasing of vehicles to the state or federal government, both of which are financially responsible, the exclusion is of no impediment to § 11580.1’s “main objective of giving ‘monetary protection to that ever changing and tragically large group of persons who while lawfully using the highways themselves suffer grave injury through the negligent use of those highways by others.’ ” Metz, supra, 10 Cal. 3d at 53, 109 Cal.Rptr. at 703, 513 P.2d at 927, quoting Interinsurance Exchange of the Auto. Club v. Ohio Cas. Ins. Co., supra, 58 Cal.2d at 153, 23 Cal.Rptr. at 598, 373 P.2d at 646.

      . Reserve Ins. Co. v. Universal Underwriters Ins. Co., 13 Cal.App.3d 656, 92 Cal.Rptr. 137, 142 n. 3 (1970), vacated; Metz v. Universal Underwriters Ins. Co., 106 Cal.Rptr. 779 (1973), vacated, 10 Cal.3d 45, 109 Cal. Rptr. 698, 513 P.2d 922 (1973). The vacated opinions are, of course, of no legal precedence.

      . In addition to relying upon the trial court’s finding that the lessor in Mete, supra, was the owner of the vehicle for purposes of liability, the California Court of Appeal found that the lessor had retained numerous incidents of ownership, including various restrictions upon the lessee in regard to the manner of use of the vehicle, the right to immediate possession under certain circumstances, the right to approve insurance obtained by the lessee and the requirement that the insurance protect the lessor. Reserve Ins. Co. v. Universal Underwriters Ins. Co., 13 Cal.App.3d 656, 92 Cal.Rptr. 137, 142 (1970), vacated; Metz v. Universal Underwriters Ins. Co., 106 Cal.Rptr. 779 (1973), vacated, 10 Cal.3d 45, 109 Cal.Rptr. 698, 513 P.2d 922 (1973). According to Vehicle Code § 460, the lessor in Metz was also defined as the “owner” of the vehicle.

      . The only rights held by Gibson were the rights to repossession of the vehicle at the expiration of the lease and the right to terminate the lease after the first six months upon thirty days’ notice. Since the accident occurred on July 13, 1968, Gibson had neither right at the time of the accident. Nor did' Gibson have any of the incidents of ownership found in the Metz decision, supra. See footnote 2, supra.

        . Appellee has been unable to cite, and I have been unable to find any California case holding a “legal owner” liable for use of a vehicle when his only connection with the vehicle is that he holds legal title (such as to qualify as a legal owner under § 370 or otherwise). The attitude of the California Supreme Court in regard to “legal owners” was fairly summarized in Stoddart v. Peirce, supra, 53 Cal.2d at 115, 346 P.2d at 779: “There is no doubt that the word ‘owner’ as used in section 402 [now § 17150] for the purpose of creating a liability thereunder, is not synonymous with that word as used in the ordinary sense of referring to a person or persons whose title is good as against all others.”

      . California Vehicle Code § 17156 (West. 1971) provides: “If a motor vehicle is sold under a contract of conditional sale whereby the title to such motor vehicle remains in the vendor, such vendor or his assignee shall not be deemed an owner within the provisions of this chapter, but the vendee or his assignee shall be deemed the owner notwithstanding the terms of such contract until the vendor or his assignee retakes possession of the motor vehicle. A chattel mortgagee of a motor vehicle out of possession is not an owner within the provisions of this chapter.” It should be noted that “legal owners,” who have become such by virtue of conditional sales, have been held liable when they have failed to comply with the notice and registration requirements which are prerequisites to the immunity granted in § 17156. See, e. g., Dorsey v. Barba, 38 Cal.2d 350, 240 P.2d 604 (1952) ; Rosenthal v. Harris Motor Co., 118 Cal.App.2d 403, 257 P.2d 1034 (1953) ; Leplat v. Raley Wiles Auto Sales, 62 Cal. App.2d 628, 145 P.2d 350 (1944). Since the effect of the failure to comply with the registration requisites meant that the “legal owners” were also the “registered owners,” those cases fall within the rule that registered owners are liable under § 17150.

      . Oppenheimer v. Gordon, supra, strongly suggests that mere legal owners, as defined under § 370 or otherwise, are not liable under § 17150.


author: WIDENER, Circuit Judge:

text:
    Delilah B. BLANKS, Appellant, v. Wilbur REGISTER et al., Appellees.
    No. 73-1873.
    United States Court of Appeals, Fourth Circuit.
    Argued Dec. 3, 1973.
    Decided March 26, 1974.

      Norman B. Smith, Greensboro, N. C. (Smith, Carrington, Patterson, Follín & Curtis, Greensboro, N. C., on brief), for appellant.
    David A. Nash, Wilmington, N. C. (William L. Hill, II, Hogue, Hill & Jones, Wilmington, N. C., on brief), for appellees.
    Before HAYNSWORTH, Chief Judge, and B OREM AN, Senior Circuit Judge, and WIDENER, Circuit Judge.
   WIDENER, Circuit Judge:

This civil rights action was brought by Mrs. Delilah Blanks, a Negro female, who sought injunctive relief, including back pay, from the defendant members of the Bladen County, North Carolina Social Services Board. She alleged that the defendants violated 42 U.S.C. § 1981, § 1983, and § 2000e-2(a) (1) in failing to appoint her, on account of her race, as Director of Social Services. The defendants filed a verified motion to dismiss under F.R.Civ.P. 12(b)(6) for failure to state a claim, averring, which was not denied, among other things, that Mrs. Blanks was still being considered for the position as Director of Social Services, the position still being vacant at that time.

The district court treated the motion to dismiss as one for summary judgment under F.R.C.P. 56, and dismissed the case, holding that the action was premature. Mrs. Blanks complains on appeal that she had no notice the court would treat the motion as one for summary judgment. Because it is clear from the record that the court did indicate its intent to treat the motion as one for summary judgment, and the suit was obviously premature, we affirm.

Mrs. Blanks had been employed by the Bladen County Social Services Board (Board) since 1968, and was granted a one year leave of absence in July, 1971, in order to secure her masters degree in social services. The director of the Board submitted his resignation to be effective on February 29, 1972. On February 8, 1972, Mrs. Julia Butler, the highest ranking employee in terms of grade and service, was appointed acting director to serve until a permanent director could be appointed. By letter dated February 9, 1972, Mrs. Blanks applied for the position. When this letter was received by the Board the record does not show, so we presume a day or so thereafter. Mrs. Blanks had her job interview with the Board May 22, 1972.

Mrs. Blanks filed this suit on November 14, 1972, at which time a permanent director had not been appointed. The essence of her complaint was that she was a qualified black person and therefore should be appointed. The Board filed its verified answer and motion to dismiss under F.R.C.P. 12(b)(6) on December 5, 1972, noting that plaintiff had not been rejected as an applicant and her application was still being considered along with a number of other applicants. This condition remained when Mrs. Blanks filed her unverified response to the motion to dismiss on March 14, 1973. Hearing on defendants’ motion was held on April 9, 1973, at which time the court indicated that the F.R.C.P. 12(b)(6) motion would be treated as one for summary judgment in accordance with F.R.C.P. 56. The memorandum opinion granting summary judgment was issued on May 11, 1973, as was the order dismissing the case. The Board, until after that date, had not appointed a permanent director, Mrs. Butler’s temporary appointment having been extended.

On May 31, 1973, the plaintiff filed her notice of appeal and motion for an injunction pending appeal, which motion was denied by order entered June 1, 1973. For the first time, in the unverified motion for an injunction pending appeal, it was brought to the attention of the district court that, on May 14, 1973, a certain Prince had been appointed as Director of Social Services for the county. In that motion, the plaintiff stated, not supported by affidavit or evidence, that the Board had tentatively agreed to employ Prince sometime during the winter of 1972-73, and that the statement of the Board, in its answer, that the plaintiff was under consideration was “not accurate.” Plaintiff, as she could have, made no motion under F.R.C.P. 59 to alter or amend the judgment, and no motion under F.R.C.P. 60 for relief from the judgment. Rather, she chose to prosecute her appeal on the record submitted to the district court.

Mrs. Blanks now contends that she had insufficient notice of the court’s intention to treat the F.R.C.P. 12(b)(6) motion as one for summary judgment under Rule 56. We are of opinion the point is not well taken. As stated before, the court indicated, on April 9th, at the hearing on the motion, its intention to treat the motion as one for summary judgment, and the matter of filing affidavits was discussed at length at that time. The defendants did file an affidavit on April 17, but the plaintiff filed none until August 28, 1973, with her appellate brief in this court, more than three months after the decision of the district court. The “reasonable opportunity to present new material” required by Rule 12(b)(6) is satisfied where the court has made plain its intention to both parties and where one party has acted, and the other not acted, in accordance with the court’s request for affidavits outside the pleadings. See Dale v. Hahn, 440 F.2d 633, 638 (2nd Cir. 1971). Cf. Johnson v. R.A.C. Corporation, 491 F.2d 510 (4th Cir. 1974), in which case the district court did not indicate to the parties that it was treating the 12(b)(6) motion as one for summary judgment.

The argument on the motion was quite detailed and full opportunity was granted the parties to be heard. 87 pages of transcript are devoted to it. The defendants’ position was there stated: “But at this stage nobody has been hired and I don’t think you can have a lawsuit. There’s no controversy about it.”

Following plaintiff’s filing of affidavits in this court with her appellate brief, defendants filed affidavits here. Both sets of affidavits deal largely with the merits of the question as to whether or not plaintiff should have received the sought-for appointment. Since none of them were ever seen by the district court, much less considered, we do not consider them here but leave such matters as they may assert for another day. “Our adjudication of the merits of such a challenge will await that time.” Socialist Labor Party v. Gilligan, 406 U.S. 583, 589, 92 S.Ct. 1716, 1720, 32 L.Ed.2d 317 (1972).

In short, this suit was brought by a plaintiff who applied for a top-level supervisory job, was in fact considered for the position, and then, before the Board had acted in making any appointment, sued, alleging unlawful discrimination because the Board had not appointed her. It is obvious that Mrs. Blanks had not become deprived of any right at the time of the filing of this suit and at the time the case was decided by the district court, because the Board had neither rejected her application nor appointed anyone else to the position. We are of opinion that no justiciable case or controversy under Article III of the Constitution had been presented until the Board had at least done some act or made some omission concerning Mrs. Blanks which affected her in some way. The ease was premature and therefore not ripe for judicial determination. Any opinion a federal court might have given on the merits would have been a forbidden, advisory one.

Appeal dismissed.

      . Beard v. Stahr, 370 U.S. 41, 82 S.Ct. 1105, 8 L.Ed.2d 321 (1962) ; Stearns v. Wood, 236 U.S. 75, 35 S.Ct. 229, 59 L.Ed. 475 (1915) ; Socialist Labor Party v. Gilligan, 406 U.S. 583, 92 S.Ct. 1716, 32 L.Ed.2d 317 (1972) ; Eccles v. Peoples Bank, 333 U.S. 426, 68 S.Ct. 641, 92 L.Ed. 784 (1948) ; A & P Tea Company v. Grosjean, 301 U.S. 412, 429, 57 S.Ct. 772, 81 L.Ed. 1193 (1937).


author: CRAVEN, Circuit Judge: WIDENER, Circuit Judge,

text:
    Margaret Rosa WALKER, Appellant, v. UNITED STATES of America et al., Appellees.
    No. 73-1940.
    United States Court of Appeals, Fourth Circuit.
    Argued Dec. 4, 1973.
    Decided March 25, 1974.
    Charles H. Burgardt, Fayetteville, N. C. (Joe McLeod, P. A., Fayetteville, N. C., on brief), for appellant.
    David Y. Seaman, Atty. Civ. Div., U. S. Dept, of Justice (Irving Jaffe, Acting Asst. Atty. Gen., Walter H. Fleischer, Atty., Civ. Div., U. S. Dept, of Justice, Thomas P. McNamara, U. S. Atty., on brief), for appellees.
    Before BRYAN, Senior Circuit Judge, and CRAVEN and WIDENER, Circuit Judges.
   CRAVEN, Circuit Judge:

On May 26, 1970, George Edward Walker, Jr. was killed in action in Vietnam. At the time of his death Walker had three insurance policies on his life. Two of the policies, in amounts of $1,000 and $9,000, were issued in 1949 and 1950 under the nomenclature of National Service Life Insurance (NSLI); the third policy was under Servicemen’s Group Life Insurance (SGLI) for $10,000 and was issued in 1965. The question presented by this appeal is whether Walker, prior to his death, did any overt act to change the beneficiary of the two NSLI policies from his former wife, Barbara A. Walker Soucy, to his second wife, Margaret Rosa Walker. The district court could find no such act, despite clear evidence that Walker intended that his second wife be the beneficiary under all three policies. Because we believe there was an overt act which, together with the undisputed evidence of Walker’s intent, was sufficient to indicate a change of beneficiary from the first to the second wife, we reverse the judgment of the district court.

At the time the disputed NSLI policies were issued, Florence V. Walker, the mother of the deceased, was named as principal beneficiary. In 1954 Sergeant Walker executed DA Form 41-1 (“Designation or Change of Beneficiary ■ — Servicemen’s Indemnity”) on which he named his wife, Barbara, as principal beneficiary and his mother as contingent beneficiary. Though this was not the form prescribed by the Veteran’s Administration for changing the beneficiary of NSLI policies, the district court found, in the absence of any evidence that Walker was entitled to “servicemen’s indemnity” at the time, that he effectively changed the beneficiary. Bew v. United States, 286 F.2d 570 (4th Cir. 1961).

In 1961 Walker obtained a divorce from Barbara, on grounds of three years separation, in the County Court of Franklin County, Vermont. Custody of their daughter was awarded to the wife. The daughter was subsequently adopted by the wife’s second husband. There is no evidence that Walker had ever seen his first wife or daughter from the date of the divorce until his death nine years later. Walker married his second wife, Margaret, in 1962. One son, Gene, was born to the marriage; Walker also adopted Margaret’s son from a previous marriage. The SGLI policy issued in 1965 named Margaret and the two sons as beneficiaries.

At trial Margaret testified that on numerous occasions her husband told her that if anything should happen to him she and the sons would get $20,000 worth of life insurance. This testimony is substantiated by the affidavits of two neighbors of the Walkers at Fort Bragg and by the testimony of a former agent for Metropolitan Life Insurance Company who had discussed Walker’s insurance situation with him on two occasions before he began his second tour of duty in Vietnam. Further evidence introduced at trial consisted of a power of attorney executed by Walker in favor of Margaret prior to his departure for Vietnam in December, 1969, and a DA Form 41 (“Record of Emergency Data”) which Walker filled out while in a combat zone in Vietnam in February, 1970. This latter form indicated that Margaret K. Walker was the beneficiary for unpaid pay and allowances and for allotments if Walker were to become missing in action. Under the blanks reserved for “Insurance data” only “SGLI” was written. There was no mention of the NSLI policies.

In Roberts v. United States, 157 F.2d 906 (4th Cir. 1946), this court said that “in war risk insurance cases involving change of beneficiary the courts brush aside all legal technicalities in order to effectuate the manifest intention of the insured . . . .”157 F.2d at 909. Subsequently we have held that intent alone is not sufficient, Kluge v. United States, 206 F.2d 344 (4th Cir. 1953), but must be accompanied by some overt act directed toward effectuating that intent. See, e. g., Bew v. United States, 286 F.2d 570 (4th Cir. 1969). We adhere to that viewpoint.

The idea of brushing aside legal technicalities in order to do substantial justice is very appealing. What makes this ease difficult of decision is our incompetence to assay collateral effect. If we create a rule of subjective intent, we inevitably also create administrative problems that may affect thousands of beneficiaries under these policies. To adopt a pure-intention rule might delay payment in innumerable cases and might well result in the cumbersome procedure of interpleader with the government depositing the money in a fund for disbursement by the administrative judge or the district court after an evidentiary hearing as to the intention of the deceased soldier. Getting Rosa Walker the monies that her husband intended her to have is a worthwhile endeavor, but it may not be accomplished properly at a price of encumbering the administrative process for thousands of other claimants. We think, therefore, we must continue to insist upon an overt act and decline to adopt a rule of intention that may be sustained simply by oral testimony. We think the Fifth Circuit has balanced, as well as it can be done, the need for reasonably rapid processing of claims against the wish to assure that in as many cases as feasible the actual beneficiary is the one intended by the deceased serviceman. In Smith v. United States, 421 F.2d 634 (5th Cir. 1970), the court stated:

In those cases where the proof of intent is clear and convincing, the rationale is that a lesser quantum of proof is required to show the affirmative act to carry out the intent to make the change.

421 F.2d at 635. In this case the proof of intent, as in Smith, is “clear and convincing,” as the district judge seemed to recognize. But the lower court understandably felt constrained by our opinion in Collins v. Collins, 378 F. 2d 1020 (4th Cir. 1967). In Collins the issue was precisely the same as in the case at bar. The serviceman in Collins told his wife “that he had ‘willed’ his insurance to her and that she would be taken care of for the rest of her life.” 378 F.2d at 1020. The alleged overt act was the execution of a “Record of Emergency Data” form similar to that which Walker filled out. Collins designated his wife as beneficiary of his unpaid pay and allowances, and, in the blank designated for listing insurance policies, listed “NSLI”. He did not, however, fill in the space on the form in which he might have listed the beneficiary of this insurance. On this basis the court found there was no overt act since “the execution of the form is equally consistent with an intention on the part of the insured to leave his father and sister as the designated beneficiaries as with an intention to change the designated beneficiary to his wife.” 378 F.2d at 1020.

We think, admittedly with some hesitation, that the case presently before us is factually distinguishable from Collins. The showing of intent by the appellant here is significantly more convincing since the testimony of his wife, who stands to benefit from the finding of a change of beneficiary, is supported by affidavits from neighbors and the testimony of an insurance agent whereas in Collins the wife’s testimony was apparently the only evidence of intent. The form executed by Collins differed from that filled out by Walker in that the later DA Form 41 called only for “insurance data” rather than calling to the soldier’s attention the difference between SGLI and NSLI and providing a space for the listing of beneficiaries under the policies enumerated. Furthermore, the “equally consistent” conclusion in Collins that the serviceman intended for his father and sister to benefit from his insurance is absent here. The government does not seriously contend that Walker intended that the NSLI proceeds should go to a wife with whom he had not lived in twelve years and from whom he had been divorced and had not seen for nine years. That Walker had no such intention is further strengthened by the obligation of support which he owed to his two sons.

It is quite apparent that long before George Walker went to Vietnam he believed he had made his second wife and his two sons the beneficiaries of all three of his insurance policies, either because of the mere fact of his divorce from his first wife or because of some action taken by him of which there is no record. The acts of granting his second wife a general power of attorney and filling out his Record of Emergency Data, DA Form 41, are certainly consistent with this belief.

Because we believe a less overt act is necessary to change a beneficiary in war risk insurance cases where clear and convincing proof of intent is made, we treat these acts together as sufficient to constitute the overt act necessary to find that George Walker changed the beneficiary of his NSLI policies prior to his death.

Reversed.

WIDENER, Circuit Judge,

dissenting:

I must respectfully dissent.

I would affirm on the opinion of the district judge. He heard the evidence of witnesses ore tenus, in open court, and, in a written opinion, found that “[pjlaintiff’s difficulty lies in the absence of any evidence that George ever did any overt act toward implementing this intention,” and again, “the plaintiff has therefore failed to establish this essential element [an overt act] of her claim by any evidence, much less the required preponderance of the evidence.” I think whether or not there has been an overt act is within the rule that findings of fact shall not be set aside unless clearly erroneous and due regard shall be given to the opportunity of the trial court to judge the credibility of the witnesses. FRCP 52(a). I do not consider the findings by the trial judge, especially since they are concerned with the weight and sufficiency of evidence, to have been clearly erroneous.

As mentioned by the majority, its opinion may very well be disturbing not only to the United States in this case but to the thousands of beneficiaries of war risk insurance policies written by the United States and by private insurance companies. There are in force at this time at least three kinds of war risk insurance, National Service Life Insurance, 38 U.S.C. § 301 et seq; United States Government Life Insurance, 38 U.S.C. § 740 et seq; and Servicemen’s Group Life Insurance, 38 U.S.C. § 765 et seq. National Service Life Insurance and United States Government Life Insurance policies are written by the United States; however, Servicemen’s Group Life Insurance is written by private insurance carriers, 38 U.S.C. § 766 et seq.

In the case before us, the United States has already paid the claim to Barbara, a previous wife. If Barbara has dissipated the money, or even if she has not, the United States may very well be put into the position of paying twice. 38 CFR § 8.47, concerning National Service Life Insurance, provides that “a change of beneficiary to be effective must be made by notice in writing signed by the insured and forwarded to the Veterans Administration . . .;” 38 U.S.C. § 770(a) provides Servicemen’s Group Life Insurance may be payable to the beneficiary “ . . . designated by a writing received in the uniformed services prior to such death,” see also 38 CFR § 9.16(c) for change of beneficiary; and 38 CFR § 6.60 provides, for United States Government Life Insurance, that a change of beneficiary must be “ . . . made by written notice to the Veterans Administration over the signature of the insured and shall not be binding on the United States unless received by the Veterans Administration.” So the methods for designating beneficiaries, or changes, are not too different in at least three kinds of war risk policies currently in force. While it may only be distasteful and inconvenient to the United States to be required to pay out the proceeds of an insurance policy twice, and it is doubtful if this mild attitude will characterize future payments, I suggest that private insurance companies must take a far more sanguine approach toward payment of war risk policies in the future, since there will be a greater possibility of paying twice. As such, I can only foresee a great increase in the amount of litigation concerning the payment of the proceeds of war risk policies, and especially I would expect a considerable increase in the number of interpleader actions filed both by the United States and by private insurance companies in order to avoid double payment. Litigation, of course, in all events will cause much delay in paying just claims to needy beneficiaries.

For reasons best known to itself, the United States has not pleaded that part of 38 CFR § 8.47 which furnishes a defense to the United States for payments made before proper notice of change of beneficiary has been received by the Veterans Administration under National Service Life Insurance policies. A similar, if not identical, provision exists for United States Government Life Insurance, 38 CFR § 6.60, but Servicemen’s Group Life Insurance apparently does not carry any such defensive regulation or statute. 38 U.S.C. § 765 et seq, 38 CFR § 9.1, et seq. While these provisions have thus far been relatively free from litigation, I cannot but expect both the United States and private insurance companies to assert every defense to payment in the future to avoid the possibility of the double payment which has occurred in this case.

      . On direct examination the agent, Charles King, Jr., testified as follows:
      Q. What statements did Mr. Walker make to you about his insurance?
      A. Indicated to me that he had, that the $20,000 available to him through the Army would be payable to his wife and children should something happen to him.
      Q. And did he say to whom it was payable?
      A. To his wife, Margaret Walker, and his children.

      . The power of attorney was general and included the right to act as his attorney-in-fact or proxy “in respect to any policy of insurance on [his] life” excepting any right to change the beneficiary.

      . In his “Memorandum of Decision” the district judge stated: “From this evidence the court has no hesitance in finding the insured fully intended that his widow, Margaret, should receive the proceeds of all of this insurance at his death.”


author: MULLIGAN, Circuit Judge: WATERMAN, Circuit Judge

text:
    UNITED STATES of America, Petitioner, v. Hon. Robert L. CARTER, United States District Judge, Respondent. UNITED STATES of America, v. Bertram L. PODELL et al., Defendants.
    No. 816, Docket 74-1057.
    United States Court of Appeals, Second Circuit.
    Argued Jan. 29, 1974.
    Decided Feb. 27, 1974.

      Rudolph W. Giuliani, Asst. U. S. Atty. (Paul J. Curran, U. S. Atty., S. D. N. Y., Joseph Jaffe, Michael B. Mukasey, Asst. U. S. Attys., of counsel), for petitioner.
    James M. La Rossa, New York City (Gerald L. Shargel, New York City, of counsel), for Bertram L. Podell.
    Before WATERMAN and MULLIGAN, Circuit Judges, and BRYAN, District Judge.

       Hon. Frederick vP. Bryan, of the Southern District of New York, sitting by designation.

   MULLIGAN, Circuit Judge:

On January 14, 1974, Hon. Robert L. Carter, United States District Judge for the Southern District of New York, filed an opinion and order denying the motion of the United States to take the deposition of a prospective Government witness, Ronald C. Kinsey, in Seattle, Washington, pursuant to 18 U.S.C. § 3503. The United States Attorney for the Southern District of New York now petitions us for a writ of mandamus directing Judge Carter to issue an order granting the motion of the United States. Petition granted.

The indictment in this case, containing ten counts, was filed on July 12, 1973 and charges the defendants, Bertram L. Podell, a United States Congressman, Herbert S. Podell and Martin Miller, with conspiracy to defraud the United States (counts 1 and 7), bribery (counts 2, 3 and 4) and conflict of interest (counts 5 and 6), in violation of 18 U.S.C. §§ 371, 201 and 203. The defendants Bertram and Herbert Podell are also charged with making false statements (counts 8 and 9) and Bertram L. Podell is charged with perjury (count 10), in violation of 18 U.S.C. §§ 1001 and 1623.

The defendant Miller, President of the Florida Atlantic Airlines’ parent company, is charged with having asked Congressman Podell to use his official position to cause the Civil Aeronautics Board to approve the application of the airline to fly a regularly scheduled route from Florida to the Bahamas. The indictment charges that Congressman Po-dell agreed to use such influence in return for substantial payments of money in the form of fees and contributions to his own re-election committee. Congressman Podell is alleged to have attempted to influence various federal agencies and Bahamian officials to obtain the route. It is further charged that the defendants were engaged in a conspiracy to commit perjury, to obstruct justice and to make false statements in connection with these services. On July 23, 1973, the defendants pleaded not guilty.

On December 27, 1973, the Assistant United States Attorney in charge of the prosecution of this case, prepared a subpoena for a retired official of the C.A. B., Ronald C. Kinsey, who had appeared before the Grand Jury and who had previously given information to the F.B.I. The Government maintains that Kinsey’s testimony is critical to the Government’s proof of the charges of conspiracy to defraud, bribery and conflict of interest and this does not appear to be controverted. The trial was set for January 14, 1974, but, at the request of counsel for Bertram Podell on January 2, 1974, trial was adjourned for one week to January 21, 1974. On Jan.uary 3, 1974, the Assistant United States Attorney learned that Kinsey had suffered a severe heart attack on December 20, 1973, and was hospitalized in Seattle. Kinsey’s physician, a certified cardiologist and internist practicing at the Seattle Heart Clinic, advised the Government that Kinsey’s attack had been almost fatal, and that on the assumption that he suffered no further setbacks, he would not be able to come to New York to testify before the end of March or early April, 1974. The physician indicated that a deposition would not be advisable until the end of January, 1974 at the earliest.

On January 8, 1974, Henry E. Petersen, Assistant Attorney General of the United States, issued the following certification pursuant to 18 U.S.C. § 3503:

Mr. Paul J. Curran United States Attorney New York, New York

Dear Mr. Curran:

Pursuant to your request to obtain an order granting the taking of a deposition from Ronald C. Kinsey, I hereby certify, pursuant to the authority conferred upon me by 28 C.F.R. § 0.59(b), that the case of United States v. Bertram Podell, et al, is a legal proceeding against a person who is believed to have participated in an organized criminal activity.

Sincerely,

Henry E. Petersen

Assistant Attorney General

Thereafter, the Government moved by order to show cause for an order to permit it to take the deposition of Kinsey. In his opinion filed on January 14, 1974, denying the Government’s motion, Judge Carter found that the certification was “without basis in fact and is, therefore, made in bad faith.” On the other hand, he found that there was adequate demonstration of the unavailability of Kinsey and that his early deposition was the only insurance that the Government had to preserve his testimony. He further held that there was no doubt of the constitutionality of Section 3503 and the right of the Government pursuant thereto to use the deposition of a witness in a criminal trial. Thus, his denial of the Government’s motion here was based solely on the alleged inadequacy of the certification of the Assistant Attorney General. Judge Carter construed the term “organized criminal activity,” as utilized in the statute, to be equivalent to “gangsterism, racketeering and syndicate activity of clandestine criminal groups.” He felt that crimes such as trafficking in dangerous drugs, loan sharking, wholesale theft and violence on a large scale were within the statute. He pointed out that the three defendants in this case are a member of Congress, his brother, who is a member of the New York Bar, and a Florida businessman. He characterized the crimes charged here as typical “public official offenses” not normally associated with so-called organized criminal activity.

This court has recently construed the statute in question in United States v. Singleton, 460 F.2d 1148 (2d Cir. 1972). The holding of that case is clear. “[T]he decision whether or not a proceeding is against a person believed to have participated in organized criminal activity is to be made by the Attorney General or his designee and not by the court.” 460 F.2d at 1154. This court specifically held that Congress did not intend that the organized criminal activity certification be subject to judicial examination. The trial court is not to make a de novo determination. The certification used here was in the form upheld in Singleton, and under Singleton, is vulnerable only if the defendant is able to show that the Government acted in bad faith. 460 F.2d at 1154.

The court below found that while the crimes charged in the indictment here were heinous, they were not properly characterized as organized criminal activity. The certification was, for this reason, determined to be without a basis in fact and therefore made in “bad faith.” While purporting to follow Singleton, the court below was plainly disregarding it. The determination of whether or not the defendants were engaging in organized criminal activity is to be made by the Attorney General or by his designee and not by the court. This is what Singleton held. It cannot be circumvented by a finding that the Assistant Attorney General was acting in “bad faith” because the court here disagreed with the Government’s determination that the defendants were believed to have participated in organized criminal activity. Under Singleton, the burden is upon the defendant to establish bad faith on the part of the Government and there is not a scintilla of evidence of bad faith in the record before us and, in fact, no such evidence is suggested in the opinion below. Presumably, the Attorney General had information at his disposal upon which the certification could be made.

Even if we were free to question the determination of the Attorney General, we could not accept the proposition that the Congress did not intend to include corruption, obstruction of justice and perjury within the purview of the statute. While crimes of violence engineered by gangs of thugs are of course repulsive and clearly within the concept of organized criminal activity, the concerted corruption charged here is equally odious. The fact that the alleged perpetrators are presumably respectable and entrusted with responsibility by an electorate or a profession or by stockholders does not suggest, in our view, that they are incapable of engaging in organized criminal activity. We all stand equal before the bar of criminal justice, and the wearing of a white collar, even though it is starched, does not preclude the organized pursuit of unlawful profit. In any event, the determination is for the Attorney General and not for the courts, and that is the holding of Singleton,

It follows therefore that the court below did not simply abuse its discretion but usurped a power in making a finding which the Congress vested in the Attorney General. Hence, although this court has been reluctant to use the writ of mandamus, and we are aware of no case in which it has been utilized to review, at the behest of the Government in a criminal case, an interlocutory procedural order which does not have the effect of a dismissal, the possibility has not been foreclosed. See Will v. United States, 389 U.S. 90, 88 S.Ct. 269, 19 L.Ed.2d 305 (1967); United States v. Griesa, 481 F.2d 276, 278 (2d Cir. 1973) and the concurring and dissenting opinion of Judge Timbers at 279-281. See also Supervisory and Advisory Mandamus Under the All Writs Act, 86 Harv.L.Rev. 595, 624-28 (1973).

In view of the circumstances set forth here, we believe the issuance of the extraordinary writ is fully justified. The Government’s case, if not terminated, is at least jeopardized if the deposition of the witness Kinsey is not permitted. Counsel for the defendants and the defendants have been invited to attend the deposition. See 18 U.S.C. § 3503(b). The crimes charged here are serious and a cloud of suspicion hangs over the heads of those not usually suspect. The court below commendably urged the parties to seek an early review and resolution of the present dispute by this court in view of the importance and significance of the question. We believe that justice dictates, both for the Government and the defendants, that all the evidence which is relevant be ascertained and presented in this case, and we therefore grant the writ requested by the Government and direct the court below to issue the order permitting the deposition of the witness Kinsey. The trial date we leave to the discretion of the trial court after the taking of the deposition.

WATERMAN, Circuit Judge

(concurring in the result):

I concur with my colleagues in granting the petition.

I cannot concur in their opinion, however, for I have substantial doubts that Congress intended that a letter sent by return mail from an Assistant Attorney General of the United States to a United States Attorney who requested the letter would be a “certification” pursuant to 18 U.S.C. § 3503. And I have similar doubts that the Congress intended the term “organized criminal activity” to include a broader range of alleged criminal activity than activity generally comprehended within the term “organized crime.” In sum, I adopt, in substantial part, the approach of Judge Oakes in his dissent in United States v. Singleton, 460 F.2d 1148, 1155-1159 (2 Cir. 1972). However, the law of the Circuit has been declared in the majority opinion in United States v. Singleton, and I believe it incumbent upon me to follow that declaration. Nevertheless, I would hope that, if Mr. Kinsey’s deposition is taken in Seattle and later introduced at trial, not only the proper interpretation of the statutory language mentioned here, but also the impact upon the constitutionally guaranteed right of an accused “to be confronted with the witnesses against him,” will be preserved for later adjudication. 5 Wigmore on Evidence (3d ed. 1940) §§ 1364-1367; §§ 1420-1422.

“Confrontation: . . . [inter alia], permits the jury that is to decide the defendant’s fate to observe the demeanor of the witness in making his statement, thus aiding the jury in assessing his credibility.” California v. Green, 399 U.S. 149, 158, 90 S.Ct. 1930, 1935, 26 L.Ed.2d 489 (1970).

We should be zealous to protect the Sixth Amendment right from erosion. See, e. g., Warren, Ch. J., in Greene v. McElroy, 360 U.S. 474, 497, 79 S.Ct. 1400, 3 L.Ed.2d 1377 (1959).

      . Section 3503(a) provides:
      Whenever due to exceptional circumstances it is in the interest of justice that the testimony of a prospective witness of a party be taken and preserved, the court at any time after the filing of an indictment or information may upon motion of such party and notice to the parties order that the testimony of such witness be taken by deposition and that any designated book, paper, document, record, recording, or other material not privileged be produced at the same time and place. If a witness is committed for failure to give bail to appear to testify at a trial or hearing, the court on written motion of the witness and upon notice to the parties may direct that his deposition be taken. After the deposition has been subscribed the court may discharge the witness. A motion by the Government to obtain an order under this section shall contain certification by the Attorney General or his designee that the legal proceeding is against a person who is believed to have participated in an organized criminal activity.
      Section 3503(f) governs the use of the deposition at trial:
      At the trial or upon any hearing, a part or all of a deposition, so far as otherwise admissible under the rules of evidence, may be used if it appears: That the witness is dead; or that the witness is out of the United States, unless it appears that the absence of the witness was procured by the party offering the deposition; or that the witness is unable to attend or testify because of sickness or infirmity; or that the witness refuses in the trial or hearing to testify concerning the subject of the deposition or part offered; or that the party offering the deposition has been unable to procure the attendance of the witness by subpoena. Any deposition may also be used by any party for the purpose of contradicting or impeaching the testimony of the deponent as a witness. If only a part of a deposition is offered in evidence by a party, an adverse party may require him to offer all of it which is relevant to the part offered and any party may offer other parts.

      . See Statement of Findings and Purpose, Organized Crime Control Act of 1970, Pub. L.No.91-452, 84 Stat. 922 in U.S.Code, Cong. & Admin.News at p. 1073 (1970) ; cf. 18 U. S.C. § 1961(1) (A)-(B). Representative Poff, in describing Section 3503 to the members of the House of Representatives, explained that the statute would be applicable “no matter what [the defendant] is being tried for — a violation of the Migratory Bird Act, for instance . . . ” provided that he had at sometime participated in organized criminal activity. 116 Cong.Rec. 35293 (Oct. 7, 1970). “Organized criminal activity” is not defined in the statute, however, it is clear that it was not intended that it be given a restrictive interpretation. Congressman Poff described the term as being “broader in scope than the concept of organized crime; it is meant to include any criminal activity collectively undertaken . . . .” 116 Cong.Rec. 35293 (Oct. 7, 1970). Senator Hruska, a co-sponsor of the bill, advised the Senate that the term included all criminal activity that was “not an isolated offense by an isolated offender . . . . ” 116 Cong.Rec. 36294 (Oct. 12, 1970).

      . Congress has in other instances vested exclusive jurisdiction in the executive branch of Government to make determinations relating to law enforcement matters. Under 18 U.S.C. § 3731, for example, the United States Attorney certifies that an interlocutory appeal is not taken for purposes of delay and that evidence suppressed by a trial court is substantial proof of the charge pending against the defendant. The Seventh Circuit has held that this certification need not be accompanied by supporting evidentiary material. United States v. Comiskey, 460 F.2d 1293, 1297-1298 (1972). Similarly where the Attorney General finds under 18 U.S.C. § 6003 that conferring immunity upon a witness is in the public interest, that determination is not judicially reviewable. See Ull-mann v. United States, 350 U.S. 422, 432-434, 76 S.Ct. 497, 100 L.Ed. 511 (1956).


author: WALLACE, Circuit Judge:

text:
    CASUAL CORNER ASSOCIATES, INC., Plaintiff-Appellee, v. CASUAL STORES OF NEVADA, INC., et al., Defendants-Appellants.
    No. 71-2805.
    United States Court of Appeals, Ninth Circuit.
    March 5, 1974.

      Lawrence W. Jordan, Jr. (argued), Stafford W. Keegin, Cotton, Seligman & Ray, San Francisco, Cal., for defendants-appellants.
    Julian Caplan (argued), J. Thomas McCarthy, Gregg, Hendricson & Caplan, San Francisco, Cal., Elihu H. Berman, Ritter & Berman, Hartford, Conn., for plaintiff-appellee.
    Before CHAMBERS, CHOY and WALLACE, Circuit Judges.
   WALLACE, Circuit Judge:

Casual Stores of Nevada, Inc. and other related corporations primarily controlled by either Vegod Corporation or Maurice Hack (Hack Group) appeal from a judgment in favor of Casual Corner Associates, Inc. (Casual Associates) enjoining future use of the trademark “CASUAL CORNER.” Casual Associates was required to pay $1,600 to compensate the Hack Group for expenses it would incur in complying with the injunction. We affirm.

Curtis and Anderson, Hack’s predecessors in interest, began using the mark CASUAL CORNER in 1947, in connection with a retail clothing store in Sacramento, California. By 1953, Curtis and Anderson had four small, local Casual Corner stores in Sacramento, two of which were closed the next year. Hack acquired the remaining two stores in 1955 and 1956, and subsequently closed one in 1959. According to the document providing for the sale of the store in 1956, Curtis and Anderson sold to Hack:

All right of sellers in and to the use of the name “Casual Corner” in connection with the operation of a women’s apparel business in the premises or elsewhere in Fruitridge Shopping Center, Sacramento, California.

Curtis and Anderson further agreed not to compete with Hack within one mile of the shopping center, but retained, although never exercised, the right to use the mark in any other area.

Although by 1961 Hack had established two more small, local stores in Napa and San Leandro, he did not use the mark at those stores prior to August, 1957. By 1966, he had closed all of his stores and for a period of about one year from 1966 to 1967, neither he nor any member of the Hack Group operated any Casual Corner stores or used the mark CASUAL CORNER. In 1967, Hack opened a Casual Corner store in San Francisco, and, in 1968, Casual Associates filed this action against the Hack Group.

Casual Associates’ predecessors first began using the CASUAL CORNER mark in 1950 in Washington, D. C. Since that time Casual Associates has acquired the rights of these predecessors through valid assignments of trademarks and goodwill and is the owner of a United States Trademark Registration for the mark which was published by the United States Patent Office in 1957. The registration has now become incontestable and Casual Associates and its licensees or their predecessors have continuously used the mark while expanding their operation to encompass 15 states and the District of Columbia. By 1970, they were operating 58 stores and were planning to expand to other states. Casual Associates and its licensees have extensively advertised the mark both in national publications and by direct mailings to about 600,000 customers; over 1,000 of these mailings, which included mailings to numerous charge-account and mail-order customers, were to people located in California. In 1971, subsequent to the filing of this action, Casual Associates opened its first West Coast store in the San Francisco Bay area.

The right of a registrant to use his mark becomes incontestable under 15 U. S.C. § 1065 after five years of continuous use from the date it is registered, except to the extent that the use infringes upon a valid right acquired under state law by a use continuing from a date prior to the federal registration and publication. Once a mark becomes incontestable, the registrant’s right to use it is exclusive subject to the conditions and limitations of section 1065 and the defenses allowed under 15 U.S.C. § 1115. The Hack Group urges that Casual Associates’ mark is not incontestable as to it because Hack’s predecessors (Curtis and Anderson) obtained a state common law right to use the mark before Casual Associates’ predecessors began using thé same mark. Asserting that section 1065 controls section 1115, the Hack Group argues that it is not limited to the section 1115 defenses and can assert common law defenses.

Although a similar claim that section 1065 controls section 1115 was rejected in Travelodge Corporation v. Siragusa, 228 F.Supp. 238, 242 (N.D. Ala.1964), aff’d per curiam, 352 F.2d 516 (5th Cir. 1965), we need not reach that issue. Even assuming that section 1065 controls section 1115, the Hack Group must establish that it has a valid right under state law acquired by a use continuing from a date prior to the registration and publication of the mark under the federal trademark laws. To establish such a right, it must show (I) that its use of the mark began before its registration and publication in 1957 and (2) that there has been continuing use since that time. Since the trial court found that the predecessors of the Hack Group began using the mark before Casual Associates or its predecessors, the pivotal issue is whether there has been a continuing use. To be a continuing use, the use must be maintained without interruption.

The trial court concluded that there was not a continuing use of the mark by the Hack Group and its predecessors. To prevail on appeal, the Hack Group must demonstrate that the findings of fact were clearly erroneous. Fed.R.Civ. P. 52(a). Norm Thompson Outfitters, Inc. v. General Motors Corp., 448 F.2d 1293 (9th Cir. 1971). Clearly, it has not done so. In making this determination, we have judged, as we must, the evidence in a light most favorable to Casual Associates and have allowed it every reasonable inference. Wineberg v. Park, 321 F.2d 214, 218 (9th Cir. 1963).

The trial court’s decision is supported by Hack’s complete nonuse of the mark for the one-year period between 1966 and 1967. In response to this evidence, the Hack Group argues that there is a continuing use within the meaning of the statute unless the owner has abandoned the mark. In support of this argument, it contends that absence of use for a period of time by itself without intent to “abandon” does not dictate the loss of rights to a mark as a matter of law, citing Beech-Nut Packing Co. v. Lorillard, Co., 273 U.S. 629, 47 S.Ct. 481, 71 L.Ed. 810 (1927) (lack of use for five years). It vigorously argues that since it did not abandon the mark, it is entitled by its prior use to common-law rights superior to Casual Associates’ registration. The Beech-Nut case, however, was decided almost twenty years prior to the enactment of 15 U.S.C. § 1065, the statute which governs our decision, and that statute excepts only uses continuing from a date prior to publication of the registered mark.

Furthermore, to argue that there is a continuing use unless the user has abandoned the mark creates a false issue. Section 1065 places upon a person claiming a prior state right the burden of showing that his has been a continuing use. To equate continuing with a failure to abandon would shift the burden from the state-right claimant to the owner of a valid and incontestable trademark. Such a result would be inconsistent with the statute and with the protection afforded by the trademark laws. The Hack Group’s failure to use the mark for the one-year period prevents it from claiming that it falls within the exception of section 1065 requiring a continuing use.

Although sufficient to sustain the judgment, the nonuse was not the only evidence before the trial court from which it could determine that there was not a continuing use by the Hack Group. In 1965 and 1966, Hack closed his Sacramento and San Leandro stores pursuant to an agreement of noncompetition between himself and a subsidiary of the Vegod Corporation, after which they worked together in a joint enterprise. On the basis of this agreement, the trial judge found that Hack had no intent to reopen either store as long as Vegod operated in the area. Only the use of the mark at this Sacramento store predated the issuance of the federal trademark registration to Casual Associates. The court further found that there was no goodwill from the prior stores that could bridge the one-year gap; aggressive collection tactics subsequent to the factoring of the accounts receivable had turned the only remaining goodwill into ill will. The trial court also found that the only store opened subsequent to the one-year period and prior to the commencement of this action was in San Francisco which was a new and different trade area.

Another indispensable requirement for the Hack Group to prevail is an adequate demonstration of entitlement to the use by Hack’s predecessors. If the claimed continuing use is to be projected back to a date prior to the registration and publication of the mark owned by Casual Associates, it must prove its entitlement to the use by Curtis and Anderson. To do so, the Hack Group argues that it acquired complete ownership of the mark as part of the 1955 store purchase, but the trial judge found that Hack’s rights in the mark were limited to the two Sacramento shopping centers in which the stores were purchased. This was not clearly erroneous. The only evidence contrary to this finding is the oral testimony of Hack and Curtis to the effect that Anderson and Curtis intended to transfer all their rights to the use of the mark to Hack in 1955. This story was more than a little difficult to credit especially given the limited 1956 purchase agreement and the absence of a written agreement in 1955. Even though un-contradicted by other oral testimony, the trial judge was entitled to disbelieve it. See Broadcast Music, Inc. v. Havana Madrid Restaurant Corp., 175 F.2d 77, 80 (2d Cir. 1949); American Photographic Pub. Co. v. Ziff-Davis Pub. Co., 135 F.2d 569, 573 (7th Cir. 1943). Given this, there is substantial evidence to support the trial judge’s finding. Following the 1955 sale, Curtis and Anderson continued to operate the nearby Fruitridge store, an action inconsistent with a claim that all rights to the mark were earlier transferred. More importantly, the 1956 purchase agreement limited the trademark rights granted to those of the store purchased, and Anderson and Curtis retained the right to compete with Hack outside of one mile from the shopping center.

Therefore, regardless of whether section 1065 controls section 1115, the Hack Group is precluded from claiming any rights arising out of the exception to section 1065 because of its failure to demonstrate a use of the mark continuing from a date prior to the federal trademark registration and publication. Thus, it may raise only those defenses specifically enumerated in section 1115. The Hack Group claims a defense of nonabandonment. While abandonment is a defense under section 1115, the defense is abandonment by the registrant, not the nonabandonment by the nonregistrant. Abandonment under section 1115 would be relevant only if Casual Associates had abandoned the trademark. 3

Finally, the Hack Group raises a limited area defense under section 1115(b)(5), claiming that at least within certain areas, it should be able to use the mark. However, this defense hinges upon the requirement of the Hack Group being a valid prior and continuous user. Based upon the trial court’s findings, the Hack Group is not a prior continuous user. Therefore, that issue must also be decided against the Hack Group.

Affirmed.

      . Casual Stores of Nevada, Inc., Casual Stores, Inc., Hayward Fashions, Inc., Vegod Corporation, Bayfair Casuals, Inc., and Maurice Hack are the defendants in this case. These parties are connected by the following relationships: Maurice Hack owns 100% of the stock of Casual Stores of Nevada, Inc., a Nevada corporation, and Bay-fair Casuals, Inc., a California corporation; the stock of Casual Stores, Inc., a California corporation, is owned by Hack, his Casual Stores of Nevada corporation and others; Vegod Corporation, a California corporation, owns 100% of the stock in Hayward Fashions, Inc., another California corporation.

      . The Hack Group quotes Callmaim for the proposition that:
      The trademark owner need not, however, prove a settled and permanent place of business, and any intervening period of nonuse, unless, of course, it constitutes an abandonment, will not destroy the right of the first user, (footnotes omitted)
      3 R. Callmann, The Law of Unfair Competition, Trademarks and Monopolies, § 76.2(d) at 289-90 (3d ed. 1969). Callmann’s statement is misleading and subject to different interpretations. One interpretation is that a nonregistrant who first used the mark will not lose his rights by nonuse, unless that nonuse is an abandonment. This interpretation would be more favorable to the Hack Group because it is more difficult to prove abandonment than it is to prove lack of use. However, if this interpretation were intended by Callmann, the cases he cites do not support the proposition asserted. On the other hand, Callmann is correct if he means that the registrant will lose his right through nonuse only if that nonuse constitutes an abandonment. This, of course, is of no value to the Hack Group because it has neither proven nor attempted to prove that Casual Associates has abandoned the mark.

      . The limited area defense applies if the alleged infringer can establish:
      That the mark . . . was adopted without knowledge of the registrant’s prior use and has been continuously used by such party . . . from a date prior to registration of the mark Provided, however, That this defense or defect shall apply only for the area in which such continuous prior use is proved ....
      15U.S.O. § 1115(b) (5).