author: WISDOM, Circuit Judge:

text:
    Captain John H. FRAZIER, Jr., Plaintiff-Appellee, v. Howard H. CALLAWAY, Secretary of the Army, Defendant-Appellant.
    No. 73-2880.
    United States Court of Appeals, Fifth Circuit.
    Nov. 22, 1974.
    Donald E. Walter, U. S. Atty., Leven H. Harris, Asst. U. S. Atty., Shreveport, La., Royce C. Lamberth, Captain, JAGC Office of the Judge Advocate Gen., William Eckhardt, Major, JAGC, Dept, of the Army, Walter H. Fleischer, Barbara L. Herwig, Dept, of Justice, Washington, D. C., for defendant-appellant.
    James J. Cox, Lake Charles, La., for plaintiff-appellee.
    Before WISDOM, AINSWORTH and GODBOLD, Circuit Judges.
   WISDOM, Circuit Judge:

The single issue this appeal presents is whether John Frazier, an Army Reserve officer who had been an enlisted man, was entitled under 10 U.S.C. § 3258 to reenlist at his previous enlisted rank at the termination of his active duty as a Reserve officer despite the fact that he did not have regular enlisted service immediately before receiving his commission. The district court held that Frazier was entitled to reenlistment under Section 3258 and issued an order of mandamus under 28 U.S.C. § 1361 directing the Secretary of the Army to permit Frazier to reenlist at his former grade. We reverse.

I.

John Frazier enlisted in the Regular Army on June 27, 1950, for a term of three years and was discharged on July 1, 1953. For the next four years he attended Southern University at Baton Rouge where he participated in the Reserve Officers Training Corps and received a reserve commission with his academic degree in June 1957. He entered on active duty in September 1957 as a Second Lieutenant and served on active duty through June 1972 when he was released as a Captain. When Captain Frazier was advised in December 1971 that he would be released from active duty, he attempted to reenlist at his former grade in the Regular Army. The Army Grade Determination Board ruled that Captain Frazier had no statutory right to reenlist under 10 U.S.C. § 3258. The Army denied him the right to reenlist and released him from active duty on June 30, 1972. Frazier had seventeen years and six months of service. If he could have served six months more, thereby attaining eighteen years of service, he would have been entitled to serve two more years. Two more years would have given him a twenty-year retirement.

Captain Frazier brought an action in mandamus under 28 U.S.C. § 1361 to order the Secretary of the Army to permit his reenlistment. The district court held that the Regulations promulgated by the Army were not “a reasonable implementation of the statute” and that the “plain language” of 10 U.S.C. § 3258 requires Frazier’s reenlistment.

II.

This case turns on the construction of 10 U.S.C. § 3258. We find no eases which have construed this section. The relevant language of Section 3258 provides that “[a]ny former enlisted member of the Regular Army who has served on active duty as a Reserve officer . is entitled to be reenlisted in the Regular Army in the enlisted grade that he held before his service as an officer.” The question of statutory construction raised on this appeal is whether Captain Frazier is a “former enlisted man” within the meaning of the statute because of his having served at one time, but not immediately before becoming an officer, as an enlisted man.

The Secretary of the Army contends that Section 3258 applies not to any enlisted man who has become an officer but only to those officers who were enlisted men immediately before their entry onto active duty as commissioned officers in the Army Reserve. Captain Frazier argues that there is no immediacy requirement under Section 3258 and that “any former enlisted man” includes any officer who has been, at any time in the past, an enlisted man in the Regular Army.

The district court adopted Captain Frazier’s construction of the statute because that construction followed from what the court called the “unambiguous language” of the statute. Feeling “no compulsion to explore the legislative history for interpretative assistance”, the district court held that all “former enlisted men . . . who become reserve officers and serve on active duty and who are then relieved from active status for no improprietous reasons are entitled to be reenlisted in their former enlisted status upon timely application”. The court found no immediacy requirement, either express or implicit, in the clear and unambiguous language of the statute. There is a possible ambiguity, however. The statute refers to entitlement “to be reenlisted in the Regular Army in the enlisted grade that he held before his service as an officer. .” A man who has progressed anywhere in the grades will have held more than one enlisted grade. Presumably if one had served as a buck private before going on active service as an officer, there would be no point in saving that status on re-enlistment, since one could be a buck private immediately upon re-enlistment. The use of the singular article seems therefore to contemplate a particular enlisted grade, say, to E-4 as Captain Frazier had. The article “the”, therefore, would seem to refer to the one grade held immediately before going on active service.

We conclude that the statutory history of Section 3258 supports the Army’s construction of the statute and that the district court erred in failing to consider the statutory history.

The earliest predecessor of Section 3258 was enacted in March 1918 for the purpose of encouraging noncommis-sioned officers in the Regular Army to accept temporary commissions as Reserve officers during World War I. Although the Army believed that some career soldiers would be of greater value to the war effort as temporary officers than as enlisted men, these men were reluctant to accept such commissions because they had no guarantee that they could return to their previous enlisted rank at the end of the hostilities. The Senate Report on this legislation set forth the problem Congress sought to remedy:

The War Department has found in practice that certain excellent noncom-missioned officers of many years of service have declined temporary promotion because of the fear that they might jeopardize, by the acceptance of such commission, that status with respect to service as enlisted men of the Army. It has taken some of these noncommissioned officers many years of service to attain the positions they now hold, and they naturally do not care to give up such positions for temporary commissions and then start at the bottom and try to regain their former status. 65th Cong., 2d Sess., Senate Report No. 320, p. 1.

The purpose of the Act of March 30, 1918, was not to provide preferential treatment for any officer who was at some time in his career an enlisted man, but to satisfy the Army’s need for officers with military experience by providing an incentive for enlisted men then in the service to accept temporary reserve commissions.

The Act of March 30, 1918, provided that “any enlisted man of the Army of the United States who has heretofore been, or shall hereafter be, discharged to accept a commission in the Army of the United States shall ... be accepted and be restored to the grade held by him before being discharged to accept such commission.” Act of March 30, 1918, 40 Stat. 501. The provisions of this Act were limited in their scope and provided a right to reenlist only to an enlisted man who was discharged to accept a temporary commission. No provision was made for the protection of enlisted men who were also reserve officers and who were discharged from their status as enlisted men upon being called to active duty pursuant to their reserve commissions. Because the 1918 Act applied only to enlisted men in the Regular Army who were discharged for the purpose of accepting reserve commissions, an immediacy requirement was implicit in the 1918 Act.

In 1939 Congress repealed the 1918 Act and replaced it with a statute of broader scope. The 1939 Act extended the protection of the earlier statute to warrant officers as well as to enlisted men and to enlisted men and warrant officers called to duty under their existing Reserve commissions as well as those discharged to accept new commissions in the Army of the United States. The Secretary of War supplied the Congress with draft legislation intended to cure the disparity in treatment accorded men discharged in an emergency to accept a new commission and those men who qualified for Reserve commissions in peacetime and subsequently called to active duty during the emergency. In a letter that accompanied the legislation, the Secretary explained the nature of the problem:

Under the provisions of the Act of March 30, 1918, enlisted men discharged to accept a commission during an emergency can, upon termination of that commission, be reenlisted and restored to the grade held at the time of discharge. No such provision exists for those men who in peacetime have qualified for Reserve Commission and who subsequently may be called to active duty. The Comptroller General has ruled that the status of these men as enlisted men or warrant officers must terminate whenever they are called to active duty under their commissions Most of the enlisted men able to qualify for Reserve commissions are those of long service and high grade. Acceptance of active duty as an officer might operate to deprive them of benefits and rights which had accrued to them previously as enlisted men. 76th Cong., 1st Sess., Senate Report No. 397, p. 2.

The suggested legislation was enacted on July 14, 1939 and provided that “any warrant officer or enlisted man of the Regular Army who shall serve on active duty as a Reserve officer ... or who shall be discharged to accept a commission . . . and whose active service as a commissioned officer shall terminate honorably, shall be entitled to reappointment as warrant officer or to reenlistment in the grade held prior to such commissioned service, without loss of service or seniority”. Act of July 14, 1939, 53 Stat. 1001.

The Act of July 14, 1939, thus broadened the class of persons protected under the statute to include enlisted men already holding Reserve commissions as well as enlisted men discharged in order to accept such commissions. The purpose of the Act remained the same: to facilitate the movement of experienced enlisted men into the reserve officers corps when the national interest would be better served by their presence there. Neither the 1918 legislation nor the 1939 legislation was intended to bestow benefits on any officer who merely happened to have been an enlisted man at some point in his career. An immediacy requirement must be inferred from the very purpose of the legislation.

In 1954 Congress amended the Act of July 14, 1939, to limit the statutory right of reenlistment in former grade to enlisted men alone because of a change in the law which authorized warrant officers to hold a temporary higher grade without termination of their warrant officer status. This change in the law meant that warrant officers no longer needed this statutory right to reappointment in their former grade.

The difficulty in statutory construction in the present case stems from the codification and enactment into law of Title 10 of the United States Code in 1956. The 1939 Act, as amended, was codified and enacted into law as 10 U.S. C. § 3258, with some alteration in the statutory language. Section 3258 states in relevant part:

Any former enlisted man of the Regular Army who has served on active duty as a reserve officer ... or who was discharged as an enlisted member to accept a temporary appointment in the Regular Army in the enlisted grade he held before his service as an officer, (emphasis added).

The “Historical and Revision Notes” to Section 3258 state that the word “former” was inserted by the codifiers for the sake of clarity. The House Committee and. Senate Committee Reports on the codification of Title 10 point out that the codifiers intended only to restate existing law and did not intend to make new law. See 1956 U.S.Code, Cong. & Admin.News, pp. 4620-4651. Nonetheless, Captain Frazier argues that the word “former” should be accorded substantial weight and taken at face value to include any officer who was an enlisted man at any time prior to his service as an officer. In light of the purposes of Section 3258, as set forth in the legislative history, we find this construction implausible.

Without the insertion of the word “former”, Section 3258 would have read “[a]ny enlisted man of the Regular Army who has served on active duty as a reserve officer . . .”. The codifiers apparently rejected this language because of its implication that a serviceman could serve contemporaneously as an enlisted man and as a reserve officer on active duty. Unfortunately, the codifiers chose to clarify this apparent contradiction by inserting the word “former” and thus created a more significant uncertainty concerning the continued vitality of the immediacy requirement.

As noted earlier, in construing the language of Section 3258, the district court did not consider the weight to be given the words of the section which entitle the former enlisted man to reenlistment in “the enlisted grade” held before his service as an officer. Because an enlisted man qualifying under Section 3258 would have held several grades during his periods of enlistment before becoming an officer, the statutory language “the enlisted grade” appears to contemplate a grade held at a particular point in time. Although this phrase would not by itself prove the existence of an immediacy requirement under the statute, it is significant both for its compatability with the immediacy requirement shown in the legislative history and for its incompatibility with the construction advanced by the court below.

We find that the proper construction of Section 3258 implies an immediacy requirement and that an Army Reserve officer attempting to reenlist at the termination of his active duty as a commissioned officer must have been commissioned immediately after the termination of his prior service as an enlisted man in order to qualify for reenlistment at prior grade under 10 U.S.C. § 3258.

III.

The Secretary of the Army urges that we adopt his construction of Section 3258 because of the deference generally paid an administrative agency’s interpretation of the statutes that the agency is charged to administer. Red Lion Broadcasting Co. v. F. C. C., 1967, 395 U.S. 367, 89 S.Ct. 1794, 23 L.Ed.2d 371. To uphold an agency’s interpretation of its statutes, a court “need not find that [the agency’s] construction is the only reasonable one, or even that it is the result that . . . [the court] would have reached”. Udall v. Tallman, 1965, 380 U.S. 1, 16, 85 S.Ct. 792, 801, 13 L.Ed.2d 616. Although the construction we adopt is in effect that urged by the Secretary, we are compelled to state that we do so because of our understanding of the legislative history of Section 3258. This case is peculiarly inappropriate for application of the standard set down in Red Lion Broadcasting.

The policy underlying the deference courts pay to an agency’s interpretation of the statutes the agency is charged to administer is strongest when the agency’s interpretation is contemporaneous with the adoption of the statute it interprets and is long-continued in its application. See Griswold, A Summary of The Regulations Problem, 54 Harv.L.Rev. 398, 404 (1941).

The Army has attempted to establish the longevity of its immediacy interpretation of Section 3258 by producing the Army regulations in effect in 1949. These regulations clearly state an immediacy requirement. The relevant paragraph states that “[a]ny enlisted man of the Regular Army . . . who serves on active duty as a Reserve officer or who is discharged to accept a temporary commission in the Army is entitled to reenlist in the Regular Army ... in the permanent enlisted grade held immediately preceding such commissioned service.” Army Regulations SR 615-105-1, § 14(b) (1), dated 15 April 1949.

The Army has also provided us with its 1973 Regulations which also impose an immediacy requirement. The relevant paragraph in the 1973 regulations states that “[a] statutory entitlement to reenlist under 10 U.S.C. 3258 exists only to Regular Army enlisted personnel who hold Reserve Commissions and are called to active duty under that commission, and tho those Regular Army enlisted personnel who were discharged to accept AUS commissions in time of emergency.” Army Regulations C7, AR 601-280, § 1-4 (b)(1).

Although both the 1949 regulations and the 1973 regulations indicate some type of immediacy requirement under Section 3258, a discordant note is struck by the wording of the 1971 regulations which do not state any sort of immediacy requirement and in fact track in relevant part the language of the statute which the Secretary himself has characterized as ambiguous. The relevant section provides:

Secretarial Authority, a. The establishment of qualifications for reenlistment in the Regular Army is the prerogative of the Secretary of the Army. The Secretary of the Army may deny reenlistment to any individual who otherwise meets the criteria specified in this regulation, except as set forth in b below.
b. Any former member of the Regular Army who has served on active duty as a Reserve commissioned officer of the Army, or who was discharged as an enlisted man to accept a temporary appointment as a commissioned or warrant officer of the Army is entitled to be reenlisted in the Regular Army provided his commission or warrant officer service was terminated by an honorable discharge or by relief from active duty for a purpose other than that to await appellate review of a sentence including dismissal or dishonorable discharge, and provided application for reenlistment is made within 6 months following such termination. (10 U.S.C. 3258). Army Regulation C5, AR 601-280, § 1-4, dated 29 June 1971.

The record does not contain the Army regulations in effect between 1949 and 1971. The 1971 regulations, however, offer no more guidance to an enlisted man relying on them than does the bare language of the statute itself, which the Secretary now argues is ambiguous on its face.

The Secretary informs us that for some time officers in Captain Frazier’s position were routinely allowed to re-enlist regardless of the individual’s failure to qualify for the statutory right to reenlist under Section 3258. Apparently this reenlistment was effected under the Secretary’s discretionary power to determine the grade at which Army personnel are enlisted. See 10 U.S.C. § 3256. Presumably it was because of this policy of permissive reenlistment that the 1971 regulations made no distinction between former enlisted men who had become officers immediately after termination of their enlisted service and those who had simply been enlisted men at some time in the past. During the period the Secretary of the Army chose to exercise his discretion in this manner it made no difference that one class was entitled to reenlist by statute and the other class could reenlist only because the Secretary chose to exercise his discretion in their favor. Indeed, the problem this litigation raises could occur only when the Secretary of the Army decided to change his policy. When the manpower needs of the Army changed as a result of the planning for an all-volunteer Army, the Secretary made a determination within his discretion that former officers should not be allowed to fill up the higher noncommissioned ranks and thus stifle the opportunities for advancement offered new enlisted men. When the Secretary determined that he would allow reenlistment only for those who were statutorily entitled to it, the Army-Regulations suddenly did not mean what they said on their face.

The Army’s policy and regulations show a lack of concern for servicemen in Captain Frazier’s position who might make important career choices on the basis of a right to reenlist apparent on the face of the regulations but in fact illusory. For the purpose of carrying out the congressional objectives, as evidenced in the legislative history of 10 U.S.C. § 3258, the judgment of the district court must be

Reversed.

      . 10 U.S.C. § 3258 provides that:
      Any former enlisted member of the Regular Army who has served on active duty as a Reserve officer of the Army, or who was discharged as an enlisted member to accept a temporary appointment as an officer of the Army, is entitled to be reenlisted in the Regular Army in the enlisted grade that he held before his service as an officer, without loss of seniority or credit for service, regardless of the existence of a vacancy in his grade or of a physical disability incurred or having its inception in line of duty, if (1) his service as an officer is terminated by an honorable discharge or he is relieved from active duty for a purpose other than to await appellate review of a sentence that includes dismissal or dishonorable discharge, and (2) he applies for reenlistment within six months (or such other period as the Secretary of the Army prescribes for exceptional circumstances) after termination of that service. However, if his service as an officer terminated by a general discharge, he may, under regulations to be prescribed by the Secretary of the Army, be so reenlisted.

      . 28 U.S.C. § 1361 provides that:
      The district courts shall have original jurisdiction of any action in the nature of mandamus to compel an officer or employee of the United States or any agency thereof to perform a duty owed to the plaintiff.

      . The obfuscatory character of the Army’s regulations, as well as the difficulty one has in obtaining them, is demonstrated in the record by a letter of 21 April 1972 from Lieutenant-Colonel Mayers of the Judge-Advocate General Corps to the Commanding General of the Fifth Army in reference to Captain Frazier’s claim. Colonel Mayers’ letter describes a “conflict of interpretation of possible long standing” with regard to 10 U.S.C. § 3258. Moreover, Colonel Mayers concluded that Captain Frazier’s interpretation was correct after “researching appropriate regulations and through inquiries at each level of command through to Department of the Army”.

      . The Secretary of the Army has provided us with Army Regulation C 16, AR 601-210, § 2-3, dated 2 October 1972. This regulation states basic eligibility criteria for persons with prior Army service and specifically defines a “former enlisted member of the Regular Army” as one “separated for the purpose of entering into active commissioned or warrant officer service”. We are urged to read this regulation in tandem with C 5, AR 601-280, § 1-4. This reading would ignore the fact that 601-280 is dated 1971 while 601-210 is dated 1972. We are still without guidance as what interpretation the Army gave to Section 3258 before 1972.


source: Caselaw Access Project

author: PER CURIAM:

license: Public Domain

text:
    Captain Robert W. GLEMAKER, Plaintiff-Appellant, v. Honorable James SCHLESINGER, Honorable Howard H. Callaway and General Creighton Abrams, Defendants-Appellees.
    No. 73-2939.
    United States Court of Appeals, Fifth Circuit.
    Nov. 22, 1974.
    Vincent P. McCauley, G. Michael Agnew, Columbus, Ga., for plaintiff-appellant.
    William J. Schloth, U. S. Atty., Charles T. Erion, Asst. U. S. Atty., Macon, Ga., Capt. Royce C. Lamberth, Judge Advocate Office, Ft. Benning, Ga., Barbara L. Herwig, Robert E. Kopp, Attys., Dept, of Justice, Washington, D. C., for defendants-appellees.
    Before WISDOM, AINSWORTH and GODBOLD, Circuit Judges.
   PER CURIAM:

For the reasons stated in Frazier v. Callaway, 5 Cir. 1974, 504 F.2d 960, also decided today, the judgment oí the district court is affirmed.


author: GEE, Circuit Judge:

text:
    Leon WEST, Individually and as personal representative of the Estate of Gwendolyn West, Deceased, Plaintiff-Appellee, v. CATERPILLAR TRACTOR COMPANY, INC., Defendant-Appellant.
    No. 73-3217.
    United States Court of Appeals, Fifth Circuit.
    Nov. 27, 1974.
    James S. Usich, Charles C. Papy, Jr., John Carruthers, II, Coral Gables, Fla., for defendant-appellant.
    Philip Freidin, Robert Orseck, Miami, Fla., for plaintiff-appellee.
    Before TUTTLE, WISDOM and GEE, Circuit Judges.
   GEE, Circuit Judge:

This appeal presents important issues of modern tort principles which are particularly appropriate for resolution by the Florida Supreme Court. Broadly the questions include (1) whether Florida has adopted strict liability as defined by the Restatement of Torts, § 402A and/or as defined by the district court in its instructions to the jury, compare McLeod v. W. S. Merrell Co., 174 So.2d 736 (Fla.1965) with Royal v. Black and Decker Manuf. Co,, 205 So.2d 307 (Fla.App. — 3d. Dist. — 1967) and Keller v. Eagle Army-Navy Dept. Stores, Inc., 291 So.2d 58 (Fla.App. — 4th Dist. — 1974), and (2) whether comparative negligence, Hoffman v. Jones, 280 So.2d 431 (Fla.1973), constitutes a defense to either or both strict liability and breach of implied warranty, and if so, in particular what type of negligence or conduct by plaintiff constitutes such a defense — abnormal, unintended or unforeseen use; lack of due care which is the sole proximate cause or just a proximate cause; voluntary encounter of a known risk; assumption of risk as defined in Cleveland v. City of Miami, 263 So.2d 573 (Fla.1972). See Coleman v. American Universal of Florida, Inc., 264 So.2d 451 (Fla.App. — 1st Dist. — 1972), interpreted in Florida Power & Light Co. v. R. O. Products, Inc., 489 F.2d 549 (5th Cir. 1974).

We defer decision on these questions and certify the issues to the Supreme Court of Florida. We will decide the ev-identiary and procedural issues which remain after decision of the Florida Court.

Following our practice, we requested that the parties submit a proposed agreed certificate of the issues for decision. Commendably, they have reached full agreement upon them. Since we also agree that these are the substantive issues presented, we submit the parties’ statement of facts and issues hereby, disclaiming, however, any intention or desire that the Supreme Court of Florida confine its reply to the precise form or scope of the questions certified. See Allen v. Estate of Carmen, 446 F.2d 1276 (5th Cir. 1971).

CERTIFICATE FROM THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT TO THE SUPREME COURT OF FLORIDA, PURSUANT TO § 25.031 FLORIDA STATUTES 1971, AND RULE 4.61 FLORIDA APPELLATE RULES

TO THE SUPREME COURT OF FLORIDA AND THE HONORABLE JUSTICES THEREOF:

It appears to the United States Court of Appeals for the Fifth Circuit that the above-styled ease in this Court involves questions or propositions of the law of the State of Florida which are determinative of the cause, and there appear to be no clear controlling precedents in the decisions of the Supreme Court of Florida. This Court hereby certifies the following questions of law to the Supreme Court of Florida for instructions concerning said questions of law, based on the facts recited herein, pursuant to § 25.031, Florida Statutes 1971, and Rule 4.61, Florida Appellate Rules, as follows:

1. Style of the Case.

The style of the ease in which this certificate is made is Leon West, individually and as personal representative of the Estate of Gwendolyn West, deceased, Appellee, v. Caterpillar Tractor Company, Inc., Appellant, being Case No. 73-3217, United States Court of Appeals for the Fifth Circuit, such case being an appeal from the United States District Court for the Southern District of Florida.

2. Statement of the Case.

A caterpillar grader operated by an employee of Houdaille Industries struck and ran over, with its left rear tandem wheel, Gwendolyn West on a street under construction in Miami, Florida, on September 1, 1970. Gwendolyn West died of massive internal injuries after six days in the hospital. As a result, the deceased’s husband, Leon West, individually and as administrator of the estate of his deceased wife, claimed a right to damages against Houdaille Industries and Caterpillar Tractor Company, Inc., the manufacturer of the machine. He ultimately settled with Hou-daille Industries for $35,000 damages and brought a products liability suit against the manufacturer of the grader, Caterpillar Tractor Company, Inc., in the United States District Court, in and for the Southern District of Florida bottomed on diversity of citizenship jurisdiction.

West’s Complaint contained two counts: (1) negligent design of the grader by failure to provide an audible warning system for use while backing the grader, by failure to provide adequate rear view mirrors, and by manufacturing the grader with a blind spot created by obstructions when looking to the rear while driving in reverse, and (2) a breach of implied warranty or strict liability based upon the same design defects.

At trial, the evidence indicated that preceding the accident Gwendolyn West had walked to the corner, stood on the west curb of the street which was under construction, speaking to a friend, for a period while the grader operated- in a forward manner, southward and proceeded to pass her. The machine reached the end of its southward operation and commenced to back up. In the meantime, Mrs. West began walking across the street intersecting the path of the grader while it was travelling in reverse. She had been waiting for a bus, and as it approached she commenced to walk across the street, looking to her left; and then she looked into her purse; and continued to look into her purse until the time of the accident. She did not look to her right at any time toward the approaching grader. Both West and Caterpillar presented extensive conflicting expert testimony about the alleged defects in the design of the caterpillar.

The expert proof on the plaintiff’s side, in essence, showed improper design and configuration of various parts of the grader obstructing visibility to the rear; absence of appropriate mirrors; and absence of available warnings on a machine created for rearward use; and design with a “blind spot” behind the operator.

The expert proof of the defendant, in essence, was that the machine was designed in an ordinary, standard fashion in a practical, reasonable manner, and thus was properly designed and constructed in a reasonably safe manner.

The district court submitted the case to the jury on three potential theories of recovery: negligence, which is not pertinent to this certificate; breach of an implied warranty of merchantability; and strict tort liability. On implied warranty the Court instructed the jury that:

Thus, in order for the plaintiff to prevail on the basis of the breach of an implied warranty of merchantability, the plaintiff must establish each of the following elements by a preponderance of the evidence:
1. The motor grader manufactured by the defendant, Caterpillar Tractor Company, was not reasonably fit for the purposes for which it was sold and intended to be used;
2. The motor grader manufactured by the defendant was defective on the date of its delivery to Houdaille Industries, whose employee was operating the vehicle at the time of the accident; and
3. The plaintiff incurred damages as a result of the alleged defects.

On strict liability, the Court instructed:

. in order for the plaintiffs to recover under the theory of strict tort liability, the plaintiff must establish each of the following elements by a preponderance of the evidence:
1. That at the time of the sale the road-grading vehicle was in a defective condition unreasonably dangerous to foreseeable users or bystanders ; and
2. That the defective, unreasonably dangerous condition in the road-grading vehicle was a proximate cause of the damages complained of in this litigation by the plaintiff.

Additionally, the Court asked the jury to consider Gwendolyn West’s negligence:

the burden is upon the defendant, Caterpillar Tractor Company, to establish by a preponderance of evidence that Mrs. West was eontributo-rily negligent, as alleged, and that such negligence contributed one of the proximate causes of any injuries sustained by the plaintiff.
On the defense of contributory negligence you must determine .
1. Was Mrs. West herself negligent in the manner alleged by the defendant ? If yes,
2. Was such negligence a proximate cause of the incident complained of by the plaintiff? If yes,
3. What was the percentage of Mrs. West’s negligence which contributed to the accident complained of by the plaintiff ?

The Court did not instruct the jury as to assumption of risk.

In answer to special interrogatories, the jury found Caterpillar liable on all three theories of recovery and determined that damages totalled $125,000. The jury also concluded that Mrs. West’s negligence contributed to the accident to a degree of 35 percent.

The Court entered judgment for West and disregarded comparative negligence on the basis of strict liability and concluded that contributory (comparative) negligence was no defense to strict liability in Florida. The Court thus awarded damages of $90,000 which represented the full jury award of $125,000 set off by the earlier $35,000 settlement. This appeal followed.

3. Questions to be Certified.

1. (a) Under Florida law, may a manufacturer be held liable under the theory of strict liability in tort, as distinct from breach of implied warranty of merchantability, for injury to a user of the product or a bystander ?

(b) If the answer to 1(a) is in the affirmative, what type of conduct by the injured party would create a defense of contributory or comparative negligence ?

(1) In particular, under principles of Florida law, would lack of ordinary due care, as found by the jury in this case, constitute a defense to strict tort liability?

2. Assuming Florida law provides for liability on behalf of a manufacturer to a user or bystander for breach of implied warranty, what type of conduct by an injured person would constitute a defense of contributory or comparative negligence ?

(a) In particular, does the lack of ordinary due care, as found by the jury in the case, constitute such a defense ?

The entire record in this ease, together with copies of the briefs of the parties and agreed certification in this Court, are transmitted herewith.

      . The appellant contends that it made timely application for jury instruction on its defense as pled of assumption of risk. The appellee denies same.


author: LEWIS R. MORGAN, Circuit Judge.

text:
    A. DUDA & SONS COOPERATIVE ASSOCIATION, Plaintiff-Appellee, v. UNITED STATES of America, Defendant-Appellant.
    No. 73-1246.
    United States Court of Appeals, Fifth Circuit.
    Dec. 5, 1974.

      Scott P. Crampton, Asst. Atty. Gen., Helen E. Marmoll, Meyer Rothwacks, Attys., Tax Div., Dept, of Justice, Washington, D. C., Lee H. Henkel, Jr., Acting Chief Counsel, I. R. S., Washington, D. C., John L. Briggs, U. S. Atty., Jacksonville, Fla., Kendell W. Wherry, Asst. U. S. Atty., Orlando, Fla., Leonard J. Henzke, Jr., Carleton D. Powell, Tax Div., Dept, of Justice, Washington, D. C., for defendant-appellant.
    George I. Meisel, Cleveland, Ohio, William Y. Akerman, Orlando, Fla., Robert H. Kennedy, Eric M. Oakley, Cleveland, Ohio, for plaintiff-appellee.
    Richard H. Appert, American Bar Assoc., Section of Taxation, New York City, for amicus curiae.
    Before RIVES, WISDOM and MORGAN, Circuit Judges.
   LEWIS R. MORGAN, Circuit Judge.

Petition for rehearing was duly filed by plaintiff-appellee, supported by its brief, to which defendant-appellant filed its brief in opposition.

The petition for rehearing is granted, the original panel opinion dated June 6, 1974, is withdrawn, and this opinion is substituted in lieu thereof.

This appeal arises from a highly technical area of federal income taxation law superimposed upon a welter of confused and conflicting facts. Following a dis-asterous miscalculation by the government trial counsel and a less than lucid argument to this Court by the taxpayer, the government asks us to extend existing precedents in order to correct a pretrial error. We decline to do so.

I

Taxpayer, A. Duda & Sons Cooperative Association, is an agricultural cooperative formed in 1946 for the purpose of marketing the agricultural products of its member-producers. Among its original members were four members of the Duda family who at that time were organized in a partnership named A. Duda & Sons (hereinafter “Duda Partnership”).

In early 1948, taxpayer applied for a ruling recognizing its exemption from income tax under § 101(12) of the Internal Revenue Code of 1939, the predecessor of § 521 of the Internal Revenue Code of 1954, 26 U.S.C. § 521. This application was rejected by the Commissioner on the grounds the taxpayer’s voting was on a patronage basis, that taxpayer transacted approximately 90% of its business with the Duda Partnership, and that the' patronage basis voting therefore contravened the requirements of mutuality of interest and equality of treatment under general cooperative law and was intended to protect the interests of the Duda Partnership. Taxpayer’s attorney thereafter wrote the Commissioner protesting the rejection and stating, inter alia, that the Duda Partnership would not necessárily have the largest vote in the cooperative every year, since favorable weather conditions might enable any of the other members to have the dominant share of the tonnage to be marketed by the cooperative. The Commissioner again rejected the ruling request.

On April 23, 1948, taxpayer filed a formal protest of the rejection of the ruling request pointing out that the taxpayer’s accounting records, which showed the Duda Partnership entitled to 90% of the cooperative’s voting shares, were “in error.” Hence, certificates issued to the Duda Partnership were recalled, and new certificates were issued to individual members of the Duda family. As a result, no one member of the cooperative held more than 25% of the total “retain” certificates.

On the basis of these and other representations of cooperative operation and equality of member treatment, the Internal Revenue Service issued an exemption letter cautioning that any changes in the character or method of taxpayer’s operation should be reported immediately.

In 1953, apparently forgetting their previous “error,” the Duda Partners formed a corporation, A. Duda & Sons, Inc., (hereinafter “Duda, Inc.”). The shares previously held by the partners were withdrawn, and one share was issued to the corporation. The association operated as an exempt organization from 1948 through 1965, at which time a revenue agent was dispatched to audit taxpayer’s records in light of the information returns it was required to file each year. In a letter and report to the taxpayer, the agent questioned the tax exempt status of the association in several respects, among which were the association’s alleged failure to meet four “technical” requirements of § 521 and the association’s alleged failure to “operate as a cooperative,” the latter by virtue of Duda, Inc.’s dominance. The agent cautioned, however, that his findings were “preliminary” and were designed to “clarify the issues” in the examination of the association.

On December 29, 1965, the Acting District Director of the IRS sent taxpayer a determination letter revoking the association’s tax exempt status. The letter cited only the failure to comply with the four technical requirements of the statutory exemption as the grounds for revocation.

The Acting Director’s letter revoked the 1948 ruling “as of September 1, 1956,” and stated that the association would be “required to file federal income tax returns for the fiscal year ending August 31, 1962, and subsequent years.” The association protested the inaccuracy of the factual conclusions relied upon to support the revocation but did not administratively appeal the decision, for it had no immediate effect on the association’s tax liabilities, since even non-exempt cooperatives are entitled to large deductions unavailable to other types of corporations. Thus, when the association filed the usual corporate income tax forms- for 1962 and subsequent years, it claimed deductions under Subchapter T of Chapter 1 of the Code, 26 U.S.C. § 1381 et seq., on the ground that it was operating on a cooperative basis, and continued to pay no taxes.

On September 2, 1966, the IRS sent a “30-day letter” to the association, ■ assessing proposed deficiencies for the years 1962 through 1965. The IRS disallowed the deductions taken under Sub-chapter T on the ground that the association was not “operating on a cooperative basis.”

On November 28, 1966, the association filed a protest of the report which led to the 30-day letter. On August 22, 1968, a notice of deficiency (“90-day letter”) was sent to the association. The notice disallowed the association’s deductions again on the ground that during the years in issue the taxpayer was not operating as a cooperative. In 1969, taxpayer paid the additional assessed taxes and filed claims for refund with the IRS. After the requisite six months had passed (see 26 U.S.C. § 6532(a)), taxpayer commenced the suit for refund of the taxes, claiming that the patronage deductions were improperly disallowed and alternatively that it was exempt from taxes under § 521.

During a pre-trial conference on May 11, 1971, the government trial attorney stipulated that the four technical reasons cited in the Service’s 1965 revocation letter were factually erroneous and that the revocation was not based upon taxpayer’s alleged failure to operate as a cooperative. Further discovery was conducted, and the government argued that all evidence relating to the association’s past or present status as an exempt organization should be excluded by the court. The government further contended that the question of whether the revocation was proper was a question of law for the court to decide.

The trial court considered the evidence and stipulations, reasoning that if the attempted revocation was based solely upon the taxpayer’s alleged failure to comply with the four technical requirements and taxpayer in fact met these conditions, the revocation was without foundation and therefore a nullity. And if the revocation was void, there was no cause for considering the contested deductions, for taxpayer had no tax liability at all. Hence, on September 13, 1972, the district court ruled that:

The 1965 revocation of the exempt status of plaintiff, A. Duda & Sons Cooperative Association was invalid and the defendant cannot challenge the association’s status as “operating on a cooperative basis” in this action. The court finds, therefore, that the association is entitled to a full refund of all taxes and interest paid for the suit years.

Then, on October 18, 1972, although no summary judgment motions had been filed and no documents or testimony had been admitted into evidence, the court entered judgment for the appellee. The government filed a notice of appeal on December 14, 1972.

On July 10, 1973, upon a motion of the appellee to supplement the record, the district court set forth an order that at the May 11, 1971, conference counsel for the government stipulated that the revocation of the exemption

was based solely on the asserted noncompliance by the plaintiff with the technical requirements of Section 521 and that the plaintiff in fact met the said technical requirements of Section 521. Defendant’s counsel also admitted that the attempted revocation had not been based, in whole or in part, on the contention that plaintiff was not “operating on a cooperative basis” during fiscal years 1962 through 1965.

These admissions led the court to conclude that the revocation of taxpayer’s exempt status was invalid.

Following the entry of the order supplementing the record, the government moved this Court to strike the order from the record or, in the alternative, to relieve the government of the concession. This Court denied the government’s motion in all respects. A. Duda & Sons Cooperative Association v. United States (No. 73-1246) (August 17, 1973). We now consider the propriety of the district court’s sua sponte grant of summary judgment.

II

The government frames the issue as whether the “variance” between the grounds stated in the revocation letter and those asserted in the refund suit justify the dismissal. The government first argues that no “variance” existed between the letter of revocation and the Service’s defense in the refund suit. The government maintains that the final notice of revocation contained a general ground sufficient to sustain the refund suit defense. Alternatively, the government contends that the agent’s letter gave the taxpayer ample notice that the government felt taxpayer was not operating as a cooperative, and the fact that the final revocation notice listed only the four grounds did not prejudice the taxpayer, for only a proposed revocation can be appealed. The government then concludes by asserting that since the final revocation need state no grounds, indicating the incorrect grounds should not prejudice the government’s ease.

We find these arguments entirely without merit. We believe the government’s erroneous approach stems from its incorrect statement of the issue upon appeal. First, we find no general ground for revocation in the district director’s letter. The statement upon which the government relies was merely a summary of the four previously discussed technical violations and could in no way be expected to apprise the taxpayer that the revocation was based upon an alleged failure to operate as a cooperative.

Second, the unsatisfactory manner in which the revocation was attempted makes it difficult to ascertain whether the district director’s letter was appeala-ble. Taxpayer received two letters, a preliminary letter from the auditing agent which indicated that it was intended to narrow the issues under discussion, and a final letter of revocation from the district director. The Statement of Procedural Rules in effect at the relevant time indicated that the district director must send the taxpayer both a proposed letter of revocation setting forth the grounds relied upon and a final letter of revocation. Only the former is appealable. Hence, either the district director’s single letter, in which the wrong grounds were indicated, is both the proposed and final revocation and therefore appealable, or the taxpayer never received the proposed revocation. In either case, the taxpayer was not properly informed of the government’s intentions. We need not, however, base our conclusions upon the government’s failure to abide by its own procedural rules, for as we indicate below, the government has not properly revoked the exemption and any issue of notice to the taxpayer is therefore rendered nugatory.

Finally, the fact that the final letter need not set forth any grounds for revocation does not ameliorate the government’s position. Regardless of the requirements for the final letter of revocation, the revocation itself must be legal and proper. Here, however, government trial counsel stipulated that the only grounds upon which the attempted revocation was based were erroneous. This stipulation had greater ramifications than a mere admission that the grounds stated in the final letter were incorrect; the government, in effect, conceded that the revocation itself was erroneous. Hence, the requirements of the final letter of revocation are of no consequence.

Ill

The government next argues that even if some “variance” existed between the letter of revocation and defense at trial, it was so insignificant in light of all the circumstances as not to warrant voiding the government’s defense. The government concedes that the IRS is expected to follow both the letter and spirit of the law but explains that the proposed and final ruling revocations occurred at an early stage and a low level in the audit process and that taxpayer is generally entitled to several further administrative hearings before the tax is finally assessed and collected. The provision for numerous hearings in the Statement of Procedural Rules, contends the government, indicates that a change in the Service’s position may be necessary as the case is more fully presented. Moreover, the government maintains that it would be unduly restrictive to bind the Service indefinitely to a legal position originally outlined at the District Director level.

The notion that the government should be able to change its defense in a tax refund suit as new and more detailed facts come to light is an appealing one. However, government counsel in the trial court stipulated that the attempted revocation was not based, in whole or in part, on the contention the taxpayer was not “operating on a cooperative basis.” The government now wishes to espouse the defense that it abjured by stipulation below. It is well settled that stipulations of fact fairly entered into are controlling and conclusive, and courts are bound to enforce them, see e. g., United States v. Righter, 400 F.2d 344, 351 (8th Cir. 1968); Osborne v. United States, 351 F.2d 111, 120 (8th Cir. 1965), even if the government is the party bound, see Fenis v. Finch, 436 F.2d 831 (8th Cir. 1971). Thus, the United States is bound by a statement of its attorney made at a pretrial conference to the same extent as any other litigant. See, e. g., United States v. Fallbrook Public Utility District, 165 F.Supp. 806 (S.D.Cal.1958). This Court has already refused on a prior occasion to relieve the government of stipulations made by it to the trial court, A. Duda & Sons Cooperative Association v. United States, No. 73-1246 (August 17, 1973), and we again refuse to do so.

IV

In its oral argument and briefs to this Court the government makes much of its ability to retroactively revoke a taxpayer’s income tax exemption. Indeed, the Supreme Court has held that the Commissioner may retroactively revoke a taxpayer’s exemption if the original decision to grant the exemption was based upon a “mistake of law.” See, Automobile Club of Michigan v. Commissioner, 353 U.S. 180, 77 S.Ct. 707, 1 L.Ed.2d 746 (1957); Etter Grain Company, Inc. v. United States, 462 F.2d 259 (5th Cir. 1972). Likewise, the rules in effect in 1965 specify that a ruling or determination letter could be revoked retroactively “if there has been an omission or misstatement of material fact” or “if the organization operated in a manner materially different from that originally represented.” Rev.Pro. 62-30, 1962-2 Cum.Bull. 512 (26 C.F.R. § 601.-201(n)(10)(iii)); see Huff-Cook Mutual Burial Association v. United States, 327 F.Supp. 1209 (W.D.Va.1971). The government here contends that it can show both an omission of material fact and operation in a manner materially different from that originally represented and hence retroactive revocation should be permitted.

The precise goal of the government’s argument is unclear, as we have indicated the Service’s attempted revocation of taxpayer’s exemption was never effected because it was based on erroneous grounds. There has been no new letter of revocation from the Service prior to our decision. Therefore, there is no letter of revocation to be applied retroactively or otherwise.

The government has had an adequate opportunity to properly deal with this taxpayer with regard to the years here in issue. Therefore, the government’s request for additional time to issue a new letter of revocation retroactive to 1961 is also denied.

Affirmed.

      . 26 U.S.C. § 521 provides :
      (a) Exemption From. Tax. — A farmers’ cooperative organization described in subsection (b) (1) shall be exempt from taxation under this subtitle except, as otherwise provided in part I of subehapter T (sec. 1381 and following). Notwithstanding part 1 of subehapter T (sec. 1381 and following), such an organization shall be considered an organization exempt from income taxes for purposes of any law which refers to organizations exempt from income taxes.
      (b) Applicable Rules.—
      (1) Exempt farmers’ cooperatives. — The farmers’ cooperatives exempt from taxation to the extent provided in subsection (a) are farmers’, fruit growers’, or like associations organized and operated on a cooperative basis (A) for the purpose of marketing the products of members or other producers, and turning back to them the proceeds of sales, less the necessary marketing expenses, on the basis of either the quantity or the value of the products furnished by them, or (B) for the purpose of purchasing supplies and equipment for the use of members or other persons, and turning over such supplies and equipment to them at actual cost, plus necessary expenses.
      (2) Organizations having capital stock. — • Exemption shall not be denied any such association because it has capital stock, if the dividend rate of such stock is fixed at not to exceed the legal rate of interest in the State of incorporation or 8 percent per annum, whichever is greater, on the value of the consideration for which the stock was issued, and if substantially all such stock (other than nonvoting preferred stock, the owners of which are not entitled or permitted to participate, directly or indirectly, in the profits of the association, upon dissolution or otherwise, beyond the fixed dividends) is owned by producers who market their products or purchase their supplies and equipment through the association.
      (3) Organizations maintaining reserve.-— Exemption shall not be denied any such association because there is accumulated and maintained by it a reserve required by State law or a reasonable reserve for any necessary purpose.
      (4) Transactions with nonmembers. — Exemption shall not be denied any such association which markets the products of nonmembers in an amount the value of which does not exceed the value of the products marketed for members, or which purchases supplies and equipment for nonmembers in an amount the value of which does not exceed the value of the supplies and equipment purchased for members, provided the value of the purchases made for persons who are neither members nor producers does not exceed 15 percent of the value of all its purchases.
      (5) Business for the United States. — Business done for the United States or any of its agencies shall be disregarded in determining the right to exemption under this section.

      . The Acting Director’s letter stated, in relevant part: “The examination of your books and records by Agent Frank Houghton of our Orlando office revealed (1) that since September 1, 1956, a substantial amount of your capital stock outstanding is held by producers who do not market their products or purchase equipment: through the association ; (2) your purchase of vegetables from non-members, to fill customers’ requirements for vegetables not normally handled by the association, are not on a cooperative basis; (3) you failed to credit the profit from the hardware store activities to non-member patrons ; (4) the amounts retained by the cooperative are unreasonable, and the use for which this money is used, i. e. unsecured interest-free advances or loans to one member does not appear to justify the maintenance of such a reserve.”

      . See 26 C.F.R. § 601.201 (n) (6).

      . The lettei reads in relevant part: “Eased upon the evidence presented it is our conclusion that your activities are not within the Code Regulation stated above. Accordingly, it is our conclusion that you are not an organization within the contemplation of § 521 of the Code and our ruling dated Augusted [sicj 18, 1948 is revoked as of September 1, 1956 and you are required to file Federal Income Tax returns for fiscal years ending August 31, 1962 and subsequent years.”

      . Section 601.201 (n) (11) provides in relevant part: “If a district director concludes, in the course of examining an information return, or from any other source, that a ruling or a determination letter holding an organization to be exempt should be revoked or modified, the organization will be advised in writing of the proposed action and the reasons therefor. The district office will also advise the organization of its rights to protest the proposed action by submitting a statement of facts, law, and arguments in support of its continued exemption, and of its rights to an informal conference in the district office.”


author: SIMPSON, Circuit Judge:

text:
    KINCAID COTTON COMPANY, INC., Plaintiff-Appellant, v. KESEY BROTHERS, Defendant-Appellee.
    No. 74-2820
    Summary Calendar.

    United States Court of Appeals, Fifth Circuit.
    Dec. 2, 1974.

      Lucius D. Bunton, Odessa, Tex., Marvin Jay Wise, Dallas, Tex., for plaintiff-appellant.
    Richard D. Naylor, Pecos, Tex., for defendant-appellee.
    Before BELL, SIMPSON and MORGAN, Circuit Judges.

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

   SIMPSON, Circuit Judge:

Plaintiff-appellant, Kincaid Cotton Company, Inc., a North Carolina corporation, brought suit in the district court for breach of contract against defendant-appellee Kesey Brothers, a Texas partnership. The complaint, alleging diversity jurisdiction, sought declaratory relief and specific performance or, in the alternative, damages. The district court without holding an evidentiary hearing entered judgment for Kesey Brothers. Because the district court appeared to disregard Texas law in construing the contract and because factual issues which could be determinative were not satisfactorily resolved by stipulations of fact agreed to by the parties, we vacate and remand'for trial.

This suit is based on a contract for the sale of cotton entered into on March 30, 1973. Appellant agreed to buy and appellee agreed to sell all cotton meeting certain specifications and grown on certain acreage near Pecos, Texas. Three grades were priced at 48^ per lb. and one at 46 ^ per lb. The clause in the contract which is the focus of the present controversy provides that the cotton is “[t]o be picked and documents delivered by January 1, 1974. Buyer has option on acceptable cotton after January 1, 1974.”

Appellee delivered all cotton meeting contract requirements and which was ginned prior to January 1 at the contract price but offered delivery on cotton ginned after January 1 only at the then current market price, at that time more than double the contract price. Appellant, asserting that the option price was the lower contract price, refused delivery and filed suit.

The decisive issues raised are whether the option provision is valid and, if so, what price governs its exercise. Buyer-appellant takes the position that the option provision is valid and was intended to be exercised at the contract price. It views the option - as its “insurance” of prompt delivery, for without it, the seller could take advantage of a rising market by delaying delivery and demanding current prices, but in a falling market could gin and tender the entire cotton harvest before January 1. Seller-appel-lee contends that the option is invalid, but in any event was intended solely to insure a source of supply at the current market price.

At the request of the court below, to avoid the necessity for an evidentiary hearing, the parties entered into stipulations of fact, only three of which need be considered on this appeal. Stipulation XVI provided that appellant would have offered, over objection, testimony that the contract used had evolved through custom and usage between cotton buyers and growers over the past several years. On the other hand, Stipulation XVII provided that the appellee would have offered, over objection, testimony that the contract was not a customary one in the cotton industry, but that customary contracts contained provisions specifying option price. Stipulation XVIII stated that no separate consideration supported the option provision.

The district court held that the option clause was divisible from the remainder of the contract and was invalid because it did not “contain any provision for consideration” and because it did not indicate price to be paid or time for performance.

On the basis of the record before us, we are unable to discern what the trial judge determined Texas law to be or, for that matter, whether he in fact applied Texas law, as a federal court sitting in diversity is Erie-bound to do. Erie Railroad Co. v. Tompkins, 1938, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188.

The district judge held the option clause invalid because it failed to provide for consideration. He gave no indication whether Texas law requires separate consideration for an option provision, in which case Stipulation XVIII conclusively determined the result against appellant, or whether Texas law allows consideration for the underlying contract to support an option provision. If the latter, it would have been impossible for the district court to determine whether the consideration for the underlying contract supported the option provision without holding an evidentiary hearing. Stipulation XVIII did not resolve this issue. It provided only that no independent consideration for the option was given.

We have not found, nor have counsel directed our attention to, any Texas Supreme Court cases which address the issue of consideration to support an option provision in circumstances similar to this case. We do note, however, that the Texas Court of Civil Appeals has spoken to this issue. See Echols v. Bloom, Tex.Civ.App.1972, 485 S.W.2d 798 (ref. n. r. e.); Blaffer & Farish v. Gulf Pipe Line Co., Tex.Civ.App.1919, 218 S.W. 89 (no writ hist, avail.).

The task of ascertaining applicable state law is not always an easy one. Where the highest state court has not spoken, intermediate appellate decisions may be binding and must in any event be given appropriate consideration. See, Ramirez v. Autobuses Blancos Flecha Roja, S.A. De C.V., 5 Cir. 1973, 486 F.2d 493; Ford Motor Company v. Mathis, 5 Cir. 1963, 322 F.2d 267. We think the task of discerning whether Texas law requires independent consideration is one initially for the trial court.

The district judge also held the option provision invalid for failure to specify time for performance and price, and “this Court can not write essential provisions for the parties.” Here again, he did not identify his conception of the controlling Texas law on these issues. He made no reference to the Uniform Commercial Code, adopted in Texas in 1965 and included in the Business and Commercial Code in 1967, V.T.C.A., Bus. and C. Sec. 1.101 et seq., nor have counsel on this appeal offered guidance on the relevance of the Code. On remand the district court should consider its relevance in determining Texas law.

Without restricting in any way the scope of the inquiry of the court on remand, we direct the attention of the parties to several sections of the Code which may be pertinent. Sec. 2.204 provides in part:

(a) A contract for sale of goods may be made in any manner sufficient to show agreement, including conduct by both parties which recognizes the existence of such a contract.
(c) Even though one or more terms are left open a contract for sale does not fail for indefiniteness if the parties have intended to make a contract and there is a reasonably certain basis for giving an appropriate remedy.

On remand, the court may wish to consider whether the conduct of the parties clarified intent with regard to time for performance, and if not, the applicability of Sec. 2.309, which provides for a “reasonable time.” While the issue raised as to price is whether the parties did in fact agree to one, Sec. 2.305, providing for a “reasonable price” where not otherwise agreed upon, would appear to indicate that failure to specify price is not a ground for holding a contract invalid under Texas law.

The standards to which Texas law holds contracts on these issues and their applicability to the present case we leave for initial determination and exposition by the trial court.

Several relevant factual issues were also left unresolved below, in spite of counsel’s attempt to aid the lower court to reach a decision without holding an evidentiary hearing. We believe that a trial is required to provide a sound basis for rendering a decision in this case and remand for trial.

There is no disposition on our part to limit the inquiry of the trial court on remand, but nonetheless we note several of the unresolved factual issues which bear on a correct disposition of this suit: (a) whether consideration for the base contract was intended to support the option clause, an issue not addressed by Stipulation XVIII, as noted above; (b) whether the parties would have contracted if the option provision were not included; (c) whether the parties intended the contract price to apply to cotton delivered under the option; (d) whether the option was intended as “insurance” of prompt delivery or as assurance of a source of supply; and finally (e) what was custom and usage with regard to similar contracts, left in dispute by Stipulations XVI and XVII. Sec. 1. 205(b) V.T.C.A. provides in part that the “existence and scope” of a “usage of trade,” which is “any practice or method of dealing having such regularity of observance in a place, vocation or trade as to justify an expectation that it will be observed with respect to the transaction in question,” “are to be proved as facts.” Sec. 1.205(c) V.T.C.A. provides that such usage of trade gives “particular meaning to” and supplements the agreement between the parties. This Section is evidence of an attempt by the framers of the Code to provide a flexible and sympathetic legal background for commercial dealings, and of the importance of a court’s determining the factual context of a business transaction.

The applicability of the Code and its relevance to fact issues are for the trial court to determine; the factual issues noted above are to be developed as the court directs.

Vacated and remanded for trial.


author: BELL, Circuit Judge:

text:
    Marvin DUDLEY et al., Plaintiffs-Appellees, v. Gilbert P. SMITH, Defendant-Appellant.
    No. 73-3624.
    United States Court of Appeals, Fifth Circuit.
    Dec. 3, 1974.
    Rehearing and Rehearing En Banc Denied Jan. 23, 1975.

      Chase R. Laurendine, Ray G. Riley, Jr., Mobile, Ala., for defendant-appellant.
    G. Hamp Uzzelle, III, Mobile, Ala., for plaintiffs-appellees.
    Before WISDOM and BELL, Circuit Judges, and BREWSTER, District Judge.
   BELL, Circuit Judge:

This appeal involves a diversity action against appellant, Gilbert Smith, to enforce a 1971 judgment rendered in ap-pellee’s favor against Smith’s closely-held corporation, Bayou Fabricators Co., Inc. The prior suit arose when a shrimp boat that appellee had purchased from Bayou was partially destroyed by fire. Appellee recovered a judgment against Bayou for $16,996.66 plus interest, but was subsequently unable to collect the judgment because of Bayou’s insolvency.

Appellee then filed the present action against appellant seeking recovery for the 1971 Bayou judgment based upon the allegation that “there existed such a unity of interest and ownership” between appellant and Bayou that the former was the alter ego of the latter. In his amended complaint, appellee alternatively argued that payments made to appellant after Bayou had become insolvent and after appellee had become Bayou’s judgment creditor were illegal preferences, portions of which appellee was entitled to recover from appellant.

The district court submitted two special interrogatories to the jury pursuant to Rule 49(a) of the Federal Rules of Civil Procedure. One asked the jury to decide whether appellant was Bayou’s alter ego. The other queried whether monies paid by appellant to Bayou from 1966 to 1971, other than an initial contribution to capital, were loans. The jury answered both questions in the affirmative.

Armed with these findings, the district court entered judgment for the ap-pellee based upon the legal conclusions that appellant, as Bayou’s alter ego, was liable on the 1971 judgment, and that the post-insolvency monetary transfers to appellant constituted repayments of loans and were, therefore, illegal preferences. Appellant’s total liability on both portions of the judgment was not to exceed the amount of the 1971 judgment against Bayou, plus interest.

On appeal, the parties agree that if the district court’s judgment is to be affirmed by upholding the alter ego theory of recovery, review of the preference issue becomes unnecessary. We concur in this view and affirm the district court judgment against appellant based upon his alter ego relationship with Bayou.

A preliminary contention of appellant which must be disposed of is that the district court lacked in personam jurisdiction under Alabama’s long arm statute, Code of Alabama, Title 7, Section 199(1). Although Bayou was incorporated in Alabama and had its principal place of business there, appellant is and has been a resident of Mississippi.

The issue of jurisdiction under Alabama’s long arm statute is not controlled by state law but rather is a question of federal due process. King & Hatch, Inc. v. Southern Pipe & Supply Co., 5 Cir., 1970, 435 F.2d 43, 44. The “purposeful activity” test of Hanson v. Denckla, 1958, 357 U.S. 235, 253, 78 S.Ct. 1228, 2 L.Ed.2d 1283, 1298, is our due process benchmark. See the discussion in Benjamin v. Western Boat Building Corp., 5 Cir., 1973, 472 F.2d 723, 725-727. See also Costin v. Olen, 5 Cir., 1971, 449 F.2d 129. Appellant’s purposeful activities in Alabama are sufficient to support jurisdiction. He was president, chairman of the board, and de facto sole stockholder of an Alabama corporation with its principal place of business in Alabama. He alone was authorized to sign all company checks, which were drawn on an Alabama bank. The checks were signed by him in Alabama. He visited Bayou’s shipyard in Alabama three or four times weekly and generally dominated its affairs.

Appellant does not contest the jury’s alter ego finding. The alter ego interrogatory was submitted to the jury as an issue within the confines of Alabama law. See Appelbaum v. First National Bank, 285 Ala. 380, 179 So. 373 (1938); Jefferson County Burial Society v. Cotton, 222 Ala. 578, 133 So. 256 (1930). There was sufficient evidence to support the finding. As stated above, appellant owned or controlled Bayou in toto. He was president and chairman of the board. He shuttled over $200,000 between personal and corporate accounts without accepting promissory notes therefor. The other directors (appellant’s daughters) testified that they took no active part in Bayou’s operations, and left such responsibilities to appellant. Corporate formalities were seldom adhered to.

Despite the jury’s alter ego finding, appellant argues that there must be full relitigation of the substantive issues of liability and damages before he can be held for Bayou’s debts. Generally speaking, a final judgment is res judicata only between parties to the lawsuit and their privies. Baltimore Steamship Co. v. Phillips, 1927, 274 U.S. 316, 319, 47 S.Ct. 600, 71 L.Ed. 1069, 1071; 1 Freeman on Judgments § 407 (1925). Stockholders and officers are not in privity to and are not personally bound by judgments against their corporations. American Range Lines, Inc. v. Commissioner of Internal Revenue, 2 Cir., 1952, 200 F.2d 844. See also Ritchie v. Landau, 2 Cir., 1973, 475 F.2d 151, 155 n. 2. A stockholder may be in privity with his corporation, however, such that a judgment against the latter is res judicata as to the former, if the two are found to be alter egos. Cf. Zenith Radio Corp. v. Hazeltine Research, Inc., 1969, 395 U.S. 100, 108-111, 89 S.Ct. 1562, 23 L.Ed.2d 129, 139-141. In Shamrock Oil and Gas Co. v. Ethridge, D.Colo., 1958, 159 F.Supp. 693, 697, the court stated:

The effect of applying the alter ego doctrine ... is that the corporation and the person who dominates it are treated as one person, so that any act committed by one is attributed to both, and if either is bound, by contract, judgment, or otherwise, both are equally bound. .

See also International Telephone and Telegraph Corp. v. General Telephone & Electronics Corp., M.D.N.C., 1973, 369 F.Supp. 316, 329. The jury’s alter ego finding below thus leads us to affirm the district court’s determination that the Bayou judgment is binding against appellant.

We reject appellant’s claim that appellee’s insurer ' should have been joined as a party plaintiff because of its status as partial subrogee to the cause of action against appellant. Appellant relies upon United States v. Aetna Casualty & Surety Co., 1949, 338 U.S. 366, 70 S.Ct. 207, 94 L.Ed. 171. Three of the plaintiffs in Aetna, were insurers proceeding as partial subrogees and, as to them, the Court stated that the joinder of their respective insureds could be compelled under Rule 19(a) of the Federal Rules of Civil Procedure as the rule then existed. Rule 19(a) as amended in 1966 provides for joinder where there is substantial risk of the defendant being subjected to a multiplicity of suits. See Rule 19(a) (2) (ii), F.R.Civ. P. The facts of Aetna as to the partial subrogee plaintiffs fit well into this portion of the amended rule. The facts of the instant case, however, where the suit is by the insured (as distinguished from the insurer), and for the full amount of the loss, do not meet the requirements of Rule 19(a). Any multiplicity of suit risk can be obviated by final judgment of the district court at the request of appellant. Cf. Braniff Airways, Inc. v. Falkingham, D.Minn., 1957, 20 F.R.D. 141, on the result reached here. Cf. Haas v. Jefferson National Bank, 5 Cir., 1971, 442 F.2d 394, on the reasoning to be applied under Rule 19(a)(2) (ii) in determining when a non-party should be “joined if feasible.”

Finally, we do not view the answers to the interrogatories as being inconsistent, and reject appellant’s argument in that regard.

Affirmed.

      . Dudley v. Bayou Fabricators, Inc., S.D.Ala., 1971, 330 F.Supp. 788.

      . From 1966 to 1971, appellant’s total investment in Bayou was $251,514.30, $50,000 of which was an initial contribution to capital.

      . Apjjellant loaned Bayou $201,514.30 from 1906 to 1971. Bayou transferred $138,869.-59 in cash and accounts receivable to appellant during the same period, and still owes him $62,644.71.

      . Before the 1966 amendments, Rule 19(a) classified parties to be joined, i. e., “persons having a joint interest,” as “necessary” or “indispensable.” The Court in Aetna jdaced the unjoined insureds in the “necessary party” category, and as a result, viewed their joinder as compulsory. 338 U.S. at 382, 70 S.Ct. at 216, 94 L.Ed. at 186.

      . The rigid classifications of former Rule 19(a) were abandoned in 1966 in favor of a more flexible description of parties for which joinder would be “desirable.” Rule 19, E.R.Civ.I’., Advisory Comm. Note, 39 F. R.D. 89, 91. Joinder is compulsory only where the facts fit within one of the Rule 19(a) i>remises. Id. at 91-92. See generally Cohn, The New Federal Rules of Civil Procedure, 54 Geo.L.J. 1204, 1204-11 (1966).

      . Public Service Co. of Oklahoma v. Black & Veatch, 10 Cir., 1972, 467 F.2d 1143, as well as treatise writers, are ai)parently contra in the case of a jiartial subrogee, but none have reasoned in terms of the 1966 amendment to Rule 19. See 6 C. Wright & A. Miller, Federal Practice and Procedure § 1546, at 660, (1971) ; 3A J. Moore, Federal Practice § 17.09 [2.-4] (2d ed. 1974).


author: THORNBERRY, Circuit Judge:

text:
    WILLIAMSON-DICKIE MFG. CO., Plaintiff-Appellant-Cross Appellee, v. HORTEX, INC. and the B. F. Goodrich Company, Defendants-Appellees-Cross Appellants.
    No. 73-3740.
    United States Court of Appeals, Fifth Circuit.
    Dec. 3, 1974.
    Rehearing Denied Jan. 7, 1975.

      Joseph A. DeGrandi, Richard G. Young, Washington, D. C., Wyndham K. White, El Paso, Tex., for plaintiff-appellant-cross appellee.
    John A. Grambling, El Paso, Tex., for Goodrich Co.
    Joe W. Christie, El Paso, Tex., for Hortex, Inc.
    R. W. Furlong, Boston, Mass., James R. Lindsay, Akron, Ohio, for defendants-appellees-cross appellants.
    Before TUTTLE, THORNBERRY and SIMPSON, Circuit Judges.
   THORNBERRY, Circuit Judge:

In 1967, B. F. Goodrich Company began to manufacture a plastic reinforcement film for commercial sale to garment manufacturers. Hortex, Inc., a Texas garment producer, purchased the Goodrich product, called Fabrilock, and used it to reinforce the knee areas of boys’ trousers. Williamson-Dickie Mfg.' Co. is the owner of the Mizell patent that related to a method of reinforcing garments by applying heat and pressure to a film of thermoplastic material. They sued Goodrich and Hortex for patent law violations. Williamson-Dickie claimed that Hortex’s use of Fabrilock film infringed upon the Mizell patent, and that Goodrich’s actions in marketing Fabrilock constituted contributory infringement.

Goodrich and Hortex denied infringement of the Mizell patent, and counterclaimed for a declaratory judgment of invalidity and an award of attorneys’ fees. Adopting almost all of the defendants’ proposed findings of facts and conclusion of law, the district court ruled that Hortex and Goodrich had not infringed upon the patent, and that the patent itself was invalid. Williamson-Dickie appeals the trial court’s decision on those issues, while Goodrich and Hortex cross appeal the denial of attorneys’ fees. We affirm the district court’s ruling on the validity issue; accordingly we do not reach the infringement claim. We also affirm the district court’s refusal to award attorneys’ fees.

The Mizell Patent

On May 13, 1959, Louis R. Mizell applied to the Patent Office for a patent on an invention relating to producing garments with increased resistance to abrasive wear His original application made sixteen claims relative to both the process and the end product. Protracted negotiations between Mizell’s attorneys and the Patent Examiner followed. The Examiner rejected all the original claims and seven subsequent claims. On May 14, 1963, he finally allowed the following claim:

A method of making a garment comprising, cutting pieces of fabric of about 10 ounce weight to peripheral dimensions and shapes for fabrication into a garment, overlaying said pieces in areas of potential wear with a film of thermoplastic material having a thickness of approximately 2 mils, and simultaneously applying heat from about 345° F. to 440° F. and pressure from about 14 p. s. i. to 145 p. s. i. for periods of about 3-10 seconds to cause the film to flow around the fibers of the fabric in said area on one side only and separate at the interstices between the fibers to render said area permeable to air and water and prevent mechanical separation of the thermoplastic material from the fabric.

Thus the end product under the Mizell process has the following characteristics: (1) flow of the film on only one side of the fabric; (2) separation of the l'lm at the interstices rendering the area permeable to air and water; (3) a permanent bond between film and fabric. Mizell’s process achieves these results through application of heat and pressure to the film and fabric for a certain time period.

The striking characteristic of the Miz-ell patent is the breadth of the claim. When Mizell’s deposition testimony is considered in conjunction with the language of the claim, its scope becomes clearer. The patent is not limited to certain types of fabrics. Nor does it embrace a limited class of thermoplastic materials. Instead the claim refers to any fabric “of about 10 ounce weight,” and to any thermoplastic film “having a thickness of approximately 2 mils.” Yet Mizell’s deposition testimony makes clear that the 10 ounce weight is not crucial. He testified that Williamson-Dickie manufactured work clothes with fabrics ranging from 5 to 12 ounces in weight, and that wear problems were similar for all of them. He later referred to the problem of strikethrough —having the film penetrate through both sides of the fabric:

Q Did you ever observe a problem of strikethrough in connection with the film patches which you subsequently developed for Williamson-Dickie ?
A Yes.
Q And in what connection did you observe the problem in that case ?
A When we got the pressure or thickness too great we could get strike-through.
Q Did it depend also on the weight of the fabric?
A We could get strikethrough with twelve-ounce denim.
Q Would it stike through twelve-ounce denim just as readily as through a five-ounce fabric?
A Under different pressure and temperature conditions.

The proper temperature factor depended in large part on the heat softening temperature of the particular thermoplastic film employed. Mizell testified that he used a temperature of about 440° to cause eaplene (a Nylon film) to fuse and imbed into the fabric, while 325-350° was sufficient to achieve that result with polypropylene. Mizell stated the basic requirement as follows:

Q Continuing at the bottom of page 10, the entry says that the propylene film was placed on the fabric and pressed in the Carver press at 345 degrees, the conditions otherwise apparently being the same as for the Mylar film and the eaplene film.
How was the temperature of 345 degrees Fahrenheit selected for this first experiment?
A Well, if you look on page 9 you will see that the polypropylene, it says the heat sealing range is 325 to 350 so we are close to the 350.
• Q It was considered important then to have the temperature within the heat softening range of the material in question?
A Well, it was important to have to get the temperature of the film in the heat softening range, ....

Mizell’s testimony shows that the patent claim does not contain precise specifications for a particular film and fabric. He stated that “. . . these factors are interrelated ... by applying more pressure for a longer time we could have been a little lower in the temperature . . . . ” The figures in the claim represent the range of temperatures, pressures and times that Miz-ell used in his experiments. Given the interrelationship between the five variables — time, temperature, pressure, fabric thickness, and film thickness-the particular specifications in his process are achieved through trial and error. We find that the district court properly concluded Mizell’s process was obvious in light of the prior art.

Validity of the Mizell Patent

The three basic tests for patent validity are utility, novelty, and non-obviousness. 35 U.S.C. §§ 101, 102, 103. When a patent application survives the scrutiny of the Patent Office, it presumptively passes all three tests, and the burden of establishing invalidity rests with the party challenging the patent. 35 U.S.C. § 284. But the presumption of validity weakens when the challenger presents evidence of prior art not considered by the Patent Office. Beckman Instruments, Inc. v. Chemtronics, Inc., 5th Cir. 1970, 439 F.2d 1369, 1374-1375. Here Goodrich and Hortex contend that the Mizell patent was obvious in light of' certain prior art not disclosed to or considered by the Patent Office.

The Supreme Court has set out the applicable boundaries of the obviousness inquiry in Graham v. John Deere Co., 1966, 383 U.S. 1, 86 S.Ct. 684, 15 L.Ed.2d 545. Mr. Justice Clark stated:

While the ultimate question of patent validity is one of law, Great A. & P. Tea Co. v. Supermarket Equipment Corp., supra, 340 U.S. 147 at 155, 71 S.Ct. 127 at 131 [95 L.Ed. 162 (1950)], the § 103 condition, which is but one of three conditions, each of which must be satisfied, lends itself to several basic factual inquiries. Under § 103, the scope and content of the prior art are to be determined; differences between the prior art and the claims at issue are to be ascertained; and the level of ordinary skill in the pertinent art resolved. Against this background, the obviousness or nonob-viousness of the subject matter is determined. Such secondary considerations as commercial success, long felt but unsolved needs, failure of others, etc., might be utilized to give light to the circumstances surrounding the origin of the subject matter sought to be patented. As indicia of obviousness or nonobviousness, these inquiries may have relevancy.

Id. at 17-18, 86 S.Ct. at 694, 15 L.Ed.2d at 556. The standard of invention under the patent laws is a demanding one. Lear, Inc. v. Adkins, 1969, 395 U.S. 653, 676, 89 S.Ct. 1902, 1914, 23 L.Ed.2d 610, 626. The Supreme Court has counselled that strict observance of the Graham three-pronged test for obviousness is required since the patent standard is bottomed on the Constitution. Anderson’s-Black Rock, Inc. v. Pavement Salvage Co., 1969, 396 U.S. 57, 61-62, 90 S.Ct. 305, 308, 24 L.Ed.2d 258, 262.

A. Scope and Content of the Prior Art

In Finding of Fact No. 42, the district court defined the scope of the prior art. “A man of ordinary skill in the art would have been familiar with the properties and characteristics of thermoplastic materials and of fabrics at the time the alleged invention of the patent was made.” We agree. Mizell’s claim is not limited to a particular type of fabric or thermoplastic film.

The district court also found that a person of ordinary skill in the art would have been familiar with all the patents cited by Goodrich and Hortex as more relevant to the Mizell claim than the references the Examiner relied upon. Williamson-Dickie does not contest the finding that these patents were within the scope and content of the prior art. Rather they argue that these patents are no more relevant to the Mizell patent than the references cited and ultimately rejected by the Examiner. In fact they imply that the Patent Examiner may have considered these patents.

B. Relationship Between the Mizell Patent and the Prior Art

We find no significant differences between the results achieved through the Mizell process and those achieved by the prior art references cited by Goodrich and Hortex. The Anderson, Redman, Kline, and Gillespie patents all teach application of heat and pressure to cause thermoplastic material to flow around the fibers of the fabric, effecting a substantially permanent bond. Both Kline and Gillespie explicitly teach flow of the film on one side of the fabric only. Redman and Gillespie claim that permeability results from their processes.

None of the references cited by Goodrich and Hortex give the same ranges of temperature, pressure, and time as appear in the Mizell claim. However, given the interrelationship between those factors, we find that the lack of precise specifications is immaterial. The general principle, as stated in Mizell’s deposition testimony, is that the temperature, pressure, and time must be sufficient to cause the thermoplastic material to soften and imbed itself into the fabric. Yet the temperature cannot be so high as to scorch the fabric. Both Redman and Kline explicitly refer to this principle.

Robert F. Johnson, the expert witness for the defendants below, testified that the Mizell process would have been obvious to one of ordinary skill in the art prior to the filing date of the Mizell patent. The district court accepted that statement in Conclusion of Law Number 9. We believe the record amply supports the district judge’s conclusion. Mizell’s original application sought to patent the resulting article of manufacture as well as the process itself. The Patent Examiner consistently rejected the product claims, and eventually allowed the process claim. But the actual method for achieving Mizell’s results would have been obvious to one of ordinary skill in the art.

Attorneys’ Fees

Under 35 U.S.C. § 285, the court has discretion to award attorneys’ fees to the prevailing party in exceptional cases. In this case, the district court refused to hold that this was an exceptional ease within § 285, and did not award attorneys’ fees. We, as an appellate court, cannot lightly overturn that decision. “The law placing, as it does, the discretion in the trial court to determine . . . whether the case is an exceptional one so that attorneys’ fees should be allowed, appellate courts ought not to and will not interfere with the exercise of such discretion. Indeed, they may not do so unless there is such a clear abuse as to show that discretion was not exercised, or unless it is plain that the trial court’s decision is based on an erroneous concept of law.” Graham v. Jeoffroy Mfg., 5th Cir. 1958, 253 F.2d 72, 78 (Tuttle J.).

It is our conclusion that the district court did not abuse its discretion in refusing to award attorneys’ fees. Our review of the record provides no indication that Williamson-Diekie has not proceeded in good faith in this litigation, or in its dealings with the Patent Office. Under these circumstances, the trial court properly refused to award attorneys’ fees. Garrett Corp. v. American Flight Systems, Inc., 5th Cir. 1974, 502 F.2d 9.

Affirmed.

      . Goodrich has actually produced three types of Fabrilock film. They originally manufactured Fabrilock Red, a plastic film with a backing of release paper to keep the film from sticking to itself. Fabrilock Red was never distributed on a large scale basis as Fabrilock Blue quickly replaced it. Fabrilock Blue added a water soluble release coating between the film and the paper. Then in 1971 Goodrich marketed Fuzzy Fabrilock, which used a permanent backing of noil-woven fabric to avoid the excessive reduction in tear strength experienced with Fabrilock Red and Fabrilock Blue. Hortex never used Fabrilock Red, but did use the other two products. Williamson-Dickie claims that all three infringe upon the Mizell patent.

      . United States Patent No. 3,089,806, issued May 14, 1963. The patent is named after Louis R. Mizell. the researcher who conducted the tests that ultimately led to the patent grant.

      . In violation of 35 U.S.C. § 271(a), which provides: “Except as otherwise provided in this title, whoever without authority makes, uses or sells any patented invention, within the United States during the term of the patent therefor, infringes the patent.”

      . In violation of 35 U.S.C. § 271(b), (c), which provide:
      "(b) Whoever actively induces infringement of a patent shall be liable as an in-fringer.”
      “(c) Whoever sells a component of a patented machine, manufacture, combination or composition, or a material or apparatus for use in practicing a patented process, constituting a material part of the invention, knowing the same to be especially made or especially adapted for use in an infringement of such patent, and not a staple article or commodity of commerce suitable for substantial noninfringing use, shall be liable as a contributory infringer.”

      . The trial judge adopted all of defendants’ proposed findings of fact and conclusions of law save the conclusion that this case was “exceptional” within the meaning of 35 U.S. C. § 285 so as to justify an award of attorneys’ fees. This practice is not viewed with favor in this circuit. However, it does not alter the scope of our review in this case. See Ag Pro, Inc. v. Sakraida, 5th Cir. 1973, 474 F.2d 167, 171.

      . Mr. Mizell worked for Harris Research Laboratories, a Washington, D. O. consulting firm that Williamson-Dickie hired to solve their knee patch problems. At the time Mizell began his work, Williamson-Dickie used the Hood patch, a rubber patch that produced satisfactory abrasion resistance and tear strength. But excessive wear occurred around the edges of the patch because of its thickness. Mizell sought to solve the wear problem, yet maintain satisfactory tear strength and abrasion resistance.

      . A thermoplastic material is any material that has the characteristic of softening under application of heat, then regaining its original texture when cooled.

      . App. at 679.

      . Id. at 681.

      . Id. at 686-88.

      . Id. at 689.

      . Id. at 687.

      . Goodrich and Hortex cited the following references:
      (1) Anderson Patent, No. 1,930,030, issued October 10, 1973. Patent on a reinforce member for stockings. The Anderson patent described use of heat and pressure to permanently secure a patch of gutta-percha (a natural thermoplastic material) to the stocking. (App. 796).
      (2) Wann Patent, No. 2,138,588, issued November 29, 1938. Patent on the product resulting from impregnation of fabric with liquid thermoplastic material. The proper amount of material is determined through “cut and try” experimentation. (App. 800).
      (3) Redman Patent, No. 2,283,698, issued May 19, 1942. Redman’s patent covered lamination of fabrics through the use of a thermoplastic adhesive film. The claim describes the use of heat and pressure to secure a permanent bond, and leave the material permeable to laundering fluids. (App. 802).
      (4) Kline Patent, No. 2,631,947, issued March 17, 1953. This patent related to heat-sealing adhesive tapes to mend household goods. The process created a permanent bond between the thermoplastic film and the fabric. Heat was applied to bring the thermoplastic sheet to the softening point for sufficient time to achieve flow on one side of the fabric only. (App. 805).
      (5) Gillespie Patent, No. 2,646,374, issued July 21, 1953. Patent on semi-stiff articles of apparel such as collars, cuffs, and shirt bosoms. Gillespie’s invention teaches bonding of the thermoplastic sheet to the fabric through the application of heat and pressure. The patent teaches avoidance of strike-through and notes that the finished product is permeable. (App. 810).
      (6) Manwaring Patent, No. 2,757, 266, issued July 31, 1956. Patent on the press often used to apply the requisite heat and pressure to the patch. (App. 814).

      . Anderson at col. 3, lines 4-22 (App. 798) ; Redman at col. 1, lines 3-18, col. 3, lines 3-11 (App. 803) ; Kline at col. 2, lines 2-6, col. 4, lines 1-11 (App. 805, 806) ; Gillespie at col. 2, lines 21-26 (App. 810).

      . Kline at col. 2, lines 2-6 (App. 805) ; Gillespie at col. 2, lines 26-30 (App. 810).

      . Redman at col. 6, lines 13-16 (App. 804) ; Gillespie at col. 2, lines 16-20 (App. 810).

      . App. 701-02.

      . Redman at col. 6, lines 5-13 (App. 804) ; Kline at col. 1, lines 51-57, col. 2, lines 1-2 (App. 805).

      . The district court also held the patent invalid for failure to distinguish from the prior art under 35 U.S.C. § 102. Conclusion of Law No. 8. Recause we hold the patent invalid under 35 U.S.C. § 103, we do not review the trial court’s conclusion on anticipation.