text:
    Don B. COOK, Plaintiff-Appellee, v. UNITED STATES ATTORNEY GENERAL, Defendant-Appellant.
    No. 73-1436.
    United States Court of Appeals, Fifth Circuit.
    Jan. 18, 1974.
    Rehearing Denied Feb. 11, 1974.

      Roby Hadden, U. S. Atty., Tyler, Tex., Charles E. Myers, Asst. U. S. Atty., Beaumont, Tex., for defendant-appellant.
    Alvin J. Bronstein, Washington, D. C., Jerry Bain, Tyler, Tex., Nancy Crisman, Washington, D. C., for plaintiff-appellee.
    Before BROWN, Chief Judge, and RONEY and GEE, Circuit Judges.
   BROWN, Chief Judge:

The question is, must the Parole Board grant a Morrisey -type revocation hearing to a parolee at the commencement of a new prison sentence imposed for a crime committed while on parole where a parole violators warrant has been issued but returned unexecuted pending completion of the intervening sentence? Reversing the District Court, we hold that the revocation hearing can be postponed. In 1966, while out on parole in Texas, under a federal bank burglary conviction, Appellee was returned to federal custody under two charges of post office burglary and one charge of burglary of a federally insured bank. On March 17, 1966 Appellee was released on $23,000 bond but was rearrested on March 28 on a charge of unlawfully attempting to enter yet another bank.

The following day the Parole Board issued a parole violators warrant charging Appellee with violating the conditions of his parole. The warrant was delivered to the United States Marshal for the Eastern District of Texas with instructions to (1) place a detainer if Appellee was apprehended by, and in custody of, local authorities and (2) to return the warrant unexecuted if the prisoner was sentenced on a new federal charge. The warrant was placed as a detainer against Appellee. Once again Appellee was prepared to make bond but decided not to when informed that the presence of the detainer would preclude his release in any event.

While in custody, Appellee was granted a preliminary interview with a United States probation officer pertaining to the issuance of the parole violators warrant. At this time, Appellee stated that he wished to fill out parole form 59(a) requesting a hearing before the Parole Board on return to a federal penal institution. The parole officer forwarded this request to the Parole Board.

On April 26, 1966 Appellee pleaded guilty to all four federal charges and received two five year sentences and one ten year sentence to run concurrently and one five year sentence to run consecutively. The five year consecutive sentence was suspended.

The parole violators warrant was not served on Appellee but was returned to the Parole Board unexecuted. This was not inadvertent but pursuant to earlier instructions to the Marshal and the apparently long established policy of the Parole Board. Appellee did not receive a revocation hearing on return to the federal prison nor thereafter although he repeatedly sought one.

The violators warrant was finally executed on March 30, 1972 on the eve of Appellee’s completion of the service of his sentence at Leavenworth. In March, May and July Appellee was informed that he would be afforded a revocation hearing before the Parole Board. The hearing was held in July but Appellee voluntarily declined to appear. Following the hearing the Parole Board issued a written order revoking Appellee’s parole, and ordering him to serve the 1,170 days remaining under his original sentence (see note 2, supra).

The District Court granted the request for mandamus ordering Appellee discharged from custody concluding that the parole violators warrant was “technically” executed in 1966, that it was a denial of due process as a matter of law to delay the revocation hearing for six years in view of Appellee’s numerous requests for an earlier hearing, and that the attempted execution of the warrant in March 1972 constituted a denial of due process and abuse of discretion by the Parole Board. Federal statutes and the precedent of this Circuit compel us to reverse.'

In Morrisey v. Brewer, supra, the Supreme Court established that in order to comply with due process, the parolee is entitled to certain procedural safeguards before parole may be revoked. The parolee must be afforded a preliminary probable cause hearing when he is arrested for a parole violation and a more thorough revocation hearing within a reasonable time after he is taken into custody.

Even prior to Morrisey an opportunity for a parole revocation hearing was provided by federal statute as well as by Justice Department regulations. Where a hearing is required procedure must, of course, measure up to the due process requirements mandated by Morrisey.

The instant case raises a question of timing — that is when must the federal parole revocation hearing be held where the parolee has been returned to prison under an intervening conviction and the parole violators warrant has been returned unexecuted.

While a parole violators warrant must be issued within the maximum term of the sentence in accordance with 18 U.S.C.A. § 4205 it need not be ea:ecuted during this period. Instead, as we have many times declared, the warrant may be held in abeyance while the parolee serves sentence under an intervening conviction (the occurrence of which prompted the issuance of the violators warrant) and may then be executed following completion of this intervening sentence. Smith v. Blackwell, 5 Cir., 1966, 367 F.2d 539; Galloway v. Attorney General, 5 Cir., 1971, 451 F.2d 357; Cox v. Feldkamp, 5 Cir., 1971, 438 F.2d 1; Williams v. United States Board of Parole, 5 Cir., 1970, 428 F.2d 1210; Clark v. Blackwell, 5 Cir., 1967, 374 F.2d 953; Buchanan v. Blackwell, 5 Cir., 1967, 372 F.2d 451.

A parole violators warrant is executed when its command is carried out —that is when the parolee is retaken and returned to federal custody pursuant to it. But the return to federal custody must be by virtue of the parole violators warrant, not as was the case here, under the new intervening sentence for the recent crimes. See Johnson v. Wilkinson, 5 Cir., 1960, 279 F.2d 683.

Both statute and precedent confirm that execution of the warrant is the operative factor in triggering the availability of the revocation hearing. The hearing authorized by 18 U.S.C.A. § 4207 and 28 C.F.R. 2.40 is applicable to “a prisoner retaken upon a warrant.” And in Galloway v. Attorney General, 5 Cir., 1971, 451 F.2d 357, we explicitly recognized that the right to a federal parole revocation hearing does not accrue while the parolee is serving an intervening federal sentence where the parole violators warrant remains unexecuted.

Appellee was not “retaken upon the warrant” in 1966 since he was already in federal custody under the four charges to which he eventually pleaded guilty. Thus the warrant was returned unexecuted, in accordance with the Parole Board’s instructions. In an attempt to activate the § 4207 hearing requirement Appellee contends and the District Court held that the warrant was in fact “technically” executed since when filed as a detainer it effectively served the purpose of an executed warrant by preventing Appellee’s release regardless of whether he made bond on the new charges. “Technically,” however, we must conclude that the warrant was not executed in 1966 because Appellee was in fact held in custody pursuant to the four federal charges despite the subsequent lodging of the warrant as a de-tainer. The apparent futility of furnishing bond under these circumstances did not execute the warrant.

To hold otherwise would effectively vitiate Smith v. Blackwell, supra, and the eases which are binding on this panel that have expressly approved the Parole Board’s common, if not standard, practice of deterring execution of the warrant until the intervening sentence has been served since the parolee will no doubt frequently be returned to custody pursuant to new federal charges prior to the issuance of the violators warrant.

We wish to emphasize that where the parole revocation hearing is deferred pending service of the intervening sentence, the parolee is not left without notice of the issuance of the violators warrant nor review of the propriety of its continued existence as a detainer.

Under 28 CFR 2.37(c) the Board in its discretion may provide a dispositional interview at the federal prison for a parolee who is serving an intervening sentence with an outstanding unexecuted violators warrant lodged as a detainer, at which time the continued propriety of the detainer may be challenged.

While in custody under the federal charges prior to pleading guilty, Appel-lee requested and received an interview with a local probation officer pertaining to the presence of the violators warrant then lodged as a detainer.

Nor was Appellee’s case that of the forgotten person. The written report filed by the Parole Board subsequent to the 1972 revocation hearing affirmatively states that Appellee’s case was reviewed by the Board several times during the course of his intervening sentence.

We realize that our decisions approving the deferral of the revocation hearing while the parolee serves an intervening sentence predated Morrisey. In concluding that the deferral of the hearing did not deprive Appellee of any rights prescribed by Morrisey, we emphasize that Appellee has not shown that he was prejudiced by the delay.

The District Court found that “the refusal of the Parole Board to grant a parole revocation hearing upon the request of Don Cook and his attorney, and the inability of Don Cook to be released from incarceration as a result of the parole violator warrant, materially altered his course of action in the defense of other charges outstanding against him at the time.” This finding will not withstand the modest scrutiny required by the clearly erroneous rule since it is simply not supported by the record. There literally was no, not just insufficient, evidence to show what if any courses of action were open or foreclosed. Indeed, to this day there is no suggestion of what Appellee could or would have done nor anything which detracts from the validity and consequence of the plea of guilty to the new charges which constituted irrefutable proof of the parole violation.

As contemplated by Morrisey, the Parole Board must make two separate determinations at the revocation hearing: (1) Whether the parolee has in fact violated a condition of his parole and (2) what action should be taken by the Board if such a violation has occurred. 408 U.S. at 479-480, 92 S.Ct. at 2598, 33 L.Ed.2d at 493. In describing the nature of the revocation hearing in Morrisey, the Supreme Court expressly-observed that “a parolee cannot reliti-' gate issues determined against him in other forums, as in the situation presented when the revocation is based on conviction of another crime.” 408 U.S. at 490, 92 S.Ct. at 2605, 33 L.Ed.2d at 499.

Appellee did not even begin to demonstrate that he could have presented a stronger showing of mitigating circumstances supporting non-revocation had the hearing been held earlier. This is especially true in light of the fact that a formal hearing was finally held at which Appellee deliberately did not appear and in which the Board revoked parole. If after the expiration of the intervening sentences the Board concluded that revocation was called for there is no showing here that either the facts and circumstances or the attitude of the Board would have led to a different result had hearings been held earlier.

Appellee also contends that he was prejudiced during the term of his intervening sentence in that the presence of an unexecuted parole violators warrant serving as a detainer results in the deprivation of certain prison privileges such as trustee status and various educational opportunities. We are unable to conclude on this record that the extent of such deprivation is so great or so unreasonably related to the very existence of a detainer — based as it is in this case on a serious and incontestable parole violation — as to require that the revocation hearing be held at the commencement of the intervening sentence. See Lawrence v. Blackwell, N.D.Ga., 1969, 298 F.Supp. 708.

Appellee also asserts that the deferral of the revocation hearing coupled with the presence of the detainer caused him great anxiety and interfered with the rehabilitation process since it is difficult for a parolee to become motivated while laboring under the uncertain prospect of further imprisonment following completion of his current sentence. We are simply unqualified, unauthorized, and unwilling to second guess the Parole Board on a matter so peculiarly within its own expertise.

We do not close our eyes to the fact that Appellee may have been disadvantaged in certain respects by the deferral of the revocation hearing but we are unable to conclude that the disadvantage constitutes such a grievous loss — in due process terminology — as to require the hearing be held prior to service of the intervening sentence or to permit the intrusion by a Court into this highly discretionary activity.

Underlying the District Court’s decision was the proposition that the revocation hearing must be held within a reasonable time. Morrisey, in fact, recognized that “[t]he revocation hearing must be tendered within a reasonable time after the parolee is taken into custody.” 408 U.S. at 488, 92 S.Ct. at 2603, 33 L.Ed.2d at 498. It is important to realize, however, that in Morrisey the Court was confronted with parolees who had been returned to prison under exe- euted warrants — -not under new intervening convictions for admitted, serious crimes.

The District Court concluded that “the attempted execution of the parole violator warrant in March of 1972, more than six years after the issuance thereof, is a denial of due process as a matter of law and an abuse of discretion by the parole officials. Simon v. Moseley, 10 Cir., 1971, 452 F.2d 306 and McCowan v. Nelson, 9 Cir., 1970, 436 F.2d 758.” As noted above our precedents clearly refute that conclusion. ■ Furthermore neither of the cases cited by the District Court supports its holding.

As we have pointed out, Appellee received a full federal parole revocation hearing — which he declined to attend— prior to the revocation of his parole. He does not show that this hearing lacked any of the various ingredients required by Morrisey. Nor does, nor can, he show that the result would have been different had this hearing been held earlier. The District Court’s discharge of Appellee from federal custody was unwarranted.

Finally, Appellee claims that he is entitled to credit under 18 U.S.C.A. § 3568 for the 25 days spent in jail between March 28, 1966 when he was rearrested and April 21 when he pleaded guilty during which time he was unable to obtain release from custody due to failure to make bond coupled , with the presence of the detainer. Whatever the significance of the 1966 amendments to § 3568 (June 22, 1966, Pub.Law 89-465, 80 Stat. 217, 18 U.S.C.A. § 3568) he is not entitled to credit against his original sentence but only, at most, credit against the sentences for the new intervening crimes. Claims of this kind are best determined administratively so we express no opinion as to this.

Reversed.

      . Morrisey v. Brewer, 1972, 408 U.S. 471, 92 S.Ct. 2593, 33 L.Ed.2d 484.

      . At the time of his parole he liad 1,170 days remaining to serve under his original sentence.

      . Appellee’s certificate of mandatory release ■was dated June 13, 1972.

      . The parolee must be served written notice of the alleged parole violations, informed of the evidence against him, allowed to testify, present witnesses and documentary evidence, and allowed with certain qualifications to confront and cross-examine adverse witnesses. Furthermore, the hearing must be held before a neutral and detached party (such as the Parole Board) which must issue a written statement detailing the evidence it relied upon and the reasons that it revoked parole.

      . 18 U.S.C.A. § 4207 provides that
      “A prisoner retaken upon a warrant issued by the Board of Parole, shall be given an opportunity to appear before the Board, a member thereof, or an examiner designated by the Board.
      The Board may then, or at any time in its discretion, revoke the order of parole and terminate such parole or modify the terms and conditions thereof.
      If such order of parole shall be revoked and the parole so terminated, the said prisoner may be required to serve all or any part of the remainder of the term for which he was sentenced.”

      . 28 C.F.B. §§ 2.40 and 2.41 provide:
      “§ 2.40 Revocation by the Board.
      A prisoner who is retaken pursuant to a warrant issued by the Board or a member thereof shall, while being held in custody under authority of such warrant awaiting possible return to a Federal institution, be afforded a preliminary interview by an official designated by the Board. Following receipt of a summary or digest of the preliminary interview, the Board shall afford the prisoner an opportunity to appear before the Board, a member thereof, or an examiner designated by the Board. If the prisoner requests a local hearing prior to return to a Federal institution in order to facilitate the retention of counsel or the production of witnesses, and if he has not been convicted of a crime committed while under community supervision, and if he denies that he has violated any condition of his release, he shall be afforded a local revocation hearing reasonably near the place of the alleged violation (or one of the alleged violations if more than one is alleged). Otherwise, he shall be given a revocation hearing after he is returned to a Federal institution. Following the revocation hearing, the Board may then or at any time within its discretion revoke and terminate the order of parole or mandatory release or modify the terms and conditions thereof. Whenever a parole or mandatory release is thus revoked, the prisoner may be required to serve all or any part of the remainder of the term for which he was sentenced, less such good time as he may earn following his recom-mitment.”
      [Parole Bd. Dir. No. 6, 35 F.R. 15288, Oct. 1, 1970]
      “§ 2.41 Same; legal counsel and witnesses at preliminary interviews and revocation hearings.
      Each alleged parole or mandatory release violator shall be advised that he may be represented by counsel and that voluntary witnesses who have information relevant and material may testify at the preliminary interview or the revocation hearing, or both, authorized by § 2.40: Provided, That the alleged violator arranges for the appearance of counsel and witnesses in accordance with procedures prescribed by the Board.”
      [Parole Bd. Dir. No. 1, 27 F.R. 8487, Aug. 24, 1962, as amended by Parole Bd. Dir. No. 2, 28 F.R. 10750, Oct. 5, 1963]

      . 18 U.S.C.A. § 4205 provides:
      “A warrant for the retaking of any United States prisoner who has violated his parole, may be issued only by the Board of Parole or a member thereof and within the maximum term or terms for which he was sentenced. The unexpired term of imprisonment of any such prisoner shall begin to run from the date he is returned to the custody of the Attorney General under said warrant, and the time the prisoner was on parole shall not diminish the time he was sentenced to serve.” (Emphasis added).

      . 18 U.S.C.A. § 4206 provides:
      “Any officer of any Federal penal or correctional institution, or any Federal officer authorized to serve criminal process within the United States, to whom a warrant for the retaking of a parole violator is delivered, shall execute such warrant ly talcing such prisoner and returning him to the custody of the Attorney General.”

      (Emphasis added).

      . See notes 5 and 6, supra.

      . 28 C.F.R. 237(e) provides:
      “(c) In those instances where the prisoner is serving in an institution on a new sentence, the warrant may be placed there as a detainer. The prisoner shall be advised that he may communicate with the Board relative to disposition of the warrant. Where the facts merit, the Board shall direct a Member or a designated examiner to conduct a dispositional interview at the institution where the prisoner is confined. At such disposi-tional interview, die prisoner may be represented by counsel of his own choice and may call witnesses in his own behalf, provided that lie bears their expenses. He shall be given timely notice of the dis-positional interview and its procedure.
      Note: Following the interview, the Board may take any action relative to the warrant appropriate under the statutes and the regulations of the Board. The dispositional interview may be constructed as a revocation hearing in those cases where the Board does not withdraw its warrant but determines that the violator term shall begin to run concurrently with the new sentences then being served.
      In all cases, including those where a dis-positional interview is not conducted, the Board shall conduct reviews relative to disposition of the warrant. For its consideration, it shall request periodic reports from institution officials as required.” [Parole Bd. Dir. No. 5, 32 F.R. 15014, Oct. 31, 1967]

      . While serving his intervening sentence, Appellee requested but was not granted a hearing until the sentence had practically expired. 28 CFR 2.37(e) provides that “where the facts merit, the Board shall direct a member or a designated examiner to conduct a dispositional interview at the institution where the prisoner is confined.” The duty to provide a hearing under the regulation would appear to be discretionary to the extent that the Board must determine whether “the facts merit.” Even if a hearing were required in all cases, however, the appropriate remedy for breach of the regulation would be to provide the parolee with a proper hearing — not to discharge him from further custody.
      While it would be within the Board’s discretion to grant a full § 4207/28 O.F.R. § 2.40-41 revocation hearing to a parolee serving an intervening sentence with a de-tainer lodged against him, the regulations do not impose such a duty on the Board. See notes 5, 6, and 9, supra and accompanying text. Nothing we have said should be construed to discourage the Board from holding the revocation hearing during the course of the intervening sentence if it deems such a procedure appropriate.

      . We express neither approval nor disapproval of the detainer system as sueh.

      . We concur in the observation of Judge (now Chief Justice) Burger writing in Hyser v. Reed, 1963, 115 U.S.App.D.C. 254, 318 F.2d 225 at 242, cert. denied, 375 U.S. 957, 84 S.Ct. 446, 11 L.Ed.2d 315:
      “The functions of the Parole Board involve the application of blended concepts of criminology, penology, and psychology, and if the doctrine of ‘administrative expertise’ should carry weight anywhere it should do so in this area.”
      See Morrisey v. Brewer, 1972, 408 U.S. at 480, 92 S.Ct. 2593, 33 L.Ed.2d 484.

      . We take note that a District Court in the District of Columbia has recently held, in a case similar to the one before us, that Morrisey requires that a parolee returned to prison under a conviction for a crime committed on parole must be granted a parole revocation hearing within a reasonable period of time. Sutherland v. District of Columbia, DDC, 366 F.Supp. 270 [1973].

      . Simon found a denial of due process where the Parole Board (due to a mistake pertaining to the length of the parolee’s state sentence) failed to execute a parole violators warrant until three years after the parolee had been completely released from custody. The Court held that the Board must exercise due diligence in executing the warrant but may delay execution where there is a “good reason” for so doing.
      The Court explicitly noted, however, that “incarceration in a state institution during the time the warrant remains unserved is such a ‘good reason.’ ” 452 F.2d 309. In Simon the parolee happened to be serving an intervening state sentence. The same policy should be applicable, where as here, the parolee is serving an intervening federal sentence.

        McOowwn also recognized the importance of diligent execution of parole violator warrants but found no violation of due process in a two-year delay between issuance and execution of a California parole violators warrant where the parolee was answering charges in another state, California had attempted to extradite the parolee, and the parolee was not prejudiced by the delay.


source: Caselaw Access Project

author: LEWIS R. MORGAN, Circuit Judge:

license: Public Domain

text:
    Di VOSTA RENTALS, INC., Plaintiff-Appellee, v. Emmett C. LEE, Jr., Colonel, Corps of Engineers, etc., et al., Defendants-Appellants.
    No. 73-1893.
    United States Court of Appeals, Fifth Circuit.
    Nov. 14, 1973.
    Rehearing Denied Dec. 4, 1973.

      Lawrence E. Shearer, Carl Strass, At-tys., Dept, of Justice, Washington, D. C., Robert W. Rust, U. S. Atty., Robert N. Reynolds, Asst. U. S. Atty., Miami, Fla., Wallace H. Johnson, Asst. Atty. Gen., Dept, of Justice, Washington, D. C., for def endants-appellants.
    James E. Weber, Douglas C. Fulton, West Palm Beach, Fla., for plaintiff-ap-pellee.
    Before GEWIN, AINSWORTH and MORGAN, Circuit Judges.
   LEWIS R. MORGAN, Circuit Judge:

The question presented to us for review in this case is whether the district court erred in ordering the Secretary of the Army to issue a permit to fill navigable waters to Di Vosta Rentals, Inc. (hereinafter referred to as Di Vosta). To answer the question, we must examine the scope of authority granted to the Secretary by § 10 of the Rivers and Harbors Appropriation Act of 1899, 33 U.S.C. § 403, and the scope of review which the district court should have used to test the validity of the Secretary’s refusal to issue a permit. After receiving stipulated evidence and trial briefs from the parties, the district court ordered defendants to issue a permit to the plaintiff. We reverse.

I

On February 3, 1967, Di Vosta acquired title to a parcel of land fronting on Lake Worth, Florida. On September 10, 1969, having paid $18,221 to the Trustees of the Internal Improvement Trust Fund of the State of Florida, Di Vosta acquired title to .614 acres of submerged land adjoining its lakeside property. Di Vosta’s purpose, which did not become known to the government agencies involved until much later, was to build an apartment building on the property. To make the land suitable for this project, Di Vosta had to obtain fill permits for the submerged land from both the state and federal governments. Di Vosta first applied to the Trustees for a permit. They refused. Di Vosta successfully sued in the state courts of Florida to compel issuance of the permit, which was issued July 23,1970.

Di Vosta applied to the Corps of Engineers for a dredge and fill permit on July 31, 1970. After distributing public notice of the request, the Corps received objections from private citizens, the Palm Beach County Board of County Commissioners and several federal agencies.

The Corps informed Di Vosta of the objections and offered the opportunity to present arguments in support of the project. Di Vosta did so in late January, 1971. This information was sent to the objecting federal agencies, and in March, the Corps was informed that these agencies remained opposed to the permit. Negotiations continued throughout 1971, but all parties held staunchly to their positions. The District Engineer informed Di Vosta on April 19, 1972, that its application for a permit had been denied because the permit:

1. Is not believed to be consistent with current public interest in the preservation of man’s natural environment as enunciated in Public Law 91-190,
2. Would not involve, a water-dependent development, and
3. Is opposed by the Department of the Interior and the Environmental Protection Agency and was approved by the Board of Trustees of the Internal Improvement Trust Fund only after an order from circuit court.

Di Vosta filed suit in district court on May 25, 1972, and the court entered its final judgment March 16, 1973, requiring the federal defendants to issue the fill permit to Di Vosta. The defendants filed a notice of appeal April 19, 1973.

II

The Secretary’s decision to deny the permit must be examined in relation to the applicable institutional framework. Section 10 of the Rivers and Harbors Appropriation Act of 1899, 33 U.S.C. § 403, is a total ban on all obstructions of navigable waters, subject only to exceptions specifically authorized by the Secretary of the Army. The Act allows the Secretary wide discretion in deciding whether to issue a permit. In fact, it places no restrictions on the decision at all. Nevertheless, the authority of the Secretary to grant or deny permits is not unlimited. His decision may be reviewed by a court. 5 U.S.C. § 706. Zabel v. Tabb (5 Cir. 1970) 430 F.2d 199, cert. denied, 401 U.S. 910, 91 S.Ct. 873, 27 L.Ed.2d 808 (1971). See, Association of Data Processing Service Organization, Inc. v. Camp, 397 U.S. 150, 156-157, 90 S.Ct. 827, 25 L.Ed.2d 184 (1970).

A reviewing court is limited in its review of an agency decision, however. Its function is not to determine the correctness, in some ultimate sense, of an agency’s actions. A reviewing court is limited to determining only the legality of the challenged action. If an agency acts within the scope of its authority, and if that authority is consistent with the Constitution, then a court may not overturn the agency’s decision. St. Joseph Stock Yards Company v. United States, 298 U.S. 38, 51, 56 S.Ct. 720, 80 L.Ed. 1033 (1936).

In § 10, Congress has left certain decisions within the discretion of the Secretary of the Army. A court may review the legality of the Secretary’s exercise of discretion, American School of Magnetic Healing v. McAnnulty, 187 U.S. 94, 108, 23 S.Ct. 33, 47 L.Ed. 90 (1902), but may not substitute its judgment for that of the Secretary. Federal Reserve System v. Agnew, 329 U.S. 441, 444, 67 S.Ct. 411, 91 L.Ed. 408 (1947).

Congress has codified the rules which control court review of agency action. In the Administrative Procedure Act, 5 U.S.C. § 701 et seq., Congress set forth specific guidelines which courts are obliged to use in reviewing agency decisions. The primary question before this court is one of the applicability of the various subsections of 5 U.S.C. § 706, setting standards for the judicial review of administrative action.

The district court held 5 U.S.C. § 706(2) (E) to be applicable to the Secretary’s decision to refuse a permit. That section allows a court to set aside agency action found to be “unsupported by substantial evidence in a case subject to sections 556 and 557 of this title or otherwise reviewed on the record of an agency hearing provided by statute

The defendants argue that subsection (E) is not applicable because the proceedings herein do not fall into either of the two categories of that subsection. They further argue that the only relevant subsection of § 706(2) is § 706(2) (A), providing that agency action may be set aside if found to be “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law

Defendants’ position is unexceptionable. At no time has Di Vosta argued that the Secretary’s actions fall into either of the two categories of subsection (E), proceedings under 5 U. S.C. §§ 556 and 557, or decisions “otherwise reviewed on the record of an agency hearing provided by statute.” Actions which do not fall within either of these categories are not subject to the “substantial evidence” test. Camp v. Pitts, 411 U.S. 138, 93 S.Ct. 1241, 36 L. Ed.2d 106, 111 (1973).

Di Vosta’s citation of General Motors Corporation v. United States, (6 Cir. 1963) 324 F.2d 604, is unavailing, since that case involved a tariff-setting proceeding before the Interstate Commerce Commission. The G.M. case was based on the landmark case of Universal Camera Corporation v. N.L.R.B., 340 U.S. 474, 71 S.Ct. 456, 95 L.Ed. 456 (1951). Concededly, proceedings before both the I.C.C. and the N.L.R.B. are subject to the “substantial evidence” requirement. But decisions of the Secretary of the Army under 33 U.S.C. § 403 are not.

Di Vosta argues that the following language in Zabel v. Tabb, supra, indicates that the Secretary’s decision is subject to “substantial evidence” review.

The question presented to us is whether the Secretary of the Army can refuse to authorize a dredge and fill project in navigable waters for factually substantial ecological reasons even though the project would not interfere with navigation, flood control, or the production of power. 430 F.2d at 203.

The question of the proper standard of review was not before the court in Zabel. The only question presented was whether the Secretary could consider ecological factors in making his decision on the granting of a permit. Id. The court answered this question in the affirmative. The Zabel opinion cannot be read to include any holding with respect to the proper scope of judicial review of the Secretary’s decision.

Di Vosta also argues that by submitting the case to the district court on stipulated evidence, the defendants agreed to de novo review of the Secretary’s decision. This contention is totally without merit. Parties may not agree to expand the jurisdiction of the federal courts. American Fire & Casualty Company v. Finn, 341 U.S. 6, 71 S.Ct. 534, 95 L.Ed. 702 (1951).

III

Under different circumstances, it might be advisable to end the opinion at this point and simply remand the case to the district court for a determination of the issue of whether the Secretary’s action in denying the permit was “arbitrary and capricious” within the meaning of 5 U.S.C. § 706(2) (A). We feel, however, that additional litigation in the district court would be a waste of resources for all concerned. This case was submitted to the district court on stipulated documentary evidence and written trial briefs. Although this circumstance does not change this court’s scope of review, it does affect our disposition of the case. For the reasons explained below, we are convinced that the Secretary’s action was not arbitrary or capricious. Believing that nothing that might happen in the district court on remand could change our view of the case, we reverse, not for further proceedings not inconsistent with this opinion, but with directions to dismiss the complaint. Because we are making a final disposition of this case in this opinion, it is necessary to deal with several other points raised by the parties.

IV

Appellants point out that the United States has been included as a defendant in this case, and that this inclusion is improper under the doctrine of sovereign immunity. Dugan v. Rank, 372 U.S. 609, 83 S.Ct. 999, 10 L.Ed.2d 15 (1963). Di Vosta fails to present any argument or authority to the contrary. It is well established that the United States may not be made a defendant without its consent. There is no consent here. Therefore, the district court had no jurisdiction to bind the United States in its decree. Cohens v. Virginia, 6 Wheat. (19 U.S.) 264, 411-412, 5 L.Ed. 257 (1821).

V

DiVosta appears to argue that the Secretary improperly considered objections from other government agencies in making his decision on a permit. Although Di Vosta’s brief is not as lucid as it might be, this argument is apparently based on two grounds: the objections of other agencies were too vague to allow Di Vosta to respond properly and the receipt of written objections from other agencies violates the hearsay rule. Both of these arguments are without merit. An examination of the record reveals that the objections from other agencies were put in terms sufficiently explicit to give Di Vosta an opportunity to try to refute them. At every turn, Di Vosta was given sufficient opportunity to communicate with these agencies in an effort to change their recommendations. In no respect can Di Vosta be said to have been deprived of its right to due process of law. As to the apparent hearsay objection raised in Di Vosta’s brief, we have been cited to no case which holds that in a proceeding such as this, the Secretary is to be held to the rigid formalities of the hearsay rule. Nor do we think such a citation exists.

VI

Having determined that the proper standard, for review of the Secretary's decision is whether it was arbitrary or capricious, we turn to a review of the record. This review demonstrates that the Secretary’s action may not be set aside under 5 U.S.C. § 706(2) (A).

After receiving Di Vosta’s application for a permit, the Corps made a public announcement of the application. This it was required to do by 83 C.F.R. § 209.120(f)(1). Several replies indicated no objection to the project. But the opinion was not unanimous.

Three bureaus of the Department of the Interior opposed the permit application. The Bureau of Sport Fisheries and Wildlife of the Fish and Wildlife Service objected for three reasons: (1) “Lake Wqrth has been severely damaged by dredging and filling in the past and will be a prime candidate for possible habitat rehabilitation studies in the future. Further filling and destruction of submerged marine bottoms will not be of any benefit to Lake Worth.” (2) “To preserve esthetic qualities and to allow for future restoration of the marine biological environment, further unnecessary filling in Lake Worth should be prohibited.” (3) Having been advised that Di Vosta had no plans to construct a building on the fill, the bureau felt that the fill project “would be an unnecessary and irretrievable commitment of the marine environment involved and should not be allowed.” (Appendix page 77). The Bureau of Outdoor Recreation stated that, “Although this application for permit to fill does not specifically allow the development of appurtenant structures, it is felt that it will nevertheless encourage this kind of development at some future date; should this happen, the existing aesthetic qualities of Lake Worth would be degraded and any attempts to restore the lake to its natural condition would become increasingly difficult.” Also, the Federal Water Quality Administration opposed the project “because it consists of the destruction of a natural shoreline and shallow water areas.” (Appendix pp. 78-79). The field representative to the Secretary of the Interior for the Southeast Region transmitted these objections to the District Engineer of the Corps of December 21, 1970, adding that, based on the objections of the three bureaus, the department itself recommended that the permit application be denied. (Id.)

In addition to these objections by federal agencies, several objections from private citizens were received, as well as an objection from the Board of County Commissioners of Palm Beach County. In accordance with' the policies set forth in a memorandum of understanding between the Secretary of the Interior and the Secretary of the Army promulgated July 13, 1967, (see 33 C.F.R. § 209.-120(d) (11)), the Corps attempted to mediate the differences between the Department of the Interior and Di Vosta by acting as a conduit for information. It forwarded the objections of the Department of the Interior to the plaintiff, received arguments in support of the permit application from the plaintiff, and forwarded these arguments to the Department of the Interior. This exchange occurred during December, 1970, and January, 1971. In a letter dated February 24, 1971, the Environmental Protection Agency stated that it opposed the application for the following reasons: (1) The lake is a “valuable estuarine area” that “has some signs of degradation” but “is not beyond recovery.” Granting of the fill permit “will make that recovery more difficult and protracted.” (2) “It is the opinion of the Environmental Protection Agency that the only way in which water quality values and the water use classification of Lake Worth can be preserved is to prevent any further development of land within the Lake below the mean high water line.” (3) The portion of the Lake to be filled is without vegetation, but it may be of some value to the marine ecosystem. (4) “The development by Di Vosta Rentals is only a part of an overall encroachment on the shallow water areas of Lake Worth and it is to this overall encroachment that EPA objects.”

After receiving plaintiff’s written arguments in favor of its application, the Department of the Interior replied that it remained opposed to the project. The field representative to the Secretary for the Southeast Region reiterated his position and added that, having learned that an apartment building was planned for the area, the Bureau of Sport Fisheries and Wildlife concluded that such a project would put a further strain on already heavily overloaded sewerage facilities in the area.

A meeting was held between Di Vosta and a representative of the Bureau of Sport Fisheries and Wildlife in October, 1971, but in January, 1972, the bureau indicated that it was unconvinced that the permit should be granted. It added the following objection: “This Bureau strongly objects to the filling of bay bottoms for residential purposes where there is no demonstrated overall public need, where acceptable alternatives are not considered, and where the proposed works are not water dependent.”

We are unable to find fault with the Corps’ processing of Di Vosta’s application. It was consistent with the applicable regulations, 33 C.F.R. § 209.120, and with the three major pieces of legislation which set policy in this area, the National Environmental Policy Act of 1969, 42 U.S.C. § 4331-4347, the Fish and Wildlife Coordination Act of 1934, 16 U.S.C. § 661-666c, and the Rivers and Harbors Appropriation Act of 1899. The Corps properly considered environmental factors in making its decision. Zabel v. Tabb, supra. It properly consulted other agencies in making its decision. United States v. Moretti, 5th Cir. 1973, 478 F.2d 418. See also Bankers Life and Casualty Company v. Village of North Palm Beach, 469 F.2d 994 (5 Cir. 1972).

For these reasons, we do not feel that the Secretary’s denial of Di Vosta’s permit application can be said to be “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.” 5 U.S.C. § 706(2)(A). We have not, in this opinion, reiterated all the evidence in support of Di Vosta’s application. Evidence to support a conclusion opposite to that reached by the Secretary was present in the record. But we do not feel that the evidence in opposition was so overwhelming as to make the Secretary’s decision unreasonable. Whether or not the objections from other agencies qualify as “substantial evidence,” within the meaning of 5 U.S. § 706(2) (E), they are sufficient to shield the Secretary’s decision from attack under § 706(2) (A).

Sufficient evidence has been presented to us that, under the provisions of § 706(2) (A), the Secretary’s order denying the permit was lawful. In such a situation, we see no need to burden the parties with further litigation in the district court. Bankers Life and Casualty Company v. Village of North Palm Beach, supra.

The judgment of the trial court is vacated and the case is remanded to the trial court with directions to dismiss the suit.

Vacated and remanded with directions.

      . 33 U.S.C. § 403 provides:
      § 403.
      The creation of any obstruction not affirmatively authorized by Congress, to the navigable capacity of any of the waters of the United States is prohibited; and it shall not be lawful to build or commence the building of any wharf, pier, dolphin, boom, weir, breakwater, bulkhead, jetty, or other structures in any port, roadstead, haven, harbor, canal, navigable river, or other water of the United States, outside established harbor lines, or where no harbor lines have been established, except on plans recommended by the Chief of Engineers and authorized by the Secretary of the Army; and it shall not be lawful to excavate or fill, or in any manner to alter or modify the course, location, condition, or capacity of, any port, roadstead, haven, harbor, canal, lake, harbor of refuge, or inelosure within the limits of any breakwater, or of the channel of any navigable water of the United States, unless the work has been recommended by the Chief of Engineers and authorized by the Secretary of the Army prior to beginning the same.

      . 5 U.S.C. § 706 provides:
      § 706.
      ■ To the extent necessary to decision and when presented, the reviewing court shall decide all relevant questions of law, interpret constitutional and statutory provisions, and determine the meaning or applicability of the terms of an agency action. The reviewing court shall—
      (1) compel agency action unlawfully withheld or unreasonably delayed; and
      (2) hold unlawful and set aside agency action, findings, and conclusions found to be—
      (A) arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law;
      (B) contrary to constitutional right, power, privilege, or immunity; (C) in excess of statutory jurisdiction, authority, or limitations, or short of statutory right;
      (D) without observance of procedure required by law;
      (E) unsupported by substantial evidence in a case subject to sections 556 and 557 of this title or otherwise reviewed on the record of an agency hearing provided by statute; or
      (P) unwarranted by the facts to the extent that the facts are subject to trial de novo by the reviewing court.
      In making the foregoing determinations, the court shall review the whole record or those parts of it cited by a party, and due account shall be taken of the rule of prejudicial error.


author: BELL, Circuit Judge:

text:
    RANGER INSURANCE COMPANY, Plaintiff-Appellant, v. UNITED HOUSING OF NEW MEXICO, INC., et al., Defendants-Appellees.
    No. 73-2434
    Summary Calendar.

    United States Court of Appeals, Fifth Circuit.
    Jan. 21, 1974.
    L. W. Anderson, Dallas, Tex., for plaintiff-appellant.
    T. Mike Field, Edward R. Smith, Lubbock, Tex., for defendants-appellees.
    Before BELL, GODBOLD and GEE, 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.

   BELL, Circuit Judge:

This is a declaratory judgment action brought by the appellant-insurer seeking to establish that, under the coverage provisions of its insurance contract with the appellees, herein referred to as the “insureds,” it is not liable for claims arising from a fatal crash of the insureds’ plane. The jurisdictional basis is diversity, the appellant being a resident of Texas while the insureds are residents of New Mexico. In order to preserve diversity the appellant did not join certain interested parties, residents of Texas, who are seeking damages against the insureds. This appeal is from dismissal of the action for failure to join these claimants.

In reaching its decision the district court relied on the dictum in Abbott Laboratories v. Gardner, 1967, 387 U.S. 136, 155, 87 S.Ct. 1507, 1519, 18 L.Ed.2d 681, 695, that courts “may even refuse declaratory relief for nonjoinder of interested parties who are not, technically speaking, indispensable.” The district court also quoted a similar principle from 6A Moore, Federal Practice § 57.25 at 3148 (2d ed.). See also Delno v. Market St. Ry. Co., 9 Cir., 1942, 124 F.2d 965. The theory is that the declaratory judgment remedy is inherently discretionary due to both its equitable nature and the permissive wording of the Declaratory Judgment Act, 28 U.S.C.A. § 2201 (1959). Thus, it is argued, a district court’s power to dismiss for failure to join a party in a declaratory judgment action is not restricted to that provided by Rule 19(b) of the Federal Rules of Civil Procedure. However, we do not pass on this question because we conclude that the claimants are indispensable parties under the conventional Rule 19 (b) approach.

Rule 19(b) states that when it is determined under Rule 19(a) that a person should be joined if feasible, but he cannot be, then the court should decide,

“whether, in equity and good conscience the action should proceed among the parties before it, or should be dismissed .... The factors to be considered by the court include: first, to what extent a judgment rendered in the person’s absence might be prejudicial to him or those already parties; second, the extent to which, by protective provisions in the judgment, by the shaping of relief, or other measures, the prejudice can be lessened or avoided; third, whether a judgment rendered in the person’s absence will be adequate; fourth, whether the plaintiff will have an adequate remedy if the action is dismissed for nonjoinder.”

In applying these factors we are mindful of the rule that:

“Where an initial appraisal of the facts reveals the possibility that an unjoined party is arguably indispensable, the burden devolves upon the party whose interests are adverse to the unjoined party to negate the unjoined party’s indispensability to the satisfaction of the court.”

Boles v. Greenville Housing Authority, 6 Cir., 1972, 468 F.2d 476, 478 (Tuttle, J., sitting by designation).

As for the first factor, the district court considered it “nonsensical to suggest that a declaration, in this Court, of liability or non-liability will have no practical effect upon the [claimants],” given the possibility (now an actuality), of their obtaining a judgment against the insureds. While a judgment in favor of the appellant probably would not operate to bar the absent claimants from proceeding under the policy’s direct action clause, we are satisfied that the claimants’ interests would be prejudiced. For example, they would have to contend with the stare decisis effect of such a judgment, or they might be forced to litigate its effect on the direct action clause.

Conceivably the district court could shape relief to avoid seriously prejudicing the absent claimants, possibly by enjoining appellant from raising its judgment of noncoverage as a defense to a direct action. However, at this point the basic difficulty with appellant’s case becomes apparent — either a judgment might prejudice the claimants, violating the first Rule 19(b) factor, or it would not be adequate to finally resolve the issue, violating the third Rule 19(b) factor. Neither alternative is acceptable.

The third factor has been authoritatively construed to refer to the public interest in efficient, nonrepetitive litigation. Provident Trademens Bank & Trust Co. v. Patterson, 1968, 390 U.S. 102, 111, 88 S.Ct. 733, 738, 19 L.Ed.2d 936, 946. We think it clear that this factor weighs heavily against appellant —assuming, as we must, that any judgment would be shaped to avoid prejudice to claimants, they could force relitigation of the very issue here involved, that of whether the appellant is liable under its insurance contract.

Finally, we are not convinced that the appellant is without an adequate alternative remedy. It could seek its declaratory judgment in the state courts of Texas, where the claimants could be joined without destroying jurisdiction. We are aware that Texas courts apply strict standards to avoid issuing contingent, advisory opinions through the declaratory judgment procedure, but the fact that claimants have actually obtained a judgment against an insured apparently’ renders the coverage issue justiciable under Texas law. Cf. Firemen’s Ins. Co. v. Burch, S.Ct.Tex. 1968, 442 S.W.2d 331.

In sum, the appellant has failed to carry its burden of establishing that this case would not prejudice absent parties or that it would not be wasteful, uneconomical litigation that could be more efficiently conducted in another forum. The judgment of the district court therefore is

Affirmed.

      . Since the accident occurred in Texas, personal jurisdiction over the appellees was obtainable under the Texas long-arm statute, Vernon’s Tex.Rev.Civ.Stat.Ann. arts. 2031a and 2031b.

      . These claimants filed suit against the ap-pellees in the United States District Court for the Western District of Texas during pendency of this case in the court below. Subsequent to the lower court’s disposition of this declaratory judgment action, judgment was rendered in the Western District of Texas in behalf of the claimants and against one of the insureds.

      . Rule 19(a) defines a person who should be joined if feasible as, inter alia, one who “claims an interest relating to the subject of the action and is so situated that the disposition of the action in his absence may as a practical matter impair or impede his ability to protect that interest . .” For reasons to be discussed in considering the first Rule 19(b) factor, infra, the claimants are such persons.


author: J. JOSEPH SMITH, Circuit Judge;

text:
    CONTRACTING PLUMBERS COOPERATIVE RESTORATION CORPORATION, Plaintiff-Appellee, v. UNITED STATES of America, Defendant-Appellant.
    No. 64, Docket 73-1083.
    United States Court of Appeals, Second Circuit.
    Argued Nov. 12, 1973.
    Decided Dec. 13, 1973.
    Rehearing and Rehearing En Banc Denied Jan. 23, 1974.

      Wesley J. Filer, Atty., Tax Div., Dept, of Justice, Washington, D. C. (Scott P. Crampton, Asst. Atty. Gen., Tax Div., Ernest J. Brown and Leonard J. Henzke, Jr., Attys., Tax Div., Dept, of Justice, Washington, D. C., and Robert A. Morse, U. S. Atty., for the Eastern District of New York, of counsel), for defendant-appellant.
    Robert N. Cooperman, New York City (Kuh, Goldman, Cooperman & Levitt, New York City, Peter Lushing, of counsel), and Kadel, Wilson & Potts, New York City (Abraham Wilson, New York City, of counsel), for plaintiff-appellee.
    Before KAUFMAN, Chief Judge, and SMITH and OAKES, Circuit Judges.
   J. JOSEPH SMITH, Circuit Judge;

This is an appeal by the government from a determination by the District Court for the Eastern District of New York, Mark A. Costantino, Judge, that taxpayer is exempt as both a “civic organization,” 26 U.S.C. § 501(c)(4), and a “business league,” 26 U.S.C. § 501(c)(6). While we believe that taxpayer’s activities are totally commendable, we nevertheless find that Congress has imposed certain limitations on those two exemptions and that taxpayer simply does not qualify. We therefore reverse.

I.

Taxpayer’s sole purpose is .to insure the efficient repair of “cuts” made in the streets of New York City by its members in the course of their plumbing activities. Prior to taxpayer’s formation, city employees had repaired such cuts, billing the responsible plumber accordingly. But this municipal restoration program was highly inefficient, subjecting the community to the dangers of — and the plumbers to corresponding liability for — improperly filled excavations for prolonged periods. Moreover, this inefficient program was resulting in an annual operating loss to the city —after reimbursement by the plumbers —of approximately $2 million.

By 1967 this unsatisfactory arrangement had deteriorated to the point that the plumbers were threatening to sue the city to limit their liability, and the city, in turn, was threatening to burden the plumbers with most of the $2 million annual loss. The plumbers therefore proposed that they conduct their own restoration program through a private, non-profit cooperative. The city, undoubtedly overjoyed, agreed with . the stipulation that the cooperative make all repairs within thirty days.

In what must surely be a tribute to the private sector, taxpayer has performed more efficiently than even its founders had expected: By promptly assigning the repair work to private contractors and scrupulously monitoring its completion, taxpayer has reduced the average restoration time to approximately fourteen days. Perhaps even more startling, in 1968 — the tax year in question — taxpayer not only did not lose $2 million in charging its members the same price the city had been exacting, but actually turned a modest profit of $5239 — the taxable income at issue.

II.

Relying on taxpayer’s non-profit nature, its public origins, and its undisputed benefit to the people of New York, the district court held that taxpayer was exempt as a “civic . . . organization not organized for profit but operated exclusively for the promotion of social welfare. . . . ” 26 U.S.C. § 501(c)(4). The court noted that this statutory definition has been significantly liberalized by regulations providing:

An organization is operated exclusively for the promotion of social welfare if it is primarily engaged in promoting in some way the common good and general welfare of the people of the community. [§ 1.501(c)(4)-1(a)(2)]

The district court then found that the taxpayer’s value to the community and to its individual members was “indistinguishable,” and that therefore the organization was tax-exempt. We cannot agree. Rather we adhere to the rule that the presence of a single substantial non-exempt purpose precludes exempt status regardless of the number or importance of the exempt purposes. People’s Educational Camp Society, Inc. v. Commissioner, 331 F.2d 923, 931 (2d Cir.), cert. denied, 379 U.S. 839, 85 S.Ct. 75, 13 L.Ed.2d 45 (1964); American Women Buyers Club, Inc. v. United States, 338 F.2d 526, 528 (2d Cir. 1964). See also, Better Business Bureau of Washington, D. C., Inc. v. United States, 326 U.S. 279, 283, 66 S.Ct. 112, 90 L.Ed. 67 (1945); Commissioner v. Lake Forest, Inc., 305 F.2d 814, 820 (4th Cir. 1962).

In applying this standard, we think at least four factors are relevant. First, we must look to the formative history of the organization. Here the plumbers’ open disenchantment with both prolonged liability and the threat of increased restoration costs clearly suggests that they had a substantial business interest in taxpayer’s formation.

Second, we have the embodiment of that completely legitimate, but nevei’theless private, interest in the taxpayer’s bylaws:

The purposes for which the Corporation is formed are to operate and maintain ... in coordination with the Department of Highways a program . . . for rendering mutual help and service to the Corporation’s members by arranging for the repaving or replacement of streets, curbs, and sidewalks required to be repaved or replaced by the members of the Corporation. .

While such a statement is not conclusive, Consumer-Farmer Milk Cooperative v. Commissioner, 186 F.2d 68, 70 (2d Cir. 1950), cert. denied, 341 U.S. 931, 71 S. Ct. 803, 95 L.Ed. 1360 (1951), we nevertheless think it is probative as to the taxpayer’s non-exempt purpose of mutual aid.

Third, we have the taxpayer’s actual operation. Here there can be no doubt that the cooperative is of tremendous value to the private economic interests of its members — a clearly non-exempt purpose. Consumer-Farmer Milk Cooperative v. Commissioner, 186 F.2d 68, 71-72 (2d Cir. 1950), cert. denied, 341 U.S. 931, 71 S.Ct. 803, 95 L.Ed. 1360 (1951); Commissioner v. Lake Forest, Inc., 305 F.2d 814, 820 (4th Cir. 1962). The members now have far less liability at a price considerably lower than that which almost certainly would have developed under the former, municipal system. Conversely, it must be remembered that the taxpayer has never followed the “social welfare” into repairing the equally troublesome potholes left by the few remaining nonmember plumbers or the other, more numerous, enterprises that burrow into the city streets.

Finally, we have the fact that each member of the cooperative enjoys these economic benefits precisely to the extent that he uses, and pays for, its restoration services. It is this conditional benefit that most distinguishes this case from Monterey Public Parking Corporation v. United States, 321 F.Supp. 972 (N.D.Cal.1970), aff’d, 481 F.2d 175 (9th Cir. 1973) — a district court opinion stressed by both the taxpayer and the court below. In Monterey the court held that a private, non-profit parking lot financed by local merchants was exempt under § 501(c)(4) — but only because its organizers had not exploited the facility “by giving themselves special advertising rights, or by restricting the validation stamp system to certain businesses. . ” Id. at 975. The court recognized that such limitations would have demonstrated that the merchants “were in fact primarily interested in their own ends rather than those of the public. . . . ” Id.

Thus, to the extent we might be inclined to agree with Monterey’s suggestion that “indistinguishable” public and private benefits satisfy the exemption, that theory is inappropriate here where the private benefit to each member is so much more precise.

In sum, we find that the taxpayer provides substantial and different benefits to both the public and its private members, and that we therefore cannot say that it is “primarily” devoted to the common good as required by even the most liberal reading of § 501 (c) (4).

III.

Much of the above is relevant to the district court’s conclusion that taxpayer is also exempt as a “business league.” 26 U.S.C. § 501(c)(6). Here the relevant regulations provide:

A business league is an association of persons having some common business interest, the purpose of which is to promote such common interest and not to engage in a regular business of a kind ordinarily carried on for profit. ... Thus, its activities should be directed to the improvement of business conditions of one or more lines of business as distinguished from the performance of particular services for individual persons.
[§ 1.501(c) (6)-l]

In holding the taxpayer so exempt, the district court again relied on the fact that it is neither organized for profit nor engaged in a traditionally profit-motivated activity. While we agree with these findings, we believe that they only partially satisfy the exemption. Rather we find that taxpayer has failed to prove that its primary purpose is “the improvement of business conditions ... as distinguished from the performance of particular services for individual persons.”

While all plumbers may receive some small, incidental benefit from the goodwill of a community no longer subjected to their improperly filled excavations, each individual member receives far more in economic terms precisely to the extent that he uses the restoration service. In Evanston-North Shore Board of Realtors v. United States, 320 F.2d 375, 378-379, 162 Ct.Cl. 682 (1963), cert. denied, 376 U.S. 931, 84 S. Ct. 700, 11 L.Ed.2d 650 (1964), the court emphasized just such proportional benefit as the most important factor demonstrating that a multiple listing system operated by member realtors was not exempt under § 501(c)(6). The court below attempted to distinguish Ev--anston-North Shore on the grounds that while there the listing service was related to the underlying sale of real estate, here the restoration service involved only the plumbers themselves. We find this unpersuasive. Rather we believe that the regulations and Evanston-North Shore are directed towards a realistic economic analysis of the benefits derived by the members of the organization. Where, as here, those individual benefits are precisely proportional to the member’s financial involvement in the organization, the fundamentally non-exempt purpose of providing a necessary service at reduced cost becomes too clear to be ignored.

Reversed.

      . The Deputy Highway Commissioner assigned to the problem testified that the cuts were generally left unrepaired for eight to ten months.

      . This minimal profit represented slightly more than 1% of the $433,762 that the taxpayer charged its members. Pursuant to taxpayer’s by-laws, this profit was distributed to tax-exempt groups promoting the plumbing industry.

      . The government further contends that many members — notably the smaller operators — have also benefited by the fact that taxpayer reduced the minimum restoration fee from $67.50 (for three cubic yards of fill) to $45.00 (for two yards). Taxpayer strenuously disputes the significance of this reduction.
      We find it unnecessary to ascertain the precise extent of these theoretical savings, since they in any event pale before the far more substantial savings occasioned by taxpayer’s efficient operation. Most notably, in 1968 taxpayer charged its members $433,672 for repairs that would have cost the city— and almost inevitably the plumbers — an estimated $2.5 million.

      . Not surprisingly, participation by licensed city plumbers has increased from 85% in 1968 to 98% today.

      . In November of 1972, the city established a color code to indicate responsibility for improperly filled excavations. In addition to the taxpayer, the private subway, telephone and utility companies were required to join the city traffic, water and sewer agencies in so labeling their cuts. N.Y. Times, November 26, 1972 at 84, col. 3. However, .enforcement of the code has been difficult (N.Y. Times, February 5, 1973 at 33, col. 1), and the “pothole problem” remains: One city councilman recently complained that the streets of his borough were akin to the “Burma Eoad.” N.Y. Times, May 21, 1973 at 27, col. 7.

      . This dictum in Monterey may not have survived the Ninth Circuit’s guarded affirmance:
      The District Court made a quantitative comparison of the private versus the public benefits derived from the organization and operation of the plaintiff corporation. Thereby, it was determined that the “social welfare” and “charitable purpose” requirements of the two respective sections were adequately fulfilled. We cannot disagree.
      481 F.2d 175, 177 (9th Cir. 1973). We would, of course, agree on such an explicit comparison of distinct public and private purposes.


author: GEWIN, Circuit Judge:

text:
    UNITED STATES of America, Plaintiff-Appellee, v. Willie Frank WILSON, Defendant-Appellant.
    No. 73-2641
    Summary Calendar.

    United States Court of Appeals, Fifth Circuit.
    Dec. 21, 1973.

      Victor Arditti, El Paso, Tex. (court appointed), for defendant-appellant.
    William Sessions, U. S. Atty., San Antonio, Tex., Ronald F. Ederer, Asst. U. S. Atty., El Paso, Tex., for plaintiff-ap-pellee.
    Before GEWIN, COLEMAN and MORGAN, Circuit Judges.

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

   GEWIN, Circuit Judge:

I

On April 19, 1973, a grand jury returned a three-count indictment charging appellant Willie Frank Wilson with (1) defrauding the Texaco Oil Company by use of a stolen credit card in violation of 18 U.S.C. § 1341; (2) interstate transportation of a stolen motor vehicle in violation of 18 U.S.C. § 2312; and (3) transportation of a firearm in foreign commerce in violation of 18 U.S.C. §§ 922(g) and 924(a). On May 3, 1973, a trial ensued which resulted in a jury verdict of guilty on all three counts. Accordingly, the district court entered a judgment of conviction, sentencing Wilson to five years on each count, the sentences to run consecutively.

II

The facts giving rise to appellant’s conviction may be summarized with brevity. On the evening of February 19, 1973, appellant and his brother, Nan-thenial, were stopped at a border crossing between Juarez, Mexico and El Paso, Texas. A customs agent asked appellant to get out of the automobile so he could make a routine search of its contents. Appellant complied and during the search of the automobile the agent found a loaded pistol under the passenger’s side of the front seat of the car.

The agent’s suspicion was aroused and appellant and his brother were taken to a room for a personal body search. This search produced a Texaco credit card issued in the name of R. H. Gott. Furthermore, a check on the automobile revealed that it had been reported stolen by the Palo Alto, California Police Department.

Armed with this knowledge the customs agents called in the Federal Bureau of Investigation. Later that evening F.B.I. Agent Steven Walker arrived at the custom’s station and advised appellant of his Miranda protections. Appellant responded that he understood his rights and signed a waiver of rights statement. Wilson told the agent that he had been to Pensacola, Florida on personal business and was returning to Palo Alto, California. He further stated that he had rented the ear in Palo Alto and was in the process of returning it. He asserted that the credit card had been sent to him in Pensacola by C. M. Davis of San Francisco to pay for gasoline expenses on his return trip to California and that his mother had given him the gun to provide for protection on his return trip.

At trial, Mrs. R. H. Gott testified that she had lost her Texaco credit card at a Berkeley, California theater on August 28, 1972. She disavowed knowing a person named C. M. Davis or the appellant. Attempts by the F.B.I. to locate C. M. Davis proved fruitless.

Leonard W. Roberds, who was the manager of rentals at the Lutz Ford Sales in Palo Alto, California, testified that on December 29, 1972, appellant signed an automobile rental agreement with him and obtained possession of the vehicle. According to the agreement the vehicle was to be used in the Bay area and was to be returned on January 7, 1973. At the time of rental, appellant told Roberds that he was going to drive the automobile to the San Francisco airport, pick up his mother and then drive her around the Bay area.

When the vehicle was not returned by the lease termination date, Roberds attempted to telephone the reference supplied by appellant on the rental agreement. After several unsuccessful calls, a female answered the phone and Rob-erds informed her that it would be necessary for appellant to return the rented automobile in order to renew the lease since the December 29th contract was null and void. The party responded that she was in contact with appellant and would convey this information to him. As time continued to lapse, several further calls to the listed reference proved unproductive as did attempts to locate appellant’s alleged employer listed in the rental agreement. Finally on February 6th Roberds reported the automobile as stolen to the Palo Alto police.

Ill

Appellant seeks a reversal of his conviction on two grounds. First, he contends that the evidence fails to establish that the rented automobile had been stolen. Secondly, he alleges that comments by the trial court evidenced bias against him and unduly prejudiced his defense. We find no merit in either of these contentions and affirm the judgment of conviction.

Essentially, appellant asserts that once a motor vehicle is leased for a time certain, it cannot thereafter become the object of theft as a result of the lessee’s actions. Appellant’s rather limited definition of the word “stolen” as used in Dyer Act prosecutions has been rejected. Our previous holding in United States v. Richards, 425 F.2d 432, 434 (5th Cir. 1970) is dispositive of appellant’s argument. There the court stated:

The law is well settled that although one may lawfully obtain possession of a vehicle through rental agreement or otherwise, a jury may conclude from adequate evidence that he intended to steal the car. It is similarly settled that an avowed intention to return the car is no defense if the accused exceeds the scope of his authorization or contractual rights and thereby deprives the owner of the benefits of ownership, (citations omitted) Id.

Thus, what may originally be a valid lease agreement of a motor vehicle can ripen into a Dyer Act violation.

The facts adduced at trial clearly establish that appellant’s conduct deprived the owner of possession and the benefits of ownership of the vehicle here involved. Merely because appellant might have eventually returned the rented automobile is no defense to the offense charged. The evidence shows that appellant acted with the intent to use the vehicle for his own convenience in contravention of the owner’s rights under the rental agreement.

During the course of the proceedings below the appellant attempted to interject many irrelevant issues and made several objections to the introduction of evidence by the Government. Although a defendant has a perfect right to object to testimony or evidence which he feels is inadmissible, the trial court has a corresponding duty to rule on such objections according to its view of the law. Furthermore, a trial judge may interrogate witnesses in appropriate circumstances in order to make certain that the facts are accurately presented to the jury.

A review of the record demonstrates that the trial court revealed no bias by its comments and questions during the course of the trial or its rulings on the various motions made by appellant. A trial judge has the right and the duty to participate in the conduct of the trial proceedings to insure that justice is done. The actions taken in the instant case were well within the discretion vested in the trial court.

The judgment is affirmed.

      . Accord, United States v. Dillinger, 341 F.2d 696, 697 (4th Cir. 1965).

      . See United States v. Bruton, 414 F.2d 905, 909 (8th Cir. 1969).

      . Hellman v. United States, 339 F.2d 36, 37 (5th Cir. 1964).

      . See Posey v. United States, 416 F.2d 545 (5th. Cir. 1969) ; United States v. Bays, 448 F.2d 977 (5th Cir. 1971).


text:
    Luther HUMPHREY, Plaintiff-Appellee, v. SOUTHWESTERN PORTLAND CEMENT COMPANY, Defendant-Appellant.
    No. 73-2278.
    United States Court of Appeals, Fifth Circuit.
    Jan. 21, 1974.
    Rehearing and Rehearing En Banc Denied Feb. 22, 1974.

      W. A. Thurmond, El Paso, Tex., for defendant-appellant.
    James P. Scanlan, Appellate Division, E. E. O. C., Washington, D. C., amicus curiae.
    Bob Hoblit, Odessa, Tex., for plaintiff-appellee.
    Before BELL, DYER and CLARK, Circuit Judges.
   BELL, Circuit Judge:

Plaintiff filed suit under Title VII of the Civil Rights Act of 1964, 42 U.S.C. A. § 2000e et seq., seeking injunctive relief and assorted damages on the claim of discriminatory conduct in the award of a job by defendant. The district court found discrimination and awarded damages. 42 U.S.C.A. § 2000e-5(g). There was no award of the position in question, plaintiff having become disabled in the meantime. Thisappeal followed. We reverse.

The operative facts ended in 1968 with the award of the job. They were that plaintiff, a black employee, bid on the position of special utilityman (mechanical) in defendant’s Odessa, Texas cement plant. He had seniority dating back to 1964. A white employee also bid on the position. He had seniority of only five months. There were no other bidders. It was undisputed that seniority governed in the award of positions only when qualifications were approximately equal, otherwise the position was to go to the most qualified bidder.

The procedure used for bidding on vacant positions in defendant’s plant was to post the job vacancy with the request that bid forms be completed by those interested in bidding. This procedure will be seen in the following exhibit which was actually posted in this case:

To: ALL EMPLOYEES

Prom: G. F. SEIBERT

Subject: Position Opening

Date: May 14, 1968

SPECIAL UTILITY MAN (MECH)

QUALIFICATIONS

High School education or equivalent. Capable of performing inspections, lubrication, and minor repairs of equipment related to cement plant operation. Able to read and interpret simple mechanical drawings, blue-prints, sketches, and manufacturers’ specifications.

Able to use measuring devices such as feeler gauges, micrometer, and calipers.

DUTIES

Responsible to Maintenancé Foreman. Lubricate and make general inspections, simple installations, minor repairs (including dust collector repairs), and adjustments to mechanical equipment. Assist maintenance men on major work. Perform such general housekeeping necessary to keep tools, equipment and working areas safe, clean and orderly. May at times work with a helper. Perform any other duties as assigned by the Maintenance Foreman.

HOURS

Normally day work; 5 days per week; 8 hours per day.

RATE

$3.29/hour after completion of a satisfactory probation period.

IF NO QUALIFIED BIDS ARE RECEIVED, A BREAK-IN POSITION WILL BE AWARDED, REQUIRNG THE ABOVE QUALIFICATIONS TO BE MET WITHIN A REASONABLE PERIOD OF TIME. BIDS WILL BE ACCEPTED UNTIL 4:00 PM, FRIDAY, MAY 17, 1968.

NOTE:For the present, this man will be used for baghouse work.

/s/ G. F. SEIBERT /s/ BY DKH

The required procedure was that the bid forms be completed and deposited in a mailbox in the First Aid room of the plant. Plaintiff’s bid was as follows:

Odessa Plant

Date: 5/17/68

Bid for job of- — special utility man (Mech.)

Employment Date — June 1, 1964 AGE —36

Job Preference *-

Education (location, number years, graduation date; field of greatest interest; special courses)

High School — Completed 11th grade College—

Technical—

Correspondence—

Other

Specific Experience and Qualifications (as applied to this particular job)— Have worked and assisted at this job from time to time since being employed here.

General Plant Experience — capable of operating all yard equipment at this Plant.

Remarks: — Am familiar with Dust Collection systems.

/s/ LUTHER HUMPHREY

' The bid of employee Dennis was as follows:

Odessa Plant Date 5/16/68

Bid for job of — Special Utility man (Mech)

Employment Date — 1/5/68 AGE — 27

Job Preference *-

Education (location, number years, graduation date; field of greatest interest; special courses)

High School — G.E.D.

College—

Technical — Electronics, Welding.

Correspondence — Electronics Other—

Specific Experience and Qualifications (as applied to this particular job)—

Automobile mechanics, Discel Mechanics, Hydraulic repair (Backholes) Welding, and Equipment operation. General Plant Experience — Baghouse work, Knile. Bricking, belt roller replacement, Packhouse loading, Equipment operations, and general clean up.

Remarks: — Have read Blue-prints, Mechanical Drawings. Have used feeler gauges micrometers and calipers. Have done some mechanical drawing in the past.

/s/ HOWARD H. DENNIS JR.

After receiving the two bids, the plant manager, personnel officer, and foreman met, considered the bids, and awarded the job to Dennis on the grounds that he was better qualified even though plaintiff was the senior employee.

Thereafter plaintiff complained to one of defendant’s officers from California of the failure to keep a company promise that a written test would be given to bidders before awarding jobs. Within a few days thereafter plaintiff and Dennis were given written tests. Plaintiff scored 12 on the test while Dennis scored 50. The validity of the test is not in issue. The score mdde by Dennis was not acceptable in that 70 was eon-sidered a passing grade but he was allowed to stay on the job pending the taking of another test.

Plaintiff testified that he became upset over Dennis’s having been allowed to stay on the job and because he was given extra time for taking the second test. One difficulty with plaintiff’s position, however, is that the job was awarded to Dennis, as between plaintiff and Dennis, before or not later than the first test.

All of the evidence adduced upon the trial was to the effect that Dennis was the better qualified of the two employees. In addition, plaintiff’s counsel stipulated that Dennis was qualified for the position.

There were only two circumstances which militated against defendant at all during the trial from the standpoint of plaintiff carrying the burden of establishing racial discrimination in the award of the job. The first was the disclosure that the bid form submitted by Dennis was completed in two colors of ink. Some of the insertions by Dennis were in blue ink while others were in black ink. Dennis testified that he ran out of ink while completing the form but that he deposited the bid in the mailbox in precisely the same condition as it appeared on the trial. The other circumstance was in the fact of the tests having been given.

The district court drew the following inferences from these circumstances:

Finding of Fact No. 13

Fearing that a charge of discrimination might be made, a test was ordered given. In addition, the bid of the employee who was awarded the promotion was altered to reflect the fact that he had received additional training.

These findings are the sole support for the conclusion as to racial discrimination reached in Finding of Fact No. 11:

On May 20, 1968, the officials who reviewed the credentials of these two men chose the latter to receive the promotion. In part, their decision was based upon his apparent capacity to perform the job. But their decision to award him the promotion, rather than the plaintiff, was also based on the plaintiff’s race; i. e. the fact that he is a Negro.

It is to be noted that these findings are in terms of ultimate facts and must depend for efficacy on underlying or subsidiary findings. There must be some support in the record for the ultimate facts found and, absent support, they are due to be set aside as clearly erroneous. Rule 52(a), F.R.Civ. P. There are no subsidiary findings whatever to undergird these ultimate facts and we thus turn to the record in an effort to find support for them.

With respect to the finding that the bid was altered, we gather that the district court hinged its finding against defendant on the inference, based on the difference in the colors of ink, that additional qualifications were included after the award of the bid to bolster the bid. As noted, this inference was in sharp conflict with the testimony of Dennis.

The clear, positive and undisputed testimony of record from Dennis was that all handwriting on the bid was his; that the bid form was filled out in its entirety by him on May 16, 1968; that it was filled out at his home; that it was filled out and completed with both colored inks on it at the time he dropped it into the bid box; and the bid form was not changed after he dropped it into the box. He further explained the reason for the bid form containing two different colored inks. He stated:

“At the time I was filling it out, you can’t pick up a pen and say it is going to have enough ink to write the whole thing. . I run out of ink, I filled it in, the top part, signed it and then went ahead and started filling in the rest and run out of ink.”

This testimony which reasonably explains the existence of both blue and back ink stands unimpeached and uncon-tradicted. There is no evidence to the contrary and the record as a whole is consistent with this testimony.

We have attempted to reconstruct the possible reasoning of the district court. It was apparently a two step procedure: first, the court concluded Dennis was not a credible witness; second, from the fact of two colors of ink, the court inferred that the form was altered after the job was awarded. This goes too far.

The inference drawn could not stand in the face of the testimony of Dennis and its consistency with the facts actually proven; indeed with the whole record. In Pennsylvania Railway Co. v. Chamberlain, 1933, 288 U.S. 333, 341, 53 S.Ct. 391, 394, 77 L.Ed. 819, 823, the court said:

“And the desired inference is precluded for the further reason that respondent’s right of recovery depends upon the existence of a particular fact which must be inferred from proven facts, and this is not permissible in the face of the positive and otherwise uncontradicted testimony of unim-peached witnesses consistent with the facts actually proved, from which testimony it affirmatively appears that the fact sought to be inferred did not exist. . . .”

See also Foran v. Commission of Internal Revenue, 5 Cir., 1948, 165 F.2d 705, 707 (J. Sibley applying this same rule in reversing the tax court). The undisputed facts were inconsistent with the inference drawn. Thus the finding of an alteration fails as a matter of law.

The other essential fact found was that defendant feared that a charge of discrimination might be made and, because of this fear, a test was given. There is no evidence whatever to support this statement. The only evidence bearing on it is that plaintiff requested the test. Thus this finding is clearly erroneous.

The long and the short of the matter here is that plaintiff failed to prove racial discrimination in the award of the position in question. There was simply no evidentiary basis on which the district court could decide the case in favor of plaintiff.

The result is that the judgment of the district court must be and it is reversed with direction that judgment be entered in favor of the defendant. It is unnecessary to consider the other assignments of error.

Reversed with direction.

      . After the entry of judgment, defendant filed a motion for new trial, attaching thereto the affidavit of Dennis reiterating his testimony, and the affidavit of the company personnel director stating that he personally removed the Dermis bid form from the bid box and that it was then in the same form as it existed at the trial. The motion for new trial was overruled.