author: PER CURIAM.

text:
    RIVER FOREST PHARMACY, INC., Petitioner, v. DRUG ENFORCEMENT ADMINISTRATION, Respondent.
    No. 73-1899.
    United States Court of Appeals, Seventh Circuit.
    Argued April 15, 1974.
    Decided Aug. 12, 1974.

      Gerald M. Werksman, Chicago, 111., for petitioner.
    Allyn Myle Carnman, Chief Counsel Drug Enfc. Admin., Henry E. Petersen, Asst. Atty. Gen., Allan P. Mackinnon, Atty., U. S. Dept, of Justice, Washington, D. C., James R. Thompson, U. S. Atty., Chicago, 111., for respondent.
    Before CUMMINGS, PELL and SPRECHER, Circuit Judges.
   PER CURIAM.

This petition for review questions the propriety of an order of the federal Drug Enforcement Administration which increased the sanction recommended by an administrative law judge (law judge) from a six-month suspension of petitioner pharmacy’s Certificate of Registration to a two-year suspension. The order assertedly is “arbitrary, capricious, [and] an abuse of discretion,” 5 U.S.C. § 706(2) (A).

River Forest Pharmacy, Inc., is wholly owned by Norman Tankel, a pharmacist who operates the drugstore with the assistance of his family. In January 1973, Tankel pleaded guilty to four counts of distributing controlled substances in violation of 21 U.S.C. § 841(a), a felony. The charges arose out of two sales of secobarbital and two sales of codeine cough syrup to a man who frequented the River Forest Pharmacy and ran errands for Tankel. Tankel received three years’ probation.

In April 1973, on the basis of Tankel’s guilty pleas, the Acting Administrator of the Bureau of Narcotics and Dangerous Drugs (the BNDD was a predecessor of the Drug Enforcement Administration) issued an order to show cause why the pharmacy’s Certificate of Registration should not be revoked. Pending disposition of the matter, he ordered an immediate suspension of the Registration.

At a hearing before the law judge, a compliance investigator for the BNDD testified, as did Tankel. The investigator stated that he had conducted an audit after Tankel’s arrest, the audit consisting of an inventory of the controlled substances in the pharmacy and an examination of the records kept by Tankel.

“Mr. Krause [the investigator] testified that he found many discrepancies and inadequate records; that the discrepancies included both overages and shortages of various drugs which are classified as controlled substances. In addition he found other violations of the Department’s regulations .... Mr. Krause also testified that he has been an investigator for one year and during that time had conducted about 40 audits. In his experience the discrepancies . . . [were] greater than any he had encountered . He testified that the respondent cooperated and assisted him during the audit.” 38 Fed.Reg. 27417 (1973).

Tankel, age 46, whose father had been a pharmacist, has worked in drugstores all his life. He is present in the store every day of the week it is open except one, when another pharmacist is there. He realized that his records were inadequate but explained this as the result of the long hours he works, although he also admitted to being a poor record-keeper. He blamed some of the discrepancies on the fact that when prescriptions were telephoned to him, he neglected to follow up and secure the physicians’ written prescription forms. He attributed this omission to forgetfulness and the pressure of business. His failure to keep proper records in the past was also due to ignorance and unfamiliarity with the regulations. Tankel had not made any extra profit on the sales which had resulted in the prosecution. He submitted four letters attesting to his good character.

On the basis of the testimony of these two witnesses and documentary evidence, the law judge made findings of fact and conclusions of law. He recommended that the pharmacy’s Certificate of Registration be suspended for six months. Such a measure, he suggested, would be sufficiently severe to serve both as a deterrent to others and as an extremely costly lesson to Tankel as to the seriousness of his actions and to remind him of his bookkeeping duties. The judge also noted that the probationary period imposed by the federal court • in the section 841(a) prosecution would deter Tankel from repeating his mistakes.

The Acting Administrator accepted the findings of the administrative law judge but rejected his recommended sanction.

“In short, due to [1] the seriousness of the nature of Mr. Tankel’s conviction for the unlawful distribution of controlled substances, [2] the Respondent’s inability to comply with certain recordkeeping, report-making, order form, and prescription require.-ments of the Controlled Substances Act and implementing Administrative Regulations, and [3] the obvious misconstruction of the requirements of section 304 [21 U.S.C. § 824] of the Controlled Substances Act, by the . Judge; and after reviewing [the record, including the findings of fact and conclusions of law proposed by counsel for the Government] ., the Administrator hereby adopts the recommended decision ., provided the suspension of the subject Certificate of Registration be for a period of two years . . . .” 38 Fed.Reg. 27420.

Counsel, in behalf of the pharmacy, asserts that there is an inadequate statement of reasons for overruling the recommendation of the law judge and that this inadequacy is tantamount to arbitrary and capricious action on the Administrator’s part. In particular, petitioner complains that the increased sanction rests on a misinterpretation of the law judge’s discussion.

This claim is twofold: (1) the Administrator was mistaken in saying that, in evaluating the evidence, the law judge used as his standard of review a requirement of knowledge and intent; and (2) the Administrator incorrectly concluded that the law judge used the standard announced in section 304 (21 U.S.C. § 824(d)), that of “imminent danger to the public health or safety,” in deciding the ultimate issue of suspension or revocation, which standard, under section 824(d), is a guideline only for immediate pendente lite suspension.

It appears to us that a fair reading of the law judge’s statements challenged by the Administrator would indicate that the law judge was merely citing absence of knowledge, intent, and imminent danger as factors supportive of a minimal suspension. At least, we will assume so arguendo. It does not follow, however, that the agency action therefore “lack[ed] a stated rational basis” and must be overturned.

It is evident from the first two reasons given by the Acting Administrator and his citation of the Government’s proposed findings of fact and conclusions of law that he viewed petitioner’s violations of the drug laws as substantial and not "merely technical.” The Government’s proposed findings and conclusions set out the legislative history of the Controlled Substances Act. The materials reveal that Congress and the President were concerned, in part, with ensuring the establishment of safeguards by pharmacists, among others, to protect against the diversion of dangerous drugs into illicit channels. Accurate record-keeping was deemed one of the essential safeguards.

Although the law judge and not the Administrator was in the best position to evaluate Tankel’s credibility and demeanor, those factors are irrelevant to an assessment of the seriousness of petitioner’s violations and of the sanction most appropriate for the promotion of agency policy regarding them. In a case analogous to the present one, the Second Circuit upheld the decision of the Securities and Exchange Commission to increase the penalty ordered by a.hearing examiner in regard to a securities salesman who had been found to have made certain misrepresentations. Fink v. SEC, 417 F.2d 1058 (2d Cir. 1969). Cf. Hamlin Testing Lab., Inc. v. United States Atomic Energy Comm’n, 337 F.2d 221 (6th Cir. 1964), where, on petition for an order staying an order of the AEC denying renewal of the company’s Byproduct Material License, the court stated:

“Hamlin’s application for license renewal was denied on the basis of its conceded repeated violations of Commission regulations adopted to protect health and safety. A trial examiner, while finding such violations, exonerated Hamlin on his view that its violations were not wilful. ... It has not been shown to us that lack of wilfulness would necessarily bar the Commission from refusing renewal to a licensee which had repeatedly violated its regulations.” Id. at 222.

Thus, the Administrator’s decision, fairly read, does provide reasons why the Administrator increased the sanction recommended by the law judge. True, it does not explicitly announce why the Administrator imposed a two-year suspension rather than, say, a twelve-month or an eighteen-month suspension. However, we do not construe 5 U.S.C. § 706(2) (A) as requiring so refined an explanation of his exercise of discretion.

Although we hold that the Acting Administrator was not bound by the law judge’s recommendation as to the appropriate sanction, we must also consider petitioner’s additional argument, its appeal to our “sense of fairness.” “Fairness” supposedly dictates that we reverse the Administrator’s action and reinstate the law judge’s proposed sanction.

Neither section 824 nor the Administrative Procedure Act authorizes us to substitute our “sense of fairness” for the noncapricious decision of the regulatory agency. In Butz v. Glover Livestock Comm’n Co., 411 U.S. 182, 183, 188-189, 93 S.Ct. 1455, 1457, 1459, 36 L.Ed.2d 142 (1973), involving the propriety of an order of the Eighth Circuit which had set aside as “unconscionable” a 20-day suspension of registration by the Secretary of Agriculture because of the registrant’s shortweighting of cattle, the Court concluded “that the setting aside of the suspension was an impermissible judicial intrusion into the administrative domain under the circumstances of this case .... The fashioning of an appropriate and reasonable remedy is for the Secretary, not the court.” In its discussion of the applicable standard of judicial review, the Court approvingly cited American Power & Light Co. v. SEC, 329 U.S. 90, 67 S.Ct. 133, 91 L.Ed. 103 (1946). The Court in that earlier decision had declared :

“Our review is limited solely to testing the propriety of the remedy so chosen from the standpoint of the Constitution and the statute. We would be impinging upon the Commission’s rightful discretion were we to consider the various alternatives in the hope of finding one that we consider more appropriate.” 329 U.S. at 118, 67 S.Ct. at 148.

See also G. H. Miller & Co. v. United States, 260 F.2d 286, 296 (7th Cir. 1958) (en banc), cert. denied, 359 U.S. 907, 79 S.Ct. 582, 3 L.Ed.2d 572.

Ignorantia legis neminem excusat is an often quoted and generally still honored maxim of the law. While it is possible that less deference may be accorded the maxim in the punishment process than in that of guilt determination, in the present area, where the failure, whether through carelessness, ignorance, or otherwise, to maintain a tight control of deleterious drugs including precise recordation of their movements, may well have a substantially adverse impact upon the public weal, we are not unmindful of another maxim, Ignorare legis est lata culpa. Thus, while we might if we were reviewing de novo, which we are not, determine that from the petitioner’s individual point of view the suspension was harsh, we cannot say that from the point of view of overall enforcement, which is the Administrator’s responsibility, there was an abuse of discretion.

Accordingly, we uphold the challenged order and reversal on review is denied.

      . “§ 706. Scope of Review.
      To tlie 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—
      (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 ....
      In making the foregoing determinations, the court shall review the whole record or those parts of it cited by a party

      . 21 U.S.C. § 824. Subsection (a)(2) provides that:
      “A registration pursuant to section 823 of this title to manufacture, distribute, or dispense a controlled substance may be suspended or revoked by the Attorney General upon a finding that the registrant—
      (2) has been convicted of a felony under this subchapter or subchapter II of this chapter or any other law of the United States, or of any State, relating to any substance defined in this subchapter as a controlled substance . . . . ”
      28 C.F.It. § 0.100 assigned this function to the Director of the Bureau of Narcotics and Dangerous Drugs.

      . The conclusion of the Government’s submission reads as follows: “Therefore, on the basis of the entire record, the Government recommends that your Honor find that respondent, over a substantial period of time, (a) has been convicted of violating Section 401(a) (1) of the Controlled Substances Act [Section 841(a)(1), Title 21, United States Code], by unlawfully distributing controlled substances listed in Schedules III and V, the former violation being a felony provision of said statute, and (b) has not been in compli-anee with specific legal requirements pertaining to the dispensing and distribution of controlled substances and that its business operation generally, as set forth in detail above, is such that its continued access to controlled substances is not consistent with the provisions of the Act or the deep and intense concern expressed by the Congress regarding the serious [menace] of drug abuse.”


source: Caselaw Access Project

author: MANSFIELD, Circuit Judge:

license: Public Domain

text:
    UNITED STATES of America, Plaintiff-Appellant, v. Pablo BERRIOS et al., Defendants-Appellees.
    No. 1111, Docket 74-1365.
    United States Court of Appeals, Second Circuit.
    Argued June 7, 1974.
    Decided Aug. 8, 1974.

      James W. Dougherty, Sp. Atty., U.S. Dept, of Justice, Edward John Boyd, V, U. S. Atty., E. D. of N. Y., Denis E. Dillon, Sp. Atty., U. S. Dept, of Justice, on the brief, for plaintiff-appellant.
    Martin Garbus, New York City, on the brief for Pablo Berrios, defendant-appellee.
    Michael B. Standard, New York City (Rabinowitz, Boudin & Standard, New York City, on the brief), for William Nuchow and Julius Zaretsky, defendants-appellees.
    Phylis Skloot Bamberger, Atty., New York City (William J. Gallagher, The Legal Aid Society of New York City, Federal Defender Service Unit, on the brief), for Matthew Principe, defendant-appellee.
    Before KAUFMAN, Chief Judge, and MANSFIELD and MULLIGAN, Circuit Judges.
   MANSFIELD, Circuit Judge:

At issue on this appeal by the government is the question of whether the district court, after the defendant Pablo Berrios alleged that in this case he had been the victim of selective and discriminatory prosecution by the government, acted properly and within its powers in dismissing the indictment against all defendants because of the government’s refusal to turn over to the court for disclosure to defense counsel a memorandum that had been sent by the prosecutor to the United States Department of Justice recommending that prosecution of the defendants be initiated. We vacate the district court’s order and remand the case for further proceedings consistent with this opinion.

Some eighty years ago, the Supreme Court observed that the administration of laws “with an evil eye and an unequal hand, so as practically to make unjust and illegal discrimination between persons in similar circumstances” constitutes a denial of equal protection. Yick Wo v. Hopkins, 118 U.S. 356, 373-374, 6 S.Ct. 1064, 30 L.Ed. 220 (1886). Nothing can corrode respect for a rule of law more than the knowledge that the government looks beyond the law itself to arbitrary considerations, such as race, religion, or control over the defendant’s exercise of his constitutional rights, as the basis for determining its applicability. See Oyler v. Boles, 368 U.S. 448, 456, 82 S.Ct. 501, 7 L.Ed.2d 446 (1962). Selective prosecution then can become a weapon used to discipline political foe and the dissident, see, e. g., United States v. Falk, 479 F.2d 616 (7th Cir. 1973); United States v. Steele, 461 F.2d 1148 (9th Cir. 1972). The prosecutor’s objective is then diverted from the pub-lie interest to the punishment of those harboring beliefs with which the administration in power may disagree. This case involves such allegations.

In an indictment filed on January 8, 1973, appellee Berrios stands accused of holding union office in violation of 29 U.S.C. § 504, which provides that no person who has been convicted of the crime of arson, among others, shall within five years of such conviction serve as an officer or employee of a labor organization. Berrios, it is alleged, was convicted of the crime of arson by the Supreme Court of New York in 1971 and; notwithstanding that conviction, within five years thereafter became Trustee and a member of the Executive Board of Teamsters Union Local 840. His success in achieving these positions is the cause of his present plight. The other appellees (Nuchow, Principe and Zaretsky) were later charged with violating § 504 by wilfully and knowingly permitting Berrios to hold union office after his conviction.

Berrios contends that he was chosen for prosecution because he was counted among the few Teamster officials who were in 1972 outspoken in their support of Senator McGovern for President as against President Nixon and because he was at that time spearheading an effort to unionize the Marriott Restaurant Chain, an enterprise that apparently enjoys close ties with President Nixon and his family. In support of his charge of selective prosecution, Berrios submitted the affidavit of his counsel, Martin Gar-bus, Esq., which states that he and his client “believe” that (1) there have been only three prosecutions under § 504 since 1969; (2) Mr. Marriott has been a close friend of the President and a substantial contributor to his political campaign; (3) Donald Nixon, the President’s brother, is a vice-president of Marriott; (4) Herbert Kalmbach, attorney for Marriott, was also the President’s personal attorney; (5) Charles Colson, formerly counsel to the President and later counsel to the Teamsters Union was a “prime mover in the prosecution”, and (6) there are hundreds of unions with officers who have prison records. Although Berrios’ counsel later pointed to newspaper articles as the basis for some of these beliefs, no evidence or facts were offered to show the basis of his belief that numerous other violations of 29 U.S.C. § 504 had gone unprosecuted. Nevertheless, on the strength of the affidavit, Berrios moved for a hearing on his defense of selective prosecution.

Upon oral argument, which was conducted by the court for the purpose of determining whether a hearing was required, counsel for Berrios urged that he had shown enough to warrant further exploration by way of a hearing. As might be anticipated, the government took the opposite view, pointing out the vagueness of Berrios’ allegations and explaining that the prosecutor had learned of Berrios’ criminal record while investigating a charge of arson lodged against him for an attempted firebomb attack on a Marriott restaurant. (Berrios was acquitted of this charge after a jury trial before Judge Judd on February 7, 1973). Judge Judd suggested that the charge of selective prosecution might be resolved without a hearing if the government would turn over a copy of the letter from the prosecutor to his superiors, which originally sought authorization for the prosecution of Berrios. At first the government resisted this idea on the ground that the material sought was confidential. Eventually, however, the United States Attorney proposed a compromise: let the judge view the memorandum in camera and, if he should determine that there was nothing to support Berrios’ claim, return it to the government without disclosure to the defense. Defense counsel, dissatisfied with the notion of a completely in camera inspection, prevailed upon the judge to order that the defendants should have access to the memorandum which would be redacted only to the extent necessary to protect against disclosure of any confidential grand jury testimony.

When the government declined to comply with the disclosure order Judge Judd, acting upon Berrios’ motion for dismissal of the indictment, see Aider-man v. United States, 394 U.S. 165, 89 S.Ct. 961, 22 L.Ed.2d 176 (1969), filed an opinion and order on January 7, 1974, directing that the indictment be dismissed unless the government within thirty days submitted the memorandum to the court for its study and for release to the defendants of any portions thereof which the court should determine “are not required to be kept confidential.” In his opinion Judge Judd held that Berrios’ allegations warranted a hearing on the selective prosecution issue and that Berrios’ “offer of proof” was sufficient to create a prima facie case of selective prosecution. Upon the government’s refusal to produce the memorandum on the terms specified by Judge Judd, the court, on February 8, 1974, dismissed the indictment, from which the Government appeals.

DISCUSSION

To support a defense of selective or disciminatory prosecution, a defendant bears the heavy burden of establishing, at least prima facie, (1) that, while others similarly situated have not generally been proceeded against because of conduct of the type forming the basis of the charge against him, he has been singled out for prosecution, and (2) that the government’s discriminatory selection of him for prosecution has been invidious or in bad faith, i. e., based upon such impermissible considerations as race, religion, or the desire to prevent his exercise of constitutional rights. These two essential elements are sometimes referred to as “intentional and purposeful discrimination.” See Snow-den v. Hughes, 321 U.S. 1, 8, 64 S.Ct. 397, 88 L.Ed. 497 (1943); Moss v. Hor-' nig, 314 F.2d 89, 92-93 (2d Cir. 1963); United States v. Ahmad, 347 F.Supp. 912 (M.D.Pa.1972), aff’d sub nom., United States v. Berrigan, 482 F.2d 171 (3rd Cir. 1973); United States v. Falk, 479 F.2d 616 (7th Cir. 1973) (en banc); United States v. Crowthers, 456 F.2d 1074 (4th Cir. 1972); United States v. Steele, 461 F.2d 1148 (9th Cir. 1972), See Comment, “The Right to Nondiscriminatory Enforcement of State Penal Laws,” 61 Colum.L.Rev. 1103 (1961). Mere “conscious exercise of some selectivity in enforcement is not in itself a federal constitutional violation.” Oyler v. Boles, 368 U.S. 448, 456, 82 S.Ct. 501, 506, 7 L.Ed.2d 446 (1962).

In the present case, in an effort to support his defense of selective prosecution, Berrios sought a hearing and disclosure of certain government records solely upon the basis of his counsel’s affidavit to the effect that he and his clients “believe” that facts indicating a vindictive motive on the part of the government exist (as outlined above) and their further belief that “there are hundreds of unions who have men with prison records sitting as officers.” In support of the latter claim, although Ber-rios introduced a letter from the Department of Justice to the effect that there had been three indictments of others for violations of § 504 since July 1969, he neither named any unprosecuted violators nor identified any of the unions In which they allegedly held office.

Clearly the defendants are not entitled under Rule 16, F.R.Crim.P., to disclosure of the government records sought by them, since Rule 16(b) expressly exempts from discovery “reports, memoranda, or other internal government documents made by government agents in connection with the investigation and prosecution of the case . . .” Upon an adequate preliminary showing of relevancy, however, the district court may hold a hearing upon a motion raising defenses or objections, Rule 12(b)(4), F. R.Crim.P., and issue a subpoena directing the government to produce books, papers or records for introduction at the hearing, Rule 17(c), F.R.Crim.P. Upon the meagre preliminary showing made here, we doubt whether we would have granted a hearing or ordered the production of evidence for such a hearing, since Berrios appears frankly to have embarked upon a fishing expedition. The effect could be to encourage use of the defense of selective prosecution, however baseless, as a means of obtaining discovery to which the defense would not otherwise be entitled. In order to show what has been described by the Third Circuit as a “colorable basis” entitling the defense to subpoena documentary evidence required to establish a 'selective prosecution defense, see United States v. Berrigan, 482 F.2d at 177, 181, we would first require some evidence tending to show the existence of the essential elements of the defense and that the documents in the government’s possession would indeed be probative of these elements. In this case, Berrios has not pointed to the existence of a single unprosecuted violation of § 504 on the part of others, even though proof of this essential element would not necessarily be in the government’s exclusive control. See, e. g., United States v. Falk, 479 F.2d 616 (7th Cir. 1973) (en banc). Nor has Berrios represented that the government’s files, including the prosecutor’s recommendation that prosecution be initiated, will in fact support his beliefs.

Notwithstanding the apparent weakness of Berrios’ claim, we recognize that the decision to permit a hearing and, in anticipation thereof, to authorize a subpoena of evidence in the government’s possession, lies largely in the trial judge’s discretion. As the Supreme Court has just stated in United States v. Nixon, - U.S. -, 94 S.Ct. 3OHO, 41 L.Ed.2d 1039 (1974) :

“Enforcement of a pretrial subpoena duces tecum must necessarily be committed to the sound discretion of the trial court since the necessity for the subpoena most often turns upon a determination of factual issues. Without a determination of arbitrariness or that the trial court finding was without record support, an appellate court will not ordinarily disturb a finding that the applicant for a subpoena complied with Rule 17(c). See, e. g., Sue v. Chicago Transit Authority, 279 F.2d 416, 419 (CA7 1969); Shotkin v. Nelson, 146 F.2d 402 (CA10 1944).”

Although we might have proceeded differently in this case, we cannot on this record say that Judge Judd abused his discretion in ordering the government to turn over to him for “study” its memorandum recommending prosecution. However, his opinion and order filed January 7, 1974, went too far in directing the government to surrender the memorandum “for release to the defendants of any portions thereof which the court shall determine are not required to be kept confidential.”

Although Berrios does not object to redaction of any portions of the prosecutor’s memorandum found by the court to be entitled to protection from disclosure on the grounds of confidentiality (e. g., the substance of grand jury testimony, see Rule 6(e), F.R.Crim.P.) he would at most be entitled under Rule 17(c), F.R. Crim.P. to introduce at a hearing only material that is demonstrably relevant, i. e., which would tend to establish the elements of his defense of selective and discriminatory prosecution. Even under the district court’s liberal ruling the test for disclosure should be the relevancy of the evidence to the specific defense for which it is sought, not its lack of confidentiality. The government is entitled to have withheld from the defendants all material in the memorandum which does not relate to the defense of selective prosecution. On the other hand, the government is not entitled, on a mere claim of generalized confidentiality, to withhold material that is relevant to the defense.

The order of the district court is vacated and the case is remanded for proceedings consistent with this opinion. Against the possibility that, upon remand, a difference might arise between the court and the government regarding the relevancy of any portions of the memorandum which the court proposes to release to the defendants, we retain jurisdiction for the purpose of review of the court’s ruling. Should Judge Judd decide, on the other hand, not to release all or any part of the memorandum to the defendants, we direct that the entire memorandum be sealed and retained by the court so that it will be available for such review after trial as may become necessary. United States v. Nixon, supra.

      . 29 U.S.C. § 504(a) reads in pertinent part: “No person who is or has been a member of the Communist Party or who has been convicted of, or served any part of a prison term resulting from his conviction of, robbery, bribery, extortion, embezzlement, grand larceny, burglary, arson, violation of narcotics laws, murder, rape, assault with intent to kill, assault which inflicts grievous bodily injury, or a violation of subchapter III or IY of this chapter, or conspiracy to commit any such crimes, shall serve—
      (1) as an officer, director, trustee, member of any executive board or similar governing body, business agent, manager, organizer, or other employee (other than as an employee performing exclusively clerical or custodial duties) of any labor organization, or
      (2) as a labor relations consultant to a person engaged in an industry or activity affecting commerce, or as an officer, director, agent, or employee (other than as an employee performing exclusively clerical or custodial duties) of any group or association of employers dealing with any labor organization,
      during or for five years after the termination or his membership in the Communist Party, or for five years after such conviction or after the end of such imprisonment

      . A letter dated May 16, 1973 from the Chief Management and Labor Section, Department of Justice, addressed to Berrios’ counsel, reports that since July, 1969, there had been three other indictments filed charging violations of 29 U.S.C. § 504. However, by letter dated June 12, 1973, the Assistant Director for Regulations and Administrative Rulings, U. S. Department of Labor, reported to Berrios’ counsel that there had been approximately nine other prosecutions during the first ten years of administration of § 504. Neither source refers to any unprose-cuted violations of § 504.

      . Neither Berrios nor Garbus has identified any of the unions or officers. Moreover, they fail to state whether the officers had been convicted of any of the felonies specified by § 504, or, if so, whether the convictions had taken place within five years prior to the officers’ assumption of union office, both of which conditions must be proved to establish a violation of § 504.

      . Although Berrios relies heavily on Falle, it is clearly distinguishable. There the defendant, who had been indicted for failure to possess his Selective Service draft card, offered to prove that approximately 25,000 Selective Service registrants who had disposed of their draft cards had not been prosecuted, even though the government was aware of many of these other violations. Indeed, it was conceded that there existed an official policy statement issued by the Director of the Selective Service System to the effect that those who turned in their cards should not be prosecuted. Furthermore, the Assistant U. S. Attorney in charge of the prosecution of Falk advised that Falk had been singled out for prosecution because of his draft-counselling activity, after the decision to prosecute had been approved by a chain of higher officials of the Department of Justice.
      It is also not without significance that the court in Falle found defendant’s evidentiary offering sufficiently strong to establish a “prima facie case” of selective prosecution, thus justifying a shift in the burden of proof to the government — i. e., the burden of proving that the decision to prosecute was free of discriminatory taint. Id. 479 F.2d at 623-624. See also United States v. Steele, 461 F.2d 1148, 1152 (9th Cir. 1972) ; United States v. Crowthers, 456 F.2d 1074, 1078 (4th Cir. 1972). By contrast, we are asked here to gauge the quantum of proof required to support merely an order for evidentiary production. The result of such an order, when appropriately guarded by preliminary in camera review, is of far less serious consequence to the government than is shifting the ultimate burden of proof.


author: WALLACE, Circuit Judge: ALFRED T. GOODWIN, Circuit Judge

text:
    Orval M. RHODES and William A. Guf-fey, as Co-Administrators of the Estate of Moris O. Rhodes and Beverly J. Rhodes, Deceased, Plaintiffs-Appellees, v. REPUBLIC NATIONAL LIFE INSURANCE COMPANY, Defendant-Appellant.
    No. 72-2505.
    United States Court of Appeals, Ninth Circuit.
    July 1, 1974.
    Rehearing Denied Sept. 12, 1974.

      Robert W. Holland (argued), Carson, Messinger, Elliott, Laughlin & Ragan, Phoenix, Ariz., for defendant-appellant.
    James P. Cunningham (argued), Cunningham, Goodson, Tiffany & Weltsch, Phoenix, Ariz., for plaintiffs-appellees.
    Before CARTER, GOODWIN and WALLACE, Circuit Judges.
   OPINION

WALLACE, Circuit Judge:

The administrators of the estates of Moris O. Rhodes and Beverly J. Rhodes, deceased, sought a declaratory judgment as to the correct construction of a life insurance policy issued by Republic National Life Insurance Company (the Company) through its predecessor, Pacific National Life Assurance Company. The Company admitted coverage, but argued that its liability was limited to $3,000, rather than $26,625.30 as claimed by the administrators. The district court granted the administrators’ motion for summary judgment and entered judgment against the Company in the amount of $23,625.30. The Company appeals and we reverse.

On February 11, 1964, Moris Rhodes entered into a contract of life insurance with the Company (the Husband’s Policy) . Under the policy the Company was liable, upon proof of Mr. Rhodes’ death, for a lump sum and for a monthly income benefit until the end of the protection period. In April, 1965, the policy was amended by the addition of a rider entitled “CHILDREN’S BENEFIT FOR TERM INSURANCE TO AGE 25” (the Children’s Benefit Rider) under which the life of each of Rhodes’ three children was insured for a lump sum. The Company has settled its liability under the Children’s Benefit Rider and Mr. Rhodes’ policy and they are discussed here only as background. In April, 1965, the Husband’s Policy was also amended by the addition of a rider entitled “WIFE’S INSURANCE BENEFIT” (the Wife’s Benefit Rider). The correct construction of this rider is the subject of this dispute. On September 5, 1970, the Rhodes, together with their children, perished in a flash flood near Payson, Arizona. There was no evidence that their deaths were otherwise than simultaneous.

The Wife’s Benefit Rider is captioned by the following:

WIFE’S INSURANCE BENEFIT FOR ADDITIONAL INSURANCE OVER A TERM PERIOD AND PAYABLE AS A MONTHLY INCOME TO THE END OF THE PERIOD OR UPON ELECTION AS A SINGLE PAYMENT, IF THE INSURED’S WIFE’S DEATH OCCURS DURING THE PERIOD

The benefit paragraph of the rider reads as follows:

The Company agrees, subject to the terms and conditions of this Provision and the policy, to pay the following benefits immediately upon due proof of the death of the Insured’s wife named in the application, while the policy and this Provision are in force:
1. For each unit of this benefit shown on page 3 [3 units]
a. $1,000 payable immediately in one sum.
b. If the wife has not attained age 50, a monthly income of $50 beginning at the date of the Insured’s wife’s death and payable at monthly intervals until the end of the month in which the Insured’s wife would have attained age 50.
2. If a Children’s Benefit is attached to the policy, it will be continued in force as fully paid-up term insurance to the child’s 25th birthday.
The Benefit under this Provision is payable in addition to any amount otherwise payable under the policy.
This Provision is made a part of the policy to which it is attached, in consideration of the application, a copy of which is attached to and made a part of the policy, and payment of the premiums specified on page 3 applicable to this Benefit and the Life Insurance Benefit.

The benefits are limited by the following paragraph:

Benefit After Death of Insured
In the event of the Insured’s death while the policy and this Benefit are in force in place of all other benefits hereunder, the Company will issue to the Insured’s wife a paid-up term life insurance policy in the amount of $1,000 Sum Insured for each unit of this Benefit shown on page 3, which will expire on the policy anniversary following the Insured’s wife’s 65th birthday.

Upon the wife’s death, the proceeds are to be paid according to the following paragraph:

Payment of Proceeds
Any proceeds payable under this Provision because of the death of the Insured’s wife will be paid to the Insured, if living, otherwise to the estate of the Insured’s wife, unless otherwise provided. The payee may elect to receive the commuted value of such monthly income in one sum. The commuted value shall be computed by discounting the monthly income payable at 3% interest, compounded annually.

The administrators argue that these paragraphs are ambiguous and, thus, under well-established principles [see, e.g., Liverpool & London & Globe Ins. Co. v. Kearney, 180 U.S. 132, 136, 21 S.Ct. 326, 45 L.Ed. 460 (1901); Pacific Mut. Life Ins. Co. v. Young, 40 Ariz. 1, 10, 9 P.2d 188, 191 (1932)] we are required to construe the language against the Company and in favor of insurance coverage. As ambiguities, they point to the fact that the caption does not condition the payment of. the monthly benefit upon the survival of the husband, that the benefit is payable in addition to any amounts otherwise payable under the policy, that the payee may be the wife’s estate if the insured is not living (indicating that the Company contemplated that the husband might predecease the wife) and that the policy does not provide that the death of the insured prior to the death of the wife is one of the conditions which terminates the benefit.

Although we concede that the policy should have been drafted with more clarity and that the Wife’s Benefit Rider may be difficult to understand, when it is viewed as part of a package providing insurance protection for the whole family, the paragraphs are not ambiguous. Under the Husband’s Policy, the wage earner’s life was insured to protect the other members of the family in the event of his death. Under that policy the Company agreed to pay to the wife, upon proof of the husband’s death, a lump sum plus a monthly income until the end of the period when the children would normally be expected to have become independent. Thus, the wife was protected with a lump sum to cover burial and other immediate expenses and with a monthly income during the years she would have been responsible for the young children.

Under the Children’s Benefit Rider the Company agreed to pay the husband, upon proof of a child’s death, a lump sum, thus protecting the family from death and burial expenses. Under the Wife’s Benefit Rider the Company agreed to pay the husband, upon proof of the wife’s death, a lump sum, protecting against burial and death expenses, plus a monthly income until the time when the wife would have reached age 50. Thus, the husband was assured that in the event of his wife’s death he would have been able to continue to work and also would have been able to hire a housekeeper and to provide for child care until the children would have become independent. The monthly income coverage, however, was conditioned upon the husband surviving the wife-. This is logical since if the husband had predeceased the wife, the children would have received the benefit from the monthly income under the husband’s policy. An additional monthly income under the Wife’s Benefit Rider would have been double protection. Thus, if the husband had predeceased the wife, the Company under the alternative coverage of the Wife’s Benefit Rider would have issued her a paid-up term policy to pay a lump sum at her death, which could have been used for death and burial expenses. The paid-up term life would have expired when she reached age 65.

The language of the Wife’s Benefit Rider, when viewed in this light, is not ambiguous. Although the caption does not contain any conditions, the first sentence of the first paragraph provides that the Company shall pay the benefits “subject to the terms and conditions of this Provision [the Wife’s Benefit Rider] and the policy . . . .” One of the conditions is that if the husband predeceases the wife, the Company will issue “in place of all other benefits hereunder” a paid-up term life insurance policy for a lump sum. Consistent with this condition, the paragraph providing for the payment of the proceeds provides that if the husband has predeceased the wife, the proceeds, which would then be only the lump sum, shall be paid to the estate of the wife. It is only natural that the Company would contemplate the prior death of the husband and provide both for a reduction in coverage and for a contingent beneficiary; but that does •not make ambiguous the paragraph which reduces the coverage by terminating the monthly income benefit. The clause making the benefit under the Wife’s Benefit Rider payable in addition to the other benefits under the policy can reasonably refer only to the benefits under the Husband’s Policy and the Children’s Benefit Rider. Finally, the policy does not provide that the death of the husband prior to the wife’s death terminates the benefit because his prior death only alters the scope of the wife’s coverage; it does not completely terminate the benefit. We hold that, when viewed as part of a family insurance package, the Wife’s Benefit Rider is not ambiguous.

The ambiguity in this case arises only because of the lack of evidence concerning the order of death. The policy does not provide for this contingency; but an Arizona statute does and the parties must be presumed to have contracted with knowledge of the existing statutes. Broenen v. Beaunit Corp., 440 F.2d 1244, 1249 (7th Cir. 1970); In re Clise’s Estates, 64 Wash.2d 320, 322, 391 P.2d 547, 549 (1964). Arizona Revised Statute § 20-1127 reads:

Where the individual insured or the annuitant and the beneficiary designated in a life insurance policy or policy insuring against accidental death or in an annuity contract have died and there is not sufficient evidence that they have died otherwise than simultaneously, the proceeds of the policy or contract shall be distributed as if the insured or annuitant had survived the beneficiary, unless otherwise specifically provided in the policy or contract.

The Company argues that under this statute Beverly, as the person insured under the Wife’s Benefit Rider, must be presumed to have survived her husband, the beneficiary. Thus, the Company argues, at the presumed moment of the wife’s death only the reduced benefit was in effect and the Company is liable only for $3,000.

The administrators answer by arguing first that the terms of the statute must be given the same meaning as the terms of the policy. Accordingly, they argue, that since Moris is defined as the “insured” in the Husband’s Policy and since he is referred to as the “insured” in the Wife’s Benefit Rider, he must also be deemed to be the “insured” under the statute. Thus, the administrators conclude that the husband should be presumed to have died last, entitling the estate to the commuted value of the monthly income.

This argument is spurious. The terms of the statute must be given their usual meaning, unless they are specifically defined otherwise within the statute. Malat v. Riddell, 383 U.S. 569, 571, 86 S.Ct. 1030, 16 L.Ed.2d 102 (1966). The term “insured” as used in the statute can only refer to the person whose death triggers the Company’s liability for the benefits provided by the policy. See In re Clise’s Estates, 64 Wash.2d at 323, 391 P.2d at 549. Under the Wife’s Benefit Rider this person was Beverly.

The administrators next argue that section 20-1127 does not apply in this case, thus creating an ambiguity that must be resolved in favor of coverage. They reason that the purpose of the simultaneous death act is only to control the distribution of insurance proceeds over the Company’s liability has been established, not to aid in determining whether the company is liable in the first instance. They have not cited any authority for this position.

Although there is some merit to their argument, we do not believe we can adopt it, primarily because we have already elected to apply a similar simultaneous death act in determining whether a decedent owned, at the time of her death, a property interest in a policy on her husband’s life. In Estate of Chown v. Commissioner of Internal Revenue, 428 F.2d 1395 (9th Cir. 1970), we held that a life insurance policy owned by a wife on the life of her husband must be valued for estate tax purposes according to a theory that uses the life expectancy of a man of the husband’s age (interpolated terminal reserve value) without consideration of the fact that there was no evidence that the husband died otherwise than simultaneously with the wife. In order to reach the question of valuation we had to conclude that the wife at the time of her death held sufficient incidents of ownership to require that the policy be included in her gross estate. If the husband had predeceased her or had died simultaneously with her, she would not have held any of the required incidents of ownership since her right to change the beneficiary, to surrender the policy, to borrow on it or to assign it would have been extinguished at the death of the insured. Estate of Wien v. Commissioner of Internal Revenue, 441 F.2d 32, 35 (5th Cir. 1971). In assuming that Mrs. Chown held the required incidents of ownership, we relied upon the Oregon Uniform Simultaneous Death Act under which, for purposes of distributing the proceeds, the beneficiary is presumed to have predeceased the insured. Thus, we held that the insurance policy had to be valued as if the wife had preceded the husband in death. 428 F.2d at 1397.

Three other circuits, also relying upon simultaneous death acts, have reached this same conclusion. Estate of Wien v. Commissioner of Internal Revenue, 441 F.2d 32 (5th Cir. 1971); Estate of Meltzer v. Commissioner of Internal Revenue, 439 F.2d 798 (4th Cir. 1971); Old Kent Bank & Trust Co. v. United States, 430 F.2d 392 (6th Cir. 1970). In Estate of Wien v. Commissioner of Internal Revenue, the Fifth Circuit, after reviewing the purpose of the simultaneous death act, stated:

Consequently, Ellen, as the owner-beneficiary of the policies on Sidney’s life, is treated for property purposes as if Sidney still survived at the instant of her death. Since it is Sidney’s death alone which could have caused the extinguishment of Ellen’s ownership rights, it is clear that under state law Ellen’s ownership rights were intact and in her estate at the moment of her death.

441 F.2d at 36. The court explained that in determining questions of ownership of property for purposes of taxation it must apply state law and stated:

Applying these principles to the instant case we conclude that Ellen, as the owner-beneficiary of policies insuring Sidney’s life, had under Georgia law at the time of her death an ownership interest which was a valuable property right, and that the value of this interest must be included in her estate under § 2033.

441 F.2d at 37. In Wien, the Fifth Circuit did expressly what we did implicitly in Chown; it relied upon the simultaneous death act to conclude that the decedent had an ownership interest in the insurance policy at the time of death.

We recognize that under the simultaneous death act the insured is not presumed to have survived the beneficiary for all purposes, but only that the proceeds of the policy shall be distributed as if the insured had survived the beneficiary. Indeed, in Wien the Fifth Circuit stated that “the application of that act is not tantamount to a finding that the parties in fact died simultaneously. Rather, the application of the act . simply makes the actual order of death irrelevant and mandates that the property be disposed of as if the insured survived the beneficiary.” 441 F.2d at 39. But if we were to construe the act to be applicable only once the insurance company’s liability is established, we would have to ignore the fact that we and the other circuits have relied upon the act for determinations other than the distribution of proceeds. To do so, we would need to carve out an artificial exception to a well-recognized statutory interpretation. This we are not justified in doing. In addition, by so limiting the application of the act we would limit its usefulness in resolving problems of construction when the parties fail to anticipate such contingencies in advance.

We conclude, therefore, that the Wife’s Benefit Rider must be construed as if Moris had predeceased Beverly, thus reducing her coverage to include only a paid-up term life policy for a lump sum of $3,000.

Reversed.

ALFRED T. GOODWIN, Circuit Judge

(specially concurring):

I agree with the reasoning, and concur in the opinion of the court. But I devoutly hope that this court’s ability, after much study, to make some sense out of the mindless draftsmanship we found here will not be interpreted by the insurance industry as “approval” of the contract language which caused all this mischief.

      . Ariz.Rev.Stat. § 14-2808, dealing with the succession of estates, is similar to section 20-1127:
      Where the insured and the beneficiary in a policy of life or accident insurance have died and there is no sufficient evidence that they have died otherwise than simultaneously the proceeds of the policy shall be distributed as if the'insured had survived the beneficiary, but if the policy is community property of the insured and his spouse and there is no alternative beneficiary, or no alternative beneficiary except the estate or personal representatives of the insured, the proceeds shall be distributed as community property under [section 14-2807].
      Since the issue in this case deals primarily with a question of insurance rather than succession, we have applied section 20-1127.

      . Int.Rev.Code of 1954, § 2042.

      . The statute involved in Chown provided:
      Where the insured and the beneficiary in a policy of life or accident insurance have died and there is no sufficient evidence that they have died otherwise than simultaneously the proceeds of the policy shall be distributed as if the insured had survived the beneficiary.
      428 F.2d at 1396.


author: GIBSON, Circuit Judge. ROSS, Circuit Judge

text:
    Doris HERNDON, Appellant, v. UNITED STATES of America, Appellee.
    No. 73-1609.
    United States Court of Appeals, Eighth Circuit.
    Submitted Dec. 13, 1973.
    Decided Jan. 24, 1974.
    Steele Hays, Little Rock, Ark., for appellant.
    Robert G. Burke, Atty., Tax Div., Dept, of Justice, Washington, D. C., for appellee.

      Before GIBSON and ROSS, Circuit Judges, and SMITH, Senior District Judge.

       The Honorable Talbot Smith, Senior District Judge, Eastern District of Michigan, sitting by designation.

   GIBSON, Circuit Judge.

Plaintiff, Mrs. Doris Herndon, appeals from the District Court’s denial of an injunction to enjoin the United States from selling real property owned by plaintiff’s husband and levied upon by the United States for unpaid wagering taxes owed by her husband. We affirm the denial of the injunction.

Plaintiff asserts that the federal government cannot sell the real property titled solely in her husband’s name due to her alleged property interest under the Arkansas homestead exemption law. We disagree.

Plaintiff has been married to Edward J. Herndon since 1967 and has resided with him at 1300 East Maryland, North Little Rock, Arkansas, since 1969. Title to this real property is held in the husband’s name alone, and the Government does not contest the fact that the real property is the couple’s homestead under Arkansas law. The United States has a lien against the property of the plaintiff’s husband in the amount of $28,519.-74 for unpaid wagering taxes. On July 27, 1973, the United States issued a notice of seizure on the above-described real estate pursuant to its levy and proceeded by non judicial steps to foreclose its lien by selling the real property at a public auction on August 14, 1973. On August 8, 1973, plaintiff filed this action asking the District Court to enjoin the sale, since the Arkansas homestead exemption law purportedly grants the wife a property interest in the homestead, even though owned by her husband alone, which property interest as-sertedly precludes a sale to satisfy a federal tax lien. In an order dated August 13, 1973, the District Court denied plaintiff’s request for an injunction, but stayed the sale pending appeal. Plaintiff promptly appealed.

The only issue on appeal is whether the plaintiff can assert whatever homestead rights she has under Arkansas law and the facts of this case to preclude the United States from selling the real property owned solely by her husband.

Federal courts must first determine what property or rights to property an individual has under state law in applying any federal revenue act. The reason for examining state law is to ascertain what property or property rights the taxpayer holds to which a tax lien can attach. Aquilino v. United States, 363 U.S. 509, 512-514, 80 S.Ct. 1277, 4 L.Ed.2d 1365 (1960). For example, the Government concedes that if the plaintiff and her husband had held the real property as tenants by the entirety under Arkansas law, no federal tax lien could attach to that property, unless and until the taxpayer (husband) becomes the sole survivor of the entirety estate. See, e. g., United States v. Hutcherson, 188 F.2d 326 (8th Cir. 1951).

Under Arkansas law, it would have been possible for the plaintiff and her husband to have held the real estate in tenancy by the entirety. See United States v. 339.77 Acres of Land, 240 F.Supp. 545, 548 (W.D.Ark.1965) (and cases cited therein). Plaintiff makes no contention that the real estate was held in tenancy by the entirety.

Homestead exemption laws, however, have presented difficult problems of analysis. Some courts have viewed them as creating a property interest; others have not. One commentary states:

Nevertheless, there is a conflict in the cases as to whether a tax lien is valid upon a homestead interest. It has been held that the states cannot carve out homestead exemptions from the effect of the Federal tax liens. The resolution of this issue may depend upon whether there is involved a single interest of the taxpayer who is subject to tax liability, or whether both spouses have an interest while only one is under a tax liability.

9 Mertens, Law of Federal Income Taxation § 54.52 at 205 (1971) (footnotes omitted) (emphasis added).

The Internal Revenue Code has a specific section covering property exempt from a federal levy. It reads:

(c) No Other Property Exempt. — Notwithstanding any other law of the United States, no property or rights to property shall be exempt from levy other than the property specifically made exempt by subsection (a).

26 U.S.C. § 6334(e).

The Commissioner has promulgated a regulation briefly explaining 26 U.S.C. § 6334(c) which states:

(c) Other Property. No other property or rights to property are exempt from levy except the property specifically exempted by Section 6334(a). No provision of a State law may exempt property or rights to property from levy for the collection of any Federal tax. Thus, property exempt from execution under State personal or homestead exemption laws is, nevertheless, subject to levy by the United States for collection of its taxes.

Treas.Reg. § 301.6334-1 (c) (1954).

The Code and particularly the regulation, therefore, take the view that only the federal exemption statute exempts property from a federal levy. A necessary corollary to this view is that even if state laws do create a property, interest pursuant to a homestead exemption law, the United States can still levy upon that property. The cases, however, take differing views.

The Code and ancillary regulation is supported by all of the case law except that of the Tenth Circuit. In Broday v. United States, 455 F.2d 1097 (5th Cir. 1972), the Government levied upon a community property checking account for the satisfaction of an antenuptial federal tax debt of the wife. The taxpayer argued that the community property statute of Texas exempted community property from antenuptial debts and that this exemption statute “gives a property right to the husband which transcends the federal tax law.” Broday v. United States, supra at 1100. The Fifth Circuit held:

We think that the taxpayer must fail in his argument that [the community property exemption statute of Texas] should be characterized in a different manner than an exemption statute. * * * It appears clear * * * that the right of the United States to enforce its liens does not depend upon state laws which regulate the rights of creditors generally and does not depend upon whether the “exemption” label is attached to the particular statute in question.

Broday v. United States, supra at 1101.

The Fifth Circuit had earlier adopted the same position in Shambaugh v. Sco-field, 132 F.2d 345 (5th Cir. 1942). In rejecting the contention that a homestead is immune from forced sale to satisfy a federal income tax lien, the Fifth Circuit held:

The Federal statute authorizes the seizure and sale of real estate to satisfy unpaid income taxes when sufficient personalty is not found. * * * Homesteads are not exempted. * * * These statutes, enacted to effectuate a constitutional power, are the supreme law of the land. If they are in conflict with State law, constitutional or statutory, the latter must yield.

Shambaugh v. Scofield, supra at 346 (citations omitted).

The Ninth Circuit concurs with the Fifth Circuit. United States v. Heffron, 158 F.2d 657, 659 (9th Cir. 1947), held that a homestead exemption prescribed by state law is -ineffective against a federal tax lien. That view was reiterated by the Ninth Circuit in the recent case of United States v. Overman, 424 F.2d 1142 (9th Cir. 1970). The taxpayer in Overman agreed that state exemption laws are ineffective a’gainst a federal tax lien, but argued the community property statute of the State of Washington, which generally exempts the community property from liability for a husband’s premarital debts, is more than an exemption statute and is a “rule * * * of property law [creating] a limitation on the extent and quality of his ownership rights under state law.” United States v. Overman, supra at 1145. The court held that even assuming the taxpayer’s argument concerning the community property rule was correct, all that the federal lien statute “requires is that the interest be ‘property’ or ‘rights to property.’ ” United States v. Overman, supra at 1145. It further stated that “[i]t is of no statutory moment how extensive may be those rights under state law, or what restrictions exist on the enjoyment of those rights.” United States v. Overman, supra at 1145.

The Eighth Circuit is in agreement with the Fifth and Ninth Circuits. Citing Shambaugh v. Scofield and United States v. Heffron, this court held “that as against federal tax liens, homestead exemptions prescribed by state laws, are of no effect.” United States v. Heasley, 283 F.2d 422, 427 (8th Cir. 1960) (footnote omitted).

Plaintiff places strong reliance on United States v. Hershberger, 475 F.2d 677 (10th Cir. 1973). The Government agrees that the dicta on the superiority of a homestead property interest under Kansas law could provide support for plaintiff’s position, but contends Hersh-berger was wrongly decided and urges us to apply Heasley instead of Hershber-ger.

We think that Heasley and the Fifth and Ninth Circuits’ views correctly interpret the effect of a state homestead exemption as against a federal tax lien. According to Hershberger, if a state’s homestead laws confer a present property interest, instead of creating merely a privilege or exemption, then the United States cannot levy upon that present property interest. The Tenth Circuit is, so far, alone in this view. We think the sounder view in this area of conflicting approaches is that state exemption laws- — even if the state, through ease interpretation, statute, or constitutional provisions, characterizes its homestead exemption statute as creating a present property interest — do not preclude the United States from levying upon and selling the taxpayer’s interest in the property. The buyer at the sale, however, takes the foreclosed interest in the property subject to any rights under state law on homesteads that may exist.

We reach this conclusion for several reasons. First, Treas.Reg. § 301.6334-1(c) states that state exemption statutes have no validity in relation to the federal levying statute. Second, Scofield properly recognizes that the federal levying statute should be considered the “supreme law of the land” in relation to state exemption statutes. To hold otherwise would allow states to create statutorily or otherwise present property interests in homesteads so as to allow a homestead to be exempt from a federal tax levy. The collection of federal taxes in this instance should be prior to any rights of the state to exempt its citizens from federal taxing power. Third, the United States has provided for certain categories of exempt properties under 26 U.S.C. § 6334(a), which exemptions are exclusive and do not include a homestead exemption. Congress, but not this court, may, if it wishes, determine that citizens of all states should possess a homestead exemption free from federal tax levy.

Of course, according to our analysis, we have not determined whether the Arkansas homestead exemption law creates a property interest in the plaintiff. The resolution of that issue is not necessary for this case. The Government here is only claiming the right to sell Mr. Hern-don’s “right, title, and interest in the instant property, leaving any purported-interest held by Mrs. Herndon unimpaired.” We agree that the Government is selling Mr. Herndon’s real estate subject to Mrs. Herndon’s rights. It may well be under Arkansas law that the buyer at the auction sale of this real estate takes subject to Mrs. Herndon’s homestead rights. On the other hand, the buyer at the auction may take free from any homestead right of the wife or minor children, if the federal taxing and exemption statutes, which do not exempt homesteads, are seen as applicable to rights of competing parties after a federal tax sale. That issue is not before us for decision.

We think it advisable as a matter of fairness under the circumstances of this case that the Government in selling this real estate should advise all prospective purchasers that the real property is being sold subject to any homestead interest that Mrs. Herndon may have under Arkansas law. The possible purchasers should also be advised of the litigation in this case.

The District Court’s denial of the injunction is affirmed.

ROSS, Circuit Judge

(concurring).

I concur in Judge Gibson’s opinion and agree with his explication of the law on the narrow issue before us. I do so reluctantly, because I think the result reached is not a satisfactory one for either the United States, the taxpayer, or the appellant. The United States may now pi’oeeed to sell the subject real estate but must advise any and all prospective purchasers of the claim of the appellant under the homestead laws of Arkansas. At best the purchaser of the property is buying a lawsuit with the appellant and the sales price will likely be diminished by the uncertainty of the title. This diminished sales price is bad for both the United States, and for the taxpayer.

I fail to understand why the United States in this situation insisted upon a nonjudieial sale with all its attendant problems when it could have followed the procedure set forth in 26 U.S.C. § 7402 and § 7403 and foreclosed the lien in a federal court action thereby determining the interest of all parties in and to the property and delivering clear title to the purchaser. One is left with the suspicion that the government officials involved were more interested in an immediate sale than in the amount realized therefrom and that they were not particularly concerned with the rights of third parties.

      . Hon. G. Thomas Eisele, United States District Judge, Eastern District of Arkansas.

      . Ark. Const, art. 9, § 3 reads:

        Homestead exemption from legal process —Exceptions.—The homestead of any resident of this State who is married or the head of a family shall not be subject to the lien of any judgment, or decree of any court, or to sale under execution or other process thereon, except such as may be rendered for the purchase money or for specific liens, laborers’ or mechanics’ liens for improving the same, or for taxes, or against executors, administrators, guardians, receivers, attorneys for moneys collected by them and other trustees of an express trust for moneys due from them in their fiduciary capacity.

      . Edward" J. Herndon was contesting this alleged liability at the time appellant’s brief in this case was filed.

      . Appellant also argues that the sale would violate procedural due process under the Fifth Amendment, since she would not be a party to the nonjudicial proceeding, the auction sale. The Government correctly argues that a sale of the described real estate would only convey whatever “right, title, and interest” that Mr. Herndon might have under state law. Mrs. Herndon’s rights and interest in the real property, if any, would not be conveyed, and therefore she would neither be a proper party nor would her due process rights be violated.

      . 26 U.S.C. § 6334(a) reads in part:
      Enumeration. — There shall be exempt from levy — •
      (1) Wearing apparel and school books. * * * . )

      (2) Fuel, provisions, furniture, and personal effects. * * * ;
      (3) Books and tools of a trade, business, or profession. * * *;

      (4) Unemployment benefits. * * *.
      (5) Undelivered mail. * * *.
      (6) Certain annuity and pension payments. Ht Hi Hi

      (7) Workmen’s compensation. * * *.
      (8) Salary, wages, or other incomp. * *

      . The Notice of Public Auction Sale explicitly states:
      TITLE OFFERED: Only the right, title, and interest of Edward J. Herndon in and to the property will be offered for sale.

      . See, e. g., Maloney v. McCullough, 215 Ark. 570, 221 S.W.2d 770 (1949) ; Scoggin v. Hudgins, 78 Ark. 531, 94 S.W.2d 684 (1906); M’Loy v. Arnett, 47 Ark. 445, 2 S.W. 71 (1886); Johnson v. Turner, 29 Ark. 280 (1874). We, however, express no view on what rights Mrs. Herndon may have against the purchaser of her homestead.