author: MOORE, Circuit Judge:

text:
    Eleanor QUICK, Appellee, v. UNITED STATES of America, Appellant.
    No. 73-1827.
    United States Court of Appeals, Tenth Circuit.
    Argued July 8, 1974.
    Decided Sept. 16, 1974.

      Jonathan S. Cohen, Atty. Tax Div., U. S. Dept, of Justice, Washington, D. C. (Scott P. Crampton, Asst. Atty. Gen., Meyer Rothwaeks, Richard W. Perkins and Carolyn R. Just, Attys., Washington, D. C., of courtsel), for appellant.
    Edward J. Krisor, Jr., Denver, Colo. (Shoemaker & Wham, Denver, Colo., and W. J. Shoemaker, Denver, Colo., of counsel), for appellee.
    Before LEWIS, Chief Judge, and MOORE  and DOYLE, Circuit Judges.

      . Honorable Leonard P. Moore, Senior Judge, United States Court of Appeals, Second Circuit, New York, New York, sitting by designation.

   MOORE, Circuit Judge:

This suit for a tax refund was submitted to the trial court for decision upon a joint stipulation of facts and un-controverted facts in a pre-trial order. Pertinent to decision are the following:

Prior to his death, plaintiff’s husband, Edmund T. Quick (the decedent) had contracted to sell 640 acres of land for $1,100,000 on an installment basis with the proviso that the seller would convey to the purchaser one acre for each $2,000 paid annually. The balance remaining to be paid on the date of decedent’s death was $1,060,000, an amount which was included in his estate.

During each of the years in question, 1968, 1969 and 1970, plaintiff received as income in respect of a decedent, the sum of $160,000, pursuant to the sales contract which, because of a cost basis of $1,910, she reported as a net long-term capital gain of $158,090 on her annual tax returns. Plaintiff then, pursuant to Section 1202 of the Internal Revenue Code of 1954, took advantage of the 50% capital gains deduction provided for therein, thus reducing capital gains to $79,045. In addition, she deducted the estate tax deduction allowed by Section 691(c) of the Code in the amount of $20,506.84 (as to which amount there is no dispute) from the $79,045, and reported the balance of $58,538.16 as a net taxable gain for each of the tax years in question.

Upon audit the government accepting the same figures rearranged them slightly by deducting the estate tax allowance of $20,506.84 from the entire net capital gain of $158,090 before applying the 50% deduction thereto. The mathematics of this approach resulted in a net gain less the estate tax deduction of $137,583.16 ($158,090 less $20,506.84). Applying the 50% deduction thereto produced a net taxable gain of $68,791.58 instead of 58,538.16, thus accounting for the deficiencies claimed by the government as follows:

Year Tax Deficiency Interest
1968 $5,726.94 $ 868.43
1969 $3,138.84 $ 283.01
1970 $ 654.59 $ 19.69
$9,520.37 $1,171.13

Plaintiff paid the asserted deficiencies (but not the interest), her claims for refund were disallowed and this suit followed. The only question before us is: which method is proper, namely, deduction of the estate tax allowance before applying the 50% capital gains deduction (the government’s theory) or after the deduction (plaintiff’s theory).

The District Court in approving plaintiff’s method of calculation relied chiefly upon a rather recent decision in the Court of Claims, Goodwin v. United States, 458 F.2d 108, 198 Ct.Cl. 88 (1972) wherein an almost identical tax situation was presented. There, as here, the taxpayers received installment payments consisting of long-term capital gains which was income in respect of a decedent. There, again as here, the taxpayers deducted their estate tax allow-anee after the 50% (section 1202) capital gains deduction had been made.

In the District Court, the parties stipulated the issue as follows:

Whether the deduction of estate tax provided by Section 691(c) of the Internal Revenue Code of 1954 should be taken as an offset against the long-term capital gain representing income in respect of a decedent before deducting fifty percent (50%) of the long-term capital gain (as provided by Section 1202 of the Internal Revenue Code of 1954) or whether the Section 691(c) estate tax deduction should be taken against the sum of the net of long-term capital gain (after the fifty percent (50%) Section 1202 deduction) and ordinary income. Pre-Trial Order.

Decisional authority as a guide to the resolution of the problem appears to be limited to three cases, two of which preceded Goodwin, supra, namely, Read v. United States, 320 F.2d 550 (5th Cir. 1963) and Meissner v. United States, 364 F.2d 409, 176 Ct.Cl. 684 (1966).

In Read, there was substantial capital gains income in contrast to little ordinary income. The decision that the taxpayer was not restricted to taking the deduction against ordinary income was a recognition of the principle that the taxpayer should be allowed to have the full benefit of the deduction. Likewise, in Meissner, also factually similar to Read, the court permitted the taxpayer to make full use of the deduction, stating explicitly that “a taxpayer should be able to' use the deduction in the way most advantageous to him.” Meissner, at 413.

Goodwin, also before the Court of Claims, finally presented a state of facts similar to the Quick situation. The taxpayers (except one) there, as here, took their 50% capital gains deduction first and then deducted the estate tax allowance. The Court of Claims supported the taxpayers’ position.

As the District Court pointed out, although the statute reads that the estate tax deduction “shall be allowed,” it does not specifically state “from what.” However, the very omission of a “from what” specification is a sufficient basis for the courts to fill in a purpose. This the courts did in both Meissner and Goodwin by holding that the method most advantageous to the taxpayer was proper. Here the estate tax deduction was roughly $20,000. The government had already received its tax share from the decedent’s tax obligations. The law (section 1202) cut the capital gains in half before taxes. It did not cut the deduction in half. Yet if the deduction had to be taken before the cut, the net effect would have been to reduce the allowance from $20,000 to $10,000. Therefore, if any meaning is to be given to the “most advantageous” principle, it should be applied here. The income against which it is being applied is the statutory income, i. e., 50%.

Judgment affirmed.


source: Caselaw Access Project

author: PER CURIAM.

license: Public Domain

text:
    INDIAN TRAIL TRADING POST, INC., Petitioner, v. COMMISSIONER OF INTERNAL REVENUE, Respondent.
    No. 74-1015.
    United States Court of Appeals, Sixth Circuit.
    Argued June 5, 1974.
    Decided Sept. 20, 1974.

      Robert L. Aekerson, Ackerson, Acker-son & Remmers, Louisville, Ky., for petitioner.
    Libero Marinelli, Jr., Dept, of Justice, Washington, D. C., for respondent; Scott P. Crampton, Asst. Atty. Gen., Meyer Rothwacks and Gary R. Allen, Attys., Tax Div., Dept, of Justice, Washington, D. C., on brief.
    Before WEICK, PECK and MILLER, Circuit Judges.
   PER CURIAM.

The Internal Revenue Service assessed an income tax deficiency of $3,298.84 against the petitioner, Indian Trail Trading Post, Inc., for the taxable year ending October 31, 1967. The petitioner sought from the Tax Court a redetermi-nation of the deficiency assessment. The Tax Court upheld the I.R.S.’s assessment and from that decision this appeal is taken.

A detailed account of the factual situation from which the case arises is set forth in the opinion of the Tax Court, Indian Trail Trading Post, Inc. v. Commissioner of Internal Revenue, 60 T.C. 497 (1973). Briefly stated, the petitioner owned 30 acres of real estate in Louisville, Kentucky, part of which contained a shopping center. In late 1964 or early 1965, the petitioner began plans to construct a Woolco (F. W. Woolworth Company) store on the undeveloped portion of the 30-acre tract. The petitioner obtained interim construction financing in the amount of $630,000.00 from the Citizens Fidelity Bank and Trust Company and a commitment from Commonwealth Insurance Company for up to $1,100,000.00 of permanent financing. Construction began in early 1965 and later in the year with the work largely completed the petitioner, using the proceeds of the Citizens’ loan and its own corporate funds, paid $843,000.00 to the construction company. In 1966 the petitioner borrowed the full $1,100,000.00 committed by Commonwealth. The petitioner used some of the proceeds of the Commonwealth loan to pay Citizens, $630,000.00 principal and $12,490.00 interest, in full payment of that obligation. The balance of the proceeds from the Commonwealth loan was placed in petitioner’s general corporate account. In connection with the expansion of the shopping center, the petitioner incurred some other expenses. In 1966, the petitioner purchased some unimproved real estate adjoining the shopping center for $100,632.00. In the early part of 1965, the petitioner expended $113,000.00 to enclose a drainage ditch on the land and $24,000.00 worth of structural steel to be used in the construction of the shopping center. Another expense was incurred in the settlement of a law suit with W. T. Grant Company, a tenant in the existing shopping center, which claimed that the construction of the Woolco Store was in violation of its lease agreement with petitioner. The settlement cost the petitioner $175,000.-00 plus $50,000.00 in attorneys fees.

In 1966, the petitioner, using money the Tax Court found to be traceable from its general corporate funds, purchased $150,000.00 worth of tax-exempt Kentucky Toll Road Bonds. It is this transaction that the Internal Revenue Service determined made the petitioner ineligible for an interest deduction of $8,250.00 paid on a part of the Commonwealth loan.

Section 265(2) of the Internal Revenue Code of 1954 disallows a deduction for interest paid on an indebtedness if the indebtedness was incurred or continued in order to purchase or carry tax-exempt obligations. The Tax Court found that the debt incurred by the petitioner for the expansion of the shopping center was in excess of the amount needed for that business purpose and that some of the excess funds were used to purchase tax-exempt bonds. The petitioner attempts to offer other explanations for obtaining a loan in the amount borrowed and for maintaining that amount of indebtedness. Despite these explanations, the Tax Court found that with cash on hand in excess of its current business needs, and with the indebtedness outstanding, the petitioner chose to purchase tax-exempt bonds. We are cognizant that the existence of indebtedness at the time when one purchases tax-exempt securities does not automatically cause one to be engaged in activity proscribed by Section 265(2). Wisconsin Cheeseman, Inc. v. United States, 388 F.2d 420 (7th Cir. 1968). The section applies only where the indebtedness is incurred or continued for the purpose of acquiring or carrying tax-exempt securities. This purpose may be inferred where the proceeds of an indebtedness are used to purchase the bonds or commingled with a fund from which the purchase money is taken. There may be circumstances where a taxpayer may be able to prove the lack of such purpose despite this tracing of funds to the purchase of the bonds. Yet we are satisfied that the Tax Court did not err in determining that the petitioner failed to make such a showing in the present case. The Tax Court found not only that proceeds of the Commonwealth loan could be traced to payment of the tax-exempt securities but also that a sufficiently direct relationship linked the indebtedness with such tax-exempt securities even apart from such tracing. The Court found:

The lapse of some eight months between the borrowing from Commonwealth and the purchase of the tax-exempt bonds militates to a degree against the conclusion that petitioner incurred the indebtedness to purchase the bonds. Cf. Constance M. Bishop, supra, 41 T.C. [154] at 159. On the other hand, the facts indicate that the borrowing generated cash in excess of petitioner’s current business needs and in an amount greater than the purchase price of the bonds, and there is nothing in the record herein to show that this situation did not obtain throughout the period between the borrowing and the purchase. Under these circumstances, it might be said that there is a sufficient degree of tracing present to justify the inference that, whatever petitioner’s original purpose may have been, it became so diffused by the act of allowing the funds to lie fallow that the actual use of the funds for the acquisition of the bonds provided the necessary purposive connection with the earlier borrowing.

From the entire record we are persuaded that the findings of the Tax Court are not clearly erroneous.

Affirmed.


text:
    Percy McDONALD, Plaintiff-Appellant, v. BOARD OF TRUSTEES OF the UNIVERSITY OF ILLINOIS et al., Defendants-Appellees. Robert MARSHALL, Plaintiff-Appellant, v. BOARD OF TRUSTEES OF the UNIVERSITY OF ILLINOIS et al., Defendants-Appellees. Kevin SULLIVAN, Plaintiff-Appellant, v. BOARD OF TRUSTEES OF the UNIVERSITY OF ILLINOIS et al., Defendants-Appellees.
    Nos. 74-1219 to 74-1221.
    United States Court of Appeals, Seventh Circuit.
    Argued May 24, 1974.
    Decided July 9, 1974.
    Martin J. Dubowsky, Chicago, 111., for plaintiff-appellant.
    John C. Tucker, Chicago, 111., for defendants-appellees.
    Before PELL and STEVENS, Circuit Judges, and LARAMORE, Senior Judge.

       Senior Judge Don N. Laramore of the United States Court of Claims is sitting by designation.

   PER CURIAM.

This case comes before the court on appeal from an adverse judgment by Judge P. H. Marshall, entered in the U. S. District Court for the Northern District of Illinois, on March 14, 1974, denying appellants’ motions for preliminary injunctions, granting defendants’ motion for summary judgment and dismissing plaintiffs’ actions. Plaintiffs’ cases were consolidated because they present similar facts and common questions of law concerning the amount of evidence a tax-supported institution of higher education must have in order to expel students for allegedly cheating on final examinations.

After considering the record, the briefs submitted to this court, and the oral arguments of counsel, we affirm and adopt the opinion of the District Court, 375 F.Supp. 95 (N.D.Ill.1974), as the opinion of this court.

Accordingly, the judgment of the District Court in this appeal is

Affirmed.


author: TALBOT SMITH, Senior District Judge.

text:
    UNITED STATES of America, Appellee, v. Troy L. WILEY, Appellant.
    No. 74-1266.
    United States Court of Appeals, Eighth Circuit.
    Submitted Sept. 13, 1974.
    Decided Sept. 16, 1974.
    Troy L. Wiley, pro se.
    W. H. Dillahunty, U. S. Atty., and Richard M. Pence, Jr., Asst. U. S. Atty., Little Rock, Ark., for appellee.
    Before GIBSON, Chief Judge BRIGHT, Circuit Judge and TALBOT SMITH, Senior District Judge.

       TALBOT SMITH, Senior District Judge, Eastern District of Michigan, sitting by designation.

   TALBOT SMITH, Senior District Judge.

Defendant Troy L. Wiley appeals from his conviction by a jury of two counts of violation of 26 U.S.C. § 7203, willful failure to file an income tax return. He contends the trial court erred in failing to give a requested instruction on “jury nullification,” and in failing to dismiss because of alleged discriminatory and arbitrary enforcement of the statute here involved. We affirm.

The defendant’s proposed instruction states in part that “the members of the jury have an inherent right to disregard the instructions of the court and the evidence presented and return a verdict of acquittal if you find that the defendant was not blameworthy in the sense that he has not shocked the community conscience * * It would serve no useful purpose to repeat here the debates over jury nullification which have been presented from time to time. Suffice it to say that we are persuaded, as have been all the federal courts which have recently considered the issue, that the defendant is not entitled to the instruction here requested. Particularly relevant here are the pointed observations of Judge Sobeloff in United States v. Moylan, 417 F.2d 1002, 1009 (4th Cir. 1969), cert. denied, 397 U.S. 910, 90 S.Ct. 908, 25 L.Ed.2d 91 (1970):

To encourage individuals to make their own determinations as to which laws they will obey and which they will permit themselves as a matter of conscience to disobey is to invite chaos. No legal system could long survive if it gave every individual the option of disregarding with impunity any law which by his personal standard was judged morally untenable.

The defendant, an attorney, moved to dismiss the indictment alleging that the Government discriminatorily enforces 26 U.S.C. § 7203 “by intentionally and purposefully prosecuting self-employed persons, particularly professionals and specifically attorneys.’’ His proofs thereon' failed to convince the trial judge, and we find no error in the denial of the motion. It is clear that a reasonable prosecutorial discretion is inherent in our judicial system. As we stated in United States v. Alarik, 439 F.2d 1349, 1350-1351 (8th Cir. 1971):

[T]he law is clear that a prosecutor may exercise discretion in deciding who should be prosecuted as long as he does not deliberately discriminate between persons in similar circumstances based upon an unjustifiable standard such as race, religion, or other arbitrary classification. [Citations and footnote omitted.]

Affirmed.

      . Defendant was acquitted on a third count.

      . The full text reads :
      Now that you have heard the evidence and argument, it becomes my duty to give you the instructions of the court as to the law applicable in this case.
      Generally, it is your duty as jurors to consider the law as stated in the instructions of the court and to apply the rules of law so given to the facts as you find them from the evidence in the case.
      It is my duty, however, to instruct you that you the members of the jury have an inherent right to disregard the instructions of the court and the evidence presented and return a verdict of acquittal if you find that the defendant was not blameworthy in the sense that he has not shocked the community conscience, or if you further feel that he is a victim of an oppressive or discriminatory prosecution.

      . E. g., Follow-up/The Jury, Center Magazine, July, 1970, at 59; Seheflin, Jury Nullification: The Right to Say No, 45 S.Cal.L. Rev. 168 (1972); Comment, Jury Nullification and the Pro Se Defense: The Impact of Dougherty v. United States, 21 Kan.L.Rev. 47, 57-63 (1972).

      . United States v. Dougherty, 154 U.S.App.D.C. 76, 473 F.2d 1113, 1130-1137 (1972); United States v. Dellinger, 472 F.2d 340, 408 (7th Cir. 1972), cert. denied, 410 U.S. 970, 93 S.Ct. 1443, 35 L.Ed.2d 706 (1973); United States v. Simpson, 460 F.2d 515, 518-519 (9th Cir. 1972); United States v. Boardman, 419 F.2d 110, 116 (1st Cir. 1969), cert. denied, 397 U.S. 991, 90 S.Ct. 1124, 25 L.Ed.2d 398 (1970); United States v. Moylan, 417 F.2d 1002, 1005-1007 (4th Cir. 1969), cert. denied, 397 U.S. 910, 90 S.Ct. 908, 25 L.Ed. 2d 91 (1970). See United States v. Sawyers, 423 F.2d 1335, 1341 (4th Cir. 1970).


author: SAMUEL P. KING, District Judge:

text:
    John H. STEWART, Appellant, v. The TRAVELERS CORPORATION et al., Appellees.
    No. 72-2457.
    United States Court of Appeals, Ninth Circuit.
    Sept. 9, 1974.

      Hunsdon Cary Stewart (argued), Los Angeles, Cal., for appellant.
    Kenneth W. Anderson (argued), of Gibson, Dunn & Crutcher, Los Angeles, Cal., for appellees.
   OPINION

Before DUNIWAY and HUFSTEDLER, Circuit Judges, and KING, District Judge.

SAMUEL P. KING, District Judge:

Appellant, Stewart, was discharged by The Travelers Insurance Company on January 15, 1971. Stewart subsequently complained to the United States Department of Labor that his dismissal violated 15 U.S.C. § 1674(a) which forbids the discharge of an employee due to the garnishment of his wages for one indebtedness. When the Department of Labor refused to take action on his claim, Appellant filed a complaint in the district court for the Central District of California. Although private civil remedies are not expressly authorized for § 1674(a) violations, Stewart requested as relief reinstatement, backpay, punitive damages, and attorney’s fees. Judge Gray found that Congress did not intend such private actions for civil relief to be available under § 1674, and dismissed the complaint. On appeal from that ruling, this court must decide whether private civil remedies may be implied for § 1674(a) violations. We hold that such remedies must be implied; and accordingly, we reverse the district court’s dismissal of Stewart’s complaint.

Private civil remedies for violations of federal statutes have been implied, even when criminal sanctions and administrative enforcement are expressly authorized. In Burke v. Com-pania Mexicana de Aviación, supra note 4, this court held that under § 2 of the National Railway Act an individual discharged for union organizing could bring suit for reinstatement and damages, even though a criminal action by the U.S. attorney was expressly provided in the act. The Burke court stated:

In the absence of a clear congressional intent to the contrary, the courts are free to fashion appropriate civil remedies based on the violation of a penal statute where necessary to ensure the full effectiveness of the congressional purpose. See, e. g., Wyandotte Transportation Co. v. United States, 1967, 389 U.S. 191, 88 S.Ct. 379, 19 L.Ed.2d 407; J. I. Case Co. v. Borak, 1964, 377 U.S. 426, 84 S.Ct. 1555, 12 L.Ed.2d 423; Texas & Pacific R. Co. v. Rigsby, 1916, 243 U.S. 33, 36 S.Ct. 482, 60 L.Ed. 874. Where the interest asserted by the plaintiff is within the class that the statute was intended to protect, the harm of the type the statute was intended to forestall and the statutory criminal penalty inadequate to fully protect the asserted interest, a civil action for damages arises by implication. Wyan-dotte Transportation Co. v. United States, supra.

Based upon the allegations in his complaint, Stewart’s interest as an employee is within the class that the statute was intended to protect, and his discharge due to one indebtedness is the type of harm which the statute was intended to forestall. The Appellees do not argue to the contrary. However, the Appellees do assert that there is ample evidence of a clear congressional intent against private actions for civil remedies for § 1674(a) violations, and further that the criminal sanctions and agency enforcement explicitly authorized in Subchapter II of the Act adequately protect Stewart’s statutory interest.

Appellees’ position that Congress clearly intended not to have private civil relief available for § 1674(a) violations is well argued, but unconvincing. First, although the passage of § 1674 was influenced by an analogous New York law containing a limited civil remedy for discharges due to “income execution,” the absence of such a limited provision in § 1674 indicates at most that Congress did not want a limited civil remedy provision. It does not clearly suggest that Congress meant to exclude all private actions for civil relief. Second, Appellees point to a Congressional debate on whether there should be a criminal penalty for § 1674(a) violations as proof that the authors of the statute assumed no civil remedies were to be available. See 114 Cong.Rec. 1839 (Feb. 1, 1968). While this debate manifests that Congress regarded criminal penalties as essential to effective enforcement, it does not evince a clear congressional intent to exclude civil remedies, which are not mentioned.

Finally, Appellees assert that because specific and limited civil remedies exist in § 1640 of Subchapter I of the Act, the absence of a similar provision in Subchapter II shows the intent to exclude a private civil remedy for § 1674. In fact, they are urging this Court to apply the doctrine of expressio unius est exclusio cdterius — the express authorization of a remedy in one section of a statute indicates that an omission of that remedy from other sections was intended by the legislature. While in the past some courts (including this one) have used this rule when denying implied actions under particular statutes, the rule has been criticized. Recently (as recognized by this court’s holdings) the tendency is to limit the expressio un-ius rule in favor of construing an act so as to effectuate its dominant purpose.

Appellees also argue that the criminal sanctions of § 1674(b) and the Department of Labor enforcement mandate of § 1676 adequately protect Stewart’s statutory interests, citing Breitwieser v. KMS Industries, Inc., 467 F.2d 1391 (5th Cir. 1972). In Breitwieser, the Fifth Circuit affirmed a lower court’s dismissal of a private action for damages under the Fair Labor Standards Act (FLSA) for the wrongful death of a child. While noting that the FLSA had elaborate criminal provisions which fulfilled the act’s purpose and that state law afforded the plaintiff a limited monetary remedy, the court indicated that remedies are implied if no remedy exists, or if the remedy provided is “grossly inadequate.” However, in this case, neither the existence of alternative remedies under the same statute or under state law, nor the fact that enforcement of the federal statute is expressly vested in an administrative agency overcomes the need to imply a private right of action for § 1674(a) violations.

Whatever may be the rule of “adequacy” elsewhere, we believe that when there is no clear congressional intent contrary to the implication of private civil remedies, the adequacy of a statute’s express remedies (or alternatively, the necessity of implied private ones) must be determined according to whether those express remedies ensure the full effectiveness of the congressional purpose underlying the statute. In this sense, when the statute in question seeks to protect an individual’s interest, it is not enough for it to have some enforcement mechanisms: the initial question is whether the statute’s protection might be enhanced by allowing private civil relief. Of course, “effectiveness” means more than deterrence, and the court must also consider whether implied private remedies might diminish the efficient and fair administration of the statute in question given the complexity of the act, and the interests of those regulated by it.

In this case, a primary purpose of § 1674(a) is to protect against the hardships and disruptions resulting from employee discharges due to but one garnishment of wages. The administrative and criminal remedies for § .1674 violations do not provide maximum enforcement. The criminal sanctions cover only wilful violations: negligent violations are not covered, and proving wilfulness may well be difficult in the context of large corporate employers where the locus of particular decision-making is often elusive. Whatever deterrence § 1674(b) creates, since it does not compensate the jobless and credit-stricken victim, it does not undo the very harm which the statute was intended to forestall. Enforcement by the Department of Labor is also problematic because any action by the Secretary is discretionary, not mandatory.

Furthermore, the implication of a private remedy under this statute will not upset the general administration of Sub-chapter II of the Act, or unfairly affect the interests of employers. § 1674(a) contains a relatively straightforward mandate covering virtually all employers and employees, and compliance with the statute is hardly onerous since discharges may occur after one garnishment of wages. The issues raised in § 1674(a) claim are simple ones, not requiring special knowledge of the economics or other intricacies of a particular industry or type of employer. To the extent that implying a private action for civil relief causes employers to be more careful before discharging individuals for one wage garnishment, it serves their own interests as well as those of creditors. As the court in Johnson v. Pike Corp. of America, 332 F.Supp. 490, 496 (C.D.Cal.1971), stated, “Discharging an employee solely because his wages have been garnished once or several times benefits no one; the employer loses an otherwise capable employee and must expend considerable time and effort to train a replacement; the employee loses his source of income and may become dependent upon unemployment compensation or welfare; and the creditor is less likely to recover his claim.”

Therefore, the implication of private civil remedies is necessary to ensure the full effectiveness of the congressional purpose behind § 1674(a), and we remand this case to the district court for trial on the merits.

       The Honorable Samuel P. King, United States District Judge, for the District of Hawaii, sitting by designation.

      . This case arises under Subchapter II (§§ 1671-1677, “Restrictions on Garnishment”) of the Consumer Credit Protection Act of 1968, 15 U.S.C.A. §§ 1601-1681 (Supp. I, 1974) (hereinafter “the Act”). § 1674(a) provides: “No employer may discharge any employee by reason of the fact that his earnings have been subjected to garnishment for any one indebtedness.” § 1674(b) authorizes criminal penalties for violations of subsection (a). Under § 1676, the Secretary of Labor, acting through t'.e Wage and Hour Division of the Department of Labor, is charged with the duty of enforcing Sub-chapter II.

      . While nowhere in Subchapter II of the Consumer Credit Protection Act are private civil remedies expressly authorized, § 1640 contains detailed private civil relief for violations under Subchapter I of the Act.

      . See, e. g., Wyandotte Co. v. United States, 389 U.S. 191, 88 S.Ct. 379, 19 L.Ed.2d 407 (1967) (allowing U. S. government to sue); J. I. Case Co. v. Borak, 377 U.S. 426, 84 S.Ct. 1555, 12 L.Ed.2d 423 (1964); Moses v. Burgin, 445 F.2d 369 (1st Cir.), cert. denied, 404 U.S. 994, 92 S.Ct. 532, 30 L.Ed.2d 547 (1971); Gomez v. Florida State Employment Service, 417 F.2d 569 (5th Cir. 1969); Ellis v. Carter, 291 F.2d 270 (9th Cir. 1961); Matheson v. Armbrust, 284 F.2d 670 (9th Cir. 1960). See generally, Farmland Industries, Inc. v. Kansas-Nebraska Natural Gas Co., Inc., 349 F.Supp. 670, 678 n. 1 (D.Neb.1972); A. Katz, The Jurisprudence of Remedies: Constitutional Legality and the Law of Torts in Bell v. Hood, 117 U.Penn.L.Rev. 1 (1968); Symposium, Private Rights From Federal Statutes: Toward a Rational Use of Borak, 63 N.W.U.L.Rev. 454 (1968); R. O’Neil, Public Regulation and Private Rights of Action, 52 Cal.L.Rev. 231 (1964); Note, Implying Civil Remedies From Federal Regulatory Statutes, 77 Harv.L.Rev. 285 (1963).
      Traditionally where there is a right, courts will fashion a remedy. See Bell v. Hood, 327 U.S. 678, 66 S.Ct. 773, 90 L.Ed. 939 (1946). Our decision is consistent with this rule in that the addition of implied remedies to express ones in this case will provide the most effective protection for employees’ statutory rights.

      . Cases where private civil actions were implied from statutes containing criminal penalties include Burke v. Compania Mexicana de Aviacion, 433 F.2d 1031 (9th Cir. 1970); Common Cause v. Democratic National Committee, 333 F.Supp. 803 (D.C.D.C.1971); Fagot v. Flintkote Co., 305 F.Supp. 407 (E.D.La.1969); Wills v. Trans World Airlines, Inc., 200 F.Supp. 360 (S.D.Cal.1961). Cases where private civil actions were implied from statutes authorizing enforcement by a federal agency include Pearlstein v. Scudder & German, 429 F.2d 1136 (2d Cir. 1970); Fitzgerald v. Pan American Airways, 229 F.2d 499 (2d Cir. 1956); Fagot, supra; Wills, supra.

      . Both sides apparently agree that 'the rationale of Burke, supra note 4, at 1033-1034, controls this case. Nevertheless, Appellant also argues that since § 1674(a) is at least partially remedial in nature, it falls within the rule that remedial statutes must be broadly construed to effectuate the purpose of the act in question. Peyton v. Rowe, 391 U.S. 54, 88 S.Ct. 1549, 20 L.Ed. 2d 426 (1968); Jordan v. Acacia Mutual Life Insurance Co., 133 U.S.App.D.C. 224, 409 F.2d 1141, cert. denied, 395 U.S. 959, 89 S.Ct. 2101, 23 L.Ed.2d 746 (1969); Blau v. Rayette-Faberage, Inc., 389 F.2d 469 (2d Cir. 1968); Wirtz v. Ti Ti Peat Humus Co., 373 F.2d 209 (4th Cir. 1967). However, as the cases cited by Stewart suggest that canon of statutory construction applies when ambiguous statutory language must be applied to the facts of a given case, not when a civil remedy is requested in the total absence of any authorizing statutory language.

      . Three district courts outside the Ninth Circuit have used arguments similar to Appellees’ while refusing to imply a private civil action for § 1674(a) violations. Western v. Hodgson, 359 F.Supp. 194 (S.D.W.Va.1973); Oldham v. Oldham, 337 F.Supp. 1039 (N.D.Iowa 1972) (court relied upon Jordan v. Montgomery Ward & Co., note 8, infra); Simpson v. Sperry Rand Corp., 350 F.Supp. 1057 (W.D.La.1972), vacated, 488 F.2d 450 (5th Cir. 1973). But see, Nunn v. City of Paducah, 367 F.Supp. 957 (W.D.Ky.1973) (private party permitted to sue under § 1674).
      Appellees also assert that implied private remedies would be inadvisable here because the amount of damages would be limitless, and there would be no explicit statute of limitations. These arguments have not stopped other courts from implying private remedies under other statutes. Furthermore, the plaintiff’s relief may well be limited by his need to mitigate damages, and the doctrine of laches restricts the time in which a suit can be brought.

      . While Appellees do not question the Burke rule of allowing implied remedies in the absence of a clear congressional intent to the contrary, other courts sometimes fashion civil remedies from federal regulatory statutes only where an affirmative intent of Congress to create such private remedies is manifest. Chavez v. Freshpict Foods, 456 F.2d 890 (10th Cir.), cert. denied, 409 U.S. 1042, 93 S.Ct. 535, 34 L.Ed.2d 492 (1972) (refusal to imply private right of action under the Immigration and Nationality Act, or under the Farm Labor Contractor Registration Act). See also, Symposium, supra note 3, at 458. However, the rule that rights of actions may be implied in the absence of clear congressional intent to the contrary is well-founded in the law. See Wyandotte Co., supra note 3, 389 U.S. at 200-201, 88 S.Ct. at 385:
      But our reading of the Act does not lead us to the conclusion that Congress must have intended the statutory remedies and procedures to be exclusive of all others. There is no indication anywhere else — in the legislative history of the Act, in the predecessor statutes, or in nonstatutory law — that Congress might have intended that a party who negligently sinks a vessel should be shielded from personal responsibility. We therefore hold that the remedies and procedures specified by the Act for the enforcement of § 15 were not intended to be exclusive. Applying the principles of our decision in [United States v.] Republic Steel [362 U.S. 482, 80 S.Ct. 884], we conclude that other remedies, including those here sought, are available to the Government.

        See also, Katz, The Jurisprudence of Remedies, supra note 3, at 31-32. Such a rule of congressional intent has the salutary effect of allowing the courts to act when the full effectiveness of a statute .might otherwise be in jeopardy. If Congress wishes to preclude judicial consideration of issues concerning the implication of a private action under a statute, it needs only to say so expressly in the act itself or in the legislative record.

      . See T.I.M.E. Inc. v. United States, 359 U.S. 464, 79 S.Ct. 904, 3 L.Ed.2d 952 (1959); Jordan v. Montgomery Ward & Co., 442 F.2d 78 (8th Cir. 1971), cert. denied, 404 U.S. 870, 92 S.Ct. 78, 30 L.Ed.2d 114. Consolidated Freightways v. United Truck Lines, 216 F.2d 543 (9th Cir. 1954), cert. denied, 349 U.S. 905, 75 S.Ct. 582, 99 L.Ed. 1242 (1955). Of course, these cases are distinguishable from the one at hand, and the utilization of the expressio unius rule to construe congressional intent in each case was but one argument supporting the court’s holding. In T.I.M.E. Ino., the Court held that a shipper of goods by a certified motor carrier could not challenge in post-shipment litigation the reasonableness of the carrier’s charges alleged to be violative of the Motor Carrier Act of 1935. The Court’s view of congressional intent was buttressed by the fact that proposed statutory amendments on this issue had been defeated in Congress. In Jordan the court refused to imply a civil remedy for violation of the credit advertising provisions of the Federal Truth in Lending Act. The court, in Jordan, referred to the House Committee Report on the bill, which explicitly stated:
      “‘[T]he bill specifically exempts credit advertising from the application of civil penalties. This exemption has been written into the bill by your committee to avoid the possibility that anyone . . . would attempt to seek civil penalties.’ U.S.Code Cong. & Admin.News, p. 1976.” 442 F.2d, at 81.
      Twenty years ago, this court in Consolidated Freightways upheld a dismissal of a claim for damages under the Motor Carriers Act for lack of jurisdiction, using the expressio unius rule as one argument. A more compelling reason for the court’s ruling was that the claimant had no rights under the Act, but was only a permittee subject to the regulations of the I.C.C. The Court was also influenced by the fact that the violation could generally be brought to the I.C.C.’s attention before any harm would occur to the competitor.

      . See, e. g., Hart & Sacks, The Legal Process 1173-74 (temp. ed. 1958); Note, Implying Civil Remedies, supra note 3, at 290.

      . In illafheson, supra note 3, we explicitly refused to follow the expressio unius rule and found that there was an implied right of action for buyers under § 10(b) of the Securities Exchange Act of 1934 even though express remedies were provided for §§11 and 12 violations. See also, O’Neil, Public Regulation, supra note 3, at 259.

      . The Breitwieser decision has been criticized. See Note, 26 Vand.L.Rev. 867 (1973) wherein the author at 873 argues that the recognition of a private right of action under the act “. . . would have supplemented effectuation of the Congressional policy favoring protection of child labor and would have compensated plaintiffs more satisfactorily.”

      . See Note, Federal Restrictions of Wage Garnishments: Title III of the Consumer Credit Protection Act, 44 Ind.L.Rev. 267, 278-82 (1968) wherein the author advocates the implication of a private civil remedy for wrongful discharges under § 1674. See also, Note, The Implication of a Private Cause of Action Under Title III of the Consumer Credit Protection Act, 47 S.Cal.L.Rev. 383 (1974) wherein the author argues for the courts to recognize a private right of action for debtor-employees as a means of supplementing the Labor Department’s enforcement activities. Although it has been asserted that the existence of alternative state remedies lessens the need for implied ones (Note, Implying Civil Remedies, supra note 3, at 292-93) and some states do have laws restricting discharges for wage garnishments, the existence of state remedies has not prevented courts from implying private ones under federal statutes. See Borak, supra note 3; Wills, supra note 4.

      . There are, for example, statutes which codify an intricate regulatory scheme of a particular industry, and implying a private civil action may well diminish the statute’s full effectiveness because violations may raise highly complex issues requiring a federal agency’s understanding of the intricate economic policies underlying the act. See generally, Fagot, supra note 4, at 413; O’Neil, Public Regulation, supra note 3, at 262-63. Violations based on rate-making under a regulatory statute may exemplify such a situation. Compare T.I.M.E. Inc. v. United States, supra note 8, with Hewitt-Robins, Inc. v. Eastern Freight-Ways, Inc., 371 U.S. 84, 83 S.Ct. 157, 9 L.Ed.2d 142 (1962). T.I.M.E. Inc. and Hewitt-Robins are distinguishable from the case at hand because there the issue of remedies involved a statutory savings clause; yet in IlewittRobins, the Court indicated that the test for deciding whether a particular pre-statutory remedy was “inconsistent” witli the act and therefore outside the savings clause was “the effect of the exercise of the remedy upon the statutory scheme of regulation.” 371 U.S. at 89, 83 S.Ct. at 160. Although a savings clause is . not here involved, the court’s determination of whether an implied private action would be inconsistent with achieving the full effectiveness of the congressional purpose underlying § 1674(a) accords with the rationale of Hewitt-Robins.

      . § 1674 manifests congressional concern over the unscrupulous and unfair use of wage garnishments by creditors. In support of § 1674, Congresswoman Sullivan, Chairman of the House Subcommittee on Consumer Affairs, stated:
      What we know from our study of this problem is that in a vast number of cases the debt is a fraudulent one, saddled on a poor ignorant person who is trapped in an easy credit nightmare, in which he is charged double for something he could not pay for even if the proper price was called for, and then hounded into giving up his pound of flesh, and being fired besides.
      114 Oong.Ree. II688 (Feb. 1, 1968). Congress also sought to protect the general public from the adverse effects of discharges for wage garnishments. § 1671(a)(2) states: “The application of garnishment as a creditors’ remedy frequently results in loss of employment by the debtor, and the resulting disruption of employment, production, and consumption constitutes a substantial burden on interstate commerce.”

      . See Note, The Implication of a Private Cause of Action, supra note 12, at 398. See also, Common Cause v. Democratic National Committee, 333 F.Supp. 803, 813 n. 35 (D.C.D.C.1971) (cause of action implied, and Justice Department enforcement said to be inadequate in part because prosecution was within Executive’s discretion). Appellant argues that enforcement of § 1674(a) by the Department of Labor is inadequate because of the agency’s insufficient manpower and resources; and in its amicus curiae brief in the Simpson case, supra note 6, the Department did advocate allowing private actions under § 1674. See also, Note, The Implication of a Private Cause of Action, supra note 12, at 399-401. Nevertheless, since evidence of any inability of the Department to carry out its § 1676 mandate was not presented to us in this case, we make no such finding here. Similarly, Appellee cites several cases wherein the Secretary of Labor has brought suit for violations of § 1674; but of course, absent evidence of the number of cases the Secretary might have filed, these cases do not indicate how effective an enforcement mechanism § 1676 is.

      . See note 13, supra.

      . Because the district court refused to find an implied private civil action for violation of § 1674, it did not consider the nature of relief to which a plaintiff will be entitled if successful on the merits. We reserve ruling on that question until the district court lias had an opportunity to consider the appropriate scope of relief in the context of the facts of a particular case.


author: MANSFIELD, Circuit Judge:

text:
    Jordan BROWN, and all others similarly situated, Plaintiff-Appellee, v. FIRST NATIONAL CITY BANK, Defendant-Appellant.
    No. 1093, Docket 74-1279.
    United States Court of Appeals, Second Circuit.
    Argued June 5, 1974.
    Decided Aug. 14, 1974.

      Sheldon V. Burman, New York City, on the brief, for appellee.

      Shearman & Sterling, New York City, on the brief, for appellant.
    John Leferovich, Jr., New York City, for amicus curiae New York State Bankers Ass’n.
    Before KAUFMAN, Chief Judge, MANSFIELD and MULLIGAN, Circuit Judges.
   MANSFIELD, Circuit Judge:

During the last decade some banks in New York have offered to their customers, as an additional banking service, various types of revolving credit or check-credit loan plans, which permit the automatic or immediate payment of a customer’s overdraft on his regular checking account. At issue on this appeal is the legality of certain aspects of a plan of this type offered by defendant-appellant First National City Bank (“Citibank”) to its depositors, known as the “Checking Plus Credit Agreement.”

Specifically, on this appeal by both parties from a summary judgment and order of Judge Kevin T. Duffy of the Southern District (opinion reported at 365 F.Supp. 1286), we are asked to decide whether federal and state usury statutes, 12 U.S.C. § 85 and N.Y. Banking Law, McKinney’s Consol.Laws, c. 2, § 108(5), permit Citibank, pursuant to its “Cheeking Plus” program, to charge plaintiff-appellee Jordan Brown interest on certain portions of funds transferred by Citibank to Brown’s Regular checking account pursuant to its Checking Plus Credit Agreement with him and to refuse to credit deposits made by Brown to his checking account as a repayment of loans advanced to Brown from his “Checking Plus” account. We hold that these terms and conditions are valid and enforceable, and we reverse so much of the district court’s order as enjoined Citibank from charging Brown interest on the entire amount of funds made available to him pursuant to the “Checking Plus” agreement. We further direct the district court to dismiss Brown’s complaint in its entirety.

Under the “Checking Plus Credit Agreement”, which was introduced in 1966, Citibank agrees with a regular checking account depositor that, if the depositor’s checking account should be overdrawn, (1) the bank will automatically debit his Cheeking Plus account, which is opened by him at the time when he enters into the agreement, and credit to his regular checking account, an amount equal to the first multiple of $100.00 above the amount of the overdraft, or (2) the depositor may give the bank a written authorization to debit his Checking Plus account and credit to his Regular checking account a specific sum, which may be limited by him to the amount of the overdraft. The amount thus debited to the customer’s account becomes a loan repayable with interest at the rate of .03333% per day — the maximum rate permitted by state law — in minimum monthly installments. These repayments must be made directly to the Checking Plus account and must be accompanied “by a properly completed payment ticket (enclosed with the monthly Checking Plus statement) or by any other properly completed form of notice . . . authorized by the bank.” The agreement further provides that as collateral security for the payment of any indebtedness under the program the bank is given a “security interest and/or right to set-off in and to all monies, securities and other property of the [depositor] now or hereafter on deposit with or otherwise held by or coming into the possession or under the control of the bank .” The bank further retains the right to terminate the agreement when the depositor reaches “70 years of age, or at any other time, upon written notice by the bank . . . . ”

After entering into a “Checking Plus Credit Agreement” with Citibank early in July of 1972, appellee Brown on five separate occasions in August and September, 1972, overdrew his checking account and elected to receive credits in multiples of $100.00 rather than authorize credits limited to the specific amounts of the overdrafts. Additionally, on one occasion in September, he made a deposit to his Regular checking account which, pursuant to the agreement, Citibank did not apply to the outstanding debit balance in appellee’s Checking Plus account.

In a complaint filed on October 24, 1972, on behalf of himself and all other Citibank Cheeking Plus customers (asserted to number in the thousands), Brown claimed that Citibank violated § 85 of the National Bank Act, 12 U.S.C. § 85 and § 108(5) of the New York Banking Law by charging him daily interest at the maximum legal rate on the full amounts credited to his checking account in multiples of $100.00, rather than on the lesser amounts of the overdrafts, and on previously imposed interest charges and on service and maintenance charges.

After both parties moved for summary judgment the district court, in an opinion filed on November 7, 1973, (1) upheld Brown’s claim to the extent that it challenged the bank’s practice of charging interest on the amounts by which the credits exceeded the overdrafts (2) dismissed his claim that Citibank was charging interest on interest, since records submitted by the bank, which were undisputed by Brown, clearly contradicted the claim and (3) denied summary judgment to either party on Brown’s claim that Citibank was charging him interest on service and maintenance charges, since the question could not be resolved “until the defendant discontinues its practice of charging interest on multiples of a hundred-dollars rather than the amount of the overdraft.” Finally, the court refused to order the bank to credit deposits made by Brown to his checking account as repayment of the transfers from his Checking Plus account. The court held that the bank could lawfully require the repayments to be credited to the Checking Plus loan account since such repayments did not “entail additional expense or sacrifice” of the kind'referred to in [section 108(5) (f) of the New York Banking Law].” Both parties have appealed from the district court’s judgment.

DISCUSSION

Before reaching the merits, we must consider a threshold issue which neither of the parties raised here or in the district court. The district court’s jurisdiction was properly invoked pursuant to 28 U.S.C. §§ 1337, 1355, since Brown was technically asserting a claim under the National Bank Act, 12 U.S.C. § 85 and seeking to recover the penalties provided for in 12 U.S.C. § 86. However, in regulating the interest-charging practices of national banks such as Citibank those sections contain no independent provisions but merely incorporate the laws of the various states. Thus § 85 provides that “[a]ny association may take, receive, reserve and charge on any loan . . . interest at the rate allowed by the laws of the State, Territory, or District where the bank is located.” The provision is clearly enabling rather than restraining and was intended solely to place national banks in a position to compete with all other banks in the country. See Tiffany v. National Bank, 18 Wall. 409, 85 U.S. 409, 21 L.Ed. 862 (1873).

Since the federal statute had no independent operation and only state law questions were presented, the district court could, and probably should, have postponed its decision' until Brown’s claim was presented to and adjudicated by the courts of New York. Cf. Railroad Commission v. Pullman Co., 312 U.S. 496, 61 S.Ct. 643, 85 L.Ed. 971 (1941); Louisiana Power & Light Co. v. Thibodaux City, 360 U.S. 25, 79 S.Ct. 1070, 3 L.Ed.2d 1058 (1959). While we recognize that abstention should be reserved for exceptional circumstances, Zwickler v. Koota, 389 U.S. 241, 248, 88 S.Ct. 391, 19 L.Ed.2d 444 (1967), in view of its substantial costs for litigants, see Baggett v. Bullit, 377 U.S. 360, 375-379, 84 S.Ct. 1316, 12 L.Ed.2d 377 (1969), it would have been appropriate in this case, since the district court was dealing with part of a complicated and comprehensive regulatory statute intended to strike a balance between differing local interests. See Burford v. Sun Oil Co., 319 U.S. 315, 63 S.Ct. 1098, 87 L.Ed. 1424 (1943); Alabama Public Service Commission v. Southern R. Co., 341 U.S. 341, 71 S.Ct. 775, 95 L.Ed. 1016 (1951). In enjoining Citibank from continuing a practice which its competitors in neighboring states clearly have power to do, see N.J.S.A., Article 12-A, § 17.9A-59.1, there was the danger that the district court was frustrating a significant state policy in favor of permitting commercial banks located within the state to be “free to compete”. See New York State Banking Department, Report of the Superintendent’s Committee on Financial Reform 4 (1974).

With these considerations in mind and in deference to New York’s' overriding interest in this litigation, we would reverse the district court on abstention grounds alone if' Citibank had raised the issue or if we oui’selves were in any doubt as to the proper meaning of the state statute. However, while the abstention doctrine is designed primarily to serve such public policies as comity in federal-state-relations, see Comment, Federal-Question Abstention: Justice Frankfurter’s Doctrine in an Activist Era, 80 Harv.L.Rev. 605 (1967), the failure of a defendant even to raise the abstention issue is entitled to some consideration when an appellate court is deciding whether the plaintiff should be required to start all over again. See AFA Distributing Co. Inc. v. Pearl Brewing Co., 470 F.2d 1210, 1213 (4th Cir. 1973). Furthermore, abstention is inappropriate when a federal court believes the state law is clear, see Chicago v. Atchison Topeka & Santa Fe Railway Co., 357 U.S. 77, 78 S.Ct. 1063, 2 L.Ed. 2d 1174 (1957); Toomer v. Witsell, 334 U.S. 385, 392 n. 15, 68 S.Ct. 1156, 92 L.Ed. 1460 (1948), and a state statute may be clear even where, as here, it has not been ruled upon by a state court. See Executive Properties, Inc. v. Sherman, 223 F.Supp. 1011, 1014 (D.Ariz. 1963).

Turning to the merits, in our. view § 108(5) of the New York Banking Law on its face clearly permits the practice which the district court enjoined. The statute permits banks to “establish credits under written agreements with borrowers pursuant to which one or more loans or advances to or for the account of a borrower may be made from time to time, by means of honoring one or more cheeks or other written orders or requests of the borrower,” (emphasis supplied) and to charge “interest on such loans or advances at the rate of [one thirtieth of one per cent per day].” The district court concluded that “[a]dvancing funds in multiples of a hundred dollars does not constitute honoring a check.” See 365 F.Supp. at 1289. While this may be true, it overlooks the statute’s additional provision authorizing banks to establish credits', “by means of written orders or requests of the borrower.” The Checking Plus Credit Agreement provides that the customer may either draw a check against insufficient funds, in which case he will receive the hundred dollar multiple, or he may submit a written authorization specifically requesting the transfer of a lesser amount. Thus a check drawn by the depositor against insufficient funds clearly constitutes as much of a “written order or request” by the borrower to Citibank for a loan and transfer in the next highest multiple of $100.00 as if it had expressly said so. Otherwise, the borrower would not have drawn the check without first submitting a written authorization to debit his Checking Plus account in the amount of the overdraft and credit his checking account accordingly.

The district court also concluded that there was no “loan” or “advance” of the funds transferred in excess of the overdraft until the depositor had actually drawn checks on that amount. Judge Duffy based this conclusion on his assumption that prior to the transfer the funds were “at the plaintiff’s disposal as credit in the ‘Checking Plus Account’,” going on to say that “[i]t is difficult to see how the mere transfer of money from one account to another can create the right to charge interest on it before it is actually withdrawn by the borrower.” 365 F.Supp. at 1289. The record, however, demonstrates conclusively that this conclusion, and its premise, are in error. Prior to the transfer of the funds, such funds were not unqualifiedly at Brown's disposal. Citibank had reserved the right to terminate the Checking Plus Agreement at any time merely by giving written notice. Prior to the transfer Brown had at most the possibility of a line of credit contingent on the agreement not being terminated by will by Citibank. After the transfer, on the other hand, he had a firm demand deposit available for his immediate and unrestricted use and no longer subject to the bank’s right of termination. The demand deposit represented an indebtedness owed by Citibank to Brown, which could be pledged, levied upon or attached. See N.Y.C.P.L.R., McKinney’s Consol.Laws, c. 8, §§ 5201, 6202. Thus the transfer between accounts was a significant event which comes within the ordinary definition of a loan. See N.Y. Banking Law § 108(5) (f), Uniform Consumer Credit Code § 3.106(2).

Nor do we agree with appellee that the loans in multiples of $100.00 should be treated as an indirect method of evading the usury laws on the ground that they were forced upon him, like a “compensating balance” scheme whereby a borrower, in order to borrow $100.00 at 6 per cent interest, must deposit $50.-00 with the lender for the period of the loan. See Austin and Soloman, The Antitrust Implications of Compensating Balances, 58 Va.L.Rev. 1 (1972).

First, aside from the fact that the Checking Plus Credit Agreement is a purely voluntary arrangement on the customer’s part, he is not obliged, even after entering into it, to accept loans in multiples of $100.00 since he has the alternative of submitting a written authorization for the transfer of whatever lesser amount will meet an overdraft. Second, even if the customer does take the multiple of $100., there is no compulsion upon him to leave any excess over his overdraft in his checking account. He can do anything with the excess that he wants. He can even draw it all out immediately and use it to make up the corresponding- debit in his Cheeking Plus account, thus reaching the same result as it he had used the written authorization in the first place. We find nothing unconscionable in all of this. Regardless of which option he chooses, the customer receives substantial benefits under the Cheeking Plus agreement since it avoids the embarrassment, financial penalties, and legal liability frequently involved in overdrawing a checking account.

Our conclusion that § 108(5) of the Banking Law permits Citibank’s $100.00 multiple overdraft lending arrangement is supported by an amicus curiae brief submitted by the New York State Bankers Association, the trade organization which drafted the section. Additionally, we note that the New York Legislature has amended § 108(5), at least four times since Citibank and several other commercial banks first introduced this type of lending, without attempting in any way to prohibit it. Such legislative inaction provides a further basis for concluding that the Legislature intended to sanction the challenged practice. Cf. Zachary v. Macy & Co., 31 N.Y.2d 443, 460, 340 N.Y.S.2d 908, 293 N.E.2d 80 (1972). Nor have the administrative agencies responsible for monitoring compliance with the federal and state banking laws — the Office of the Comptroller of the Currency and the New York Banking Department — ever disapproved the practice of making overdraft loans in multiples of $100.00 which is currently practiced widely in New York by both state and national banks. Such tacit approval by the agencies charged with enforcing the statutes is entitled to considerable weight. Cf. Investment Company Institute v. Camp, 401 U.S. 617, 626-627, 91 S.Ct. 1091, 28 L.Ed.2d 367 (1971); Louisville R R v. United States, 282 U.S. 740, 759, 51 S.Ct. 297, 75 L.Ed. 672 (1930); NLRB v. Medo Photo Supply Corp., 135 F.2d 279 (2d Cir. 1943), aff’d, 321 U.S. 678, 64 S.Ct. 830, 88 L.Ed. 1007 (1944); Commissioner v. Pepsi-Cola Niagara Bottling Corp., 399 F.2d 390 (2d Cir. 1969). Finally, if any additional help were needed, the New Jersey statute dealing with the same subject matter, which was plainly drafted with the same general policies and objectives in mind, see 2A Sutherland, Statutory Construction §§ 51.06, 52.03 (4th Ed. 1973) expressly permits the practice challenged here by providing:

“The advance loan contract may provide that the amount of the advance loan shall equal the amount by which the account is overdrawn, or it may provide that, when the amount of the overdraft is not in a sum equal to an even multiple of $100.00, or an even multiple of such other sum, less than $100.00, as the contract may prescribe, the amount of the loan shall equal the nearest even multiple of $100.00, or the nearest even multiple of such other sum, less than $100.00, as the contract may prescribe, which is greater than the amount of such overdraft.” N.J.S.A. Article 12A, § 17: 9A-59.2, subd. B (1973-74 Cum.Supp.) (emphasis added).

In light of this additional evidence which merely comports with the words of the statute, we conclude that Citibank’s Cheeking Plus program, whereby checks drawn against insufficient funds are deemed written orders or request for a transfer of funds in the next highest multiple of $100.00 above the amount of the overdraft, is lawful.

Brown’s cross-appeal from that part of the district court’s decision upholding Citibank’s refusal to credit deposits to Brown’s checking account against debits in his Checking Plus account is frivolous. The Checking Plus agreement clearly states how the transfers under the agreement are to be repaid. The prescribed method, which is flagged for the customer every time he receives his monthly “Checking Plus Statement”, including repayment tickets, hardly entails any significant “addition- . al expense or sacrifice” of the kind pro-hibited by the statute, ing Law § 108(5) (f). See N.Y. Bank-

The judgment of the district court is reversed insofar as it awards relief to plaintiff. Otherwise it is affirmed. The district court is directed to dismiss plaintiff-appellee’s complaint in its entirety.

      . Thus, whore no written authorization is received but an account is overdrawn by $10.-00, $100.00 will be transferred. If the aecount is overdrawn by $105.00, $200.00 will be transferred.

      . See New York Banking Law § 108, subd. 5 (b).

      . Whereas without the transfers Brown would have overdrawn his account by approximately $1000.00, he received transfers totalling $1100.00.

      . Ordinarily, Citibank imposes a $5.00 charge on customers who draw a check against insufficient funds.

      . Brown’s claim that Citibank gains additional lending power from making the overdraft loans in multiples of $100.00 is frivolous since the practice gains Citibank no additional “currency and coin.” See 12 U.S.C. § 461(c) (2).

      . See 1968 New York Laws, c. 1072, § 7; 1969 New York Laws, c. 39, § 3, c. 778, § 3, c. 840, § 1.

      . See 12 U.S.C. § 1.

      . See New York Banking Law §§ 10, 36.

      . According to an affidavit submitted by counsel for the New York State Bankers Association, John Leferovich, Jr., an “informal” survey concluded by the Association established “that most of the commercial banks in the State of New York, which are members of the Association and offer some form of “check loan” or “check credit”, have for several years utilized credit agreements similar to that of First National City Bank herein, i. e., such banks make check loans, inter alia, in “multiples of $100.00”. According to the Association, state-chartered banks making overdraft loans in multiples of $100.00 include, in New York City alone, the Chemical Bank, the Irving Trust Co., the Bank of New York, the Marine Midland Bank, and Bankers Trust Co.


author: McCREE, Circuit Judge.

text:
    Eugene V. KRUGH, Plaintiff-Appellee, v. MIEHLE COMPANY, a foreign corporation, Defendant-Appellant.
    No. 73-1697.
    United States Court of Appeals, Sixth Circuit.
    Decided Sept. 20, 1974.
    Argued Feb. 6, 1974.

      Wheeler, Upham, Bryant & Uhl, by Buford A. Upham, Grand Bapids, Mich., on brief, for defendant-appellant-
    Bruce M. Bieneman, Grand Rapids, Mich., for plaintiff-appellee; Cholette, Perkins & Buchanan by Grant J. Gruel, Grand Rapids, Mich., on brief.
    Before CELEBREZZE and McCREE, Circuit Judges, and McALLISTER, Senior Circuit Judge.
   McCREE, Circuit Judge.

This is an appeal from a judgment for plaintiff entered upon a jury verdict in a diversity action for negligent design and breach of a statutory duty brought by an apprentice press assistant who lost the fingers of his right hand while cleaning transfer drums of an offset press manufactured and installed by appellant and sold to appellee’s employer.

In 1967, plaintiff-appellee Eugene V. Krugh, then seventeen years old, entered the employ of the Simplicity Pattern Company in Niles, Michigan. On the evening of May 17, approximately five to six weeks after beginning his employment, Krugh, with Gerald R. Lewis, the second pressman, and Wilmer Oswalt, another employee, was working on a four color offset press manufactured by appellee and installed by it at Simplicity about a year earlier. The press was mounted on two concrete walls erected in a pit at a height to afford a clearance of approximately five feet to permit employees to work beneath the press.

The maintenance of the press required periodic manual cleaning of the transfer drums to remove accumulations of ink and dust. Cleaning was usually performed once during each shift and took from three to five minutes. The drums, large metal cylinders approximately nineteen inches in diameter and six to seven feet long, revolved in opposite directions during operation and cleaning. During cleaning the transfer drums were rotated by activating controls in the pit to expose the drum surfaces a portion at a time. When the “inch” button was pushed, the drums would rotate a short distance and stop. A “reverse” button permitted the cylinders to be moved in the opposite direction, and a “stop” button with a lock ring enabled a worker in the pit to render the press inoperable. Gerald R. Lewis, Krugh’s supervisor, testified that the procedure for cleaning the drums during his shift was to place the press on “safe” by locking the “stop” button before touching any moving parts. Lewis, as well as another Simplicity employee and Brandt, appellant’s expert witness, also testified, however, that the proper cleaning procedure was to move the drums short distances with the “inch” button, clean the exposed surface with a rag and solvent, and then move the drums again to expose other portions of the surfaces. The movements of the drums were visible and audible.

On the evening in question, Lewis, who was in charge of the cleaning operation, left the floor for a moment and, according to his testimony, directed Krugh and Oswalt who were in the pit under the press not to begin cleaning until he returned. Both Oswalt and Krugh testified, however, that they did not hear this direction and that they proceeded to clean immediately. According to Oswalt, Krugh was cleaning the drums while they were continuously in motion. Krugh testified, however, that he was cleaning by periodically pushing the “inch” button in the manner already described, but that he knew that the cylinders had not completely stopped when his right hand was drawn between them and he sustained the injury. Although he admitted that he was aware of the likelihood of personal injury if his hand should be caught in the “pinch point” between the two drums, he added that he was not aware that the transfer drums would rotate as much as they did when the “inch” button was employed.

Other evidence was adduced concerning the extent to which the transfer drums might “coast” after pressing the “stop” button or after releasing the “inch” button. An employee of appellant testified that the “coast” could be as much as twenty inches after the “inch” button was released. An expert witness for Krugh testified that the “coast” could be as little as two inches or as much as forty-five inches depending upon the speed of the drums at the time the motor was “de-energized” and that coasting after the inch button was released was “significant”. No warning of the potentially hazardous coasting was ever relayed to appellee.

At the time that appellant manufactured the press that injured Krugh, there was at least one other press that had been designed to eliminate coasting. Moreover, in designing its own presses, appellant installed a barrier to protect operators from access to comparable zones of danger on the top side of the machine. Illumination of the top area of the press was excellent in contrast to the dimly lighted pit. There was also testimony that a similar safety guard on the underside of the press was practicable and would have prevented Krugh’s injury.

As the result of his injury, Krugh was disabled from employment at Simplicity for three months until August 17, 1967, when he returned to work in the same capacity at the same wage. Thereafter he was employed at Simplicity at a higher wage until October 4, 1968, when he left because Saturday employment was inconsistent with his religious beliefs. At the time of trial Krugh was studying to become a nurse.

Shortly after the accident, Krugh sued the Miehle Company for breach of warranty and negligent design. The court directed a verdict for appellant on the breach of warranty claim, and submitted the case to the jury on the theories of negligent design and violation of section 15 of Act 285 of P.A. of 1909, M.S.A. § 17.25 which makes unlawful the installation of machinery without proper safeguards. The essence of Krugh’s complaint was that the extent of the coasting of the drums, particularly in the dark pit, was so hazardous that a safety guard was required and that it was a hidden or latent danger that required either warnings or a safety guard or both. The jury returned a verdict for Krugh in the amount of $73,496.59.

On appeal, the Miehle Company makes four assignments of error: (1) that the district court erred in instructing the jury that M.S.A. § 17.25 was applicable in a suit brought against the manufacturer of a device by an employee of its purchaser; (2) that the district court erred in denying its motion for a directed verdict and for judgment n. o. v. because appellant breached no duty owed to Krugh and because Krugh was guilty of contributory negligence as a matter of law; (3) that the district court erred in refusing to give three requested negligence instructions; and (4) that the award of damages was excessive. We hold that the statute had no application to this case but that the district court did not err in submitting the case to the jury on the common law negligence claim and in refusing to give the requested instructions. Because a new trial is required, we do not decide whether the damage award was excessive.

M.S.A. § 17.25 (M.C.L.A. § 408.65) provides:

Machinery; safeguards; condemnation; inspection, fee
Sec. 15. It shall be the duty of the owner of any factory, storehouse or warehouse, or his agent, superintendent or other person in charge of the same, to furnish or supply, or cause to be furnished or supplied, and equip all machinery in use with proper shifters or other mechanical contrivances for the purpose of throwing belts on or off pulleys. It shall be unlawful for any person, firm, copartnership or corporation, to operate or cause to be operated, any of the machinery or equipment mentioned in this section, without it being first properly equipped with proper safety devices and guards. All gearing and belting shall be provided with proper safeguards, and when necessary, machinery shall be provided with loose pulleys. All vats, saws, pans, planers, cogs, set screws, gearing and machinery of every description shall be properly guarded. The commission after hearing duly had shall have power to condemn such machinery and equipment if the same is unsafe, and stop the operation of such machinery and equipment until same be put in safe condition. It shall be unlawful for any person, firm or corporation, or agent thereof, to install or place in operation any of the machinery or equipment mentioned in this section unless the same be equipped with proper safeguards, or unless the same bé approved by the commission or factory inspector. When requested in writing by any owner of such machinery or equipment, or agent of such owner, the commission shall within 6 days cause such machinery to be inspected. The commission, or factory inspector, as the case may be, shall determine whether such machinery or equipment is properly guarded. The findings of the commission or inspector shall be in writing and a copy shall be furnished said owner, or his agent, and a copy shall be filed in the office of the commission at Lansing. A fee of not to exceed 5 dollars may be charged for each such inspection. Such fees shall be turned into the state treasury and placed in the general fund, (emphasis added.)

Appellant contends that this statute does not apply because: (1) it imposes liability for injury caused by unguarded machinery only upon owners of specified establishments on whose premises the injury occurs and not on suppliers of machinery; and (2) presses are not among the kinds of machinery regulated.

Since jurisdiction is based on diversity of citizenship, we must, in construing this statute, interpret it as the Michigan Supreme Court would were this case before it; and, in so doing, we employ Michigan principles of statutory construction. Moreover, we “may [also] utilize the blessings of hindsight [in the realization that a] glance at the past will [often] reveal the considerations that led to the enactment of the legislation before us . . . ” Town & Country Motors, Inc. v. Local Union No. 328, 355 Mich. 26, 49, 94 N.W.2d 442, 454 (1959). This statute was enacted before a workmen’s compensation law existed in Michigan and when lawsuits were being filed in increasing numbers by employees against their employers for injuries caused by unsafe working conditions. Within a decade, however, a workmen’s compensation law was enacted in Michigan, and suits brought by employees under this statute virtually ceased.

Although the practical construction accorded this section by the conduct of employees for sixty years may be persuasive, it is the language of the section itself that determines whether liability extends to a manufacturer and supplier of machinery that injures an employee of its purchaser. Although this is a case in which civil liability is sought to be imposed, we observe that the statute is a penal statute and that it must therefore be strictly construed. E. g., Bremer v. Equitable Construction & Mortgage Corp., 26 Mich.App. 204, 182 N.W.2d 69 (1970), aff’d, 386 Mich. 187, 191 N.W.2d 331 (1971). Moreover, we also consider the principle of ejusdem, generis, which is especially applicable to penal statutes:

In general, where no intention to the contrary appears, general words used after specific terms in a statute, or following an enumeration of particular classes of persons or things, are to be confined to things that are in ejus-dem generis with the things previously specified, and apply only to persons or things of the same general nature as the preceding particular classes of persons or things.

21 Michigan Law and Practice, Statutes, § 90. See also, e. g., Board of Control of the Michigan State Prison v. Auditor General, 197 Mich. 377, 163 N.W. 921 (1917), McDade v. People, 29 Mich. 50 (1874).

The usual difficulties attending the construction of a statute are greater in this case because of the ambiguity and imprecision of the language of the section and because we have been unable to find, and the parties have not cited, any legislative history that might help us ascertain the legislative intent. The first sentence of the section imposes liability only on “the owner of any factory, storehouse or warehouse, or his agent, superintendent or other person in charge of the same . . . . ” (emphasis added.) The second sentence refers to “any person, firm, copartnership or corporation,” and the sixth, to “any person, firm, corporation, or agent thereof.” Appellant argues that the entities listed in the second and sixth sentences are within the scope of the statute only if they are also owners of a factory, storehouse or warehouse. Appellee, on the other hand, would have us read the second and sixth sentences without any limitation of ownership imposed by the first. Appellee has adduced nothing that would warrant such a broad interpretation. Accordingly, we believe that in light of the problems incident to actions for injuries against factory owners at the time of the enactment of this section, it is consistent with established principles of statutory construction to read the statute as imposing liability only upon the owner (and persons under his control) of an industrial establishment where an injury occurs. And it is of no consequence whether the owner is a “person, firm, copartnership or corporation.” Since we have determined that the statute is not applicable, we find it unnecessary to consider appellant’s contention that offset presses are not the kinds of machinery upon which the statute requires safety devices to be placed.

Appellant’s contention that the district court erred in refusing to grant its motion for a directed verdict or for a judgment n. o. v. on the negligence claim, requires us to view the evidence in the light most favorable to appellee. In products liability cases in which it is alleged that an injury was caused by faulty design, liability is usually asserted on one of three theories:

(a) that the manufacturer’s design has created a concealed or hidden danger; (b) that the manufacturer has failed to provide a needed or reasonably required safety device; or (c) that the manufacturer has used or employed material of inadequate strength or quality suitable for the intended use. Parsonson v. Construction Equipment Co., 386 Mich. 61, 64, 191 N.W. 2d 465, 466 (1971)

In this case, the first two theories are advanced. Considering the evidence, we hold that questions of fact were raised that were properly submitted to the jury.

The evidence demonstrated that a safety device was feasible and practicable, and it therefore became a question of fact whether appellee was negligent in failing to provide such a device. And appellant’s contention that the hazard to be guarded against was obvious has little relevance to the question of the reasonableness of employing a safety device. See, e. g., Coger v. Mackinaw Products Co., 48 Mich.App. 113, 210 N.W.2d 124 (1973). In that case, plaintiff’s hand was partially amputated when a co-worker activated a mechanical log splitter that propelled a log on which plaintiff had rested his hand into the cutting edge of the machine. Although plaintiff knew of the danger of catching his hand between the wedge and the log, his knowledge did not preclude an award of damages against the manufacturer of the log splitter for failure to install a safety device that would have eliminated the hazard. Accordingly, it was proper here to submit to the jury the question whether the manufacturer discharged its “duty to use reasonable care to guard against unreasonable or foreseeable risks,” and “whether as a practical matter a safety device should have been put on the product by the manufacturer”— even though appellee was aware of the danger of placing his hand in the “pinch point” between the drums. Id. at 122, 210 N.W.2d at 128.

We also hold that the evidence that the drums coasted after release of the “inch” button presented a jury question whether this tendency was a latent danger that required appropriate warnings or a safety device, and not a patent one. Parsonson v. Construction Equipment Co., supra. In Brynes v. Economic Machinery Co., 41 Mich.App. 192, 202, 200 N.W.2d 104, 109 (1972), the court reversed the granting of a motion for summary judgment in favor of the defendant-manufacturer and remanded for trial a case in which an employee, repairing a machine, was injured when a co-worker activated it. The court observed :

It is true that plaintiff was aware of the risk and that many cases find no duty where the danger is obvious. This requirement must be considered in conjunction with the modern tort concept that awareness alone does not preclude negligence, [citations omitted.] A danger may be obvious but not appreciated, [citation omitted.] Even where a danger is appreciated, circumstances may cause it to be momentarily forgotten. Id. at 202, 200 N.W.2d at 109.

Similarly, in Murphy v. Eaton, Yale & Towne, Inc., 444 F.2d 317 (6th Cir. 1971), an action against the manufacturer of a truck for injuries suffered when bales of hides fell from it on the driver who had overloaded the vehicle, this court, applying Michigan law, reversed summary disposition for defendant and remanded for trial the questions “whether the defect [in design alleged] was obvious or hidden, and whether plaintiff had knowledge of the danger . . . . ” Id. at 327.

On the question of the obviousness of the claimed defect in the design of the press, plaintiff testified:

Q. When you put your right hand into position where you would have to have it to clean the transfer drums, did you believe that the cylinders were stopped at that time?
A. I didn’t believe — I knew the cylinders wasn’t completely stopped, but they coasted way beyond what they had. To me they felt like they coasted beyond the point they had before.

From this testimony, from testimony of expert witnesses and from that of appellant’s employee, a jury could conclude that although Krugh was aware that injury could result if his hand were caught in the “pinch point”, he was unaware of the propensity of the transfer drums to coast to the extent that they did. Accordingly, it could have determined that a warning or a safety device was required.

Although the question whether the danger was latent or patent in this case is a close one, in Michigan, “ ‘the doubtful case in each instance calls for jury instruction and jury verdict rather than a verdict by order of the court’.” Jordan v. Whiting Corp., 49 Mich.App. 481, 495, 212 N.W.2d 324, 332 (1973) citing Washington v. Jones, 386 Mich. 466, 471, 192 N.W.2d 234, 237 (1971).

The next question is whether plaintiff’s conduct constituted contributory negligence as a matter of law. In Michigan, “[t]he entry of a directed verdict in favor of a defendant which is based upon a plaintiff’s alleged contributory negligence is only proper where from the evidence presented all reasonable men would agree that plaintiff was guilty of ‘no care at all’.” Coger v. Mackinaw Products Co., 48 Mich.App. 113, 120, 210 N.W.2d 124, 127 (1973), citing Normand v. Thomas Theatre Corp., 349 Mich. 50, 57, 84 N.W.2d 451, 454 (1957). Cf. Uren v. Toth, 5 Mich. App. 170, 146 N.W.2d 137 (1966).

Krugh testified that he, as well as others, had used the “inch” button to clean the drums, and that on the occasion of his injury, the drums appeared to “coast” further than they had done before when the “inch” button had been released. Under Michigan law, his failure to anticipate the extent of the “coast” based upon his previous experience was not so clearly negligent that the case should have been removed from the jury’s consideration. Thus, in Tracy v. Finn Equipment Co., 310 F.2d 436 (6th Cir. 1962), this court affirmed a verdict for plaintiff who had been injured when he had removed by hand, material that was clogging the operation of a machine even though he was aware that removal of the debris might cause the machine to begin operating immediately and injure him. In Garfield v. La-pham, 173 Mich. 217, 139 N.W. 3 (1912), the Michigan Supreme Court found that defendant was not entitled to a directed verdict on the ground that plaintiff was guilty of contributory negligence as a matter of law in a case where plaintiff was injured while cleaning out by hand rotating rollers of a corn-husking machine, because there was evidence that the person who had given him instructions had also used his hands in demonstrating how to clean the apparatus. Finally in Gronlie v. Positive Safety Mfg. Co., 50 Mich.App. 109, 212 N.W.2d 756 (1973), the court reversed the entry of a judgment n. o. v. that had overturned a jury award in a case where plaintiff’s hands had been amputated when he placed them into a crank-driven press and the safety device designed to pull his hands back from the jaws of the press failed to operate. Observing that “the plaintiff had actual knowledge of the dangers of placing his hands in the point of operation of a press, the jury could reasonably have found that the defendant, in representing the safety device to be safe even with the operator’s hands in the jaws of the press, vitiated any cautionary effect that that knowledge might otherwise have had,” the court determined that there was evidence that defendant was negligent in failing to warn plaintiff that hand tools should be used to remove material from the press. Id. at 114, 212 N.W.2d at 759. Accordingly, the jury’s verdict should have been permitted to stand.

Careful consideration of Michigan precedents demonstrates that cases should not be removed from jury consideration unless the evidence demonstrates with utmost clarity either that defendant breached no duty owed to plaintiff or that plaintiff exercised absolutely no care for his own safety. Accordingly, we hold that it was not error for the district court to refuse to direct a verdict for defendant or to grant a judgment n. o. v.

The final assignment of error that we will consider is the district court’s failure to give instructions requested by appellant that concerned the standard to be applied in determining whether a defect in design caused the injury complained of and whether the defect, if it existed, was latent or patent. Although the requested instructions may have stated the relevant law with greater particularity than did the instructions given by the district court, the instructions that were given stated properly applicable legal principles and discussed the points emphasized by appellant’s requested instructions. Accordingly, there was no error committed when the district court refused to give the requested instructions.

Reversed and remanded for a new trial.

      . This statute, enacted in 1909, was repealed by Act 282 of the Public Acts of 1967, M.S.A. § 17.49, shortly after Krugh’s injury.

      . During oral argument, the court was referred to the case Hardaway v. Consolidated Paper Co., 366 Mich. 190, 114 N.W.2d 236 (1962), in which the Michigan Supreme Court held that the section of the statute at issue in this case extended to an unguarded ventilation fan into the blades of which plaintiff accidentally put his hand. This is an unusual case, and although it suggests that an offset press is included within the regulatory scope of the statute, we observe that it supports our determination that the legislature did not intend to make liable manufacturers bearing the kind of relationship to persons that appellant has to appel-lee. Thus, the court stated :
      A reading of the statute does not cause us to reach the conclusion that it is so limited [to employer-employee relationships] ; its protection extends to all who are legally upon the premises and imposes a duty upon the owner of any factory, storehouse or warehouse, or its agent, superintendent or other person in charge. The statute requiring that all machinery be properly safeguarded was unquestionably designed for the protection of anyone lawfully entering or working around or about such machinery in a place covered by the statute. Id. at 197, 114 N.W.2d at 239.
      In that case, an independent contractor was injured while he was performing work at defendant’s place of business; the case holds only that liability of an owner extends not only to his own employees but also to persons who are lawfully upon his premises.

      . Appellant claims that it owes a lesser duty of care to persons repairing its machines than it owes to persons operating its machines, citing Jordan v. Whiting Corp., 49 Mich.App. 481, 212 N.W.2d 324 (1973). However, in that case, although the court recognized that a person making repairs necessarily exposes himself to dangers to which operators would not ordinarily be exposed and that there may, therefore, be cases in which the latter but not the former could recover for injuries sustained, it was unwilling to fashion an inflexible rule. Instead, the court stated:
      We think we must revert to the longstanding legal principle . . . that when the minds of reasonable men cannot differ the question is one of law for the court and will require a purely legal determination. Where the facts adduced may fairly be said to support differing conclusions or inferences the question must be submitted to the trier of the facts be it jury or court sitting without a jury. Id. at 492, 212 N.W.2d at 331.
      "We believe that the district court’s instructions fairly stated Michigan law in this respect, and we are doubtful that the required frequency of cleaning of the drums can be considered repair of the machine instead of just part of its operation.

      . The requested instructions that the district court refused to give are as follows:

        INSTRUCTION NO. 14C (Filed March 31, 1972)
      You are further instructed that it is not of itself negligence to use a particular design or method in the manufacture or handling of a product or doing a job which is reasonably safe and in customary use in the industry, although other possible designs whether in use in the industry or not, might be conceived which would be safer.

        INSTRUCTION NO. 14/1 (Filed March 31, 1972)
      Members of the Jury, plaintiff in this case claims that defendant is liable to him for negligence for failing to use reasonable care in designing the printing press on which he was injured. You are instructed that defendant did not have a duty to design a machine which was accident-proof or fool-proof or which was free of open danger. It did, however, have a duty to use reasonable care in designing a machine which was free of hidden or concealed dangers.
      In considering the question of negligence in design in this case, you must evaluate the nature of the hazard or danger which this machine presented to Mr. Krugli, and you must determine whether or not that danger or hazard would have been open and apparent to a reasonably prudent person, or whether it would have been hidden from a reasonably prudent person. If you find that the danger of having one’s hand (•¡night in the press was hidden or latent and not apparent to a reasonably prudent person and the plaintiff was not aware of such danger, then the defendant was guilty of negligence by designing the press.
      If, on the other hand, you find that the danger of having one’s hand caught in the press was or should have been apparent to a reasonably prudent person, or that the plaintiff was aware of such danger, then the defendant was not guilty of negligence in designing the press.

        IX8TItT7fíTIOK XO. 14/i (Filed March 31, 1972)
      Members of the Jury, the plaintiff in this case claims that the defendant is liable to him for negligence for failing to provide adequate guards on the printing press to prevent his injury. This claim is similar to his claim that the defendant did not use reasonable care in designing the press. You are instructed that the defendant did not have a duty to provide a machine which was accident-proof or fool-proof or which was free of open danger, and that it, likewise, had no duty to provide guards against dangers which were or should have been apparent to a reasonably prudent person. The defendant did, however, have a duty to use reasonable care to provide guards against injury from hidden or concealed dangers.
      In considering the plaintiff’s claim of negligence for failure to provide adequate guards in this case, you must also evaluate the nature of the hazard or danger which this press presented to Mr. Krugh. You must determine whether or not that hazard or danger would have been open and apparent to a reasonably prudent person, or whether it would have been hidden from a reasonably prudent person. If you find that the danger of having his hand caught in the press was hidden or latent and not apparent to a reasonably prudent person, and that the plaintiff was not aware of such a danger, you may consider this as evidence of negligence for failing to provide proper guards on the press. You must then consider whether or not such negligence was the proximate cause of plaintiff’s injury, and whether or not plaintiff was guilty of contributory negligence.
      If, on the other hand, you find that the danger of having one’s hand caught in the press was or should have been apparent to a reasonably prudent person, or that the plaintiff was aware of such danger, then the defendant was not guilty of negligence for failing to provide adequate guards on the press.

      . The relevant portion of the instructions actually given by the district court is as follows :
      A manufacturer or seller is not required to guarantee that his product is incapable of doing harm and thus the mere happening of an accident creates neither a presumption of liability nor of non-liability on the part of the manufacturer because of the accident. The law does not require that a manufacturer produce a product which is accident-free or fool-proof. What the law does require is that the defendant have exercised that ordinary care in design, manufacture and sale of the printing press which a reasonably careful manufacturer of like products would have exercised under the same or similar circumstances as you find existed in this case at the time of the sale and delivery of the printing press to Simplicity Pattern Company which is involved here.
      A manufacturer, such as Mielile Company here, who knows or should reasonably have known of a latent — and by that I mean a hidden, unobvious or unapparent danger to the user of his product has a duty to adequately guard against such danger where feasible, or absent such guarding, to adequately warn expected users of its products of such dangers, and such a duty exists even if only a few users might be affected by the hazard. Such a failure to guard or to give effective warnings would be negligence if you find that a reasonably and ordinarily careful manufacturer of printing presses would have so guarded or so warned under the circumstances which you find existed in this case.
      There is, however, no duty to warn against hazards or dangers which are, or should be obvious to everyone or where the user lias actual knowledge of them.
      In considering what a reasonably careful manufacturer would have done or would not have done, you may consider the state of the art at the time, and the state of the science and engineering information available at the time of the sale and delivery of the machine. You may consider the customs and the usages and practices existent at the times as shown by the evidence, and as bears upon the defendant’s knowledge of the anticipated use of the printing machine. You may consider what a reasonably careful manufacturer at the time would have anticijjated in terms of the skill or lack of it on the part of the employees using the machine. You may consider what the manufacturer would have anticipated in terms of training, and instruction and supervision or lack of it which could have been expected to be afforded by the employer. You may consider whether or not a guard or a different braking device would have been feasible. You may consider whether a warning, if given, would or would not have been heeded. You may consider whether the danger of getting one’s fingers caught in the drums was obvious or apparent, or whether the coasting of the drums after shutting the power off, if you find this to have occurred, was unapparent or apparent. You may consider whether or not the work involved was tedious, giving rise to foreseeable human inattentiveness.
      You are to bear in mind that what we are talking about here is neither an extraordinarily cautious manufacturer nor an extraordinarily cautious emidoyee or user, and that the standard you are to apply is in each instance that of reasonable and ordinary care.