author: LAY, Circuit Judge.

text:
    Edwin GILBERTSON, Appellee, v. TRYCO MANUFACTURING COMPANY, INC., Appellant.
    No. 73-1615.
    United States Court of Appeals, Eighth Circuit.
    Submitted Jan. 16, 1974.
    Decided Feb. 25, 1974.

      Ludwig B. Gartner, Jr., Faegre & Benson, Minneapolis, Minn., for appellant.
    Douglas E. Schmidt, Mott, Grose & Von Holtum, Worthington, Minn., for appellee.
    Before LAY, STEPHENSON and WEBSTER, Circuit Judges.
   LAY, Circuit Judge.

The defendant, Tryco Manufacturing Company, Inc. (Tryco), manufactures an applicator machine used for spraying fertilizer and agricultural chemicals. Plaintiff, Edwin Gilbertson, an employee of the Lucan Grain and Fuel Co., Inc., was operating the machine when a hose clamp came loose resulting in aqua-ammonia, a liquid nitrogen fertilizer, being sprayed on plaintiff’s neck and face, causing burns and a permanent impairment of vision in his right eye. Plaintiff brought suit under the doctrine of strict liability for a design defect. Spe-> cial interrogatories were submitted to I the jury and under the Minnesota com- j parative negligence statute the jury apportioned fault 65 percent to the defendant and 35 percent to the plaintiff. The jury returned a verdict for $60,712.87, and the trial court entered judgment on the verdict in favor of the plaintiff 'for $39,712.87. The trial court overruled defendant’s motion for a new trial and alternative motion for judgment notwithstanding the verdict. Defendant appeals.

Defendant urges several grounds for reversal: (1) that the evidence was insufficient to prove the machine was defective; (2) that plaintiff was aware of the claimed defect; (3) that the trial court erred in defining contributory negligence in the same terms as assumption of risk; (4) that the trial court erred in submitting both contributory negligence and assumption of risk to the jury in the same special interrogatory; and (5) that the trial court erred in refusing to order a remittitur because the award of $60,000 was excessive and not supported by the evidence. For the reasons discussed below, we affirm the judgment of the district court.

The accident occurred in Minnesota and the law of that state governs. We find it necessary to give extensive discussion only to the defendant’s contention that the trial court erred in submitting contributory negligence and assumption of risk in one special interrogatory. We find no merit in the other issues raised.

The special interrogatories in question are as follows:

5. Was the plaintiff, Edwin Gilbert-son, contributorily negligent or did he assume the risk?
6. If the answer to question No. 5 is yes, answer the following question: Was Edwin Gilbertson’s contributory negligence or fault or assumption of the risk a direct or proximate cause of the accident and the injuries he sustained ?

The jury answered “yes” to both of the above questions. The defendant urges that the verdict is perverse, since under controlling Minnesota law assumption of risk and contributory negligence are distinct defenses and should have been submitted separately to the jury. After the jury verdict was in the trial court admitted its error in combining the two defenses in the same interrogatory. However, in its order overruling the motion for judgment n. o. v. the trial court found that the verdict should still stand since upon review of the record it found no evidence to support the submission of assumption of risk to the jury and its submission was, therefore, not prejudicial to the defendant. It is this ruling which is attacked here.

Minnesota law governing assumption of risk and contributory negligence has undergone substantial change in recent years. Prior to Springrose v. Willmore, 292 Minn. 23, 192 N.W.2d 826 (1971), assumption of risk was treated as a defense separate and distinct from that of contributory negligence and where a plaintiff was guilty of assumption of risk he was completely barred from recovery. See Moteberg v. Joímson, 210 N.W.2d 27 (Minn.1973); Parness v. Economics Laboratory, Inc., 284 Minn. 381, 170 N.W.2d 554 (1969). Upon passage of its comparative negligence statute (Minn.Stat. § 604.01 subd. 1) and in response to the New Jersey decision of Meistrich v. Casino Arena Attractions, Inc., 31 N.J. 44, 155 A.2d 90 (1959), the Minnesota court in Springrose held that “an injured plaintiff’s involuntary or otherwise not unreasonable assumption of risk should not exonerate a defendant from his causal negligence.” Springrose, supra at 827, of 192 N.W.2d. Thus, the Minnesota Supreme Court now holds, where the defendant has a duty to exercise ordinary care, that plaintiff’s “secondary, express or implied,” assumption of risk, as distinguished from “primary” assumption of risk, becomes part of the defense of contributory negligence. However, the new rule as stated in Springrose was to be applied prospectively so that it only governs causes of action arising after the date of that decision, i. e., December 10, 1971. See Gottskalkson v. Canby, 296 Minn. 212, 207 N.W.2d 361 (1973). The accident in the present case occurred on April 17, 1968, and therefore Minnesota law as it existed before Springrose is applicable. As indicated, earlier Minnesota case law treated plaintiff’s assumption of risk as a complete bar to recovery. Thus, we are faced with the singular question of whether there existed any evidence of plaintiff’s assumption of risk.

Under Minnesota law prior to Sprin-grose, the Minnesota jury instructions on assumption of risk read:

Assumption of risk is voluntarily placing oneself in a position to chance known hazards. To find that a person assumed the risk, you must find:
1. That he had knowledge of the risk.
2. That he appreciated the risk, and
3. That he had a choice to avoid the risk or chance it and voluntarily chose to chance it.
If a person has assumed the risk, he cannot recover for any injury or damage sustained by him.
Assumption of risk should be distinguished from contributory negligence. Assumption of risk does not involve the failure to use reasonable care. A person who assumes the risk is one who voluntarily chooses to chance a danger which is known and appreciated. Contributory negligence does involve a failure to use reasonable care. A person who is contributorily negligent is one who has failed to use that care which a reasonable person would use under like circumstances.

Minnesota Jury Instruction Guides, Instructions 135 and 136.

The fundamental difference under Minnesota law between assumption of risk and contributory negligence, at least prior to Springrose, is reflected in Coenen v. Buckman Building Corp., 278 Minn. 193, 153 N.W.2d 329 (1967). The Minnesota Supreme Court there observed in discussing the defense of assumption of risk:

The knowledge required is actual knowledge as distinguished from constructive notice or knowledge. The mere fact that plaintiff would, in the exercise of ordinary care, have known or appreciated the danger is not sufficient. Where the facts are such that plaintiff must have had knowledge, the situation is equivalent to actual knowledge; but where it merely appears that he should or could have discovered the danger, the defense is contributory negligence and not assumption of risk. 65A C.J.S. Negligence, § 174(3).

We said in Schrader v. Kriesel, 232 Minn. 238, 247, 45 N.W.2d 395, 400:

“ * * * Notice or knowledge and appreciation of the danger are indispensable to an assumption of risk. City of Winona v. Botzet (8 Cir.) 169 F. 321, 23 LRA (N.S.) 204. Assumption of risk involves comprehension that a peril is to be encountered and a willingness to encounter it. It differs from contributory negligence, based on carelessness, by being an exercise of intelligent choice.”

Coenen, supra at 338.

In the present case, the plaintiff’s expert, Dr. Schertz, an agricultural engineering professor at the University of Minnesota, opined that the hose clamp was defectively designed because of its inherent loosening characteristics; that “swage-fittings” should have been used to avoid spontaneous loosening of the hose; that there should have been pressure relief valves incorporated into the system; and that a two-way shut-off valve was inadequate since it allowed pressure build-up during filling operations. He expressed his opinion that the hose came off because of excessive pressure and the loose clamp. This testimony was sufficient to submit the issue of defective design to the jury. ■

The evidence showed that the plaintiff was the principal operator of the applicator during 1967. He was aware of the “caution” signs on the machine. He had previously been instructed by his employer to make sure the hose clamps were properly tightened. He knew that the applicator operated under pressure and that aqua-ammonia was caustic.

Plaintiff readied the applicator for use in the spring of 1968. He greased the machine and checked all of the hoses and clamps. Two to three days before the accident he tightened the clamps with a screwdriver. Thereafter, he used the applicator without incident on two and possibly three occasions prior to the accident. On the day of the accident plaintiff did not recheck the clamps. After the accident, the hose was replaced on the nipple, the clamp was tightened, and the applicator was continued in use without further incident.

Defendant’s expert witness, John Carroll, a consulting engineer, testified that if the hose clamp had been tightened by plaintiff, as he had testified, the clamp would not have loosened by the time of the accident.

On the strength of plaintiff’s knowledge of the risk, his knowledge that the clamps must be regularly tightened, and the testimony of defendant’s expert, defendant urges that there was sufficient evidence from which the jury could have determined that the plaintiff assumed the risk. We disagree. We conclude that this evidence raises only the question whether plaintiff should or could have discovered the danger and whether under the circumstances he failed to fully appreciate the peril. The evidence falls short of proof that plaintiff knew of the existing peril, to-wit, the existence of a loose clamp, and made a voluntary choice to willingly operate the machine knowing of the actual danger.

Defendant urges that the recently decided case of Schroeder v. Jesco, Inc., 296 Minn. 447, 209 N.W.2d 414 (1973), rejects this conclusion. In Schroeder, tried under the same pre-Springrose Minnesota law applicable here, plaintiff was injured while ascending a stairway of a newly constructed building when struck on the head by a wooden beam that had been knocked into the stairway by the negligence of another. Plaintiff urged that assumption of risk was not applicable since he had no knowledge that the particular timber beam would fall upon him. The Supreme Court affirmed the jury verdict for the defendant and said:

It is inconceivable that reasonable men would have to conclude that plaintiff, an experienced construction worker who knew that lumber would sometimes be dropped from one floor to another at construction sites, did not know and appreciate the risk of falling objects inherent in working under construction in progress.

Schroeder, supra at 418.

Defendant urges here that plaintiff, being an experienced farmhand, was equally aware of the risk of being sprayed with aqua-ammonia if a hose clamp came loose. Defendant contends, in this regard, that the evidence was sufficient to submit to the jury defendant’s theory that plaintiff nevertheless operated the applicator without first checking the clamp. We think the two situations distinguishable. In Schroeder, the risk was fully known, it existed as a present fact, based on actual knowledge of past occurrences. The situation presented is no different than a person voluntarily walking across a rifle range during target practice and then claiming he did not know of the projection of the specific bullet that hit him. In the present case, even assuming that the plaintiff did not first tighten the clamp as defendant’s expert suggests, there was no showing of plaintiff’s knowledge that the clamp was in fact loose. There is no contradiction in the record of plaintiff’s claim that he had checked the tightness of each and every hose clamp on the machine two to three days prior to the accident by inserting a screwdriver and turning it as hard as he could. In the meantime, the machine was used only twice, once for two to three hours and a second time for a half-day. Even defendant’s representative testified that the cautionary instruction to “regularly tighten” the clamps did not require “frequent” tightening of the clamps or that the tightening be done before each use. Thus, at best the evidence shows only that there was a possibility that the clamp on the hose might be loose. This was evidence of a risk from which danger might possibly flow rather than of a risk of actual danger. Under these circumstances we think the evidence falls into the broader ambit of contributory negligence, i. e., whether a plaintiff knowing of a risk from which danger might possibly flow exercised due care under the circumstances.

Judgment affirmed.

      . Presumably if a plaintiff is guilty of “primary” assumption of risk defendant owes no duty. See Meistrich v. Casino Arena Attractions, Inc., 31 N.J. 44, 155 A.2d 90 (1959). Since these terms need not be defined for resolution of this case we prefer leaving their further definition to the Minnesota courts.

      . The Minnesota Supreme Court suggests, however, that there may still exist occasions where the two defenses may be submitted by separate interrogatories, subject to “a single apportionment verdict.” Springrose, supra at 828.


source: Caselaw Access Project

author: KILEY, Senior Circuit Judge.

license: Public Domain

text:
    UNITED STATES of America, Plaintiff-Appellee, v. William TANKERSLEY and Frank A. Stefanelli, Jr., Defendants-Appellants.
    No. 73-1762, 73-1761.
    United States Court of Appeals, Seventh Circuit.
    Argued Jan. 10, 1974.
    Decided Feb. 26, 1974.

      Max Cohen, Gary, Ind., for defendants-appellants.
    John R. Wilks, U. S. Atty., Fort Wayne, Ind., Andrew Baker, Jr., Asst. U. S. Atty., Hammond, Ind., for plaintiff-appellee.
    Before SWYGERT, Chief Judge, KILEY, Senior Circuit Judge, and SPRECHER, Circuit Judge.
   KILEY, Senior Circuit Judge.

Defendants Tankersley and Stefanelli, Gary, Indiana school teachers, appeal their conviction by a jury for possession of an unregistered destructive device (Count I) which was not identified by serial number (Count II), in violation of 26 U.S.C. § 5861(d) and (i), respectively, of the National Firearms Act (Act). We affirm.

In May of 1972 a teachers’ strike was in progress in Gary, Indiana. Philip Ryals, a teacher, elected to cross picket lines and report for work during the strike, and aroused the anger of his co-teachers. At approximately midnight on May 17, 1972, police maintaining surveillance on Ryals’ home observed Tank-ersley, Stefanelli, and codefendant Morgan — a vacationing college student and friend of Stefanelli — in front of Ryals’ home, lighting what appeared to be a fuse. The police announced themselves, and the defendants fled. The police were required to shoot out a tire of Tankersley’s camper bus to prevent the defendants’ escape. After removing the defendants, the police searched the camper and found an M-80 firecracker encased in an envelope, some fuse, twine, and a can of paint and varnish remover. In front of Ryals’ residence the police found a burned-out M-80 (a dud) inside an envelope with masking tape applied thereto in such a way that the adhesive was turned outward, and three to four inches from the envelope a Diet-Pepsi bottle containing six ounces of paint remover.

The indictment charged possession of “a destructive device composed of a flammable liquid contained in a breakable container, a detonator, and a fuse made from rope impregnated with Potassium Nitrate . . . .”

The government’s theory at trial was that Tankersley, Stefanelli and Morgan intended to affix the M-80 to the Pepsi bottle, light the fuse, detonate the M-80, and set off the paint remover. It adduced evidence that an exploding M-80 affixed to a Pepsi bottle would detonate the paint remover inside the bottle. Paint remover in the bottle placed upon a corner of the envelope housing the M-80 was similarly detonated.

Tankersley and Stefanelli maintained that they intended to write the word “Scab” on Ryals’ car with the paint remover, and explode the M-80 separately. They argue that the tape was to be used to affix the envelope containing the M-80 to the porch or side of the house. .They introduced evidence that at a distance of three or four inches a firecracker’s explosion would not set off the paint remover.

The jury acquitted Morgan, convicted Tankersley on both Counts, and convicted Stefanelli on Count I. After motions by Tankersley and Stefanelli, the court ordered the jury to deliberate further with respect to Stefanelli. The jury thereupon convicted Stefanelli on both Counts. Both defendants were sentenced to two years, Stefanelli to serve ninety days and Tankersley six months; the remainder of the sentences were suspended, and both were placed on probation for two years. This appeal followed.

I.

Defendants contend that the court erred in denying their motion for judgment of acquittal on grounds to be discussed below. We disagree.

A.

A “destructive device” is defined in 26 U.S.C. § 5845(f) as

(1) any explosive, incendiary, or poison gas (A) bomb, (B) grenade, (C) rocket having a propellent charge of more than four ounces, (D) missile having an explosive or incendiary charge of more than one-quarter ounce, (E) mine, or (F) similar device;
(2) any type of weapon by whatever name known which will, or which may be readily converted to, expel a projectile by the action of an explosive or other propellant, the barrel or barrels of which have a bore more than one-half inch in diameter, except a shotgun or shotgun shell which the Secretary or his delegate finds is generally recognized as particularly suitable for sporting purposes; and
(3) any combination of parts either designed or intended for use in eon-verting any device into a destructive device as defined in subparagraphs (1) and (2) and from which a destructive device may be readily assembled.

Therefore, a combination of certain materials, coupled with the requisite intent, can be sufficient to constitute a destructive device.

We find no merit in defendants’ contention that a fatal variance existed between indictment and proof. The indictment, silent as to whether the device was assembled or not, charged an offense under § 5845(f)(3): a “combination of parts . . . intended for use in converting any device into a destructive device . . .” The proof was not at variance with the charge.

B.

Defendants next contend that they could not properly be charged under § 5845(f)(3) because their alleged intentions are irrelevant in this case. They properly concede that the Circuits are in conflict as to the meaning of subsection (3), and rely on United States v. Posnjak, 457 F.2d 1110 (2nd Cir. 1972). The second Circuit there held that proof of evil intent could not convert commercial dynamite into a “destructive device” within the meaning of § 5845(f). The court reasoned that the intention of Congress was to prohibit trafficking in articles that had no social utility, and therefore subsection (3) should not be broadened to include socially useful articles such as dynamite. So construed, subsection (3) has limited applicability. Intent is irrelevant when an assembled device falls “within (1) or (2),” because :

the parts are clearly “designed” to convert the device into a destructive device. When it is equally clear that the end product does not fall within one of those categories, the same is true. When, however, the components are capable of conversion into both such a device and another object not covered by the statute, intention to convert the components into the “destructive device” may be important. Posnjak at 1119.

The Ninth Circuit (United States v. Oba, 448 F.2d 892 (1971): commercial dynamite), and the Fourth Circuit (United States v. Morningstar, 456 F.2d 278 (1972): sticks of black powder and blasting caps), have, contrary to Posn-jak, decided that evil intention is relevant to whether the articles therein come within the statutory definition.

We need not resolve the conflict, however, since under either construction, resort to intention under subsection (3) is proper upon the charge and facts in the instant case. The defendants herein were charged with possession of components “capable of conversion into both [a destructive] device and another object not covered by the statute.” Posnjak, supra, 457 F.2d at 1119. In United States v. Davis, 313 F.Supp. 710 (D. Conn.1970), the court stated:

The defendant was found with bottles, rags, and a can of gasoline, [and] the question of whether he intended to convert these components into a Molotov cocktail, a crude but well-known variety of incendiary bomb, was a central issue.

Tankersley and Stefanelli were in possession of a bottle, a firecracker and tape, and paint remover: the components of a Molotov cocktail. A Molotov cocktail is not something like dynamite with a valid social use. United States v. Peterson, 475 F.2d 806, 811 (9th Cir. 1973). While the components separately have social utility, in combination they form a destructive device within the ambit of subsection (3).

We are unpersuaded by defendants’ attempt to distinguish Davis on the ground that the defendant therein admitted his intention to bomb a factory with the Molotov cocktail. The evidence before us justified the jury’s implicit finding that Tankersley and Stefanelli intended to convert the material they possessed into a destructive device. An admission by them was not required.

C.

The Supreme Court in United States v. Freed, 401 U.S. 601, 91 S.Ct. 1112, 28 L.Ed.2d 356 (1971), conclusively determined that the National Firearms Act does not violate the Fifth Amendment right against self-incrimination, and therefore we reject defendants’ contention to the contrary.

D.

Nor is there any merit in defendants’ contention that there is no requirement that a destructive device have a serial number. 26 U.S.C. § 5842(e) provides: “Any firearm classified as a destructive device shall be identified in such manner as the Secretary or his delegate may by regulations prescribe.” And 26 C.F.R. § 178.92 requires that a serial number must be placed upon the destructive device unless circumstances make it “dangerous or impracticable” to do so. Upon information from the transferor the Director may authorize “other means” of identification. Here the destructive device bore neither serial number nor “other means” of identification.

E.

We reject Stefanelli’s contention that since he came into possession of the alleged device shortly before apprehension, he did not have sufficient opportunity to comply with the registration requirements, and accordingly should have been acquitted. Timing is irrelevant here because Stefanelli, a possessor-transferee, could not have registered the device; only transferors can register firearms under the Act. Furthermore, it follows that there was no error in the district judge’s refusal to give an instruction based upon this contention.

II.

Prior to the commencement of the final day of the trial, June 13, 1973, government agent Bauer conducted an experiment in which he detonated an M-80 approximately three inches away from a bottle of paint remover. The paint remover was unaffected by the explosion, and Bauer informed government counsel accordingly. Later that morning government counsel, knowing that the M-80 had not exploded the bottle, attempted to impeach a defense witness who had conducted a similar experiment with the same result, using a different type of firecracker, by emphasizing the difference in firecrackers. In rebuttal Bauer testified that an M-80 contains “16% more flash powder than the [firecracker used by the defendants’ witness].” (Tr. 362). The defendants having learned, after the trial, of Bauer’s early morning experiment, moved unsuccessfully for a new trial.

They contend that the suppression of the information relating to Bauer’s experiment, coupled with the- disparaging cross examination by the government, violated their right to due process as delineated in Brady v. Maryland, 373 U.S. 83, 83 S.Ct. 1194, 10 L.Ed.2d 215 (1963).

Although we cannot condone the government’s tactics, we think that they do not require reversal.

The fact that the experimentally exploding M-80 did not break the bottle three inches away and set off the paint remover was irrelevant, since the three inch separation of the M-80 and the bottle dropped by defendants was purely fortuitous. And the “suppressed” evidence would not “tend to exculpate or reduce the penalty ...” Brady, 373 U.S. at 88, 83 S.Ct. at 1197. Nor do we find that the government’s cross-examination in light of the knowledge of Bauer’s experiment deprived defendants of due process.

III.

Defense counsel objected to government counsel’s stating in final argument :

Ladies and gentlemen, the issue of the possible punishment of these defendants is not before you. That is his Honor’s job. It is probably the worst job in the court room, the most difficult. He has an opportunity to look at the probation report. (Tr. 399.)

The court denied a motion for mistrial, but instructed the jury to disregard the statements referring to the probation report.

Defendants contend that the court erred in failing to grant the motion. Assuming arguendo that the government’s remarks implied that the defendants would get probation if convicted, and were unfair, our reading of the record as a whole convinces us that the error was harmless and the court was not required to declare a mistrial.

IV.

Prior to trial, the district court, after a hearing, denied defendants’ motion to suppress the evidence discovered in Tankersley’s vehicle. The court based its denial on the rationale enunciated in Carroll v. United States, 267 U.S. 132, 45 S.Ct. 280, 69 L.Ed. 543 (1924), and Chambers v. Maroney, 399 U.S. 42, 90 S.Ct. 1975, 26 L.Ed.2d 419 (1970), that probable cause existed for police belief that the camper contained contraband.

In the present case the police saw the defendants light something in front of Ryals’ home, pursued them on foot, firing shots in the air, and shot out a tire to prevent the defendants’ escape. Under these circumstances the police had probable cause to search the vehicle immediately. They could also have seized the camper and searched it at the police station, under Chambers’ expansion of the Carroll holding. The court’s reliance on those eases was proper, and there was no error in sustaining the search and seizure. Coolidge v. New Hampshire, 403 U.S. 443, 91 S.Ct. 2022, 29 L.Ed.2d 564 (1971), is inapposite and consequently of no assistance to defendants.

V.

We are not persuaded that the verdicts acquitting Morgan, convicting Tankersley on both counts, and convicting Stefanelli on Count I and acquitting him on Count II were inconsistent and require reversal. Thiso court said in United States v. Hickey, 360 F.2d 127, 139 (1966): “[inconsistent jury verdicts on separable counts are generally permissible, even though the same evidence is offered in support of each.”

Nor did the district judge err in sending the jury back to “deliberate further with regard to Stefanelli.” The relevant part of the transcript satisfies us that the judge’s language did not effectively mandate a guilty verdict as to Stefanelli on both counts; the jury might have acquitted him on both counts as it did Morgan.

VI.

There is no merit in defendants’ final contention that the district court erred in failing to require the government to elect only one of the two counts for submission to the jury. Defendants argue that since they were charged with a single course of conduct, the government should not be allowed to multiply the punishment by charging them with violating several parts of a single statute.

This contention was answered by the Ninth Circuit in United States v. Clements, 471 F.2d 1253 (1972), and we adopt its reasoning. While agreeing that the statute did not authorize cumulative punishment for violations of three different sections of 26 U.S.C. § 5861, the court affirmed the defendants’ conviction but limited the maximum punishment to that which could be imposed for a single violation. The sentences given in the present case do not exceed that maximum, and accordingly were not improper.

Affirmed.

      . 26 U.S.C. § 5861. It shall be unlawful for any person
      * * * * *
      (d) to receive or possess a firearm which is not registered to him in the National Firearms Registration and Transfer Record, or
      *****
      (i) to receive or possess a firearm which is not identified by a serial number as required by this chapter.
      § 5845(a) Th& term “firearm” means . . . (8) a destructive device.

      . The court did not err in instructing the jury that although the defendants must have intended to unite the components, unite “did not necessarily mean attaching to. Uniting can mean if it worked as a destructive device it would be sufficient to set the bottle on the firecracker or container of the firecracker, it doesn’t necessarily mean it has to be attached.” (Tr. 407-408). If the end result is identical, it is specious to argue that one can be guilty if he attaches the components and not guilty if he merely places them in close proximity to each other.

      . 26 C.F.R. § 178.92: Each licensed manufacturer or licensed importer of any firearm . . . shall legibly identify each such firearm by engraving, casting, stamping (impressing), or otherwise conspicuously placing . . . on the frame or receiver thereof . . . an individual serial number . . . . Provided further, that in the case of a destructive device, the Director may authorize other means of identifying that weapon upon receipt of letter application . . . from the licensed manufacturer or licensed importer showing that engraving, casting, or stamping (impressing), such a weapon would be dangerous or impracticable. (Emphasis added.)

      . 26 U.S.C. § 5812(a).

      . Nor did the court err in refusing to give defendants’ instruction reciting the statute. The court adequately stated the law to the jury (Tr. 404-405), and defendants’ instruction was surplusage.

      . See United States v. Poole, 379 F.2d 645 (7th Cir. 1967), wherein this court used its supervisory power to reverse a conviction, holding that the government’s suppression of evidence deprived defendant of a fundamentally fair trial. In that case, however, the suppressed evidence directly related to the crime charged.

      . Tr. 431.

      . 26 U.S.C. § 5871: a fine of $10,000 and/or a ten year prison sentence.


author: PER CURIAM:

text:
    J. C. GRIFFIN, Plaintiff-Appellant, v. Caspar W. WEINBERGER, Secretary of Health, Education and Welfare of the United States, Defendant-Appellee.
    No. 73-3500
    Summary Calendar.

    United States Court of Appeals, Fifth Circuit.
    April 19, 1974.

      Frank J. Mizell, Jr., Montgomery, Ala., for plaintiff-appellant.
    Ira DeMent, U. S. Atty., Kenneth E. Vines, J. Jerry Wood, Asst. U. S. Attys., Montgomery, Ala., for defendant-appel-lee.
    Before BROWN, Chief Judge, and THORNBERRY and AINSWORTH, Circuit Judges.

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

   PER CURIAM:

J. C. Griffin here challenges the finding of the Social- Security Administration, as affirmed by the district court, that he is too young to receive retirement insurance benefits under § 202(a) of the Social Security Act, 42 U.S.C. § 402(a). He first contends that there was not substantial evidence to support the finding that he was born in 1917 rather than 1900. In support of the earlier birthdate Griffin offered his own testimony, the statements of a number of members of the community, his marriage record, his son’s birth certificate, and evidence based on the files of the Board of Registrars of Covington County, Alabama. In support of the latter birthdate the Secretary offered two records from the Campbell Chappel School, a letter from the Census Bureau relating to the 1930 census, three draft registration certifications, and Griffin’s application for a social security account number. There was obviously a conflict of evidence regarding Griffin’s birth-date which was resolved in favor Of the latter year. We cannot say that the evidence supporting that resolution is insubstantial, particularly in view of the fact that the older records, which the Secretary may justifiably regard as more trustworthy, tend to support the latter birthdate. See Ginsburg v. Richardson, 3 Cir. 1971, 436 F.2d 1146, cert. denied, 402 U.S. 976, 91 S.Ct. 1680, 29 L.Ed.2d 142, rehearing denied, 403 U.S. 912, 91 S.Ct. 2213, 29 L.Ed.2d 690.

Griffin next contends that the administrative law judge’s overly coercive and stern admonition against perjury indicates a bias or prejudice that requires - reversal. This contention is without merit. In the first place, the admonition did no more than lay out accurately the consequences of testifying falsely. It was not overly coercive or threatening. Even if it were construed as coercive, however, reversal would not be required under Webb v. Texas, 1973, 93 S.Ct. 351, 409 U.S. 95, 34 L.Ed.2d 330. The judge’s warning in Webb was so stern as to frighten off the stand the only witness for the defendant in a criminal case, depriving the defendant of any opportunity to present his defense to the jury. There was no such result here, since Griffin proceeded to testify fully after the admonition. Furthermore, unlike the judge in Webb, the administrative law judge here did not imply that he expected Griffin to lie. The wording of the admonition does not indicate that Griffin was deprived of a fair hearing.

Affirmed.

      . Before he began his testimony, Griffin was admonished in the following language.
      Mr. Griffin, I want you to clearly understand the import of what is about to occur. You have taken an oath to tell the truth. There are certain penalties for not telling the truth provided in the United States Criminal Code. If you do not tell the truth under oath, it will be perjury, and you may be liable to prosecution. Now, perjury is the knowing misrepresentation under oath of a material fact. In plain words, if you lie about the date of your birth and any of the other circumstances surrounding it, you may be liable to prosecution.


author: BARRETT, Circuit Judge.

text:
    Arthur SHERR and Richard Rubin, Petitioners-Appellants, v. SIERRA TRADING CORPORATION, a Nevada corporation, Debtor-Appellee, L. W. Winkler, Jr., Trustee-Appellee. Peter GRAF and Harry Rubin, Petitioners-Appellants, v. SIERRA TRADING CORPORATION, a Nevada corporation, Debtor-Appellee, L. W. Winkler, Jr., Trustee-Appellee.
    Nos. 73-1251, 73-1252.
    United States Court of Appeals, Tenth Circuit.
    Argued and Submitted Sept. 14, 1973.
    Decided Jan. 16, 1974.

      Paul B. Rodden and Richard T. Paynter, Jr., Denver, Colo., for appellants.
    James A. Clark, Denver, Colo., for trustee-appellee.
    Before SETH, McWILLIAMS and BARRETT, Circuit Judges.
   BARRETT, Circuit Judge.

I.

No. 73-1251

The issues presented for our review arose following the filing of a Chapter X petition for reorganization under the Bankruptcy Act by Sierra. After this appeal was taken and briefs filed, our per curiam opinion was filed in case No. 72-1537, entitled In Re Sierra Trading Corporation, 486 F.2d 191 (10th Cir. 1973). We there reversed the trial court and remanded with instructions to enter judgment directing the trustee to tender unto the appellants here the additional sum of $58,788.74, the exact amount sought here, which represents development and production costs chargeable to Debtor Sierra’s 12%% working interest share in the subject leases situate in Campbell County, Wyoming, and production realized therefrom. Rehearing has been denied.

We are urged to reverse the trial court in its failure to accede to these demands of appellants: (1) requiring the trustee in bankruptcy to segregate funds awarded by the reorganization court to third parties from other funds held by the trustee which are subject to the Plan of Reorganization pending appeal of the Order awarding said funds to a third party; (2) requiring the trustee to segregate funds which are claimed by a third party and are in issue on appeal, from other funds held by the trustee which are subject to the Plan of Reorganization pending appeal of the Order ; (3) if the trustee is not required to segregate the funds, requiring him to post a bond equal to or greater than the amounts in issue to protect appellants’ rights; and (4) requiring that the trustee’s bond should be increased to protect appellants’ claims in that the trustee took appellants’ funds without first examining title to the producing oil properties and without prior notice to appellants in apparent breach of duty.

We need not reach these issues. Our per curiam opinion in In Re Sierra Trading Corporation, supra, awarded appellants, Sherr and Rubin, the additional sum of $58,788.74 claimed, together with all interest earned from the investment of the moneys turned over to the trustee from operator Petrofina (representing proceeds from production) from certificates of deposit. We there specifically noted that “These funds were never the property of Sierra or the trustee. Pet-rofina held them for the benefit of the owners of a 50% working interest, and the intervention of bankruptcy on the part of Sierra did not affect the rights of others to possession of their share of the funds.” Because the funds were never properly subject to the summary Turnover Order of September 4, 1970, we decline to opine relative to the above relief denied appellants by the District Court following hearing held on January 3, 1973 on Appellants’ Petition to Increase Trustee’s Bond or to Segregate Funds.

II.

No. 73-1252

This action was initiated by the Trustee, Winkler, in proceedings for reorganization of Sierra under Chapter X against all parties who claim, or may claim, any interest in four Wyoming oil leaseholds. The trustee sought a declaration of Sierra’s (Debtor’s) rights in one of the leaseholds, together with a declaration concerning the existence, nature of, and the priority of its lien rights in all of the leaseholds, and those of other claimants, and a foreclosure thereof. In addition, the trustee prayed for money judgments against some of the respondents-defendants, including appellants Peter Graf and Harry Rubin, representing a percentage reimbursement for development and production costs incurred relating to three Wyoming oil and gas leaseholds.

Graf and Rubin specially appeared. They filed two motions, a Motion to Dismiss the Action and/or a Motion to Quash Service of Process. The parties agree that Debtor, Sierra Trading Corporation, owns a 25% interest and that appellants Graf and Rubin own the remaining 75% interest, all subject to various landowner and overriding royalty interests, in threé of the leaseholds situate in Wyoming. Their interests are in cotenancy. Graf and Rubin are residents of New York. Debtor is a Colorado corporation. The Chapter X proceeding is, of course, before the District Court in Colorado. Graf and Rubin allege that no transactions relating to their 75% working interest in the Wyoming leases took place in Colorado. Debtor or trustee have at all times been in possession, as operator, of the Wyoming leaseholds.

Following the filing of the petition in reorganization the trustee entered into the leaseholds “to complete drilling and place the oil wells in production,” seeking to carry on Debtor’s business. Graf and Rubin assert that they, as cotenants, did not receive notice that the wells were going to be drilled or that they had been drilled. The record does not indicate that appellants had notice. However, we deem it doubtful, under Wyoming law, that such notice was required. Torgeson v. Connelly, 348 P.2d 63 (Wyo.1959).

Appellants also assert that there was no operating agreement between them and Debtor, or the trustee. Although no such agreement appears in the record and no contention to the contrary is made by the trustee, it is most difficult to perceive how the development could have proceeded and the oil marketed without an operating agreement existing between the parties or their predecessors in interest.

The presence of such an operating agreement does not, however, present a problem in relation to the issues raised by Graf and Rubin on appeal. They contend: (1) that the court did not have jurisdiction over the funds representing the production attributable to the 75% interest of Graf and Rubin, as cotenants of Debtor, in the Colorado Chapter X bankruptcy proceedings in light of the fact that neither Debtor nor trustee were in possession of the funds when the Chapter X proceeding was filed; (2) that the court, in the Colorado bankruptcy proceeding, does not have jurisdiction over Graf and Rubin, residents of New York, or over the subject matter of the wells situate in the State of Wyoming; (3) that the court has no authority, ex-parte, to enjoin an action filed in the State of Wyoming concerning funds held by the crude oil purchaser, Marathon Oil Company, in Wyoming, and which does not involve property of the Debtor; and (4) that the Colorado bankruptcy re-organization court is not the proper forum for taking evidence and applying the law relative to the proper accounting between cotenants in an oil and gas lease situate in the State of Wyoming when one claimed cotenant is the Debtor in a bankruptcy proceeding in Colorado, and the other cotenants are residents of New York.

These various contentions are intertwined in the Court’s Order of January 17, 1973, in the action brought by the trustee leading to this appeal from the Court’s denial of Graf’s and Rubin’s Motion to Dismiss the Action and Graf’s Motion to Quash Service. The Court did grant Rubin's Motion to Quash Service, finding that it was defective under Rule 4(d)(1) of the Fed.R.Civ.P. and Rule 4(e)(1) of the Colorado rules.

Graf and Rubin entered into a stipulation with Marathon Oil Company relating to the Snell 5-26 lease in Campbell County, Wyoming, in a civil action filed in the District Court of Natrona County, Wyoming, by Rubin and Graf against Marathon, praying for an order requiring Marathon to pay over the proceeds from production represented by the 75% working interest owned by Rubin and Graf in that lease. This stipulation referred to Judge Arraj’s Order in the Chapter X proceeding staying the Wyoming action relating to the 75% working interest. The crux of the stipulation is to insure that Marathon is not in default for failure to answer or otherwise plead in the Wyoming proceeding in view of the Stay Order and that the abatement of the Wyoming action is without prejudice to the parties.

The trustee contends that: (1) the Order denying the Motion to Dismiss or to Quash Service of Process is “clearly interlocutory and not a final order” thus failing to fall within the categories of orders made appealable by 28 U.S.C.A. § 1292(a); (2) that there was no effort to comply with 28 U.S.C.A. § 1292(b); and (3) that the Court did not direct entry of a final judgment under Rule 54(b) of the Federal Rules of Civil Procedure.

We do not interpret the Court’s Order of January 17, 1973, denying the motions as resting or relying upon these grounds. The Court ruled on the motions following a hearing, clearly treating them as asserting substantial rights. An interlocutory order to be appealable must have been a determination of some right or duty following hearing. Dubnoff v. Goldstein, 385 F.2d 717 (2nd Cir. 1967); Cowans Bankruptcy Law & Practice § 1149 (pp. 1973). We, too, have held that interlocutory orders in bankruptcy proceedings are appealable as a matter of right under the Bankruptcy Act relating to jurisdiction of appellate courts if the order determines a matter adverse to the asserted rights of ' a party. General Electric Company v. Beehive Telecasting Corporation, 284 F.2d 507 (10th Cir. 1960); Harris v. Mills Novelty Co., 106 F.2d 976 (10th Cir. 1939); 11 U.S.C.A. § 47(a).

The motions here considered involved exercise of the bankruptcy court’s discretion. The appellate court will not interfere except upon a showing of a clear abuse of discretion. Consumers Aluminum Co. v. Dresser, 157 F.2d 416 (10th Cir. 1946). The Court found that although Debtor Sierra did not physically occupy the subject leasehold properties situate in the State of Wyoming on the date the reorganization petition was filed, the trustee entered the leaseholds soon afterwards “to complete drilling and place the oil wells into production.” The Court further found that the trustee’s entry was uncontested and that it constituted such possession of the leaseholds as would “give us jurisdiction to determine the rights of the owners and lien claimants.”

We must set aside the Court’s ex-parte Order, following the trustee’s petition, requiring Marathon Oil Company, an Ohio corporation, to turn over to the trustee all proceeds in its possession, as purchaser, from the sale of oil produced, in part, from the Snell lease and directing Marathon to pay over future proceeds from the sale of such oil to the trustee. The petition was granted by the Special Master on November 4, 1971. On February 8, 1973, Marathon moved the Court to vacate the Turnover Order asserting, in part, that the Court had neither the power to summarily adjudicate, nor the requisite jurisdiction over the proceeds or the question of to which parties the proceeds lawfully belonged. Marathon asserted that it would be willing to turn over funds within the constructive possession of Debtor Sierra and therefore within the Court’s summary jurisdiction (presumably those funds representing Debtor’s 25% interest), but that the Turnover Order of November 4, 1971, went beyond this jurisdiction to encompass funds not validly adjudicated to be in Debtor’s constructive possession or that of the trustee.

On August 16, 1972, the bankruptcy court ordered the proceedings brought by Graf and Rubin against 'Marathon Oil Company in the Wyoming state District Court, to recover the proceeds from the sale of oil from the Snell lease attributable to their 75% interest, to be enjoined and stayed pending further order.

The reorganization court rejected Graf and Rubin’s challenges to its jurisdiction either over the res, including the leaseholds and the proceeds or over them in personam. The Court, in rejecting their contentions put its emphasis upon the fact that the Debtor and/or trustee were in possession of the leaseholds, had completed the wells and put them into production, and had incurred expenses as “operator” in possession of the leaseholds. Under these circumstances, the Court held that the language of Section 111 of the Bankruptcy Act, 11 U.S.C.A. § 511 (1970) controls. It provides that the reorganization court has “exclusive jurisdiction of the debtor and its property, wherever located.” From this, the Court reasoned that it had jurisdiction based upon the possession of the leaseholds by Debtor and the subsequent and present possession of the trustee.

Specifically, the Court found- — and the finding is uncontested — that the trustee entered the leaseholds soon after the reorganization petition was filed to “complete drilling and place the oil wells into production.” The Court obviously equated “possession” of the leaseholds with “possession” of the proceeds realized from production held by Marathon.

In order for the reorganization court to have summary jurisdiction to order a turnover of property or funds, two requisites must be present: (1) the money or property directed to be delivered to the trustee or other officer of the court must be a part of the Debt- or’s estate; and (2) the person ordered to turn it over must have had it in his possession or under his control at the time of the Turnover Order. In re Rosser, 101 F. 562 (8th Cir. 1900); 2 Collier, Bankruptcy, ¶ 23.10 [2] (1971). As to property within the actual or constructive possession of the bankrupt, a court of bankruptcy can determine in a summary proceeding controversies involving adverse claims of title, but when possession is held by a third person, adverse claims may not be summarily adjudicated unless by consent, or unless the claim is merely colorable. Thompson, Trustee v. Magnolia Petroleum Co., 309 U.S. 478, 60 S.Ct. 628, 84 L.Ed. 876 (1940); MacDonald v. Plymouth County Trust Co., 286 U.S. 263, 52 S.Ct. 505, 76 L.Ed. 1093 (1932); Harrison, Trustee v. Chamberlin, 271 U.S. 191, 46 S.Ct. 467, 70 L.Ed. 897 (1926); Taubel-Scott-Kitzmiller Company, Inc. v. Fox, 264 U.S. 426, 44 S.Ct. 396, 68 L.Ed. 770 (1924); In re Fox Metals Industries, Inc., 453 F.2d 1128 (10th Cir. 1972); City and County of Denver v. Warner, 169 F.2d 508 (10th Cir. 1948). The bankruptcy court did not have summary jurisdiction over the proceeds of production held by Marathon, a third person, to determine claims thereto. Accordingly, the Colorado reorganization court’s Turnover Order and Stay Order must be set aside. The Turnover Order could not reach the proceeds of production held by Marathon, the crude purchaser. At all material times possession of the proceeds was in Marathon, actual or constructive. Furthermore, the proceeds were not — in their entirety — the “property” of the debtor. 11 U.S.C. § 511.

At the date of the Court’s Turnover Order, Graf and Rubin had initiated a suit against Marathon, as claimants of a 75% working interest, in the District Court of Natrona County, Wyoming, praying for an accounting of proceeds due them from production of crude oil purchased by Marathon from certain leases situate in Big Horn County, Wyoming. That proceeding was stayed by the Order of the reorganization court.

We hold that the reorganization court erred in assuming plenary jurisdiction over the parties in support of its Turnover Order or Stay Order. See 6 Collier, Bankruptcy, ¶ 3.19 [1] (1972), and cases cited therein. Marathon held the proceeds of production, as to the 75% interest, adverse to the trustee when the reorganization court improperly took “possession” thereof. There is no showing that the Wyoming suit “would embarass the administration of the debtor’s estate.” Diners Club, Inc. v. Bumb, 421 F.2d 396 (9th Cir. 1970). 28 U.S.C.A. § 959 evidences the congressional intent that there are certain cases where the trustee may have to resort to other forums than the reorganization court in plenary rather than summary proceedings.

We have recognized that the bankruptcy court, pursuant to authority to collect property of the bankrupt and determine controversies in relation thereto, may make such orders, issue such process and enter such judgments in addition to those specially provided for as may be necessary to enforce provisions of the Bankruptcy Act. City and County of Denver v. Warner, supra. The reorganization court may direct and authorize the trustee to make appearance in the reinstated Wyoming state court proceeding necessary to fully protect all claims of Debtor to the proceeds in the possession of Marathon.

The trustee’s uncontested “possession” of the Wyoming leaseholds vests legal custody of these specific real properties in the Colorado reorganization court, authorizing that court to entertain a plenary proceeding to adjudicate that portion of the trustee’s petition praying for a declaration of ownership and the existence, nature and priority of its lien rights and those of others in all of the Wyoming leaseholds and a foreclosure thereof.

We are not unmindful of the interrelation between the two proceedings, i. e., one as the proceeds held by Marathon applicable to certain producing wells in the state court of Wyoming and a determination of ownership in the leaseholds and lien rights therein. We are aware that like interrelationship may arise relating to other leaseholds in the possession of the trustee. It may very well be that the reorganization court may determine to direct the trustee to initiate suits in Wyoming or elsewhere to make claim upon the proceeds representing debtor’s 25% interest realized from production, together with any claim the trustee may have against the interest of other owners out of such proceeds as reimbursement for costs expended in development, completion and production from the leaseholds.

Legal custody of specific property by one court of competent jurisdiction withdraws it, so far as is necessary to accomplish the purpose of that custody, until the purpose is completely accomplished, from the jurisdiction of every other court, as between the jurisdiction of a state or other court and a court of bankruptcy. Metcalf v. Barker, 187 U.S. 165, 23 S.Ct. 67, 47 L.Ed. 122 (1902). While it is true that to administer property situate in a territorial district other than that of the bankruptcy court, it is often necessary for the bankruptcy court to authorize the trustee to invoke the aid of the United States District Court in the district where the property is located and to undertake so-called ancillary proceedings; this is done only in order that the trustee take possession of the property and proceed to reduce it to cash so that it may be forwarded to the bankruptcy (local) court for its administration. Cowans Bankruptcy Law & Practice § 835 (1963). Bankruptcy courts “have summary jurisdiction to adjudicate controversies relating to property over which they have actual or constructive possession.” Cline v. Kaplan, 323 U.S. 97, 65 S.Ct. 155, 89 L.Ed. 97 (1944). To the same effect it has been held that while recognizing that a trustee has only the right to pursue claims belonging to the debtor estate, the Court must determine title to the property and adjudicate lien rights therein im order to finally determine the nature and extent of the claim belonging to the estate. Ex Parte Baldwin, 291 U.S. 610, 54 S.Ct. 551, 78 L.Ed. 1020 (1934); In Re American National Trust, 426 F.2d 1059 (7th Cir. 1970); Duda v. Sterling Mfg. Co., 178 F.2d 428 (8th Cir. 1949); In Re Cosmopolitan Bond & Mortgage Co., 79 F.2d 457 (7th Cir. 1935), cert. denied 296 U.S. 657, 56 S.Ct. 382, 80 L.Ed. 468 (1935).

It is true that a determination of what matters are appealable can be an elusive question. In general it is possible to appeal both interlocutory and final “proceedings in bankruptcy” but no interlocutory matters in “controversies arising in proceedings in bankruptcy.” In Re Brendan Reilly Associates, Inc., 378 F.2d 30 (2nd Cir. 1967). Definitions of these terms have been made, but are difficult to apply. Standard Electronics Corporation v. Kenneally,

336 F.2d 394 (8th Cir. 1964), Annot., 5 A.L.R.2d 1124 (1966). The rights and/or duties asserted within the am-bits of the motions filed and the Court’s rulings thereon are substantial proceedings in bankruptcy. The trustee’s reliance on 28 U.S.C.A. § 1292(a) and (b) and Rule 54(b) of the Federal Rules of Civil Procedure are misplaced. It is well settled that an order dismissing the action, as distinguished from dismissal of the complaint, is a final judgment. But beyond this, jurisdiction vests in the appellate courts to review any judgment, order or decree upon a complaint of an aggrieved party from the bankruptcy court, both as to matters of law and of fact where the matter in controversy was determined by the bankruptcy court, without a jury. Further, such appeals may be taken without prior allowance of the appellate court in cases where the order, decree, or judgment complained of involves less than $500. 11 U.S.C.A. §§ 47 and 48; General Electric Company v. Beehive Telecasting Corporation, supra; Scott v. Jones, 115 F.2d 133 (10th Cir. 1940). The language employed in DeLaney v. City Investment Company, 224 F.2d 808 (10th Cir. 1955), is best explanatory of our holding that the instant appeal is well taken:

The record poses at the threshold a question concerning the jurisdiction of this court to entertain the appeal. Section 24, sub. a of the Bankruptcy Act, as amended, 11 U.S.C.A. § 47, sub. a, makes appealable as a matter of right virtually all interlocutory orders in proceedings in bankruptcy involving $500 or more. (Citations omitted). But in order to be appeala-ble under the statute, an interlocutory order must determine something. It must substantially determine some issue or decide some step in the course of the proceeding. It must have the character of a formal exercise of judicial power affecting the asserted rights of a party. An interlocutory order which determines nothing adversely to the asserted rights of a party is not reviewable on direct appeal therefrom. (Citations omitted).

224 F.2d at 809, 810.

We affirm the reorganization court’s Order declaring plenary jurisdiction to hear and adjudicate title and lien claims, together with foreclosure rights, applicable to the Wyoming leaseholds in the possession of the trustee. We reverse the reorganization court’s Order declaring its jurisdiction over the proceeds of production held by Marathon Oil Company, the crude oil purchaser, from producing wells in Wyoming. We remand to the reorganization court with instructions to quash the Turnover Order and the Stay Order. The Court is further directed to instruct the Clerk to remit the proceeds turned over, together with all accrued interest, to Marathon Oil Company when, in the Court’s discretion, the interests of all of the parties making, or who may make claims thereto, including the trustee, may be adequately protected.

Affirmed in part, reversed in part and remanded.


author: COFFIN, Chief Judge.

text:
    PROVIDENCE WASHINGTON INSURANCE COMPANY, Plaintiff-Appellant, v. James T. LYNN, in his capacity as the Secretary of Housing and Urban Development, Defendant-Appellee.
    No. 73-1330.
    United States Court of Appeals, First Circuit.
    Argued Jan. 8, 1974.
    Decided Feb. 21, 1974.

      John W. Kershaw, Providence, R. I., for plaintiff-appellant.
    Anthony J. Steinmeyer, Atty., Dept. of Justice, with whom Irving Jaffe, Acting Asst. Atty. Gen., Lincoln C. Almond, U. S. Atty., and Morton Hollander, Atty., Dept. of Justice, were on brief, for defendant-appellee.
    Before COFFIN, Chief Judge, ALDRICH and McENTEE, Circuit Judges
   COFFIN, Chief Judge.

This is an appeal by a private insurance company, insurer of a state prison, from an adverse judgment in its suit against its federal reinsurer, the Department of Housing and Urban Development (HUD). The question for review is whether the district court erred in concluding that the fire loss, under the circumstances described below, was not caused by a “riot” or a “civil disorder” within the meaning of the policy issued pursuant to the Urban Property Protection and Reinsurance Act of 1968, 12 U.S.C. §§ 1749bbb-1749bbb-21.

At about 10:30 in the morning of May 23, 1969, three inmates of the maximum security section of the Adult Correctional Institution (ACI), Cranston, Rhode Island, set fire to the facility by pushing a burning mop through a tiled roof. The resulting conflagration caused physical damage to the building exceeding $300,000. During the fire prisoners in the maximum security section, some of whom were locked in their cells at the time, had to be evacuated, and transferred to other portions of the ACI or to other institutions. Local firefighters and state and local police were called in to control the blaze and assist in maintaining security. No disturbances occurred among the prison population during this time, nor was the arson linked to any other incidents, either prior to or subsequent to this event.

The three perpetrators apparently thought that they were carrying out their deed secretly. Unhappily for them they were seen by other inmates, and after an investigation of the cause of the fire, were indicted, tried, and convicted of arson. Throughout the criminal proceedings the accused prisoners maintained their innocence and no motive for the burning was ever established. Their appeals to the state supreme court were denied, State v. Carsetti, 306 A.2d 166 (R.I. June 1973). The present action is not concerned with criminal responsibility, but seeks to determine, in a dollars and cents meaning, who shall “pay” for the consequences of the crime.

The Adult Correctional Facility was insured by a consortium of companies, including plaintiff Providence Washington Insurance Company. Providence Washington paid out to the state as its share of the loss $69,214. Plaintiff then filed a claim for $37,408.88 under its reinsurance contract with HUD. Under this reinsurance contract, which is the Standard Reinsurance Contract (1969-1970), the government engaged to reimburse the insurance carrier for a set portion of any payments made by the carrier to its insured under certain lines of property insurance so long as the property losses were caused by “riot or civil disorder”. The reinsurance was made available by HUD pursuant to 12 U.S.C. § 1749bbb, the National Insurance Development Program, which was part of a package of remedial housing legislation passed by the Congress in the wake of the urban disorders of the mid-1960’s.

The plaintiff’s reinsurance claim was rejected by HUD on the basis of its finding that the loss was not the result of a riot or civil disorder as defined in the contract. The reasoning of the agency was set forth in a letter dated August 26, 1971 from the Federal Insurance Administrator to plaintiff which letter constitutes the final denial of plaintiff’s claim:

“To warrant payment of the Cranston loss it would be necessary to establish either that this loss occurred as a result of a common law riot as defined in paragraph (A) of Section XV(2) of the Contract or else that it occurred in a ‘terroristic’ manner with ‘civil disruption or civil disobedience as a primary motivation’ as required by the alternative (B) and (C) definitions of that section.
“We have consistently taken the position that the (B) and (C) definitions, which are in effect extensions of riot coverage under the discretionary authority conferred by the Congress in enacting reinsurance protection against the 1965-1968 type of mass urban riot, require some showing of racial or other political or quasi-political motivation, rather than merely an unknown motivation or a motive of gain, animosity, diversion (for escape or to cover some other crime) or the like, for essentially personal reasons. “The transcript of the trial . does not sufficiently establish the required quasi-political motivation of the perpetrators . . . nor does it establish that a mass riot (defined as a ‘tumultuous disturbance of the public peace’) took place. The motivation for the setting of the fire is still essentially unknown.
“Consequently, we do not believe that the motivation test has been met, and the claim is therefore again denied.”

After the denial of its claim plaintiff brought this action in the United States District Court for the District of Rhode Island pursuant to the provisions for judicial review of such denials set out in 12 U.S.C. § 1749bbb-11. The district court agreed with the agency that plaintiff had failed to establish that the loss met the definition of “riot or civil disorder” set forth in the reinsurance contract and gave judgment for defendant, Providence Washington Insurance Co. v. Romney, 361 F.Supp 427 (D.R.I.1973).

The reinsurance contract contains three definitions of riot or civil disorder, which are set out in section XV(2), paragraphs (A), (B), and (C). Paragraph (B) requires, inter alia, “three or more unlawful and terroristic acts or occurrences” and plaintiff concedes that it is inapplicable here. The two remaining paragraphs require analysis in order to evaluate plaintiff’s contention that both the agency and the court below erred in finding the ACI fire encompassed by neither of them. Paragraph (A) contains the following definition:

“(2) ‘riot’ or ‘civil disorder’ means: (A) any tumultuous disturbance of the public peace by three or more persons mutually assisting one another, or otherwise acting in concert, in the execution of a common purpose by the unlawful use of force and violence resulting in property damage of any kind.”

It is clear that this definition corresponds with the common law concept of riot. We can find no case dealing with common law riot which would extend that concept so far as to encompass this incident. We therefore agree with the court below that the arson at ACI was not a riot as defined in paragraph (A) of the reinsurance contract.

Plaintiffs primarily rely on the consequences flowing from the arson, rather than the act of setting the fire itself, to establish a paragraph (A) riot. These consequences include the evacuation and transport of displaced prisoners, the need for increased security, the necessary excitement and activity occasioned by a major fire, and the presumed fear and confusion caused by a blaze in a prison, particularly among those prisoners who were in lockup when the fire broke out. Whether this and other results of the arson at ACI might together constitute a “tumultuous disturbance of the public peace” we need not determine. It is a clear doctrine of the common law that a stealthy act of destruction is not transformed into an act of riot because upon later discovery of the damage there is a public disturbance. 11 G. Couch, Cyclopedia of Insurance Law § 42.472 (2d ed. 1963). International Wire Works v. Hanover Fire Ins. Co., 230 Wis. 72, 283 N.W. 292 (1939).

To show that a riot occurred, therefore, plaintiff must show that the act of setting the fire was a tumultuous disturbance of the peace. Plaintiff attempts to demonstrate that it has met this requirement by pointing out that in the indictment of the three accused arsonists is the standard statement that the illegal conduct was “Against the form of the statute in such case made and provided, and against the peace and dignity of the state”. But the fact that a felony like arson offends the peace and dignity of the state cannot be construed to be a finding that a riot has occurred. Presumably three undetected nighttime burglars would be similarly charged. Moreover, a riot has a number of additional characteristics, including being “tumultuous”. The quiet and stealthy manner in which the ACI fire was set cannot possibly be interpreted as a “tumultuous disturbance of the public peace” unless common sense, as well as common law, be discarded in the process of defining the words. Plaintiff has failed to establish this part of the definition of riot as set out in paragraph (A).

Paragraph (A) also requires that there be “unlawful use of force or violence”. In a similar context these terms have been construed as follows:

“The question comes, then on the construction of the terms ‘force’ or. ‘violence.’ Do they mean merely the manual force necessary to accomplish the act, or do they mean something more? There is no doubt that under the common law ‘force or violence’ meant a concerted intent of the perpetrators to mutually assist one another against all who should oppose them in the doing of an unlawful act. 3 Greenleaf on Evidence, 16th ed., sec. 216.” Walter v. Northern Insurance Co. of New York, 370 Ill. 283, 18 N.E.2d 906, 908 (1939).

The cases wherein destructive activity has been found to be riotous have been ones where the illegal act was accompanied by the use of force, or the threat of use of force, against anyone who might interfere with the criminal enterprise. See e. g., Insurance Co. of North American v. Rosenberg, 25 F.2d 635 (2d Cir. 1928); Brous v. Imperial Assur. Co., 130 Misc. 450, 224 N.Y.S. 136 (1927), aff’d, 223 App.Div. 713, 227 N.Y.S. 777 (1928); Germania Fire Ins. Co. v. Deckard, 3 Ind.App. 361, 28 N.E. 868 (1891). The only other case to construe a reinsurance contract under the National Insurance Development Program reached a conclusion consistent with these cases. In Bituminous Casualty Corp. v. Romney, (amended mem. opinion, E.D.Ky.1973), the court found a riot, as defined in a provision of the contract identical to the one in issue here, in the actions of three or four men who overpowered, bound and threatened the night watchman at a coalfield and who then destroyed valuable mining equipment with explosives. On the other hand, stealthy destructive activity accomplished without force or threat of force to those who might interfere has been found not to constitute a riot, Salem Mfg. Co. v. First American Fire Ins. Co., 111 F.2d 797 (9th Cir. 1940); Hartford Fire Ins. Co. v. War Eagle Coal Co., 295 Fed. 663 (4th Cir. 1924); International Wire Works v. Hanover Fire Ins. Co., 230 Wis. 72, 283 N.W. 292 (1939); Walter v. Northern Ins. Co. of New York, supra.

, Plaintiff argues that the fact that the arsonists were seen in the act of setting the fire makes their action the kind of public display of force which is encompassed within the term “riot”. We deem it strange doctrine that if a crime merely happens to be overseen (or overheard), it becomes a riot. Without authorities, we do not embrace it.

Plaintiff has therefore failed to establish those elements of a common law riot which distinguish that crime from all other destructive acts. The act of setting the fire was not a tumultuous public disturbance, and did not involve “unlawful use of force or violence”.

Under Paragraph (C) of the reinsurance contract “riot” or “civil disorder” is defined as:

“any other unlawful and terroristic act or occurrence, apparently having civil disruption or civil disobedience as a primary motivation, resulting in intentionally-caused property damage of any kind in the amount of $2,000 or more, which may be determined by the REINSURER, on the basis of evidence submitted by the COMPANY, to have been, under the circumstances, a form of civil disorder.”

Plaintiff asserts that the setting of the ACI fire was a terroristic act which, under the circumstances, apparently had civil disruption or civil disobedience as a primary motivation. Although there is absolutely no evidence of the motivation of the perpetrators of the arson, the argument is made that it may be presumed that one who sets fire to a prison intends the kind of results which actually occurred, including evacuation of prisoners, fire fighting efforts, and excitement, and that these results constitute “civil disruption or civil disobedience”. Courts normally accord substantial deference to the decisions of administrative agencies acting within the scope of their statutory function, as HUD clearly was doing here. In addition, unlike paragraph (A) this contract provision specifically makes the finding of civil disorder a matter of discretion. It was well within this “double” discretion of the agency to refuse to indulge the presumption as to motivation urged upon it by plaintiff and to disagree with plaintiff that the reaction to the fire constituted civil disruption, civil disobedience or civil disorder.

We do not find plaintiff aided by its argument in reference to two criminal statutes passed in the same year as the Reinsurance Act. The Civil Obedience Act of 1968, 18 U.S.C. §§ 231-233, makes it a crime to give certain kinds of assistance in furtherance of a civil disorder. “Civil disorder” is defined simply as “any public disturbance involving acts of violence by assemblages of three or more persons [resulting in or threatening] . . . damage or injury . . . .”18 U.S.C. § 232(1). The other relevant penal statute passed in that year, 18 U.S.C. §§ 2101, 2102, involves inciting, committing or aiding a riot. “Riot” is defined as “a public disturbance involving an act [or threat of an act] of violence by one or more persons part of an assemblage of three or more persons . [resulting] in damage or injury . . . .” 18 U.S.C. § 2102(a). Although plaintiff makes a respectable argument that these laws and HUD’s definition of riot or civil disorder contained in paragraph (C) of the reinsurance contract are inconsistent, we agree neither that any substantial inconsistency can be found, nor, even if any inconsistency could be discovered, that it would make HUD’s action improper. As to this latter point, we think that, in view of the fact that these statutes were passed to achieve very different purposes, their terms need not be forced into the same mold. Congress may use a broader term for identifying activities which it chooses to proscribe, and use, or allow an agency to use, a narrower term to identify what losses the federal government shall reimburse.

Paragraph (A) of the reinsurance contract, 18 U.S.C. § 232(1) and 18 U.S.C. § 2102(a) all deal with public actions. Paragraph (A) speaks in terms of “tumultuous disturbance of the public peace”. The two criminal statutes use very similar language, “public disturbance involving . . . acts of violence”, the plain meaning of which is that the act of violence is contemporaneous with, and part of, the public disturbance. They would exclude a covert act which was related to public disturbance only by a causal link. Thus, only paragraph (C) of the reinsurance contract could encompass a covert act and HUD’s requirement that some racial or political motivation be shown cannot be seen as inconsistent with the other congressional enactments mentioned above. But in addition to this, HUD’s motivation test is quite reasonable. It means that if an act of destruction is not public in the sense that it is openly done, it must be public in the sense of its purpose. After all, the word “civil” (as in civil disorder, civil disobedience, and civil disruption) could appropriately be equated with one of its primary definitions: “the relations of citizens one with another or with the body politic or organized state or its divisions and departments”. Webster’s Third International Dictionary. If an action is done neither openly or for a public purpose then the term “civil” would be deprived of any meaning. And beyond the definitional problem is the very practical consideration that without some such limitation the scope of paragraph (C) could well reach to any illegal and destructive act at all. We would hesitate to so magnify the breadth of coverage without definite evidence that such was the legislative intent.

Under paragraph (C) plaintiff had the burden of bringing to the attention of the agency evidence which would demonstrate that a “civil disorder” had occurred. The court below properly found that plaintiff had failed to do so and that HUD acted in conformity with the reinsurance contract in denying the reinsurance claim.

Affirmed.

      . There is no statutory definition of these terms. 12 U.S.C. § 1749bbb-2(a) (9) defines “losses resulting from riots or civil disorders” as “losses resulting from riots or civil disorders under policies for standard lines of property insurance for which reinsurance is offered under section 1749bbb-7 of this title, as determined under regulations of the Secretary [of HUD].” 12 U.S.C. § 1749bbb-2(b) adds that, “The Secretary is authorized to define, by rules and regulations, any technical or trade term, insofar as such definition is not inconsistent with the provisions of this subehapter.” Although regulations have been published containing definitions of the terms “riot” and “civil disorder”, these definitions add little or nothing to those contained in the reinsurance contract. In the regulations in effect at tie time this contract was operative the terms are defined in exactly the same language as used in the contract. Present regulations differ slightly, but add nothing of substance.

      . “An offense committed secretly does not constitute a riot. Thus riot insurance contemplates something more than violent acts done by three or more persons in stealth without the knowledge of others who might resist their acts or summon the armed force of the city. Even though there is terror or disturbance at the time the damage is discovered, a crime committed secretly away from the public view is not a riot, for no riot exists in the absence of publicity at the time of the violent or tumultuous acts.” 11 G. Couch, Cyclopedia of Insurance Law § 42.472 at 225.

      . Plaintiff also asserts that much of paragraph (C) is ambiguous, and that under the insurance law doctrine of construing ambiguous language in an insurance contract against the insurer we should strike the word “terroristic” and the phrase commencing with the word “apparently” and ending with “motivation”. Even assuming that the rule of construction against the insurer applies when the insurer is the federal government, but cf. Federal Crop. Ins. Corp. v. Merrill, 332 U.S. 380, 383 n. 1, 68 S.Ct. 1, 92 L.Ed. 10 (1947), we can see no ambiguity such as would justify this kind of extensive surgery upon the contract language.

      . In denying the reinsurance claim IIUD gave as one ground that plaintiff had failed to show “racial or other political or quasi-political motivation” for the ACI fire. The agency stated that it has “consistently taken the position” that the paragraph (C) (and paragraph (B)) definitions of riot or civil disorder require such a showing. We think it proper to note our concern with the failure of the agency to include this position in its published regulations. Under 12 U.S.C. § 1749bbb-2(b) the Secretary is authorized to define technical terms “by rules and regulations”, and under 12 U.S.C. § 1749bbb-17 “Any rules or regulations of the Secretary shall only be issued after full consultation with the [Advisory] Board and after notice and hearing, if granted, as required by the Administrative Procedure Act.” In light of this congressional concern that definitions of terms be established and promulgated in a regular and public manner it would have been preferable for HUD to have included the racial or political motivation test in the published regulations.

      . As pointed out by both parties to this litigation the legislative history of the Urban Property Protection and Reinsurance Act of 1968 includes the following statement:
      “It has been pointed out that there has recently been a pattern of losses resulting from intentionally caused fire or other property damage which may or may not be connected in time or place to riots or group activity, but which could be determined to be a form of civil disorder. It is the view of the committee that losses of this nature might be considered by the Secretary when he issues regulations delineating the precise scope of ‘losses resulting from riots or civil disorders.’ ” House Report No. 1585, Committee on Banking and Currency, 90th Congress, 2d Session, at 80, U.S.Code Cong. & Admin. News 1968, p. 2955.
      The precatory language of this statement, and its reference to a “pattern of losses” indicates that HUD’s disallowance of this claim did not violate congressional intent, particularly in view of the isolated nature of the loss involved. Furthermore, neither this nor any other item in the legislative history to which we have been referred is in any way opposed to the motivation test established by the agency.