author: SPRECHER, Circuit Judge.

text:
    The CLARION CORPORATION, Plaintiff-Appellant, v. AMERICAN HOME PRODUCTS CORPORATION and Lehman Brothers, Defendants-Appellees.
    Nos. 73-1418, 73-1419.
    United States Court of Appeals, Seventh Circuit.
    Argued Feb. 22, 1974.
    Decided April 2, 1974.
    As Amended on Denial of Rehearing and Rehearing En Banc May 17, 1974.

      Paul J. Klein, Chicago, 111., for plaintiff-appellant.
    Bryson P. Burnham, Lionel G. Gross, William R. Jentes, Chicago, 111., for defendants-appellees.
    Before KILEY, Senior Circuit Judge, SPRECHER, Circuit Judge, and JAME-SON, Senior District Judge.

       Senior District Judge William J. Jameson of the District of Montana is sitting by designation.

   SPRECHER, Circuit Judge.

This appeal represents a pro se attempt to relitigate matters which have become final either through failure to appeal in timely fashion or through a prior concluded appeal.

The Clarion Corporation brought an action against American Home Products Corporation and Lehman Brothers on March 21, 1967 for á “finder’s fee” of $980,000 alleged to be due as a result of its activities in bringing together the principals of American Home and Ekco Products Company, culminating in the merger of Ekco into American Home on November 5, 1965. Count I of the complaint alleged an oral agreement of March 20, 1965 for % of 1% (which was alleged to be $980,000) of the gross consideration paid for the acquisition of Ekco. Count II alleged that the reasonable compensation for services requested and rendered was $980,000. Count III sought $980,000 from Lehman Brothers for allegedly inducing the breach of the oral contract alleged in Count I.

American Home in its answer admitted that Clarion had performed some services in connection with bringing Ekco and American Home together and that American Home had assumed responsibility for paying whatever finder’s fee might be due.

American Home pleaded as one affirmative defense that Clarion had agreed in a writing addressed to Ekco and signed by Clarion’s president, and sole shareholder, Paul J. Klein, on August 5, 1962, “that in the event a merger of your company is actually consummated with American Home Products Corporation, we are willing to accept $100,000.00 in settlement of our fee.” The writing concluded with “we would naturally appreciate your good offices should the circumstances be amenable to further reviewing the amount of the fee.” On or about October 1, 1965, American Home sent Clarion its check for $100,000, which it held but did not cash.

Extensive despositions were taken, written interrogatories were exchanged and discovery generally proceeded apace. Discovery indicated that the 1962 attempts to consummate the merger had failed and that the attempts were revived in 1964; that Clarion’s claim rested upon oral discussions between Arthur Keating, Chairman of the Board of Ekco, and Klein; that the merger was completed on November 5, 1965; that Lehman Brothers received on or about September 30, 1965 a fee of $916,064; that Arthur Keating died in 1967; and that at some time in 1965 consideration had been given by American Home to offering Clarion $200,000 for its services and if such an offer was formally or informally made to Klein, he had rejected it.

On January 30, 1970, Clarion was given leave to file an amended complaint, which repeated Counts I, II and III, but added Count IV, charging a conspiracy among officials of American Home, Ekco and Lehman Brothers to pay a $916,064 fee to Lehman and to refuse to pay Clarion the reasonable value of its services. The basis for the adding of Count IV was the fact that discrepancies had apparently been discovered as to whether the Lehman fee was payment for its services in the American Home-Ekco merger or was in fact payment in whole or substantial part for other unrelated services performed for Ekco. A discovery dispute also centered around Lehman’s contention that finders’ fees were customarily 10 to 15% of investment bankers’ fees (which presumably would make a finder’s fee of $100,000 reasonable). In view of the written agreement of 1962 establishing Clarion’s fee at $100,000 and Lehman’s contention that $100,000 was reasonable, the probability of Clarion’s succeeding under Counts I and II was highly speculative and undoubtedly motivated the adding of Count IV.

The case was set for trial on April 8, 1970. Literally on the eve of trial (the day and night of April 7) the parties agreed to a settlement of fourteen annual payments of $35,000 each, or a total amount of $490,000. Consequently, the case was dismissed on April 8 without prejudice and with the leave of court to reinstate if necessary, pending the completion of complicated settlement documents. On that date, the trial judge placed on the record the fact that by accident he had run into Klein the night before while the judge was taking his evening walk and that Klein had reported the details of the settlement at that time to the judge.

The settlement documents required some ten months to prepare. When they were ready, however, Klein refused to execute them on behalf of Clarion because of a dispute he was having with Clarion’s lawyers in regard to attorneys’ fees. Upon American Home’s motion, the court on February 8, 1971 reinstated the case and dismissed it with prejudice, retaining jurisdiction for the sole purpose of supervising (if requested) the exchange of settlement documents. On February 8, Klein advised the court that “I am prepared to . execute the documents” and “I am prepared to close the documents.” He also filed a memorandum with the court which set forth the attorney fee dispute and concluded with “I stand ready . . . to go ahead with Mr. Burnham in closing the settlement agreement.” The February 8, 1971 judgment order was not appealed.

On March 16, 1971, the court ordered that the parties exchange executed settlement documents and that defendants deliver the first annual payment of $35,000, the proceeds of which were to be divided $17,707.44 to Clarion’s attorneys for fees and the balance to Clarion. At this point, Klein proceeded to act without counsel on behalf of Clarion and appealed the order.

We affirmed the district court in Clarion Corp. v. American Home Products Corp., 464 F.2d 444 (7th Cir. 1972) stating:

“Plaintiff’s president has not presented to this court or the District Court any valid reason why the lien imposed upon the first installment of the settlement proceeds should not be enforced. Indeed, the only defense offered by plaintiff in regard to the claim for attorneys’ fees is that the ease for Clarion against American and Lehman was not handled properly; and yet, as indicated earlier, when the settlement was offered, plaintiff accepted the terms and conditions thereof without objection. Thus, this court has no choice but to affirm the decision of the lower court. Moreover, even if we were free to go back into the original case and scrutinize the conduct of plaintiff’s attorneys, we would reach the identical conclusion. However, since plaintiff accepted the settlement without objection or appeal, and because he has appealed only the lower court’s decision as to the enforcement of the lien, we must affirm the District Court.”

Following remand to the district court, the former Clarion attorneys sought relief pursuant to Rule 70 Fed. R.Civ.P. and shortly thereafter Klein, still acting without counsel on behalf of Clarion, moved to vacate the February 8, 1971 judgment order to “redress serious inequities.” Klein’s motion was denied on March 1, 1973. This order was appealed under our No. 73-1418.

On March 5, 1973, the court ordered that (1) Clarion Corporation be divested of all right, title and interest in and to $20,486.21 (the original amount of $17,707.44 plus interest and costs) and that (2) defendants deduct and pay that amount to the attorneys and receive a credit for it against the initial installment of $35,000 owed to Clarion under the settlement. This order was appealed under our No. 73-1419. We were advised at oral argument that checks for the $35,000 installments have been tendered to Clarion each year.

Although it is extremely difficult to determine on what legal basis Klein seeks to continue to litigate the judgment order and the attorneys’ lien, apparently the grounds are: (1) in No. 1418, the client’s consent to the settlement was given without complete knowledge of the facts; and (2) in No. 1419, the attorneys’ lien is conditioned upon the settlement and if one falls so must the other.

Compromises of disputed claims are favored by the courts. Williams v. First National Bank, 216 U.S. 582, 595, 30 S.Ct. 441, 54 L.Ed. 625 (1910). Abraham Lincoln is often quoted in his advice to lawyers:

“Discourage litigation. Persuade your neighbors to compromise whenever you can. Point out to them how the nominal winner is often a real loser — in fees, expenses and waste of time. As a peacemaker, the lawyer has a superior opportunity of being a good man.”

Former Canon 8 of the Canons of Professional Ethics provided that “[w] henever the controversy will admit of fair adjustment, the client should be advised to avoid or to end the litigation.” The present Code provides this ethical consideration (EC 7-5) :

“A lawyer as adviser furthers the interest of his client by giving his professional opinion as to what he believes would likely be the ultimate decision of the courts on the matter at hand and by informing his clients of the practical affect of such decision.” On April 2, 1970, as the April 8 trial

date neared, Clarion’s attorneys furnished Clarion and Klein with an eight-page single-spaced letter reviewing in detail the strength and weakness of Clarion’s cause of action: the difficulties of proving an oral contract when the opposing discussant is dead; the battle of experts as to what would be a reasonable fee; the written agreement for $100,000 and the $100,000 tendered cheek; the jury’s possible feeling that “$100,000 is a lot of money;” the credibility factor where Klein’s testimony is contradicted by high executives of American Home.and Lehman Brothers; the unexpected and unknown factors which may influence a jury; the complications of trial and the difficulties of introducing some of the evidence; the expenses of discovery and trial preparation, and the additional cost of a lengthy trial and possible appeal; the time required to collect any judgment after trial and appeal; the chances of reversal on appeal and the possibility of retrial; and many others. The attorneys concluded that a settlement in the range of $450,000-$490,000 “would represent an excellent settlement in light of the probabilities of what will happen at trial;” that “we do not think the chances are 50-50 that the verdict will be as much as $450,000; in fact my own view is that the chances of a verdict as large as that are about one in five;” and that “you must decide” what to do.

Significantly, the attorneys’ letter also pointed out:

“The sole objective of the litigation is to get money for you; it is not to visit some kind of revenge on the defendants, nor is it to make an example of them so that, for fear of further repercussions, they will mend their ways.
“. . . [I] t is a major mistake to let extraneous factors — such as ‘proving’ something to someone — get in the way of a hard-headed, dollars and cents, monetary evaluation of the case.”

The Code of Professional Conduct includes these further ethical considerations (EC 7-8) :

“In assisting his client to reach a proper decision, it is often desirable for a lawyer to point out those factors which may lead to a decision that is morally just as well as legally permissible. He may emphasize the possibility of harsh consequences that might result from assertion of legally permissible positions.”

Once the lawyer has fulfilled his obligation to evaluate the situation, the final decision whether to settle or not is for the client alone.

In this case the client (Klein acting as and for Clarion) personally advised the trial judge on the night of April 7, 1970, that the case had been settled for $490,000; ten months later on February 8, 1971, he appeared in open court and at least twice acknowledged that he and Clarion had approved the settlement; and at that time he also filed a written memorandum stating that but for his dispute about the amount of the legal fees he stood ready to close the settlement. As late as with the filing of his brief in this court on June 20, 1973, Klein stated that he “felt there was no other practical alternative but to accept and to use the initial $35,000 settlement proceeds to employ new counsel to investigate what was legally at fault with the handling of the case.” In other words, he believed that he could use the settlement proceeds for the purpose of overturning the settlement.

As this court said in Cummins Diesel Michigan, Inc. v. The Falcon, 305 F.2d 721, 723 (7th Cir. 1962):

“Federal and State Courts have held under a great variety of circumstances that a settlement agreement or stipulation voluntarily entered into cannot be repudiated by either party and will be summarily enforced by the Court [citing cases].”

The only possible ground on which Klein could upset the voluntarily entered settlement would be that it was procured through fraud. One who relies upon fraud, misrepresentation, or concealment must sufficiently allege and prove it. Clark v. Barlow, 74 App.D.C. 328, 122 F.2d 337, 341 (1941). The allegations and proof must be clear and convincing and must show (1) a representation, (2) its falsity, (3) its materiality, (4) the speaker’s knowledge of its falsity or ignorance of its truth, (5) his intent that it should be acted on by the person and in the manner reasonably contemplated, (6) the hearer’s ignorance of its falsity, (7) his reliance on its truth and (8) his right to rely thereon. McCarthy v. Cahill, 249 F.Supp. 194, 196 (D.D.C.1966).

Klein has filed a great volume of documents in the district court and here. He has had ample time to ponder what his fancied grievances may be. Aside from generally alleging a conspiracy among the trial judge, all of Clarion’s and his former attorneys, and most of the local bar (for failing to represent him in one case where the time to appeal has long since passed and another case where appeal was taken and lost), he has developed nothing to allege any of the elements to show that the'settlement was procured by fraud.

We have already in our previous opinion dealt with Klein’s unpersuasive complaint that Clarion’s case had somehow not been properly handled, 464 F.2d 444, 445-446. Nevertheless, we have carefully read through all of Klein’s writings to attempt to fathom his grievances and we have also gone through the entire record in this case to try to determine whether anything he has said has any basis in fact or whether something appears in the record which he has not alluded to but which bears the slightest trace of unfairness to or overreaching of Clarion or Klein. We find nothing of that nature.

The case was diligently and competently handled by all of Clarion’s and Klein’s former counsel. In view of the voluntary settlement, the trial judge had no opportunity to display any prejudice against Clarion or Klein. The settlement is unquestionably an excellent and remunerative one. His former attorneys advised him that the purpose of litigation is not “revenge” or to “make an example” of defendants.

What finally emerges from documents Klein has filed is the complaint that the strategy of the case was mishandled. If this were so, it would not have any legal effect at this point. But it is manifestly not so. We have read the discovery in the form of the'depositions and interrogatories and answers. The strategy was sound and at times exceedingly adept. Klein objects, for example, to the strategy of adding Count IV, but it was probably this count which persuaded the favorable settlement. Klein objects at one time that the cost of discovery was “prohibitively expensive” and then devotes the remainder of his brief to complaints about the failure to “follow through” on further discovery of insignificant details. We found that Klein was personally present at virtually every deposition. He was, far more than the average client, aware of every fact discovered and of every strategy pursued. When he approved of and consented to the settlement, he was fully informed and well-advised.

Klein’s course of action since the dismissal of the case on February 8, 1971 (as to No. 73-1418) and since our opinion in 464 F.2d 444 (as to No. 73-1419) has been frivolous and obstructive and has caused a shameful waste of judicial manpower.

Rule 38 F.R.A.P. provides that “ [i] f a court of appeals shall determine that an appeal is frivolous, it may award just dámages and single or double costs to the appellee.” Rule 38 was designed to penalize litigants for just such tactics as these and to compensate those who have been put to the expense of answering such wholly frivolous appeals. Oscar Gruss & Son v. Lumbermen’s Mutual Casualty Co., 422,F.2d 1278, 1283-1284 (2d Cir. 1970); N.L.R.B. v. Smith & Wesson, 424 F.2d 1072 (1st Cir. 1970); Fluoro Electric Corp. v. Branford Associates, 489 F.2d 320, 326 (2d Cir. 1973).

In assessing a penalty we have taken into account the fact that Klein is a layman but that nevertheless he should have understood that the refusal of many attorneys to represent him was not a conspiracy but instead a recognition of the frivolity of his position.

The judgments in 73-1418 and 73-1419 are affirmed. Pursuant to Rule 38, each appellee is awarded damages against Clarion Corporation in the sum of $2,500 and double costs.

Affirmed.

      . Rule 70 provides : “If a judgment directs a party to execute a conveyance of land or to deliver deeds or other documents or to perform any other specific act and the party fails to comply within the time specified, the court may direct the act to be done at the cost of the disobedient party by some other person appointed by the court and the act when so done has like effect as if done by the party. On application of the party entitled to performance, the clerk shall issue a writ of attachment or sequestration against the property of the disobedient party to compel obedience to the judgment. The court may also in proper cases adjudge the party. in contempt. If real or personal property is within the district, the court in lieu of directing a conveyance thereof may enter a judgment divesting the title of any party and vesting it in others and such judgment has the effect of a conveyance executed in due form of law. When any order or judgment is for delivery of possession, the party in whose favor it is entered is entitled to a writ of execution or assistance upon application to the clerk.”

      . As with most lay persons, Klein explores in infinite detail a host of irrelevant matters but sheds no substantial light on what seems to be the crux of his current opposition to the settlement.

      . American Bar Association, Code of Professional Responsibility and Canons of Judicial Ethics 48 (1969). Cf. Estin v. Estin, 334 U.S. 541, 545, 68 S.Ct. 1213, 1216, 92 L.Ed. 1561 (1948) : “[T]here are few areas of the law in black and white. The greys are dominant and even among them the shades are innumerable. For the eternal problem of the law is one of making accommodations between conflicting interests.”

      . American Bar Association, Code of Professional Responsibility and Canons of Judicial Ethics 25 (1969).

      . Id., at 25.

      . Moreover, under Rule 60(b) Fed.R.Civ.P., a motion to vacate a judgment for fraud must be filed within one year.

      . 28 U.S.C. § 1912 also provides: “Where a judgment is affirmed by the Supreme Court or a court of appeals, the court iu its discretion may adjudge to the prevailing party just damages for his delay, and single or double costs.”


source: Caselaw Access Project

author: LEVIN H. CAMPBELL, Circuit Judge.

license: Public Domain

text:
    Paul ROMERO REYES, Plaintiff, Appellant, v. MARINE ENTERPRISES, INC. et al., Defendants, Appellees.
    No. 73-1097.
    United States Court of Appeals, First Circuit.
    Argued Feb. 8, 1974.
    Decided April 2, 1974.

      James A. Toro, with whom Nachman, Feldstein & Gelpi, San Juan, P. R., was on brief, for appellant.
    Charles A. Cordero, San Juan, P. R., for appellees.
    Before COFFIN, Chief Judge, Mc-ENTEE and CAMPBELL, Circuit Judges.
   LEVIN H. CAMPBELL, Circuit Judge.

Romero Reyes, a longshoreman, was injured when he slipped and fell from an allegedly unstable, poorly lit and defective gangway while boarding the CARIBBEAN, a barge owned by defendant Caribbean Barge Corporation. He sued the barge’s owner and an associated company for unseaworthiness and negligence. At the close of his evidence the court, upon defendants’ motion, directed a verdict on both counts for defendants, and he appealed.

The court stated several reasons for directing a verdict. First, it noted that Romero Reyes was injured a half hour before his shift was to commence; the court intimated, although it did not actually say, that he was not then a longshoreman, engaged in the ship’s work, to whom the vessel owner’s warranty of seaworthiness runs. Second, the court ruled that the gangway, which was permanently affixed to a pier-based tower and did not belong to the barge, was not a part of the ship or its appurtenances; accordingly, the barge owner’s warranty of seaworthiness did not cover the gangway, nor, in the court’s estimation, was the owner negligent. As we disagree with the court’s conclusions on these issues, we remand for a new trial.

I

It could not be ruled as a matter of law that Romero Reyes was not a longshoreman when injured, hence not entitled to the warranty of seaworthiness. See Seas Shipping Co. v. Sieracki, 328 U.S. 85, 66 S.Ct. 872, 90 L.Ed. 1099 (1946) He testified to having worked since 1962 for Antilles Shipping Corp., which had been engaged as the CARIBBEAN’S stevedore; several co-workers confirmed that he was a regular Antilles longshoreman. A fellow longshoreman testified that Romero Reyes had worked on the CARIBBEAN the night before. Prior to the accident, Romero Reyes had gone to the pier from his home, intending to work the graveyard (11 p. m.-7 a. m.) shift on the CARIBBEAN shovel-ling grain. He had arrived at around 10:30, and attempted to speak to his foreman, Francisco Bastard, who was on the barge. Bastard, he testified, was his permanent foreman and gave him work whenever he showed up. After failing to make himself heard above the noise of the machinery, he attempted to board and fell from the gangway.

Any question whether Romero Reyes had actually assumed the status of a working longshoreman would be for the jury. Zeidman v. Gutterson & Gould, 139 F.2d 160 (1st Cir. 1944); Parker v. Long Island R.R., 425 F.2d 1013 (2d Cir.), cert, denied 400 U.S. 829, 91 S.Ct. 57, 27 L.Ed.2d 58 (1970). A workman may be within the scope of his employment while he is on the premises prior to actual commencement of work. See, e. g., Watkins v. New York, N.H. & H.R.R., 290 Mass. 448, 195 N.E. 888 (1935). Cf. Ward v. Atlantic Coast Line R.R., 362 U.S. 396, 80 S.Ct. 789, 4 L.Ed.2d 820 (1960); Baker v. Texas & Pac. Ry., 359 U.S. 227, 79 S.Ct. 664, 3 L.Ed.2d 756 (1959); Morris v. Pennsylvania R.R., 187 F.2d 837 (2d Cir. 1951); Virginian Ry. v. Early, 130 F.2d 548 (4th Cir. 1942). This was not a case where the evidence of employment could be said to be inadequate as a matter of law. See Restatement (Second) Agency § 233, comment a.

Romero Reyes’ longshoreman status was, moreover, admitted by defendants both in their answer to the amended complaint and in the pre-trial stipulation. It is unclear why the legal effect of these several admissions was overlooked.

“That which a defendant admits in his answer is binding upon him until he withdraws the admission by a proper amended or supplemental pleading.”

Freedom Nat. Bank v. Northern Illinois Corp., 202 F.2d 601, 605 (7th Cir. 1953). Pre-trial stipulations “stand as fully determined as if adjudicated at the trial.” 3 J. Moore, Federal Practice If 16.19.

Of course, there are escape valves; a court has discretion, which we would seldom disturb, to allow amendments to pleadings, and it may permit the modification of stipulations to prevent “manifest injustice”. See F.R.Civ.P. 16. But no amendment or modification was ever requested or allowed. Although Romero Reyes did not emphatically direct the court’s attention to the pleadings and stipulation, we cannot say that he waived their benefits. Cf. F.R.Civ.P. 15(b). The presumption is rather the other way.

Defendants must be held to the position they freely adopted prior to trial. If they had cause for relief, they should have moved to amend, thereby forewarning Romero Reyes, who was otherwise entitled to suppose that he had no burden to prove employment. The spirit of flexibility behind the Rules is not intended to permit one of the parties to be booby-trapped. Defendants shall remain bound by admissions in the pleadings and pre-trial stipulation unless the district court is later persuaded, for good cause shown, that they should be relieved.

II

The gangway from which Romero Reyes fell was owned and controlled by a concern we shall call Molinos. It did not belong to the barge or its owner. Suspended from a tower on pilings next to the dock, it could be raised or lowered by cables attached to the tower. The court concluded that the injury was caused by “pierside equipment attached to the pier based structure and not part of the ship or its appurtenances and that there was no member of the crew of the ship directing the plaintiff nor having any control over the plaintiff or his activities at the time.” Were the vessel owner’s duty determined by ownership of the gangway, we would agree with the district court. It is undisputed that a smaller portable structure was the only structure in the nature of a gangway actually belonging to the barge, and it was not in use at the time of the accident. The apparatus from which plaintiff fell was the regular means of boarding and leaving the vessel.

The seaworthiness warranty is not, however, limited to gear “owned” by the shipowner, and while the phrase “equipment appurtenant” to the vessel suggests equipment “belonging” physically to the vessel, it may, and in this case does, include equipment vital to the vessel’s mission that does not accompany it while at sea. “Seaworthiness” comprehends the owner’s duty to supply his crew with a suitable ship and equipment, and this includes providing them with a suitable means to board and disembark. The duty thus extends to the gangway by whomever supplied, owned or controlled. A crewman injured by an unfit hence “unseaworthy” gangplank may recover against the vessel’s owner.

In Victory Carriers, Inc. v. Law, 404 U.S. 202, 92 S.Ct. 418, 30 L.Ed.2d 383 (1971), the Court spoke of the gangway as the dividing line between admiralty and state jurisdiction. Id. at 207, 92 S. Ct. 418. Respondent Law (a longshoreman injured on the pier) could not recover because he was not injured by the ship’s equipment, and because “the accident did not occur aboard ship or on the gangplank.” Id. at 214, 92 S.Ct. at 426. [Emphasis supplied.]

Appellees argue that in Victory Carriers the Court might not have been thinking of pier-based ramps owned by others, nor of injuries to persons embarking rather than going ashore. Cf. The Brand, 29 F.2d 792 (D.Ore.1928), app. dismissed sub nom. Piper v. Knud-son, 45 F.2d 1017 (9th Cir. 1930). But see The Shangho, 88 F.2d 42 (9th Cir.), cert, denied, 301 U.S. 705, 57 S.Ct. 938, 81 L.Ed. 1359 (1937). However, it would be entirely impractical to make the existence of a maritime cause of action turn on such fortuitous distinctions; either the crew member is guaranteed a suitable means of ingress and egress to the vessel or he is not. There should not be the possibility of a different answer in every case. As the Court said in Victory Carriers, supra, 404 U.S. at 214 n. 14, 92 S.Ct. at 426,

“Reliance upon the gangplank line as the presumptive boundary of admiralty jurisdiction, except for cases in which a ship’s appurtenance causes damage ashore, recognizes the traditional limitations of admiralty jurisdiction . . . and decreases the arbitrariness and uncertainties surrounding amorphous definitions.”

The authorities are virtually unanimous that maritime liability encompasses the gangway. The Admiral Peoples, 295 U.S. 649, 55 S.Ct. 885, 79 L.Ed. 1633 (1935); Brady v. Roosevelt S.S. Co., 317 U.S. 575, 63 S.Ct. 425, 87 L.Ed. 471 (1943); Southern Pacific Co. v. Jensen, 244 U.S. 205, 37 S.Ct. 524, 61 L.Ed. 1086 (1917); Tullis v. Fidelity & Cas. Co. of New York, 397 F.2d 22 (5th Cir. 1968); O’Keeffe v. Atlantic Stevedoring Co., 354 F.2d 48 (5th Cir. 1965).

In Ford v. Parker, 52 F.Supp. 98 (D. Md.1943), the ship’s watchman fell while boarding via a pier-based ladder. The court found it immaterial that the ladder was provided and maintained by a third party, because anything “furnishing ingress to or egress from the ship, has been regarded as part of the ship’s equipment . . .” Id. at 100. The rule is

“simple and easily applied to situations which have heretofore been difficult of decision. And it seems entirely consistent with the real nature of the subject matter. Employes whose duties are on ships and require them to board and leave ships are engaged in a purely maritime activity . . . . In going to and fro in the performance of their duties it is reasonable that they should use and rely upon the safety of the only means of ingress to or egress from the ship as part of the ship’s equipment.” Id. at 101.

In Caldaro v. Baltimore & O.R.R., 166 F.Supp. 833 (E.D.N.Y.1956), a railroad worker was injured walking down a long gangway supplied “by the dock and were not part of the ship’s equipment.” Id. at 835. The court opted for a clear cut boundary rather than for

“subtle arguments concerning the source or ownership of its component parts. Whether the gangway is kept on the shore or on the ship, it is used to provide ingress to and egress from the vessel and is in that sense a part of the ship’s equipment.” Id. at 836.

Accord, West v. Erie R.R., 163 F.Supp. 879 (S.D.N.Y.1958); Job v. Erie R.R., 79 F.Supp. 698 (S.D.N.Y.1948). See Lunsford v. Bethlehem Steel Corp., 269 F.Supp. 570 (D.Md.1967); Olsen v. Is-brandtsen Co., 209 F.Supp. 6 (S.D.N.Y. 1962). In a case decided since Victory Carriers, it has been held that the warranty of seaworthiness attaches to a catwalk permanently affixéd to the pier because it “was an integral part of the equipment used in getting on and off” the ship. Kearney v. Savannah Foods & Indus., Inc., 350 F.Supp. 85, 90 (S.D. Ga.1972).

In view of the foregoing, our views on the negligence claim may be of little practical significance; however, we state them, though with perhaps less certainty. Because the means of ingress or egress, by whomever furnished, are an “appurtenance” of the vessel, the owner has a duty of care regarding them. The owner is thus liable for a negligent failure to inspect a gangway and to warn against defects reasonably apparent from inspection or to take steps to repair or replace it. We finding nothing to the contrary in Usner v. Luckenbach Overseas Corp., 400 U.S. 494, 91 S.Ct. 514, 27 L.Ed.2d 562 (1971). Gf. Mitchell v. Trawler Racer, Inc., 362 U.S. 539, 80 S.Ct. 926, 4 L.Ed. 2d 941 (1960); Crumady v. The J. H. Fisser, 358 U.S. 423, 79 S.Ct. 445, 3 L. Ed.2d 413 (1959); Mahnich v. Southern S.S. Co., 321 U.S. 96, 64 S.Ct. 455, 88 L.Ed. 561 (1944). We hold, therefore, that Romero Reyes was entitled to take his case to the jury on the issues of both unseaworthiness and negligence.

Reversed and remanded for a new trial.

      . Congress has recently provided that vessels no longer owe a duty of seaworthiness to longshoremen, and are liable solely for their negligence. Longshoremen’s and Harbor Workers Compensation Act Amendments of 1972, 86 Stat. 1263, amending 33 U.S.C. § 905 (1970). The amendment is prospective only, Addison v. Bulk Food Carriers, Inc., 489 F.2d 1041 (1st Cir. 1974), and does not apply to this case.

      . See also O’Keeffe v. Smith, Hinchman & Grylls Associates, Inc., 380 U.S. 359, 85 S.Ct. 1012, 13 L.Ed.2d 895 (1965). Cf. Continental Ins. Co. v. Byrne, 471 F.2d 257, 260 (7th Cir.), cert, denied 406 U.S. 918, 92 S. Ct. 1767, 32 L.Ed.2d 117 (1972).

      . It may, at first glance, seem harsh to hold the vessel owner for the fault of a shore-based operator. But the owner may often be entitled to indemnity, and may, of course, protect himself by private agreement and by insurance. For purposes of this suit, fault as between tort feasors is secondary to enforcement of the maritime worker’s right to a seaworthy vessel and appurtenances. “The fact that the unseaworthy condition [is! the fault of [the longshoreman’s] employer, and not the defendant, [is] immaterial.” Bostrom v. Astro Crecido CIA, 477 F.2d 718, 720 (1st Cir. 1973). See Alaska S.S. Co. v. Petterson, 347 U.S. 396, 74 S.Ct. 601, 98 L.Ed. 798 (1954) (per curiam), aff’g, 205 F.2d 478 (9th Cir.).

      . In so stating, we refer to cases preceding the 1973 Amendments to the Longshoremen’s and Harbor Workers Compensation Act, supra n. 1. We have no need to consider, and do not consider, what duties and liabilities may exist under the 1972 Amendments.


author: INGRAHAM, Circuit Judge:

text:
    UNITED STATES of America, Plaintiff-Appellee, v. Houston H. FEASTER, Defendant-Appellant.
    No. 72-2683.
    United States Court of Appeals, Fifth Circuit.
    May 28, 1974.
    Rehearing Denied Aug. 2, 1974.
    Thomas M. Haas, Mobile, Ala., Champ Lyons, Jr., Montgomery, Ala., for defendant-appellant.
    Charles S. White-Spunner, U. S. Atty., Irwin W. Coleman, Jr., Asst. U. S. Atty., Mobile, Ala., for plaintiff-appellee.
    Before GODBOLD, SIMPSON and INGRAHAM, Circuit Judges.
   INGRAHAM, Circuit Judge:

Appellant Houston H. Feaster was indicted in eight counts for evading income taxes in the years 1965 through 1968. Counts 1, 3, 5 and 7 alleged that Feaster violated 26 U.S.C. § 7201i. by fraudulently understating his income for the years in question while Counts 2, 4, 6 and 8 alleged that he failed to report as income certain bribes and kickbacks he received during these years in violation of 26 U.S.C. § 7206(1). The jury found him guilty under Count 3, and we affirm that conviction.

The facts are summarized in some detail in the district court’s opinion denying appellant’s motion for a new trial, 341 F.Supp. 524 (S.D.Ala., 1972), and we will repeat only those necessary to gain an understanding of the principal issue raised on appeal. When the investigation of Feaster began in the fall of 1970, he was the Director of the Alabama State Docks located in Mobile. A concurrent investigation was also underway into the tax affairs of Marvin Mas-sengale, a local Mobile contractor whose family-owned corporation did a substantial amount of work for the Docks. The investigation of Massengale revealed that between the years 1965 and 1968 he had withdrawn approximately $90,000 from the corporation. There was no indication where this money had gone other than that Massengale had not reported it on his individual return. It also developed that Feaster’s life style, illustrated particulax-ly by his bank deposits and cash expenditures, was not in line with the $15,000 a year salary he was paid as Director of the Docks. Interestingly, Massengale was asked in an initial interview with the IRS who he was “having to pay off to get work;” he replied that he did not “do that sort of thing.”

Both investigations culminated in July 1971 with a recommendation to the Intelligence Division of the IRS that criminal tax charges be brought against both Feaster and Massengale. The content of the report on Feaster is pertinent. In addition to listing the Massengale investigation as a related case, the report contains more than passing emphasis on the relationship between these two men. Even a casual reading leaves one with the strong impression that the agents believed Massengale’s withdrawals constituted a probable source for Feaster’s unreported income.

The appropriate IRS officials were apparently convinced that criminal charges were warranted because on August 27, 1971, Feaster and Massengale were afforded separate conferences in the Regional Counsel’s office in Atlanta. At their respective conferences Feaster and Massengale were represented by the same attorney (hereafter Barrister), who held a power of attorney from each. From the record it appears that Feas-ter’s conference amounted to little more than Barrister’s telling the IRS that there was insufficient evidence to successfully prosecute Feaster for income tax evasion. The IRS replied that his guilt could be proven by the bank deposits and cash expenditures method.

Massengale’s conference was somewhat different however. Barrister had prepared a memorandum of law which he submitted in an effort to convince the IRS to forego prosecuting his client Massengale. The thrust of the memo is that a taxpayer paying bribes or kickbacks to another on behalf of a corporation is not taxable for the monies received from the corporation to make the payments. It is in order to quote the first two paragraphs of this document:

“The following is a Memorandum of Law regarding the ineludability in gross income of kickbacks when received by an employee of a corporation and which kickbacks are then paid on behalf of the corporation to an employee of Federal, State or Local Government. For the purpose of this memorandum the following facts are to be assumed. The ‘X’ corporation was desirous of obtaining construction contracts from ABC, a governmental body. The taxpayer was an officer of ‘X’ corporation and made an agreement on behalf of ‘X’ corporation with John Dooks the Chief Executive Officer of ABC. Under the agreement, John Dooks agreed to cause ‘X’ corporation to receive construction contracts from ABC provided that ‘X’ corporation made periodic payments to John Dooks in an amount required by John Dooks. The ‘X’ corporation made the payments to John Dooks through the medium of the taxpayer. The taxpayer upon receipt of the payment from ‘X’ corporation immediately gave it to John Dooks pursuant to the agreement. The taxpayer never kept any of the payments received by him from ‘X’ corporation nor did he ever use any of the payments for his own benefit.
“Under the above facts the payments received by the taxpayer from ‘X’ corporation are not includable in his gross income under Section 61 of the Int.Rev.Code of 1954.”

But the IRS told Barrister that hypothetical examples were not enough, “cold hard facts” were necessary. Barrister responded that without immunity for his client such facts would not be forthcoming. The conference ended on that note, with the IRS intending to transmit both cases to the Justice Department for presentation to the grand jury that was to be convened in Mobile on September 15, 1971.

Although Barrister requested a conference for Massengale at the Justice Department level, nothing was heard concerning this request until 6:30 P.M. on September 15, 1971. Someone from either the Justice Department or the IRS called Barrister at that time and advised him that if he desired a conference for Massengale it would have to be that very evening. Barrister then went without his client to the United States Attorney’s office in Mobile and conferred with officials from the local United States Attorney’s office, the Justice Department, and the IRS regional office in Atlanta. Later that evening Barrister returned to the office with Massen-gale. It was not until this meeting that Barrister decided he could no longer represent Feaster, and the government officials were told that he would be informed of this development the next day.

Earnest discussions then began concerning Massengale’s plight. The government evidently made it clear that unless Massengale produced facts sufficient to absolve himself of tax liability, his case would be presented to the grand jury the next day. Massengale then told his story: the money he had withdrawn from his corporation had been paid to Houston Feaster during the years in question in order to obtain construction contracts from the Alabama State Docks. His statement was reduced to writing in affidavit form the following day. Although Massengale was not given immunity at this juncture, the government agreed not to prosecute him on the basis of this statement and refrained from submitting his case to the grand jury. Feaster was thereafter indicted on September 17,1971.

Feaster’s trial began in January 1972 and lasted for a total of fourteen days. Using the bank deposits and cash expenditures method of proof, the government introduced ample evidence to create jury questions on whether Feaster had falsely understated his income for the years 1965 through 1968. As to the even numbered counts of the indictment concerning alleged bribes and kickbacks, Massengale was granted immunity and testified that he paid substantial sums to Feaster over the four years involved in order to receive favorable treatment in the awarding of construction contracts by the Docks. Feaster was found guilty only under Count 3 of knowingly and willfully signing a return which understated his income for the year 1966. See note 3, supra.

One principal issue is raised on appeal. Feaster contends that Massen-gale’s testimony should have been suppressed because the IRS violated 31 C. F.R. § 10.29 (1966), which provides as follows:

“No attorney, certified public accountant, or enrolled agent shall represent conflicting interests in his practice before the Internal Revenue Service, except by express consent of all directly interested parties after full disclosure.”

Feaster argues that the government obtained Massengale’s testimony by exploiting the conflict between them at a time when both were represented by the same attorney and that the remedy for this regulation violation should be the suppression of Massengale’s testimony. This is a novel request for the application of the exclusionary rule.

The first question is whether at some point the IRS had an obligation to tell Feaster to get another attorney, or, put another way, to inform Barrister that he could not represent both Feaster and Massengale in the proceedings which preceded the actual indictment. The government appears to argue that until the night of September 15, 1971, the IRS did not have sufficient facts available in order to make the determination that a conflict of interest existed. We must reject this assertion. From the outset of the separate investigations of Feaster and Massengale it was clear that the two cases were closely related. Even disregarding this factor, however, the thinly veiled hypothetical example submitted by Barrister at the regional conference was more than sufficient to put the IRS on notice that Massengale might be willing to put the finger on Feaster. The suggestion in the government’s brief that this document “does not in any way attempt to implicate” Feaster “in any bribe or kickback arrangement with” Massengale is almost preposterous when it is considered in the light of facts known to the IRS at that time. Assuming that Barrister was in the dark concerning the extent of the IRS’s knowledge, the memorandum must have removed any remaining doubt concerning the tie-in between Feaster and Massengale. The conclusion is inescapable that, at least after the regional conference, the IRS knew that Feaster and Massengale had conflicting interests. Although the conflicting interest regulation appears directed more to attorneys appearing before the IRS than to the IRS itself, we are convinced that on the facts of this case the IRS had, if nothing more, an obligation to inquire into the matter to determine whether Barrister had complied with the regulation’s full disclosure requirements.

It does not follow, however, that Massengale’s trial testimony should have been suppressed. There is no indication in this record that Massengale would have refrained from talking had he and Feaster been represented by different attorneys. Although damaging to Feaster, Massengale’s statement was obviously in his own self-interest, and Feaster had no right to prevent him from making it. Moreover, even if Feaster had been represented by a lawyer other than ■Barrister, there is no basis on which this lawyer could have prevented the late night meeting detween Massengale and the government, and there is no administrative regulation which would have entitled such counsel to be present at that meeting. Massengale did not talk until he was on the verge of being indicted, and he could tell his story in an effort to avoid that event. In short, there was no evidence developed at the suppression hearing held in the trial court to support Feaster’s broad allegation that Mas-sengale’s statement and subsequent testimony were achieved by governmental exploitation of the conflict of interest between the two men. Contrary to Fea-ster’s argument, Massengale’s statement and testimony did not flow from the IRS’s violation of. the regulation but are a product of his desire to save himself from indictment and prosecution.

Feaster was ably represented at his trial. His present counsel presented a vigorous defense that included a thorough cross-examination of Massengale. It has not been shown that the effectiveness of this cross-examination was diminished by the fact that Feaster and Massengale were represented by the same attorney at an earlier point in time. Again, the record does not support Feaster’s contention that the government obtained Massengale’s testimony as a result of the failure of the IRS to strictly abide by the regulation or that Massengale’s testimony somehow deprived Feaster of a fair trial.

Nor do the cases relied on by Fea-ster support his request for the application of the exclusionary rule to Massen-gale’s testimony. The two most nearly in point are United States v. Heffner, 420 F.2d 809 (4th Cir., 1970), and United States v. Leahey, 434 F.2d 7 (1st Cir., 1970). Each of these cases involved the failure of an IRS special agent investigating tax fraud to give Miranda type warnings on initial contact with the taxpayer under investigation. Both courts held that incriminating statements obtained in the absence of such warnings were inadmissible in the subsequent criminal prosecutions. The courts reasoned that the IRS was bound to follow its established procedures, particularly when these procedures were specifically designed to protect a taxpayer’s constitutional rights. In the case at bar, however, Feaster is not attempting to suppress incriminating statements which he made, but is instead seeking to suppress incriminating statements made about him by Massen-gale, a third party. And as our previous discussion indicates, Massengale’s statements did not flow from the violation by the IRS of the conflicting interest regulation.

Support for our conclusion that there is no basis on which to suppress Massengale’s testimony is provided by the Supreme Court’s recent decision in United States v. Calandra, 414 U.S. 338, 94 S.Ct. 613, 38 L.Ed.2d 561 (1973). The Court held that a grand jury witness could not refuse to answer questions on the basis that they are the product of evidence seized in an unlawful search and seizure. Calandra presented a much stronger case for the application of the exclusionary rule than does our case, but the Court’s decision explains that the rule does not necessarily apply to remedy violations of an individual’s constitutional rights. The constitutional violation there was not questioned and the connection between the illegal search and the questions propounded to Calandra was established without a doubt because the materials obtained in the illegal search provided the source for the questions. But in the case at bar the relationship between Massengale’s testimony and the asserted due process violation arising from the violation of the regulation is at best attenuated. The substance of Feaster’s argument is that the exclusionáry rule should be used here to punish the government for its questionable conduct. Calandra teaches that this is an inadequate reason to apply the rule. See also United States v. Walden, 490 F.2d 372 (4th Cir., 1974).

In conclusion, our reading of the record leaves us convinced that Feaster received a fair trial. While we do not condone the manner in which the IRS handled its aspect of the case, we have found no reason to reverse Feaster’s conviction.

Affirmed.

      . § 7201. Attempt to evade or defeat tax Any person who -willfully attempts in any manner to evade or defeat any tax imposed by this title or the payment thereof shall, in addition to other penalties provided by law, be guilty of a felony and, upon conviction thereof, shall be fined not more than $10,000, or imprisoned not more than 5 years, or both, together with the costs of prosecution.

      . § 7206. Fraud and false statements Any person who—
      (1) Declaration under penalties of perjury. — Willfully makes and subscribes any return, statement, or other document, which contains or is verified by a written declaration that it is made under the penalties of perjury, and which he does not believe to be true and correct as to every material matter; or
      shall be guilty of a felony and, upon conviction thereof, shall be fined not more than $5,000, or imprisoned not more than 3 years, or both, together with the costs of prosecution.
      Count Two is typical of the counts which charged a violation of this statute and it reads as follows:
      That on or about the 15th day of April, 1966, in the Southern District of Alabama, and within the jurisdiction of this Court, HOUSTON H. FEASTER, a resident of Mobile, Alabama, did willfully and knowingly make, subscribe and sign a false and fraudulent joint income tax return for the calendar year 1965, which was verified by a written declaration that it was made under the penalties of perjury, and was filed with the Internal Revenue Service pursuant to regulations as prescribed by said Internal Revenue Service, which said joint income tax return for the year 1965 he did not believe to be true and correct as to every material matter, in that be failed to include as taxable income bribes and kickbacks paid to the said defendant, then Director of the Alabama State Docks, as the said defendant then and there well knew.

      . Count Three involved the largest amount of unreported income covered by the indictment, and it reads as follows:
      That on or about the 15th day of April, 1967, in the Southern District of Alabama, and within the jurisdiction of this Court, HOUSTON I-I. FEASTER, a resident of Mobile, Alabama, who during the calendar year 1966 was married, did willfully and knowingly attempt to evade and defeat a large part of the income tax due and owing by him and his wife to the United States of America for the calendar year 1966 by preparing and causing to be prepared, by signing and causing to be signed, and by mailing and causing to be mailed, in the Southern District of Alabama, a false and fraudulent joint income tax return on behalf of himself and his said wife, which was filed with the Internal Revenue Service pursuant to regulations as prescribed by said Internal Revenue Service, wherein it was stated that their taxable income for said calendar year was the sum of $9,142.31 and that the amount of tax due and owing thereon was the sum of $1,631.31, whereas, as he then and there well knew, their joint taxable income for the said calendar year was the sum of $60,893.62 upon which said taxable income there was owing to the United States of America an income tax of $15,714.53.

      . In addition to incorporating in his appellate brief the thirty-two assertions of error relied on to support his motion for a new trial, Feaster specifically argues that the trial court unduly restricted the defense in its cross-examination of government witnesses and in its attempts to subpoena additional witnesses. He also argues that the amount of tax allegedly due by Feaster should have been reduced by income averaging. We have considered these arguments and find them to be without merit.

      . This regulation is found under the general heading “Duties and Restrictions Relating to Practice Before the Internal Revenue Service” and the sanction for its violation is the possibility of being disbarred or suspended from practicing before the Internal Revenue Service, 31 C.F.R. § 10.52 (1963).

      . We find little consolation from the fact that either on his own initiative or on the insistence of the government, Barrister announced that lie was no longer representing Feaster immediately prior to the time Mas-sengale made his statement. For all practical purposes, this was nothing more than a formality. It certainly did not help Feaster or serve to protect his interest in any way, and he was not informed of Barrister’s withdrawal until the following day.

      . Both courts relied, as does Feaster, on Ac-cardi v. Shaughnessy, 347 U.S. 260, 74 S.Ct. 499, 98 L.Ed. 681 (1954) and Service v. Dulles, 354 U.S. 363, 77 S.Ct. 1152, 1 L.Ed. 2d 1403 (1967), as support for the proposition that the failure of a governmental agency to follow its regulations violates due process. As the Leahey court pointed out, however, “agencies [do not] always violate due process when they fail to adhere to their procedures.” 434 F.2d at 11. It is unnecessary for us to determine whether the IRS’s violation of the regulation here deprived Feaster of due process because neither of the above cases support the request to suppress Massengale’s testimony.

      . Arguably, the situation would be different had Feaster made incriminating statements as a result of the failure of the IRS to adhere to the regulation.

      . The Court thus reversed the Court of Appeals for the Sixth Circuit, 465 F.2d 1218 (1972), which had affirmed the district court’s holding suppressing the evidence and permitting Calandra to refuse to answer questions based on the illegally seized evidence. 332 F.Supp. 737 (N.D.Ohio, 1971).


author: WALLACE, Circuit Judge:

text:
    Claire MORSE, Plaintiff-Appellant, v. UNITED STATES of America, Defendant-Appellee.
    No. 72-1671.
    United States Court of Appeals, Ninth Circuit.
    March 27, 1974.

      Phillip Singer (argued), Beverly Hills, Cal., for plaintiff-appellant.
    Louis Bradelury (argued), Scott P. Crampton, Asst. Atty. Gen., Meyer Roth-wacks, Tax Div., Dept, of Justice, Washington, D. C., William D. Keller, U. S. Atty/ Lawrence V. Brookes, Asst. U. S. Atty., Los Angeles, Cal., for defendant-appellee.
    Before WRIGHT, KILKENNY and WALLACE, Circuit Judges.
   OPINION

WALLACE, Circuit Judge:

Mrs. Morse filed this action in the district court seeking a refund of tax overpaid in her name. On cross-motions for summary judgment, the district court dismissed Mrs. Morse’s complaint with prejudice, holding that the decision of the tax court in Claire Morse, 19 T. C.M. 393 (1960), was res judicata, barring the district court from having jurisdiction to order a refund. The District Court further held that since the tax coui’t found that Mrs. Morse was not the taxpayer, she could not receive a refund of the tax. We reverse.

During the years 1944 and 1945, income tax returns were filed in Mrs. Morse’s name declaring an income of $32,239.42 with tax due in the amount of $14,925.62 for 1944 and income of $46,028.35 with tax due in the amount of $24,596.39 for 1945. The tax was paid by someone other than Mrs. Morse. Mrs. Morse filed a timely claim for refund for those years and the Commissioner mailed her a notice of deficiency for the same years. Mrs. Morse subsequently filed a petition in the tax court requesting it to find that there were overpayments and no deficiencies. Prior to the trial in the tax court, the Commissioner conceded that Mrs. Morse owed no deficiencies. At the conclusion of the trial, the tax court found that there were overpayments in the amounts of $14,925.62 for 1944 and $24,569.39 for 1945. When the Commissioner failed to refund the overpayments, Mrs. Morse filed the present action.

The government argues that the district court correctly held that it lacked jurisdiction because section 6512(a) of the Internal Revenue Code of 1954 precludes a taxpayer from bringing a suit for the recovery of tax in any other court once he has filed a timely petition with the tax court. The government concedes that subsection (1) of that section allows an exception for overpay-ments determined by a decision of the tax court which has become final, but argues that this exception does not apply to Mrs. Morse because the tax court declined to find that she had made the overpayments. The government’s construction limits the language of the exception more than is reasonable or necessary. Section 6512(a)(1) excepts from the general preclusion of suits in other courts, suits to recover tax “[a]s to overpayments determined by a decision of the Tax Court which has become final.” The language does not require that the overpayments must have been made by the taxpayer.

The government further argues that even if suits for refund of overpayments do fall within the exception to section 6512(a), Mrs. Morse’s suit in the district court is barred by the doctrine of res judicata since the issues of this case were adjudicated and decided by the tax court. Although the doctrine of res judicata does bar subsequent litigation between the same parties on identical claims that have previously been decided by the tax court, it has no application where the legal matters raised in the second case differ from those determined in the earlier case. Commissioner v. Sunnen, 333 U.S. 591, 600, 68 S.Ct. 715, 92 L.Ed. 898 (1948). The doctrine also has no application where the issues to be litigated in the subsequent suit were beyond the jurisdiction of the tax court. Erickson v. United States, 309 F.2d 760, 765, 159 Ct.Cl. 202 (1962); Empire Ordnance Corp. v. Harrington, 102 U.S.App.D.C. 14, 249 F.2d 680, 682 (1957).

While the tax court found that an overpayment had been made, it declined to order a refund to Mrs. Morse or to determine who was entitled to the refund. This was proper since it lacked jurisdiction to order a refund or to determine who was entitled to the refund. The tax court’s jurisdiction, which exists only to the extent specifically enumerated by statute, is confined to determining the amount of deficiency or overpayment for the particular tax year for which the commissioner has sought a deficiency and the taxpayer has filed a petition for review. Commissioner v. Gooch Milling & Elevator Co., 320 U.S. 418, 64 S.Ct. 184, 88 L.Ed. 139 (1943). The tax court has no jurisdiction to order or to deny a refund, United States ex rel. Girard Trust Co. v. Helvering, 301 U.S. 540, 542, 57 S.Ct. 855, 81 L.Ed. 1272 (1937), or to decide equitable questions. Commissioner v. Gooch Milling & Elevator Co., 320 U.S. 418, 64 S.Ct. 184, 88 L.Ed. 139 (1943). Thus, the tax court has no jurisdiction to decide which of several claimants is entitled to a refund, Huntington National Bank, 13 T. C. 760 (1949), to decide who is entitled to the refund when someone other than the person named in the deficiency notice has paid the tax, John A. Snively, Sr., 20 T.C. 136 (1953), or to resolve disputes as to a right to a refund that may hinge upon some contingency beyond mere overpayment. Robbins Tire and Rubber Co., Inc., 53 T.C. 275, 279 (1969) ; see Empire Ordnance Corp. v. Harrington, 102 U.S.App.D.C. 14, 249 F.2d 680, 682 (1957). The taxpayer must resort to the district court or the court of claims for a resolution of such disputes or for an order granting a refund. United States ex rel. Girard Trust Co. v. Helvering, 301 U.S. 540, 542, 57 S.Ct. 855, 81 L.Ed. 1272 (1937); Thelma Rosenberg, 29 T.C.M. 888, 892 (1970) . Accordingly, the tax court was without jurisdiction to decide whether Mrs. Morse, the person who actually paid the tax, or someone else was entitled to the refund. Once it had determined that there was no deficiency and that there had been an overpayment in a certain amount, it had no jurisdiction to consider or resolve any other issue. Thus, the tax court’s decision could not bar the district court from deciding the very issues that the tax court was without jurisdiction to determine. The district court had jurisdiction under 28 U. S.C. § 1346(a)(1) and it was error to dismiss the suit on the grounds of res judicata.

The district court also erred in holding that the tax court had found that Mrs. Morse was not the taxpayer. The tax court made no such finding, but found only that Mrs. Morse did not pay the tax and that a person unknown to the court had paid the tax. 19 T.C.M. at 395. There is a big difference between the factual conclusion that Mrs. Morse did not pay the tax and the legal conclusion that Mrs. Morse was not the taxpayer. Under section 3797(a) (14) of the Internal Revenue Code of 1939, “[t]he term “taxpayer’ means any person subject to a tax imposed by this title.” Under this definition it is not necessary that a person actually be liable for the tax; it is sufficient that he is potentially liable for it, even if it is ultimately determined that he in fact owes no tax. Accordingly, when returns were filed in Mrs. Morse’s name declaring income to her for 1944 and 1945, and making her potentially liable for the tax due on that income, she became a taxpayer within the meaning of the Internal Revenue Code. When she was subsequently named in the commissioner’s notice of deficiency, she became the only person who could petition the tax court for review of her tax liability. Cincinnati Transit, Inc., 55 T.C. 879 (1971); Bond, Inc., 12 B.T.A. 339 (1928). The fact that someone else had paid the tax in her name and that she was ultimately found to owe no tax does not affect her claim to the overpayments as between her and the government. If Mrs. Morse had paid the tax herself, the government could not assert that since she ultimately was found to have had no tax liability, she was not a taxpayer and was not entitled to a refund. Similarly, the government should not be able to defeat her claim to a refund by claiming that, simply because someone else paid the tax in her name, she had no tax liability and was not a taxpayer. If the person who actually paid the tax has a claim to the refunded money, that dispute is between Mrs. Morse and that person, not between Mrs. Morse and the government.

Section 322(d) of the Internal Revenue Code of 1939 provided:

If the Tax Court finds that there is no deficiency and further finds that the taxpayer has made an overpayment of tax in respect of the taxable year in respect of which the Commissioner determined the deficiency . the Tax Court shall have jurisdiction to determine the amount of such overpayment, and such amount shall, when the decision of the Tax Court has become final, be credited or refunded to the taxpayer.

The government contends that under this section, a person is entitled to a refund only if the tax was paid by him or by someone else in his behalf. The tax cannot be paid in a person’s behalf, the government argues, where that person has not consented to having the return filed in his name. We find no merit in this contention since one may bestow a benefit upon another person without that person’s consent. Even if the person who paid Mrs. Morse’s tax had no intent to benefit her, he paid the tax in her name and that should be sufficient to give Mrs. Morse better title than the government since the tax court found that no tax was due.

Nevertheless, we express no opinion as to whether Mrs. Morse is actually entitled to the refund, but remand the case to the district court for further proceedings to consider other relevant tax laws, including sections 322(a)(1) and 3770(a)(1) of the Internal Revenue Code of 1939.

Reversed and remanded.

      . Whether or not the district court had jurisdiction must be determined under the statutes in effect when the refund action was filed, but whether or not a taxpayer is entitled to a refund must be determined under the statutes in effect when the tax was paid. Therefore, as to the jurisdiction issue, the Internal Revenue Code of 1954 applies.

      . See note 1. On this issue the Internal Revenue Code of 1939 applies.


author: SCHNACKE, District Judge:

text:
    Herbert T. BRENNER, Plaintiff-Appellant, v. MITCHUM, JONES & TEMPLETON, INC., a corporation, and Lee Montgomery, Defendants-Appellees.
    No. 72-2255.
    United States Court of Appeals, Ninth Circuit.
    April 10, 1974.
    Edward H. Cummings (argued), Dow-ney A. Grosenbaugh, Meserve, Mumper & Hughes, Los Angeles, Cal., for appellant.
    Marshall B. Grossman (argued), Frank M. Kaplan, Schwartz & Alschuler, Los Angeles, Cal., for appellee.
    Before CHAMBERS and WRIGHT, Circuit Judges, and SCHNACKE, District Judge.

       The Honorable Robert H. Schnaeke, United states District Judge for the Northern District of California, sitting by designation.

   SCHNACKE, District Judge:

The court below granted summary judgment for defendant-appellee on grounds that plaintiff-appellant’s claim was barred by collateral estoppel and limitations. Since we affirm as to the first of these grounds, we do not reach the second.

The action is founded upon alleged violations of §§ 7 and 10 of the Securities Exchange Act of 1934, 15 U.S.C. §§ 78g and 78j, SEC Regulation T and Rule 10b-5 thereunder, certain rules of the New York Stock Exchange, and common-law fraud.

The facts, stated sufficiently for present purposes, are that in 1968 and 1969, plaintiff was a customer of defendant. When he failed to respond to margin calls, the securities in his account were sold out, leaving a deficiency of some $75,000.

Defendant brought suit for this deficiency in the Superior Court, Los Ange-les County. Plaintiff was duly served and represented by counsel. Prior to the filing of any responsive pleadings by plaintiff (defendant therein), the action was settled, and the present defendant filed a dismissal with prejudice.

The question here is the effect of those proceedings on plaintiff’s maintenance of this action.

It is undisputed that defendant’s claim for the deficiency arose out of the same transactions as those complained of by plaintiff here, and that plaintiff could have advanced his present claims as counterclaims in the deficiency action. In such cases Calif.C.C.P. § 439 at all applicable times provided:

“If the defendant omits to set up a counterclaim upon a cause arising out of the transaction set forth in the complaint as the foundation of the plaintiff’s claim, neither he nor his assignee can afterwards maintain an action against the plaintiff therefor.”

Plaintiff attempts to avoid the plain meaning and applicability of this statute by arguing that it applies only where an answer has been filed in the first suit and not to a case where settlement is achieved without joinder of issue.

We fail to see anything in the statute or in logic to support plaintiffs’ distinction. If such an interpretation were' adopted, it would result in no more than the addition to the papers in every settlement of a pro forma general denial or else a trap for the unwary if counsel did not obtain and file it.

Nor, as plaintiff contends, are we bound to reach this result by California authority. Admittedly, no California case so holds. Plaintiff rests primarily upon two leading California cases, Datta v. Staab, 173 Cal.App.2d 613, 343 P.2d 977 (1959) and Rothtrock v. Ohio Farmers Ins. Co., 233 Cal.App.2d 616, 43 Cal. Rptr. 716 (1965). In those cases, the courts refer to the fact that issue had been joined in the prior actions, but, as we read them, make nothing turn on such fact or suggest that the result would be otherwise had that element been lacking.

Affirmed.

      . Mitchum, Jones & Templeton, Inc. The individual defendant has never been served,

      . This section was repealed effective in 1972. The comparable present section is 426.30, effective July 1, 1972.

      . This may be the result under § 426.-30(b)(2), supra, n. 2. We express no opinion.


author: BIGGS, Circuit Judge.

text:
    Viola O. TOMALEWSKI, Appellee, v. STATE FARM LIFE INSURANCE COMPANY and Elizabeth Tomalewski, Defendant on the Counterclaim. Appeal of Elizabeth G. TOMALEWSKI, Individually and as Administratrix of the Estate of Paul Tomalewski, Deceased.
    No. 73-1301.
    United States Court of Appeals, Third Circuit.
    Submitted Under Third Circuit Rule 12(6) Oct. 24, 1973.
    Finally Submitted Feb. 5, 1974.
    Decided April 4, 1974.

      Samuel J. Goldstein, Pittsburgh, Pa., for appellant.
    Raymond L. Brennan, Pittsburgh, Pa., for appellee.
    Before BIGGS, GIBBONS and RO-SENN, Circuit Judges.
   OPINION OF THE COURT

BIGGS, Circuit Judge.

This is a diversity case. Viola O. To-malewski, mother of Paul Tomalewski, sued State Farm Life Insurance Company seeking to recover the face amount of a life insurance policy issed to Paul by State Farm in the sum of $15,000. State Farm paid the money into the district court and that court ordered inter-pleader between Viola and Elizabeth G. Tomalewski, Paul’s wife. Elizabeth claimed the proceeds of the policy individually and as administratrix of his estate.

The facts giving rise to the controversy sub judice are described by the district judge as follows:

“The interesting contretemps presented by this case arose because the insurance agent who filled out the application got a sheet of carbon paper reversed. One Nick A. Valicenti, the agent, was making three copies of the application. The original goes to the Company, the second to the agent, and the third is attached to and forms part of the policy.

“The insured affixed his signature on the first page, before the papers were reversed to fill in some blanks on the second page regarding applicant’s military service. He had skipped over the spaces for designation of beneficiary on the first page before he signed, to think over the matter who should be designated. Having made up his mind, he instructed the agent who then filled those vacant spaces. That is when the carbon paper was reversed. Accordingly, the original application shows as primary beneficiary Viola O. Tomalewski, applicant’s mother; and as successor beneficiary, Thaddeus J. Tomalewski, his father. The second or agent’s copy is identical. But the third or applicant’s copy is blank with respect to designation of beneficiary. What should have gone on the third copy appears on the verso of the agent’s copy.” (Footnote omitted).

In her answer to the complaint, under the heading “New Matter”, paragraph 21, Elizabeth alleged the following: “The said Elizabeth G. Tomalewski avers that her husband during his lifetime did make a gift absolute of said policy to her; hence at his death, she is entitled to the proceeds thereof.” In the plaintiff’s answer to the new matter alleged in paragraph 21, it is stated: “3. Paragraph 21 is denied, and if material to this proceeding, Plaintiff demands proof of the same.” Thus a question of fact was presented.

On November 2, 1972, plaintiff Viola renewed a previous motion for judgment on the pleadings and on January 2, 1973, Elizabeth filed a motion for summary judgment. In a motion to dismiss, if matters outside the pleading are presented and not excluded by the court (here, the deposition of Valicenti, the insurance agent who wrote the policy), the court is required to treat the motion to dismiss as one for summary judgment and to dispose of it as provided in Rule 56. Carter v. Stanton, 405 U.S. 669, 671, 92 S.Ct. 1232, 31 L.Ed.2d 569 (1972) (Per Curiam). The learned district judge granted summary judgment in favor of Viola Tomalewski finding as a matter of law that she was entitled to the proceeds of the policy. See 354 F. Supp. 1359.

The use and purpose of a motion for summary judgment is well stated in Mintz v. Mathers Fund, Inc., 463 F.2d 495, 498 (7 Cir. 1972), as follows: “As a procedural matter, granting summary judgment, while a drastic remedy, is a wholesome one where applicable to the circumstances. It is never warranted except on a clear showing that no genuine issue as to any material fact remains for trial. * * * If the pleadings and proof in the form of depositions, affidavits and admissions on file disclose that no real cause of action or defense exists, the court may determine there is no issue to be tried and may grant a summary judgment. In reaching its determination the court has the power to penetrate the allegations of fact in the pleadings and look at any evidential source to determine whether there is an issue of fact to be tried. * -x- * The prjmary purpose of a motion for summary judgment is to avoid a useless trial, and summary judgment is a procedural device for promptly disposing of actions in which there is no genuine issue of any material fact even though such issue might have been raised by formal pleadings. The very purpose of Rule 56 is to eliminate a trial in such cases where a trial is unnecessary and results in delay and expense. Appellate courts should not look the other way to ignore the existence of the genuine issues of material facts, but neither should they strain to find the existence of such genuine issues where none exist. * * * ” But it is the law that where motions for summary judgment are made by both parties, if the pleadings present a genuine issue as to a material fact, there can be no valid summary judgment of the disputed facts. Uti-ca Mutual Insurance Co. v. Rollason, 246 F.2d 105 (4 Cir. 1957); M. Snower & Co. v. United States, 140 F.2d 367 (7 Cir. 1944); United States v. Haynes School District No. 8, 102 F.Supp. 843 (E.D.Ark.1951); City of Edinburg v. Central Power & Light Co., 2 F.R.D. 560 (S.D.Tex.1943). Summary judgment may not be granted where there is the slightest doubt as to the facts. Brady v. Hearst Corp., 281 F.Supp. 637, 642 (D. Mass.1968).

The learned District Judge in his opinion failed to make any reference to the issue of fact presented by the claim of gift of the policy, patently appearing from the peladings, though he may have been incorrectly influenced by Elizabeth’s motion for summary judgment as an indication that she preferred to stand upon the record then before the court. But we cannot take the position that when an issue of fact is clearly presented by the peladings a party by a motion for summary judgment waives any right to assert a claim, here the claim set out by Elizabeth in paragraph 21 of her counterclaim of a gift of the policy. We know of no authority which would support such a proposition and none has been cited to us. The distinguished District Judge has not seen fit to advise us as to the basis of his action.

Since a plain issue of fact appears from the pleadings and has been disregarded by the learned District Judge, we must and will reverse the judgment and remand for appropriate proceedings in the district court.

      . Citing Morrissey v. Procter & Gamble Co., 379 F.2d 675, 677 (1 Cir. 1967) : “[I]f a party has made an evidentiary showing warranting a favorable inference, contradiction cannot eliminate it. Summary judgment may not be granted where there is the ‘slightest doubt as to the facts.’ ”

      . The learned District Judge may have been of the view that only issues of law were presented and the case could be decided properly on the pleadings plus the Valicenti deposition, but we think a cursory examination of the law of insurance will indicate to him that there can be circumstances under which a policy of insurance can be given as a gift or assigned to a wife by an insured husband. It would appear, therefore, that the disposition of the ease by use of summary judgment may be improper under the circumstances. See Stepson v. Brand, 213 Miss. 826, 58 So.2d 18 (1952), and in particular the annotation in 33 A.L.R.2d 267, 273, “Gift of Life Insurance Policy.” We have found no Pennsylvania case directly on point, but frequently federal courts must venture into fields of law undecided by state courts in diversity cases. The district court failed to consider the issue of fact presented by the pleadings or the legal consequences which might flow therefrom.
      Elizabeth pursues the issue of question of fact in her brief in this court, setting out in her “Statement of Questions Involved,” the following: “2. Can the Court enter summary judgment for either party where there are triable issues of fact, and more particularly, whether or not the decedent made a gift of the policy to his wife, Elizabeth G. Tomalewski?” In her brief she devotes approximately three pages to this issue, citing numerous cases on the subject to show that summary judgment should not be granted except where there are no disputed issues of fact, a Hornbook proposition. Yiola, on the other hand, devotes only a paragraph in her brief to this matter, citing the “dead man’s rule”, 28 P.S. § 322. The citation is hardly apposite since we do not know what the evidence may be as to proof of gift.
      Viola has not taken the position in this court or in the district court, insofar as the record shows, that Elizabeth’s motion for summary judgment was in effect a waiver of any issue of fact.

      . It is obvious, of course, that if the case were decided in Elizabeth’s favor it would nonetheless be necessary to determine whether she received the policy as a gift or by operation of law as administratrix of the estate.
      To ascertain the tona fides of Elizabeth’s assertion of a gift, by order of this court an affidavit by Elizabeth was filed in the district court along with a statement by her counsel as to what was his basis for the filing of the pleading. What is said in the affidavit and in the statement of Elizabeth’s counsel, at least at this stage of the proceeding, cannot be treated as a frivolity. See Rule 11, Fed.R.Civ.P., 28 U.S.O.