author: ROBERT P. ANDERSON, Circuit Judge: PER CURIAM:

text:
    HUDSON RIVER FISHERMEN’S ASSOCIATION, and Scenic Hudson Preservation Conference, Petitioners, v. FEDERAL POWER COMMISSION, Respondent, Consolidated Edison Company of New York, Inc., Intervenor.
    Nos. 859, 860, Dockets 73-2258, 73-2259.
    United States Court of Appeals, Second Circuit.
    Argued Feb. 11, 1974.
    Decided May 8, 1974.
    Rehearings Denied July 1, 1974.

      Albert K. Butzel, New York City, (Berle, Butzel & Kass and Peter Millock, New York City, on the brief), for Scenic Hudson Preservation Conference.
    Angus Macbeth, New York City (Sarah Chasis, New York City, and Ronald J. Wilson, Washington, D. C., on the brief), -for Hudson River Fishermen’s Ass’n.
    William M. Sawyer, Washington, D. C. (Leo E. Forquer, Gen. Counsel, and George W. McHenry, Jr., Solicitor, Washington, D. C., on the brief), for Federal Power Comm.
    Carl D. Hobelman, New York City (LeBoeuf, Lamb, Leiby & MaeRae, G. S. Peter Bergen, and Andrew Gansberg, New York City, on the brief), for Consolidated Edison Co. of New York, Inc.
    Before ANDERSON, MANSFIELD and OAKES, Circuit Judges.
   ROBERT P. ANDERSON, Circuit Judge:

In Scenic Hudson Preservation Conference v. Federal Power Commission, 354 F.2d 608 (2 Cir. 1965), cert. denied, 384 U.S. 941, 86 S.Ct. 1462, 16 L.Ed.2d 540 (1966), hereinafter cited as Scenic Hudson I, this court vacated the Federal Power Commission’s grant of a license to Consolidated Edison Company of New York, Inc., for construction of a hydroelectric pump-storage plant on Storm King Mountain in Cornwall, New York. The determinative reason underlying the decision was that the Commission had failed fully to comply with 16 U.S.C. § 803(a) in that it neither considered alternative sources of power nor did it resolve the crucial issue of whether the project was “best adapted to a comprehensive plan for improving or developing a waterway” with minimal disruption of the environment. The Commission was ordered to investigate “among other matters, costs, public convenience and necessity, and absence of reasonable alternatives,” as well as the potential danger to fish “before deciding whether the Storm King project [was] to be licensed.” 354 F.2d 624-625.

During the next six years the Commission gave detailed and comprehensive consideration to alternatives and rejected a gas turbine plant as a means of providing reserve power because of prohibitive operating costs, frequency of breakdowns and the lengthy turbine starting time. Interconnections with other electrical systems were also rejected because they could not provide sufficient power and because the connections might be terminated during emergencies.

In addition Consolidated Edison sponsored a Policy Committee to determine the extent to which the plant operation would deplete fish population. The Policy Committee’s report, entitled “Hudson River Fisheries Investigation 1965-68”, hereinafter referred to as Study Report, declared that the evidence indicated there would not be any significant adverse effect on the striped bass. Although the Committee estimated that one percent of all eggs in the River, three percent of all larvae, and over six percent of the young-of-the-year fish would be destroyed by the plant in one year of operation, it concluded that these percentages were “negligible when related to the total population of the species in the Hudson river.” The Study Report stated, however, that additional tests would be necessary and that “if these suggested studies indicate adverse effects not established in pre-constuetion surveys the plant operation schedules should be modified to produce minimal effects on fish populations.”

The Study Report was not issued until after the hearings concluded and the Policy Committee was, therefore, never subjected to cross-examination. Nonetheless, the Commission relied heavily on the report in affirming the Trial Examiner’s finding that the project posed no threat to fish. Consolidated Edison Company of New York, Inc., Federal Power Commission Opinion and Order Issuing License (1970). The Commission adopted the Policy Committee’s proposal for future studies, and, in Article 36 of the license, ordered Consolidated Edison to engage in a continuing study of the plant’s potential impact on the fish in the River. The Commission reserved the power under Article 15 to order Consolidated Edison to “coordinate the operation of the project” to protect “beneficial uses of water resources” and under Article 16 to order Consolidated Edison “for the conservation, and development of fish and wildlife resources” to construct or modify such facilities or operations as the Commission might order.

In affirming the issuance of the license in Scenic Hudson Preservation Conference v. Federal Power Commission, 453 F.2d 463 (2 Cir. 1971), cert. denied, 407 U.S. 926, 92 S.Ct. 2453, 32 L.Ed.2d 813 (1972), hereinafter cited as Scenic Hudson II, this court relied primarily on the Study Report in finding that there was substantial evidence to support the Commission’s conclusion that fish were not endangered, 453 F.2d at 476. But it has meanwhile become apparent that the Policy Committee assumed, for purposes of its projections, that the Hudson River flows only downstream, and consequently it apparently calculated the fish mortality rate on the assumption that the eggs and larvae would only be exposed to the plant intake once. The River, however, is a tidal estuary and the water flows north on the flood and south on the ebb, changing direction four times each day. A given number of eggs or larvae, therefore, might be exposed to the plant four times in the course of a 24-hour day rather than just once on their way to the sea. Further, the Policy Committee calculated the speed of the River as the average of the downstream flow which included both the rates of the ebbing tides and the natural drift of the River during the same period. But the actual rate of speed of a given hatch of larvae is far less than the maximum downstream flow because they are pushed upstream again by the flooding tide. Therefore, the eggs and larvae do not pass the plant as quickly as the Committee estimated, and the chances for a given set of eggs or larvae to enter the plant increase accordingly.

The potential impact of the Committee’s failure to assess the effect of the tidal flow was not evident until 1972-73 when the Atomic Energy Commission held hearings on Consolidated Edison’s license to operate the nuclear power plant at Indian Point, a few miles south of Cornwall. Using the Study Report data, but correcting the Policy Committee’s assumptions, the AEC staff concluded that the Indian Point plant alone would reduce a black bass generation from 14 to 43 percent. In the Matter of Consolidated Edison of New York, Inc., Atomic Safety and Licensing Board, September 14, 1973. As a result, the Board conditioned its grant of a license upon the installation, not later than January 1, 1978, of a closed-cycle cooling system. According to a statement of Consolidated Edison’s counsel upon oral argument the Board may consent to the substitution of other suitable methods for fish protection. The Indian Point facilities utilized half the amount of water as that of Storm King, and consequently the loss of bass at Storm King could be substantially greater than the AEC projections.

On February 2, 1973, the Hudson River Fishermen’s Association (HRFA), a group of commercial and sports fishermen petitioned the Commission, pursuant to 16 U.S.C. § 803, to determine the feasibility of taking no water into the reservoir during the 49-day spawning period in May and June. The HRFA did not request a complete hearing but asked the Commission to exercise the power reserved under Articles 15 and 16 of the license to consider modification of plant operations for the protection of fish.

On March 29, 1973, the Scenic Hudson Preservation Conference, a coalition of individuals and groups interested in protecting the beauty and resources of the River valley, also petitioned, pursuant to 16 U.S.C. §§ 797 and 803, for complete reconsideration of the license based on the newly discovered danger to fish, the increased capital cost of the project, and the New York utilities’ working agreement which no longer requires the amount of reserve power that the Storm King project was designed to provide.

The FPC dismissed both petitions, stating that all the issues had been previously decided. With regard to the danger to fish, the FPC said the Trial Examiner had been aware of the tidal effects of the River, and that the evidence presented consisted of “no new basic data but only differences of opinion and interpretation by professional biologists in connection with matters already in the record.” Consolidated Edison of New York, Inc., Project No. 2338, Order Denying Petition to Reopen and- For Further Hearings, Federal Power Commission (May 31,1973).

While Scenic Hudson’s petition, based on increased costs and decreased power requirements, was denied with prejudice, the petitions concerning fish conservation were denied without prejudice to allow renewal after Consolidated Edison’s studies relating to fish spawning are completed. Consolidated Edison of New York, Inc., Project No. 2338, Order Denying Application for Rehearing, Federal Power Commission (July 26, 1973).

The Commission relies on two principles of administrative law in arguing that a reopening of these proceedings would be improper. First, it contends that it has unreviewable discretion on this issue; and, second, it states that all of the questions raised have been finally decided and are, therefore, barred from reconsideration under the Federal Power Commission Act, 16 U.S.C. § 825.

Agencies must have the power to protect themselves from “interminable delay” brought about by repeated updatings of the evidence, whether cost increases or amendments to working agreements. United States v. Interstate Commerce Commission, 396 U.S. 491, 522, 90 S.Ct. 708, 24 L.Ed.2d 700 (1970). And a party in interest, such as Consolidated Edison, should not be forced to justify again and again in terms of costs and benefits the means which it has chosen to supply electrical energy during peak hours and emergencies. See Appalachian Power Co. v. Environmental Protection Agency, 477 F.2d 495 (4 Cir. 1973).

For these reasons, courts are reluctant to order administrative agencies to reopen and the Supreme Court has done so only once in Atchison, Topeka & Santa Fe Railway Co. v. United States, 284 U.S. 248, 52 S.Ct. 146, 76 L.Ed. 273 (1932), a rates reduction case that has been limited to its facts. United States v. Pierce Auto Freight Lines, Inc., 327 U.S. 515, 534, 66 S.Ct. 687, 90 L.Ed. 821 (1946). “It has been almost a rule of necessity that rehearings were not matters of right, but were pleas to discretion. And likewise it has been considered that the discretion to be invoked was that of the body making the order, and not that of a reviewing body.” Interstate Commerce Commission v. City of Jersey City, 322 U.S. 503, 514-515, 64 S.Ct. 1129, 1134, 88 L.Ed. 1420 (1944). Braswell Motor Freight Lines, Inc. v. United States, 275 F.Supp. 98 (W.D.Tenn.1967), aff’d per curiam, 389 U.S. 569, 88 S.Ct. 692, 19 L.Ed.2d 779 (1968).

The petition to review the Commission’s order denying Scenic Hudson’s petition to reopen for further study of alternative means of generating electricity is, therefore, dismissed, without prejudice, however, to its renewal if the Commission has not affirmatively found fish protection and preservation adequate by January 1,1975.

Reconsideration of fish conservation, however, does not impose on either the Commission or the utility the burdens of a reopening. The Commission, pursuant to Articles 15, 16 and 36 of the license, has assumed “continuing jurisdiction” over the issue, see 2 Davis, Administrative Law Treatise § 18.09, and will presumably conduct further investigations in this area. Furthermore, Consolidated Edison has committed itself under Article 36 to continue studies of this same issue, and it will not be prejudiced because it is asked to correct promptly a probably incorrect report previously submitted to the court.

If an administrative agency’s refusal to take new evidence clearly subverts the public interest, Brennan v. Occupational, Safety and Health Review Commission, 492 F.2d 1027, 1031-1032 (2 Cir. 1974); WMOZ, Inc. v. Federal Communications Commission, 120 U.S.App.D.C. 103, 344 F.2d 197 (1965), courts have the power to order further hearings. The Commission has a statutory duty to protect recreational and commercial uses of waterways, Namekagon Hydro Company v. Federal Power Commission, 216 F.2d 509 (7 Cir. 1954), and the Supreme Court has emphasized that the FPC must develop an adequate record concerning spawning activities of anadromous fish. Udall v. Federal Power Commission, 387 U.S. 428, 87 S.Ct. 1712, 18 L.Ed.2d 869 (1967).

When the Commission denied the present petitions for hearings, it was not operating in a vacuum, but was refusing to correct an apparent error in a report ordered by and previously relied upon by this court. Under these circumstances the Agency’s exercise of discretion must be reviewable and “[w]here, as here, a regulatory agency has ignored factors which are relevant to the public interest,” as defined by this court in its prior decisions, “the scope of judicial review is sufficiently broad to order their consideration.” Michigan Consolidated Gas Co. v. Federal Power Commission, 283 F.2d 204, 226 (D.C.Cir.), cert. den. 364 U.S. 913, 81 S.Ct. 276, 5 L.Ed.2d 227 (1960). See also Ng Yip Yee v. Barber, 267 F.2d 206, 208 (9 Cir. 1959); Morand Brothers Beverage Co. v. NLRB, 204 F.2d 529 (7 Cir.) cert. den. 346 U.S. 909, 74 S.Ct. 241, 98 L.Ed. 407 (1953), reh. den. 346 U.S. 940, 74 S.Ct. 376, 98 L.Ed. 428 (1954).

If, after adequate hearings and expert consideration, the Commission had decided that conclusions reached in the Study Report were correct, this court would be bound by that finding, if supported by substantial evidence, but the petitioners have demonstrated such a grave probability of error that the Commission cannot excuse itself from its obligation under Scenic Hudson I by simply submitting an unsworn statement in a letter from one of the authors of the disputed report as ample evidence to rebut the claimed inaccuracy.

By “donning . . . ‘complete blinders’ . . . to a new situation,” Blue Bird Coach Lines, Inc. v. United States, 328 F.Supp. 1331, 1338 (W.D.N.Y.1971), the FPC has abused its discretion.

The Commission contends, however, that under 16 U.S.C. § 8251(b), this court finally decided all questions raised in Scenic Hudson II and, therefore, is now barred from ordering further hearings. “Finality,” in the context of administrative proceedings, usually precludes reconsideration of adjudicative facts which, with due diligence on the part of petitioners, could have been litigated in the previous proceeding. 2 Davis, Administrative Law Treatise § 18.02 (1958). Nothing in § 8251(b) suggests that Congress intended to broaden the meaning of “finality” to foreclose correction of egregious errors resulting from evidence which qould not, even with due diligence, have been subject to cross-examination. On the contrary, the section provides that the court may consider objections not raised before the Commission and order the taking of additional evidence upon a showing that there were reasonable grounds for failure to raise such claims. While this exception applies only to cases on direct appeal, it evinces Congress’ intent to assure that there is a chance to be heard on all relevant issues.

“When an administrative agency is acting in a judicial capacity and resolves disputed issues of fact properly before it which the parties have had an adequate opportunity to litigate, the courts have not hesitated to apply res judicata to enforce repose,” United States v. Utah Construction & Mining Co., 384 U.S. 394, 422, 86 S.Ct. 1545, 1560, 16 L.Ed.2d 642 (1966), but there has not been “an adequate opportunity to litigate” the fish conservation issue because the disputed Study Report was presented to the Commission after the hearings were closed, and the potential impact of the flaw in the report was not evident until the data on which it was based were subjected to analysis by the AEC after this court had approved the grant of the license.

Moreover, the finality provision of § 825J(b) does not apply to a request for an evidentiary hearing pursuant to a provision in a license. This section was intended by Congress to prevent postponement of construction through repetitive ánd unnecessary inquiries, but where the Commission has already ordered further evidence to be compiled, there is no frustration of congressional intent by ordering a remand to consider that evidence promptly.

The Commission contends that the fish conservation issue was “adequately litigated” before the Trial Examiner who decided before the issuance of the Study Report that the plant posed no threat to fish. But the Examiner noted “the absence of usable data” concerning the danger to fish and, in his report deferred to some of the Study Report’s statistics. Consolidated Edison of New York, Inc., Presiding Examiner’s Initial Decision, (August 6, 1968) 101, 102. The Commission, itself, has termed the Study Report “a most comprehensive study of the problem and as definitive a development of the issues raised by the court as is ever likely to be achieved within the realm of practicality.” Consolidated Edison Co. of New York, Inc., supra, Opinion and Order Issuing License, 59. It cannot now fall back on a factual record which the Examiner admitted was inadequate.

Both the Commission and Consolidated Edison state that the tidal assumption in the Study Report have been called to the attention of the New York Court of Appeals in de Rham v. Diamond, 32 N.Y.2d 34, 343 N.Y.S.2d 84, 295 N.E.2d 763 (Crt. of App. 1973), and that the New York court’s holding that the record indicates no substantial danger to fish should be res judicata. The State court, however, was reviewing the record compiled by the State Commission of Environmental Conservation to assure the State that New York’s water quality standards were not contravened. It was not enforcing the Federal Power Commission Act, nor was it in a position to enforce the mandate of Scenic Hudson I. Its decision, furthermore, was issued six months prior to the publication of the findings by the AEC staff. “Courts often assert a reluctance to hold that a public interest is estopped by res judicata,” 2 Davis, Administrative Law Treatise § 18.03, and “a determination under one statute is not binding when the same question arises under another statute,” Id. § 18.04, especially where the question is presented to a different forum in a different factual context. See Grose v. Cohen, 406 F.2d 823, 825 (4 Cir. 1969); Old Dutch Farms, Inc. v. Milk Drivers and Dairy Employees Local Union No. 584, 281 F.Supp. 971, 974 (E.D.N.Y.1968).

The HRFA has only requested a hearing, pursuant to the license, to consider closing the plant intake system during spawning season. The Scenic Hudson Preservation Conference, however, contends that the fisheries issue alone requires a complete reconsideration of the license because the plant cannot be operated in any event without endangering the striped bass. Consolidated Edison informed the court at oral argument that it believes the plant can operate effectively, absent emergencies, without withdrawing water from the Hudson during spawning season. The mandate of Scenic Hudson I can, therefore, be met without a complete reopening of the licensing proceeding, but if the Commission concludes that the plant’s operation cannot be curtailed during spawning season or that emergency use during that time would still pose a major threat to the fish, a reopening of the entire licensing proceeding may be necessary.

The Commission says that these hearings should not be held now but should await Consolidated Edison’s initial reports on its study of spawning under Article 36. Environmental issues, however, should be considered early in the life of a project to insure that construction or operating changes will conform to environmental requirements. Calvert Cliffs’ Coordinating Committee, Inc. v. United States Atomic Energy Commission, 146 U.S.App.D.C. 33, 449 F.2d 1109, 1128 (1971). The environmental groups, who have so assiduously prosecuted this appeal, should not be faced with the fait accompli of an operating plant before any modifications are considered.

The Commission’s order refusing to hear the petition of the Hudson River Fishermen’s Association is vacated, and that issue is remanded for immediate hearings pursuant to Articles 15, 16, and 36 of the license.

ON PETITIONS FOR REHEARING

PER CURIAM:

In its petition for rehearing Consolidated Edison of New York Inc. states, in effect, that the latest decision of this court has confronted it with an impossible choice. It says that § 13 of the Federal Power Commission Act, 16 U.S.C. § 806, requires commencement of construction within two years of the award of a license and limits extensions of this period to two additional years; and that, due in large part to litigation, the Storm King project has already been granted the two-year extension. It asserts that if it is required by economic considerations or by the Federal Power Commission to cease construction pending reconsideration of the fish conservation issue in compliance with this court’s mandate, it will be foreclosed from this project under the time limits of the statute.

The strictures which it mentions, however, are not as inflexible or stringent as Consolidated Edison assumes. It has already commenced construction within the plain meaning of the statute; and, after construction begins, “the period for the completion of construction carried on in good faith and with reasonable diligence may be extended by the commission when not incompatible with the public interest.” 16 U.S.C. § 806. It is hardly conceivable that the Commission would not conclude that a delay for purposes of complying with the mandate of this court is in good faith and compatible with the public interest.

The petitions for rehearings submitted by both Consolidated Edison and the Scenic Hudson Preservation Conference reveal some confusion regarding the further proceedings required by this court. The hearings pursuant to the license should deal with the extent to which the plant píoses a danger to fish life and whether such danger can, as a practical matter, be eliminated or greatly minimized. If the danger is found to be greater than previously predicted and if the plant or plant operations cannot be altered effectively to remove or substantially prevent this danger, then the Commission must decide whether to reopen completely the licensing proceedings to determine whether the benefits to be provided by this plant outweigh its costs in terms of danger to fish life. Such a reopening will also be required if Consolidated Edison or the Commission fails to make a good faith effort to comply with the deadline set by this court for the completion of the hearings.

Consolidated Edison’s petition for rehearing and Scenic Hudson Preservation Conference’s motion for stay of construction and its petition for rehearing are denied. .

      . Within the next year, Consolidated Edison expects to begin construction of the hydroelectric plant to pump -water from the Hudson River to a reservoir to be located on the top of Storm King mountain. By storing water in the reservoir during seasons or hours of low electrical consumption, when power is likely to be less expensive, and by allowing water to flow from the reservoir during times of peak consumption, when electricity may be more highly priced, the plant is designed to equalize the demand for electricity, and, thus, reduce the chance of brown-outs due to overloads. By being able quickly to draw on a huge reserve of electrical generating powjj, the plant may also be helpful in offsetting dramatic electrical imbalances, such as the one which caused the 1965 blackout.

      . The fisheries question largely concerned the potential danger to the Hudson River striped bass, Rocus saxatillis, which spawn in an 80-mile span of the River extending from Croton, 20 miles below the plant site, to Coxsackie, 60 miles north of Cornwall. This area and the Chesapeake Bay are the major spawning locations for the striped bass in the North-Atlantic states, and the commercial value of the yearly catch spawned in the Hudson River alone has been estimated by an Atomic Energy Commission Safety and Licensing Board to range from $4 million to $16 million. In the Matter of Consolidated Edison of New York, Inc., Atomic Safety and Licensing Board, September 10, 1973.
      Twenty-six other species of fish spawn in the Hudson River, and some of these, notably the white perch and shad, are also likely to be affected by plant operations. It is presumed for purposes of this opinion and the resulting order that the appropriate agencies should exercise the same concern for other species as for the striped bass.

      . The Policy Committee was composed of representatives from the New York Conservation Department, the New Jersey Division of Fish and Game, and the United States Bureau of Sports, Fishing and Wildlife.

      . Between early May and the middle of June, the bass eggs are laid and hatch into larvae which, after a week of development, are capable of some swimming; nevertheless, both eggs and larvae tend to drift with the flow of the River. No screening device has yet been invented which can keep eggs or larvae out of a hydroelectric system without significantly damaging them. If they are drawn into the system, a substantial number of eggs and an even more substantial number of the extremely delicate larvae will be destroyed by turbulence, abrasion, and heat. By late June, most larvae have grown to an inch and a half long, and can be screened from the intake; nevertheless, many of these young-of-the-year fish can be expected to elude screens and enter the plant.

      . To refute the claim that there is an error in the record, the Commission and Consolidated Edison rely on a letter from Policy Committee Chairman Hall stating that “the most critical evaluation of the potential effect” on fish life is projected in the Study Report. In light of the AEC Safety and Licensing Board’s conclusion that the plant could kill ten times as many fish as estimated in the Study Report and the obvious fact that in a slow, alternating river flow, a given number of eggs or larvae is more likely to be removed than in a fast, downstream flow, this claim is unpersuasive.

      . The Assistant Secretary of the Interior has urged the Commission “to give a full and complete review of the effects ... of the Cornwall project ... on the Hudson fishery” in light of the AEC staff’s findings. Although this is not a request for a plant modification within the meaning of Article 16, the Commission was asked to use its informed discretion in reviewing the petitioners’ requests.

      . This section in pertinent part provides:
      “. . . the judgment and decree, of the court, affirming, modifying, or setting aside, in whole or in part, any such order of the Commission, shall be final . . . ”


source: Caselaw Access Project

author: MANSFIELD, Circuit Judge:

license: Public Domain

text:
    In the Matter of LAW RESEARCH SERVICE, INC., Appellant, v. MARTIN LUTZ APPELLATE PRINTERS, INC., Appellee.
    No. 436, Docket 73-2113.
    United States Court of Appeals, Second Circuit.
    Submitted Jan. 23,1974.
    Decided May 2, 1974.

      Jane Compton Hammett, New York City, for appellant.
    David M. Ettinger, New York City, for appellee.
    Before HAYS, MANSFIELD and OAKES, Circuit Judges.
   MANSFIELD, Circuit Judge:

Law Research Service, Inc. (“Law Research”) appeals from a decision of Judge Sylvester J. Ryan affirming Referee in Bankruptcy Herzog’s allowance of certain secured claims of Martin Lutz Appellate Printers, Inc. (“Lutz”) against the assets of Law Research. We affirm.

On June 19, 1971, Law Research filed a petition pursuant to Chapter XI of the Bankruptcy Act, 11 U.S.C. §§ 701-799, for an arrangement with its unsecured creditors. Thereafter Lutz filed with the bankruptcy court two secured claims amounting to approximately $20,000 for services rendered in printing a brief and record for Law Research in connection with an appeal taken by The Western Union Telegraph Company in the Supreme Court of the State of New York from a judgment in excess of a million dollars against it in favor of Law Research. In order to secure payment for the printing work Law Research assigned to Lutz a part of the judgment. The assignment, which was executed on February 1, 1971, but not filed until May 5, 1971, forms the basis for Lutz’s claim that it is a secured creditor.

Law Research sought before the Referee to defeat Lutz’s claims on two grounds: (1) that the charges for the printing services were excessive; and (2) that since the assignment was not perfected until May 5, 1971, a date well within the four-month period preceding bankruptcy, it was voidable as a preferential transfer under § 60 of the Bankruptcy Act, 11 U.S.C. § 96. The Referee rejected both arguments, and we think correctly so. The first contention is frivolous. The amount of the charges is supported by ample evidence. The debtor’s second claim, though it too must fail, requires some discussion.

Law Research advances two theories in support of its contention that the assignment operated as a voidable preferential transfer. First, it suggests that there was no “perfectable” transfer at the time of the assignment because the funds underlying the judgment had yet to be identified and the judgment, being on appeal, was subject to reversal. Alternatively, it argues that the judgment was not in fact perfected until May, 1971, within four months of bankruptcy. We find both arguments Wanting.

On the first score, the debtor confuses the law relating to assignment of present rights or intérests with that relating to assignment of future rights or interests. Under New York law, which controls on the question of perfection under § 60 of the Bankruptcy Act, see In re Morasco, 233 F.2d 11 (2d Cir. 1956), the assignment of an existing right creates an immediate lien in favor of the assignee that is valid against later lien creditors of the assignor. Stathos v. Murphy, 26 A.D.2d 500, 276 N.Y.S.2d 727 (1st Dept.1966) (Breitel, J.), affd., 19 N.Y.2d 883, 281 N.Y.S.2d 81, 227 N.E.2d 880 (1967). The assignment of a future right, on the other hand, creates a lien that attaches only at such time as the right accrues. See, e. g., Okin v. Isaac Goldman Co., 79 F.2d 317, 319 (2d Cir. 1935). Concededly the courts have encountered some difficulty in defining the contours of a future right or interest for purposes of assignment law. But whatever ambiguities there- may be, it is clear that the assignment of an existing judgment is of a present, not a future, interest. See Stathos v. Murphy, supra.

Nor does In re Modell, 71 F.2d 148 (2d Cir. 1934), relied upon by Law Research, support its argument to the contrary. Modell involved the assignment of an interest in “any verdict, decision, judgment or proceeds thereof” which the assignor might recover in a pending suit. When two years later a judgment was entered and a formal assignment made (within four months of the assignor’s bankruptcy), the assignee maintained that his lien should relate back to the initial assignment. The claim was properly rejected. We ruled that the first purported assignment was merely an agreement to assign a judgment which might be acquired in the future and which, as it turned out, was not entered until after the four-month period preceding bankruptcy had commenced. Later in Okin v. Isaac Goldman Co., supra, we confirmed that Mo-dell turned on the absence of any existing judgment at the time of the purported assignment. But when, as in the present case, an assignment is of an existing judgment, it creates a lien in favor of the assignee at the time of its execution.

That the judgment was on appeal and thus subject to reversal or modificátion does not affect this result. N. Y. General Obligations Law § 13-103, which authorizes the assignment of judgments, clearly envisions that such assignments may take place before the appellate process has rún its course. Under .this section the assignment of a judgment operates as a transfer of the present right to the judgment, subject though it may be to defeasance on appeal, and of the residual right to the underlying cause of action in the event of a reversal or vacation of the judgment. Indeed, we have given effect to assignments of an even more conditional nature, holding in Rockmore v. Lehman, 129 F.2d 892 (2d Cir. 1942) (construing New York law), cert. denied, 317 U.S. 700, 63 S.Ct. 525, 87 L.Ed. 559 (1943), that the assignment of monies to become due under the contract created a present lien even though the rights were contingent on performance by both of the contracting parties. And in In re Barnett, 124 F.2d 1005 (2d Cir. 1942), we found that the assignment by a daughter of her testate or intestate interest in her father’s estate during her father’s lifetime created a lien as of the date of its execution. A fortiori the assignment of the existing judgment by Law Research created a lien in favor of Lutz as of the date of the assignment’s execution.

The assignment of Law Research’s interest in the judgment, though valid when executed on February 1, 1971, was not filed by Lutz until May 5, 1971. If, as Law Research maintains, filing was necessary to perfect Lutz’s interest in the judgment, the failure to file until within four months of bankruptcy would render the assignment a preference under § 60 of the Bankruptcy Act. The Referee declined to hold the assignment preferential, finding that the delay in filing did not stem from any negligence or fault on the part of the assignee. Indeed, Lutz apparently attempted to file its assignment shortly after its execution, but for reasons that are not entirely clear the clerk refused to accept it for filing. The Referee concluded that the clerk had refused the Lutz assignment because there was already on file a purported assignment of the entire judgment to another creditor. Since Lutz had made a good faith effort to file the assignment the Referee concluded that it would be inequitable under the circumstances not to relate the May 5th filing of the assignment back to the date when it was first offered for filing, i. e., in early February.

There is support for the Referee’s decision that the filing should be deemed effective as of the earlier date. N.Y.U. C.C. § 9-403 provides that presentation of a filing statement constitutes filing. Furthermore, in construing the predecessors of § 9-402, we have held that when a clerk improperly refuses to accept a document tendered for filing, filing will nonetheless be deemed to have been effected. See, e. g., In re Mutual Board & Packaging Corp., 342 F.2d 294 (2d Cir. 1965). However, we need not remand for further facts as to the clerk’s rejection in the present case or plumb the effect of the attempted filing for we hold that filing was not in any event necessary to perfect the assignment of the judgment.

N.Y.U.C.C. § 9-104(h) specifically excludes a right represented by a judgment from Article 9 of the Uniform Commercial Code. Thus, as was noted in the Practice Commentary accompanying Article 9, we are left without any statutory law governing perfection of assignments of judgments. Under such circumstances the pre-Code law continues to govern. See 1 G. Gilmore, Security Interests in Personal Property § 10.7 (1965). Under the pre-Code law filing was not necessary for the perfection of an assignment of a judgment or claim. See Malone v. Bolstein, 151 F.Supp. 544, 547 (N.D.N.Y.1956), affd., 244 F.2d 954 (2d Cir. 1957) (construing N.Y. Personal Property Law § 41, from which N.Y. General Obligations Law § 13-103 was derived), and Rockmore v. Lehman, supra. The present section authorizing the assignment of judgments, General Obligations Law § 13-103, likewise contains no filing requirement.

Law Research’s reliance upon N.Y.C.P.L.R. § 5019(c) as supporting its contention that an assignment of a judgment must be filed in order to be perfected, is misplaced. It is true that § 5019, which deals generally with corrections and amendments of judgments, provides that the assignee of a judgment shall file a copy of the assignment in the County Clerk’s office. However, we agree with the Referee that the section is clearly intended for the benefit of the assignee, being designed to protect him against payment of the judgment to the

wrong party and not as a means of providing notice to third-party creditors. See Boyd v. Buffalo Steam Roller Co., 87 Misc. 20, 149 N.Y.S. 1050 (Co.Ct. 1914), affd., 167 App.Div. 959, 152 N.Y.S. 1099 (4th Dept.1915).

We conclude that the assignment of the judgment against Western Union was perfected as of the date of its execution in early February and therefore falls outside the four-month period preceding bankruptcy.

The decision of the district court is affirmed.

      . In December 1971 Law Research entered into a settlement with Western Union. Lutz seeks to enforce its claim against the proceeds of that settlement.

      . The theme of this argument is not unlike that of N.X.U.C.C. § 9-204, which provides that a security interest cannot attach until the debtor has rights in the collateral. If the assignment of a judgment were covered by the U.C.O. (see § 9-104(h)), however, we would be confident that Law Research had such rights in the judgment as to meet the test of § 9-204.

      . For security interests covered by the U.C. C. this concept has of course been codified in § 9-204(1), which provides :
      “A security interest cannot attach until there is agreement (subsection (3) of Section 1-201) that it attach and value is given and the debtor has rights in the collateral. It attaches as soon as all of the events in the preceding sentence have taken place unless explicit agreement postpones the time of attaching.”

      . The earliest and certainly purest form of the future assignment can be found in Field v. City of New York, 6 N.Y. 179 (1852), where the assignor assigned moneys he expected to earn under a contract he expected to enter. The court, while recognizing that the assignment could not operate to pass a present claim, concluded that the assignment “ . . . did, nevertheless, create an equity, which would seize upon those claims as they should arise. ...” Because this “equitable” lien would not attach until the claim actually arose, intervening lien creditors could acquire a position superior to the assignee.
      A similar rule has been applied in cases dealing with a pledge of chattels to be acquired in the future, e. g., Titusville Iron Co. v. City of New York, 207 N.Y. 203, 100 N.E. 806 (1912), and an assignment of a future refund on a liquor license deposit, e. g., City of New York v. Bedford Bar & Grill, 2 N.Y.2d 429, 161 N.Y.S.2d 67, 141 N.E.2d 575 (1957). On the other hand, we have declined to extend the same treatment to the assignment of a mere expectancy in an estate. See, e. g., In re Barnett, 124 F.2d 1005, 1008 (2d Cir. 1942) (“It is not our duty, of course, to explain why the New York courts distinguish between the validity of mortgages and pledges of after-acquired property, and assignments of expectancies.”). The vagaries in the development and application of the law of assignment of future rights and interests have led one court to the frank admission that the cases cannot all be reconciled. Stathos v. Murphy, supra.

      . “[I]n that decision [Modell] the assignment which purported to cover the right, title, and interest of the assignor in any ‘judgment or proceeds thereof’ which the latter might recover in a pending action for malicious prosecution did not operate upon the judgment until within the four months’ period, for only within that period was the judgment entered.” Okin v. Isaac Goldman Co., supra, 79 F.2d at 319-320.

      . The continuing force of the Modell decision as it relates to the assignment of an expected judgment or recovery may even be doubted. The Stathos court characterized the Modell decision as one resting on ancient and largely discredited distinctions between law and equity. 26 A.D.2d at 506, 276 N.Y.S.2d at 733. According to Stathos the better view is that the assignment of personal injury claims and, a fortiori, contract claims is effective to create a present lien in the assignee. 26 A.D.2d at 504-506, 276 N.Y.S.2d at 731-733.

      . It is likewise unclear what change in circumstances prompted the clerk to accept the Lutz filing in May.

      . The president of Law Research testified that he had given an earlier assignment in blank to Joseph S. Herbert & Co. and that, although the assignment was to have been in payment of a $10,000 debt owed by Law Research to Herbert & Co., the latter filled in the full amount of the judgment in the blank assignment. The Referee, however, did not credit portions of the testimony given by the witness.

      . “§ 9-403. What Constitutes Filing; Duration of Filing; Effect of Lapsed Filing; Duties of Filing Officer

      “(1) Presentation for filing of a financing statement and tender of the filing fee or acceptance of the statement by the filing officer constitutes filing under this Article.”

      . “§ 9-104. Transactions Excluded From Article

      “This Article does not apply
      í¡: * :¡: * *
      “(h) to a right represented by a judgment ■ . . .”

      . “§ 5019. Validity and correction of judgment or order; amendment of docket

      * * * * *
      “A person other than the party recovering a judgment who becomes entitled to enforce it, shall file in the office of the clerk of the court in which the judgment was entered or, in the case of a judgment of a court other than the supreme, county or a family court which has been docketed by the clerk of the county in which it was entered, in the office of such county clerk, a copy of the instrument on which his authority is based, acknowledged in the form required to entitle a deed to be recorded, or, if his authority is based on a court order, a certified copy of the order. Upon such filing the clerk shall make an appropriate entry on his docket of the judgment.”

      . Filing under § 5019(c) also serves to assist the assignee in directly enforcing the judgment against the judgment debtor. With his right to the judgment a matter of court record, the assignee himself can invoke the court’s process against the judgment debtor. See, e. g., N.Y.C.P.L.R. § 5225(a).


author: MERRILL, Circuit Judge:

text:
    Mr. and Mrs. Ardmore CANTON et al., Plaintiffs-Appellants, v. SPOKANE SCHOOL DISTRICT #81, a public corporation, et al., Defendants-Appellees.
    No. 72-1250.
    United States Court of Appeals, Ninth Circuit.
    May 13, 1974.

      Douglas D. Lambarth (argued), Spokane, Wash., for plaintiffs-appellants.
    Donald C. Brockett, Pros. Atty., Emmett J. Shaerer, Deputy Pros. Atty., Spokane, Wash., for defendants-appellees.
    Robert W. Winston, Jr. (argued), of Winston, Cashatt, Repsold, McNichols, Connelly & Driscoll, Spokane, Wash., Alexandra Harmon, Seattle, Wash., for amicus curiae.

       Honorable William J. Jameson, Senior United States District Judge for the District of Montana, sitting by designation.

   OPINION

Before MERRILL and TRASK, Circuit Judges, and JAMESON, District Judge.

MERRILL, Circuit Judge:

Mr. and Mrs. Canton and other named plaintiffs brought this action on their own behalf, on behalf of their children, and on behalf of a class described in the margin. They allege that certain “policies and practices” of the defendant school district and its officials of “charging fees[] as an incident of participation in the total school program, and of penalizing students who do not pay the fees” deny them and members of their class rights secured by the equal protection clause of the Fourteenth Amendment to the Constitution of the United States and 42 U.S.C. § 1983, and by Articles IX and XXYI of the Constitution of the State of Washington and certain Washington statutes providing for public education. Damages, an injunction, and declaratory relief are asked.

It is to be noted that plaintiffs do not com plain only of the fact that fees are charged. That is, they do not rest on the theory that the state cannot exact a price for the benefits involved, although that is one argument they present. In addition they complain of concomitant noneconomic harms which this particular system of fees, in the public school setting, has visited upon the children of their class. They allege:

“In addition to charging the fees, defendants have penalized children who do not pay. The penalties include withholding or reducing grades, inflicting physical punishment upon students, as well as causing students serious, direct and grave humiliation and furthermore threatening them with such actions.”

It is alleged that plaintiffs’ children “have been frustrated and humiliated by being singled out by reason of their inability to pay the fees.” And, further:

“The children of plaintiffs and the sub-class represented thereby have suffered direct, additional emotional and mental disturbance, degradation, embarrassment and -humiliation because of the treatment accorded them by the penalizations thrust upon said children by defendants.”

Defendants responded to this complaint with a motion to dismiss, “because of lack of jurisdiction by this Court over the subject matter; [] lack of jurisdiction over the persons of the defendants ; insufficiency of service of process; and, failure to state a claim upon which relief can be granted.” Following oral argument this motion was granted. The objections to the sufficiency of process and personal jurisdiction relate only to the defendant school principals and their spouses, who apparently were not served at all. The dismissal as to them on this ground is not questioned on this appeal.

In its written order of dismissal the district court based its ruling solely on “the doctrine of abstention.” However, it is apparent that substantial reliance was also placed upon a theory entirely distinct from the doctrine ordinarily referred to as “abstention”: that in order to recover here plaintiffs must have exhausted state judicial and administrative remedies. For a general description of these two doctrines, see H. Hart and H. Wechsler, The Federal Courts and the Federal System 980-1009 (2d ed. P. Bator, P. Mishkin, D. Shapiro and H. Wechsler 1973) [hereinafter cited as Bator, et al.]; C. Wright, Handbook of the Law of Federal Courts §§ 49, 52 (2d ed. 1970). We deal with both grounds.

1. Exhaustion

The question here is whether state or local law provides remedies for plaintiffs’ alleged injuries which should be exhausted before resort is had to the federal forum.

Defendants point to a resolution allegedly enacted by the Board of Directors of School District No. 81 on June 10, 1959, and in effect at all relevant times, which provides in part:

“Registration Fees — Collection of Monies at Junior and Senior High School Level
-X- -X- *
2. Students who are unable to pay registration-day fees shall be spared embarrassment. All such cases are to be referred to the School Administration, which is authorized to issue waivers to deserving students.
3. Whenever possible, such waivers shall include student body privileges as well as privileges and rights extended by the Board of Directors.” Defendants point also to Washington

statutes which provide for judicial review of actions of school boards and officials at the behest of aggrieved persons. See R.C.W. eh. 28A.88. They note that plaintiffs neither allege nor offer to show that they have sought either state court review of School District No. 81’s policies or waiver, pursuant to the resolution set out above, of any or all fees of which they complain in this action.

It is well established that state judicial remedies need not be exhausted or invoked to perfect a federal cause of action under the Civil Rights Act, § 1983. “It is no answer that the State has a law which if enforced would give relief. The federal remedy is supplementary to the state remedy, and the latter need not be first sought and refused before the federal one is invoked.” Monroe v. Pape, 365 U.S. 167, 183, 81 S.Ct. 473, 482, 5 L.Ed.2d 492 (1961).

The Supreme Court has never said that state administrative remedies need not under any circumstances be exhausted as a prerequisite to an action under § 1983. Some authorities suggest that such a blanket rule can be inferred from the line of cases following McNeese v. Board of Education, 373 U.S. 668, 83 S.Ct. 1433, 10 L.Ed.2d 622 (1963), particularly the per curiam opinion in Damico v. California, 389 U.S. 416, 88 S.Ct. 526, 19 L.Ed.2d 647 (1967) (citing McNeese for the proposition that “ ‘relief under the Civil Rights Act may not be defeated because relief was not first sought under state law which provided [an administrative] remedy’” (brackets in original)). See Bator, et al., supra, at 983-985; C. Wright, supra, § 49, at 187 n. 6; Note, Exhaustion of State Remedies Under the Civil Rights Act, 68 Colum.L.Rev. 1201, 1208 (1968). This court has not gone so far. Toney v. Reagan, 467 F.2d 953, 956-957 (9th Cir. 1972), cert. denied, 409 U.S. 1130, 93 S.Ct. 1951, 35 L.Ed.2d 263 (1973). Cf. Eisen v. Eastman, 421 F.2d 560, 567-569 (2d Cir. 1969), cert. denied, 400 U.S. 841, 91 S.Ct. 82, 27 L.Ed.2d 75 (1970). Nevertheless we have said that McNeese, Houghton and Damico do establish that if what is sought is “relief from, or compensation for, a deprivation of civil rights which had already occurred,” rather than merely “forestalling a threatened future deprivation of civil rights,” no exhaustion of state administrative remedies is required. Whitner v. Davis, 410 F.2d 24, 28 (9th Cir. 1969). Plaintiffs here are not seeking merely to “forestall * * * a threatened future deprivation of civil rights,” but are also seeking “relief from, or compensation for, a deprivation of civil rights which ha[s] already occurred.”.

Finally, Whitner v. Davis holds that in any event exhaustion is not required unless the administrative remedy is fully adequate to obviate the federal claims; and the adequacy of the remedy cannot be presumed but must appear from the record. 410 F.2d at 29. It is not demonstrated in the record that this administrative remedy — waiver by the “School Administration” — would be adequate to obviate the constitutional claims presented. On the contrary, according to the as yet uncontroverted allegations of the complaint, whatever procedures may exist pursuant to this resolution for waiver of fees by the school administrators have proven grossly inadequate.

2. Abstention

The question here is whether a doubtful issue of state or local law is presented, resolution of which in the state courts could make decision upon the federal constitutional claim unnecessary.

“The doctrine of abstention, under which a District Court may decline to exercise or postpone the exercise of its jurisdiction, is an extraordinary and narrow exception to the duty of a District Court to adjudicate a controversy obligation to decide cases can be justified under this doctrine only in the exceptional circumstances where the order to the parties to repair to the state court would clearly serve an important countervailing interest.”

Allegheny County v. Frank Mashuda Co., 360 U.S. 185, 188-189, 79 S.Ct. 1060, 3 L.Ed.2d 1163 (1959). Ordinarily the “exceptional circumstances” must include all the basic elements of the leading case, Railroad Commission of Texas v. Pullman Co., 312 U.S. 496, 498-499, 61 S.Ct. 643, 85 L.Ed. 971 (1941):

(1) The complaint “touches a sensitive area of social policy upon which the federal courts ought not to enter unless no alternative to its adjudication is open.”
(2) “Such constitutional adjudication plainly can be avoided if a definitive ruling on the state issue would terminate the controversy.”
(3) The possibly determinative issue of state law is doubtful.

With regard to elements (2) and (3), it is crucial that the uncertainty in the state law be such that construction of it by the state courts might obviate, or at least delimit, decision of the federal (constitutional) question, Baggett v. Bullitt, 377 U.S. 360, 375-378, 84 S.Ct. 1316, 12 L.Ed.2d 377 (1964). See generally Bator, et al., supra, at 991-992.

While it has been held that abstention is not necessarily improper in a civil rights case (where jurisdiction is founded on 28 U.S.C. § 1343), Harrison v. NAACP, 360 U.S. 167, 79 S.Ct. 1025, 3 L.Ed.2d 1152 (1959), we agree with the Second Circuit that

“ * -x- ■>:• js reasonable to conclude that cases involving vital questions of civil rights are the least likely candidates for absention * * *. Indeed, the objectives of the Civil Rights Act would be defeated if we decided that this federal claim grounded on an alleged violation of the federal constitution would have to stagnate in the federal court until some nebulous or nonexistent remedy was pursued like a will-o’-the-wisp in the state court.”

Wright v. McMann, 387 F.2d 519, 525 (2d Cir. 1967).

Applying these principles to the case at bar, we conclude that abstention was not warranted. It does not appear that there is a doubtful issue of state law which, if authoritatively resolved by the state courts, would dispose of the constitutional claims presented. R.C.W. § 28A.59.180(9) provides that a board of directors of a school district “of the first class” shall have the power “[t]o provide free textbooks and supplies for all children attending school, when so ordered by a vote of the electors; or if the free textbooks are not voted by the electors, to provide books for the children of indigent parents * * In Hand v. School District No. 1, 118 Wash. 439, 203 P. 940 (1922), the Supreme Court of Washington interpreted this section to mean that the provision of free books is mandatory when the electors have voted to provide them, and discretionary with the school board otherwise. Assuming that Spokane School District No. 81 is a district “of the first class,” we note, first, that the defendants themselves have pointed out in their brief that there is no indication in the record that this district’s electors have voted to make mandatory the provision of “free textbooks and supplies.” More importantly, there is no indication that this term “textbooks and supplies” would possibly be construed to encompass all the benefits which the complaint alleges are now subject to fees attacked as unconstitutional. We are referred to no decision of any Washington court which suggests such an interpretation. The best evidence we are shown of the application of Washington law to the system of fees at issue consists of two opinions of the Attorney General of the state, one issued subsequent to the trial of this case. AGO 1973 No. 11 (May 10, 1973); AGO 65-66 No. 113 (October 13, 1966). According to the law stated in the 1973 opinion, it appears that perhaps some of the fees complained of might be regarded by Washington as unlawful, at least in a district whose electors had voted for free “textbooks and supplies.” Other fees complained of, however, would clearly not be so regarded, according to the state law as set forth by the Attorney General.

Hence, it cannot be said that a decision by a Washington court based on Washington law alone could be expected to dispose of the federal constitutional claims plaintiffs present; that “constitutional adjudication plainly can be avoided [because] a definitive ruling on the state issue would terminate the controversy.” Railroad Commission of Texas v. Pullman Co., supra, 312 U.S. at 498. Nor can we on any other basis say that an “order to the parties to repair to the state court would clearly serve an important countervailing interest.” Allegheny County v. Frank Mashuda Co., supra, 360 U.S. at 189. It would likely serve no interest at all.

We conclude that neither ground on which the district court acted can support dismissal of the action.

Reversed and remanded for further proceedings.

      . The class which the named plaintiffs seek to represent includes all parents of children attending Spokane School District No. 81 schools whose children have been charged fees “as an incident of their attendance and participation in the total school program.” Two “sub-classes” are also said to be represented by these same plaintiffs: (1) “Parents whose children have been penalized because of their failure to pay fees and who fear their children will be penalized in the future for failure to pay fees”; (2) “persons who are financially unable to pay the fees and who as a result thereof are deprived of the full benefits of the total school program.”

      . The system of fees complained of is described in the complaint in some detail. It is alleged that the following fees are charged at all the District’s schools:
      High schools:
      Science $3.00 per year
      Art $2.00 per semester
      Home Economics $1.00 per semester
      Industrial Arts $1.00 per semester, plus charges for individual project costs
      Physical Education $3.00 per year (towel fee)
      Junior high schools:
      Art $1.00 per semester
      Home Economics $2.00 per year (foods)
      Industrial Arts $2.00 per semester (for basic instructional materials)
      Physical Education $3.00 per year (towel fee)
      In addition to these “uniform” fees, charged throughout the District, other fees are allegedly levied by each individual school. We will not reproduce all the schedules here; the following is typical (Rogers High School):
      lock rental $ .25 per year
      gym lock rental $ .25 per year
      accident insurance $4.00 per year
      school paper $1.50 per year
      activity ticket book $6.50 per year
      Boys’ Federation $ .25 per year
      Girls’ League $ .25 per year
      athletic insurance $10.00 per year, football or wrestling $3.50, baseball, basketball, track or cross country
      Industrial Arts Students must purchase materials for projects (which become their property)

      . “Every person who, under color of any statute, ordinance, regulation, custom, or usage, of any State or Territory, subjects, or causes to be subjected, any citizen of the United States or other person within the jurisdiction thereof to the deprivation of any rights, privileges, or immunities secured by the Constitution and laws, shall be liable to the party injured in an action at law, suit in equity, or other proper j)roceeding for redress.”

      . 28 U.S.C. § 1343(3) unquestionably gave the district court jurisdiction over this § 1983 action.

      . We reject tbe suggestion that dismissal of the action could be supported on the ground of failure to state a claim, which, as we have noted, was one of the grounds on which the motion to dismiss was based. The contention of appellants that their children have a cognizable, constitutional right not to be subjected to the kinds of harms and penalizations which are alleged in our view is sufficient to withstand a motion to dismiss.

      . Other eases in this line include Carter v. Stanton, 405 U.S. 669, 92 S.Ct. 1232, 31 L.Ed.2d 569 (1972); Wilwording v. Swenson, 404 U.S. 249, 251, 92 S.Ct. 407, 30 L.Ed.2d 418 (1971); Houghton v. Shafer, 392 U.S. 639, 88 S.Ct. 2119, 20 L.Ed.2d 1319 (1968); King v. Smith, 392 U.S. 309, 312 n. 4, 88 S.Ct. 2128, 20 L.Ed.2d 1118 (1968).

      . Lurking in the arguments of defendants is the implication that as to this resolution we are faced not so much with a question of exhaustion of remedies as with the failure of plaintiffs to show injury and state a claim until they have shown failure of the Board to grant waivers. The effect of this resolution in the facts of this case, however, is a disputed issue and is hardly a proper subject for summary disposition. The manner in which it has been implemented and carried out remains to be ascertained.

      . Other “exceptional circumstances” justifying abstention have been recognized in rare cases not presenting all the Pullman elements. These cases have comprised two categories: (1) “cases involving possible disruption of complex state administrative processes, see, e. g., Alabama Public Serv. Comm’n v. Southern R. Co., 341 U.S. 341, 71 S.Ct. 762, 95 L.Ed. 1002 [ (1951)]; Bur-ford v. Sun Oil Co., 319 U.S. 315, 63 S.Ct. 1098, 87 L.Ed. 1424 [(1943)] * * *”; (2) diversity cases involving no federal question at all and turning on questions such as state statutory eminent domain, e. g., Louisiana Power & Light Co. v. City of Thibodaux, 360 U.S. 25, 79 S.Ct. 1070, 3 L.Ed.2d 1058 (1959), where abstention is justified “in regard for the respective competence of the state and federal court systems and for the maintenance of harmonious federal-state relations in a manner close to the political interests of a State,” 360 U.S. at 29. Zwickler v. Koota, 389 U.S. 241, 249 n. 11, 88 S.Ct. 391, 19 L.Ed.2d 444 (1967). See also Allegheny County v. Frank Mashuda Co., 360 U.S. 185, 189-190, 79 S.Ct. 1060, 3 L.Ed.2d 1163 (1959); Bator, et al., supra, at 985-1005; C. Wright, supra, § 52, at 199-204. Clearly this case falls in neither category.

      . The three eases cited by the district court in its order are inapposite. Burford v. Sun Oil Co., 319 U.S. 315, 63 S.Ct. 1098, 87 B. Ed. 1424 (1943), has been identified by more recent decisions as representing the standard to be applied “when the exercise of jurisdiction by the federal court would disrupt a state administrative process.” Allegheny County v. Prank Mashuda Co., 360 U.S. 185, 189, 79 S.Ct. 1060, 3 L.Ed.2d 1163 (1959) ; accord, Zwickler v. Koota, 389 U.S. 241, 249 n. 11, 88 S.Ct. 391, 19 L.Ed.2d 444 (1967) (Burford was a case “involving possible disruption of complex state administrative processes”). The state administrative regulations there challenged, relating to oil and gas operations, were found to “clearly involve basic problems of Texas policy” ; the Court concluded that it “should leave these problems of Texas law to the state court where each may be handled as ‘one more item in a continuous series of adjustments.’ ” 319 U.S. at 332. No such delicate, ongoing administrative program is involved here.
      Detroit Edison Co. v. East China Township School District No. 3, 378 F.2d 225 (6th Cir.), cert. denied, 389 U.S. 932, 88 S.Ct. 296, 19 L.Ed.2d 284 (1967), rested in part, at least, on the Tax Injunction Act, 28 U.S.C. § 1341, rather than on the judicially developed doctrine of abstention. To the extent that it rested upon the latter, the court found that the state law issues were, as in Pullman, potentially dispositive. 378 F.2d at 230.
      Schwartz v. Galveston Independent School District, 309 F.Supp. 1034 (S.D.Tex.1970), has been at least thrice repudiated by the Court of Appeals for its own circuit. Hobbs v. Thompson, 448 F.2d 456, 461 n. 11 (5th Cir. 1971); Moreno v. Henckel, 431 F.2d 1299, 1303 n. 9 (5th Cir. 1970); Hall v. Garson, 430 F.2d 430, 436-437 (5th Cir. 1970) (Brown, C. J.).


author: GARTH, Circuit Judge. GIBBONS, Circuit Judge

text:
    UNITED STATES of America v. ESTATE of Claude Beresford PEARCE, Appellant, et al.
    No. 73-1012.
    United States Court of Appeals, Third Circuit.
    Argued Sept. 17, 1973.
    Reconsidered without oral argument April 11, 1974.
    Decided on May 31, 1974.
    Scott P. Crampton, Asst. Atty. Gen., Meyer Rothwaeks, William A. Friedlander, William M. Brown, Tax Div., Dept, of Justice, Washington, D. C., for appellee ; Norman E. Levine, of counsel.
    Bruce M. Stargatt, Ben T. Castle, Young, Conaway, Stargatt & Taylor, Wilmington, Del., for appellant; Robert
    H. Kapp, Hogan & Hartson, Washington, D. C., of counsel.
    Before KALODNER, ALDISERT and GARTH, Circuit Judges.
    Reconsidered April 11, 1974 without oral argument.
    Before SEITZ, Chief Judge, and KALODNER, VAN DUSEN, ALDI-SERT, ADAMS, GIBBONS, ROSENN, HUNTER, WEIS and GARTH, Circuit Judges.
   OPINION OF THE COURT

GARTH, Circuit Judge.

The sole issue with which we deal here is: is the denial of a motion to quash a sequestration order (issued in accordance with 10 Del.C. § 366) appealable under 28 U.S.C. § 1291 as an appeal of a “final order” ? We hold that an order denying such relief is not final and accordingly dismiss the appeal and remand to the district court for further proceedings.

I.

Litigation giving rise to this appeal commenced with a complaint filed by the United States (Plaintiff-Appellee) seeking among other relief a judgment against the Estate of Pearce:

(a) for unpaid estate taxes and interest in the amount of $268,876.18;

(b) for a lien on all property of the estate, including some 27,200 shares of common stock of United States Steel Corporation (“U.S.S.”);

(c) for an order pursuant to 10 Del.C. § S66 authorizing sequestration and seizure of the Estate’s property in Delaware, (including the U.S.S. stock) and appointing a Sequestrator.

On April 30, 1971 the district court entered an order appointing a Sequestrator and ordering sequestration of the Estate’s property in Delaware, including the U.S.S. shares. Thereafter the Estate moved to quash the order of sequestration. That motion asserted, inter alia, that the stock was not subject to sequestration by reason of the proceedings in Canada; that both Canada and the Province of Ontario have interests in and claims upon the stock; that the defendant “Estate of Claude Beresford Pearce” is not a proper defendant; and that the sequestration was defective because the non-residence of the named defendant was not alleged in the complaint as required by the Delaware statute.

On September 14, 1972 the district court filed an opinion and entered an order denying the Estate’s motion to quash the April 30, 1971 order of sequestration. Thereafter the Estate moved for an order of certification [interlocutory appeal] under 28 U.S.C. § 1292(b), which motion was denied by the district court. This appeal by the Estate, asserting jurisdiction under 28 U.S.C. § 1291, followed.

II.

Under 28 U.S.C. § 1291 “finality” is a prerequisite to appeal. This general rule, however, has been subject to certain qualifications and limitations. See Forgay v. Conrad, 47 (6 How.) U.S. 201, 202-203, 12 L.Ed. 404 (1848); Cohen v. Beneficial Industrial Loan Corporation, 337 U.S. 541, 69 S.Ct. 1221, 93 L.Ed. 1528 (1949); 9 Moore’s Federal Practice fl 110.08.

Our analysis of the “final” quality of a Delaware sequestration order (sustaining sequestration) requires us to look at the similar provisional remedy of attachment, inasmuch as the Delaware courts have held that the Delaware sequestration remedy is analogous to foreign attachment at law. Sands v. Lefcourt Realty Company, 35 Del.Ch. 340, 117 A.2d 365 (1955); Greene v. Johnston, 99 A.2d 627, 34 Del.Ch. 115 (1953); Wife, J.B.G. v. Husband, P.J.G., 286 A.2d 256 (Del.Ch., 1971) aff’d sub nom. Garretson v. Garretson, 306 A.2d 737 (Del.S.Ct., 1973).

Orders granting or denying attachment are ordinarily interlocutory and non-appealable, 9 Moore’s Federal Practice U 110.13[5J. The Estate urges upon us, however, that Cohen v. Beneficial Industrial Loan Corporation, supra, which upheld the appealability in a diversity action of an order requiring a plaintiff to post security for costs as a predicate to maintaining a stockholders derivative action, imparts that degree of “finality” to the September 14, 1972 order as would permit jurisdiction to attach. We cannot agree.

Mr. Justice Frankfurter, in discussing Cohen, supra, contrasted appellate review of an order dissolving attachment with appellate review where attachment is upheld. “Appellate review of the order dissolving the attachment at a later date would be an empty rite after the vessel had been released and the restoration of the attachment only theoretically possible .... The situation is quite different where an attachment is upheld pending determination of the principal claim. Such was Cushing v. Laird, 107, U.S. 69, 2 S.Ct. 196, 27 L.Ed. 391, which is urged on us. In such a situation the rights of all the parties can be adequately protected while the litigation on the main claim proceeds.” Swift & Co. Packers v. Compania Colombiana del Caribe S.A., 339 U.S. 684 at 689, 70 S.Ct. 861 at 865, 94 L.Ed. 1206 (1950) (dictum). The Supreme Court in that ease found “finality” in the former instance (i. e., where the attachment was dissolved) and denied it in the latter (where the attachment was upheld).

In Borden Company v. Sylk, 410 F.2d 843 (3d Cir. 1969) (while admittedly dealing with matters of discovery held ultimately to be non-collateral), Judge Aldisert of this court had the occasion to comment on the Cohen doctrine as follows: “We have detected what appears to be an irresistible impulse on the part of appellants to invoke the ‘collateral order’ doctrine whenever the question of appealability arises. Were we to accept even a small percentage of these sometime exotic invocations, this court would undoubtedly find itself reviewing more ‘collateral’ than ‘final’ orders.” 410 F.2d at 845-846. Further, “every interlocutory order involves, to some degree, a potential loss. That risk, however, must be balanced against the need for efficient federal judicial administration as evidenced by the Congressional prohibition of piecemeal appellate litigation. . . .” 410 F.2d at 846.

Reference was had to these same principles in West v. Zurhorst, 425 F.2d 919 (2d Cir. 1970). Judge Friendly, writing for the Second Circuit, held that a lower court order refusing to vacate an attachment was not appealable as a final deci - sion. Finding no authority in 28 U.S.C. § 1291 for such an appeal, Judge Friendly went on to discuss the “. . . [non-] desirability of an expansive reading of Cohen [v. Beneficial Industrial Loan Corporation, supra]. . While the grievance created by an improper attachment pendente lite is ‘important’, 337 U.S. at 546, 69 S.Ct. 1221, 93 L.Ed. 1528 it is not important enough to make the decision ‘final’.” 425 F.2d at 921. More recently the Second Circuit has reaffirmed this principle of non-appealability where a preliminary injunction to restrain the enforcement of an order of attachment was denied. Judge Feinberg writing for the court held that such an action was no more than an attempt to vacate an order of attachment and hence, dismissed the appeal despite the surface appearance of an injunctive proceeding. Financial Services, Inc. v. Ferrandina, 474 F.2d 743 (2d Cir. 1973).

The United States has suggested that we ignore the non-appealability of the September 14, 1972 order and proceed to the merits. See Gillespie v. U. S. Steel Corp., 379 U.S. 148, 85 S.Ct. 308, 13 L.Ed.2d 199 (1964). This suggestion, commendable though it may be from the litigants’ standpoint, overlooks our displeasure with piecemeal litigation as articulated in Borden Company v. Sylk, supra.

Here the rights of the parties are still to be adjudicated. The defendant Estate has not conceded, and the United States must still prove, the tax claim, both as to liability and as to amount. Whether or not Canada or Ontario, or both, may file proceedings seeking to intervene is still an open question. In essence, all that has happened to date is that shares of stock have been seized. An order refusing to vacate that action is not final for purposes of appeal.

Appeal dismissed for want of jurisdiction.

GIBBONS, Circuit Judge

(dissenting) :

I agree with the majority that the order appealed from is not appealable as a final order under 28 U.S.C. § 1291. But it is, in my view, appealable under 28 U.S.C. § 1292(a), since it is functionally identical with an injunction against transfer or the appointment of a pendente lite receiver.

In the complaint the United States seeks to foreclose a tax lien on securities and seeks no other relief. The assessment giving rise to the alleged lien became final long ago. If the defendant appears in personam there is at least a question whether a defense going to the validity or amount of the assessment may be asserted. See United States v. O’Connor, 291 F.2d 520, 526-28 (2d Cir. 1961) overruling Pipola v. Chicco, 274 F.2d 909 (2d Cir. 1960); cf. Quinn v. Hook, 231 F.Supp. 718 (E.D.Pa.1964), aff’d per curiam, 341 F.2d 920 (3d Cir. 1965); Cooper Agency, Inc. v. McLeod, 235 F.Supp. 276, 284 (E.D.S.C.1964), aff’d per curiam, 348 F.2d 919 (4th Cir. 1965). No general appearance has been made to date. The assessment is presumptively valid. Since the market value of the stock is less than the assessment, there may well be a default. Thus the only determination likely to be made in the litigation is that the federal lien attaches to the sequestered securities ahead of other lien claims and can be foreclosed in Delaware. The dispute is over priority of liens. The action is in rem rather than quasi in rem since its sole object is foreclosure of an alleged lien.

The lien of the United States for unpaid estate taxes is a creature of federal law. 26 U.S.C. § 6324. Unlike the income tax lien, 26 U.S.C. § 6323, the estate tax lien is effective without the filing of notice from the date of the decedent’s death even against subsequent purchasers. Detroit Bank v. United States, 317 U.S. 329, 63 S.Ct. 297, 87 L.Ed. 304 (1942); Michigan v. United States, 317 U.S. 338, 63 S.Ct. 302, 87 L.Ed. 312 (1942). The Internal Revenue Code, 26 U.S.C. § 2104(a), defines shares of stock of a domestic corporation owned and held by a nonresident not a citizen as property within the United States. The Code does not with respect to estate tax say where in the United States is the situs of such shares. But Article 11(f) of the Convention Between the United States of America and Canada for the Avoidance of Double Taxation on the Estate of Deceased Persons, February 17, 1961, 13 U.S. Treaties 382, establishes the situs of such shares at the place of incorporation of the issuer. Thus venue in the foreclosure action, brought pursuant to 26 U.S.C. § 7403, was properly in Delaware.

But calling the order a “sequestration” order, as if this were merely an in personam action and an effort to compel a general appearance, is an oversimplification. A general appearance is not only unlikely, but the government really does not seek one. As the district court said:

“To prevent a transfer of the U.S. Steel stock from the Estate’s name, the United States concurrently moved for, and was granted, a sequestration order by this Court under authority of 10 Del.C. § 366.” United States v. Sinclair, 347 F.Supp. 1129, 1133 (D.Del.1972) (emphasis added).

If the United States had, on the authority of 26 U.S.C. § 7403(d), obtained the appointment of a receiver, the order would be appealable under 28 U.S.C. § 1292(a) (2). See United States v. O’Connor, supra, 291 F.2d at 523. If the court had called the order an injunction against transfer it would be appeal-able under 28 U.S.C. § 1292(a)(1). An order which to me looks, feels, and smells like pendente lite relief in the nature of a receivership or an injunction in aid of foreclosure should be appealable as such regardless of the labels Delaware State practice would attach to it. I would reach the merits of the appellant’s allegation respecting the conflicting claims of the United States and Canadian taxing authorities. Otherwise, if there is no general appearance, the possibility of relitigation in another forum respecting situs of the stock will remain. See United States v. First National City Bank, 379 U.S. 378, 85 S.Ct. 528, 13 L.Ed.2d 365 (1965).

      . 10 Del.C. § 366 provides in part that:
      “(a) If it appears in any complaint filed in the Court of Chancery that the defendant or any one or more of the defendants is a non-resident of the State of Delaware, the Court may make an order directing such non-resident defendant or defendants to appear by a day certain to be designated. Such order shall be served on such nonresident defendant or defendants by mail or otherwise, if practicable, and shall be published in such manner as the Court directs, not less than once a week for three consecutive weeks. The Court may compel the appearance of the defendant by the seizure of all or any part of his property, which property may be sold under the order of the Court to pay the demand of the plaintiff, if the defendant does not appear, or otherwise defaults. Any defendant whose property shall have been so seized and who shall have entered a general appearance in the cause may, upon notice to the plaintiff, petition the Court for an order releasing such property or any part thereof from the seizure. The Court shall release such property unless the plaintiff shall satisfy the Court that because of other circumstances there is a reasonable possibility that such release may render it substantially less likely that plaintiff will obtain satisfaction of any judgment secured. If such petition shall not be granted, or if no such petition shall be filed, such property shall remain subject to seizure and may be sold to satisfy any judgment entered in the cause. The Court may at any time release such property or any part thereof upon the giving of sufficient security.”
      The Delaware sequestration procedure is made applicable to federal proceedings by Rules 4(e)(2) and 64 of the Federal Rules of Civil Procedure.

      . 28 U.S.C. § 1291 provides in part that:
      “The Courts of Appeals shall have jurisdiction of appeals from all final decisions of the district courts of the United States.

      . We do not reach the other contentions of the parties (particularly those concerned with the adequacy of the complaint, its amendment and related arguments) by reason of our conclusion that the appeal must be dismissed. These issues and the facts upon which they are predicated are discussed in the District Court opinion found at 347 F.Supp. 1129 (Del.1971).

      . The United States moved to dismiss the appeal for lack of jurisdiction asserting that the order of September 14, 1972 was not a “final decision” as required by 28 U.S.C. § 1291. That motion was denied by another panel of this court on January 18, 1973. In light of that action, when the issue of appealability again surfaced at the oral argument on the merits, we listed that issue for rehearing by the court in banc. We regard it as our obligation to determine the threshold question of appealability, and hence, jurisdiction, whenever it may be presented or recognized. Atkins, Kroll (Guam) Ltd. v. Cabrera, 277 F.2d 922 (9th Cir. 1960) ; United States v. Baehner, 309 F.2d 154, 155 (2d Cir. 1962); See also United States v. Corrick, 298 U.S. 435, 440, 56 S.Ct. 829, 80 L.Ed. 1263 (1935).

      . The Seventh Circuit has also held that a refusal to vacate attachment is a non-final judgment. American Mortgage Corp. v. First National Mortgage Co., 345 F.2d 527 (7th Cir. 1965).

      . Compare § 2104(a) with 26 U.S.C. § 6323(f) (2) dealing with situs of securities for other tax purposes.