author: LAY, Circuit Judge.

text:
    UNITED STATES of America, Plaintiff-Appellee, v. Rogelio QUINTANA et al., Defendants-Appellants.
    Nos. 71-1609 to 71-1611.
    United States Court of Appeals, Seventh Circuit.
    Argued Oct. 3, 1974.
    Decided Jan. 13, 1975.
    Rehearing Denied Feb. 26, 1975.

      Allan A. Ackerman, Sherman C. Ma-gidson, Frederick F. Cohn, Chicago, 111., for defendants-appellants.
    James R. Thompson, U. S. Atty., Gary L. Starkman and William J. Schilling, Asst. U. S. Attys., Chicago, 111., for plaintiff-appellee.
    Before SWYGERT, Chief Judge, LAY, Circuit Judge, and GRANT, Senior District Judge.

       The Honorable Donald P. Lay, United States Circuit Judge of the Eighth Circuit at Omaha, Nebraska, is sitting by designation.

       The Honorable Robert A. Grant, United States Senior District Judge for the Northern District of Indiana, is sitting by designation.

   LAY, Circuit Judge.

Defendants Leonides D. Suarez, Rogelio Quintana and Gilberto Alonso appeal from their convictions on various counts of narcotics offenses and conspiracy to distribute narcotics, in violation of 18 U.S.C. § 2; 21 U.S.C. § 174, and 26 U.S.C. § 4705(a). They were convicted by a jury in 1971 in the Northern District of Illinois, the Honorable Bernard M. Decker presiding. We affirm the judgments of conviction of Leonides Suarez and Gilberto Alonso. We reverse the judgment of conviction of Rogelio Quintana on the ground that there is insufficient evidence to sustain the government’s burden of proof.

The evidence at trial may be briefly summarized. The investigation which led to defendants’ arrest began in Chicago in February 1970, when the Bureau of Narcotics and Dangerous Drugs (BNDD) was informed about a group importing large quantities of heroin and cocaine for distribution in this country. Agents Dominic Petrossi and Harry Ful-lett assumed undercover roles as underworld figures. In this capacity, the agents flew to Miami to meet with other members of the conspiracy on February 25, 1970, to arrange delivery of drugs to Chicago. On the next day, 1400 grams of high-grade cocaine were delivered to the agents in Chicago by a courier who was then followed to defendant Suarez’s apartment building.

As the investigation proceeded, suspicion centered on Suarez’s clothing store as the Chicago hub of the operation. In April 1970, the persons with whom the agents had previously dealt invited the agents to come to the store to meet with Suarez. The agents did so and Suarez offered to supply heroin at $25,000 per kilo. He also admitted having held the cocaine sold to the agents on February 26 prior to its delivery to them. Thereafter, the agents continued to purchase kilogram amounts of heroin and cocaine from the group.

On May 18, 1970, Chief Judge Robson of the Northern District of Illinois authorized a wiretap for twenty days on two phones, one at Suarez’s home and the other at his clothing store. This order was later extended for fifteen days.

Thereafter the agents discussed further sales with Suarez, but no drugs were delivered until June 18, when the agents purchased a half kilo of heroin from defendants Suarez and Alonso. The same day, the agents arranged to purchase four kilos of cocaine from Al-onso. On June 20, Suarez took the agents to a Chicago motel where they paid Alonso $40,000 in exchange for the cocaine. Petrossi then admitted other BNDD agents who arrested Suarez and Alonso.

All three defendants were convicted of conspiracy. Suarez was also convicted on eight substantive counts for drug sales on February 26, May 23, June 18, and June 20. Alonso was convicted on four substantive counts for the June 18 and 20 sales. On appeal, they challenge the use of wiretap evidence on the grounds that the tap was improperly authorized within the Justice Department and was conducted without any attempt to minimize interception of innocent conversation, in violation of Chief Judge Robson’s order and the Fourth Amendment. Suarez also claims that (1) the agents illegally coerced him into the May and June sales, (2) that there is no proof of his knowledge of importation of the cocaine, and (3) that the trial court failed to answer the jury’s questions properly. Defendants Alonso and Quin-tana challenge the sufficiency of the evidence connecting them with the conspiracy.

Wire Interceptions

The wiretap in this case was authorized in May 1970. An extension was granted in June 1970. Subsequent to trial, it was disclosed that these wiretaps were approved during the period that then-Attorney General Mitchell’s executive assistant, Sol Lindenbaum, approved taps whenever the Attorney General himself was unavailable, in violation of 18 U.S.C. § 2516(1). This court remanded the case to the trial judge, the Honorable Bernard Decker, on April 6, 1972, for a further evidentiary hearing on the authorization procedure used in the instant case.

On the basis of affidavits from Mitchell, Lindenbaum, Henry Peterson and a letter from Mitchell to Will Wilson, the Assistant Attorney General for the Criminal Division, Judge Decker on December 15, 1972, found that Mitchell had personally authorized the original application and that Sol Lindenbaum had authorized the extension order. Subsequently, the Supreme Court held, in United States v. Chavez, 416 U.S. 562, 94 S.Ct. 1849, 40 L.Ed.2d 380 (1974), that if a wiretap was in fact approved by the Attorney General, then suppression would not be required merely because the application indicated that Wilson rather than Mitchell was the authorizing official. Id. 416 U.S. at 565, 94 S.Ct. 1849. In a companion case, United States v. Giordano, 416 U.S. 505, 94 S.Ct.. 1820, 40 L.Ed.2d 341 (1974), the Court held that suppression was required where Lindenbaum rather than the Attorney General had given the authorization. Id. 416 U.S. at 508, 94 S.Ct. 1820. The government concedes that in light of Giordano, the extension order is invalid. The question remaining, therefore, is the validity of the original wiretap, which Judge Decker found Mitchell had personally approved.

Defendants argue that the evidence is insufficient to support the finding below that Mitchell personally authorized this wiretap application. First, they argue that the Fifth Circuit has, since the hearing on remand, found a closely related tap to be invalid due to approval by Lindenbaum rather than Mitchell. United States v. Robinson, 472 F.2d 973 (5th Cir. 1973) (en banc). Second, defendants now claim that without a statement from Mitchell himself to the effect that he personally reviewed the application in question, the evidence is insufficient to support the finding below.

First, defendants are clearly mistaken if their contention is that the taps found invalid by the Fifth Circuit in Robinson were the same as those with which we are concerned. The Robinson taps were on phones in Miami, rather than Chicago, and the requesting officers, authorization dates and supporting affidavits differ materially from those involved here. In Robinson, Lindenbaum’s affidavit admitted that he, rather than Mitchell, reviewed the requests. In the present case, according to Lindenbaum’s affidavit, the request to tap the Chicago phones was reviewed by Mitchell himself on May 14, 1970. We conclude that Robinson is not controlling.

Defendants likewise challenge the sufficiency of the affidavits as a statement of what part Mitchell took in approving the application. It is true that in Chavez, Mitchell’s affidavit did assert that he had personally authorized the tap. United States v. Chavez, 478 F.2d 512, 514 (9th Cir. 1973), rev’d, 416 U.S. 562, 94 S.Ct. 1849, 40 L.Ed.2d 380 (1974). Defendants urge that the instant case is the only one in which Mitchell’s own affidavit failed to detail his participation, if any, in the particular wiretap in question. On the contrary, at least four circuits have upheld wiretaps where the Attorney General’s personal participation was proved, as here, through the affidavit of Lindenbaum and a Mitchell-initialed memorandum to Assistant Attorney General Wilson. See, e. g., United States v. Brick, 502 F.2d 219 (8th Cir. 1974); United States v. James, 161 U.S.App.D.C. 88, 494 F.2d 1007, 1016-1018 (1974); United States v. Fiorella, 468 F.2d 688, 690 (2d Cir. 1972), cert. denied, 417 U.S. 917, 94 S.Ct. 2622, 41 L.Ed.2d 222 (1974); United States v. Ceraso, 467 F.2d 647, 650-651 (3d Cir. 1972); United States v. Cox, 462 F.2d 1293 (8th Cir. 1972), cert. denied, 417 U.S. 918, 94 S.Ct. 2623, 41 L.Ed.2d 223 (1974). In each of these cases, Mitchell either filed no affidavit at all, or, as here, his affidavit failed to state what part he played in authorizing the challenged wiretap. In each case the court nevertheless found sufficient proof of Mitchell’s personal review of the application.

Chavez did not require any particular form of proof of Mitchell’s involvement. Lindenbaum’s affidavit would not be insufficient under normal rules of evidence merely because Mitchell himself could have, but failed to, testify as to his part in reviewing this application. The affidavits of Lindenbaum and Mitchell show that Lindenbaum had the opportunity to observe how each application was handled, whether he or Mitchell actually authorized a particular tap. That showing of personal observation of the events to which he testifies makes Lindenbaum a competent witness. C. McCormick, Evidence § 10 (2d ed. 1972); 2 J. Wigmore, Evidence § 478 (3d ed. 1940). Thus, Judge Decker’s reliance on the proof in the district court was not error.

The Invalid Extension Order

The government concedes that the June 10, 1970, order extending the wiretap for 15 days is invalid under United States v. Giordano, 416 U.S. 505, 94 S.Ct. 1820, 40 L.Ed.2d 341 (1974). Eleven conversations intercepted thereunder were used at trial, only three of which are independently admissible. The government urges that the error in admitting the other eight conversations is harmless because the independently obtained evidence of guilt was overwhelming.

The record shows that the great majority of the evidence admitted at trial was obtained prior to and without reliance upon the improperly authorized extension. The 124-day investigation culminating in defendants’ arrest began in February 1970. Suarez sold heroin and cocaine to Agent Petrossi on two occasions before the invalid extension. Only the last ten days before defendants were arrested were tainted by the illegal extension order issued June 10, 1970. Of the eleven counts in the indictment, only the first, the conspiracy charge, and counts 8-11 were based in any part on events occurring during the extension period. None of the evidence used at trial on counts 2-7 was derived from the extension order.

The untainted evidence in support of Counts 1 and 8 — 11 was substantial. Counts 8 and 9 involve delivery by Suarez and Alonso of a half kilogram of heroin to BNDD Agents Petrossi and Fullett on June 18, 1970, at Suarez’s clothing store. Defendant Suarez was well known to the agents due to prior narcotics sales. Both Petrossi and Ful-lett testified to the sale, and three other BNDD surveillance agents corroborated this with oral and photographic evidence. Counts 10 and 11 related to the sale by Alonso and Suarez of 4 kilograms of cocaine to the agents at a motel on June 20, 1970, the date defendants were arrested. The negotiations setting up this sale were conducted on June 18 at a meeting of the four at Suarez’s store. Again, the two agents were the principal witnesses and other surveillance agents also testified. The overall conspiracy charge involved all the meetings and acts charged in the individual substantive counts. Of the eighteen overt acts alleged in furtherance of the conspiracy, only the last three occurred during the extension period, and all of these concerned meetings of the various defendants in Chicago, rather than telephone calls.

Under these circumstances, the eight conversations admitted in error were merely cumulative to the great weight of other evidence, and no leads prejudicial to the defendants were obtained from the illegal tap. We conclude that the tainted evidence could not reasonably have affected the verdict. See United States v. Nasse, 432 F.2d 1293, 1303 (7th Cir. 1970), cert. denied, 401 U.S. 938, 91 S.Ct. 927, 28 L.Ed.2d 217 (1971).

Defendant Alonso asserts that the doctrine of harmless error is inapplicable to unauthorized wire interceptions. We disagree. Harmless error has been recognized in constitutional violations. Harrington v. California, 395 U.S. 250, 89 S.Ct. 1726, 23 L.Ed.2d 284 (1969); Chapman v. California, 386 U.S. 18, 87 S.Ct. 824, 17 L.Ed.2d 705 (1967). It has been applied by this circuit where there have been violations concerning search and seizure. Cf. United States v. Nasse, supra. We think the rule is applicable here. The sales were arranged prior to the interceptions. Alonso’s involvement in Counts 9, 10 and 11 arose from his direct sales to Agents Petrossi and Fullett on June 18 and 20. The challenged interceptions affecting Alonso, in our judgment, did not affect the substantial rights of the parties and were harmless beyond a reasonable doubt.

Minimization

Defendants urge that the taps must be suppressed because the government failed to comply with that portion of the wiretap order which required that the taps be conducted so as to “minimize the interception of communication not otherwise subject to interception.” It is undisputed that during the 20 days of the original wiretap and during the extension as well, government agents monitored and recorded all incoming and outgoing calls on the phones at Suarez’s clothing store and his home. Some 2000 calls were intercepted, while only 153 were ultimately found germane enough to be worth transcribing, and only 47 were used at trial.

The minimization provision is based on a statutory requirement that every wiretap order shall so provide. 18 U.S.C. § 2518(5). Three courts of appeals have held that interception of all calls for periods of twenty days or more under judicial authorization does not necessarily violate the order, the statute, or the Fourth Amendment, even when a high percentage of the monitored conversations contain no evidence of criminal conduct. United States v. James, 161 U.S.App.D.C. 88, 494 F.2d 1007, 1018 (1974); United States v. Manfredi, 488 F.2d 588, 599-600 (2d Cir. 1973), cert. denied, 417 U.S. 936, 94 S.Ct. 2651, 41 L.Ed.2d 240 (1974) (of 1595 calls monitored, only 150 were possibly pertinent); United States v. Bynum, 485 F.2d 490, 500 (2d Cir. 1973), vacated on other grounds, 417 U.S. 903, 94 S.Ct. 2598, 41 L.Ed.2d 209 (1974); United States v. Cox, 462 F.2d 1293, 1300 (8th Cir. 1972), cert. denied, 417 U.S. 918, 94 S.Ct. 2623, 41 L.Ed.2d 223 (1974).

These decisions view the statute’s minimization command as requiring a case-by-case analysis of the reasonableness of a particular interception. As the District of Columbia Court of Appeals has observed:

The congressional reports accompanying the wiretap statute and decisions interpreting 18 U.S.C. § 2518(5) make it clear that the minimization standard, like the standards traditionally applied to the determination of probable cause, is one of reasonableness which must be ascertained from the facts of a given case.

United States v. James, 161 U.S.App.D.C. 88, 494 F.2d 1007, 1018 (1974).

A number of factors are relevant to determining whether, in a particular case, the government has done all that it could to avoid unnecessary intrusion. The first consideration is the nature and scope of the criminal enterprise under investigation. Large and sophisticated narcotics conspiracies may justify considerably more interception than would a single criminal episode. This is especially so where, as here, the judicially approved purpose of the wiretap is not so much to incriminate the known person whose phone is tapped as to learn the identity of the far-flung conspirators and to delineate the contours of the conspiracy. United States v. James, 161 U.S.App.D.C. 88, 494 F.2d 1007, 1019 (1974); United States v. Cox, 462 F.2d 1293, 1301 (8th Cir. 1972).

Another important factor is the government’s reasonable expectation of the contents of particular calls:

If at the time of the initiation of the wiretap the government knows those persons who are suspected of the criminal offense, it can tailor its minimization efforts to avoid monitoring incom-. ing or outgoing calls involving other persons; similarly, if the government knows during what time of the day the telephone will be used for criminal activity, it can avoid intercepting calls at other times. These considerations affect the initial minimization tactics employed by the government, but agents may expand or contract their interception policy as the wiretap continues.

United States v. James, supra 494 F.2d at 1020.

Where the government does not at the outset have reason to believe that any identifiable group of calls will be innocent, then it may be reasonable to monitor all calls for some time. If the agents learn from this initial total interception that there is a pattern of innocent conversations, then they should cease eavesdropping on that group during the remainder of the tap. Cf. United States v. Focarile, 340 F.Supp. 1033 (D.Md.), aff’d sub nom. United States v. Giordano, 469 F.2d 522 (4th Cir. 1972), rev’d on other grounds, 416 U.S. 505, 94 S.Ct. 1820, 40 L.Ed.2d 341 (1974).

To state that agents must seek a method of separating innocent from incriminating conversations is not to say that such a pattern will always be identifiable. The problem is that

“ . . . it is often impossible to determine that a particular telephone conversation would be irrelevant and harmless until it has been terminated.
It is all well and good to say, after the fact, that certain conversations were irrelevant and should have been terminated. However, the monitoring agents are not gifted with prescience and cannot be expected to know in advance what direction the conversation will take.”

United States v. Cox, 462 F.2d 1293, 1301 (8th Cir. 1972), quoting United States v. LaGorga, 336 F.Supp. 190, 196 (W.D.Pa.1971).

Even if a pattern of innocent calls is identified,

[i]t is obvious . . . that no electronic surveillance can be so conducted that innocent conversations can be totally eliminated. Before a determination of innocence can be made there must be some degree of eavesdropping. [If many calls are of very short duration] in a case of such wide-ranging criminal activity as this, it would be too brief a period for an eavesdropper even with experience to identify the caller and characterize the conversation as merely social or possibly tainted .

United States v. Bynum, 485 F.2d 490, 500 (2d Cir. 1973), vacated on other grounds, 417 U.S. 903, 94 S.Ct. 2598, 41 L.Ed.2d 209 (1974).

A third important consideration is the authorizing judge’s continuing supervision. The statute permits but does not require the judge to ask for interim reports from the investigating agents setting out the progress to date and the need for further interception. 18 U.S.C. § 2518(6). Where the judge has required and reviewed such reports at frequent intervals, courts have been more willing to find a good-faith attempt to minimize unnecessary interceptions. See, e. g., United States v. James, 161 U.S.App.D.C. 88, 494 F.2d 1007, 1021 (1974); United States v. Bynum, 485 F.2d at 501; United States v. Cox, 462 F.2d at 1301; United States v. Focarile, 340 F.Supp. 1033, 1048 (D.Md.), aff’d sub nom. United States v. Giordano, 469 F.2d 522 (4th Cir. 1972), rev’d on other grounds, 416 U.S. 505, 94 S.Ct. 1820, 40 L.Ed.2d 341 (1974). See also United States v. Kahn, 471 F.2d 191 (7th Cir. 1972), rev’d, 415 U.S. 143, 94 S.Ct. 977, 39 L.Ed.2d 225 (1974).

In the instant case the purpose of the tap was to learn the identity of Suarez’s suppliers and customers in his narcotics business. There were many potential defendants and the government had no reason to expect that any particular group of calls would be innocent. Some of the defendants were husband and wife (Marion and Leonides Suarez, and Rogelio Quintana and Linda Ramirez Quintana). Others were close friends. Thus, their conversations often included innocent social matters as well as material relevant to the investigation. Cf. United States v. James, 161 U.S.App.D.C. 88, 494 F.2d 1007, 1022-1023 (1974). The difficulty of identifying what was relevant and what was not was increased by the use of codes and often, by use of colloquial Spanish rather than English. Thus, only after translation could the agents evaluate the conversations. Chief Judge Robson, prior to giving his authorization, was advised of some of these difficulties. He limited the initial tap to 20 rather than the statutory maximum of 30 days. He required, and received, reports from Agent Petrossi at five-day intervals throughout the tap.

Under these circumstances we find that the government has made a prima facie showing of reasonableness, and that the burden is shifted to the defendants to suggest what alternative procedure would have better minimized interception of noncriminal conversation while still permitting the government to achieve its legitimate objectives. United States v. Manfredi, 488 F.2d 588, 599— 600 (2d Cir. 1973), cert. denied, 417 U.S. 936, 94 S.Ct. 2651, 41 L.Ed.2d 240 (1974); see also United States v. Fino, 478 F.2d 35, 37 (2d Cir. 1973), cert. denied, 417 U.S. 918, 94 S.Ct. 2623, 41 L.Ed.2d 223 (1974). The defendants have made no such suggestion. Under these circumstances, we hold that the interceptions in this case did not exceed the district court’s authorization or the statute.

Statutory Presumption Under § 174

Suarez asserts that the evidence is insufficient under former title 21 U.S.C. § 174 to show that he had knowledge that the cocaine in the February 26 sale had been illegally imported. This contention is without merit.

In Turner v. United States, 396 U.S. 398, 90 S.Ct. 642, 24 L.Ed.2d 610 (1970), the Supreme Court set aside a conviction under § 174 on the ground that possession of 15 grams of a 5% cocaine mixture could not support the statutory presumption of knowledge of importation. The Court found that since some cocaine is legally produced within this country and is then stolen, there is sufficient possibility of domestic origin of small quantities of cocaine that neither importation nor knowledge thereof may be presumed merely from the fact of possession.

However, Turner specifically reserved for another day the question of whether the presumption could constitutionally be applied where large quantities of cocaine are involved. See 396 U.S. at 419 n. 39, 90 S.Ct. 642. The Second and Fifth Circuits have since held the presumption available to the prosecution when the quantity of cocaine possessed is so large (usually 800 grams or more) that a domestic origin is highly unlikely. See, e. g., United States v. Mather, 465 F.2d 1035 (5th Cir.), cert. denied, 409 U.S. 1085, 93 S.Ct. 685, 34 L.Ed.2d 672 (1972); United States v. Jiminez, 444 F.2d 67 (2d Cir. 1971); United States v. Gonzalez, 442 F.2d 698 (2d Cir. 1970) (en banc), cert. denied sub nom. Ovalle v. United States, 404 U.S. 845, 92 S.Ct. 146, 30 L.Ed.2d 81 (1971). These decisions are based on the fact that the total amount of domestically produced cocaine stolen annually averages less than 6000 grams, and the average individual theft is 9 grams or less. The improbability that Suarez’s 1400 grams (involved in the February 26 sale) came into his hands through more than 100 individual thefts speaks for itself. In such a case, the failure of the trial judge to instruct the jury that the presumption is available only where large amounts of the drug are present is harmless error. United States v. Gonzalez, 442 F.2d at 709 n. 10.

Entrapment and Coercion

The trial court submitted Counts 6 — 11 relating to the sales on May 23, June 18 and June 20 to the jury. Suarez asserts that a judgment of acquittal should have been entered since the government agents Petrossi and Fullett entrapped or coerced him into the three drug sales which occurred after May 12. Suarez’s basic defense is that notwithstanding proof of his predisposition to commit the crime, the government’s conduct was so shocking that the prosecution should be barred. In United States v. Russell, 411 U.S. 423, 93 S.Ct. 1637, 36 L.Ed.2d 366 (1973), Mr. Justice Rehnquist reviewed the history of entrapment and the Supreme Court reaffirmed the doctrine of Sherman v. United States, 356 U.S. 369, 78 S.Ct. 819, 2 L.Ed.2d 848 (1958), and Sorrells v. United States, 287 U.S. 435, 53 S.Ct. 210, 77 L.Ed. 413 (1932). The principal issue under the entrapment defense is the defendant’s predisposition to commit the crime. As Mr. Justice Rehnquist stated:

[Entrapment is a relatively limited defense. It is rooted not in any authority of the Judicial Branch to dismiss prosecutions for what it feels to have been “overzealous law enforcement,” but instead in the notion that Congress could not have intended criminal punishment for a defendant who has committed all the elements of a prescribed offense, but was induced to commit them by the government.

United States v. Russell, 411 U.S. 423, 435, 93 S.Ct. 1637, 1644 (1973).

Bussell did not rule out the possibility that some governmental conduct might be so shocking that prosecution would bp barred as a matter of due process. Mr. Justice Rehnquist specifically noted that

we may some day be presented with a situation in which the conduct of law enforcement agents is so outrageous that due process principles would absolutely bar the government from invoking judicial processes to obtain a conviction

Id. at 431-432, 93 S.Ct. at 1643.

However, such law enforcement conduct would have to be violative of “ ‘fundamental fairness, shocking to the universal sense of justice,’ mandated by the Due Process Clause of the Fifth Amendment.” Id. at 432, 93 S.Ct. at 1643.

In the instant case, the undercover agents played the roles of an Italian underworld gangster (Petrossi) and his bodyguard (Fullett). On May 12, Suarez and one Angel Arias sold the agents what was supposed to be a kilo of heroin for $21,000. Field tests showed, however, that the substance was not a narcotic at all. The agents returned to Suarez’s store at 4:30 that afternoon, and continued in their roles as criminals who had been cheated. Petrossi held Suarez by the collar and told him to give him back the $21,000 or produce some narcotics or “somebody would get hur.” Suarez told them that Arias had taken the money, but Suarez promised to work something out. Other persons, friends of Suarez, were present, and they assured the agents that Suarez could be trusted in drug dealing. The agents left the store without further incident. Subsequently Petrossi called Suarez several times a week to arrange for further drug transactions, and Suarez continued to deal with him, negotiating over prices, etc. Suarez was involved in three more sales to the agents before his arrest.

The agents assumed the roles of mobsters and their reaction when they were “cheated” was to act like mobsters. Under the circumstances, we do not find their conduct so “shocking” or “outrageous” as to bar prosecution under Russell. Appellant Suarez does not claim that the agents pointed a gun at him or hit him. When they left his store, Suarez did not go into hiding or consult the authorities to seek protection. Instead, he continued to deal with the agents. A lesser reaction on the agents’ part might have aroused the suspicion of the defendants, endangering the investigation and perhaps the agents as well.

Jury Instructions

Suarez’s last challenge relates to the alleged failure of the trial judge to make a prompt response to the jury’s request for a definition of the words “entrapment” and “coercion.” The jury retired to consider its verdict at noon on June 10, 1971. The district judge advised counsel that he would leave the courthouse at about 5 p. m., and would not return until 9:30 a. m. the next morning, unless the jury reached a verdict before 10 p. m. About 6 p. m. counsel learned that the jury requested further instructions, and the marshal relayed the request to the judge between 7 and 8 p. m. that night. The judge apparently had the marshal tell the jury to continue deliberating until they heard from him, so they continued until 10:15 p. m. About 9 a. m. the next morning, deliberations were resumed. Defense counsel then moved for a mistrial due to the long delay in answering the request for instructions. The motion was denied, and the court, with consent of counsel, then re-read the instructions previously given on the defense of entrapment and coercion. This occurred about 10:30 a. m. Twenty minutes later, the jury reached its verdict.

Suarez does not complain that the instructions given were incorrect, but rather that allowing the jury to remain in some confusion on those defenses for five hours of deliberation was prejudicial error where entrapment and coercion were the principal grounds of his defense. The cases on which he relies, however, all based reversal on the fact that the supplemental instructions there given were incorrect and not responsive to the question. Bollenbach v. United States, 326 U.S. 607, 66 S.Ct. 402, 90 L.Ed. 350 (1946); United States v. Harris, 388 F.2d 373, 377 (7th Cir. 1967); Powell v. United States, 347 F.2d 156, 158 (9th Cir. 1965).

The ultimate test is whether the procedure as a whole was so likely to have confused the jury that reversal is required. Cf. Powell v. United States, supra 347 F.2d at 158. We hold that it was not. First, the instructions ultimately given were correct and favorable to the defense. Second, the fact that only those instructions, rather than the full charge in this complex case, were re-read would help clarify the matter. Third, the jury was not under great pressure to terminate its deliberations. After the jury heard the supplemental instructions, the jurors continued to deliberate for twenty minutes. The verdict they reached was consistent with the overwhelming weight of the evidence.

Defendant Alonso

Defendant Alonso was charged and convicted on Count 1 of conspiracy, and Counts 9, 10 and 11 with narcotics sales on June 18 and 20, 1970. Alonso was not shown to have been involved until June 17, 1970, when he was present at Suarez’s clothing store along with Suarez, Rodolfo Ricano and Ricano’s wife. The two agents met with Suarez in the back of the store to discuss the purchase of cocaine and heroin. Suarez told the agents that the person in the front room (referring to Alonso) could supply heroin and agreed to negotiate with him on the agents’ behalf.

The next day, June 18, the agents went to the store where Alonso participated in the sale by getting the half-kilo of heroin from his car and giving Petros-si a sample. After Petrossi approved, Alonso gave him the rest of the heroin and was paid $11,500 for it. Suarez got $400 for his part as middleman. Then the agents and Alonso discussed the purchase of 4 kilos of cocaine, upon which they agreed. About 1 p. m. on June 19, the agents went to see Suarez to arrange for the sale, and Suarez said that he and Alonso would dilute the 4 kilos into 6 for delivery the next day.

On June 20, the agents met Suarez at his store, and he took them to a motel room where they found Alonso and 4 kilos of cocaine. Agent Fullett discussed with Alonso the possibility of getting 5 or 6 kilos of cocaine or heroin every two or three months, and Alonso said he could supply that. Then they discussed the manufacture and importation of cocaine, which Alonso said he smuggled into the United States from South America. Petrossi paid Alonso and Suarez $40,000 for the drugs, and then he let other agents into the room to arrest the defendants.

Defendant Alonso urges that reversal is required due to the use of telephone conversations intercepted under the invalid extension. As previously discussed we reject this contention. He also claims that the evidence as a matter of law showed more than one conspiracy, so that it was an abuse of discretion for the trial judge to deny his motion for severance.

The evidence here of a single conspiracy to sell narcotics was strong, and the fact that federal agents did not discover Alonso’s part in it until near the end of the investigation does not negate his part in it. The evidence showed that Alonso was working with Suarez and Ri-cano, parties who had previously delivered drugs to the agents. In their presence, he negotiated and carried out further sales to those agents.

While Alonso may not have participated in all the prior sales, that does not necessarily mean that more than one conspiracy was involved. The problem is essentially one of agreement, the essence of conspiracy. As this court said in United States v. Varelli, 407 F.2d 735 (7th Cir. 1969):

The agreement may continue for a long period of time and include the performance of many transactions. New parties may join the agreement at any time while others may terminate their relationship. The parties are not always identical, but this does not mean that there are separate conspiracies. See Developments in the Law — Criminal Conspiracy, 72 Harv.L. Rev. 920, 922-935 (1959).

Id. at 407 F.2d 742.

The government proved a single continuing conspiracy to import heroin and cocaine into the United States, principally through Miami, and then to distribute it in Chicago through Suarez, Ricano and Alonso. Alonso participated with Ricano and Suarez in two sales, and was aware of Suarez’s prior dealings with Petrossi. In joining with Suarez and Ricano to negotiate drug sales to the agents, he made himself part of their single conspiracy. The trial judge properly denied the motion for severance.

Defendant Quintana

The defendant Quintana was charged and convicted only under the conspiracy count. We find the evidence insufficient to sustain his conviction.

Quintana was the godson of defendant Suarez. He did frequent Suarez’s clothing store, and occasionally bought jewelry from Suarez to sell on a door-to-door basis. The only evidence which the government submitted to bind Quintana to the drug conspiracy was his presence in the store on two occasions when the narcotics were discussed and two telephone conversations with Suarez. This evidence may be summarized as follows:

(1) On June 16, Quintana was present when the other defendants and the agents telephoned Escandar in Miami. Quintana was 5 to 10 feet away, took no part in the call, and there is no evidence that he could hear it.
(2) On June 18, Quintana was present in the front room of the store while drug negotiations were conducted behind closed doors in the rear of the store. At one point, Suarez came out of the back and told Quintana to go buy some Chivas Regal, which he did.
(3) On May 19, 1970, Suarez called Quintana to ask if he had “an eight” to loan. Quintana, thinking that Suarez wanted money, replied, “I don’t have eight hundred dollars.” When Suarez made it clear that he referred to narcotics, Quintana said: “ . I never want to ... I don’t want to get involved.”
(4) On May 24, Quintana talked to Suarez and said that he had just come in from horseback riding, and then may have admitted that he had some heroin in his possession. Suarez said he would possibly talk to him about it in a week or so, but no transaction was otherwise discussed.

At oral argument, the government conceded that the two occasions of Quintana’s mere presence in the vicinity of illegal narcotics dealings were insufficient to prove that defendant had agreed to or actually participated in the conspiracy. As the Sixth Circuit stated in United States v. Webb, 359 F.2d 558, 562 (6th Cir.), cert. denied, 385 U.S. 824, 87 S.Ct. 55, 17 L.Ed.2d 61 (1966), “ . . . neither association with conspirators nor knowledge that something illegal is going on by themselves constitute proofs of participation in a conspiracy.” Accord United States v. Falcone, 311 U.S. 205, 61 S.Ct. 204, 85 L.Ed. 128 (1940); DiazRosenado v. United States, 364 F.2d 941 (9th Cir. 1966); cf. United States v. Kelton, 446 F.2d 669 (8th Cir. 1971).

The government further conceded that the May 19 telephone conversation (in which Quintana first misunderstood Suarez’s reference to drugs and then, when he did understand, clearly refused to become involved) cannot reasonably be understood as showing his intention to agree to join the narcotics conspiracy. Thus, the government’s case against Quintana actually must rest on the relevant parts of the May 24 conversation:

F. Suarez: Is, what are you doing?
Nino (Quintana): Nothing, (I) came back a little while ago from horseback riding.
Suarez: And what you have nothing right?
Nino: Eh?
Suarez: Have you anything?
Nino: Eh? of what?
Suarez: Of that.
Nino: Of which?
Suarez: Of the other.
Nino: Of.
Suarez: Horse.
Nino: Yeah I have, what for?
Suarez: Here right, no because if not that, you know in about eh six or eight days I, well I talk to you.
Nino: O.K.

The government urges that the reference to horseback riding meant that Quintana had been out dealing in heroin, since “horse” is a common slang term for heroin. However, the unrefuted testimony of a riding stable owner showed that Quintana and his wife had in fact been out riding horses that morning.

After the reference to horseback riding, Suarez asked, “Have you anything?” allegedly meaning heroin. Again, Quin-tana misunderstood, so Suarez had to specify “horse.” Quintana answered “Yes.” Viewing this evidence most favorably to the government, it must be assumed that Quintana admitted possession of heroin. However, no transaction with Suarez or the others was shown to have been consummated or even discussed further than indicated in this conversation, even though all calls were monitored until June 20 except for one 2-day period, and Suarez’s store was under surveillance during the same period.

That Quintana may have possessed heroin and had the opportunity to join Suarez’s conspiracy is not sufficient proof that Quintana did agree to participate in a scheme to import and distribute large quantities of drugs. See, e. g., United States v. Jensen, 462 F.2d 763 (8th Cir. 1972); Causey v. United States, 352 F.2d 203 (5th Cir. 1965); United States v. Ford, 324 F.2d 950 (7th Cir. 1963). There is no showing of an agreement to advance any common interest. In United States v. Varelli, 407 F.2d 735 (7th Cir. 1969), this court stated:

A single act may be foundation for drawing the actor within the ambit of a conspiracy . . . But, since conviction of conspiracy requires an intent to participate in the unlawful enterprise, the single act must be such that one may reasonably infer from it such an intent.

Id. 407 F.2d at 743.

The single act of admitting possession of heroin is insufficient evidence on which to base a conviction for conspiracy to import and distribute that drug. United States v. Koch, 113 F.2d 982 (2d Cir. 1940). Quintana’s conviction is reversed and remanded .to the trial court with directions to enter an acquittal.

The judgments of conviction as to the defendants Suarez and Alonso are affirmed; the judgment of conviction as to the defendant Quintana is reversed.

      . In all, fifteen persons were indicted on a total of eleven counts. Some defendants were severed before trial and the indictments against them were dismissed on the government’s motion. Two pled guilty. A directed verdict of not guilty was entered as to one, two were acquitted by the jury, and the three appellants were found guilty.

      . The defendants argue that the fact that Agent Petrossi’s supporting affidavit was dated May 18, 1970, rather than May 14, 1970, throws such doubt on the authenticity of the other documents dated May 14 that a further evidentiary hearing is needed. They argue that this indicates the instant tap received Justice Department approval on the 18th of May, the same day as the tap invalidated in Robinson. Since Sol Lindenbaum apparently approved wiretaps only when Mitchell was out of town or otherwise unavailable, a showing that two taps were approved the same day and that one had been approved by Lin-denbaum might suggest that Lindenbaum in fact approved both.
      The fact that the investigating agent’s affidavit was notarized on May 18, 1970 (the date the Justice Department filed the application in the district court in Chicago, where Agent Petrossi was stationed), rather than on or before May 14, 1970 (the date the Attorney General reviewed the application in Washington), is not conclusive. The applicable statute, 18 U.S.C. § 2510 et seq., details what affidavits must be presented to the district court after the Attorney General or a specifically designated Assistant Attorney General determines that a tap is necessary. 18 U.S.C. § 2518. However, the statute does not state what the Attorney General must review when deciding to allow an application to be presented to a district court. 18 U.S.C. § 2516. Lindenbaum’s affidavit notes that the “proposed affidavit” was reviewed by the Attorney General. The record does not show whether it was signed at that time. The Justice Department complied with the statute when it presented Agent Petrossi’s affidavit, duly notarized, to the district court on May 18, 1970. Since Mitchell could have properly reviewed this wiretap on May 14, 1970, even if Petrossi did not sign his affidavit until May 18, the discrepancy in the dates merely reflects on the credibility of the subsequent affidavits. Cf. United States v. Brick, 502 F.2d 219, 222 n.7 (8th Cir. 1974).

      . Three of the eleven conversations intercepted under the extension order are admissible regardless of the government’s failure to follow the statutory authorization procedures. This is because Agent Petrossi was a party to three of the conversations whose interception he had requested. Judicial authorization is unnecessary in such a case, for the statute provides:
      It shall not be unlawful under this chapter [18 U.S.C. §§ 2510-2520] for a person acting under color of law to intercept a wire or oral communication, where such person is a party to the communication or one of the parties to the communication has given prior consent to such interception.
      18 U.S.C. § 2511(2)(c) (emphasis added).
      This provision does not offend the Fourth or Fifth Amendments, for one has no constitutionally protected expectation that the person to whom he voluntarily reveals incriminating information will keep it secret. See United States v. White, 401 U.S. 745, 751, 91 S.Ct. 1122, 28 L.Ed.2d 453 (1971); Hoffa v. United States, 385 U.S. 293, 302, 87 S.Ct. 408, 17 L.Ed.2d 374 (1966); United States v. Warren, 453 F.2d 738 (2d Cir.), cert. denied, 406 U.S. 944, 92 S.Ct. 2040, 32 L.Ed.2d 331 (1972); United States v. Koska, 443 F.2d 1167 (2d Cir.), cert. denied, 404 U.S. 852, 92 S.Ct. 92, 30 L.Ed.2d 92 (1971).

      . Only Suarez among these appellants was charged in Counts 2-7. Those counts charged Suarez and others later severed from the trial with selling and facilitating the sale of large quantities of heroin and cocaine to Agent Petrossi on February 26 and May 23 in 1970.

      . Suarez asserts in addition that the use at trial of conversations of his wife Marion, who was acquitted by the jury, was illegal since she was not named in the judicial order authorizing taps. It is now well settled that a wife’s conversations may properly be intercepted pursuant to an order naming her husband and “others as yet unknown.” United States v. Kahn, 415 U.S. 143, 94 S.Ct. 977, 39 L.Ed.2d 225 (1974), rev’g 471 F.2d 191 (7th Cir. 1972). The application must specifically identify only those persons whom law enforcement officials have probable cause to believe are committing the offense for which the wiretap is sought. Id. 415 U.S. at 155, 94 S.Ct. 977. On the basis of Kahn, we reject Suarez’s contention.

      . Narcotics conspiracies present special problems along this line, because the participants are often sophisticated enough to use a code to veil with innocence the most relevant conversations. See United States v. James, 161 U.S.App.D.C. 88, 494 F.2d 1007, 1019 (1974); United States v. Bynum, 485 F.2d 490, 501 (2d Cir. 1973), vacated on other grounds, 417 U.S. 903, 94 S.Ct. 2598, 41 L.Ed.2d 209 (1974); United States v. Cox, 462 F.2d 1293, 1300-1301 (8th Cir. 1972); United States v. Sisca, 361 F.Supp. 735, 744 (S.D.N.Y.1973); United States v. Focarile, 340 F.Supp. 1033, 1048 (D.Md.), aff’d sub nom. United States v. Giordano, 469 F.2d 522 (4th Cir. 1972), rev’d on other grounds, 416 U.S. 505, 94 S.Ct. 1820, 40 L.Ed.2d 341 (1974).
      Another technique often found is the use of guarded language or the deliberate discussion of irrelevant matters during the early moments of a conversation so that, if the conversations are being monitored, agents, assuming the call to be innocent, will cease the interception. See United States v. By-num, 360 F.Supp. 400, 412-413 (S.D.N.Y.), aff’d, 485 F.2d 490 (2d Cir. 1973).
      United States v. James, supra 494 F.2d at 1019-1020.

      . Title 21 U.S.C. § 174 provided:
      Whoever fraudulently or knowingly imports or brings any narcotic drug into the United States or any territory under its control or jurisdiction, contrary to law, or receives, conceals, buys, sells, or in any manner facilitates the transportation, concealment, or sale of any such narcotic drug after being imported or brought in, knowing the same to have been imported or brought into the United States contrary to law, or conspires to commit any of such acts in violation of the laws of the United States, shall be imprisoned
      Whenever on trial for a violation of this section the defendant is shown to have or to have had possession of the narcotic drug, such possession shall be deemed sufficient evidence to authorize conviction unless the defendant explains the possession to the satisfaction of the jury. (Emphasis added.)
      The section was repealed on October 27, 1970.

      . See note 7 supra.

      . On the facts of this case, the jury clearly could have found that defendant Suarez was predisposed to sell heroin and cocaine to the agents, since he had done so on February 26 and agreed to continue doing so long before the alleged coercion began. As indicated, Suarez does not claim total lack of predisposition.

      . In Russell, undercover narcotics agents had approached the defendants, illegal manufacturers of methamphetamine (“speed”), and offered to supply a necessary ingredient in exchange for half of the output. That ingredient could legally be sold, but was somewhat difficult to obtain since the BNDD had persuaded several chemical supply firms to cease selling it. Defendants agreed and used the undercover agents’ proffered supplies to make more speed, which was delivered to the agents.
      The Court specifically rejected the argument that the deceit necessarily involved in undercover work was impermissible in those circumstances:
      The illicit manufacture of drugs is not a sporadic, isolated criminal incident, but a continuing, though illegal, business enterprise. In order to obtain convictions for illegally manufacturing drugs, the gathering of evidence of past unlawful conduct frequently proves to be an all put impossible task. Thus in drug-related offenses law enforcement personnel have turned to one of the only practicable means of detection: the infiltration of drug rings and a limited participation in their unlawful present practices. Such infiltration is a recognized and permissible means of investigation; if that be so, then the supply of some item of value that the drug ring requires must, as a general rule, also be permissible. For an agent will not be taken into the confidence of the illegal entrepreneurs unless he has something of value to offer them. Law enforcement tactics such as this can hardly be said to violate “fundamental fairness” or “shocking to the universal sense of justice,”
      United States v. Russell, 411 U.S. 423, 432, 93 S.Ct. 1637, 1643 (1973). Accord, Lewis v. United States, 385 U.S. 206, 87 S.Ct. 424, 17 L.Ed.2d 312 (1966); United States v. Pingle-ton, 458 F.2d 722 (7th Cir. 1972).

      . Under the circumstances, we likewise reject the complaint that Counts 1-3 should have been severed from Counts 6-11 because of the alleged government misconduct tainting the latter counts.

      . Ricano was indicted with appellants herein on nine of the 11 counts. He pled guilty to the indictment. Mrs. Ricano was not indicted.


source: Caselaw Access Project

author: MEREDITH, Chief District Judge.

license: Public Domain

text:
    Robert BLUM et al., Appellants, v. SCHUYLER PACKING COMPANY and Spencer Foods, Inc., Appellees.
    No. 74-1343.
    United States Court of Appeals, Eighth Circuit.
    Submitted Nov. 11, 1974.
    Decided Dec. 31, 1974.

      Judith A. Lonnquist, Jacobs, Gore, Burns & Sugarman, Chicago, 111., for appellants.
    Soren Jensen, Omaha, Neb., for appel-lees.
    Before VAN OOSTERHOUT, Senior Circuit Judge, HEANEY, Circuit Judge, and MEREDITH, Chief District Judge.

       The Honorable James H. Meredith, Chief Judge, Eastern District of Missouri, sitting by designation.

   MEREDITH, Chief District Judge.

Plaintiffs appeal from a judgment rendered against them and in favor of defendants. The judgment was rendered after the case was submitted on a stipulation of the parties as to certain facts relating to the computation method used by defendants to determine the wages of the plaintiff-employees on the “kill floor” at defendants’ meat packing plant at Schuyler, Nebraska. Under the terms of the stipulation, the cause was submitted to the district court for a determination of one limited question. Paragraph “A” of the stipulation is as follows:

This stipulation of facts, along with the briefs which will be submitted by the parties, is submitted to the Court for determination of the liability in one limited but overriding area, to-wit: The legality under the provision of the Fair Labor Standards Act of 1938 of paying employees on a computed gang time basis rather than on the basis of the time on their individual time cards, where the time reflected on the time cards is greater than computed gang time.

The dispute centers around the defendants’ use of the “gang time” method for paying the employees on the kill floor. All other employees at the plant are paid according to their individual time cards. Time cards are kept for the kill floor employees, but the defendants state that these are used for recording attendance only, even though employees are carefully instructed in the use of the time clock and instructed not to punch in early or punch out late.

The stipulation indicates that the time cards are preserved by the employers, while the records of the data used to make the “gang time” computations are scanty, at best. The plaintiffs argue that the employees should be paid according to their time cards because they are the most accurate records of the individual time worked by each employee, and the failure of the defendants to keep records of the data that goes into the “gang time” computations is, in itself, a violation of the Fair Labor Standards Act [29 U.S.C. 211(c) ], entitling them to the relief requested. Defendants argue that the district court was correct in holding that the plaintiffs had not met their burden of proof, under the Act, because they did not show that the employees had performed compensable work for which they have not been paid. This Court does not agree.

The final paragraph of the stipulation states:

Because of their inability to reach agreement on certain factual details, the parties have purposely left ambiguities in this Stipulation of Facts to enable each party to argue its version of those factual details in its brief. However, the parties will supply the Court with such additional information as it shall request.

The stipulation, by its very terms, is not a complete statement of the facts of the case, as it leaves many facts still in dispute. Although no formal motion for summary judgment appears in the record, summary judgment was rendered by the district court. Rule 56(c), F.R. Civ.P., concerning summary judgment, states, in part:

The judgment sought shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.

This is not a case where there is no genuine issue of material fact. Therefore, rendering summary judgment on the record, which consisted of an incomplete stipulation, was error.

This Court is of the opinion that the record is insufficient to grant the requested relief to plaintiffs or to defendants. The parties should be given the opportunity to present evidence on the facts which have not been agreed upon or to present additional stipulations. Williams v. Chick, 378 F.2d 330 (8th Cir. 1967).

It is apparent that the parties sought by the submission of the stipulation to have the district court rule that a “gang time” method of computing compensable time was either valid or invalid, per se, under the Act. The district court properly held, in its memorandum opinion, that such a ruling could not be made. The court should have stopped there and required the parties to submit evidence or additional stipulations on the question of whether the “gang time” method, as used in this particular case, was in violation of the Act. However, the court went on to rule against the plaintiffs on the burden of proof issue. This, in effect, resulted in a holding that, since the plaintiffs were unable to get the defendants to stipulate to certain facts at issue in the case, they failed to carry their burden of proof. Such a result cannot be upheld. The stipulation did not contain enough facts for the district court to grant summary judgment in this case; therefore, it was error to do so. Bank of America Trust & Savings Assn. v. United States, 317 F.2d 859 (9th Cir. 1963).

Because summary judgment was granted in this case while there were still material facts in dispute, the judgment of the district court is vacated and the case remanded for further proceedings consistent with this opinion.


author: PER CURIAM.

text:
    Frank L. SHAMBURGER et al., Appellants, v. COMMISSIONER OF INTERNAL REVENUE, Appellee. Bobby F. SHAMBURGER and Bobbye R. Shamburger, Appellants, v. COMMISSIONER OF INTERNAL REVENUE, Appellee.
    Nos. 74-1413 to 74-1415.
    United States Court of Appeals, Eighth Circuit.
    Submitted Dec. 10, 1974.
    Decided Jan. 2, 1975.

      W. Dane Clay, Little Rock, Ark., for appellants.
    Dennis M. Donohue, Atty., Dept, of Justice, Washington, D. C., for appellee.
    Before ROSS and STEPHENSON, Circuit Judges, and SCHATZ, District Judge.

       ALBERT G. SCHATZ, United States District Judge for the District of Nebraska, sitting by designation.

   PER CURIAM.

Taxpayers Bobby F., Bobbye R. and Frank L. Shamburger appeal from a decision of the United States Tax Court, denying their petitions for review of income tax deficiencies assessed against them by the Commissioner of Internal Revenue.

These deficiencies related to income derived during the years 1963, 1964 and 1965 which the taxpayers had reported as long-term capital gain. The Commissioner contended that it should have been reported as ordinary income and taxed at that rate. The Tax Court sustained the Commissioner’s determination. Therefore, the sole issue before this Court on appeal is whether the income in question was ordinary income or long-term capital gain.

The undisputed facts reveal that Bobby F. Shamburger, his father, Frank L. Shamburger, and six other individuals organized Christian Universal Life Insurance Company in Illinois on April 5, 1961. This company had authorized capital stock of 2,500,000 shares. Two million of these shares were sold to the public at $2.00 per share. The other 500,000 shares were retained by the company and became the subject of a “Key Personnel and Employees’ Stock Warrant and Restricted Stock Option Plan” which was drawn up by a stock rights committee chaired by Bobby Shambur-ger. This plan, which was approved by the shareholders on August 9, 1972, provided for the grant of options to purchase 300,000 shares and the grant of warrants to purchase 200,000 shares. These warrants were to be sold for four cents each or two percent of the fair market value of the stock as determined by the committee at the time of granting the warrants, whichever was greater. The warrants entitled the holder to purchase shares of stock for $2.00 each or the fair market value of the shares as determined by the committee at the time the warrants were granted, whichever was greater. The purpose of the plan, as stated therein, was to provide additional incentive to employees to promote the success of the business.

Prior to the actual implementation of the plan, the common stock of Christian Universal was split four for one; and when the warrants were actually granted they were sold for one cent each and they entitled the holder to purchase shares for fifty cents each. The stock rights committee authorized the sale to Bobby of warrants for 177,700 shares for $1,777.00, while Frank was allowed to purchase warrants for 28,000 shares for $280.00. These warrants were delivered to Bobby and Frank about November 26, 1962.

Neither Bobby nor Frank ever exercised any of their warrants. However, they did sell part of them during 1963, 1964 and 1965 for prices ranging from around fifty cents each to around $2.00 each, realizing substantial financial gain. Prior to July 23, 1963, there had been no established market for the warrants. A relatively small number were traded between that date and the end of 1963 and sold for between $1.50 and $1,965 per warrant. It is the income derived by Bobby and Frank from their sales of warrants which is the subject of this action.

The taxpayers contend that regardless of the stated purpose of the plan, the warrants were actually sold to them for the purpose of allowing them to retain effective control of the company should they ever be challenged. For this reason, they argue, the income derived from the sale of the warrants does not fall within the rule of Commissioner of Internal Revenue v. LoBue, 351 U.S. 243, 247, 76 S.Ct. 800, 803, 100 L.Ed. 1142 (1956), which held that “[w]hen assets are transferred by an employer to an employee to secure better services they are plainly compensation.”

Alternatively, taxpayers urge that the warrants were investments by them rather than compensation, because they paid a fair market price for them originally.

The Tax Court rejected the taxpayers’ arguments. It held that the control argument was essentially the same as the proprietary interest argument rejected by the Supreme Court in LoBue. It also found that the warrants did not have a readily ascertainable fair market value at the time of their issuance. Therefore, the taxpayers had not established that they obtained the warrants for one cent each as an investment rather than as compensation.

We have reviewed the record and conclude that there is substantial evidence to support the Tax Court’s findings of fact. We also find that it correctly applied the relevant law. We therefore affirm the decisions of that court based on its thorough and well-reasoned opinion in this case, which is reported at 61 T.C. 85 (1973).


author: HILL, Circuit Judge.

text:
    J. W. McTIERNAN, Plaintiff-Appellant, v. Marvin FRANKLIN, Acting Secretary of the Interior of the United States of America, et al., Defendants-Appellees.
    No. 74-1266.
    United States Court of Appeals, Tenth Circuit.
    Argued Nov. 11, 1974.
    Decided Jan. 7, 1975.

      Jay R. Bond, Oklahoma City, Okl., for plaintiff-appellant.
    George Verity, Oklahoma City, Okl. (David T. Burleson, El Paso, Tex., on the brief), for defendants-appellees El Paso Nat. Gas Co., Inexeo Oil Co., Getty Oil Co., Freeport Oil Co. and R. G. Anderson.
    Peter B. Bradford, Oklahoma City, Okl. (Ray G. Moss, Oklahoma City, Okl., on the brief), for defendant-appellee Northern Nat. Gas Co.
    Dirk D. Snel, Dept, of Justice, Washington, D. C. (Wallace H. Johnson, Asst. Atty. Gen., William R. Burkett, U. S. Atty., James M. Peters, Asst. U. S. Atty., Oklahoma City, Okl., Edmund B. Clark, Dept, of Justice, on the brief), for defendant-appellee Secretary of the Interi- or.
    Richard L. Dugger, Dist. Atty., Sayre, Okl., for defendant-appellee Bd. of County Commissioners of Roger Mills County, Oklahoma.
    Wallace E. Robertson, Oklahoma City, Okl., for defendant-appellee, Statex Petroleum, Inc.
    Before MURRAH, HILL and HOLLOWAY, Circuit Judges.
   HILL, Circuit Judge.

This action results from a Board of Land Appeals’ (Board) rejection of certain non-competitive oil and gas lease offers because of uncertain title. The applicant, J. W. McTiernan, filed suit in the United ■ States District Court for the Western District of Oklahoma seeking, by amended pleadings, reversal of the Board’s decision and an order directing it to reconsider the lease offers on the basis that the United States owned the minerals in question. The district court dismissed the action, and we affirm.

At issue are five tracts of land located in Roger Mills County, Oklahoma. In 1939 or 1940 these tracts were sold for delinquent taxes and purchased at a tax resale by the County’s Board of Commissioners. Some time thereafter the Commissioners sold these tracts to the United States, reserving to the County all mineral rights for a period of fifty years.

In December, 1971, J. W. McTiernan filed five non-competitive oil and gas lease offers covering these tracts with the Bureau of Land Management. The offers were rejected for the reason that the minerals were not yet owned by the United States. McTiernan appealed to the Board of Land Appeals. He contended that the County’s mineral reservations were void, thereby vesting title thereto in the United States as a matter of law, because the County acquired and sold the tracts in the state’s taxing process under which a grantee obtains a fee simple absolute.

The Board acknowledged that McTier-nan had some support for his position but, because deeds to the tracts and government title opinions stated that the mineral rights were reserved to the County, found that title to the minerals was uncertain. On June 27, 1973, it affirmed the Bureau of Land Management’s decision on the grounds “that oil and gas lease offers may properly be rejected in the exercise of administrative discretion when there is a ‘mere uncertainty regarding title to oil and gas deposits.’ ”

On July 16, 1973, McTiernan instituted suit against the Acting Secretary, alleging that the Board’s decision was an abuse of discretion because the evidence before it established that title to the mineral deposits was vested in the United States. The complaint requested that the Board’s decision be reversed and that a writ of mandamus be issued directing the Secretary to accept McTiernan’s lease offers.

McTiernan’s subsequent motion to make the Secretary an additional party defendant was granted and an amended complaint was filed. A second amended complaint was filed on December 5, 1973, listing various oil and gas lessees of Roger Mills County, and the Board of County Commissioners, as defendants. This complaint requested that title to the lands in question be quieted in the United States.

All of the defendants filed motions to dismiss. At the hearing on these motions McTiernan orally amended his pleadings, deleting therefrom his request for mandamus and instead requesting the court to reverse the Board’s decision and direct it to reconsider the lease offers on the basis that the United States owned the minerals.

On April 4, 1974, the court dismissed the action on the grounds (1) the Secretary, acting through the Board, properly exercised his discretion in refusing to grant the leases; (2) that McTiernan lacked standing to sue; and (3) that the action was barred as to all defendants other than the Secretary by the 90-day statute of limitations for filing oil and gas contests.

On appeal McTiernan contends (1) the Board’s decision was improper because it was based on the erroneous finding that title to the mineral rights was uncertain, and (2) title to the mineral rights is vested in the United States as a matter of law because the County’s reservation thereof is void under Oklahoma law.

We do not believe the Secretary’s decision to reject McTiernan’s lease offers was improper. The Mineral Leasing Act, 30 U.S.C. § 181 et seq., gives the Secretary discretionary power to accept or reject oil and gas lease offers. Although a tract, if leased, must go to the first qualified applicant, the Secretary may refuse to issue any lease at all on a given tract. Udall v. Tallman, 380 U.S. 1, 85 S.Ct. 792, 13 L.Ed.2d 616 (1965). Such is the situation here.

McTiernan contends the Secretary abused this discretion because his decision refusing the offers was not premised on the fact that title to the minerals was vested in the United States under Oklahoma law. Although he proffered some support for this position, the deeds and title opinions which stated that the mineral rights were reserved to the County made such a conclusion questionable. Because the reservations may be valid, and the minerals therefore not subject to the Secretary’s disposition, the decision refusing McTiernan’s offers was proper.

Under these circumstances the only alternative available to the Secretary, and the course McTiernan apparently believes should have been taken, would have been to administratively determine title to the mineral rights. Such a decision, however, can only be made in a quiet title action. Since McTiernan’s oil and gas lease offer does not give him a vested property right, Hannifin v. Morton, 444 F.2d 200, 203 (10th Cir. 1971), he has no standing to question title to the mineral rights. Clark v. Holmes, 31 Okl. 164, 120 P. 642 (1912). We therefore find it unnecessary to consider the effect of Oklahoma law on the mineral rights in question.

Affirmed.

      . 30 U.S.C. § 226-2 provides in part: “No action contesting a decision of the Secretary involving any oil and gas lease shall be maintained unless such action is commenced within ninety days after the final decision of the Secretary .

      . See, e. g., 30 U.S.C. § 226(a), which provides: “All lands subject to disposition under this chapter which are known or believed to contain oil or gas deposits may be leased by the Secretary.” (Emphasis added).

      . 43 CFR § 2091.1 provides in part: “ [Applications . . . must be rejected . when approval ... is prevented by:
      (a) Withdrawal or reservation of the lands;
      * * * * * *
      (e) The fact that for any reason the land has not been made subject ... to the operation of the public land laws.”


author: BARNES, Circuit Judge:

text:
    Houston A. WHEELER, Jr., Plaintiff-Appellant, v. Raymond K. PROCUNIER, Defendant-Appellee.
    No. 72-1523.
    United States Court of Appeals, Ninth Circuit.
    Dec. 23, 1974.
    J. Anthony Kline, Public Advocates, Inc., San Francisco, Cal., for plaintiff-appellant.
    W. Eric Collins, Deputy Atty. Gen. (appeared), San Francisco, Cal., for defendant-appellee.

      Before BARNES and TRASK, Circuit Judges, and THOMPSON, District Judge.

       The Honorable Gordon Thompson, Jr., United States District Judge’ for the Southern District of California, sitting by designation.

   BARNES, Circuit Judge:

The appellant, a state prisoner, appeals from the dismissal of his complaint by the district court, which found the action failed to state a claim upon which relief can be granted. The complaint was brought under the provisions of 28 U.S.C. § 1343(3) and 42 U.S.C. § 1983. The primary issue raised with any specific and noncoiiclusory language in appellant’s pro se complaint was the claim that he was transferred from the general prison population to “punitive segregation” confinement, without receiving due process safeguards, thus abridging his Fourteenth Amendment rights.

We now grant the rehearing requested by appellees.

This is, then, the third time that this case has come before this Court. This rehearing is granted to assess the impact of the nonretroactivity holding in Wolff v. McDonnell, 418 U.S. 539, 94 S.Ct. 2963, 41 L.Ed.2d 935 (1974), both on this Court’s decision in Clutchette v. Procunier, 497 F.2d 809 (9th Cir. 1974), as modified on rehearing October 21, 1974, and our previous opinions in this case.

The California Department of Corrections conducts 20,000 disciplinary actions annually (exclusive of juvenile or female infractions or transfers). For this Court to apply Clutchette retroactively would release a deluge of actions by inmates seeking to resurrect old infractions in the hope of affecting present parole considerations. We find the same governmental interests in efficient prison administration which led the Supreme Court in Wolff to limit that decision’s affect only to prospective application, are also present here. We therefore hold that our decision in Clutchette shall only be applied prospectively. Cf. M’Clary v. California Adult Authority No. 74-1281 Memorandum (9th Cir. decided 8/6/74); Goodman v. Kerr, No. 74-1778 Memorandum (9th Cir. decided 9/13/74). The alleged violation in this case, occurring in the fall of 1971, being both pre-Clutchette, and pre-Wolff, we find that the district court did not err in dismissing appellant’s action pursuant to Rule 12(b)(6) F.R.Civ.P.

Our prior opinions of January 14, 1974 and September 16, 1974 are vacated, and the decision of the district court dismissing appellant’s action is

Affirmed.

      . We heretofore denied relief in this case under date of January 14, 1974. Subsequently we granted a rehearing and reversed the district court on September 16, 1974, based on the original Clutchette opinion. On October 21, 1974, an “Opinion on Rehearing” was issued in Clutchette modifying the original Clutchette opinion.

      (Letterhead of
      State of California&emdash;Health and Welfare Agency Department of Corrections Sacramento Ronald Reagan,
      Governor) March 5,
      1974 Honorable Evelle
      Younger Attorney General of California 300 McAllister Street San Francisco, California 94102 Dear Sir: SUBJECT: Population/Disciplinary
      Statistics&emdash;1973. Records and files in
      this office, and information received from the various institutions, show the following totals: Institution Sierra Conservation Center
      ...... 1,150 2,616 479 1,314 2,766
      California Conservation Center---- California 1,961 1,449
      Correctional Institution California 1,617 1,712
      Men’s Colony.......... California 2,667 3,147
      Medical Facility....... California 1,505 2,511
      Rehabilitation Center . 2,037 1,199
      Correctional Training Facility Deuel 3,096 2,727
      Vocational Institution ..... 2,102 940
      Folsom ........................ San Quentin.................... 929 662
      California Institution 22)486 20,490
      for Men 1973 Sincerely,
      California Institution for Women Disciplinary /s/
      Total..... 1973 Population 2,085 Hearings L.
      721 1,584 M.
      Stutsman
      /s/ L. M. Stutsman
      For R. K. Procunier
      Director of Corrections


text:
    Samuel S. JACKSON, Appellant, v. Terrell Don HUTTO, Commissioner, Arkansas Department of Correction, Appellee.
    No. 74-1711.
    United States Court of Appeals, Eighth Circuit.
    Submitted Dec. 13, 1974.
    Decided Jan. 9, 1975.

      Samuel S. Jackson, pro se.
    Jim Guy Tucker, Atty. Gen., and Jack T. Lassiter, Asst. Atty. Gen., Little Rock, Ark., for appellee.
    Before LAY and BRIGHT, Circuit Judges, and TALBOT SMITH, Senior District Judge.

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

   PER CURIAM.

Samuel S. Jackson, an Arkansas state prisoner, seeks relief in federal court from a state conviction and incarceration for robbery. Essentially, Jackson presents two grounds in support of his contention that he was convicted in violation of his constitutional rights:

1) the Arkansas trial court did not instruct the jury on the limited credibility to be given accomplice testimony; and
2) the trial judge, in the absence of the defendant, orally communicated with the jury on several occasions during jury deliberations.

Jackson raised these matters on direct appeal to the Arkansas Supreme Court but that court denied him any relief. Jackson v. State, 256 Ark. 406, 507 S.W.2d 705 (1974). The federal district court also rejected these same contentions in denying him habeas corpus relief. Jackson then brought this appeal pro se.

The first contention, relating to the alleged omitted instructions governing accomplice testimony, raises no issue of constitutional magnitude which is cognizable in habeas corpus. As we stated in Quinn v. United States, 499 F.2d 794 (8th Cir. 1974), quoting from Hill v. United States, 368 U.S. 424, 428, 82 S.Ct. 468, 7 L.Ed.2d 417 (1962), “[t]he appropriate inquiry is whether the claimed error was a ‘fundamental defect which inherently results in a complete miscarriage of justice.’ ” 499 F.2d at 795. In this case, the district court properly rejected Jackson’s contention, observing that

[t]he transcript of petitioner’s trial reveals that instructions as to the credibility of the testimony of the petitioner’s accomplices were, in fact, given, and that they properly pointed out the duty of the jury in assessing that testimony.

Jackson’s second contention does raise an issue of constitutional significance, for it is settled law that communications between judge and jury in the absence of the defendant and his counsel are improper. See, e. g., Shields v. United States, 273 U.S. 583, 47 S.Ct. 478, 71 L.Ed. 787 (1927); United States ex rel. Tobe v. Bensinger, 492 F.2d 232, 237-238 (7th Cir. 1974); United States v. McNair, 140 U.S.App.D.C. 26, 433 F.2d 1132, 1136 (1970); Rice v. United States, 356 F.2d 709, 716 (8th Cir. 1966). The rationale of these cases is that a defendant has a right to be present at every stage of his trial. See Shields v. United States, supra, 273 U.S. at 588-589, 47 S.Ct. 478; United States v. McNair, supra, 433 F.2d at 1136.

Because a defendant’s right to be present is, in the federal context, guaranteed by Fed.R.Crim.P. 43, the federal courts have, typically, not been called upon to determine the precise constitutional dimensions of this right. See, e. g., Wade v. United States, 142 U.S.App.D.C. 356, 441 F.2d 1046 (1971). Nevertheless, there appears little doubt that a defendant’s right to be present is constitutionally grounded in either the right to confrontation of the sixth amendment or the right to due process of the fifth and fourteenth amendments. See Illinois v. Allen, 397 U.S. 337, 338, 90 S.Ct. 1057, 25 L.Ed.2d 353 (1970) (right of confrontation); Wade v. United States, supra, 441 F.2d at 1049 (right of confrontation); United States v. Crutcher, 405 F.2d 239, 242 (2d Cir. 1968), cert. denied, 394 U.S. 908, 89 S.Ct. 1018, 22 L.Ed.2d 219 (1969) (“elementary principle of due process”); 3 C. Wright & A. Miller, Federal Practice & Procedure § 721 at 192-93 (1969); cf. Lewis v. United States, 146 U.S. 370, 372, 13 S.Ct. 136, 137, 36 L.Ed. 1011 (1892) (right to be present is a “leading principle that pervades the entire law of criminal procedure”).

The courts are almost uniform in holding that such communications, although presumptively prejudicial, may be shown to constitute harmless error. See, e. g., United States ex rel. Tobe v. Bensinger, supra, 492 F.2d at 238; United States v. Glick, 463 F.2d 491, 493-494 (2d Cir. 1972); United States v. Arriagada, 451 F.2d 487, 488-489 (4th Cir. 1971), cert. denied, 405 U.S. 1018, 92 S.Ct. 1300, 31 L.Ed.2d 481 (1972); Wade v. United States, supra, 441 F.2d at 1048-1051; McClain v. Swenson, 435 F.2d 327 (8th Cir. 1970); United States v. McNair, supra, 433 F.2d at 1136; Rice v. United States, supra, 356 F.2d at 716-717. There is only limited authority for the proposition that the presumption may not be rebutted. See United States v. Neal, 320 F.2d 533, 536 (3d Cir. 1963); Evans v. United States, 284 F.2d 393, 395 (6th Cir. 1960).

The record in this case clearly rebuts any presumption of prejudice. The jury expressed its concern to the trial court on whether it was required to find the defendant guilty and assess punishment on all seven counts or whether it could return a guilty verdict on one count only. The trial judge, counsel for the defendant, and the prosecutor — but not the defendant — made several trips into the jury room to respond to inquiries on this subject. The trial judge answered the jury’s inquiries. When the jury’s confusion seemed to persist, the judge recalled the jury to the courtroom and reread the instructions in their entirety. The jury returned a guilty verdict on only one count. The proceedings were duly reported and the record reflects that Jackson suffered no prejudice from these unusual colloquies. The jury’s questions were directed toward learning whether it might convict on one count rather than on several counts. Ultimately, it resolved this dilemma in favor of the defendant.

The Arkansas Supreme Court has expressed its strong disapproval of this kind of communication between the trial judge and jury outside of open court. Jackson v. State, supra, 507 S.W.2d at 708. We agree that such communication constitutes trial error. However, the record in this case discloses no prejudice and the error does not warrant habeas corpus relief.

Affirmed.


text:
    MINNESOTA PUBLIC INTEREST RESEARCH GROUP, and Sierra Club, Appellees, v. Earl B. BUTZ, Individually, and as Secretary of Agriculture, et al., and Consolidated Papers, Inc., et al., Appellants.
    Nos. 74-1805, 74-1850 to 74-1852.
    United States Court of Appeals, Eighth Circuit.
    Jan. 6, 1975.

      Joe A. Walters and Prank J. Walz and Curtis L. Roy, Minneapolis, Minn., represented and made appearance for appellants in this Court.
    Jon Jensvold, Minneapolis, Minn., represented appellees but did not make appearance for them in this Court.
    Before BRIGHT and WEBSTER, Circuit Judges.
   PER CURIAM.

This motion for expediting and consolidating these appeals comes before us as an administrative panel of this court.

The parties named as appellants herein have appealed from an order temporarily enjoining them from the cutting of timber under contract in the Portal Zone of the Boundary Waters Canoe Area (BWCA), Superior National Forest, Minnesota, pending a trial on the merits of claims made by appellees (environmental groups). The appellees seek a permanent injunction against all logging in the BWCA on grounds that (1) the final Environmental Impact Statement (EIS) prepared by the Forest Service of the United States Department of Agriculture covering forest management of the BWCA is inadequate, and (2) a provision of the Wilderness Act, 16 U.S.C. § 1133(d)(5), precludes timber harvesting in the BWCA. Appellants request an order consolidating the several appeals and request that the appeals hearing be expedited and scheduled for the next term of this court, which term commences January 6, 1975. We grant the request for consolidation but deny the request to expedite for the reasons stated below.

The district court (Judge Miles Lord) in granting a temporary injunction ruled that “there is a substantial likelihood or probability that the plaintiffs will succeed in their claim that * * * the Wilderness Act requires that timber cutting be prohibited in the virgin forest areas of the BWCA.” The district court made no preliminary ruling on the adequacy of the EIS prepared by the Forest Service.

Thus, should we agree with appellants and reverse the order granting a temporary injunction, the trial court could still enjoin timber cutting on a temporary basis because of an alleged inadequacy of the EIS without rendering a final decision on the merits.

We take notice that this case has been in the courts since November 1972. Judge Lord initially entered an injunction order banning logging in the BWCA on February 2, 1973. An appeal was taken to this court and on June 10, 1974, we issued our opinion affirming the injunction order but directing that the temporary injunction should terminate upon filing of the final EIS by the Forest Service. Minnesota Public Interest Research Group v. Butz, 498 F.2d 1314 (8th Cir. 1974) (en banc). The majority also noted that it did not express any opinion on whether the Wilderness Act authorizes timber cutting in the BWCA. Id. at 1325 n. 31.

We view with concern the piecemeal disposition of this case. We are now on the second appeal in this case but no final judgment has as yet been entered.

Because of the shortness of time remaining before our January session, we are unable to schedule a hearing on this case at said January session. Although we find it necessary to deny the motion to expedite this appeal, we suggest that the issues remaining in this lawsuit be resolved expeditiously on the merits so as to permit either party to appeal from a final judgment.

Pending the present appeal, we authorize the district court to continue with the trial on the merits of this case.

It is so ordered.

      . We are aware that Judge Lord is an extremely busy federal judge who is now engaged in the trial of a protracted antitrust case. If Judge Lord is unable to try this case on the merits in the near future, we suggest that he, together with Chief Judge Devitt, consider whether this litigation can be conveniently transferred to another judge who may be able to hear and finally decide it at an early date.


author: PER CURIAM:

text:
    ERNEST AND MARY HAYWARD WEIR FOUNDATION, Plaintiff-Appellant, v. UNITED STATES of America, Defendant-Appellee.
    No. 200, Docket 73-2822.
    United States Court of Appeals, Second Circuit.
    Argued Nov. 26, 1974.
    Decided Dec. 30, 1974.
    Michael A. Cardozo, New York City (Robert J. Jossen, Proskauer Rose Goetz & Mendelsohn, New York City, on the brief), for appellant.
    Paul J. Curran, U. S. Atty., S. D. N. Y. (David P. Land and Gerald A. Rosenberg, Asst. U. S. Attys., of counsel), for appellee.
    Before CLARK, Associate Justice, and MOORE and TIMBERS, Circuit Judges.

       Associate Justice Tom C. Clark, United States Supreme Court, Retired, is sitting by designation.

   PER CURIAM:

Appellant, a .tax-exempt charitable corporation, is the successor in interest to a private, non-eharitable testamentary trust established at the death of Ernest Weir in 1957. Under the provisions of the will, the income of the trust was to go to his widow, Mrs. Mary Hayward Weir, for life and then “to such person or persons, including her estate, as she may, by her last will and testament, nominate and appoint.” Just prior to the death of Mrs. Weir in 1968, the trust realized capital gains of some $541,738.82 and subsequently paid taxes which are the subject of this lawsuit. In her will, Mrs. Weir exercised her general testamentary power of appointment over the trust by directing that the principal be distributed to appellant-Foundation.

Below, appellant sought a refund of the taxes paid on the 1968 capital gains, claiming that the trust should be retroactively accorded a charitable deduction under § 642(c) of the Int.Rev. Code of 1954. ' We agree with the conclusion of the district court that these monies were not paid or permanently set aside for a charitable purpose “pursuant to the terms of the governing instrument” as required by § 642(c), since the will of Ernest Weir expressed no such intent. Correspondingly, we affirm on the basis of Judge Carter’s opinion published at 362 F.Supp. 928.

      . Although the 1969 Tax Reform Act modified some of the terms of this statute, these changes, codified at 26 U.S.C. § 642(c)(1) (1970), have no relevance to this case.

      . Appellant additionally claims error in the denial of its pretrial discovery request for “all notes, reports, notes of conferences and mem-oranda” prepared by the auditing IRS Agent and by the Appellate Division of the Regional Commissioner’s office. Relying on recommendations contained in a report of Magistrate Martin D. Jacobs, Judge Gagliardi granted Appellant’s motion for production of documents only to the limited extent of requiring the Government to turn over factual material (as distinguished from opinions, legal analy-ses, and recommendations). The pure deliberative processes of government have traditionally been protected against disclosure, and, accordingly, we affirm on the basis of Magistrate Jacobs’ report, unofficially reported at 72-1 USTC (CCH) (I 9435.


text:
    HAYDEN STONE, INC., Plaintiff-Appellant, v. George BRODE and Carl Jeppson Company, Defendants-Appellees.
    Nos. 73-1732, 73-1733.
    United States Court of Appeals, Seventh Circuit.
    Argued Nov. 19, 1974.
    Decided Dec. 13, 1974.

      George Brode, Samuel Morgan, Chicago, 111., for defendants-appellees.
    Michael B. Roche and Richard T. Zwir-ner, Chicago, 111., for Hayden Stone, Inc.
    Before SWYGERT, Chief Judge, CUMMINGS, Circuit Judge, and WY-ZANSKI, Senior District Judge.

      . Senior District Judge Charles Edward Wyzanski, Jr. of the District of Massachusetts is sitting by designation.

   PER CURIAM.

Hayden Stone, Inc., plaintiff below, appeals from the order of the district court denying recovery against defendants Brode and Carl Jeppson Company for conversion of a six percent convertible subordinated debenture of the McCulloch Oil Company. Brode and Jeppson cross-appeal from that portion of the district court’s order which awards costs of $3,949.70 in favor of Hayden Stone and against Brode and Jeppson pursuant to two sanction orders issued under Fed.R.Civ.P. 37(a)(4) during the discovery proceedings in this case. For the reasons which follow, we affirm the order below.

I

In Illinois, the elements of a cause of action for conversion are not in substantial dispute:

To constitute conversion of a chattel there must be an unauthorized assumption of the right to possession or ownership. The essence of conversion is not the acquisition of the property by the wrongdoer, but a wrongful deprivation of the owner thereof;. and one claiming a conversion must show a tor-tious conversion of the chattel, a right of property in it, and a right to immediate possession, absolute and unconditional and not dependent upon some act to be performed. Hobson’s Truck Sales, Inc. v. Carroll Trucking, Inc., 2 Ill.App.3d 978, 276 N.E.2d 89, 91 (3d Dist. 1971).

Although the record is by no means clear on the point, the district judge determined that the McCulloch Oil debenture in question was delivered by Hayden Stone, Inc., a brokerage firm, to defendant Brode, a regular customer, pursuant to an order placed by Brode. Since this determination depended in large part on the credibility of two trial witnesses, it cannot be set aside by this court unless it is clearly erroneous. Aunt Mid Inc. v. Fjell-Oranje Lines, 458 F.2d 712, 715-716 (7th Cir. 1972). We do not believe that the clearly erroneous test requires this finding to be set aside, and we therefore proceed to analyze plaintiff’s claim on the premise that the debenture was purchased for and transferred to Brode in the normal course of Hayden Stone’s business.

Since this transaction was a purchase by Brode on his account, Brode became the owner of the bond upon its delivery to him by Hayden Stone. Ill. Rev.Stat. Ch. 26, §§ 8-301(1), 8-313(1). From that point forward Hayden Stone had its remedy in an action for the price. Ill.Rev.Stat. Ch. 26, § 8 — 107. The facts as found will not support a cause of action in conversion for the simple reason that there was no “unauthorized assumption of the right to possession or ownership” as required by Illinois law. Hob-son’s Truck Sales, Inc. v. Carroll Trucking, Inc., supra. The original transfer and delivery to Brode was voluntary and made in the normal course of business. There was no fraud involved in this transfer and subsequent events cannot be relied upon since ownership had clearly passed to Brode when these events occurred.

Hayden Stone’s claim for damages on the theory of conversion was therefore properly denied, and its contractual claims properly held to be satisfied by the return of the appreciated bond and accumulated dividends.

II

During the pre-trial proceedings in this suit, the parties engaged in a rather discouraging and protracted pattern of bickering and non-cooperation. As Judge Perry observed, this suit “was from the beginning fought with a maximum of personal bitterness and recrimination by the parties and their counsel.” Two sanction orders resulted from these unhappy circumstances, both directed against defendants Brode and Carl Jepp-son Company. In each case, the orders were issued by judges other than the ultimate trial judge, and in each case determination of the amount of the award was held for a later hearing. Judge Perry conducted a hearing on January 23, 1973 to determine the proper amounts to be assessed, and based on that hearing and the evidence there produced, a total award of $3,949.70 was made.

Examination of the record reveals that each sanction order was clearly justified. The first order, issued by Judge Decker, concerned Mr. Brode’s evasive and uncooperative response to requests for documents specifically described in a notice of deposition filed by Hayden Stone. Brode’s refusal either to produce the requested documents or to verify their existence or nonexistence led to a useless and expensive resort to the courts by Hayden Stone. The second order, issued by Judge Bauer, concerned Brode’s clear misuse of the discovery process in the deposition of John K. Eggars, again necessitating a resort to the courts by Hayden Stone, this time to seek a protective order. In both cases the record clearly and convincingly supports the imposition of costs against Brode under the revised provisions of Rule 37(a)(4) of the Federal Rules of Civil Procedure. The district judges therefore acted well within the proper limits of their discretion. Diaz v. Southern Drilling Corp., 427 F.2d 1118, 1126 (5th Cir. 1970).

Finally, defendants have been provided an “opportunity for hearing” within the meaning of Rule 37(a)(4). In each instance the imposition of sanctions was made on the basis of transcripts of the depositions involved and memoranda from Brode setting out the alleged justifications for his activities. Moreover, had Brode desired further hearing after the imposition of sanctions to present additional justification, he could have moved for such hearings. He did not do so, however, and we do not find error in Judge Perry’s decision not to go into these matters a full year after the sanction orders were issued.

The order of the district court is therefore in all respects

Affirmed.