author: OVERTON, District Judge.

text:
    Merle F. PETERSON and Delores F. Peterson v. UNITED STATES of America.
    No. PB C 83 234.
    United States District Court, E.D. Arkansas, Pine Bluff Division.
    Oct. 31, 1985.

      Ted Drake, Bridges, Young, Matthews, Holmes & Drake, Pine Bluff, Ark., Marion Gill, Gill & Johnson, Dumas, Ark., for plaintiffs.
    Michael N. Wilcove, Atty., Tax Div., Dept, of Justice, Washington, D.C., for defendant.
   ORDER

OVERTON, District Judge.

Plaintiffs instituted this action pursuant to 28 U.S.C. § 1346(a)(1) for the recovery of Internal Revenue taxes allegedly erroneously, illegally and improperly assessed and collected from them. Plaintiffs claim that the transactions they entered into do not constitute an industrial development bond under Section 103(b) of the Internal Revenue Code and, therefore, the interest paid to them is exempt from federal income taxation under the general provision of Section 103(a). Both parties agree that there are no genuine issues of material fact and that the case should be decided on the cross motions for summary judgment as the only remaining issue is whether plaintiffs’ transactions constitute an industrial development bond.

The undisputed facts appear to be as follows:

In 1976, plaintiffs, the City of Dumas, Arkansas, and Belden Corporation entered into multi-faceted agreements. The Peter-sons sold property to the City of Dumas. At the same time, Dumas leased the property to Belden for twenty years. When the lease expired, Belden had the option to buy the property from Dumas for whatever amount of money Dumas still owed the Petersons on the sale. If Dumas owed nothing to the Petersons, Belden could buy the property for only $100.00 (Exhibit A, “Contract and Agreement”, Article III, §§ 302 and 303; Exhibit B, “Lease and Agreement”, Article XVIII, § 1801.) When Dumas bought the property, it gave the Petersons a promissory note providing for forty consecutive semi-annual installment payments. (Exhibit A, Article II, § 201, Exhibit C, “Contract”, Article III, § 301.) The contract was a special obligation of Dumas, i.e., the city only had to use rent payments by Belden to make its payments to the Petersons. (Exhibit C, Article III, § 304.) The only security given to the Petersons was the property itself, and “all rights, revenue and income” which Dumas obtained from the property. (Id., Section 305.)

Section 103(a) of the Internal Revenue Code of 1954 exempts from gross income interest on the obligations of a state or its political subdivisions. However, exempt obligations do not include an industrial development bond, which is defined as—

any obligation—
(A) which is issued as part of an issue all or a major portion of the proceeds of which are to be used directly or indirectly in any trade or business carried on by any person who is not an exempt person (within the meaning of paragraph (3)), and
(B) the payment of the principal or interest on which (under the terms of such obligation or any underlying arrangement) is, in whole or in major part—
(i) secured by any interest in property used or to be used in a trade or business or in payments in respect of such property, or
(ii) to be derived from payments in respect of property, or borrowed money, used or to be used in a trade or business.
Section 103(b)(2) of the Internal Revenue Code of 1954 (1976 ed.)

In support of its motion for summary judgment, the government contends that this transaction falls squarely within Section 103(b)(2). With respect to Section 103(b)(2)(A), the United States argues that Dumas issued an obligation to the Peter-sons, the proceeds of which were the land and building which were used by Belden Corporation, a non-exempt person, in its trade or business. Second, it is alleged that the City’s obligation to the Petersons falls within the provisions of Section 103(b)(2)(B)(i) in that it was secured only by the property and the rent paid for use of the property. Finally, the only source from which Dumas was required to make payments to the Petersons was from income derived from the property Dumas was buying and leasing to Belden, thereby meeting the requirement of Section 103(b)(2)(B)(ii). The government states that plaintiffs’ transaction is, therefore, an industrial development bond.

In response to the government’s motion for summary judgment, and in support of their motion, plaintiffs challenge two specific points. First, the Petersons argue that Section 103(b) does not include land and buildings within its definition of “proceeds”, and second, that the obligation of the City of Dumas was not “issued as part of an issue.”

Plaintiffs offered no evidence or case law to support their theory that real and/or personal property was not to be included within the Section 103(b) definition of “proceeds” or that the definition was limited to cash money. The United States Supreme Court, in a case involving the construction of a will, noted that the term “proceeds” was one of “great generality” and held that it did not have to be cash, but could be land. Phelps v. Harris, 101 U.S. (11 Otto) 370, 380-381, 25 L.Ed. 855 (1879). The government cited cases in various contexts which have not limited the definition of proceeds to cash money. See, Perkins v. Clinton State Bank, 593 F.2d 327, 335-336 (8th Cir.1979) (in a case construing an escrow agreement, held that “proceeds” could be real estate notes); Mesa Farm Company v. United States, 475 F.2d 1004 (9th Cir.1973) (in the context of the Bankruptcy Act, “proceeds” held to mean all property coming into the estate). The court concludes that the term “proceeds”, as used in Section 103(b)(2)(A) is not limited to money, but can be real and/or personal property.

With respect to the contention that the obligation must be “issued as part of an issue”, plaintiffs argue that Section 103(b) was enacted to apply to the traditional concept of third party financing where the state or political subdivision raises money from a third party or third parties by issuing a debt obligation to them and then using the money received to purchase or construct assets for the ultimate user. They claim that Congress did not intend to include within the definition of industrial development bond, a debt obligation given to a seller of real property.

However, plaintiffs offer no explanation for why Congress would apply Section 103(b) to the typical third party financing and not to their situation.

In explaining the purpose of Section 103(b) to plug a tax loophole, Senator Abraham Ribicoff noted that:

The most widespread and well-known abuse of the tax-exempt borrowing privilege is the practice of issuing so-called industrial development bonds. These bonds have permitted some of our largest corporations to issue tax-exempt bonds to the detriment of the best interests of both the Federal Government and the State and local governments.
A typical case might involve a municipality which agrees to issue bonds to finance the building of a factory for a private corporation. The Corporation in turn agrees to “rent” the factory for the exact amount needed to pay the interest and amortize the principal of the bonds. The bonds are generally revenue bonds payable only out of the rent and the municipality assumes no obligation on the bonds. Thus, we are really confronted with bonds of a private corporation. But, because the municipality allows its name to appear on the bonds, it claims and passes on to the private corporation the full benefit of the lower interest rate. This rate stems from the Federal tax exemption of interest on legitimate State and local bonds.
These are truly corporate bonds and the local government’s involvement is often little more than a sham.
113 Cong.Rec. 31612 (1967).

When the purpose of Section 103(b) is understood, it becomes clear that plaintiffs' transaction did not involve a municipal obligation under Section 103(a), but was purely and simply a corporate obligation. The parties used the City of Dumas to attempt to achieve tax exempt status on their interest income, but the City’s involvement was merely as a conduit between plaintiffs and Belden Corporation. Congress intended to place limits on the Section 103(a) exemption by enacting Section 103(b). Plaintiffs cannot escape inclusion in the Section 103(b) limitation by arranging a financial scheme that thwarts its very purpose.

The plaintiffs’ contract/lease arrangement is not prevented from being classified as an industrial development bond simply because Dumas did not utilize the typical third party financing bond offering. Nothing in the language of Section 103(b) requires such an offering. Rather, the plaintiffs’ transaction fits squarely within the definition of industrial development bond in Section 103(b).

The Supreme Court has held that the definition of income is “sweeping” and should be “broadly construed in accordance with an obvious purpose to tax income comprehensively.” The exemptions, however, “are specifically stated and should be viewed with restraint in the light of the same policy.” Commissioner v. Jacobson, 336 U.S. 28, 49, 69 S.Ct. 358, 369, 93 L.Ed. 477 (1949). Furthermore, to “protect the revenue against artful devices,” not only must Section 103(a) be narrowly construed, but the substance of the transaction, rather than the form, must control. American National Bank of Austin v. United States, 421 F.2d 442, 451 (5th Cir.1970), cert. denied 400 U.S. 819, 91 S.Ct. 36, 27 L.Ed.2d 46 (1971).

When the substance of plaintiffs’ transaction is applied to the definition in Section 103(b), the conclusion is that it is an industrial development bond and the interest earned is not exempt.

The government’s motion for summary judgment is granted.


source: Caselaw Access Project

author: ASPEN, District Judge:

license: Public Domain

text:
    UNITED STATES of America, Plaintiff, v. Donald PODOLSKY, Defendant.
    No. 85 CR 7.
    United States District Court, N.D. Illinois, E.D.
    Nov. 1, 1985.

      Suzanne B. Conlon, Asst. U.S. Atty., Chicago, 111., for plaintiff.
    Patrick A. Tuite, Patrick A. Tuite, Ltd., Chicago, 111., for defendant.
   MEMORANDUM OPINION AND ORDER

ASPEN, District Judge:

Defendant Donald Podolsky, a City of Chicago fireman, was charged in a three-count indictment with: (1) conspiracy under 18 U.S.C. § 371 to commit arson in violation of 18 U.S.C. § 844(i) and to possess an unregistered firearm in violation of 26 U.S.C. §§ 5861(d) and 5871; (2) attempted arson in violation of 18 U.S.C. § 844(i); and (3) possession of and failure to register a firearm in violation of 26 U.S.C. §§ 5861(d) and 5871. Following a brief bench trial Podolsky moved for a judgment of acquittal as to all three counts and the government sought conviction. Because this case involved significant legal issues, both the government and the defendant sought and were given leave to file post-trial memoranda of law. After considering all the evidence and reviewing these memoranda, we grant defendant’s motion of acquittal as to Count III and deny it as to Counts I and II of the indictment. We find the defendant guilty beyond a reasonable doubt as to Counts I and II.

I.

There is no dispute as to the following facts which came out at trial and appear in the record. Ron Ziedman, a government informant, approached Podolsky in November 1984 with a proposition that Podolsky burn a building for a fee of $5,000. Apparently, Podolsky and Ziedman had once discussed such a deal a year or two before, but the deal had never come to fruition. See Gov’tEx. 15A at 3-4. Ziedman claimed that the owner- of the building in question, located at 2436 W. Division in Chicago, wanted this vacant building burned to collect insurance money. During their first few conversations, Podolsky balked at the deal. See, e.g., Gov’t.Ex. 15A at 4; Gov’tEx. 16A at 1-3. But Podolsky eventually warmed to the idea, lured by the offer of money. See Gov’t.Ex. 17A at 5. Podolsky and Ziedman agreed in general that $2,500 would be paid in front and $2,500 after the job was done. Podolsky told Ziedman he worked with a partner, who turned out to be co-defendant and fellow firefighter Charles Hawkins, but did not disclose who the partner was.

At about this time, late November or early December, Podolsky asked Hawkins at work if he was willing to burn a building with Podolsky for $2,500. Hawkins thought it over for a couple of days and agreed. Podolsky was to handle the arrangements, while Hawkins would accompany Podolsky for the job itself.

Podolsky and Ziedman had several conversations and meetings between late November and January 4, 1985, the day that Podolsky and Hawkins were arrested. On December 13, 1984, Podolsky and Ziedman drove to the targeted building. During their drive Podolsky boasted about some previous “jobs” he had done. See, e.g., Gov’t.Ex. 18A at 3, 13. Podolsky observed that the building at 2436 W. Division (“the 2436 building”) was vacant, with open windows and would therefore burn quickly and easily. Id. at 21. However, during this reconnaissance mission, Podolsky affirmed, as he would several times later, that he would not agree to burn a building with people in it:

Ziedman: If there were people in the building, I don’t touch it, man.
Podolsky: No, I don’t want nothin’ to do with killing somebody.
Ziedman: No, no way.

Id. at 6.

Sometime shortly thereafter, the government must have realized that the vacant 2436 building had its natural gas line shut off, so that jurisdiction might be lacking for a federal arson prosecution concerning that building. Thus, Ziedman called Podolsky and said he wanted the building at 2438 Division (“the 2438 building”) burned, as well as the 2436 building. Podolsky said then, and several other times, that he would not burn the 2438 building if there were people in it; but relying upon repeated assurances from Ziedman that the building would be vacated, Podolsky agreed to burn the second building for an extra $5,000:

Ziedman: [HJere’s what I want. You have to give me a price though. The building next to it.
Podolsky: I can do it.
Ziedman: 2438 Division. Not the first, see.
Podolsky: There’s people in that, Z, I can’t.
Ziedman: They’ll be out of there.
Podolsky: When?
Ziedman: They are being moved out today. The landlord is moving them out today.
Ziedman: I want them both down. They will be out you know what I’m saying or not?
Podolsky: Yeah.
Ziedman: * * * How much do you want, more? Do you think I’m joking?
Podolsky: Well, you know. I want to make sure there ain’t nobody in there at all, period.
Ziedman: The ... landlord is getting them out today.
Ziedman: How much more do you want?
Podolsky: Same thing.
Ziedman: The same thing, right. OK. In other words, I hand you 5,000. Right?
Podolsky: Yeah.
Ziedman: And 5,000 on delivery, right?
Podolsky: Yeah.
Ziedman: I think they will be out.
Podolsky: Yeah.
Ziedman: Today.
Podolsky: OK.
Ziedman: They are going to be out. You going to do it or not?
Podolsky: Sure.
Ziedman: If you don’t, say “no.” Just tell me.
Podolsky: Yeah. I told you.

From this and other exchanges, it is clear that Podolsky’s agreement to burn the 2438 building was conditioned on its being vacant on the date of the fire. Similarly, it is clear from Hawkins’ testimony and his interview with government authorities that he and Podolsky agreed and understood that they would not burn the 2438 building if people were in it.

On Saturday, December 16, 1984, Podolsky told Hawkins at work that they would buy materials two days later, Monday, and burn the building that evening. They discussed what materials to buy and agreed on gasoline, brake fluid and chlorine. When mixed together, chlorine and brake fluid react chemically, releasing heat in the process. The release of heat eventually ignites the gasoline. But the chlorine/brake fluid reaction can be slow enough so that the firemen could start the reaction and drive away from the building before the fire would begin. The evidence showed that the device ultimately constructed in this case would burn intensely but not explode.

On December 17, 1984, Podolsky postponed the “job” because of an arson the evening before which killed a mother and her four children and which gained much play in the media. Podolsky told Ziedman and Hawkins he was worried about police watching vacant buildings for a while, and so he wanted to wait “till this heat, uh, comes down.” Gov’t.Ex. 20A at 2.

Podolsky put off Ziedman for several days, but on December 27, 1984, he finally rescheduled the job for Friday evening, January 4. He repeated that the buildings must be vacant by then. See Gov’t.Ex. 23A at 4. That day Podolsky told Hawkins that the deal was on again and included another building for an additional $5,000. Podolsky did not then tell Hawkins when or where the job would occur. Two days before the day for the fire, Podolsky told Hawkins of the date of the job. He also told Hawkins that the second building was occupied but would be vacant by the time of the fire.

Podolsky and Hawkins spent several hours together on Friday, January 4, preparing for their evening’s work. They bought ten pounds of a chlorine compound, two twelve-ounce containers of brake fluid and a package of styrofoam cups. That evening Podolsky introduced Hawkins and Ziedman at Fluky’s, a northside restaurant. They went out to Podolsky’s car, which had the materials in the back seat. Podolsky showed Ziedman the materials, explained how brake fluid and chlorine would ignite the gasoline and then accepted $5,000 in cash from Ziedman. Podolsky and Hawkins dropped the money off at Podolsky’s apartment and drove toward the target buildings, stopping to get gasoline along the way. Also while en route, Hawkins crushed chlorine tablets into two cups in order to prepare the ignition mixture.

Podolsky and Hawkins agreed in the car that if people were around the buildings, they would not burn them. If questioned, they would say they were there to board up the buildings. They drove past the buildings and then into an alley behind the buildings. Leaving the chemicals in the car, they walked to the buildings to check them out. They saw a light in the 2438 building and agreed that they could not burn it then because they assumed it was occupied. They walked to the basement of the 2436 building to see if it was occupied, but were then greeted and arrested by police officers.

II.

Count One of the indictment charges Podolsky and Hawkins with a two-pronged conspiracy.. The government alleges first that, in violation of 18 U.S.C. § 371, they conspired to burn the 2438 building, which would have violated 18 U.S.C. § 844(i). Second, Hawkins and Podolsky allegedly conspired to possess an unregistered firearm as defined in 26 U.S.C. §§ 5845(a) and (f) in violation of 26 U.S.C. §§ 5861(d) and 5871. Podolsky challenges the conspiracy to commit arson charge on two levels. He asserts that, assuming that Podolsky and Hawkins did agree to burn the 2438 building, the government improperly manufactured federal jurisdiction over what is essentially a state law arson offense; thus, he concludes that the Court lacks jurisdiction. He asserts in the alternative that the evidence fails to show that he and Hawkins ever actually agreed (and thus conspired) to burn the 2438 building, because an essential precondition to such an agreement, that the building would be vacant, was never fulfilled. We consider and reject each contention in turn.

A.

The parties agree that the courts have extended broad federal jurisdiction over prosecutions under 18 U.S.C. § 844(i). Enacted under the full jurisdictional breadth of the Commerce Clause, § 844(i) “is a very broad provision covering substantially all business property.” United States v. Zabic, 745 F.2d 464, 470 (7th Cir.1984), quoting, H.R.Rep. No. 91-1549, 91st Cong.2d Sess., reprinted in 1970 U.S.

Code Cong. & Ad.News 4007, 4046. In Zabic, the Court held that federal jurisdiction existed under § 844(i) in an arson prosecution concerning a rental apartment building. The Court found that the owner used the building exclusively for commercial purposes, and thus was “within the ambit of commercial ‘business property,’ alluded to by Congress” in passing § 844(i). Id. at 470-71. The Court added that the fact that the building received natural gas from out-of-state, further affecting interstate commerce, bolstered its assertion of jurisdiction. Id. at 470-71. It is clear from Zabic and the many cases it cites that § 844(i) confers federal jurisdiction so long as destruction of the building would have even a de minimis effect on interstate commerce.

The 2438 building contained two rental units and a printing brokerage office which received trade journals through the mail. It also received natural gas from Tennessee and Kentucky. An attempt to destroy the 2438 building would clearly confer jurisdiction under § 844(i). See Zabic, 745 F.2d at 470-71; also United States v. Russell, — U.S.-, 105 S.Ct. 2455, 85 L.Ed.2d 829 (1985) (two-flat rental apartment building is “business property” within § 844(i)), aff'g., 738 F.2d 825, 827 (7th Cir. 1984). Just as clearly, jurisdiction would not have existed over an attempted arson of the vacant 2436 building, which did not even receive natural gas.

Podolsky does not really dispute that the above discussion reflects the state of the law, and that jurisdiction would normally exist over an attempt to burn the 2438 building. His jurisdictional challenge is a narrow one. Relying on United States v. Archer, 486 F.2d 670 (2d Cir.1973), Podolsky argues that the government improperly fabricated federal jurisdiction in this case. He points out how the government realized during the undercover operation that a conspiracy to burn the 2436 building would not be a federal offense, so for the sole reason of creating jurisdiction, it expanded the alleged conspiracy to include the 2438 building. It further manipulated the facts, says Podolsky, to lull him into thinking that the 2438 building was vacant, knowing that Podolsky would not agree to burn an occupied building. He claims that Archer compels dismissal on these facts. Assuming the truth of these facts, we disagree.

Archer is an unusual case and has been read narrowly. The court dealt there with a federal undercover operation of a state district attorney’s office. The operation involved extensive misconduct by federal agents and prosecutors. However, rather than rule on the grounds of outrageous misconduct or entrapment, Judge Friendly, writing for the Archer court, ruled on the narrower, more technical ground that the court lacked jurisdiction under the Travel Act. In that case the corruption investigated was essentially a local affair. The federal officials set out to manufacture federal jurisdiction by phoning one of the defendants from out of state for the precise purpose of turning a local into a federal offense. Calling this episode “totally fabricated,” the court held:

[W]hen Congress responded to the Attorney General’s request to lend the aid of federal law enforcement to local officials in the prosecution of certain crimes, primarily of local concern, where the participants were engaging in interstate activity, it did not mean to include cases where the federal officers themselves supplied the interstate element and acted to ensure that an interstate element would be present. Manufactured federal jurisdiction is even more offensive in criminal than in civil proceedings____ As the late Judge Freedman said with respect to civil actions ... manufactured jurisdiction ‘is a reflection on the federal judicial system and brings it into disrepute.’ (Citations omitted.)

486 F.2d at 682. In its denial of the government’s petition for rehearing, the court emphasized the narrowness of its holding:

[W]hen the federal element in a prosecution under the Travel Act is furnished solely by undercover agents, a stricter standard is applicable than when the interstate or foreign activities are those of the defendants themselves____

Id. at 686.

Though a cousin of doctrines like entrapment or outrageous governmental misconduct, this “manufactured jurisdiction” doctrine differs from these doctrines. For example, entrapment occurs when a government agent entices an unpredisposed defendant to commit a crime he would not otherwise commit; the Archer case comes into play when a defendant would or did commit a state crime, but the government agent injects an artificial element into the case for the sole purpose of creating a federal prosecution. See United States v. Kaye, 593 F.Supp. 193, 195 (N.D.Ill.1984). But later cases in the Second and other Circuits have “carefully limited” the scope of Archer. See United States v. Lau Tung Lam, 714 F.2d 209, 210-22 (2d Cir. 1983) (defendant himself committed substantive jurisdictional act of bringing drugs into country), cert. denied, 464 U.S. 942, 104 S.Ct. 359, 78 L.Ed.2d 322 (1983); United States v. Giordano, 693 F.2d 245, 250-51 (2d Cir.1982) (Archer distinguished in case under 18 U.S.C. § 844(i) where defendant agreed with government agents to destroy a fictitious store); United States v. Jannotti, 673 F.2d 578, 610-11 (3d Cir.) (en banc) (reversing judgment of acquittal in the largely fictitional “ABSCAM” undercover operation), cert. denied, 457 U.S. 1106, 102 S.Ct. 2906, 73 L.Ed.2d 1315 (1982).

Archer does not apply to this case. There the federal officials made out-of-state calls for the purpose of creating jurisdiction. The defendant himself initiated or conducted no activities of jurisdictional significance; he merely responded to the calls from federal officials, and, in any event, those calls were not significant to furthering the essentially local bribery scheme. In short, the defendant in Archer neither agreed to do nor did anything with interstate consequences; the federal officials did it all. In contrast, Podolsky himself agreed to do acts with interstate consequences. He agreed with Hawkins to burn the 2438 building. Although federal agents set this additional plot in motion, Podolsky willingly carried the plot along. There was an agreement by the defendant not merely to commit a local crime of arson, but to burn a building which falls under the wide umbrella of 18 U.S.C. § 844(0.

It is true that jurisdiction was “fabricated” in the sense that federal officials belatedly picked the 2438 building as a target because of its “interstate” character. Had they not done this, Podolsky would not be in federal court. But that is not fabrication in the Archer sense. If they had chosen that building initially, Zabic and Russell would clearly apply and no color-able Archer issue would be raised. We do not think that the timing of the selection of the 2438 building is relevant to jurisdiction, so long as Podolsky and Hawkins agreed on their own to burn that building. “Fabrication” as defined in Archer means that federal agents themselves try to supply the interstate element to a crime that is otherwise local. Here the agents “supplied” the building, but the building already was of an interstate character under § 844(i), and the defendants themselves did allegedly agree to burn it. The present case would have been fabricated in the Archer sense if, for example, agents turned on the natural gas at the 2436 building merely to attempt to create jurisdiction. In such a situation, they would have themselves supplied the interstate element just as the agents in Archer made a phone call to create jurisdiction. But in this case, the 2438 building already received natural gas and mail and housed some businesses. The federal officials did not supply these elements. In sum, then, we hold that federal jurisdiction exists in this ease.

B.

We turn next to Podolsky’s substantive attack on Count I. He claims that he and Hawkins never conspired to burn the 2438 building because an essential precondition to such an agreement, that the building be vacant, was never fulfilled. We agree that such a condition existed, but we disagree that it was a precondition to an agreement.

Podolsky’s argument focusses on the following conceptual distinction: he essentially is saying that the condition that the building be vacant preceded the formation of the agreement itself to burn it. He implicitly distinguishes this characterization of the facts from a closely related one: that he and Podolsky actually agreed to burn the building, subject to the condition that it be empty. In the first scenario, no agreement exists, because a precondition to reaching an agreement never is fulfilled. In the second one, an agreement exists, albeit a conditional one. We think the second scenario is the accurate one.

The facts material to this issue are not disputed; only the characterization of them is. There is no question that Podolsky and Hawkins intended to burn the 2438 building on January 4, 1985, if it was unoccupied. The price was set at $10,000. The materials were bought. They received the $5,000 advance payment. They were on the way to the building itself, with Hawkins crushing the chlorine. None of this would have happened without a basic “meeting of the minds” or understanding. The evidence in this case clearly shows that they agreed to burn the building. It was a conditional agreement, but an agreement nevertheless. Podolsky’s characterization of the facts is distorted. He and Hawkins did not receive $5,000 and drive to the 2438 building, materials ready, without an agreement. They did not approach the building merely to decide then and there whether to agree to burn it. When they approached the building they clearly already had agreed to burn it. They were investigating the building, not to determine whether to agree to burn it, but to see whether anyone was inside so it would be safe to burn it.

18 U.S.C. § 371 requires that the government prove that Podolsky and Hawkins agreed to commit an offense which violates United States law, coupled with at least one overt act committed by one or both with the intent to commit the underlying offense. See, e.g., United States v. Melchor-Lopez, 627 F.2d 886, 890 (9th Cir. 1980). The government may prove a conspiracy by circumstantial evidence. See, e.g., United States v. Herrera, 757 F.2d 144, 149 (7th Cir.1985). We think the evidence proves beyond a reasonable doubt that Podolsky and Hawkins agreed to burn the 2438 building in violation of § 844(i).

Podolsky relies principally upon two cases, both of which are distinguishable. In neither case was an actual agreement or meeting of the minds reached. In United States v. Melchor-Lopez, 627 F.2d 886 (9th Cir.1980), no agreement was ever reached because the defendant had imposed preconditions to agreement which were never met. The case involved discussions concerning a drug purchase, but government agents in the case admitted that no agreement had been reached because the defendant insisted an agreement depended on delivery of money in advance and on conducting the transactions in Mexico. 627 F.2d at 891-92. In United States v. Jones, 765 F.2d 996 (11th Cir.1985), another drug case, the defendants had seriously entertained participating in a drug smuggling deal, but never reached an agreement. The Court noted there that “as a factual matter ... what we have are proposals that never ripened into an agreement except agreement ... to submit [the proposals to a third party]____ There is nothing to show that [the alleged conspirators] ever agreed to do anything whatever in the event, which occurred, that [the third-party] rejected their proposals.” 765 F.2d at 1001. Relying on Melchor-Lopez, the Court held that “the mere submission of proposals such as we have here, with preconditions not met” was not a criminal conspiracy. Id. at 1003. Unlike these two cases, in this case we have a defendant who was well beyond the “negotiation” or “proposition” stage. We have found that, as a factual matter, Podolsky and Hawkins clearly had a firm agreement to burn the 2438 building. The condition concerning the building’s vacancy was part of the agreement itself, not a precondition to the formation of the agreement in the first place.

The question of whether a conditional agreement constitutes a conspiracy where the condition is not fulfilled is answered by United States v. Anello, 765 F.2d 253 (1st Cir.1985). In that case the defendant had agreed to buy marijuana if it was of high enough quality. The Court held that a conditional agreement is, in general, an agreement nevertheless. It noted that most criminal agreements contain conditions, and the key factor to consider is whether the alleged co-conspirators believed the condition was likely to be fulfilled. 765 F.2d at 262-63 (and cases cited therein); see also Note, “Conditional Objectives of Conspiracies,” 94 Yale L.J. 895 (1985). In this case it is obvious that Podolsky and Hawkins believed the condition would likely be fulfilled. They went to their target, equipped and able to burn it, because they believed it was vacant. The fact that they were surprised that the condition was not met does not negate the fact that an agreement existed. Thus, we conclude that the government has proved a conspiracy to burn the 2438 building in violation of § 844(i).

III.

Count II of the indictment charges that Podolsky attempted to commit arson in violation of 18 U.S.C. § 844(i). Asserting that attempt is a specific intent crime, see United States v. Monholland, 607 F.2d 1311, 1318 (10th Cir.1979), Podolsky argues that he never formed the specific intent to burn the 2438 building, because of the condition that was unfulfilled. Since he found the building to be occupied on January 4, he never formed the specific intent to burn it, he concludes. We disagree for the reasons we rejected his conspiracy argument. Podolsky clearly intended to burn the 2438 building, had been paid to do it, was ready to do it, was dangerously close to doing it, until he discovered that the building was occupied. This surprise was not a precondition to his specific intent to burn the building, but merely prevented him from fulfilling his intent to burn the building.

The test for attempt is that (1) the defendant act with the kind of culpability otherwise required for the commission of the crime, and (2) that he take a substantial step toward committing the crime, a step which strongly corroborates the firmness of his criminal intent. See, e.g., United States v. Rovetuso, 768 F.2d 809, 821 (7th Cir.1985), citing United States v. Mandujano, 499 F.2d 370, 376 (5th Cir.1974), cert. denied, 419 U.S. 1114, 95 S.Ct. 792, 42 L.Ed.2d 812 (1975). This two part test

was designed to widen the ambit of attempt liability, consistent with the drafters’ belief that the proper concern of the law of attempts is the dangerousness of the actor, as a person manifesting firm disposition to commit the crime, not the dangerousness of his conduct____

Rovetuso, 768 F.2d at 821 n. 12, quoting, United States v. Ivic, 700 F.2d 51, 66 (2d Cir.1983). The government has plainly proved both of the attempt elements beyond a reasonable doubt.

IV.

Count III of the indictment charged Podolsky with possession of an unregistered firearm, in violation of 26 U.S.C. § 5861(d). The government’s theory is that the gasoline, chlorine and brake fluid constituted components of a “destructive device” as defined in 26 U.S.C. § 5845(f), and thus were subject to the registration requirements of the National Firearms Act. We disagree.

Our analysis, of course, begins with the language of the statute itself. 26 U.S.C. § 5845(a) defines a “firearm” as including a “destructive device.” Other types of firearm include weapons such as machine guns, rifles and shotguns. The key provision in dispute, § 5845(f) provides in relevant part:

(f) Destructive device. — The term “destructive device” means (1) any explosive, incendiary, or poison gas (A) bomb, (B) grenade, (C) rocket having a propellent charge of more than four ounces, (D) missile having an explosive or incendiary charge of more than one-quarter ounce, (D) mine, or (F) similar device; (2) any type of weapon by whatever name known which will, or which may be readily converted to, expel a projectile by the action of an explosive or other propellant, the barrel or barrels of which have a bore of more than one-half inch in diameter, except a shotgun or shotgun shell which the Secretary finds is generally recognized as particularly suitable for sporting purposes; and (3) any combination of parts either designed or intended for use in converting any device into a destructive device as defined in subparagraphs (1) and (2) and from which a destructive device may be readily assembled. The term “destructive device” shall not include any device which is neither designed nor redesigned for use as a weapon.

It is clear that this section applies primarily to military-type ordnance, such as bombs, mines or bazookas. The government contends that the materials in this case fall under subsection (3) as a “combination of parts ... from which a destructive device may be readily assembled.” Subsection (3) requires such a crude device to fall within one of the definitions of subsections (1) and (2). Thus, the government essentially argues that the combination of parts would produce an “incendiary ... (A) bomb ... or (F) similar device.”

There is no question that crude bombs or materials from which a bomb can be readily assembled fall under § 5845(f). Typically, courts affirm convictions under § 5845 where defendants either had built “molotov cocktails” or were prepared to build them. See, e.g., United States v. Ross, 458 F.2d 1144 (5th Cir.1972), cert. denied, 409 U.S. 868, 93 S.Ct. 167, 34 L.Ed.2d 118 (1972); United States v. Tankersley, 492 F.2d 962 (7th Cir.1974). Similarly, courts have upheld convictions in cases involving homemade dynamite devices. See United States v. Bubar, 567 F.2d 192, 200-01 (2d Cir.1977) (dynamite placed under barrel of gasoline), cert. denied, 434 U.S. 872, 98 S.Ct. 217, 54 L.Ed.2d 151 (1977); United States v. Peterson, 475 F.2d 806, 810-11 (9th Cir.1973) (flare and fuse combined with gunpowder), cert. denied, 414 U.S. 846, 94 S.Ct. 111, 38 L.Ed.2d 93 (1973). However, a molotov cocktail is clearly an “incendiary bomb,” just as dynamite is an “explosive bomb.” The “device” at issue here is not so clearly a “bomb” or “similar device.” Hawkins testified that the materials would ignite and burn, but not cause an explosion. See Hawkins Transcript at 35. The explosives expert, Mr. Gleason, admitted at trial that no explosion would occur unless a vacuum existed in the building, which was not the case. The question here, then, is not whether the device would have been “destructive” if readily assembled. Surely it would have caused destruction. Rather, we must decide whether “destructive,” as defined by the Act, includes non-explosive devices of the type in this case.

The legislative history of the Act shows that Congress was primarily concerned with regulating weapons and military ordnance:

The ‘firearms’ covered by the Act were referred to in committee hearings, committee reports, and on the floor of Congress as falling into these two classes: ‘gangster-type weapons,’ and ‘destructive devices’ described as ‘military-type weapons’ or ‘primarily weapons of war,’ having, it was repeatedly said, no appropriate private use. Thus, Senator Hruska, presenting the amended of ‘firearm’ to the Senate, stated: ‘There is universal agreement that rockets, bazookas, antitank guns, heavy field artillery, and the like should be strictly controlled, for there are no legitimate sporting uses for these weapons. Since 1934, automatic, such as machine guns and sawed-off rifles and sawed-off shotguns have been effectively regulated. * * * [Destructive devices would be placed within this regulatory framework.’ 114 Cong.Rec. 26896 (1968).

United States v. Oba, 448 F.2d 892, 897-98 (9th Cir.1971) (Browning, J., dissenting), cert. denied, 405 U.S. 935, 92 S.Ct. 979, 30 L.Ed.2d 811 (1972); see also United States v. Posnjak, 457 F.2d 1110, 1114-16 (2d Cir.1972). While the courts have disagreed as to whether this Act applies to non-military “bombs” such as commercial dynamite, compare Burchfield v. United States, 544 F.2d 922 (7th Cir.1976), cert. denied, 430 U.S. 956, 97 S.Ct. 1602, 31 L.Ed.2d 806 (1977); Oba, supra; United States v. Morningstar, 456 F.2d 278 (4th Cir.1972), cert. denied, 409 U.S. 896, 93 S.Ct. 135, 34 L.Ed.2d 153 (1972), with Posnjak, supra; United States v. Schofer, 310 F.Supp. 1292 (E.D.N.Y.1970), neither these cases nor cases involving “quasi-military” molotov cocktails or dynamite discuss whether the Act applies to a non-military, non-explosive incendiary device of the type we have in this case.

In two cases involving facts somewhat similar to those in this case, Courts have reached divergent results. In United States v. Ragusa, 664 F.2d 696 (8th Cir. 1981), cert. denied, 457 U.S. 1133, 102 S.Ct. 2958, 73 L.Ed.2d 1349 (1982), the Court upheld a conviction under § 5845(f) where defendants had spread six trash bags, each holding a five-gallon can of gasoline, through a house, and connected the bags with overlapping paper towels. Conceding that the Act was aimed at military-type weapons, the Court found that this crude device constituted an “incendiary bomb” or “similar device” under the Act. 664 F.2d at 700. In contrast, United States v. Reed, 726 F.2d 570 (9th Cir.1984), cert. denied, — U.S.-, 105 S.Ct. 221, 83 L.Ed.2d 151 (1984), the Court reversed a conviction under § 5845(f) in which the defendants had burned a building by igniting several paper-wrapped beverage cans filled with gasoline. The Court did not discuss whether the cans were “incendiary bombs or similar devices” under the Act. It instead reversed the conviction on the basis of the clause in § 5845(f) that excludes by way of affirmative defense “any device which is neither designed nor redesigned for use as a weapon.” The Court reasoned that the cans were not used as a weapon and could not be so used, because

it would have been difficult and dangerous for a person to hold such a can, ignite the paper and then successfully use or throw the can without serious harm. Nothing in the record indicates that a device of this kind, although capable of causing great incendiary damage, bears the traditional indicia of a weapon, or had such a possible use.

726 F.2d at 576.

Even under the approach of the Ragusa case, the alleged device in this case is not an “incendiary bomb” or “similar device” requiring registration under the Act. In Ragusa, the Court found that the device there would explode, and therefore was similar to a crude bomb. 664 F.2d at 699-70. In contrast, the device here would ignite and cause a fire but not explode. In no way can it be thought of as an “incendiary bomb” or “similar device” under any traditional definition of the words. The Courts, like Ragusa, have construed § 5845(f) broadly beyond the military sphere, but none that we know of have stretched the statute so far as to cover component parts of an incendiary device that is not a bomb or similar to a bomb. Accordingly, following the maxim that criminal statutes must be construed narrowly, see, e.g., Liparota v. United States, - U.S. -, 105 S.Ct. 2084, 1089, 85 L.Ed.2d 434 (1985), we hold that the device in this case falls outside the statutory definition of “destructive device” and was not subject to the registration requirements of the Act. In light of this holding, we need not decide whether the Reed analysis applies, such that the device also falls within the statutory exclusion for devices not designed for use as a weapon. Nor need we reach Podolsky’s other arguments.

V.

For the foregoing reasons, the defendant’s motion of judgment of acquittal is granted with respect to Count III and to Count I to the extent it alleges a conspiracy to possess an unregistered firearm. In all other respects, his motion is denied. The defendant is found guilty beyond a reasonable doubt as to Counts I and II. It is so ordered.

      . Hawkins pled guilty to Counts I and III and testified for the government at trial. In light of our ruling in Part IV below, Hawkins' plea of guilty to Count III will be vacated and that count will be dismissed. It is so ordered.

      . Ziedman did not mention the 2438 building until the next day, the 17th. Thus, as of that Saturday Podolsky and Hawkins had agreed only to burn the 2436 building.

      . That section provides:
      If two or more persons conspire either to commit any offense against the United States, or to defraud the United States, or any agency thereof in any manner or for any purpose, and one or more of such persons do any act to effect the object of the conspiracy, each shall be fined not more than 110,000 or imprisoned not more than five years, or both.

      . As discussed in Part IV, the government’s theory is that the gasoline, chlorine, brake fluid and sytrofoam cups were the components of a "destructive device” as defined in 26 U.S.C. § 5845(f) and thus had to be registered with the federal government as a "firearm."

      . That part of Count I which charges a conspiracy to possess a firearm is subsumed in our conclusion in Part IV that the materials were not part of a “firearm” as defined by 26 U.S.C. § 5845(f). Accordingly, Count I is dismissed to the extent it charges a conspiracy to possess an unregistered firearm. It is so ordered. Of course, this order does not impair Count I to the extent it alleges a conspiracy to violate § 844(c). When an indictment charges a conspiracy to violate two statutes, the defendant may be found guilty if the trier of fact believes beyond a reasonable doubt that he conspired to violate either one of the statutes. See, e.g., United States v. Muelbl, 739 F.2d 1175, 1183 (7th Cir. 1984), cert. denied, — U.S.-, 105 S.Ct. 388, 83 L.Ed.2d 322 (1984).

      . We do not intimate that federal jurisdiction would have existed concerning the vacant 2436 building if the natural gas line were turned on. We express no opinion on that point.

      . For the purposes of resolving the jurisdictional dispute, we merely assume at this point that Hawkins and Podolsky had actually agreed to burn the 2438 building. In Part III below, we hold that this assumption turns out to be correct.

      . Podolsky does not argue that there would have been a jurisdictional problem if the agents had selected the 2438 building in the first place. Federal agents could have lawfully chosen that building initially over another, even if they were doing so for jurisdictional reasons. Jurisdiction would exist because § 844(i) is so broad that it encompasses such a building. This statute would not be defeated simply because the officials chose it as a target.

      . It is of course well established that a defendant may be convicted of conspiracy even if the object of the conspiracy is unattainable. See, e.g., United States v. Giordano, 693 F.2d 245, 249 (2d Cir.1982) (defendant guilty of conspiring to commit arson where he had agreed to burn a fictitious store). The agreement itself is punishable because of its danger to society, regardless of whether crime itself was or could have been committed. Id.

      . The fact that the device was unassembled presents no barrier to conviction, so long as a "destructive device” as defined in § 5845(a) could have been "readily assembled” from the component parts. See, e.g., United States v. Shafer, 445 F.2d 579, 583 (7th Cir.1971), cert. denied, 404 U.S. 986, 92 S.Ct. 448, 30 L.Ed.2d 370 (1971).

      . The Court did hold that these cans were an "explosive” under 18 U.S.C. § 844(j), as then enacted. 726 F.2d at 574. See also United States v. Xheka, 704 F.2d 974, 978-79 (7th Cir. 1983) (gasoline-soaked paper towels and fumes are an "explosive” under § 844(j) where actual explosion occurred), cert. denied, 464 U.S. 993, 104 S.Ct. 486, 78 L.Ed.2d 682 (1983). We need not decide whether, as Podolsky contends. § 844(j) is much broader than § 5845(f) with regard to the definition of explosive (§ 844(j) as currently amended or plainly includes Podolsky’s device as an "incendiary"). Even if the definitions of "explosive” are the same, the evidence in this case is that the device would have caused a fire, but not an explosion. Thus, neither Xheka nor. the first part of Reed bear directly on this case.

      . The Ragusa court relied on the dictionary’s definition of “bomb,” which is “an explosive, incendiary, or gas filled container for dropping, hurling, or setting in place to be exploded by a timing mechanism.” 664 F.2d at 699. Podolsky’s device, which would not have exploded, does not fall within this or any other conception of what a “bomb” is.

      . We reject the government’s attempt to rewrite the statute by deleting the word "bomb" from it. It argued that the provision covers ” ‘any ... incendiary ... or similar device.’ ” Government’s Response at 19. However, Congress stuck the word “bomb” in the statute, and we think that in so doing it intended to restrict the breadth of the class of destructive devices. “Incendiary,” as it appears in the statute, is not a noun. It is an adjective modifying the noun “bomb.” If Congress intended to cover any dangerous incendiary, it could have done so, as it did in the recently amended § 844(j). But it did not do so, and, until it does, we must read the word “bomb” so that it retains some sensible meaning.


author: MYRON H. THOMPSON, District Judge.

text:
    Mary Lee CARTER, Plaintiff, v. COMMUNITY ACTION AGENCY OF CHAMBERS, TALLAPOOSA and COOSA COUNTIES, INC.; and Harold C. White, etc., Defendants.
    Civ. A. No. 84-T-1343-E.
    United States District Court, M.D. Alabama, E.D.
    Nov. 7, 1985.

      Kenneth L. Thomas, and Randy Stephens, Gen. Counsel, Alabama Educ. Ass’n, Montgomery, Ala., for plaintiff.
    Fred D. Gray, Gray, Langford, Sapp, Davis & McGown, Tuskegee, Ala., for defendants.
   MEMORANDUM OPINION

MYRON H. THOMPSON, District Judge.

Plaintiff Mary Lee Carter, a white person, has brought this lawsuit under Title YII of the Civil Rights Act of 1964, as amended, 42 U.S.C.A. §§ 2000e through 2000e-17, against defendant Community Action Agency of Chambers, Tallapoosa and Coosa Counties, Inc. and defendant Harold C. White, the agency’s former executive director. She claims that the agency and White terminated her employment because of her race.

Based on the evidence presented at a nonjury trial, the court finds that her claim has merit and that she is thus entitled to appropriate relief.

I.

The Community Action Agency of Chambers, Tallapoosa and Coosa Counties, Inc. is a federally regulated but locally operated agency created to combat poverty in the agency’s three-county area of operation in the State of Alabama. 42 U.S.C.A. §§ 9801-9822 (1983). The agency’s work force and the recipients of its services are mostly black. A board of directors, composed of approximately one-half white and one-half black members, has general legal and fiscal responsibility for the operation of the agency. An executive director is entrusted with the agency’s day-to-day operation.

One of the agency’s largest and most important programs is the Head Start Program, which is funded and regulated by the U.S. Department of Health and Human Services (HHS). 42 U.S.C.A. §§ 9831-9852 (1983). This program’s general goal is to “bring about a greater degree of social competence in children of low income families.” 45 C.F.R. § 1304.1-3(b) (1984). This program serves several hundred children, most of whom are black.

The Head Start Program has its own director who is vested with day-to-day responsibilities for the program’s operation and who reports directly to the agency’s executive director. The program also has a policy council which must approve or disapprove most major decisions relating to Head Start. The council is composed of community representatives and parents of Head Start children and is predominantly black.

In January 1981, the agency hired Mary Lee Carter, a white person, as director of the Head Start Program. In December of the same year, the agency hired Harold C. White as executive director. White was the agency’s first black executive director.

From the beginning of his employment, White had difficulties with members of the agency’s board of directors, primarily its white members. These members charged White with mismanagement, misuse of funds, and with discriminating against white employees. White countered that these board members were discriminating against him by subjecting him to unwarranted charges and to closer scrutiny than the previous white executive director.

Carter, in turn, had difficulties with White. For example, White excluded Carter from many decisions involving the Head Start Program. Carter would make recommendations about such matters as the Head Start budget and teacher training. White would not only reject her recommendations, he would exclude her from any further involvement in such matters. White also allowed Carter’s staff, which was all or mostly black, to meet with him regularly without first going through Carter. He also called meetings of the predominantly black policy council without including Carter. The effect of White’s treatment of Carter was not only that she was ostracized and her duties usurped, but she came to be unjustly viewed by her staff and policy council as a white person who could not be trusted and was probably racist. White created an atmosphere in the Head Start program that Carter was “one of them” and “not one of us.” White did not treat other, black program heads this way.

In early 1983, the black chairperson of the agency’s board of directors created the Executive Head Start Committee, a predominantly white committee, to deal with the problems in the Head Start Program. The committee had been created at the urging of Carter and Jasper Fielding, a white member of the board. On April 5, 1983, an official from the HHS regional office in Atlanta, Georgia met with Carter and others and suggested that the board’s and the committee’s direct involvement in the Head Start Program might be illegal.

On April 7, 1983, Carter submitted her resignation to White, effective May 31. Four days later, White accepted it and began advertising for a new Head Start director. In the meantime, at the suggestion of Jasper Fielding, Carter decided to rescind her resignation, but only if the following conditions were met:

—Any document added to my personnel folder must first be reviewed and approved by the Executive Head Start Committee;
—My role as direct supervisor of Head Start staff must not be circumvented. All alleged incidents of circumvention will be reviewed and addressed by the Executive Head Start Committee;
—The grantee staff, headed by Harold White, is formally instructed to provide support and assistance in the performance of my operational responsibilities under Head Start Manual, Appendix B,____
—I understand that, in carrying out my responsibilities, I must comply with direct orders of my supervisor, Harold White. I request, however, that I be specifically guaranteed the right to receive such orders in writing, enabling me to appeal orders which I believe are violations of Board policy or of state or federal law.

On April 27, the policy council held a regularly scheduled meeting. The chairperson of the council was Gloria Tinsley, a black person. Shortly after the close of the meeting, after Carter and the white members had left, Tinsley and some other black members of the council held another, unannounced meeting where they signed a letter accepting Carter’s resignation. The name of one of the white members who had attended the first meeting was forged to the letter.

On April 28, the board of director’s Executive Head Start Finance Committee met and voted to recommend to the board that it accept Carter’s withdrawal of her resignation on her conditions. White was not present at this committee meeting. Although he was a member of the committee, he had not been consulted prior to the meeting, nor had he been given notice of the meeting.

Immediately following the meeting of the Executive Head Start Finance Committee, the board of directors held one of its regularly scheduled meetings. As people assembled, Carter handed White her letter withdrawing her resignation with conditions. At the board meeting, White complained that the board was without authority to allow Carter to withdraw her resignation. The board voted eleven to zero, with seven abstentions, to allow Carter to withdraw her resignation on her stated conditions. The vote was for the most part along racial lines, with ten white persons and one black person voting to allow Carter to withdraw her resignation and six black persons and one white person abstaining.

In the days following the board meeting, Gloria Tinsley, the black chairperson of the policy council, wrote a letter to the HHS regional office in Atlanta, Georgia, complaining that the board had acted without legal authority and that the Head Start staff was opposed to Carter’s return. Tinsley and White later travelled to Atlanta to confer personally with the regional officials. In response to the complaints from White and Tinsley, the HHS regional office informed the board that it had acted improperly and without authority in accepting Carter’s withdrawal of her resignation and that Carter’s withdrawal of her resignation must first be approved by the executive director and the policy council.

On May 10, the board met again. Tinsley recruited and arranged for black parents to be present. The meeting was so racially charged and tense that local police had to be present. Many of the black speakers, many of those in the predominantly black crowd, and even signs on the walls accused the white board members of being racist and taunted the black board member who supported Carter for being on the wrong side. White and Tinsley also told the board that they believed that the board’s actions were racially motivated; and White further accused Carter of not being able to accept supervision from him because he was black.

In the days and weeks following the May 10 board meeting, the board, White, and Tinsley held firm to their various positions. Some effort was made without success to get the board to rescind its action. Carter wrote Tinsley requesting that her withdrawal of her resignation be placed on the agenda of the next policy council meeting. Tinsley denied the request without even consulting the other members of the policy council. Finally, the board appointed Virginia Robinson, a black person, to serve as temporary director of the Head Start Program.

For the remainder of 1983 and for the early part of 1984, the HHS regional office in Atlanta, while maintaining its position that the board acted without legal authority, attempted to help the agency and its officials resolve their problems. Finally, in February 1984, the regional office directed the agency to initiate the process for filling the Head Start director position. The board complied, and both Robinson and Carter were among the applicants. Robinson was selected. Carter was rejected principally because the board felt it was not in the best interest of the agency to rehire her in view of White’s past conflict with her.

As a result of the above events, White’s termination of Carter’s employment after she withdrew her resignation became the act of the agency.

Later, in 1985, White resigned as executive director for another job.

II.

As previously stated, Carter rests her claim of race discrimination on Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C.A. §§ 2000e through 2000e-17.

A.

Carter has exhausted the administrative remedies required by Title VII. 42 U.S. C.A. § 2000e-5. In August and October 1983, she filed timely administrative charges with the Equal Employment Opportunity Commission, claiming that White and the agency terminated her employment because of her race. She alleged that White and the agency forced her to resign and then refused to accept her withdrawal of her resignation, all because of her race. In July 1984, without making a finding, the commission issued a “Notice of Right to Sue” to Carter. And, in October 1984, Carter timely filed this lawsuit, making essentially the same claim she made in the administrative charges.

B.

In determining whether Title VII has been violated where, as here, the evidence is primarily circumstantial, a court should employ the allocation of burdens and order of proof established in Texas Department of Community Affairs v. Burdine, 450 U.S. 248, 101 S.Ct. 1089, 67 L.Ed.2d 207 (1981). See Hill v. Seaboard Coast Line R. Co., 767 F.2d 771, 773-74 (11th Cir. 1985); Lincoln v. Board of Regents of the University System of Georgia, 697 F.2d 928, 935 n. 6 (11th Cir.), cert. denied, 464 U.S. 826, 104 S.Ct. 97, 78 L.Ed.2d 102 (1983). A plaintiff has the initial burden of establishing a prima facie case of racial discrimination by a preponderance of evidence, Burdine, 450 U.S. at 253-54, 101 S.Ct. at 1093-94, which once established raises a presumption that the defendant racially discriminated against the plaintiff. Id., at 254, 101 S.Ct. at 1094. If the plaintiff establishes a prima facie case, the burden then shifts to the defendant to rebut the presumption by producing sufficient evidence to raise a genuine issue of fact as to whether the defendant discriminated against the plaintiff. This may be done by the defendant articulating a “legitimate, non-discriminatory reason” for its actions against the plaintiff, a reason which is “clear and reasonably specific” and worthy of credence. Id., at 253, 258, 101 S.Ct. at 1093, 1096. The defendant has a burden of production, not one of persuasion, and thus does not have to persuade a court that it was actually motivated by the reason advanced. Id., at 254, 101 S.Ct. at 1094. Once the defendant satisfies this burden of production, the plaintiff then has the burden of persuading a court that the proffered reason for the employment decision is a pretext for racial discrimination. The plaintiff may satisfy this burden by persuading the court either directly that a racially discriminatory reason more than likely motivated the defendant or indirectly that the proffered reason for the discharge is not worthy of belief. Id., at 256, 101 S.Ct. at 1095. By so persuading the court, the plaintiff satisfies the required ultimate burden of demonstrating by a preponderance of evidence that he or she has been the victim of intentional racial discrimination. Id.

C.

A plaintiff may establish a prima facie case of racially discriminatory termination of employment by showing by a preponderance of the evidence that he or she is a member of a racial minority, was qualified for job held, was terminated from the job, and was replaced by a member of the majority race. A person may be considered a member of a racial minority for Title VII purposes if the employees and administrators of the entity for which the person works are predominantly of another race. See, e.g., Lincoln v. Board of Regents of the University System of Georgia, 697 F.2d 928 (11th Cir.), cert. denied, 464 U.S. 826, 104 S.Ct. 97, 78 L.Ed.2d 102 (1983) (white faculty member at predominantly black college was a member of “racial minority” for Title VII purposes.)

Carter has established a prima facie case. She was a member of a racial minority, for she is white and worked for a predominantly black agency; she was qualified for her job; she was terminated from her job; and she was replaced by a black person. That the agency was substantially controlled by the white members of the board of directors does not detract from the conclusion that she was a member of a racial minority. The Head Start staff was predominantly black; and those principally responsible for hiring and discharging the Head Start director and staff were the black executive director and the black controlled policy council. Indeed, White has consistently maintained that the white dominated board had, by HHS regulations, little to no control over the hiring and firing of Head Start personnel. The scenario here was therefore that of a white employee in a work environment populated and controlled, for the most part, by black persons.

D.

White and the agency have met their burden of articulating a legitimate, nondiscriminatory reason for terminating Carter’s employment after she withdrew her resignation. In fact, they have articulated several reasons. Carter has convinced the court, however, that these reasons are but a pretext for racial discrimination.

First, White and the agency advance that they terminated Carter’s employment because she resigned. This reason fails to explain why White refused to accept Carter’s withdrawal of her resignation. There is no evidence that the agency had a policy or practice of not accepting withdrawals of resignations.

White and the agency also advance that they could not accept Carter’s withdrawal of her resignation because the job had already been advertised. This reason is meritless. There is no credible evidence that at the time Carter withdrew her resignation any one had applied for the job or had been offered the job. Moreover, White did not list this reason in responding to a request from the U.S. Equal Employment Opportunity Commission to explain why he terminated Carter’s employment. The advertising of the job was not a true barrier to accepting Carter’s withdrawal of her resignation, if indeed White wanted her to continue as director of the Head Start Program.

White and the agency contend that Carter failed to follow proper procedures by not presenting her resignation withdrawal to White and the policy council first. They further contend that she set unreasonable conditions for her continued employment. Those reasons appear on their face to justify White’s refusal to accept Carter’s withdrawal of her resignation. However, a deeper analysis is warranted here. The court is convinced that White entered into a scheme to force Carter out of the agency because she was white. He personally ostracized her and usurped her duties; and, with the help of Tinsley, the black chairperson of the policy council, he mobilized Carter’s black staff members and the black policy council members against Carter. Admittedly, White and Carter disagreed over such matters as the Head Start Budget and what school should have the training contract for Head Start teachers. However, their disagreements did not warrant White’s severe, cruel treatment of Carter. Carter did nothing to merit such treatment.

The evidence therefore reflects that for racial reasons White made the conditions of Carter’s employment so intolerable that he, in effect, forced her to retreat to the board and the board’s Executive Head Start Finance Committee for relief; and that he, in effect, forced her to set conditions to make her continued stay more tolerable. Carter’s conduct was but a reasonable and necessary response to — indeed, a product of — White’s racially discriminatory treatment of her.

White and the agency contend that the policy council was unwilling to accept Carter’s rescission of her resignation because of complaints from Head Start parents and staff. The evidence contains no credible evidence that Head Start parents and staff were dissatisfied with Carter’s performance. The evidence is clear that Carter was an efficient and effective director of the Head Start Program; indeed, White himself was unable to point the court to any evidence to the contrary during his testimony. The record does, however, contain considerable evidence of racial animosity by black members of the policy council against Carter. This racial animosity was generated and fanned by White as a part of his scheme to get rid of Carter because of her race. Any unwillingness of the policy council to accept Carter’s withdrawal of her resignation was just a part of White’s racially motivated scheme to get rid of her.

White and the agency contend that their actions were proper because the HHS regional office upheld the termination of Carter’s employment. It is apparent that the HHS regional office was principally concerned with who had the authority to accept or reject Carter’s withdrawal of her resignation, not with why White refused to accept her withdrawal. Nevertheless, to the extent the HHS regional office’s actions could be viewed as approving the basis for White’s conduct, this court disagrees with the office. And, of course, in causes such as this, this court is not bound by the HHS regional office’s findings and opinions as to whether someone has been a victim of racial discrimination.

But finally and most importantly, the above reasons advanced by White and the agency fail to overcome the fact, as found by the court, that White and the agency forced Carter to resign because of her race. As stated, White made Carter’s working conditions so intolerable that she had no choice but to resign. Carter is entitled to appropriate relief for this fact alone, irrespective of her fruitless efforts to have the withdrawal of her resignation accepted. For,

The general rule is that if the employer deliberately makes an employee’s working condition so intolerable that the employee is forced into an involuntary resignation, then the employer has encompassed a constructive discharge and is as liable for any illegal conduct involved therein as if it had formally discharged the aggrieved employee.

Buckley v. Hospital Corporation of America, Inc., 758 F.2d 1525, 1530 (11th Cir.1985), quoting Young v. Southwestern Savings & Loan Association, 509 F.2d 140, 144 (5th Cir.1975). But for Carter’s race she would still be working for the agency.

White and the agency have suggested that White was himself a victim of racial discrimination. Admittedly, there is considerable evidence that most of the white members of the board mistreated him be- . cause of his race. This evidence may explain White’s distrust and ostracization of Carter because she is white; it does not, however, make his treatment of her legal. That a black person has been racially discriminated against by some white persons working with him does not legally justify his racially discriminating against other white persons working with him. Title VII was specifically meant to combat such irrational lumping together of persons merely because of their race.

If the credible evidence reflected that Carter was a part of a scheme with the board to get rid of White because of his race, that Carter was unable or unwilling to work with White because of his race, or simply that Carter was not a good Head Start director, then White’s treatment of her, including his refusal to accept the withdrawal of her resignation, might be justified and legitimate. There would be no irrational, racially discriminatory lumping together of persons. However, the credible evidence does not support this scenario.

III.

As a victim of race discrimination, Carter is entitled to appropriate relief under Title VII. First, Carter seeks and is entitled under Title VII to backpay and other employment benefits she would have received had White and the agency not illegally terminated her employment. 42 U.S.C.A. § 2000e-5(g). The court will require that White and the agency pay Carter backpay and other employment benefits determined according to established legal principles. The parties will be given an opportunity to agree upon the amount of such relief.

Second, Carter seeks reinstatement as director of the Head Start Program. A person whose employment has been terminated because of race is presumptively entitled to reinstatement to his or her former position. 42 U.S.C.A. § 2000e-5(g). Nord v. United States Steel Corp., 758 F.2d 1462, 1473 (11th Cir.1985). However, here the court is not persuaded that reinstatement would be appropriate because to reinstate Carter would require the displacement of an innocent person, Virginia Robinson, the present director of the program. See Parker v. Wallace, 596 F.Supp. 739, 746 (M.D.Ala.1984). The court will therefore require that the agency offer Carter another position with the agency, one for which she is qualified and which has a salary and responsibilities comparable to that of Head Start director.

However, if another, comparable position is not available, the court will require that, in lieu of reinstatement, White and the agency pay Carter frontpay determined according to established legal principles. Nord v. United States Steel Corp., supra. If frontpay is required, the parties will be given an opportunity to agree upon the amount of such relief. Of course, if either White and the agency or Carter can establish that the position of Head Start director or another, comparable position, though not available now, will become available soon, the court will order that, in lieu of frontpay in part, Carter is to receive the position when it becomes available.

Finally, Carter seeks and is entitled to attorney fees from White and the agency. 42 U.S.C.A. § 2000e-5(k). The court will require that White and the agency pay her such fees determined in accordance with the criteria established in Johnson v. Georgia Highway Express, Inc., 488 F.2d 714 (5th Cir.1974). See also Blum v. Stenson, 465 U.S. 886, 104 S.Ct. 1541, 79 L.Ed.2d 891 (1984); Hensley v. Eckerhart, 461 U.S. 424, 103 S.Ct. 1933, 76 L.Ed.2d 40 (1983).

An appropriate judgment will be entered.

JUDGMENT AND INJUNCTION

In accordance with the memorandum opinion entered this date, it is the ORDER, JUDGMENT, and DECREE of the court that:

(1) Judgment be and it is hereby entered in favor of plaintiff Mary Lee Carter and against defendant Harold C. White and defendant Community Action Agency of Chambers, Tallapoosa and Coosa Counties, Inc.;

(2) Defendant Community Action Agency of Chambers, Tallapoosa and Coosa Counties, Inc., be and it is hereby ENJOINED and RESTRAINED from failing, within 14 days from the date of this order, to offer plaintiff Carter another position in the agency for which she is qualified and which has responsibilities, salary, and other benefits comparable to those of director of the Head Start Program, if such comparable position is available;

(3) Plaintiff Carter be and she is hereby awarded from defendant White and defendant Community Action Agency of Chambers, Tallapoosa and Coosa Counties, Inc. all backpay and other employment benefits she would have received had her employment not been illegally terminated;

(4) All parties be and they are hereby allowed 14 days from the date of this order to file a request with the court to determine appropriate backpay and other benefits should the parties be unable to agree among themselves on the amount of back-pay and other benefits to which plaintiff Carter is entitled;

(5) If another, comparable position is not available, plaintiff Carter be and she is hereby awarded frontpay from defendant White and defendant Community Action Agency of Chambers, Tallapoosa and Coosa Counties, Inc.;

(6) If another, comparable position is not available, all parties be and they are hereby allowed 14 days from the date of this order to file a request with the court to determine appropriate frontpay should the parties be unable to agree among themselves on the amount of frontpay to which plaintiff Carter is entitled;

(7) Plaintiff Carter be and she is hereby allowed 14 days from the date of this order to file a request for reasonable attorney fees, which request should address each of the criteria set forth in Johnson v. Georgia Highway Express, Inc., 488 F.2d 714 (5th Cir.1974); and

(8) All other relief sought by plaintiff Carter that is not specifically granted be and it is hereby denied.

It is the further ORDER of the court that all costs of these proceedings be and they are hereby taxed against defendant White and defendant Community Action Agency of Chambers, Tallapoosa and Coosa Counties, Inc., for which execution may issue.

      That Carter failed to follow proper procedures is, in fact, not all that clear. The HHS regulations, which may easily be described as very confusing, do not specifically speak to withdrawals of resignations. Furthermore, although the HHS Atlanta regional office maintained that Carter failed to follow proper procedures, the office was inconsistent in its recommendation of what Carter should have done.