author: Mr. Chief Justice Warren

text:
    UNITED STATES v. NARDELLO et al.
    No. 51.
    Argued November 12, 1968.
    Decided January 13, 1969.

      Philip A. Lacovara argued the cause for the United States, pro hac vice. With him on the brief were Solicitor General Griswold, Assistant Attorney General Vinson, Beatrice Rosenberg, and Sidney M. Glazer.

      F. Emmett Fitzpatrick, Jr., argued the cause and filed a brief for appellees.
   Mr. Chief Justice Warren

delivered the opinion of the Court.

This appeal presents solely a question of statutory construction: whether 18 U. S. C. § 1952, prohibiting travel in interstate commerce with intent to carry on “extortion” in violation of the laws of the State in which committed, applies to extortionate conduct classified as “blackmail” rather than “extortion” in the applicable state penal code. We believe that § 1952 (hereinafter “the Travel Act”) is applicable and thus must reverse the court below.

Appellees were indicted under § 1952 for their alleged participation in a “shakedown” operation whereby individuals would be lured into a compromising homosexual situation and then threatened with exposure unless appellees’ silence was purchased. The indictments charged that appellees traveled in interstate commerce on three separate occasions, twice from New Jersey to Philadelphia and once from Chicago to Philadelphia, to promote their activities. Specifically, the indictments referred to “the unlawful activity of blackmail, in violation of the laws of the Commonwealth of Pennsylvania.”

The District Court for the Eastern District of Pennsylvania dismissed the indictments, basing its decision upon Pennsylvania statutes which classify certain acts as “extortion” and others as various aspects of “blackmail.” In Pennsylvania, the statute entitled “extortion” is applicable only to the conduct of public officials. Pa. Stat. Ann., Tit. 18, §4318 (1963). Three other Pennsylvania statutes, Pa. Stat. Ann., Tit. 18, §§ 4801-4803 (1963), prohibit “blackmail,” “blackmail by injury to reputation or business,” and “blackmail by accusation of heinous crime.” Each of these three statutes defines the prohibited offense as, inter alia, an act committed with an intent “to extort.” The District Court believed that the term extortion as used in the Travel Act was intended “to track closely the legal understanding under state law.” 278 F. Supp. 711, 712 (1968). Reasoning from this premise, the court concluded that in Pennsylvania the offense of extortion was covered only by Pa. Stat. Ann., Tit. 18, § 4318, a statute which required that the accused be a public official. Since appellees were not public officials, the indictment was therefore defective. The United States appealed directly to this Court pursuant to 18 U. S. C. § 3731 and probable jurisdiction was noted. 392 U. S. 923 (1968).

Although Congress directed that content should be given to the term “extortion” in § 1952 by resort to state law, it otherwise left that term undefined. At common law a public official who under color of office obtained the property of another not due either to the office or the official was guilty of extortion. In many States, however, the crime of extortion has been statutorily expanded to include acts by private individuals under which property is obtained by means of force, fear, or threats. See Cal. Penal Code § 519 (1955); N. J. Stat. Ann. §2A: 105-3, §2A: 105-4 (1953); 3 F. Wharton’s Criminal Law and Procedure § 1396 (R. Anderson ed. 1957). Others, such as Pennsylvania, retain the common-law definition of extortion but prohibit conduct for which appellees were charged under other statutes. At least one State does not denominate any specific act as extortion but prohibits appellees’ type of activities under the general heading of offenses directed against property. See Ill. Rev. Stat., c. 38, § 15-5 (1967).

Faced with this diversity, appellees contend alternatively that Congress intended either that extortion was to be applied in its common-law sense or that, where a State does have a statute specifically prohibiting extortion, then that statute alone is encompassed by § 1952. The Government, on the other hand, suggests that Congress intended that extortion should refer to those acts prohibited by state law which would be generically classified as extortionate, i. e., obtaining something of value from another with his consent induced by the wrongful use of force, fear, or threats.

The Travel Act formed part of Attorney General Kennedy’s legislative proposals to combat organized crime. See Hearings on S. 1653-1658, S. 1665 before the Senate Judiciary Committee on the Attorney General’s Program to Curb Organized Crime and Racketeering, 87th Cong., 1st Sess. (1961). The Attorney General told the Senate Committee that the purpose of the Travel Act was to aid local law enforcement officials. In many instances the “top men” of a given criminal operation resided in one State but conducted their illegal activities in another; by creating a federal interest in limiting the interstate movement necessary to such operations, criminal conduct beyond the reach of local officials could be controlled. Id., at 15-17. The Attorney General’s concerns were reflected in the Senate Committee Report favoring adoption of the Travel Act. The Report, after noting the Committee’s belief that local law enforcement efforts would be enhanced by the Travel Act, quoted from the Attorney General’s submission letter: “Over the years an ever-increasing portion of our national resources has been diverted into illicit channels. Because many rackets are conducted by highly organized syndicates whose influence extends over State and National borders, the Federal Government should come to the aid of local law enforcement authorities in an effort to stem such activity.” S. Rep. No. 644, 87th Cong., 1st Sess., 4 (1961). The measure was passed by the Senate and subsequently became § 1952.

The House version of the Travel Act contained an amendment unacceptable to the Justice Department. The Senate bill defined “unlawful activity” as “any business enterprise involving gambling, liquor . . . narcotics, or prostitution offenses in violation of the laws of the State . . . or . . . extortion or bribery in violation of the laws of the States.” S. Rep. No. 644, 87th Cong., 1st Séss., 2 (1961). However, the House amendment, by defining “unlawful activity” as “any business enterprise involving gambling, liquor, narcotics, or prostitution offenses or extortion or bribery in connection with such offenses in violation of the laws of the State,” required that extortion be connected with a business enterprise involving the other enumerated offenses. H. R. Rep. No. 966, 87th Cong., 1st Sess., 1 (1961). In a letter to the Chairman of the House Judiciary Committee the Justice Department objected that the House amendment eliminated from coverage of the Travel Act offenses such as “shakedown rackets,” “shylocking” and labor extortion which were traditional sources of income for organized crime. The House-Senate Conference Committee accepted the Senate version. See H. R. Conf. Rep. No. 1161, 87th Cong., 1st Sess. (1961).

The Travel Act, primarily designed to stem the “clandestine flow of profits” and to be of “material assistance to the States in combating pernicious undertakings which cross State lines,” thus reflects a congressional judgment that certain activities of organized crime which were violative of state law had become a national problem. The legislative response was to be commensurate with the scope of the problem. Appellees suggest, however, that Congress intended that the common-law meaning of extortion — corrupt acts by a public official — be retained. If Congress so intended, then § 1952 would cover extortionate acts only when the extortionist was also a public official. Not only would such a construction conflict with the congressional desire to curb the activities of organized crime rather than merely organized criminals who were also public officials, but also § 1952 imposes penalties upon any individual crossing state lines or using interstate facilities for any of the statutorily enumerated offenses. The language of the Travel Act, “whoever” crosses state lines or uses interstate facilities, includes private persons as well as public officials.

Appellees argue that Congress’ decision not to define extortion combined with its decision to prohibit only extortion in violation of state law compels the conclusion that peculiar versions of state terminology are controlling. Since in Pennsylvania a distinction is maintained between extortion and blackmail with only the latter term covering appellees’ activities, it follows that the Travel Act does not reach the conduct charged. The fallacy of this contention lies in its assumption that, by defining extortion with reference to state law, Congress also incorporated state labels for particular offenses. Congress’ intent was to aid local law enforcement officials, not to eradicate only those extortionate activities which any given State denominated extortion. Indiana prohibits appellees’ type of conduct under the heading of theft, Ind. Ann. Stat. § 10-3030 (Supp. 1968); Kansas terms such conduct robbery in the third degree, Kan. Stat. Ann. § 21-529 (1964); Minnesota calls it coercion, Minn. Stat. § 609.27 (1967); and Wisconsin believes that it should be classified under threats, Wis. Stat. § 943.30 (1965). States such as Massachusetts, Mass. Gen. Laws Ann., c. 265, § 25 (1959), Michigan, Mich. Comp. Laws § 750.213 (1948), Mich. Stat. Ann. § 28.410 (1962), and Oregon, Ore. Rev. Stat. § 163.480 (1968), have enacted measures covering similar activities; each of these statutes contains in its title the term extortion. Giving controlling effect to state classifications would result in coverage under § 1952 if appellees’ activities were centered in Massachusetts, Michigan, or Oregon, but would deny coverage in Indiana, Kansas, Minnesota, or Wisconsin although each of these States prohibits identical criminal activities.

A striking illustration is presented by United States v. Schwartz, 398 F. 2d 464 (C. A. 7th Cir. 1968), pet. for cert, pending, sub nom. Pyne v. United States, No. 507, 1968 Term. Schwartz and a codefendant were accused of participating in a venture identical to that in which appellees allegedly participated, i. e., luring a businessman into a compromising situation and then demanding a payoff. The indictment charged that Schwartz traveled to Utah to promote extortionate activities illegal under Utah Code Ann. § 76-19-1 (1953), a statute captioned extortion. Pennsylvania prohibits this conduct under its blackmail statutes. Congress intended that the Travel Act would support local law enforcement efforts by allowing the Federal Government to reach interstate aspects of extortion. We can discern no reason why Congress would wish to have § 1952 aid local law enforcement efforts in Utah but to deny that aid to Pennsylvania when both States have statutes covering the same offense. We therefore conclude that the inquiry is not the manner in which States classify their criminal prohibitions but whether the particular State involved prohibits the extortionate activity charged.

Appellees do not dispute that Pennsylvania prohibits the conduct for which they were indicted. Accepting our conclusion that Congress did not intend to limit the coverage of § 1952 by reference to state classifications, appellees nevertheless insist that their activities were not extortionate. The basis for this contention is an asserted distinction between blackmail and extortion: the former involves two private parties while the latter requires the participation of a public official. As previously discussed, revenue-producing measures such as shakedown rackets and loan-sharking were called to the attention of Congress as methods utilized by organized crime to generate income. These activities are traditionally conducted between private parties whereby funds are obtained from the victim with his consent produced by the use of force, fear, or threats. Prosecutions under the Travel Act for extortionate offenses involving only private individuals have been consistently maintained. See United States v. Hughes, 389 P. 2d 535 (C. A. 2d Cir. 1968); McIntosh v. United States, 385 F. 2d 274 (C. A. 8th Cir. 1967); Marshall v. United States, 355 F. 2d 999 (C. A. 9th Cir.), cert. denied, 385 U. S. 815 (1966). Appellees, according to the court below, attempted to obtain money from their victims by threats to expose alleged homosexual conduct. Although only private individuals are involved, the indictment encompasses a type of activity generally known as extortionate since money was to be obtained from the victim by virtue of fear and threats of exposure. In light of the scope of the congressional purpose we decline to give the term “extortion” an unnaturally narrow reading, cf. United States v. Fabrizio, 385 U. S. 263, 266-267 (1966), and thus conclude that the acts for which appel-lees have been indicted fall within the generic term extortion as used in the Travel Act.

The judgment of the United States District Court for the Eastern District of Pennsylvania is reversed and the case remanded to that court for further proceedings consistent with this opinion.

It is so ordered.

Mr. Justice White took no part in the decision of this case.

       Section 1952 provides:
      “(a) Whoever travels in interstate or foreign commerce or uses any facility in interstate or foreign commerce, including the mail, with intent to—
      “(1) distribute the proceeds of any unlawful activity; or
      “(2) commit any crime of violence to further any unlawful activity; or
      “(3) otherwise promote, manage, establish, carry on, or.facilitate the promotion, management, establishment, or carrying on, of any unlawful activity, and thereafter performs or attempts to perform any of the acts specified in subparagraphs (1), (2), and (3), shall be fined not more than $10,000 or imprisoned for not more than five years, or both.
      “(b) As used in this section ‘unlawful activity’ means (1) any business enterprise involving gambling, liquor on which the Federal excise tax has not been paid, narcotics, or prostitution offenses in violation of the laws of the State in which they are committed or of the United States, or (2) extortion, bribery, or arson in violation of the laws of the State in which committed or of the United States.” (1964 ed. and Supp. III.)

       This conclusion impliedly conflicts with at least two other cases in which prosecutions of private individuals for extortion violative of the Travel Act were successfully maintained in States having a statutory structure similar to that found in Pennsylvania. See United States v. Hughes, 389 F. 2d 535 (C. A. 2d Cir. 1968); McIntosh v. United States, 385 F. 2d 274 (C. A. 8th Cir. 1967). Hughes involved a prosecution pursuant to North Carolina statutes, one of which prohibits extortion by a public official, N. C. Gen. Stat. §66-7 (1965), while a second covers blackmailing, N. C. Gen. Stat. § 14-118 (1953). Hughes was charged with involvement in a scheme identical to that in which appellees allegedly participated. McIntosh, involving Missouri law, was a prosecution under Mo. Rev. Stat. § 560.130 (1959), a prohibition of threats with intent to extort. However, Missouri also prohibits extortion by certain state officials. See Mo. Rev. Stat. § 29.360 (state auditor), § 30.420 (state treasurer) (1959).

       Cf. the Hobbs Act, 18 U. S. C. §1951 (b)(2), which defines extortion as “the obtaining of property from another, with his consent, induced by wrongful use of actual or threatened force, violencé, or fear, or under color of official right.”

       See United States v. Laudani, 134 F. 2d 847, 851, n. 1 (C. A. 3d Cir. 1943), rev’d on other grounds, 320 U. S. 543 (1944); United States v. Altmeyer, 113 F. Supp. 854, 856 (D. C. W. D. Pa. 1953); W. Clark & W. Marshall, A Treatise on the Law of Crimes §12.17 (6th ed. 1958).

       Compare Ala. Code, Tit. 14, § 160 (1959) (extortion), with Ala. Code, Tit. 14, §§49-50 (1959) (blackmail), and Ohio Rev. Code Ann. §2919.13 (1954) (extortion), with Ohio Eev. Code Ann. §2901.38 (1954) (blackmail).

       The Model Penal Code as first drafted included the offenses for which appellees are charged under the heading of “Theft by Intimidation.” Model Penal Code §206.3 (Tent. Draft No. 2, 1954). The Proposed Official Draft classifies the same offenses as “Theft by Extortion.” Model Penal Code §223.4 (Prop. Off. Draft 1962). The comments to the original draft indicate that the authors intended these sections to encompass extortionate offenses. See Model Penal Code §206.3, Comments 1, 5 (Tent. Draft No. 2, 1954).

       The Attorney General characterized S. 1653, later enacted as § 1952, as “one of the most important” of his proposals.

       In 1965 the crime of arson was added to the definition of unlawful activity in subsection (b)(2). This addition was prompted by a suggestion from the Department of Justice that arson was often used by organized crime to collect under insurance policies and had thus become another source of revenue. See H. R. Rep. No. 264, 89th Cong., 1st Sess. (1965); S. Rep. No. 351, 89th Cong., 1st Sess. (1965).

       The relevant portion of this letter, written by then Deputy Attorney General White, is reproduced in Pollner, Attorney General Robert F. Kennedy’s Legislative Program to Curb Organized Crime and Racketeering, 28 Brooklyn L. Rev. 37, 41 (1961):
      “[The House amendment] eliminated from the purview of the bill extortions not related to the four above offenses but which are, and have historically been, activities which involve organized crime. Such activities are the 'shakedown racket,’ 'shylocking’ (where interest of 20% per week is charged and which is collected by means of force and violence, since in most states the loans are uncollectable in court) and labor extortion. It also removes from the purview of the bill bribery of state, local and federal officials by the organized criminals unless we can prove that the bribery is directly attributable to gambling, liquor, narcotics or prostitution.”

       S. Rep. No. 644, 87th Cong., 1st Sess., 4 (1961) (quoting Attorney General); H. R. Rep. No. 966, 87th Cong., 1st Sess., 4 (1961) (quoting Attorney General).

       The Government notes that subsection (b) (2) prohibits bribery as well as extortion. Bribery has traditionally focused upon corrupt activities by public officials. See 18 U. S. C. §§ 201-218; 3 F. Wharton's Criminal Law and Procedure §§ 1380-1391 (R. Anderson ed. 1957). Since Pennsylvania’s extortion statute covers corrupt acts by public officials, the Government suggests that appellees' construction of “extortion” renders the bribery prohibition superfluous.

       Several cases cast some doubt upon the vitality of this distinction as they indicate that in Pennsylvania the terms extortion and blackmail are considered synonymous. See Commonwealth v. Burdell, 380 Pa. 43, 48, 110 A. 2d 193, 196 (1955); Commonwealth v. Nathan, 93 Pa. Super. 193, 197 (1928). Federal criminal statutes have also used the terms interchangeably. For example, 18 U. S. C. §250 (1940 ed.) was entitled “Extortion by informer”; today substantially the same provision is captioned “Blackmail.” See 18 U. S. C. § 873.

       Extortion is typically employed by organized crime to enforce usurious loans, infiltrate legitimate businesses, and obtain control of labor unions. See President’s Commission on Law Enforcement and Administration of Justice, Task Force Report: Organized Crime 3-5 (1967).


source: Caselaw Access Project

author: Mr. Justice Marshall Mr. Justice Harlan,

license: Public Domain

text:
    UNITED STATES v. DONRUSS CO.
    No. 17.
    Argued October 22-23, 1968.
    Decided January 13, 1969.

      Assistant Attorney General Rogovin argued the cause for the United States. With him on the brief were Solicitor General Griswold, Harris Weinstein, Richard C. Pugh, and Martin T. Goldblum.

      Richard L. Braunstein argued the cause for respondent. With him on the brief was Bernard J. Long.

      Richard E. Nolan and John P. Carroll, Jr., filed a brief for the Shaw-Walker Co., as amicus curiae, urging affirmance.
   Mr. Justice Marshall

delivered the opinion of the Court.

This case involves the application of §§ 531-537 of the Internal Revenue Code of 1954, which impose a surtax on corporations “formed or availed of for the purpose of avoiding the income tax with respect to . . . [their] shareholders ... by permitting earnings and profits to accumulate instead of being divided or distributed.”

Respondent is a corporation engaged in the manufacture and sale of bubble gum and candy and in the operation of a farm. Since 1954, all of respondent’s outstanding stock has been owned by Don B. Wiener. In each of the tax years from 1955 to 1961, respondent operated profitably, increasing its undistributed earnings from $1,021,288.58 to $1,679,315.37. The company did not make loans to Wiener or provide him with benefits other than a salary, nor did it make investments unrelated to its business, but no dividends were declared during the entire period.

Wiener gave several reasons for respondent’s accumulation policy; among them were capital and inventory requirements, increasing costs, and the risks inherent in the particular business and in the general economy. Wiener also expressed a general desire to expand and a more specific desire to invest in respondent’s major distributor, the Tom Huston Peanut Company. There were no definite plans during the tax years in question, but in 1964 respondent purchased 10,000 shares in Tom Huston at a cost of $380,000.

The Commissioner of Internal Revenue assessed accumulated earnings taxes against respondent for the years 1960 and 1961. Respondent paid the tax and brought this refund suit. At the conclusion of the trial, the Government specifically requested that the jury be instructed that:

“[I]t is not necessary that avoidance of shareholder’s tax be the sole purpose for the unreasonable accumulation of earnings; it is sufficient if it is one of the purposes for the company’s accumulation policy.”

The instruction was refused and the court instructed the jury in the terms of the statute that tax avoidance had to be “the purpose” of the accumulations. The jury, in response to interrogatories, found that respondent had accumulated earnings beyond the reasonable needs of its business, but that it had not retained its earnings for the purpose of avoiding income tax on Wiener. Judgment was entered for respondent and the Government appealed.

The Court of Appeals reversed and remanded for a new trial, holding that “the jury might well have been led to believe that tax avoidance must be the sole purpose behind an accumulation in order to impose the accumulated earnings tax.” Donruss Co. v. United States, 384 F. 2d 292, 298 (C. A. 6th Cir. 1967). The Court of Appeals rejected the Government’s proposed instruction and held that the tax applied only if tax avoidance was the “dominant, controlling, or impelling motive” for the accumulation. Ibid. We granted the Government’s petition for certiorari to resolve a conflict among the circuits over the degree of “purpose” necessary for. the application of the accumulated earnings tax, and because of the importance of that question in the administration of the tax. 390 U. S. 1023 (1968).

I.

The accumulated earnings tax is established by §§ 531-537 of the Internal Revenue Code of 1954. Section 531 imposes the tax. Section 532 defines the corporations to which the tax shall apply. That section provides:

“The accumulated earnings tax imposed by section 531 shall apply to every corporation . . . formed or availed of for the purpose of avoiding the income tax with respect to its shareholders or the shareholders of any other corporation, by permitting earnings and profits to accumulate instead of being divided or distributed.”

Section 533 (a) provides that:

“For purposes of section 532, the fact that the earnings and profits of a corporation are permitted to accumulate beyond the reasonable needs of the business shall be determinative of the purpose to avoid the income tax with respect to shareholders, unless the corporation by the preponderance of the evidence shall prove to the contrary.”

In cases before the Tax Court, § 534 allows the taxpayer in certain instances to shift to the Commissioner the burden of proving accumulation beyond the reasonable needs of the business. Section 535 defines “accumulated taxable income.” It also provides for a credit for that portion of the earnings and profits retained for the reasonable needs of the business, with a minimum lifetime credit of $100,000. Finally, § 537 provides that “reasonable needs of the business” include “reasonably anticipated” needs.

The dispute before us is a narrow one. The Government contends that in order to rebut the presumption contained in §533 (a), the taxpayer must establish by the preponderance of the evidence that tax avoidance with respect to shareholders was not “one of the purposes” for the accumulation of earnings beyond the reasonable needs of the business. Respondent argues that it may rebut that presumption by demonstrating that tax avoidance was not the “dominant, controlling, or impelling” reason for the accumulation. Neither party questions the trial court’s instructions on the issue of whether the accumulation was beyond the reasonable needs of the business, and respondent does not challenge the jury’s finding that its accumulation was indeed unreasonable. We intimate no opinion about the standards governing reasonableness of corporate accumulations.

We conclude from an examination of the language, the purpose, and the legislative history of the statute that the Government’s construction is the correct one. Accordingly, we reverse the judgment of the court below and remand the case for a new trial on the issue of whether avoidance of shareholder tax was one of the purposes of respondent’s accumulations.

II.

Both parties argue that the language of the statute supports their conclusion. Respondent argues that Congress could have used the article “a” in §§ 532 and 533 if it had intended to adopt the Government’s test. Instead, argues respondent, Congress used the article “the” in the operative part of the statute, thus indicating that tax avoidance must at least be the dominant motive for the accumulation. The Government argues that respondent’s construction gives an unduly narrow effect to the word “the.” Instead, contends the Government, this Court should focus on the entire phrase “availed of for the purpose.” Any language of limitation should logically modify “availed of” rather than “purpose” and no such language is present. The Government further argues that Congress has dealt with similar problems in other sections of the Code and has used terms such as “principal purpose,” §§ 269 (a), 357 (b)(1), and “used principally,” § 355 (a)(1) (B). Similar terms could have been used in §§ 532 (a) and 533 (a), but were not. Finally, the Government points to the fact that prior to adoption of § 102 of the Revenue Act of 1938 (52 Stat. 483) the forerunner of § 532 (a) used the words “the purpose,” while the evidentiary section used the words “a purpose,” thus indicating that tax avoidance need only be one purpose. Respondent replies that the change from “a” to “the” in the evidentiary section supports its conclusion. Respondent also contends that the statute before the change was consistent with its construction.

We find both parties’ arguments inconclusive. The phrase “availed of for the purpose” is inherently vague, and there is no indication in the legislative history that Congress intended to attach any particular significance to the use of the article “the.” Nor do we find the change in the evidentiary section from “a” to “the” at all helpful. That change came as part of a significant revision in the operation of the section, and there is no indication that it was other than a mere change in phraseology. Indeed, the Report of the Senate Finance Committee accompanying the bill that was to become the Revenue Act of 1938, insofar as it sheds any light on the question, supports the view of the Government. “The proposal is to strengthen [the evidentiary] section by requiring the taxpayer by a clear preponderance of the evidence to prove the absence of any purpose to avoid surtaxes upon shareholders . . . S. Rep. No. 1567, 75th Cong., 3d Sess., 5 (1938) (emphasis added). Since the language of the statute does not provide an answer to the question before us, we have examined in detail the relevant legislative history. That history leads us to conclude that the test proposed by the Government is consistent with the intent of Congress and is necessary to effectuate the purpose of the accumulated earnings tax.

III.

The accumulated earnings tax is one congressional attempt to deter use of a corporate entity to avoid personal income taxes. The purpose of the tax “is to compel the company to distribute any profits not needed for the conduct of its business so that, when so distributed, individual stockholders will become liable” for taxes on the dividends received, Helvering v. Chicago Stock Yards Co., 318 U. S. 693, 699 (1943). The tax originated in the Tariff Act of 1913, 38 Stat. 114, the first personal income tax statute following ratification of the Sixteenth Amendment. That Act imposed a tax on the shareholders of any corporation “formed or fraudulently availed of for the purpose of preventing the imposition of such tax through the medium of permitting such gains and profits to accumulate instead of being divided or distributed....” § II (A) (2), 38 Stat. 166. The same section provided that accumulation beyond the reasonable needs of the business “shall be prima facie evidence of a fraudulent purpose to escape such tax . ...” 38 Stat. 167.

In its first years of operation, difficulties in proving a fraudulent purpose made the tax largely ineffective. To meet this problem, Congress deleted the word “fraudulently.” Revenue Act of 1918, § 220, 40 Stat. 1072; see S. Rep. No. 617, 65th Cong., 3d Sess., 5 (1918).

During the next few years, numerous complaints were made about the ineffectiveness of the accumulated earnings tax. Various attempts were made to strengthen the tax during the 1920's and 1930’s, but the statute remained essentially the same until 1934. See Joint Committee on the Economic Report, The Taxation of Corporate Surplus Accumulations, 82d Cong., 2d Sess, 200-205 (Comm. Print 1952). In 1934, Congress dealt with one of the more flagrant examples of that ineffectiveness, the personal holding company. Personal holding companies were exempted from the general accumulated earnings tax and were subjected to a tax on undistributed income, regardless of the purpose of that accumulation. Revenue Act of 1934, §§ 102, 351, 48 Stat. 702, 751. The reason for the change was that, “[b]y making partial distribution of profits and by showing some need for the accumulation of the remaining profits, the taxpayer makes it difficult to prove a purpose to avoid taxes.” H. R. Rep. No. 704, 73d Cong., 2d Sess., 11 (1934).

Again in 1936, Congress attempted to solve the continuing problem of undistributed corporate earnings. “The difficulty of proving such [tax avoidance] purpose . . . has rendered . . . [the accumulated earnings tax] more or less ineffective.” H. R. Rep. No. 2475, 74th Cong., 2d Sess., 5 (1936). However, Congress did not change the requirement that “purpose” must be proved. Rather, it attempted the alternative method of imposing an undistributed profits surtax on most corporations. Revenue Act of 1936, § 14, 49 Stat. 1655. The tax on personal holding companies and the general accumulated earnings tax were retained.

The problem continued to be acute and several proposals were made by and to Congress in 1938. The House Ways and Means Committee proposed a surtax on all closely held operating companies. Only minor changes were proposed by the Committee in the accumulated earnings tax. See H. R. Rep. No. 1860, 75th Cong., 3d Sess. (1938). The House rejected all but the changes in the accumulated earnings tax. The Senate approached the problem of retained corporate earnings in a different way. Labeling the House Committee’s recommendation a “drastic” remedy, the Senate Finance Committee recommended “dealing with this problem where it should be dealt with — namely, in section 102, relating to corporations improperly accumulating surplus. The proposal is to strengthen this section by requiring the taxpayer by a clear preponderance of the evidence to prove the absence of any purpose to avoid surtaxes upon shareholders after it has been determined that the earnings and profits have been unreasonably accumulated.” S. Rep. No. 1667, 75th Cong., 3d Sess., 5 (1938). The change was thought to make it clear that the burden of proving intent, rather than the lesser burden of producing evidence on the question, was to be on the taxpayer. Id., at 16. The Senate proposal was enacted. Revenue Act of 1938, § 102, 52 Stat. 483. The Committee felt that a “reasonable enforcement of this revised section will reduce tax avoidance . . . .” S. Rep. No. 1567, supra, at 5.

Only insignificant changes were made in the accumulated earnings tax from 1938 to 1954. Discussion of the problem continued, however, and numerous proposals were made to alter the tax. See, e. g., Joint Committee on the Economic Report, The Taxation of Corporate Surplus Accumulations, 82d Cong., 2d Sess. (Comm. Print 1952). Congress took cognizance of these complaints and incorporated many of them in the Internal Revenue Code of 1954, but no change was made in the required degree of tax avoidance purpose. Rather, the changes, which were generally favorable to the taxpayer, demonstrated congressional disaffection with the effect of the tax and its emphasis on intent. Congress’ reaction to the complaints was to emphasize the reasonable needs of the business as a proper purpose for corporate accumulations and to make it easier for the taxpayer to prove those needs. As the House Ways and Means Committee said, “Your committee believes it is necessary to retain the penalty tax on unreasonable accumulations as a safeguard against tax avoidance. However, several amendments have been adopted to minimize the threat to corporations accumulating funds for legitimate business purposes . . . .” H. R. Rep. No. 1337, 83d Cong., 2d Sess., 52 (1954).

As this brief summary indicates, the legislative history of the accumulated earnings tax demonstrates a continuing concern with the use of the corporate form to avoid income tax on a corporation’s shareholders. Numerous methods were employed to prevent this practice, all of which proved unsatisfactory in one way or another. Two conclusions can be drawn from Congress’ efforts. First, Congress recognized the tremendous difficulty of ascertaining the purpose of corporate accumulations. Second, it saw that accumulation was often necessary for legitimate and reasonable business purposes. It appears clear to us that the congressional response to these facts has been to emphasize unreasonable accumulation as the most significant factor in the incidence of the tax. The reasonableness of an accumulation, while subject to honest difference of opinion, is a much more objective inquiry, and is susceptible of more effective scrutiny, than are the vagaries of corporate motive.

Respondent would have us adopt a test that requires that tax avoidance purpose need be dominant, impelling, or controlling. It seems to us that such a test would exacerbate the problems that Congress was trying to avoid. Rarely is there one motive, or even one dominant motive, for corporate decisions. Numerous factors contribute to the action ultimately decided upon. Respondent’s test would allow taxpayers to escape the tax when it is proved that at least one other motive was equal to tax avoidance. We doubt that such a determination can be made with any accuracy, and it is certainly one which will depend almost exclusively on the interested testimony of corporate management. Respondent’s test would thus go a long way toward destroying the presumption that Congress created to meet this very problem. As Judge Learned Hand said of the much weaker presumption contained in the Revenue Act of 1921, § 220, 42 Stat. 247, “[a] statute which stands on the footing of the participants’ state of mind may need the support of presumption, indeed be practically unenforceable without it . . . .” United Business Corp. v. Commissioner, 62 F. 2d 754, 755 (C. A. 2d Cir. 1933). And, “[t]he utility of . . . [that] presumption ... is well nigh destroyed if . . . [it] is saddled with requirement of proof of ‘the primary or dominant purpose’ of the accumulation.” Barrow Mfg. Co. v. Commissioner, 294 F. 2d 79, 82 (C. A. 5th Cir. 1961), cert. denied, 369 U. S. 817 (1962).

The cases cited by respondent do not convince us to the contrary. For the most part, they lack detailed analysis of the precise problem. Perhaps the leading case for respondent’s position is Young Motor Co. v. Commissioner, 281 F. 2d 488 (C. A. 1st Cir. 1960). That case relied in part upon the use of the article “the” instead of “a.” We have previously rejected that argument. The case also relied, as did the court below, on certain cases from the gift and estate tax areas. We find those cases inappo-site. They deal with areas of the Code whose language, purpose, and legislative history are entirely different from those of the accumulated earnings tax. See Commissioner v. Duberstein, 363 U. S. 278, 284 (1960).

Finally, we cannot subscribe to respondent's suggestion that our holding would make purpose totally irrelevant. It still serves to isolate those cases in which tax avoidance motives did not contribute to the decision to accumulate. Obviously in such a case imposition of the tax would be futile. In addition, “purpose" means more than mere knowledge, undoubtedly present in nearly every case. It is still open to the taxpayer to show that even though knowledge of the tax consequences was present, that knowledge did not contribute to the decision to accumulate earnings.

Reversed and remanded.

Mr. Justice Harlan,

whom Mr. Justice Douglas and Mr. Justice Stewart join, concurring in part and dissenting in part.

I agree with the Court that the Court of Appeals erred in framing its remand order in this case. However, I would modify the order in a different way, which I find more in harmony with the statutory scheme than the one the Court has chosen.

Section 532 of the Internal Revenue Code of 1954 states in relevant part:

“The accumulated earnings tax imposed by section 531 shall apply to every corporation . . . formed or availed of for the purpose of avoiding the income tax with respect to its shareholders ... , by permitting earnings and profits to accumulate instead of being divided or distributed.”

Section 533 (a) provides:

“For purposes of section 532, the fact that the earnings and profits of a corporation are permitted to accumulate beyond the reasonable needs of the business shall be determinative of the purpose to avoid the income tax with respect to shareholders, unless the corporation by the preponderance of the evidence shall prove to the contrary.”

Our task is to decide what jury instruction with respect to the definition of “purpose” comports best with Congress’ intent as revealed by this statutory language and the underlying legislative history.

I am in accord with much of the Court’s opinion. I too find that the successive changes in the wording of the statute, even when read together with the legislative history, do not help in our inquiry. I too find that the legislative history reveals a progressive congressional intention to rely more and more heavily upon a comparatively objective criterion: whether the accumulated earnings were in excess of the corporation’s reasonable business needs. Nevertheless, it is apparent from the language of § 533 (a), and from the legislative materials, that Congress chose still to give the taxpayer a “last clear chance” to prove that, despite the unreasonableness of the accumulation by business standards, the accumulation was not due to the proscribed purpose. My difficulty with the instruction approved by the Court is that in most instances it will effectively deny to the taxpayer the “last clear chance” which Congress clearly meant to afford and substitute a very fuzzy chance indeed.

I reach this conclusion on what I regard as commonsense grounds. In practice, the accumulated-earnings provisions are applied only to closely held corporations, controlled by relatively few shareholders. As the Court admits, the shareholders almost always will have been advised that accumulation of corporate earnings will result in individual tax savings. That fact will be before the jury. In accord with the Court’s decision, the jury will be instructed that “it is sufficient if [avoidance of shareholders’ tax] is one of the purposes of the company’s accumulation policy.” (Emphasis supplied.)

Under these circumstances, the jury is very likely to believe that it must find the forbidden purpose and impose the tax whenever the Government shows that the taxpayer has accumulated earnings with knowledge of the resultant tax saving, irrespective of any contrary evidence put forward by the taxpayer. The approved instruction simply tells the jury that the taxpayer must have had a “purpose” to avoid individual taxes. In everyday speech, we commonly say that a person has a “purpose” to do something when he acts with knowledge that the thing will inevitably result. Even were the jury legally knowledgeable, it might reach the same conclusion, for, assuming that the word “purpose” as used in § 532 is synonymous with “intention,” there is ample authority for the proposition that an actor will be deemed to have an “intention” to cause consequences of an act if “the actor . . . believes that the consequences are substantially certain to result from [the act].” To confront the taxpayer with this likelihood that its evidence of another purpose will be entirely disregarded is inconsistent with the provision of § 533 (a) which explicitly affords the taxpayer an opportunity to avoid the tax by showing “by the preponderance of the evidence” that it had a “contrary” purpose.

The Court, while conceding that the shareholders will know of the expected tax saving “in nearly every case,” see ante, at 309, reasons that the taxpayer will have its opportunity because “[i]t is still open to the taxpayer to show that even though knowledge of the tax consequences was present, that knowledge did not contribute to the decision to accumulate earnings.” Ibid. If, as appears from the Court’s opinion, this exegesis is not to be a part of the jury instruction, then the Court is simply engaging in wishful thinking. If by chance the explication is to be included in the instruction, then the jury will be told to impose the tax only if it finds that a desire to avoid tax “contribute [d] to the decision to accumulate earnings.” Such an instruction would at least inform the jury that the tax consequence must actually have been in the shareholders’ minds when they decided to accumulate. However, once the shareholders are shown to have had knowledge of the tax saving, it still will be extraordinarily difficult for the taxpayer to convince the jury that the knowledge did not play some part, however slight, in the decision. Again, it seems to me that such an instruction would not give proper scope to the congressional intention that the taxpayer have a chance to prove “by the preponderance of the evidence” that it had a “contrary” purpose. I would therefore adopt an instruction less loaded against the taxpayer.

The Court of Appeals for the Sixth Circuit decided, and respondent argues, that the tax should apply only if the jury finds that tax avoidance was the “dominant, controlling, or impelling motive” for the accumulation. I agree with the Court that such an instruction would be improper. It apparently would require the Government to show that tax avoidance was stronger than any other motive, and perhaps that it was stronger than all other motives put together. This would largely negate the statutory presumption of improper purpose contained in § 533 (a). In my view, it would also result in non-imposition of tax in cases where Congress meant there to be liability, for I think that Congress must at least have intended that the tax should apply whenever the taxpayer would have distributed, instead of accumulating, corporate earnings had there been no possibility of a tax saving.

These considerations suggest what I believe to be the best rule: the jury should be instructed to impose the tax if it finds that the taxpayer would not have accumulated earnings but for its knowledge that a tax saving would result. This “but for cause” test would be consistent with the statutory language. It would allow the Government to succeed if it could show, with the aid of the § 533 (a) presumption, that without the spur of tax avoidance the taxpayer would not have accumulated the earnings, thus giving effect to the presumption and fulfilling Congress’ desire to penalize those with a “purpose” to avoid the tax. It would permit the taxpayer to escape the tax if it could convince the jury that for other, perhaps irrational, reasons it would have accumulated even had no tax saving been possible, thus affording the opportunity for proof of a “contrary” purpose which Congress intended to provide. In addition, I believe that this instruction would be relatively easy for a jury to understand and apply. For all of these reasons, I consider it preferable to the standard adopted by the Court.

       The court below adopted the view of the First Circuit. See Young Motor Co. v. Commissioner, 281 F. 2d 488, 491 (1960); see also Apollo Industries, Inc. v. Commissioner, 358 F. 2d 867, 875-876 (1966). The Second Circuit has rejected “the view that the prevention of the imposition of surtaxes must have been shown to have been the dominant factor behind the accumulations.” Trico Prods. Corp. v. Commissioner, 137 F. 2d 424, 426, cert. denied, 320 U. S. 799 (1943). See also United States v. Duke Laboratories, Inc., 337 F. 2d 280 (1964). The Fifth Circuit has also rejected the position that tax avoidance must be the “primary or dominant” purpose of the accumulation. Barrow Mfg. Co. v. Commissioner, 294 F. 2d 79, 82 (1961), cert. denied, 369 U. S. 817 (1962). The Eighth and Tenth Circuits have taken what appears to be an intermediate position, holding that imposition of the tax is proper if tax avoidance is one of the “determinating purposes.” Kerr-Cochran, Inc. v. Commissioner, 253 F. 2d 121, 123 (C. A. 8th Cir. 1958); World Pub. Co. v. United States, 169 F. 2d 186, 189 (C. A. 10th Cir. 1948), cert. denied, 335 U. S. 911 (1949). The Sixth Circuit has adhered to its view in Shaw-Walker Co. v. Commissioner, 390 F. 2d 205 (1968). A petition for certiorari in that case is now pending in this Court.

       The rates are 27%% of the accumulated taxable income (defined in § 535) not in excess of $100,000, plus 38%% of the accumulated taxable income in excess of $100,000. Internal Revenue Code of 1954, §531.

       Section 532 (b) exempts personal holding companies, foreign personal holding companies, and certain tax-exempt corporations. Internal Revenue Code of 1954, § 532 (b). Both types of holding companies are taxed under other provisions of the Code. See Internal Revenue Code of 1954, §§ 541-547 (personal holding companies); Internal Revenue Code of 1954, §§ 551-558 (foreign personal holding companies).

       The First Circuit in Young Motor Co. v. Commissioner, 281 F. 2d 488 (1960), in part based its conclusion that tax avoidance must be the “primary or dominant purpose” on the use of “the” rather than “a.”

       No change was made in that part of the statute providing that “[t]he fact that any corporation is a mere holding or investment company shall be prima facie evidence of a purpose” to avoid tax. Revenue Act of 1938, § 102 (b), 52 Stat. 483 (emphasis added).

       The Regulations shed no light on the problem. See Treas. Reg. §§ 1.531-1.537, 26 CFR §§ 1.531-1.537.

       Another major change was made in the Revenue Act of 1921, 42 Stat. 227. Section 220 of that Act shifted the incidence of the accumulated earnings tax from the shareholders to the corporation itself. 42 Stat. 247. The change was prompted by the decision in Eisner v. Macomber, 252 U. S. 189 (1920). See H. R. Rep. No. 350, 67th Cong., 1st Sess., 12-13 (1921).

       Tax avoidance and evasion were a major subject of congressional concern in 1937. See, e. g., H. R. Rep. No. 1546, 75th Cong., 1st Sess. (1937). Congress addressed itself to another aspect of the problem by establishing a separate method for the taxation of foreign personal holding companies, again without regard to corporate intent. Revenue Act of 1937, § 201, 50 Stat. 818.

       Congress was urged to adopt a test of purpose similar to that proposed by respondent in the present case. See, e. g., Hearings before the House Committee on Ways and Means Pertaining to the General Revision of the Internal Revenue Code, 83d Cong., 1st Sess., pt. 3, p. 2142 (1953).

       The changes were expected to decrease revenues by $10,000,000 in fiscal year 1955. See S. Rep. No. 1622, 83d Cong., 2d Sess., 72 (1954).

       Section 535 (c) provided a credit for such accumulations.

       Section 534 allowed the taxpayer to shift to the Commissioner in certain instances the burden of proving unreasonable accumulation. Section 537 included anticipated needs as reasonable needs of the business. In addition to those changes, § 533 (a) omitted the requirement that the taxpayer negate the existence of tax avoidance purpose by a “clear preponderance of the evidence,” and substituted a “preponderance” test.

        Commissioner v. Duberstein, 363 U. S. 278 (1960); Allen v. Trust Co. of Georgia, 326 U. S. 630 (1946); City Bank Farmers Trust Co. v. McGowan, 323 U. S. 594 (1945); United States v. Wells, 283 U. S. 102 (1931).

       See S. Rep. No. 1622, 83d Cong., 2d Sess., 69 (1954); B. Bittker & J. Eustice, Federal Income Taxation of Corporations and Shareholders 213-214 (2d ed. 1966).

       “Purpose” is listed as a synonym for “intention” in Black’s Law Dictionary, at 948 (4th ed. 1968). Many courts have used the two words interchangeably in construing §§ 532 and 533 (a). See, e. g., Henry Van Hummell, Inc. v. Commissioner, 364 F. 2d 746 (1966) ; Youngs Rubber Corp. v. Commissioner, 331 F. 2d 12 (1964); Smoot Sand & Gravel Corp. v. Commissioner, 241 F. 2d 197 (1957); Harry A. Koch Co. v. Vinal, 228 F. Supp. 782 (1964); Motor Fuel Carriers, Inc. v. United States, 202 F. Supp. 497 (1962), vacated on other grounds, 322 F. 2d 576 (1963).

       Restatement (Second), Torts §8A (1965). See also id., Comment b; R. Perkins, Criminal Law 657-658 (1957); Cook, Act, Intention, and Motive in the Criminal Law, 26 Yale L. J. 645 (1917).


author: Per Curiam.

text:
    BERGER v. CALIFORNIA.
    No. 221,
    Misc.
    Decided January 13, 1969.

      Thomas C. Lynch, Attorney General of California, William E. James, Assistant Attorney General, and Marvin A. Bauer, Deputy Attorney General, for respondent.
   Per Curiam.

Petitioner was convicted of robbery and kidnaping for the purpose of robbery. The victim, one Carl Arthur Dunston, testified against petitioner at a preliminary hearing; there was evidence that at the time of the trial Dunston was in Colorado. A state investigator tried to contact Dunston on the telephone; he got through to some of Dunston’s relatives and to his employer, but not to Dunston himself. Although two telegrams were received, allegedly from Dunston, no subpoena was served. At trial, the transcript of Dunston’s preliminary hearing testimony was introduced into evidence. On appeal, the Court of Appeal for the Second Appellate District of California held that this procedure did not deny petitioner his Sixth Amendment right to be confronted with the witnesses against him since Dunston was absent from the State of his own free will and since petitioner’s counsel had had an adequate opportunity to cross-examine Dunston at the preliminary hearing. 258 Cal. App. 2d 622, 66 Cal. Rptr. 213 (1968). The California Supreme Court denied petitioner a hearing on April 4, 1968. Nineteen days later we held in the case of Barber v. Page, 390 U. S. 719, that the absence of a witness from the jurisdiction would not justify the use at trial of preliminary hearing testimony unless the State had made a good-faith effort to secure the witness’ presence. The sole question in this case is whether the holding of Barber v. Page should be given retroactive application. We think that it should.

Clearly, petitioner’s inability to cross-examine Dunston at trial may have had a significant effect on the “integrity of the fact-finding process.” Linkletter v. Walker, 381 U. S. 618, 639 (1965); cf. Roberts v. Russell, 392 U. S. 293 (1968); McConnell v. Rhay, ante, p. 2 (1968). As we pointed out in Barber v. Page, one of the important objects of the right of confrontation was to guarantee that the fact finder had an adequate opportunity to assess the credibility of witnesses. 390 U. S., at 721. And California’s claim of a significant countervailing interest based upon its reliance on previous standards, see Stovall v. Denno, 388 U. S. 293, 297 (1967), is most unpersuasive. Barber v. Page was clearly foreshadowed, if not preordained, by this Court’s decision in Pointer v. Texas, 380 U. S. 400 (1965), which was handed down more than a year before petitioner’s trial. Accordingly, we can see no reason why Barber v. Page should not be given fully retroactive application.

The motion for leave to proceed in forma pauperis and the petition for writ of certiorari are granted. The judgment of the Court of Appeal is vacated and the case is remanded for reconsideration in light of this Court’s decision in Barber v. Page, 390 U. S. 719 (1968).

It is so ordered.


text:
    BOYD et al. v. CLARK, ATTORNEY GENERAL, et al.
    No. 490.
    Decided January 13, 1969.

      Victor Rabinowitz and Leonard B. Boudin for appellants.

      Solicitor General Griswold for appellees.
   Per Curiam.

The judgment is affirmed, Clark v. Gabriel, ante, p. 256, without reaching the jurisdictional question raised under 28 U. S. C. § 1331.


text:
    MARKHAM ADVERTISING CO., INC., et al. v. WASHINGTON et al.
    No. 648.
    Decided January 13, 1969.

      Alfred J. Schweppe and Thomas R. Beierle for appellants.
   Per Curiam.

The appeal is dismissed for want of a substantial federal question.


text:
    FREED v. BALDI et al.
    No. 652.
    Decided January 13, 1969.

      George Louis Creamer for appellant.
   Per Curiam.

The appeal is dismissed for want of a substantial federal question.


text:
    BENNETT et al. v. COTTINGHAM et al.
    No. 665.
    Decided January 13, 1969.

      Jack Greenberg, Michael Meltsner, Melvyn Zarr, Oscar W. Adams, Jr., and Anthony G. Amsterdam for appellants.

      MacDonald Gallion, Attorney General of Alabama, pro se, and Robert P. Bradley, Assistant Attorney General, for appellees.
   Per Curiam.

The motion to affirm is granted and the judgment is affirmed.

The Chief Justice, Mr. Justice Harlan, and Mr. Justice Brennan are of the opinion that probable jurisdiction should be noted.


text:
    ESTRIN et al. v. MOSS, COMMISSIONER OF AGRICULTURE OF TENNESSEE, et al.
    No. 684.
    Decided January 13, 1969.

      Robert W. Healy for appellants.

      George F. McCanless, Attorney General of Tennessee, and Paul E. Jennings, Assistant Attorney General, for appellees.
   Per Curiam.

The appeal is dismissed for want of a substantial federal question.


text:
    WARD et al. v. JOHNSON, PRESIDENT OF THE UNITED STATES, et al.
    No. 703.
    Decided January 13, 1969.

      Solicitor General Griswold for appellees.
   Per Curiam.

The motion to dispense with printing the jurisdictional statement is granted. The motion to dismiss is granted and the appeal is dismissed for want of jurisdiction.


text:
    WILLIAMS & CO., INC. v. CITY OF PITTSBURGH et al.
    No. 706.
    Decided January 13, 1969.

      Norman J. Cowie for appellant.

      Robert E. Dauer for appellees.
   Per Curiam.

The motion to dismiss is granted and the appeal is dismissed for want of a substantial federal question.


text:
    COX et al. v. UNITED STATES et al.
    No. 708.
    Decided January 13, 1969.

      Solicitor General Griswold, Assistant Attorney General Zimmerman, Howard E. Shapiro, Robert W. Ginnane, and Fritz R. Kahn for the United States et al.
   Per Curiam.

The motion to affirm is granted and the judgment is affirmed.


text:
    BENNETT v. MISSISSIPPI.
    No. 719.
    Decided January 13, 1969.

      Albert Sidney Johnston, Jr., for appellant.
   Per Curiam.

The appeal is dismissed for want of jurisdiction. Treating the papers whereon the appeal was taken as a petition for a writ of certiorari, certiorari is denied.


text:
    WILLIAMS et al. v. VIRGINIA STATE BOARD OF ELECTIONS et al.
    No. 733.
    Decided January 13, 1969.

      Howard S. Spering and Robert L. Montague III for appellants.
   Per Curiam.

The judgment is affirmed.


text:
    HILLIARD v. CITY OF GAINESVILLE.
    No. 745.
    Decided January 13, 1969.

      Richard W. Wilson for appellant.

      Osee R. Fagan for appellee.
   Per Curiam.

The motion to dismiss is granted and the appeal is dismissed for want of a substantial federal question.

Mr. Justice Douglas is of the opinion that probable jurisdiction should be noted.


text:
    MID-VALLEY PIPELINE CO. v. KING, COMMISSIONER OF REVENUE, et al.
    No. 756.
    Decided January 13, 1969.

      H. Vincent E. Mitchell and J.. Martin Regan for appellant.

      George F. McCanless, Attorney General of Tennessee, and Milton P. Rice, Deputy Attorney General, for appellees.
   Per Curiam.

The motion to dismiss is granted and the appeal is dismissed for want of a substantial federal question.

Mr. Justice Stewart and Mr. Justice White are of the opinion that probable jurisdiction should be noted.


text:
    ADKINS TRANSFER CO., INC., et al. v. DORNBOS et al.
    No. 738.
    Decided January 13, 1969.

      H. Winston Hathaway for appellants.

      Harold S. Sawyer for appellees Dombos et al., and Robert E. Plunkett for appellee The Kroger Co.
   Per Curiam.

The motions to dismiss are granted and the appeal is dismissed for want of a final judgment.

Mr. Justice Black and Mr. Justice Douglas are of the opinion that the appeal should be dismissed for want of a substantial federal question.

Mr. Justice Stewart is of the opinion that further consideration of the question of jurisdiction should be postponed to the hearing of the case on the merits.

Mr. Justice Fortas took no part in the consideration or decision of this case.


text:
    BROWN v. COINER, WARDEN.
    No. 871,
    Misc.
    Decided January 13, 1969.
   Per Curiam.

The appeal is dismissed for want of jurisdiction. Treating the papers whereon the appeal was taken as a petition for a writ of certiorari, certiorari is denied.


text:
    SNELL et al. v. WYMAN, COMMISSIONER OF DEPARTMENT OF SOCIAL SERVICES OF NEW YORK, et al.
    No. 191.
    Decided January 13, 1969.

      James J. Graham and Martin Garbus for appellants.

      Louis J. Lejkowitz, Attorney General of New York, Samuel A. Hirshowitz, First Assistant Attorney General, and Charles A. La Torella, Jr., and Maria L. Marcus, Assistant Attorneys General, for Wyman, and J. Lee Rankin and Stanley Buchsbaum for Ginsberg, appellees.

      Solicitor General Griswold, Assistant Attorney General Weisl, Peter L. Strauss, and Morton Hollander for the United States, as amicus curiae, urging affirmance.
   Per Curiam.

The motions to affirm are granted and the judgment is affirmed.

Mr. Justice Douglas is of the opinion that probable jurisdiction should be noted.


author: Mr. Justice Black Me. Justice Harlan,

text:
    GLOVER et al. v. ST. LOUIS-SAN FRANCISCO RAILWAY CO. et al.
    No. 38.
    Argued November 14, 1968.
    Decided January 14, 1969.

      William M. Acker, Jr., argued the cause and filed a brief for petitioners.

      Donald W. Fisher argued the cause for respondents. On the brief for respondent St. Louis-San Francisco Railway Co. was Paul R. Moody. With Mr. Fisher on the brief for respondent Brotherhood of Railway Carmen of America were Richard R. Lyman and Jerome A. Cooper.

   Mr. Justice Black

delivered the opinion of the Court.

The 13 petitioners here, eight Negroes and five white men, are all employees of the respondent railroad, whose duties are to repair and maintain passenger and freight cars in the railroad's yard at Birmingham, Alabama. They brought this action in the United States District Court against the railroad and the Brotherhood of Railway Carmen of America, which is the duly selected bargaining agent for carmen employees. The complaint alleged that all of the plaintiffs were qualified by experience to do the work of carmen but that all had been classified as carmen helpers for many years and had not been promoted. The complaint went on to allege the following explanation for the railroad's refusal to promote them:

“In order to avoid calling out Negro plaintiffs to work as Carmen and to avoid promoting Negro plaintiffs to Carmen, in accordance with a tacit understanding between defendants and a subrosa agreement between the Frisco and certain officials of the Brotherhood, defendant Frisco has for a considerable period of time used so-called ‘apprentices’ to do the work of Carmen instead of calling out plaintiffs to do said work as required by the Collective Bargaining Agreement as properly and customarily interpreted; and the Frisco has used this means to avoid giving plaintiffs work at Carmen wage scale and permanent jobs in the classification of Carmen. This denial to plaintiffs of work as Carmen has been contrary to previous custom and practice by defendants in regard to seniority as far as ‘Upgrade Carmen’ are concerned. Defendant Frisco is not calling any of plaintiffs to work as Carmen in order to avoid having to promote any Negroes to Carmen.”

The complaint also claimed that each plaintiff had lost in excess of $10,000 in wages as the result of being a victim of “an invidious racial discrimination,” and prayed for individual damages, for an injunction to cause the defendants to cease and desist from their discrimination against petitioners and their class and “for any further, or different relief as may be meet and proper . . ..” The respondents moved to dismiss the complaint on the ground, among others, that petitioners had not exhausted the administrative remedies provided for them by the grievance machinery in the collective bargaining agreement, in the constitution of the Brotherhood, and before the National Railroad Adjustment Board. The District Court, in an unreported opinion, sustained the motion to dismiss, and the petitioners then filed the following amendment to their complaint:

“On many occasions the Negro plaintiffs through one or more of their number, have complained both to representatives of the Brotherhood and to representatives of the Company about the foregoing discrimination and violation of the Collective Bargaining Agreement. Said Negro plaintiffs have also called upon the Brotherhood to process a grievance on their behalf with the Company under the machinery provided by the Collective Bargaining Agreement. Although a representative of the Brotherhood once indicated to the Negro plaintiffs that the Brotherhood would ‘investigate the situation/ nothing concrete was ever done by the Brotherhood and no grievance was ever filed. Other representatives of the Brotherhood told the Negro plaintiffs time and time again: (a) that they were kidding themselves if they thought they could ever get white men’s jobs; (b) that nothing would ever be done for them; and (c) that to file a formal complaint with the Brotherhood or with the Company would be a waste of their time. They were told the same things by local representatives of the Company. They were treated with condescension by both Brotherhood and Company, sometimes laughed at and sometimes ‘cussed/ but never taken seriously. When the white plaintiffs brought their plight to the attention of the Brotherhood, they got substantially the same treatment which the Negro plaintiffs received, except that they were called ‘nigger lovers’ and were told that they were just inviting trouble. Both defendants attempted to intimidate plaintiffs, Negro and white. Plaintiffs have been completely frustrated in their efforts to present their grievance either to the Brotherhood or to the Company. In addition, to employ the purported internal complaint machinery within the Brotherhood itself would only add to plaintiffs’ frustration and, if ever possible to pursue it to a final conclusion it would take years. To process a grievance with the Company without the cooperation of the Brotherhood would be a useless formality. To take the grievance before the National Railroad Adjustment Board (a tribunal composed of paid representatives from the Companies and the Brotherhoods) would consume an average time of five years, and would be completely futile under the instant circumstances where the Company and the Brotherhood are working ‘hand-in-glove.’ All of these purported administrative remedies are wholly inadequate, and to require their complete exhaustion would simply add to plaintiffs’ expense and frustration, would exhaust plaintiffs, and would amount to a denial of ‘due process of law,’ prohibited by the Constitution of the United States.”

The District Court again sustained the motion to dismiss. The Court of Appeals affirmed the dismissal, agreeing with the opinion of the District Court and adding several authorities to those cited by the District Court, 386 F. 2d 452 (C. A. 5th Cir. 1967), and we granted certiorari, 390 U. S. 1023 (1968). We think that none of the authorities cited in either opinion justify the dismissal and reverse and remand the case for trial in the District Court.

It is true, as the respondents here contend, that this Court has held that the Railroad Adjustment Board has exclusive jurisdiction, under § 3 First (i) of the Railway Labor Act, set out below, to interpret the meaning of the terms of a collective bargaining agreement. We have held, however, that § 3 First (i) by its own terms applies only to “disputes between an employee or group of employees and a carrier or carriers.” Conley v. Gibson, 355 U. S. 41, 44 (1957). In Conley, as in the present case, the suit was one brought by the employees against their own union, claiming breach of the duty of fair representation, and we held that the jurisdiction of the federal courts was clear. In the present case, of course, the petitioners sought relief not only against their union but also against the railroad, and it might at one time have been thought that the jurisdiction of the Railroad Adjustment Board remains exclusive in a fair representation case, to the extent that relief is sought against the railroad for alleged discriminatory performance of an agreement validly entered into and lawful in its terms. See, e. g., Hayes v. Union Pacific R. Co., 184 F. 2d 337 (C. A. 9th Cir. 1950), cert. denied, 340 U. S. 942 (1951). This view, however, was squarely rejected in the Conley case, where we said, “[F]or the reasons set forth in the text we believe [Hayes, supra] was decided incorrectly.” 355 U. S., at 44, n. 4. In this situation no meaningful distinction can be drawn between discriminatory action in negotiating the terms of an agreement and discriminatory enforcement of terms that are fair on their face. Moreover, although the employer is made a party to insure complete and meaningful relief, it still remains true that in essence the “dispute” is one between some employees on the one hand and the union and management together on the other, not one “between an employee or group of employees and a carrier or carriers.” Finally, the Railroad Adjustment Board has no power to order the kind of relief necessary even with respect to the railroad alone, in order to end entirely abuses of the sort alleged here. The federal courts may therefore properly exercise jurisdiction over both the union and the railroad. See also Steele v. Louisville & Nashville R. Co., 323 U. S. 192 (1944).

The respondents also argue that the complaint should be dismissed because of the petitioners’ failure to exhaust their remedies under the collective bargaining agreement, the union constitution, and the Railway Labor Act. They rely particularly on Republic Steel Corp. v. Maddox, 379 U. S. 650 (1965), and Vaca v. Sipes, 386 U. S. 171 (1967). The Court has made clear, however, that the exhaustion requirement is subject to a number of exceptions for the variety of situations in which doctrinaire application of the exhaustion rule would defeat the overall purposes of federal labor relations policy. Thus, in Vaca itself the Court stressed:

“[I]t is settled that the employee must at least attempt to exhaust exclusive grievance and arbitration procedures established by the bargaining agreement. Republic Steel Corp. v. Maddox, 379 U. S. 650. However, because these contractual remedies have been devised and are often controlled by the union and the employer, they may well prove unsatisfactory or unworkable for the individual grievant. The problem then is to determine under what circumstances the individual employee may obtain judicial review of his breach-of-contract claim despite his failure to secure relief through the contractual remedial procedures.” 386 U. S., at 184-185.

The Court in Vaca went on to specify at least two situations in which suit could be brought by the employee despite his failure to exhaust fully his contractual remedies. The circumstances of the present case call into play another of the most obvious exceptions to the exhaustion requirement — the situation where the effort to proceed formally with contractual or administrative remedies would be wholly futile. In a line of cases beginning with Steele v. Louisville & Nashville R. Co., supra, the Court has rejected the contention that employees alleging racial discrimination should be required to submit their controversy to “a group which is in large part chosen by the [defendants] against whom their real complaint is made.” 323 TJ. S., at 206. And the reasons which prompted the Court to hold as it did about the inadequacy of a remedy before the Adjustment Board apply with equal force to any remedy administered by the union, by the company, or both, to pass on claims by the very employees whose rights they have been charged with neglecting and betraying. Here the complaint alleges in the clearest possible terms that a formal effort to pursue contractual or administrative remedies would be absolutely futile. Under these circumstances, the attempt to exhaust contractual remedies, required under Maddox, is easily satisfied by petitioners’ repeated complaints to company and union officials, and no time-consuming formalities should be demanded of them. The allegations are that the bargaining representatives of the car employees have been acting in concert with the railroad employer to set up schemes and contrivances to bar Negroes from promotion wholly because of race. If that is true, insistence that petitioners exhaust the remedies administered by the union and the railroad would only serve to prolong the deprivation of rights to which these petitioners according to their allegations are justly and legally entitled.

The judgment is reversed and the case is remanded for trial.

Reversed and remanded.

Me. Justice Harlan,

concurring.

I join in the Court’s opinion with one addition and one reservation.

I believe that Richardson v. Texas & N. O. R. Co., 242 F. 2d 230 (1957), decided by the Fifth Circuit some years before its decision in the present case, also supports today’s holding that the federal courts may grant railroad employees ancillary relief against an employer who aids and abets their union in breaching its duty of fair representation. A contrary result would bifurcate, and needlessly proliferate, litigation.

I think it clear that footnote 4 of Conley v. Gibson, 355 U. S. 41, 44 (1957), did not — as some of the language in today’s opinion, ante, at 328-329, might otherwise imply — address itself to the question now decided, which is one of first impression in this Court. Conley was a suit against the union only. A careful reading of Hayes v. Union Pacific R. Co., 184 F. 2d 337 (1950); the District Court’s opinion in Conley, 138 F. Supp. 60 (1955), which relied on Hayes; and this Court’s opinion in Conley 'makes it readily apparent that our disapproval of Hayes had nothing to do with the question of jurisdiction over an employer in a fair representation action.

       In full, §3 First (i) reads:
      “The disputes between an employee or group of employees and a carrier or carriers growing out of grievances or out of the interpretation or application of agreements concerning rates of pay, rules, or working conditions, including cases pending and unadjusted on the date of approval of this Act [June 21, 1934], shall be handled in the usual manner up to and including the chief operating officer of the carrier designated to handle such disputes; but, failing to reach an adjustment in this manner, the disputes may be referred by petition of the parties or by either party to the appropriate division of the Adjustment Board with a full statement of the facts and all supporting data bearing upon the disputes.” 48 Stat. 1191, 45 TJ. S. C. § 153 First (i).

       See, e. g., Slocum v. Delaware, L. & W. R. Co., 339 U. S. 239.