source: Caselaw Access Project

author: Mr. Justice White Mr. Justice Clark,

license: Public Domain

text:
    YIATCHOS v. YIATCHOS, EXECUTRIX, et al.
    No. 48.
    Argued January 7, 1964.
    Decided March 9, 1964.

      Ernest R. Whitmore, Jr. argued the cause for petitioner. With him on the brief was Richard G. Jeffers.

      Charles W. Cone argued the cause for respondents. With him on the brief was William B. Holst.

      Solicitor General Cox, Assistant Attorney General Douglas, Sherman L. Cohn and David L. Rose filed a brief for the United States, as amicus curiae, urging reversal.
   Mr. Justice White

delivered the opinion of the Court. Two Terms ago in Free v. Bland, 369 U. S. 663, where federal savings bonds purchased with community funds were registered in a co-ownership form and the registered co-owners were husband and wife, the survivor was held entitled to the proceeds of the bonds without liability to account in any amount to the beneficiaries of the deceased co-owner, despite conflicting state law purporting to forbid a married couple to make survivorship arrangements with respect to community property and requiring süch property to pass as part of the estate of the deceased in accordance with his will or the state intestacy laws. The success of the management of the national debt was deemed to depend upon the successful sale of the savings bonds, one of the inducements to purchasers being sur-vivorship provisions which afforded “a convenient method of avoiding complicated probate proceedings.” 369 U. S., at 669. State law interfered with a legitimate exercise of federal power and was required to give way under the Supremacy Clause of the Constitution.

The Court nevertheless recognized that the federal law was not to be used as a shield for fraud or to prevent relief “where the circumstances manifest fraud or a breach of trust tantamount thereto on the part of a husband while acting in his capacity as manager of the general community property.” 369 U. S., at 670. The scope and application of the exception to the regulatory imperative — “the doctrine of fraud applicable under federal law in such a case,” 369 U. S., at 670-671 — were left to decision in other cases.

This is one of those cases. Petitioner is the brother of Angel Yiatchos who died in 1958 and who in 1950-1951 purchased with community funds belonging to himself and his wife United States Savings Bonds in the face amount of $15,075. The deceased was the registered owner of the bonds and they were made payable on his death to his brother, the petitioner. The deceased left a will made in 1954, naming his wife as executrix and bequeathing all cash and bonds owned by him at the time of his death to his brother, four sisters and a nephew. Petitioner brought suit in the appropriate court in the State of Washington to establish his ownership of the bonds, relying upon the federal regulations providing for registration of the savings bonds in the beneficiary form and providing that in the case of the death of the registered owner “the beneficiary will be recognized as the sole and absolute owner, and payment or reissue will be made as though the bond were registered in his name alone.” 31 CFR § 315.66. The trial court, on stipulated facts, sustained the claims of the wife and the other beneficiaries under the will who insisted that since the bonds were purchased with community funds and were community property at the death of the deceased they must be divided into two equal parts, one-half to go to the wife and the other half to be distributed in accordance with the will. The Supreme Court of Washington affirmed, holding that the deceased’s “purchase with community funds of bonds payable to him alone or, after his death, payable exclusively to his brother was in fraud of the rights of the respondent wife” and “a void endeavor to divest the wife of any interest in her own property.” The deceased having been under a fiduciary duty to manage the community funds for the benefit of the community, “[a] breach of this duty [was] a constructive fraud.” Petitioner’s claim to any part of the bonds as beneficiary named therein was rejected since “[respondent widow had a vested one-half interest in the bond proceeds” and since “[t]he descent of decedent’s interest is controlled by RCW 11.04.050 and, therefore, must be distributed according to the terms of the will.” In re Yiatchos’ Estate, 60 Wash. 2d 179, 182, 373 P. 2d 125, 127. We granted certiorari to consider an asserted conflict with Free v. Bland, supra, which was decided while this case was on appeal in the Washington Supreme Court and which that court considered in rendering its own judgment.

Under the federal regulations petitioner is entitled to the bonds unless his deceased brother committed fraud or breach of trust tantamount to fraud. Since the construction and application of a federal regulation having the force of law, California Comm’n v. United States, 355 U. S. 534, 542-545; Standard Oil Co. v. Johnson, 316 U. S. 481, 484, are involved, whether or not there is fraud which will bar the named beneficiary in a particular case must be determined as a matter of federal law, Free v. Bland, supra; Clearfield Trust Co. v. United States, 318 U. S. 363. But in applying the federal standard we shall be guided by state law insofar as the property interests of the widow created by state law are concerned. It would seem obvious that the bonds may not be used as a device to deprive the widow of property rights which she enjoys under Washington law and which would not be transferable by her husband but for the survivorship provisions of the federal bonds.

Proceeding on these premises, we note that under Washington law spouses may agree to change the status of community property either by an agreement to become effective on the death of either spouse, Rev. Code Wash. § 26.16.120; In re Yiatchos’ Estate, 60 Wash. 2d 179, 182, 373 P. 2d 125, 127, or by gift during lifetime; Hanley v. Most, 9 Wash. 2d 429, 458, 115 P. 2d 933, 944. Thus the widow in this case could have consented to a gift of community property to her husband’s brother or to the inclusion of the bonds in that portion of the estate which belonged to her husband and which he could dispose of at the time of his death. If she gave such consent, or if she ratified the purchase and registration of the bonds, the conduct of the husband was not, for federal purposes, fraud or breach of trust sufficient to avoid the command of the regulations, and petitioner would be entitled to all of the bonds.

So far petitioner apparently agrees, but he denies the need for further inquiry, claiming all of the bonds because the record is silent about the knowledge or consent of the wife, she having made no claim of fraud and produced no facts negativing her consent or knowledge. But we think the course suggested by the United States in its amicus curiae brief is preferable. The factual record was made by the stipulation of the parties prior to decision of Free v. Bland, supra. Before precluding the widow because of her own conduct, she should have an opportunity upon remand to prove the actual facts concerning her knowledge or participation in the purchase and registration of the bonds.

Petitioner, however, also objects to a remand because further inquiry into consent or acquiescence rests upon the erroneous assumption that the wife could object to the husband’s transfer of the bonds after his death. Since the present value of the bonds, or even their face value, is less than one-half the community property, the deceased, says petitioner, was not attempting to give away property belonging to his wife but was only making use of a simple device provided by federal law to dispose of what he could give by will under the Washington law. The validity of this contention turns on a question of state law about which we are not entirely clear and which may be resolved upon remand. According to the court below, the widow had a “vested one-half interest” in the bonds, which may mean that under Washington law the wife before and after death has a half interest in each item of the community estate, including the particular bonds involved in this case, and cannot be forced to take cash or something else of equal value upon a division of the community property between herself and those entitled to take her husband’s half. Under such circumstances, since we cannot say that this property right, if it exists, is insubstantial, to allow all of the bonds to pass to the designated beneficiary would effect an involuntary and impermissible conversion of the widow’s assets.

On the other hand, Rev. Code Wash. § 26.16.030 provides that “The husband shall have the management and control of community personal property, with a like power of disposition as he has of his separate personal property, except he shall not devise by will more than one-half thereof.” If under Washington law, the widow, after her husband’s death, has no interest in specific assets owned by the community and her half of the community estate may be satisfied from property or money other than the bonds, petitioner is entitled to all of the bonds for then there is no fraud or breach of trust in derogation of the widow’s property rights under state law. Upon dissolution of the community one-half of the community property belonged to Angel Yiatchos, who was free, as of the time of dissolution, to dispose of this half as he pleased. He might have left it to his brother by will. Instead he elected to effect the same result by utilizing federal savings bonds with their convenient feature of permitting ownership spanning two lives. On the assumption, then, that the wife is entitled to half of the estate, but not half of each particular item of property, the bonds have not been used as an instrument of fraud ; and the survivorship provisions of the federal regulations must control, preempting, if necessary, inconsistent state law which interferes with the legitimate exercise of the Federal Government’s power to borrow money. Free v. Bland, supra.

Petitioner is therefore entitled to all of the bonds if the widow consented to making him the beneficiary or if under Washington law the surviving spouse does not have a one-half interest in each community asset. But even if the wife is not barred by her own consent or by the nature of her interest from claiming a half interest in the bonds, petitioner is entitled to the other half, the half which belonged to the deceased and could be disposed of by him to the beneficiaries of his choice. The Washington court deemed the transaction void ab initio and required the deceased’s half to pass by his will rather than by virtue of the bonds and the force of the regulation. But the petitioner was entitled to the proceeds only on the death of the husband, and then only if the bonds had not matured or been cashed. During the husband’s life he was the registered owner of the bonds, and was therefore entitled at any time to convert them into cash upon presentation and surrender “as though no beneficiary had been named in the registration.” 31 CFR § 315.65. Aside from possible consequences of the wife’s consent or ratification, as long as Angel Yiatchos was alive the bonds were community property, and could be used by him— the manager of the community and the registered owner of the bonds — for community purposes just as the assets used to purchase them could have been so used. Thus, the holding of the court below, which requires that the bonds be disposed of by will or by state intestacy provisions, is nothing more than a state prohibition against utilizing savings bonds to transmit property at death, and is, for reasons stated above, forbidden by Free v. Bland, supra.

We add but one caveat to our holding that petitioner is entitled to at least one-half the bonds. The bonds, it would appear, are less than one-half the gross estate, but the record does not compare the value of the bonds with one-half the net estate after payment of debts. It is our understanding that the deceased’s interest in the community property is chargeable with his separate debts and with one-half the community debts. Ryan v. Ferguson, 3 Wash. 356, 28 P. 910. It would not contravene federal law as expressed in the applicable regulations to require the bonds to bear the same share of the debts that they would have borne if they had been passed to petitioner as a specific legacy under the will rather than by the survivorship provisions of the bonds.

The judgment of the Washington court is reversed insofar as it relates to one-half of the bonds, subject to the above remarks concerning the portion of the debts which may be allocable thereto. As to the other half the judgment is vacated and the case remanded for further proceedings not inconsistent with this opinion.

It is so ordered.

Mr. Justice Clark,

whom

Mr. Justice Douglas joins, dissenting.

The question to be determined under Free v. Bland, 369 U. S. 663 (1962), is whether or not the purchase of the bonds by the deceased operated to deprive his surviving wife of her one-half undivided interest in the community property of the spouses. If that purchase operated to deprive her of her one-half interest in the community property, it is tantamount to a constructive fraud upon the community property, and under Free v. Bland, supra, relief must be granted to the extent of making whole the surviving wife’s undivided interest.

It therefore appears to me that the proper order in this case would be to vacate the judgment and remand the case for consideration of the following matters, all of which involve an interpretation of Washington law:

(1) Was the purchase of the bonds and the designation of petitioner as beneficiary an act within the deceased husband’s statutory (Wash. Rev. Code § 26.16.030) management powers, or did the surviving spouse consent to, or subsequently ratify, the transaction? If either question is answered in the affirmative, the bonds must be delivered to the petitioner. If both questions are answered in the negative, then
(2) What is the amount of the debts, both community and separate, chargeable to the estate? And
(3) Is there sufficient property after the payment of these debts for the surviving wife to receive her one-half undivided interest in the community estate without having to resort to the bonds? If this question is answered in the affirmative, the bonds must be delivered to the petitioner and the surviving wife must receive her one-half undivided interest in the community property from that remaining. If there is not sufficient property in the estate to satisfy the surviving wife’s undivided one-half interest from that remainder, then the bonds must be subjected to this deficit, after which the balance of the bonds, if any, would go to the petitioner.

The opinion of the Court conjectures that it might be the law of Washington that a surviving spouse has a one-half interest in each item of the community estate and that if this be so, then allowing all of the bonds to pass to the designated beneficiary would work an involuntary conversion of the spouse’s one-half interest in those bonds. The proposition that a spouse has such an interest in each item is of doubtful validity and there is no Washington authority to support it. Further, there is, at the very least, a question of whether such state law, even if it did exist, should be allowed to override the beneficiary designations of the federal bonds. The Court is passing upon this important issue even though it has not been considered by the parties in either their briefs or oral argument.


author: Mr. Justice White Mr. Justice Black,

text:
    ITALIA SOCIETA per AZIONI di NAVIGAZIONE v. OREGON STEVEDORING CO., INC.
    No. 82.
    Argued January 8, 1964.
    Decided March 9, 1964.

      Erskine B. Wood argued the cause for petitioner. With him on the brief was Erskine Wood.

      Floyd A. Fredrickson argued the cause for respondent. With him on the brief was Alfred A. Hampson.

    Briefs of amici curiae, urging reversal, were filed by Solicitor General Cox, Assistant Attorney General Douglas and Sherman L. Cohn for the United States, and by J. Ward O’Neill, Charles B. Howard, Scott H. Elder and J. Stewart Harrison for the American Merchant Marine Institute, Inc., et al.
   Mr. Justice White

delivered the opinion of the Court.

This is an action by a shipowner, Italia Societa per Azioni di Navigazione (Italia), against a contracting stevedore company, Oregon Stevedoring Company (Oregon), to recover indemnity for breach of the stevedore’s implied warranty of workmanlike service. The issue presented is whether the warranty is breached where the stevedore has ■ nonnegligently supplied defective equipment which injures one of its employees during the course of stevedoring operations.

I.

The petitioner, Italia, is the owner of the vessel M. S. Antonio Pacinotti. The respondent, Oregon, agreed to render stevedoring services for Italia in all ports along the Columbia and Willamette Rivers. Under the contract between the companies Oregon was to have exclusive rights to and control over the loading and discharge of cargoes aboard Italia’s vessels and was to “furnish all necessary labor and supervision and all ordinary gear for the performance of [these] services . . . , including winch drivers and usual appliances used for stevedoring.” Italia was to furnish and maintain in safe and efficient working condition suitable booms, winches, blocks, steam, lights and so forth. The agreement provided that the stevedoring company would be responsible for damage to the ship, cargo, and for injury or death of any person caused by its negligence, and that the steamship company would be responsible for the injury or death of any person or damage to property arising from its negligence or by reason of failure of the ship’s gear and equipment.

During the course of Oregon’s stevedoring operations in Portland, one of its longshoreman employees, Griffith, was injured on the M. S. Antonio Pacinotti when a tent rope snapped. The rope, permanently attached to a hatch tent used to protect cargo from rain, was furnished by Oregon pursuant to its obligation to supply ordinary gear necessary for the performance of stevedoring services. The injured longshoreman sued the shipowner in a state court for negligence and unseaworthiness and recovered a judgment against Italia upon a general verdict. Italia satisfied the judgment and thereupon brought this suit in a Federal District Court for indemnity from Oregon. The District Court found that the basis for Griffith’s recovery was not negligence on the part of the shipowner but a condition of unseaworthiness created by the rope supplied by Oregon, which was found defective and unfit for its intended use. However, the District Court disallowed indemnity because Italia had failed to prove negligence on the part of the stevedore company, since the defective condition of the rope was not apparent. That court viewed the contractual provision rendering Oregon liable for injuries caused by its negligence as an express disclaimer against an implied warranty of workmanlike service. The Court of Appeals for the Ninth Circuit with one judge dissenting, affirmed, but solely on the ground that a stevedore’s implied warranty of workmanlike service is not breached in the absence of a showing of negligence in supplying defective equipment. 310 F. 2d 481. Because of a conflict between this decision and the decision of the Court of Appeals for the Second Circuit in Booth S. S. Co. v. Meier & Oelhaf Co., 262 F. 2d 310, and the importance of the question involved, we granted certiorari. 372 U. S. 963. For the reasons stated below, we have determined that the absence of negligence on the part of a stevedore who furnishes defective equipment is not fatal to the shipowner’s claim of indemnity based on the stevedore’s implied warranty of workmanlike service.

In Ryan v. Pan-Atlantic Corp., 350 U. S. 124, the landmark decision in this area, it was established that a stevedoring contractor who enters into a service agreement with a shipowner is liable to indemnify the owner for damages sustained as a result of the stevedore’s improper stowage of cargo. Although the agreement between the shipowner and stevedore was silent on the subject of warranties and standards of performance, the Court found that the essence of the stevedore’s contract is to perform “properly and safely.” “Competency and safety . . . are inescapable elements of the service undertaken.” This undertaking is the stevedore’s “warranty of workmanlike service that is comparable to a manufacturer’s warranty of the soundness of its manufactured product,” 350 U. S., at 133-134, a warranty generally deemed to cover defects not attributable to a manufacturer’s negligence. See also Crumady v. The J. H. Fisser, 358 U. S. 423, 428-429.

The Court further distinguished in Ryan between contract and tort actions, stating that the shipowner’s suit for indemnification was not changed “from one for a breach of contract to one for a tort simply because recovery may turn upon the standard of the performance of petitioner’s stevedoring service,” 350 U. S., at 134, and pointedly declined to characterize the stevedore’s conduct as negligent, notwithstanding that discussion in the opinion below centered on concepts of active and passive negligence on the part of the shipowner and stevedore. Although in Ryan the stevedore was negligent, he was not found liable for negligence as such but because he failed to perform safely, a basis for liability including negligent and nonnegligent conduct alike.

Subsequent decisions have made clear that the stevedore’s obligation to perform with reasonable safety extends not only to the stowage and handling of cargo but also to the use of equipment incidental thereto, Weyerhaeuser S. S. Co. v. Nacirema Operating Co., 355 U. S. 563, including defective equipment supplied by the shipowner, Crumady v. The J. H. Fisser, supra, cf. Waterman S. S. Corp. v. Dugan & McNamara, Inc., 364 U. S. 421, and that the shipowner’s negligence is not fatal to recovery against the stevedore. “ [I] n the area of contractual indemnity an application of the theories of ‘active’ or ‘passive’ as well as ‘primary’ or ‘secondary’ negligence is inappropriate.” Weyerhaeuser, supra, at 569. And last Term in Reed v. The Yaka, 373 U. S. 410, we assumed, without deciding, that a shipowner could recover over from a stevedore for breach of warranty even though the injury-cáusing defect was latent and the stevedore without fault. We think that the stevedore’s implied warranty of workmanlike performance applied in these cases is sufficiently broad to include the respondent’s failure to furnish safe equipment pursuant to its contract with the shipowner, notwithstanding that the stevedore would not be liable in tort for its conduct.

Oregon argues, however, that the imposition in Ryan of liability on the stevedore in warranty rather than tort was necessitated by the Court’s previous decision in Halcyon Lines v. Haenn Ship Ceiling & Refitting Corp., 342 U. S. 282, which held that maritime principles of contribution between joint tortfeasors prevailing in collision cases were not applicable in suits for contribution by a shipowner against stevedore companies. It further urges that negligence on the part of the stevedore company or its employees was present in all the above cases, and that the Court characterized the warranty in post-Ryan decisions as one entailing an obligation to perform with reasonable safety and reasonable competency. However, the stevedore’s obligation established in Ryan was not merely an escape from the no-recovery consequences of Halcyon, as is evidenced by the fact that recovery of contribution between joint tortfeasors and recovery of indemnity for breach of warranty proceed on two wholly distinct theories and produce disparate results. See American Stevedores v. Porello, 330 U. S. 446. Recovery in contribution is imposed by law and is measured by the relative fault of the joint tortfeasors or shared equally between them, The North Star, 106 U. S. 17; The Max Morris, 137 U. S. 1; Halcyon Lines v. Haenn Ship Ceiling Refitting Corp., supra; while recovery in indemnity for breach of the stevedore’s warranty is based upon an agreement between the shipowner and stevedore and is not necessarily affected or defeated by the shipowner’s negligence, whether active or passive, primary or secondary. Weyerhaeuser S. S. Co. v. Nacirema Operating Co., supra. And the description of the stevedore’s obligation as one of performance with reasonable safety is not a reference to the reasonable-man test pertaining to negligence, but a delineation of the scope of the stevedore’s implied contractual duties. The implied warranty to supply reasonably safe equipment may be satisfied with less than absolutely perfect equipment; however, the issue of breach of the undertaking does not turn on whether the contractor knew or should have known that his equipment was safe, but on whether the equipment was in fact safe and fit for its intended use. As the Court has aptly said with respect to the shipowner’s duty to furnish a seaworthy vessel, a duty which is imposed by law:

“What has been said is not to suggest that the owner is obligated to furnish an accident-free ship. The duty is absolute, but it is a duty only to furnish a vessel and appurtenances reasonably fit for their intended use. The standard is not perfection, but reasonable fitness; not a ship that will weather every conceivable storm or withstand every imaginable peril of the sea, but a vessel reasonably suitable for her intended service.” Mitchell v. Trawler Racer, Inc., 362 U. S. 539, 550.

We do not believe a rope designed to withstand three to five times the pressure exerted on it when it gave way satisfies the standard of reasonable safety. And the District Court specifically found that the rope was unfit for the purpose for which it was intended and that the injury to Griffith was the natural consequence of its breakage.

Oregon, a specialist in stevedoring, was hired to load and unload the petitioner’s vessels and to supply the ordinary equipment necessary for these operations. The defective rope which created the condition of unseaworthiness on the vessel and rendered the shipowner liable to the stevedore’s employee was supplied by Oregon, and the stevedoring operations in the course of which the longshoreman was injured were in the hands of the employees of Oregon. Not only did the agreement between the shipowner place control of the operations on the stevedore company, but Oregon was also charged under the contract with the supervision of these operations. Although none of these factors affect the shipowner’s primary liability to the injured employee of Oregon, since its duty to supply a seaworthy vessel is strict and nondelegable, and extends to those who perform the unloading and loading portion of the ship’s work, Seas Shipping Co. v. Sieracki, 328 U. S. 85, cf. Pope & Talbot v. Hawn, 346 U. S. 406, they demonstrate that Oregon was in a far better position than the shipowner to avoid the accident. The shipowner defers to the qualification of the stevedoring contractor in the selection and use of equipment and relies on the competency of the stevedore company.

True the defect here was latent and the stevedore free of negligent conduct in supplying the rope. But latent defects may be attributable to improper manufacture or fatigue due to long use and may be discoverable by subjecting the equipment to appropriate tests. Further the stevedore company which brings its gear on board knows the history of its prior use and is in a position to establish retirement schedules and periodic retests so as to discover defects and thereby insure safety of operations. See Booth S. S. Co. v. Meier & Oelhaf Co., supra. It is considerations such as these that underlie a manufacturer’s or seller’s obligation to supply products free of defects and a shipowner’s obligation to furnish a seaworthy vessel. They also serve to render a tort standard of negligence inapplicable to the stevedore’s liability under its warranty of workmanlike service. For they illustrate that liability should fall upon the party best situated to adopt preventive measures and thereby to reduce the likelihood of injury. Where, as here, injury-producing and defective equipment is under the supervision and control of the stevedore, the shipowner is powerless to minimize the risk; the stevedore is not.

Where the shipowner is liable to the employees of the stevedore company as well as its employees for failing to supply a vessel and equipment free of defects, regardless of negligence, we do not think it unfair or unwise to require the stevedore to indemnify the shipowner for damages sustained as a result of injury-producing defective equipment supplied by a stevedore in furtherance of its contractual obligations. See Alaska S. S. Co. v. Petterson, 347 U. S. 396, 401 (dissenting opinion).

Both sides press upon us their interpretation of the law in regard to the scope of warranties in nonsales contracts, such as contracts of bailment and service agreements. But we deal here with a suit for indemnification based upon a maritime contract, governed by federal law, American Stevedores, Inc., v. Porello, supra, in an area where rather special rules governing the obligations and liability of shipowners prevail, rules that are designed to minimize the hazards encountered by seamen, to compensate seamen for the accidents that inevitably occur, and to minimize the likelihood of such accidents. By placing the burden ultimately on the company whose default caused the injury, Reed v. The Yaka, 373 U. S. 410, 414, we think our decision today is in furtherance of these objectives.

II.

The District Court declined to pass on the issue decided above since it found that the implied warranty of workmanlike performance was negated by the provision in the agreement rendering Oregon liable for personal injuries resulting from its negligence. The Court of Appeals declined to pass on the latter question, its finding that the warranty did not extend to nonnegligent conduct rendering a resolution of it unnecessary. The effect of the express assumption of liability for negligence provision in the contract on the existence of the implied warranty has not been briefed or argued in this Court. Accordingly, the issue remains for the Court of Appeals to decide. The judgment below is reversed and the case remanded for further proceedings consistent with this opinion.

It is so ordered.'

Mr. Justice Black,

with whom

The Chief Justice and Mr. Justice Douglas join, dissenting.

Today’s decision is commanded neither by Ryan Steve-doring Co. v. Pan-Atlantic S. S. Corp., 350 U. S. 124, and its progeny, nor by the general law of warranty. In Halcyon Lines v. Haenn Ship Ceiling & Refitting Corp., 342 U. S. 282, and Pope & Talbot, Inc., v. Hawn, 346 U. S. 406, we held that the system of compensation which Congress established in the Longshoremen’s and Harbor Workers’ Compensation Act as the sole liability of a stevedoring company to its employees prevented a shipowner from shifting all or part of his liability to the injured longshoreman onto the stevedoring company, the longshoreman’s employer. Ryan held no more than that the shipowner could recover over from the stevedoring company, by invoking the legal formula of warranty, where there had been a finding that the stevedoring company had been negligent. In the present case there is an express finding that the stevedoring company was not negligent.

Moreover, the Court here expands the general law of warranty in a way which I fear will cause us regret in future cases in other areas of the law as well as in admiralty. There is no basis in past decisions of this or any other court for the holding that one who undertakes to do a job for another and is not negligent in any respect nevertheless has an insurer’s absolute liability to indemnify for liability to injured workers which the party who hired the job done may incur.

Finally, the contract under which the parties dealt here provided that the stevedoring company was to be liable for personal injuries resulting from its negligence, while the shipowner was to be liable for injury caused by its own negligence “or by reason of the failure of ship’s gear and/or equipment.” This provision appears on its face to put the burden of liability for unseaworthiness, which was the basis of the worker’s recovery here, on the shipowner, leaving negligence as the only basis on which the stevedoring company could be held liable. The District Court so held. ' The contract is before us, and we are as competent to interpret it now, without remanding to the Court of Appeals, as we are to invoke “policy” reasons in order to expand Ryan and impose new financial burdens on stevedoring companies in plain violation of the policy Congress adopted in the Longshoremen’s and Harbor Workers’ Compensation Act.

For these and other reasons cogently expressed in Judge Hamlin’s opinion for the Court of Appeals, 310 F. 2d 481, I dissent.

       The contract reads:
      "It is mutually agreed between the parties hereto, that tbp Steve-doring Company will act as stevedores, and that they will with all possible dispatch, load and/or discharge all cargoes of vessels owned, chartered, controlled, or managed by the Steamship Company at all Columbia and Willamette River ports as directed. And it is agreed that the Steamship Company will grant to the said Stevedoring Company the exclusive rights of handling all such cargoes as before mentioned under the terms of this agreement . . . .”

       Paragraph VIII of the agreement states:
      “The Stevedoring Company will be responsible for damage to the ship and its equipment, and for damage to cargo or loss of cargo over-side, and for injury to or death of any person caused by its negligence, provided, however, when such damage occurs to the ship or its equipment, or where such damage or loss occurs to cargo, the ship’s officers or other authorized representatives call the same to the attention of the Stevedoring Company at the time of occurrence. The Steamship Company shall be responsible for injury to or death of any person or for any damage to or loss of property arising through the negligence of the Steamship Company or any of its agents or employees, or by reason of the failure of ship’s gear and/or equipment.”

       The shipowner is liable for unseaworthiness, regardless of negligence, whenever the ship or its gear is not reasonably fit for the purpose for which it was intended and this liability extends to longshoremen and others who work aboard the vessel, including those in the employ of contracting stevedore companies. Seas Shipping Co. v. Sieracki, 328 U. S. 85; Pope & Talbot v. Hawn, 346 U. S. 406; Mitchell v. Trawler Racer, 362 U. S. 539. If the owner engages others who supply the equipment necessary for stevedoring operations, he must still answer to the longshoreman if the gear proves to be un-seaworthy. Alaska S. S. Co. v. Petterson, 347 U. S. 396. This liability is strict and nondelegable. Mitchell v. Trawler Racer, supra; Mahnich v. Southern S. S. Co., 321 U. S. 96.

         George v. Willman, 379 P. 2d 103 (Alaska); Hessler v. Hillwood Mfg. Co., 302 F. 2d 61 (C. A. 6th Cir.); Green v. American Tobacco Co., 154 So. 2d 169 (Fla.); Henningsen v. Bloomfield Motors, 32 N. J. 358, 161 A. 2d 69. See Frumer and Friedman, Products Liability, § 10.01, and cases cited therein; Uniform Sales Act, Uniform Laws Annotated (1950 ed.), §15 (1); Uniform Commercial Code, Uniform Laws Annotated (1962 ed.), §2-315. See generally Williston, Sales, §237 (Rev. ed. 1948 and Supp. 1963).

         Palazzolo v. Pan-Atlantic S. S. Corp., 211 F. 2d 277 (C. A. 2d Cir.):
      “Judgment on the action for indemnity over was awarded to Ryan. We think this error. The trial judge found Pan-Atlantic guilty of negligence in that its ‘cargo officer did not properly perform his admitted duty to supervise the safe and careful loading of the vessel.’ However, Ryan created the hazardous condition by its improper stowage of the pulp paper rolls at Georgetown. We think the improper stowage the primary and active cause of the accident. Under our holdings . . . indemnity over is recoverable where, as here, the employer’s negligence was the ‘sole’ ‘active’ or ‘primary’ cause of the accident.” Id., at 279.

       If the stevedore is liable in warranty for supplying defective, injury-producing equipment, of course the provisions of the Longshoremen’s and Harbor Workers’ Compensation Act, 44 Stat. 1424, as amended, 33 U. S. C. §§ 901-950, are no bar to recovery. This question was fully resolved in Ryan v. Pan-Atlantic Corp., supra, at 130: “The Act nowhere expressly excludes or limits a shipowner’s right, as a third person, to insure itself against such a liability either by a bond of indemnity, or the contractor’s own agreement to save the shipowner harmless.” See also Reed v. The Yaka, supra.

       See Crawford v. Pope & Talbot, Inc., 206 F. 2d 784 (C. A. 3d Cir.); Rich v. United States, 177 F. 2d 688 (C. A. 2d Cir.); McFall v. Compagnie Maritime Belge, S. A., 304 N. Y. 314, 107 N. E. 2d 463. See generally Weinstock, The Employer’s Duty to Indemnify Shipowners For Damages Recovered By Harbor Workers, 103 U. of Pa. L. Rev. 321 (1954).

       Cf. Calderola v. Cunard S. S. Co., 279 F. 2d 475 (C. A. 2d Cir.); Orlando v. Prudential S. S. Corp., 313 F. 2d 822 (C. A. 2d Cir.).

       Seas Shipping Co. v. Sieracki, supra, at 100. Hugev v. Dampskisaktieselskabet Int’l, 170 F. Supp. 601, 609-611, aff’d sub norm. Metropolitan Stevedore Co. v. Dampskisaktieselskabet Int’l, 274 F. 2d 875 (C. A. 9th Cir.), cert. denied, 363 U. S. 803; Revel v. American Export Lines, 162 F. Supp. 279, 286-287, aff’d, 266 F. 2d 82 (C. A. 4th Cir.).

       “The function of the doctrine of unseaworthiness and the corollary doctrine of indemnification is allocation of the losses caused by shipboard injuries to the enterprise, and within the several segments of the enterprise, to the institution or institutions most able to minimize the particular risk involved.” DeGioia v. United States Lines, 304 F. 2d 421, 426 (C. A. 2d Cir.). And see Ferrigno v. Ocean Transport Ltd., 309 F. 2d 445 (C. A. 2d Cir.).

       44 Stat. 1424, as amended, 33 U. S. C. §§ 901-950.

        Reed v. The Yaka, 373 U. S. 410, held only that a longshoreman could bring a suit for unseaworthiness against a stevedoring company which chartered a ship and was the longshoreman’s employer. In that case no issue as to an implied warranty of workmanlike service arose because the stevedoring company had agreed in any case to hold the shipowner harmless without regard to negligence, see 183 F. Supp. 69, 70; furthermore, the stevedoring company there was also the operator of the vessel, and therefore in that particular case was primarily liable for unseaworthiness.


author: Mr. Justice Goldberg

text:
    UNITED STATES v. WARD BAKING CO. et al.
    No. 101.
    Argued February 18, 1964.
    Decided March 9, 1964.

      Assistant Attorney General Orrick argued the cause for the United States. With him on the brief were Solicitor General Cox, Philip B. Heymann and Lionel Kestenbaum.

      Davisson F. Dunlap argued the cause for appellees. With him on the brief were John W. Ball, Charles L. Gowen, John B. Miller and John H. Boman, Jr.

   Mr. Justice Goldberg

delivered the opinion of the Court.

This appeal raises the question of whether and under what circumstances a District Court may properly enter a “consent” judgment in a civil antitrust suit without the consent of the Government and without trial of certain disputed issues.

On July 21, 1961, the Government filed a civil complaint in the United States District Court for the Middle District of Florida. The complaint charged the five appellee bakery companies with violating § 1 of the Sherman Act, 26 Stat. 209, as amended, 15 U. S. C. § l, by conspiring:

“(a) To allocate among themselves the business of supplying bakery products [defined as bread and rolls] to the United States Naval installations in the Jacksonville area; and
“(b) To submit noncompetitive, collusive, and rigged bids and price quotations for supplying bakery products to United States Naval installations in the Jacksonville area.”

The Government sought relief, including an adjudication that the companies had violated the Act, an injunction- against allocating business or fixing prices in the supplying of bakery products to United States naval installations in the Jacksonville area, and “such further, general, and different relief as the nature of the case may require and the Court may deem appropriate in the premises.”

On May 8, 1962, after an extensive period of settlement negotiations, the bakery companies filed with the court a proposed form of judgment which would have enjoined the companies from conspiring to:

“(a) Submit noncompetitive, collusive or rigged bids, or quotations for supplying bakery products to United States Naval installatiom in the Jacksonville area, or
“(b) Allocate, divide or rotate the business of supplying bakery products to United States Naval installations in the Jacksonville area.” (Emphasis added.)

The proposed judgment would also have required the companies to include sworn statements of noncollusion in each bid for bakery products submitted to any naval installations in the Jacksonville area for the following three years.

The District Court ordered the Government to show cause “why the said proposed judgment . . . should not be entered.” The Government replied, objecting “to confining the scope of the injunction to bids for supplying bread and rolls to United States Naval Installations in the Jacksonville area” and “to limiting the requirement . . . that bids be accompanied by sworn statements of non-collusion, to a three year period.”

The bakery companies then filed an amended motion for entry of consent judgment, containing two significant changes in their original proposal. Its scope was broadened to include all bakery products, not only bread and rolls, and to include all sales to the United States, not only to its naval installations in the Jacksonville area. Subsequently, at the hearing on the order to show cause, the companies agreed to increase, from three to five years, the period during which they were to submit sworn statements of noncollusion.

The Government opposed entry of the amended proposed consent judgment on the ground that it still omitted two necessary items of relief:

“(1) a general injunction against conspiring to fix the price of bakery products to any third party other than the Government, and (2) an injunction against urging or suggesting to any seller of bakery products the quotation or charging of any price or other terms or conditions of sale of bakery products.”

Despite these objections, the District Court entered the amended “consent” judgment proposed by the companies. The judgment recited that it was entered “without trial or adjudication of any of the issues of fact or law herein and before the taking of any testimony . . . .” In his opinion accompanying the entry of judgment, the district judge said:

“The demand of the plaintiff as to the inclusion of the two controversial provisions in _its tendered judgment does not have a reasonable basis under the circumstances here present. . . . Based upon this court’s knowledge of the facts involved in Case No. 11677-Crim-J and this record, the proposed judgment which the court is entering provides all the relief to which the plaintiff would be entitled after the entry of a decree pro confesso against each defendant and after a trial on the allegations of this complaint. . . . The mere fact that a court has found a defendant has committed an act in violation of a statute does not justify an injunction broadly to obey the statute and thus subject the defendant to contempt proceedings if he shall at any time in the future commit some new violation unlike and unrelated to that with which he was originally charged.”

The Government, pursuant to § 2 of the Expediting Act, 32 Stat. 823, as amended, 15 U. S. C. § 29, appealed directly to this Court from the entry of judgment. Probable jurisdiction was noted. 374 U. S. 803. We conclude that the additional relief sought by the Government had a reasonable basis under the circumstances and that, consequently, the District Court erred in entering the “consent” judgment without the Government’s actual consent.

This Court has recognized that a “full exploration of facts is usually necessary in order [for the District Court] properly to draw [an antitrust] decree” so as “to prevent future violations and eradicate existing evils.” Associated Press v. United States, 326 U. S. 1, 22. After a District Court has concluded that a conspiracy in restraint of trade exists, it:

“has the duty to compel action by the conspirators that will, so far as practicable, cure the ill effects of the illegal conduct, and assure the public freedom from its continuance. Such action is not limited to prohibition of the proven means by which the evil was accomplished, but may range broadly through practices connected with acts actually found to be illegal. Acts entirely proper when viewed alone may be prohibited. The conspirators should, so far as practicable, be denied future benefits from their forbidden conduct. . . . [R] elief, to be effective, must go beyond the narrow limits of the proven violation.” United States v. United States Gypsum Co., 340 U. S. 76, 88-89, 90.

It would be a rare case where all the facts necessary for a trial court to decide whether a disputed item of relief was warranted could be determined without an “opportunity to know the record.” Id., at 89. This is not such a case.

The dispute here concerned whether the injunction should include prohibitions against (1) price fixing in sales to parties other than the United States Government, and (2) “urging or suggesting to any seller of bakery products the quotation or charging of any price or other terms or conditions of sale of bakery products.”

The conspiracy alleged in the complaint was a particularly flagrant one. The complaint charged specifically that:

“Representatives of the defendants held meetings and conferred by telephone for the purpose of alio-eating among the defendants the business of supplying bakery products to United States Naval installations in the Jacksonville area. The business was allocated in such a manner as to provide each defendant with the business for a designated quarterly period of the year. When invitations to bid were received from the Naval installations in the Jacksonville area, said representatives would again meet and confer and the representatives of the defendant designated for the particular period would declare the prices which that defendant intended to bid. The others would agree to bid higher prices and thus protect the bid of the designated low bidder.”

As this Court has said: “Acts in disregard of law call for repression by sterner measures than where the steps could reasonably have been thought permissible.” 340 U. S., at 89-90. The acts here alleged could not, under any theory, have been thought permissible. “It is a salutary principle that when one has been found to have committed acts in violation of a law he may be restrained from committing other related unlawful acts.” Labor Board v. Express Pub. Co., 312 U. S. 426, 436.

The allegedly illegal acts were surrounded by “circumstances,” United States v. United States Gypsum Co., supra, at 89, which did not preclude the possibility that the relief sought by the Government would be warranted. In fact, the circumstances tended to support the view that the practices which the Government sought to enjoin were “connected” with and “related” to practices which the companies may in the past have followed. The Government informed the District Court that “on June 27, 1962, a federal grand jury in Philadelphia indicted the defendant Ward Baking Company on a charge of conspiring with five other baking companies to fix the prices of 'economy’ bread sold in the Philadelphia-Trenton area.” The record before the District Court showed, moreover, that four of the defendants had previously pleaded nolo contendere to charges of conspiring to fix prices on sales to nongovernment accounts, such as “grocery stores, supermarkets, restaurants, hotels and similar large purchasers.” Thus, the surrounding circumstances suggest the possibility of a conspiracy reaching beyond the Jacksonville area, beyond bread and rolls, and, most significantly, beyond sales to the Government.

Against this background, it cannot reasonably be assumed that the Government could not, at the trial, have introduced evidence justifying, in whole or in part, the relief sought. This is not to say, of course, that the District Court could not correctly have concluded, after trial and an “opportunity to know the record and to appraise the need for prohibitions or affirmative actions,” United States v. United States Gypsum Co., supra, at 89, that the requested relief was not warranted. Under the circumstances of this case, however, it could not so conclude without a trial.

Since we conclude that there was a bona fide disagreement concerning substantive items of relief which could be resolved only by trial, we need not, and do not, reach appellees’ contention that, where there is agreement on every substantive item of relief, insistence by the Government upon an adjudication of guilt as a condition to giving its consent to a judgment would conflict with the congressional policy embodied in § 5 of the Clayton Act, 38 Stat. 731, as amended, 15 U. S. C. § 16. Compare, United States v. Brunswick-Balke-Collender Co., 203 F. Supp. 657. We decide only that where the Government seeks an item of relief to which evidence adduced at trial may show that it is entitled, the District Court may not enter a “consent” judgment without the actual consent of the Government. There is nothing in the language or legislative history of § 5 of the Clayton Act indicating that Congress intended to give a defendant the privilege of rejecting the bona fide demands of the Government and at the same time avoiding an adjudication on the merits of the complaint. The companies argued before the District Court that they should not be “foreclosed from a right to go to trial if [the District Court decides] to enter the Government’s Decree.” Nor should the Government be foreclosed from that same right where, as here, the District Court decides, over the Government’s objection, to enter the companies’ proposed decree.

Accordingly, the judgment is vacated and the case is remanded for trial.

It is so ordered.

       In March 1961 an indictment had been returned against the five bakery companies charging them with violating the Sherman Act by committing substantially the same acts as were charged in the subsequent civil complaint. Four of appellee companies, and two other companies, had also been charged with conspiring to fix the price of bread and rolls on sales to nongovernment wholesale accounts, defined as “grocery stores, supermarkets, restaurants, hotels and similar large purchasers ...” All the defendants submitted, over the objection of the Government, pleas of nolo contendere and fines were imposed. The same judge presided in both the criminal and civil cases.

       The companies were also charged with violating the False Claims Act, Revised Statutes §§ 3490, 3491, 3492, 5438, as amended, 31 U. S. C. §§231-233, derived from the Act of March 2, 1863, 12 Stat. 696. This was settled by a payment of $44,000.

       The disputed provisions certainly may be regarded as within the general scope of the relief sought in the complaint, which included a request for “such further, general, and different relief as the nature of the case may require and the Court may deem appropriate in the premises.” It should be noted in this regard that the companies did accede to a number of government demands which went beyond the violations charged or the specific relief requested.

       It is not contended that this would have been a proper case for the entry of summary judgment. The critical question was whether the Government could produce evidence at trial warranting the relief sought. The companies claim, however, that if the Government had such evidence, it should have produced that evidence in response to the District Court’s order to show cause why the companies’ proposed consent judgment should not be entered. The show-cause order cannot properly be read as a demand that the Government detail or tender the evidence it proposed to offer at trial. The Government’s response, which specified its legal and factual objections to the entry of the proposed decree and informed the court of the Philadelphia-Trenton indictment, ante, at 332-333, was a full and satisfactory response to the show-cause order.

       The Clayton Act, §5 (a), 38 Stat. 731, as amended, 15 U. S. C. §16, provides as follows:
      “A final judgment or decree heretofore or hereafter rendered in any civil or criminal proceeding brought by or on behalf of the United States under the antitrust laws to the effect that a defendant has violated said laws shall be prima facie evidence against such defendant in any action or proceeding brought by any other party against such defendant under said laws or by the United States under section 15a of this title, as to all matters respecting which said judgment or decree would be an estoppel as between the parties thereto: Provided, That this section shall not apply to consent judgments or decrees entered before any testimony has been taken or to judgments or decrees entered in actions under section 15a of this title.”


author: Per Curiam.

text:
    ARCENEAUX v. LOUISIANA.
    No. 76.
    Argued January 15, 1964.
    Decided March 9, 1964.

      J. Minos Simon argued the cause and filed briefs for petitioner.

      Bertrand De Blanc argued the cause for respondent. With him on the brief were Jack P. F. Oremillion, Attorney General of Louisiana, and M. E. Culligan, Assistant Attorney General.
   Per Curiam.

Petitioner, who was before the state court “on a charge of vagrancy,” raised several objections to a denial of a preliminary hearing. The third of these reads as follows:

“. . . that the bill of information charges no offense known to law and if it charges an offense within the meaning and intentment [sic] of a Louisiana statute, then both the statute and the bill of information are unconstitutional, null, and void, as being violative of the guaranties contained in the United States Constitution and of the Louisiana Constitution and Laws; . . .”

Louisiana Rev. Stat. § 15:154 provides that “after an indictment found or an information filed, it shall be wholly within the discretion of the district court, and not subject to review by any other court, to order or to refuse to order a preliminary examination; . . .”

Petitioner, when he asked for a preliminary hearing, was incarcerated and charged by affidavit with the offense of vagrancy. Neither an indictment nor a bill of information had been filed against him. In that state of the proceedings the motion for a preliminary examination was granted and a hearing set for March 8, 1962, and then continued to March 9. On March 9 the District Attorney filed an information charging the accused with the crime of vagrancy. Thereupon, the district judge recalled his order for a preliminary examination.

Petitioner appealed to the Louisiana Supreme Court, asking for a writ of habeas corpus and alternatively for certiorari, mandamus, and prohibition. In that application the remedies of certiorari, mandamus and prohibition were sought alternatively for denial of a preliminary examination and for having to stand trial under the Vagrancy Act.

In that application the petitioner said:

“The bill of information charged no criminal offense, and if it did set forth an alleged offense in the language of a statute, then such statute and the bill of information are unconstitutional, null and void, being violative of both Federal and State Constitutions.”

In the prayer for relief contained in the application he asked in the alternative that the Court rule “upon the constitutionality” of the vagrancy statute and whether it and other Louisiana statutes and constitutional provisions cited “are contrary to and violative of the provisions of the United States Constitution, and in particular the Fifth, Sixth and Fourteenth Amendments thereto.”

Thus when petitioner sought review of the denial of a preliminary hearing, he tried to raise the question of the constitutionality of the vagrancy statute.

The Supreme Court denied the writs on March 16, 1962, paying “Writ refused. There is no error of law in the ruling complained of.” The petition for certiorari to this Court was filed March 31, 1962. Two months later, i. e., May 31, 1962, petitioner appeared in the Lafayette city court (to which the case had been transferred by the District Court) and pleaded guilty to the charge of vagrancy. He was then sentenced to serve four months in jail, but given credit for the time served and forthwith discharged. We granted certiorari, 372 U. S. 906, and the case has been argued.

In Louisiana it seems that, with exceptions not relevant here, only orders which finally dispose of criminal cases can be appealed. See La. Rev. Stat. §15:540. “A case is finally disposed of by any judgment which dismisses the prosecution, whether before or after verdict, that grants or refuses to grant a new trial, that arrests or refuses to arrest judgment, or that imposes sentence.” La. Rev. Stat. § 15:541.

The “ruling complained of” as referred to by the Louisiana Supreme Court can only be the order recalling the order for a preliminary hearing. Under our decisions in the criminal field, such denial of intermediate relief in state criminal cases is similar to an order overruling a plea in bar (Eastman v. Ohio, 299 U. S. 505) or overruling a demurrer to an indictment (Polakow’s Realty Experts v. Alabama, 319 U. S. 750). Hence under 28 U. S. C. § 1257, denial of the preliminary hearing in a vagrancy case of this character is not a “final” judgment. We therefore dismiss the writ for lack of jurisdiction, without any intimation as to what rights, if any, petitioner may have under the Civil Rights Acts.

       The statute challenged, La. Rev. Stat. § 14:107 (1962 Cum. Supp.), provides:
      “The following persons are and shall be guilty of vagrancy:
      “(8) Persons found in or near any structure, movable, vessel, or private grounds, without being able to account for their lawful presence therein; . . . .”

       We do not concern ourselves with the state law aspects of habeas corpus, which is, after all, only an alternative form of relief that was sought.


text:
    SHUTTLESWORTH v. CITY OF BIRMINGHAM.
    No. 168.
    Argued February 27, 1964.
    Decided March 9, 1964.

      Jack Greenberg argued the cause for petitioner. With him on the brief were James M. Nabrit III, Peter A. Hall and Orzell Billingsley, Jr.

      J. M. Breckenridge argued the cause and filed a brief for respondent.
   Per Curiam.

The judgment of the Court of Appeals of Alabama is reversed. Cole v. Arkansas, 333 U. S. 196; Williams v. Georgia, 349 U. S. 375.

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


text:
    ARIZONA v. CALIFORNIA et al.
    No. 8, Original.
    Decided June 3, 1963.
    Decree entered March 9, 1964.
   It is Ordered, Adjudged and Decreed that

I. For purposes of this decree:

(A) “Consumptive use” means diversions from the stream less such return flow thereto as is available for consumptive use in the United States or in satisfaction of the Mexican Treaty obligation;

(B) “Mainstream” means the mainstream of the Colorado River downstream from Lee Ferry within the United States, including the reservoirs thereon;

(C) Consumptive use from the mainstream within a State shall include all consumptive uses of water of the mainstream, including water drawn from the mainstream by underground pumping, and including, but not limited to, consumptive uses made by persons, by agencies of that State, and by the United States for the benefit of Indian reservations and other federal establishments within the State;

(D) “Regulatory structures controlled by the United States” refers to Hoover Dam, Davis Dam, Parker Dam, Headgate Rock Dam, Palo Verde Dam, Imperial Dam, Laguna Dam and all other dams and works on the mainstream now or hereafter controlled or operated by the United States which regulate the flow of water in the mainstream or the diversion of water from the mainstream ;

(E) “Water controlled by the United States” refers to the water in Lake Mead, Lake Mohave, Lake Havasu and all other water in the mainstream below Lee Ferry and within the United States;

(F) “Tributaries” means all stream systems the waters of which naturally drain into the mainstream of the Colorado River below Lee Ferry;

(G) “Perfected right” means a water right acquired in accordance with state law, which right has been exercised by the actual diversion of a specific quantity of water that has been applied to a defined area of land or to definite municipal or industrial works, and in addition shall include water rights created by the reservation of mainstream water for the use of federal establishments under federal law whether or not the water has been applied to beneficial use;

(H) “Present perfected rights” means perfected rights, as here defined, existing as of June 25, 1929, the effective date of the Boulder Canyon Project Act;

(I) “Domestic use” shall include the use of water for household, stock, municipal, mining, milling, industrial, and other like purposes, but shall exclude the generation of electrical power;

(J) “Annual” and “Year,” except where the context may otherwise require, refer to calendar years;

(K) Consumptive use of water diverted in one State for consumptive use in another State shall be treated as if diverted in the State for whose benefit it is consumed.

II. The United States, its officers, attorneys, agents and employees be and they are hereby severally enjoined:

(A) From operating regulatory structures controlled by the United States and from releasing water controlled by the United States other than in accordance with the following order of priority:

(1) For river regulation, improvement of navigation, and flood control;

(2) For irrigation and domestic uses, including the satisfaction of present perfected rights; and

(3) For power;

Provided, however, that the United States may release water in satisfaction of its obligations to the United States of Mexico under the Treaty dated February 3, 1944, without regard to the priorities specified in this subdivision (A) ;

(B) From releasing water controlled by the United States for irrigation and domestic use in the States of Arizona, California and Nevada, except as follows:

(1) If sufficient mainstream water is available for release, as determined by the Secretary of the Interior, to satisfy 7,500,000 acre-feet of annual consumptive use in the aforesaid three States, then of such 7,500,000 acre-feet of consumptive use, there shall be apportioned 2,800,000 acre-feet for use in Arizona, 4,400,000 acre-feet for use in California, and 300,000 acre-feet for use in Nevada;

(2) If sufficient mainstream water is available for release, as determined by the Secretary of the Interior, to satisfy annual consumptive use in the aforesaid States in excess of 7,500,000 acre-feet, such excess consumptive use is surplus, and 50% thereof shall be apportioned for use in Arizona and 50% for use in California; provided, however, that if the United States so contracts with Nevada, then 46% of such surplus shall be apportioned for use in Arizona and 4% for use in Nevada;

(3) If insufficient mainstream water is available for release, as determined by the Secretary of the Interior, to satisfy annual consumptive use of 7,500,000 acre-feet in the aforesaid three States, then the Secretary of the Interior, after providing for satisfaction of present perfected rights in the order of their priority dates without regard to state lines and after consultation with the parties to major delivery contracts and such representatives as the respective States may designate, may apportion the amount remaining available for consumptive use in such manner as is consistent with the Boulder Canyon Project Act as interpreted by the opinion of this Court herein, and with other applicable federal statutes, but in no event shall more than 4,400,000 acre-feet be apportioned for use in California including all present perfected rights;

(4) Any mainstream water consumptively used within a State shall be charged to its apportionment, regardless of the purpose for which it was released;

(5) Notwithstanding the provisions of Paragraphs (1) through (4) of this subdivision (B), mainstream water shall be released or delivered to water users (including but not limited to public and municipal corporations and other public agencies) in Arizona, California, and Nevada only pursuant to valid contracts therefor made with such users by the Secretary of the Interior, pursuant to Section 5 of the Boulder Canyon Project Act or any other applicable federal statute;

(6) If, in any one year, water apportioned for consumptive use in a State will not be consumed in that State, whether for the reason that delivery contracts for the full amount of the State’s apportionment are not in effect or that users cannot apply all of such water to beneficial uses, or for any other reason, nothing in this decree shall be construed as prohibiting the Secretary of the Interior from releasing such apportioned but unused water during such year for consumptive use in the other States. No rights to the recurrent use of such water shall accrue by reason of the use thereof;

(C) From applying the provisions of Article 7 (d) of the Arizona water delivery contract dated February 9, 1944, and the provisions of Article 5 (a) of the Nevada water delivery contract dated March 30, 1942, as amended by the contract dated January 3,1944, to reduce the apportionment or delivery of mainstream water to users within the States of Arizona and Nevada by reason of any uses in such States from the tributaries flowing therein ;

(D) From releasing water controlled by the United States for use in the States of Arizona, California, and Nevada for the benefit of any federal establishment named in this subdivision (D) except in accordance with the allocations made herein; provided, however, that such release may be made notwithstanding the provisions of Paragraph (5) of subdivision (B) of this Article; and provided further that nothing herein shall prohibit the United States from making future additional reservations of mainstream water for use in any of such States as may be authorized by law and subject to present perfected rights and rights under contracts theretofore made with water users in such State under Section 5 of the Boulder Canyon Project Act or any other applicable federal statute:

(1) The Chemehuevi Indian Reservation in annual quantities not to exceed (i) 11,340 acre-feet of diversions from the mainstream or (ii) the quantity of mainstream water necessary to supply the consumptive use required for irrigation of 1,900 acres and for the satisfaction of related uses, whichever of (i) or (ii) is less, with a priority date of February 2, 1907;

(2) The Cocopah Indian Reservation in annual quantities not to exceed (i) 2,744 acre-feet of diversions from the mainstream or (ii), the quantity of mainstream water necessary to supply the consumptive use required for irrigation of 431 acres and for the satisfaction of related uses, whichever of (i) or (ii) is less, with a priority date of September 27, 1917;

(3) The Yuma Indian Reservation in annual quantities not to exceed (i) 51,616 acre-feet of diversions from the mainstream or (ii) the quantity of mainstream water necessary to supply the consumptive use required for irrigation of 7,743 acres and for the satisfaction of related uses, whichever of (i) or (ii) is less, with a priority date of January 9, 1884;

(4) The Colorado River Indian Reservation in annual quantities not to exceed (i) 717,148 acre-feet of diversions from the mainstream or (ii) the quantity of mainstream water necessary to supply the consumptive use required for irrigation of 107,588 acres and for the satisfaction of related uses, whichever of (i) or (ii) is less, with priority dates of March 3, 1865, for lands reserved by the Act of March 3, 1865 (13 Stat. 541, 559); November 22, 1873, for lands reserved by the Executive Order of said date; November 16, 1874, for lands reserved by the Executive Order of said date, except as later modified; May 15, 1876, for lands reserved by the Executive Order of said date; November 22, 1915, for lands reserved by the Executive Order of said date;

(5) The Fort Mohave Indian Reservation in annual quantities not to exceed (i) 122,648 acre-feet of diversions from the mainstream or (ii) the quantity of mainstream water necessary to supply the consumptive use required for irrigation of 18,974 acres and for the satisfaction of related uses, whichever of (i) or (ii) is less, and, subject to the next succeeding proviso, with priority dates of September 19, 1890, for lands transferred by the Executive Order of said date; February 2, 1911, for lands reserved by the Executive Order of said date; provided, however, that lands conveyed to the State of California pursuant to the Swamp Land Act [9 Stat. 519 (1850)] as well as any accretions thereto to which the owners of such land may be entitled, and lands patented to the Southern Pacific Railroad pursuant to the Act of July 27, 1866 (14 Stat. 292), shall not be included as irrigable acreage within the Reservation and that the above specified diversion requirement shall be reduced by 6.4 acre-feet per acre of such land that is irrigable; provided that the quantities fixed in this paragraph and paragraph (4) shall be subject to appropriate adjustment by agreement or decree of this Court in the event that the boundaries of the respective reservations are finally determined;

(6) The Lake Mead National Recreation Area in annual quantities reasonably necessary to fulfill the purposes of the Recreation Area, with priority dates of May 3, 1929, for lands reserved by the Executive Order of said date (No. 5105), and April 25, 1930, for lands reserved by the Executive Order of said date (No. 5339) ;

(7) The Havasu Lake National Wildlife Refuge in annual quantities reasonably necessary to fulfill the purposes of the Refuge, not to exceed (i) 41,839 acre-feet of water diverted from the mainstream or (ii) 37,339 acre-feet of consumptive use of mainstream water, whichever of (i) or (ii) is less, with a priority date of January 22, 1941, for lands reserved by the Executive Order of said date (No. 8647), and a priority date of February 11, 1949, for land reserved by the Public Land Order of said date (No. 559);

(8) The Imperial National Wildlife Refuge in annual quantities reasonably necessary to fulfill the purposes of the Refuge not to exceed (i) 28,000 acre-feet of water diverted from the mainstream or (ii) 23,000 acre-feet of consumptive use of mainstream water, whichever of (i) or (ii) is less, with a priority date of February 14, 1941;

(9) Boulder City, Nevada, as authorized by the Act of September 2, 1958, 72 Stat. 1726, with a priority date of May 15, 1931;

Provided, further, that consumptive uses from the mainstream for the benefit of the above-named federal establishments shall, except as necessary to satisfy present perfected rights in the order of their priority dates without regard to state lines, be satisfied only out of water available, as provided in subdivision (B) of this Article, to each State wherein such uses occur and subject to, in the case of each reservation, such rights as have been created prior to the establishment of such reservation by contracts executed under Section 5 of the Boulder Canyon Project Act or any other applicable federal statute.

III. The States of Arizona, California and Nevada, Palo Verde Irrigation District, Imperial Irrigation District, Coachella Valley County Water District, Metropolitan Water District of Southern California, City of Los Angeles, City of San Diego, and County of San Diego, and all other users of water from the mainstream in said States, their officers, attorneys, agents and employees, be and they are hereby severally enjoined:

(A) From interfering with the management and operation, in conformity with Article II of this decree, of regulatory structures controlled by the United States;

(B) From interfering with or purporting to authorize the interference with releases and . deliveries, in conformity with Article II of this decree, of water controlled by the United States;

(C) From diverting or purporting to authorize the diversion of water from the mainstream the diversion of which has not been authorized by the United States for use in the respective States; provided, however, that no party named in this Article and no other user of water in said States shall divert or purport to authorize the diversion of water from the mainstream the diversion of which has not been authorized by the United States for its particular use;

(D) From consuming or purporting to authorize the consumptive use of water from the mainstream in excess of the quantities permitted under Article II of this decree.

IV. The State of New Mexico, its officers, attorneys, agents and employees, be and they are after four years from the date of this decree hereby severally enjoined:

(A) From diverting or permitting the diversion of water from San Simon Creek, its tributaries and underground water sources for the irrigation of more than a total of 2,900 acres during any one year, and from exceeding a total consumptive use of such water, for whatever purpose, of 72,000 acre-feet during any period of ten consecutive years; and from exceeding a total consumptive use of such water, for whatever purpose, of 8,220 acre-feet during any one year;

(B)From diverting or permitting the diversion of water from the San Francisco River, its tributaries and underground water sources for the irrigation within each of the following areas of more than the following number of acres during any one year:

Luna Area...................................... 225
Apache Creek-Aragon Area....................... 316
Reserve Area................................... 725
Glenwood Area.................................. 1,003

and from exceeding a total consumptive use of such water for whatever purpose, of 31,870 acre-feet during any period of ten consecutive years; and from exceeding a total consumptive use of such water, for whatever purpose, of 4,112 acre-feet during any one year;

(C)From diverting or permitting the diversion of water from the Gila River, its tributaries (exclusive of the San Francisco River and San Simon Creek and their tributaries) and underground water sources for the irrigation within each of the following areas of more than the following number of acres during any one year:

Upper Gila Area................................ 287
Cliff-Gila and Buckhorn-Duck Creek Area.......... 5, 314
Red Rock Area................................. 1,456

and from exceeding a total consumptive use of such water (exclusive of uses in Virden Valley, New Mexico), for whatever purpose, of 136,620 acre-feet during any period of ten consecutive years; and from exceeding a total consumptive use of such water (exclusive of uses in Virden Valley, New Mexico), for whatever purpose, of 15,895 acre-feet during any one year;

(D)From diverting or permitting the diversion of water from the Gila River and its underground water sources in the Virden Valley, New Mexico, except for use on lands determined to have the right to the use of such water by the decree entered by the United States District Court for the District of Arizona on June 29, 1935, in United States v. Gila Valley Irrigation District et al. (Globe Equity No. 59) (herein referred to as the Gila Decree), and except pursuant to and in accordance with the terms and provisions of the Gila Decree; provided, however, that:

(1) This decree shall not enjoin the use of underground water on any of the following lands:

or on lands or for other uses in the Virden Valley to which such use may be transferred or substituted on retirement from irrigation of any of said specifically described lands, up to a maximum total consumptive use of such water of 838.2 acre-feet per annum, unless and until such uses are adjudged by a court of competent jurisdiction to be an infringement or impairment of rights confirmed by the Gila Decree; and

(2) This decree shall not prohibit domestic use of water from the Gila River and its underground water sources on lands with rights confirmed by the Gila Decree, or on farmsteads located adjacent to said lands, or in the Virden Townsite, up to a total consumptive use of 265 acre-feet per annum in addition to the uses confirmed by the Gila Decree, unless and until such use is adjudged by a court of competent jurisdiction to be an infringement or impairment of rights confirmed by the Gila Decree;

(E) Provided, however, that nothing in this Article IV shall be construed to affect rights as between individual water users in the State of New Mexico; nor shall anything in this Article be construed to affect possible superior rights of the United States asserted on behalf of National Forests, Parks, Memorials, Monuments and lands administered by the Bureau of Land Management ; and provided further that in addition to the diversions authorized herein the United States has the right to divert water from the mainstream of the Gila and San Francisco Rivers in quantities reasonably necessary to fulfill the purposes of the Gila National Forest with priority dates as of the date of withdrawal for forest purposes of each area of the forest within which the water is used;

(F) Provided, further, that no diversion from a stream authorized in Article IV (A) through (D) may be transferred to any of the other streams, nor may any use for irrigation purposes within any area on one of the streams be transferred for use for irrigation purposes to any other area on that stream.

V. The United States shall prepare and maintain, or provide for the preparation and maintenance of, and shall make available, annually and at such shorter intervals as the Secretary of the Interior shall deem necessary or advisable, for inspection by interested persons at all reasonable times and at a reasonable place or places, complete, detailed and accurate records of:

(A) Releases of water through regulatory structures controlled by the United States;

(B) Diversions of water from the mainstream, return flow of such water to the stream as is available for consumptive use in the United States or in satisfaction of the Mexican Treaty obligation, and consumptive use of such water. These quantities shall be stated separately as to each diverter from the mainstream, each point of diversion, and each of the States of Arizona, California and Nevada;

.(C) Releases of mainstream water pursuant to orders therefor but not diverted by the party ordering the same, and the quantity of such water delivered to Mexico in satisfaction of the Mexican Treaty or diverted' by others in satisfaction of rights decreed herein. These quantities shall be stated separately as to each diverter from the mainstream, each point of diversion, and each of the States of Arizona, California and Nevada;

(D) Deliveries to Mexico of water in satisfaction of the obligations of Part III of the Treaty of February 3, 1944, and, separately stated, water passing to Mexico in excess of treaty requirements;

(E) Diversions of water from the mainstream of the Gila and San Francisco Rivers and the consumptive use of such water, for the benefit of the Gila National Forest.

VI. Within two years from the date of this decree, the States of Arizona, California, and Nevada shall furnish to this Court and to the Secretary of the Interior a list of the present perfected rights, with their claimed priority dates, in waters of the mainstream within each State, respectively, in terms of consumptive use, except those relating to federal establishments. Any named party to this proceeding may present its claim of present perfected rights or its opposition to the claims of others. The Secretary of the Interior shall supply similar information, within a similar period of time, with respect to the claims of the United States to present perfected rights within each State. If the parties and the Secretary of the Interior are unable at that time to agree on the present perfected rights to the use of mainstream water in each State, and their priority dates, any party may apply to the Court for the determination of such rights by the Court.

VII. The State of New Mexico shall, within four years from the date of this decree, prepare and maintain, or provide for the preparation and maintenance of, and shall annually thereafter make available for inspection at all reasonable times and at a reasonable place or places, complete, detailed and accurate records of:

(A) The acreages of all lands in New Mexico irrigated each year from the Gila River, the San Francisco River, San Simon Creek, and their tributaries and all of their underground water sources, stated by legal description and component acreages and separately as to each of the areas designated in Article IV of this decree and as to each of the three streams;

(B) Annual diversions and consumptive uses of water in New Mexico, from the Gila River, the San Francisco River, San Simon Creek, and their tributaries and all their underground water sources, stated separately as to each of the three streams.

VIII. This decree shall not affect:

(A) The relative rights inter sese of water users within any one of the States, except as otherwise specifically provided herein;

(B) The rights or priorities to water in any of the Lower Basin tributaries of the Colorado River in the States of Arizona, California, Nevada, New Mexico and Utah except the Gila River System;

(C) The rights or priorities, except as specific provision is made herein, of any Indian Reservation, National Forest, Park, Recreation Area, Monument or Memorial, or other lands of the United States;

(D) Any issue of interpretation of the Colorado River Compact.

IX. Any of the parties may apply at the foot of this decree for its amendment or for further relief. The Court retains jurisdiction of this suit for the purpose of any order, direction, or modification of the decree, or any supplementary decree, that may at any time be deemed proper in relation to the subject matter in controversy.

Mr. Justice Douglas dissents.

Mr. Justice Harlan and Mr. Justice Stewart dissent to the extent that the decree conflicts with the views expressed in the dissenting opinion of Mr. Justice Harlan, 373 U. S. 546, 603.

The Chief Justice took no part in the consideration or decision of this case.


text:
    SMITH v. PENNSYLVANIA.
    No. 561.
    Decided March 9, 1964.

      William T. Coleman, Jr. for petitioner.

      Frank P. Lawley, Deputy Attorney General of Pennsylvania, for respondent.

      Solicitor General Cox filed a memorandum for the United States.

      Melvin L. Wulf for the American Civil Liberties Union, Greater Philadelphia Branch, et ah, as amici curiae, in support of the petition.
   Per Curiam.

Prior to commencement of petitioner’s trial for assault and battery upon state police officers, he served upon the local office of the Federal Bureau of Investigation a subpoena duces tecum calling for the production of “[statements of all witnesses, diagrams, sketches and photographs taken in connection with” the FBI’s investigation of the incident which formed the basis for the criminal prosecution. The FBI had made the investigation in response to a complaint filed by petitioner with the Civil Rights Division of the Department of Justice, charging a deprivation of his civil rights by the actions of the police officers whom he allegedly assaulted. An Assistant United States Attorney appeared on the day set for trial and moved to quash the subpoena, claiming that the file contained confidential material subject to a federal privilege of nondisclosure. The subpoena was quashed by the trial court for that reason and for noncompliance with local rules of practice.

Petitioner formally requested the court, both before and after they testified, to issue a subpoena duces tecum for statements taken by the FBI from two witnesses for the prosecution, stating that the statements were needed for purposes of impeachment. The trial court denied the requests because it felt that petitioner would receive the same information from material which the state authorities had promised to make available. Following petitioner’s conviction, the trial court denied his motion for a new trial which was based in part on the failure to issue the requested subpoena, stating that the Federal Government had already indicated that it would not honor such a subpoena. The judgment of conviction was affirmed by the Pennsylvania Supreme Court (412 Pa. 1, 192 A. 2d 671), the court stating, inter alia, that the FBI, not the Commonwealth, had denied petitioner access to the information in question.

In response to an inquiry from this Court, the Solicitor General has indicated that the claim of confidential privilege was concerned solely with the initial broad-based demand for virtually the entire FBI file on the matter and that the Department of Justice was not informed of, and did not refuse to comply with, the subsequent specific requests for statements given by the two witnesses.

We grant the petition for a writ of certiorari and remand the case to the Supreme Court of Pennsylvania, for reconsideration of petitioner’s requests in light of the representations of the Solicitor General.


text:
    MICHAELS ENTERPRISES, INC., et al. v. UNITED STATES.
    No. 571.
    Decided March 9, 1964.

      Morris A. Shenker and Murry L. Randall for petitioners.

      Solicitor General Cox, Assistant Attorney General Miller and Beatrice Rosenberg for the United States.
   Per Curiam.

Petitioner James A. Michaels, Jr., is president of petitioner Michaels Enterprises, Inc., a corporate retail dealer in alcoholic beverages. Petitioners were convicted by a jury in the Eastern District of Missouri on both counts of a two-count indictment. The first count charged them with failure to “produce” or to “preserve” certain purchase records, in violation of 72 Stat. 1400, 26 U. S. C. § 5603 (b)(5). The second count charged them with failure “to keep” certain purchase records or “make required entries therein” in violation of 72 Stat. 1400, 26 U. S. C. § 5603 (b)(1). Petitioner James A. Michaels, Jr., was sentenced to imprisonment for one year and fined $1,000 on the first count; he was fined an additional $1,000 on the second count. Petitioner Michaels Enterprises, Inc., was fined $1,000 on each of the two counts.

The critical issue, as we see it, is whether the record contains sufficient evidence of violations of the two counts to support the imposition of nonconcurrent sentences. The Court of Appeals for the Eighth Circuit refused to consider the “question of sufficiency of the evidence to support the verdict,” on the ground that petitioners “did not move for an acquittal at the close of all the evidence.” 321 F. 2d 913, 917. The record clearly shows, however, that petitioners did move for “judgment of acquittal at the close of all the evidence,” as well as “at the close of the government’s case.”

The writ of certiorari is granted, the judgment of the Court of Appeals is vacated, and the case is remanded to that court for consideration of the sufficiency of the evidence.

It is so ordered.

      This is the maximum penalty provided by the statute.


author: Mr. Chief Justice Warren

text:
    BRUNING v. UNITED STATES.
    No. 423.
    Argued March 3, 1964.
    Decided March 23, 1964.

      Ernest R. Mortenson argued the cause and filed a brief for petitioner.

      Philip B. Heymann argued the cause for the United States. With him on the brief were Solicitor General Cox, Assistant Attorney General Oberdorfer and I. Henry Kutz.

   Mr. Chief Justice Warren

delivered the opinion of the Court.

The issue presented in this case is whether the United States is entitled to recover, out of assets acquired by a debtor after his adjudication of bankruptcy, post-petition interest on a tax assessment which (under § 17 of the Federal Bankruptcy Act, 30 Stat. 544, 550, as amended, 11 U. S. C. § 35) was not discharged in the bankruptcy proceedings. The essential facts are not in dispute. Petitioner incurred withholding and federal insurance contributions taxes during the fourth quarter of 1951 but failed to pay those taxes when due. In March 1952, an assessment of those taxes was made against petitioner. On July 6, 1953, petitioner filed a voluntary petition in bankruptcy and was adjudicated a bankrupt in the Federal District Court for the Western District of Louisiana. The District Director of Internal Revenue filed a claim in the bankruptcy proceedings for the assessed amount owed by petitioner, and the United States received a small distribution out of the assets of the bankruptcy estate. Petitioner was granted a discharge in bankruptcy in October 1953, and the case was closed in June 1954.

In 1957, petitioner filed claims for refund of income taxes paid for the years 1953 and 1954, which resulted in his being allowed a credit for income taxes and interest in respect of those years. On March 7,1958, the Director of Internal Revenue applied the entire 1953 credit and part of the 1954 credit to the balance of the assessment of the withholding and F. I. C. A. taxes owed for 1951, plus interest to date — including interest which had accrued during the period between the filing of petitioner’s petition in bankruptcy (July 6, 1953) and the date of payment (March 7, 1958). This post-petition interest, which totals about $795, is the subject of the present controversy. Petitioner did not question the Director’s right to collect from assets acquired by petitioner after bankruptcy the unpaid principal of the tax debt and the pre-petition interest. However, contending that he was not liable for interest accruing on the assessment after his petition in bankruptcy was filed, petitioner brought suit in the Federal District Court for the Southern District of California for refund of that portion of the interest. The District Court held that petitioner’s personal liability for post-petition interest on the unpaid taxes was not discharged by the bankruptcy proceedings, and the Court of Appeals for the Ninth Circuit affirmed. Due to an apparent conflict between circuits and the potentially recurring nature of the question involved, we granted certiorari, 375 U. S. 920. We affirm the decision below.

Section 17 of the Federal Bankruptcy Act, 11 U. S. C. § 35, provides in relevant part:

“A discharge in bankruptcy shall release a bankrupt from all of his provable debts, whether allowable in full or in part, except such as (1) are due as a tax levied by the United States . . . .”

It is undisputed that, under § 17, petitioner remained personally liable after his discharge for that part of the principal amount of the tax debt and pre-petition interest not satisfied out of the bankruptcy estate. The courts below held that, under § 17, petitioner also remained personally liable for post-petition interest on the tax debt, and we find no substantial reason to reverse that holding. Initially, one would assume that Congress, in providing that a certain type of debt should survive bankruptcy proceedings as a personal liability of the debtor, intended personal liability to continue as to the interest on that debt as well as to its principal amount. Thus, it has never been seriously suggested that a creditor whose claim is not provable against the trustee in bankruptcy loses his right to interest in a post-bankruptcy action brought against the debtor personally. In most situations, interest is considered to be the cost of the use of the amounts owing a creditor and an incentive to prompt repayment and, thus, an integral part of a continuing debt. Interest on a tax debt would seem to fit that description. Thus, logic and reason indicate that post-petition interest on a tax claim excepted from discharge by § 17 of the Act should be recoverable in a later action against the debtor personally, and there is no evidence of any congressional intent to the contrary.

Petitioner suggests that the Government might have ignored the bankruptcy proceeding entirely and later brought suit upon its undischarged claim against petitioner personally and collected both principal and interest. But petitioner asserts that once the Government filed a claim in the bankruptcy proceeding, its rights became limited to the recovery of unpaid sums allowed by the trustee, not including post-petition interest. This argument is based on § 6873 (a) of the Internal Revenue Code of 1954, which provides:

“Any portion of a claim for taxes allowed in . . . any proceeding under the Bankruptcy Act which is unpaid shall be paid by the taxpayer upon notice and demand from the Secretary or his delegate after the termination of such proceeding.”

We find no indication in the wording or history of § 6873 (a) that the section was meant to limit the Government’s right to continuing interest on an undischarged and unpaid tax liability. Nor is petitioner aided by the now-familiar principle that one main purpose of the Bankruptcy Act is to let the honest debtor begin his financial life anew. As the Court of Appeals noted, § 17 is not a compassionate section for debtors. Rather, it demonstrates congressional judgment that certain problems — e. g., those of financing government — override the value of giving the debtor a wholly fresh start. Congress clearly intended that personal liability for unpaid tax debts survive bankruptcy. The general humanitarian purpose of the Bankruptcy Act provides no reason to believe that Congress had a different intention with regard to personal liability for the interest on such debts.

Finally, petitioner urges that we consider the present case in light of the decision in New York v. Saper, 336 U. S. 328. As to claims against the trustee in bankruptcy, the general rule for liquidation of the bankruptcy estate has long been that a creditor will be allowed interest only to the date of the petition in bankruptcy. Sexton v. Dreyfus, 219 U. S. 339. In New York v. Saper, supra, this Court held that the general rule applies to claims against the trustee for taxes as well as for other debts. But the instant case concerns the debtor’s personal liability for post-petition interest on a debt for taxes which survives bankruptcy to the extent that it is not paid out of the estate. Petitioner asserts that the traditional rule which denies post-petition interest as a claim against the bankruptcy estate also applies to discharge the debtor from personal liability for such interest even if the underlying tax debt is not discharged by § 17. We hold that it does not so apply.

The basic reasons for the rule denying post-petition interest as a claim against the bankruptcy estate are the avoidance of unfairness as between competing creditors and the avoidance of administrative inconvenience. These reasons are inapplicable to an action brought against the debtor personally. In the instant case, collection of post-petition interest cannot inconvenience administration of the bankruptcy estate, cannot delay payment from the estate unduly, and cannot diminish the estate in favor of high interest creditors at the expense of other creditors. In New York v. Saper, supra, the Court found the reasons for the traditional rule applicable and held that post-petition interest on a claim for taxes was not' to be allowed against the bankruptcy estate. Here, we find the reasons — and thus the rule — inapplicable, and we hold that post-petition interest on an unpaid tax debt not discharged by § 17 remains, after bankruptcy, a personal liability of the debtor.

Affirmed.

       The remainder was distributed to petitioner.

       See United States v. Mighell, 273 F. 2d 682 (C. A. 10th Cir. 1959).

       One reason for refusing to make taxes dischargeable is the desire to prevent tax evasion. See 83 Cong. Rec. 9106 (1938).

       See American Iron & Steel Mfg. Co. v. Seaboard Air Line R. Co., 233 U. S. 261, 266:
      “And it is true, as held in Tredegar Co. v. Seaboard Ry., 183 Fed. Rep. 289, 290, that as a general rule, after property of an insolvent is in custodia legis interest thereafter accruing is not allowed on debts payable out of the fund realized by a sale of the property. But that is not because the claims had lost their interest-bearing quality during that period, but is a necessary and enforced rule of distribution, due to the fact that in case of receiverships the assets are generally insufficient to pay debts in full. If all claims were of equal dignity and all bore the same rate of interest, from the date of the receivership to the date of final distribution, it would be immaterial whether the dividend was calculated on the basis of the principal alone or of principal and interest combined. But some of the debts might carry a high rate and some a low rate, and hence inequality would result in the payment of interest which accrued during the delay incident to collecting and distributing the funds. As this delay was the act of the law, no one should thereby gain an advantage or suffer a loss. For that and like reasons, in case funds are not sufficient to pay claims of equal dignity, the distribution is made only on the basis of the principal of the debt. But that rule did not prevent the running of interest during the Receivership; and if as a result of good fortune or good management, the estate proved sufficient to discharge the claims in full, interest as well as principal should be paid.”
      See also Vanston Bondholders Protective Committee v. Green, 329 U. S. 156, 164:
      “Accrual of simple interest on unsecured claims in bankruptcy was prohibited in order that the administrative inconvenience of continuous reeomputation of interest causing recomputation of claims could be avoided. Moreover, different creditors whose claims bore diverse interest rates or were paid by the bankruptcy court on different dates would suffer neither gain nor loss caused solely by delay.” Because the traditional rule rests upon such practical considerations, it has been suggested that:
      “The principle that interest stops running from the date of the filing of the petition in bankruptcy should be understood as a rule of liquidation practice rather than as a rule of substantive law.” 3 Collier, Bankruptcy (14th ed., 1961) 1858.