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JUL  2  5  1969 
San  Francisco 

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No/ft7/J. 


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IN  THE 


m^m 


United  States  Court  of  Appeals 

FOR  THE  NINTH  CIRCUIT 


J.  Bryant  Kasey  and  MaryAnn  Kasey, 

Appellants, 


vs. 


Molybdenum  Corporation  of  America,  a  corporation, 

Appellee. 


Appeal  From  the  United  States  District  Court  for  the  Central 
District  of  California. 


BRIEF  OF  APPELLEE. 


SCHULTHEIS,  LaYBOURNE  &  DOWDS,         P    l    l        E    D 

Everett  B.  Laybourne, 

Dennis  Keeley,  JAN  251968 

621  South  Spring  Street, 

Los  Angeles,  Calif.     90014,  ^^^  q   ^^^^^  ^^ERK 

Attorneys  for  Appellee. 


Parker  &  Son,  Inc.,  L,aw  Printers,  l<os  Angeles.    Phone  MA.  6-9171. 


FEB  2    1Bt8 


TOPICAL  INDEX 

Page 

Statement  of  the  Case  1 

Questions  Presented    2 

Summary  of  Argument    2 

Argument  3 

I. 

The  Order  Denying  Change  of  Venue  Is  Not 
Properly  Before  the  Court  of  Appeals  and  This 
Proceeding  Should  Be  Dismissed 3 

1.  As  a  Discretionary  Appeal,  This  Pro- 
ceeding Lacks  the  Requisite  Certification 
by  the  District  Judge  and  Permission  of 
the  Court  of  Appeals  3 

2.  As  an  Application  for  Mandamus,  This 
Proceeding  Must  Fail  for  Want  of  Extra- 
ordinary Circumstances 4 

n. 

Even  if  the  Order  Denying  Change  of  Venue 
Were  to  Be  Reviewed  by  This  Court,  Such 
Order  Was  Free  of  Error  and  Should  Be  Af- 
firmed       5 

1.  Since  This  Action  Could  Not  Have  Been 
Brought  Initially  in  the  District  of  Ne- 
vada, It  May  Not  Be  Properly  Transferred 
to  That  District  6 

(a)  Recovery  of  Possession  of  Real  Prop- 
erty Situated  in  California  Is  One  of 
the  Claims  Asserted  in  This  Action  ..     6 


11. 

Page 

(b)  An  Action  to  Recover  Possession  of 
California  Real  Property  Must  Be 
Brought  in  California  7 

(c)  The  Fact  That  the  Recovery  of  Pos- 
session of  Real  Property  Is  No  Longer 
an  Issue  in  This  Action  Does  Not 
Permit  a  Change  of  Venue;  the  De- 
termination of  Permissible  Venue  De- 
pends Upon  the  Facts  as  They  Existed 
at  the  Commencement  of  the  Action 

8 

There  Is  No  Showing  That  Transfer  of 
the  Action  Would  Serve  the  Interest  of 
Justice     9 

(a)  Appellants  Admit  That  They  Do  Not 
Seek  a  Change  of  Venue  for  the  Con- 
venience of  Witnesses  or  Because  of 
the  Situs  of  the  Subject  Matter  of  the 
Action  10 

(b)  The  Fact  That  Appellants  Have 
Moved  Their  Residence  From  Cali- 
fornia to  Nevada  Subsequent  to  Fil- 
ing Their  Action  Does  Not  Justify  a 
Change  of  Venue  10 

(c)  A  Change  of  Venue  at  This  Time 
Would  Result  in  Unnecessary  Delay 
and  Would  Impose  Additional  Ex- 
penses and  Burdens  on  Others  With- 
out Promoting  the  Interest  of  Justice 

11 


111. 

Page 

(d)  There  Is  No  Support  for  Appellants' 

Contention   That   the    District    Court 

Abused    Its    Discretion    in    Denying 

Their  Motion  for  Change  of  Venue 

13 

3.      The  Claim  of  Bias  Asserted  by  the  Appel- 
lants Has  No  Foundation  Whatsoever 14 

Conclusion    ^" 


IV. 

TABLE  OF  AUTHORITIES  CITED 

Cases  Page 

A.  Olinck  &  Sons  v.  Dempster  Bros.,  Inc.,  365  F. 
2d  439  4 

Axe-Houghton  Fund  A,  Inc.  v.  Atlantic  Research 
Corp.,  227  F.  Supp.  521  14 

Brock  V.  Superior  Court,  29  Cal.  2d  629,  177  P.  2d 
273    8 

Bufalino  v.  Kennedy,  273  F.  2d  71  4 

Clinton  Foods  v.  U.S.,  188  F.  2d  289 8 

Ellenwood  v.  Marietta  Chair  Co.,  158  U.S.  105,  15 
S.  Ct.  711,  39  L.  Ed.  913 7 

Erwin  v.  Barrow,  217  F.  2d  522  8 

Gulf  Research  &  Development  Co.  v.  Harrison,  185 
F.  2d  457,  aff'd  344  U.S.  861,  7Z  S.  Ct.  103,  97 
L.  Ed.  668  4,     5 

Hoffman  v.  Blaski,  363  U.S.  335,  80  S.  Ct.  1084, 
4  L.  Ed.  2d  1254 9 

Huisman  v.  Geuder,  Paeschke  &  Frey  Co.,  250  F. 
Supp.  631  13 

Humble  Oil  &  Refining  Company  v.  Bell  Marine 
Service,  Inc.,  321  F.  2d  53  4 

Josevig-Kennecott  Copper  Co.  v.  James  F.  Howarth 
Co.,  261  Fed.  567 7,     8 

Kasey  v.  Molybdenum  Corporation  of  America,  336 
F.  2d  560 6,  7,  8,  9,  12 

Livingston  v.  Jefferson,  15  Fed.  Cas.  660,  No. 
8411    7 


V. 

Page 

Pasos  V.  Pan  American  Airways,  Inc.,  229  F.  2d 
271    7 

Standard  v.  StoU  Packing  Corporation,  315  F.  2d 
626    4 

Rules 
Federal  Rules  of  Civil  Procedure,  Rule  54(b)  ..1,  6,  12 

Statutes 

Code  of  Civil  Procedure,  Sec.  318 6 

United  States  Code,  Title  28,  Sec.  1292(b)  3,  13 

United  States  Code,  Title  28,  Sec.  1404(a)  ....5,  6,  9 


No.  22237 
IN  THE 


United  States  Court  of  Appeals 

FOR  THE  NINTH  CIRCUIT 


J.  Bryant  Kasey  and  MaryAnn  Kasey, 

Appellants, 
vs. 

Molybdenum  Corporation  of  America,  a  corporation, 

Appellee. 


Appeal  From  the  United  States  District  Court  for  the  Central 
District  of  California. 


BRIEF  OF  APPELLEE. 


Statement  of  the  Case. 

By  order  dated  February  2,  1967,  Honorable  Jessie 
W.  Curtis,  Judge  of  the  United  States  District  Court 
for  the  Central  District  of  California,  denied  appel- 
lants' motion  to  change  the  venue  of  their  action  to  the 
United  States  District  Court  in  Nevada.  [R.  pp.  13- 
14.] 

Such  motion  was  filed  nearly  eight  years  after  the 
action  had  been  initiated.  During  that  time  there  had 
been  two  appeals,  one  attempted  appeal  and  two  peti- 
tions to  this  Court,  and  a  number  of  issues  had  been 
separately  tried  and  adjudicated  pursuant  to  Rule  S4(b). 
A  few  issues  are  still  remaining  for  trial. 


(b)  is  not  available  in  such  case  and  that  review  must 
be  effected  by  application  for  mandamus.  A.  Olinck  & 
Sons  V.  Dempster  Bros.,  Inc.,  365  F.  2d  439,  442  (2d 
Cir.  1966)  ;  Standard  v.  Stoll  Packing  Corporation,  315 
F.  2d  626  (3d  Cir.  1963)  ;  Bufalino  v.  Kennedy,  273 
F.  2d  71  (6th  Cir.  1959).  The  view  of  the  Fifth 
Circuit  is  to  the  contrary.  Hnniblc  Oil  &  Refining  Com- 
pany V.  Bell  Marine  Service,  Inc.,  321  F.  2d  53  (5th 
Cir.  1963). 

2.  As  an  Application  for  Mandamus,  This  Proceed- 
ing Must  Fail  for  Want  of  Extraordinary  Cir- 
cumstances. 

Even  if  there  had  been  some  abuse  of  discretion  or 
other  error  in  the  order  of  the  District  Court,  the  drastic 
remedy  of  mandamus  would  not  be  warranted. 

In  Gulf  Research  &  Development  Co.  v.  Harrison, 
185  F.  2d  457  (9th  Cir.  1950) ;  aff'd  in  344  U.S.  861, 
7Z  S.  Ct.  103,  97  L.  Ed.  668  (1952)  this  Court  denied 
a  petition  for  mandamus  wherein  the  petitioner  sought 
to  prevent  transfer  of  the  case  to  a  different  district. 
In  denying  such  petition,  Judge  Orr  emphasized  that 
only  extraordinary  circumstances  would  warrant  such 
relief. 

"We  are  of  the  opinion  that  once  a  suitor  has 
properly  invoked  federal  jurisdiction  in  this  circuit 
it  is  within  our  power,  in  extraordinary  circum- 
stances, to  issue  mandamus  to  prevent  a  grave  mis- 
carriage of  justice."  Gidf  Research  &  Development 
Co.  V.  Harrison,  supra,  at  page  459. 

"The  remedy  of  appeal  from  a  final  judgment 
is  'inadequate'  so  as  to  justify  the  use  of  manda- 
mus only  when  it  is  totally  unavailable,  or  when, 
because  of  the  particular  circumstances,   it  could 


— 5— 

not  correct  extraordinary  hardship."  Gulf  Re- 
search &  Development  Co.  v.  Harrison,  supra,  at 
page  460. 

Appellants  have  pointed  to  no  circumstances  which 
would  justify  the  extraordinary  remedy  of  mandamus. 
(See  discussion  on  pages  9  and  14,  infra.')  Im- 
patient as  they  may  be  for  a  review  of  the  order  of  the 
District  Court,  appellants  have  been  unable  to  advance 
any  reason  why  they  should  be  excused  from  the  rule 
imposed  upon  other  litigants,  that  review  of  an  inter- 
locutory order  must  await  entry  of   final  judgment. 

Because  this  proceeding  cannot  be  properly  enter- 
tained by  the  Court  of  Appeals,  either  as  an  inter- 
locutory appeal  or  an  application  for  mandamus,  such 
proceeding  should  be  dismissed. 

II. 
EVEN  IF  THE  ORDER  DENYING  CHANGE  OF 
VENUE  WERE  TO  BE  REVIEWED  BY  THIS 
COURT,  SUCH  ORDER  WAS  FREE  OF  ERROR 
AND  SHOULD  BE  AFFIRMED. 

The  statute  upon  which  appellants  predicated  their 
motion  is  28  U.S.C.  Section  1404(a).  (Appellants' 
Op.  Br.  p.  3,  lines  2-4.)    Such  section  provides: 

''(a)  For  the  convenience  of  parties  and  wit- 
nesses, in  the  interest  of  justice,  a  district  court 
may  transfer  any  civil  action  to  any  other  district 
or  division  where  it  might  have  been  brought." 

Denial  of  the  motion  was  based  primarily  upon  the 
ground  that  the  statute  does  not  authorize  a  change  of 
venue  in  this  particular  case.  Because  it  goes  to  the 
heart  of  the  matter,  this  point  will  receive  appellee's 
first  attention  herein. 


— 6— 

1.  Since  This  Action  Could  Not  Have  Been 
Brought  Initially  in  the  District  of  Nevada,  It 
May  Not  Be  Properly  Transferred  to  That  Dis- 
trict. 

A  District  Court  may  transfer  a  civil  action  only  to 
a  ".  .  .  district  or  division  zvhcrc  it  might  have  been 
brought."   28   U.S.C.    1404(a).    (Emphasis    supplied.) 

In  denying  appellants'  motion  for  a  change  of  venue, 
the  District  Court  stated  as  its  first  ground  for  such 
decision : 

"1.  It  does  not  appear  that  this  action  could 
have  been  instituted  in  the  District  of  Nevada;" 
[R.  p.  13,  lines  26-27.] 

(a)  Recovery  o£  Possession  of  Real  Property  Situated  in 
California  Is  One  of  the  Claims  Asserted  in  This 
Action. 

One  of  plaintiffs'  causes  of  action  seeks  recovery  of 
title  to  and  possession  of  certain  mining  claims  near 
Mountain  Pass,  County  of  San  Bernardino,  California. 
[R.  p.  4,  lines  6-7,  25-26.]  Such  issue  was  duly  tried 
and  pursuant  to  Rule  54(b)  of  the  Federal  Rules  of 
Civil  Procedure,  on  March  13,  1963,  it  was  adjudicated 
that  recovery  of  such  claims  was  barred  by  California 
Code  of  Civil  Procedure  Section  318.  Upon  appeal 
from  such  judgment,  the  same  was  affirmed  by  this 
Court  in  Kasey  v.  Molybdenum  Corporation  of  America, 
336  F.  2d  560  (9th  Cir.  1964). 

The  mining  claims  which  appellants  sought  to  recover 
in  the  instant  action  were  found  by  the  District  Court 
to  be  real  property.  Such  determination  was  confirmed 
by  this  Court,  which  stated  in  its  opinion : 

".  .  .  we  hold  that  the  district  court  was  not  in 
error   in   assuming  that   the  mining  claims,   mill- 


— 7— 

sites,  and  appurtenances  and  improvements  thereto 
are  real  property  within  the  meaning  of  Sections 
318  and  17  of  the  California  Code  of  Civil  Pro- 
cedure." Kasey  v.  Molybdenum  Corporation  of 
America,  supra,  at  page  565. 

Accordingly,  there  is  no  question  that  one  purpose  of 
the  present  action  concerned  recovery  of  title  to  and 
possession  of  real  property  and  that  such  property  is 
located  in  California. 

(b)  An    Action    to    Recover    Possession    of    California    Real 
Property  Must  Be  Brought  in  California. 

A  local  or  in  rem  action  in  the  Federal  Court,  predi- 
cated as  in  this  case  upon  diversity  of  citizenship,  must 
be  brought  in  the  district  where  the  property  is  located. 
Such  a  requirement  has  been  held  to  be  not  merely  a 
question  of  venue  but  one  which  goes  to  the  very  juris- 
diction of  the  court.  Livingston  v.  Jefferson,  15  Fed. 
Cas.  660,  No.  8411  (C.C.D.  Va.  1811);  Ellenwood  v. 
Marietta  Chair  Co.,  158  U.S.  105,  15  S.  Ct.  711,  39  L. 
Ed.  913  (1895);  Pasos  v.  Pan  American  Airways, 
Inc.,  229  F.  2d  271  (2d  Cir.  1956). 

The  Supreme  Court  has  stated  the  rule  most  suc- 
cinctly : 

".  .  .  an  action  for  trespass  upon  land,  like  an  ac- 
tion to  recover  the  title  or  possession  of  the  land  it- 
self, is  a  local  action,  and  can  only  be  brought  within 
the  state  in  which  the  land  lies."  Ellcnzuood  ik 
Marietta  Chair  Co.,  supra,  158  U.S.  105  at  page 
107. 

The  preliminary  question  of  whether  an  action  is 
local  or  transitory  is  determined  by  state  law.  Josevig- 
Kennecott  Copper  Co.  v.  James  F.  Howarth  Co.,  261 


Fed.  567,  569  (9th  Cir.  1919) ;  Erwin  v.  Barrow,  217 
F.  2d  522  (10th  Cir.  1954). 

In  CaHfornia  an  action  to  recover  real  property  is 
local  in  nature  and  such  fact  goes  to  the  jurisdiction 
of  the  state  courts : 

"An  absolute  right  is  conferred  by  the  Con- 
stitution, Article  VI,  section  5,  which  provides  that 
all  actions  for  the  recovery  of  possession  of,  quiet- 
ing title  to,  or  for  the  enforcement  of  liens  upon 
real  estate,  shall  be  'commenced'  in  the  county  in 
which  the  real  estate,  or  any  part  thereof,  af- 
fected by  such  actions  is  situated."  Brock  v.  Su- 
perior Court,  29  Cal.  2d  629,  633;  177  P.  2d  273 
(1947). 

A  motion  to  transfer  a  local  or  in  rem  action  to  a  dis- 
trict other  than  that  in  which  the  subject  matter  was 
located  was  held  to  have  been  properly  denied  in  Clinton 
Foods  V.  U.S.,  188  F.  2d  289,  292  (4th  Cir.  1951). 

As  the  mining  claims  which  appellants  sought  to  re- 
cover are  situated  within  the  jurisdiction  of  the  District 
Court  for  the  Central  District  of  California,  it  follows 
that  selection  of  that  particular  forum  was  mandatory 
as  a  matter  of  jurisdiction. 

(c)  The  Fact  That  the  Recovery  of  Possession  of  Real  Prop- 
erty Is  No  Longer  an  Issue  in  This  Action  Does  Not 
Permit  a  Change  of  Venue ;  the  Determination  of  Per- 
missible Venue  Depends  Upon  the  Facts  as  They 
Existed  at  the  Commencement  of  the  Action. 

Prior  to  the  time  appellants  filed  their  motion  for 
change  of  venue,  it  had  been  adjudicated  that  they 
could  not  recover  possession  of  the  mining  claims  which 
are  the  subject  of  this  action.     Kasey  v.  Molybdenum, 


336  F.  2d  560  (9th  Cir.  1964).  Regardless  of  such 
disposition  of  the  real  property  issue,  Section  1404(a) 
permits  transfer  of  an  action  only  to  a  district  where  "it 
might  have  been  brought"  and  such  limitation  is  ap- 
plied to  the  facts  as  they  existed  at  the  time  the 
action  was  filed. 

An  action  may  not  be  transferred  to  a  district  which 
would  not  have  been  a  proper  venue  for  the  action  at 
the  time  of  its  commencement.  Such  was  the  clear  and 
unmistakable  holding  in  Hoffman  v.  Blaski,  363  U.S. 
335,  80  S.  Ct.  1084,  4  L.  Ed.  2d  1254  (1960). 

And  since  the  District  Court  of  Nevada  would  have 
been  without  jurisdiction  had  the  action  been  filed  there- 
in, a  fortiori  the  case  may  not  be  transferred  to  such 
Court  at  this  time. 

Appellants  have  stated  no  facts  and  have  cited  no 
authority  in  support  of  a  different  conclusion,  nor  have 
they  suggested  any  possible  error  in  the  trial  Court's 
determination  that:  "It  does  not  appear  that  this  action 
could  have  been  instituted  in  the  District  of  Nevada." 
It  follows  that  the  order  sought  to  be  reviewed  is  with- 
out error. 

2.     There   Is   No    Showing    That   Transfer   of   the 
Action  Would  Serve  the  Interest  of  Justice. 

Quite  apart  from  the  fact  that  the  instant  action  can- 
not properly  be  transferred  to  a  district  in  which  it 
might  not  "have  been  brought",  there  has  also  been  no 
showing  which  would  justify  a  change  of  venue  even  if 
such  action  were  legally  possible. 

28  U.S.C.  Section  1404(a)  provides  that  under  cer- 
tain circumstances  an  action  may,  "in  the  interest  of 
justice",  be  transferred  to  another  division  or  district 


—10— 

and  that  ".  .  .  the  convenience  of  parties  and  witnesses 
..."  may  be  taken  into  account  in  determining  the  in- 
terest of  justice. 

(a)  Appellants  Admit  That  They  Do  Not  Seek  a  Change  of 
Venue  for  the  Convenience  of  Witnesses  or  Because  of 
the  Situs  of  the  Subject  Matter  of  the  Action. 

Convenience  of  witnesses  and  situs  of  the  subject 
matter  of  the  action  (in  this  case,  the  subject  land  is 
situated  more  closely  to  Las  Vegas  than  to  Los  An- 
geles) are  among  the  factors  frequently  considered  in 
determining  whether  or  not  a  change  of  venue  would 
be  in  the  interest  of  justice.  The  appellants  admit  that 
they  do  not  seek  a  change  of  venue  for  either  of  such 
reasons.  "No  witnesses  are  involved  in  this  action; 
nor  is  the  subject  matter  of  the  litigation."  (Appellants' 
Op.  Br.  p.  7,  lines  6-7.) 

While  appellants  are  not  competent  to  speak  for  ap- 
pellee in  stating  that  there  are  "no  witnesses",  such  ad- 
mission, together  with  their  statement  that  "the 
subject  matter  of  the  litigation"  is  not  involved,  remove 
from  consideration  two  of  the  often  important  grounds 
for  a  change  of  venue. 

(b)  The  Fact  That  Appellants  Have  Moved  Their  Resi- 
dence From  California  to  Nevada  Subsequent  to  Filing 
Their  Action  Does  Not  Justify  a  Change  of  Venue. 

It  was  the  appellants  themselves  who  selected  the  pres- 
ent forum.  Having  subsequently  moved  to  another 
state,  they  now  seek  to  take  this  litigation  along  with 
them  as  if  it  were  another  household  chattel,  request- 
ing a  change  of  venue  for  their  own  personal  con- 
venience and  citing  the  following  reasons,  among  others : 

(a)  "travel  of  about  600  miles  to  and  from  their 
home", 


—11— 

(b)  "traffic  congestion  on  the  Los  Angeles  end  of 
the  San  Bernardino  Freeway", 

(c)  "sleeping  quarters  are  not  always  obtained", 

(d)  "nor  is  a  parking  place  generally  available  with- 
in reasonable  walking  distance  of  this  court",  and 

(e)  "atmospheric  conditions  in  Los  Angeles  are  un- 
bearable much  of  the  time".  [R.  p.  8,  lines  31-32;  p.  9, 
lines  1-4.] 

While  appellants'  personal  convenience  would  no 
doubt  be  accommodated  by  transfer  of  the  litigation  to 
Las  Vegas,  the  reasons  proffered  do  not  constitute,  in- 
dividually or  collectively,  a  legally  sufficient  ground  for 
change  of  venue.  Certainly  the  ends  of  justice  are  not 
served  by  removal  of  a  long  protracted  and  complicated 
case  from  one  forum  to  another  in  order  to  provide  a 
less  congested  environment  and  a  more  acceptable 
standard  of  air  purity,  particularly  at  the  instance  of 
parties  who  initially  selected  the  forum. 

(c)  A  Change  of  Venue  at  This  Time  Would  Result  in 
Unnecessary  Delay  and  Would  Impose  Additional 
Expenses  and  Burdens  on  Others  Without  Promoting 
the  Interest  of  Justice. 

The  appellants  filed  the  instant  action  on  April  8, 
1959.  (Appellants'  Op.  Br.  p.  1,  lines  24-25.)  In  the 
ensuing  period  of  nearly  nine  years,  extensive  pleadings 
have  been  filed  and  numerous  hearings  have  been  held 
concerning  various  complex  questions  of  procedural  and 
substantive  law.  This  Court  alone  has  had  occasion 
to  consider  five  separate  petitions  or  appeals  in  addi- 
tion to  that  before  it  now : 

(1)  On  November  30,  1959  this  Court  granted  an 
order  allowing  an  interlocutory  appeal  pursuant  to  28 


—12— 

U.S.C.  1292(b);  such  order  was  vacated  on  June  9, 
1960.  Molybdenum  Corporation  of  America  v.  J. 
Bryant  Kasey,  MaryAnn  Kasey  and  Jidius  A.  Paskan, 
No.  16691. 

(2)  On  May  7,  1963  an  attempted  appeal  from  an 
order  denying  leave  to  file  an  amended  complaint  was 
dismissed.  /.  Bryant  Kasey,  et  ux.  v.  Molybdenum 
Corporation  of  America,  No.  18626. 

(3)  An  appeal  taken  from  a  partial  judgment  en- 
tered pursuant  to  Rule  54(b)  was  affirmed  on  August 
28,  1964.  Kasey  v.  Molybdenum  Corporation  of 
America,  336  F.  2d  560  (9th  Cir.  1964). 

(4)  A  petition  for  rehearing  in  respect  to  said  deci- 
sion of  August  28,  1964  was  denied  on  October 
5,  1964.  /.  Bryant  Kasey,  etc.  v.  Molybdenum  Cor- 
poration of  America,  No.  18695. 

(5)  A  motion  directed  to  this  Court  to  vacate  said 
judgment  of  August  28,  1964  was  denied  on  September 
21,  1965.  /.  Bryant  Kasey,  etc.  v.  Molybdenum  Cor- 
poration of  America,  No.  18695. 

Were  this  action  to  be  transferred,  the  suceeding  Dis- 
trict Court  judge  would  have  to  become  familiar  with 
an  unusually  lengthy  and  complex  record  which  has  ac- 
cumulated over  a  period  of  nine  years,  a  task  neces- 
sarily imposing  substantial  additional  delay  and  an  un- 
necessary burden  upon  the  judiciary,  all  to  the  detri- 
ment of  the  public  interest.  Moreover,  such  transfer 
would  require  employment  of  local  counsel  in  Nevada, 
with  consequent  material  added  expense   for  appellee. 


—13— 

(d)  There  Is  No  Support  for  Appellants'  Contention  That 
the  District  Court  Abused  Its  Discretion  in  Denying 
Their  Motion  for  Change  of  Venue. 

While  appellants'  make  the  conclusionary  allegation 
that  the  District  Court's  denial  of  their  motion  for 
change  of  venue  was  "an  abuse  of  discretion"  (Ap- 
pellants' Op.  Br.  p.  3,  lines  1-2),  they  suggest  no  specific 
reasons,  evidence  or  argument  in  support  of  such  as- 
sertion. 

As  a  matter  of  fact,  the  Court's  ruling  was  in  full 
conformity  with  established  doctrine  that  once  a  plain- 
tiff has  chosen  his  forum,  as  the  appellant's  have  done 
here,  the  law  imposes  a  very  heavy  burden  upon  him  if 
he  thereafter  attempts  to  change  the  venue  of  his 
action.  Implicit  in  such  holdings  is  the  fact  that  the 
personal  comfort  and  convenience  of  the  plaintiff,  the 
grounds  advanced  by  the  appellants  for  transfer,  do  not 
warrant  a  change  of  venue. 

With  one  exception,  every  case  cited  by  the  appellants 
in  support  of  their  argument  concerns  a  motion  for 
change  of  venue  made  by  the  defendant  and  not  by  the 
plaintiff. 

Much  more  to  the  point  are  such  decisions  as  Huis- 
man  v.  Geuder,  Paeschke  &  Frey  Co.,  D.C.  Wis.  1966, 
250  F.  Supp.  631,  in  which  the  plaintiff,  as  in  the  in- 
stant case,  sought  a  change  of  venue  to  the  district  in 
which  he  resided.  It  was  held  that  such  showing  was 
insufficient  of  itself  to  require  transfer  of  the  action 
to  that  district,  particularly  when  plaintiff  has  already 
chosen  a  different  forum. 


—14— 

The  forum  selected  by  the  plaintiff  as  an  appropriate 
one,  in  this  case  the  U.S.  District  Court  in  Los  Angeles, 
may  not  be  lightly  disregarded.  Axe-Houghton  Fund 
A,  Inc.  V.  Atlantic  Research  Corp.,  D.C.  N.Y.  1964, 
227  F.  Supp.  521. 

And  even  more  important,  the  grounds  which  some- 
times do  justify  a  change  of  venue,  the  convenience  of 
parties,  the  convenience  of  witnesses  and  the  situs  of 
the  subject  matter  of  the  action  are  not  present  here.  On 
the  contrary,  appellants  argue  that  irrespective  of  the 
delay  and  expense  to  others,  the  present  action  is  subject 
to  transfer  for  the  reason  it  would  be  less  of  a  burden 
for  them.  Such  contention  ignores  the  additional  bur- 
dens of  time  and  expense  which  would  necessarily  be 
placed  upon  the  Courts  as  well  as  upon  the  other  party 
to  the  action. 

It  follows  that  the  District  Court  was  correct  in 
concluding:  "It  does  not  appear  that  under  the  circum- 
stances shown  such  a  change  of  venue  would  be  in  the 
interest  of  justice."  [R.  p.  13,  lines  28-30.] 

3.     The  Claim  of  Bias  Asserted  by  the  Appellants 
Has  No   Foundation   Whatsoever. 

The  appellants  have  displayed  unusual  bitterness  to- 
wards both  Court  and  counsel  because  of  their  disap- 
pointment in  the  judgment  that  the  statute  of  limita- 
tions barred  their  recovery  of  the  mining  claims  which 
are  the  subject  of  this  action. 

"Of  primary  importance  to  appellants,  which 
prompts  them  for  a  change  of  venue,  amongst 
other  reasons,  is  the  policy  of  Judge  Curtis  to  dis- 
regard predecessory  facts  before  conclusions  are 
drawn  and  the  applicable  law  invoked.     This  was 


—15— 

the  case  in  the  trial  of  appellee's  second  defense  in 
the  piecemeal  trial  of  issues  in  case  No.  319-59- 
JWC  Appeal  No.  18695  reviewed  by  this  court." 
(Appellant's  Op.  Br.  p.  3,  lines  15-20.) 

Nor  is  their  spleen  vented  solely  upon  the  District 
Court : 

"The  Ninth  Circuit  Court  of  Appeals  affirmed 
this  nefarious  and  illegal  judgment,  a  judgment 
and  affirmation  which  plaintiff-appellants  do  not 
accept  as  binding  in  any  sense  whatsoever." 
(Appellants'  Op.  Br.  p.  5,  lines  17-19.) 

The  fact  is  that  Judge  Curtis'  decision  was  affirmed 
by  this  Court  (336  F.  2d  560)  only  after  lengthy  and 
painstaking  consideration.  Appellants  have  been  ac- 
corded full  courtesy  and  consideration  at  every  judicial 
level  and  determinations  contrary  to  their  own  position 
do  not  establish  bias  against  them. 

In  the  absence  of  even  a  scintilla  of  evidence  of  bias 
or  prejudice,  it  may  be  assumed  that  appellants  seek  a 
change  of  venue  not  out  of  concern  for  the  conven- 
ience of  parties  or  witnesses,  or  the  interest  of  justice, 
but  rather  in  the  hope  for  a  new  forum  in  which  to  at- 
tempt to  re-litigate  matters  already  decided  against 
them. 

This  conclusion  is  confirmed  by  appellant's  admission 
that 

".  .  .  the  action  should  be  transferred  to  a  forum 
which  will  take  cognizance  of  these  facts  and  law 
relative  thereto  in  the  interest  of  justice.  .  .  ." 
(Appellants'  Statement  of  Points,  p.  2,  lines  23- 
25.) 


—16— 
Conclusion. 

This  application  for  review  should  be  dismissed : 

(a)  The  order  is  interlocutory  in  character;  it  is  not 
a  final  judgment. 

(b)  The  particular  requirements  of  a  discretionary 
appeal  have  not  been  met. 

(c)  There  is   no  extraordinary  circumstance   which 
would  warrant  the  remedy  of  mandamus. 

Even  if  the  order  were  properly  before  this  Court, 
the  action  of  the  District  Court  should  be  affirmed: 

(1)  The  action  is  one  for  recovery  of  CaUfornia  real 
property. 

(2)  Such  action  could  only  have  been  brought  in  Cali- 
fornia. 

(3)  Venue  can  be  changed  only  to  districts  where  the 
action  "might  have  been  brought." 

(4)  This    particular    action    could    not    have    been 
brought  in  Nevada. 

(5)  Thus  transfer  of  the  action  to  Nevada  would 
not  be  lawfully  authorized. 

(6)  Even  if  such  transfer  were  legally  possible,   it 
would  not  be  in  the  interest  of  justice. 

(7)  Adverse  judicial  determinations  do  not  estabHsh 
bias  or  prejudice. 

Respectfully  submitted, 

SCHULTHEIS,    LaYBOURNE   & 
DOWDS, 

Everett  B.  Laybourne, 
Dennis  Keeley, 

Attorneys  for  Appellee. 


Certificate  of  Counsel. 

I  certify  that,  in  connection  with  the  preparation  of 
this  brief,  I  have  examined  Rules  18,  19  and  39  of 
the  United  States  Court  of  Appeals  for  the  Ninth  Cir- 
cuit, and  that,  in  my  opinion,  the  foregoing  brief  is  in 
full  compliance  with  those  rules. 

Dennis  Keeley 


No.  22240  "^ 


United  States 

COURT  OF  APPEALS 

for  the  Ninth  Circuit 


HENRY  E.  McDowell, 

Plaintiff -Appellant, 

V. 

AMERICAN  MAIL  LINE,  LTD., 
a  corporation, 

Defendant-Appellee, 

FIREMAN'S  FUND  INSURANCE  COMPANY, 

Intervenor-Appellant, 


BRIEF  OF  APPELLANT  FIREMAN'S  FUND  INSURANCE  CO. 


Appeal  from  the  United  States  District  Court 
for  the  District  of  Oregon 

Honorable  John  F.  Kilkenny,  District  Judge 

F  i  L-  E  D 

GRAY,  FREDRICKSON  &  HEATH 

LLOYD  W.  WEISENSEE  f^Q\/  2      1967 

Commonwealth  Building 
Portland,  Oregon  97204 

Attorneys  for  Interveno7--Ap'pella'hfH^'  ti-  LUCK..  CLERK 
Fireman's  Fund  Insurance  Company 


STEVENS-NESS  LAW   PUB.  CO..    PORTLAND,   ORE. 


SUBJECT  INDEX 

Page 

Jurisdictional  Statement  1 

Statement  of  the  Case  1 

Specifications  of  Error  4 

Summary  of  Argument  5 

Intervention    6 

The  Agreement    12 

Conclusion  19 

Certificate  of  Counsel  20 

Appendix  2 1 


TABLE  OF  AUTHORITIES 

Page 

Cases 

Allen  V.  Union  Barge  Line,  239  F.  Supp.  1004, 
1966  AMC  1525   (E.D.  La.,  1965)   aff'd  361 
.^F.2d  217    (Ca.   5,   1966),  cert.  den.  Jan.   1, 
1967,  17  L.  Ed.  2d  545 6,8 

Biggs  V.  Norfolk  Dredging  Co.,  360  F.2d  360, 
1966  AMC  578  (CA.  4,  1966)  11,  12, 18 

Bird  V.  Central  Mfgrs.  Ins.  Co.,  168  Or.  1,  120 
P.2d  753   (1942)   14 

Caldwell  v.  Wells,  228  Or.  389,  365  P.2d  505 
(1961)     14 

Cerino  v.  O.P.S.,  202  Or.  474,  276  P.2d  397 
(1954)  14 

Close-Smith  v.  Conley,  230  F.  Supp.  411  (D.  Or. 
1964)   15 

Compania  Anonima  Venezolana  de  Nav.  v.  A.  J. 
Perez  Exporting  Co.,  303  F.2d  692,  1962  AMC 
1710   (CA.  5,  1962)   19 

Crestview  Cemetery  Association  v.  Dieden,  8  Cal. 
Rptr.  427,  433,  434  (1960)  17 

Davis  V.  U.  S.  Lines,  253  F.2d  262,  1958  AMC 
633  (CA.  3,  1958)  11 

Dudley  v.  O'Hearne,  212  F.  Supp.  763,  1963 
AMC  1573    (D.  Md.  1963)   11 

Fontana  v.  Penn.  Ry.,  106  F.  Supp.  461  (S.D.  N. 
Y.  1952)  aff'd  205  F.2d  151  (CA.  2,  1963) 
cert.  den.  Fontana  v.  Huron  Steve.  Co.,  346 
U.S.  886    11 

Grace  Line  v.  Kanton,  366  F.2d  510,  1967  AMC 
514  (CA  9,  1966)  cert.  den.  385  U.S.  1007 
8, 10, 11,  18,  19 

Hamacher  v.  Tumy,  222  Or.  341,  350,  352  P.2d 
493   (1960)  15 

Harris  v.  General  Coach  Works,  37  FRD  343  (E. 
D.  Mich.  1964)  6 


m 

TABLE  OF  AUTHORITIES  (Cont.) 

Page 

Haynes  v.  Rederi  A/S  Aladdin,  362  F.2d  345, 
1966  AMC  2024  (C.A.  5,  1966)  11, 17 

Home  V.  Sup.  L.  Ins.  Co.,  203  Va.  282,  123  S.E.2d 
401  (1962)   17 

Hugev  V.  Dampsk.  Int.,  170  F.  Supp.  601,  1959 
AMC  439  (S.D.  Cal.  1959)  affd  per  curiam 
274  F.2d  875  (C.A.  9,  1960)  8 

Jackson  v.  Lykes  S.  S.  Co.,  386  U.S.  731,  18  L.  Ed. 

2d  488,  1967  AMC  584  (1967)  7,8,11 

Jeske  V.  General  Ace.  F.  &  L.  Ass.  Corp.,  83  N.W. 

2d  167,  177   (Wise,  1957)   14 

Johnson  v.  Standard  Oil  Co.  of  Cal.,  30  FRD  329 

(D.  Alaska,   1962)    6 

Knickerbocker  L.  Ins.  Co.  v.  Norton,  96  U.S.  234, 
24  L.  Ed.  689  (1877)  14 

Mitau  V.  Roddan,  149  Cal.  1,  84  P.  145,  150  16 

Mitchell  V.  SS  ETNA,  138  F.2d  37,  1943  AMC 

1126  (C.A.  3,  1943)  6,7,8 

Mock  V.  Glens  Falls  Indemnity  Co.,  210  Or.  71, 

309  P.2d  180  (1957)   14 

Poleski  V.  Moore-McCormack  Lines,  21  FRD  579, 
1958  AMC  921  (D.M.D.  1958)  7 

Reed  v.  SS  YAKA,  373  U.S.  410,  10  L.  Ed.  2d 
448,  83  S.  Ct.  1349,  1963  AMC  672  (1963) 
3,  4,  5,  7,  8, 11,  12, 17,  19,  20 

Shaver  Transportation  Company  v.  Chamberlain, 
#  21871  C.A.  9  8,  9 

U.  S.  Lines  v.  Jarka  Corp.,  265  F.  Supp.  811  (D. 
Mass.  1967)   7 

Statutes 

28  U.S.C.  §  1291  2 

28  U.S.C.  §  1333  2 

33  U.S.C.  §  933  6, 11 


No.  22240 


United  States 

COURT  OF  APPEALS 

for  the  Ninth  Circuit 


HENRY  E.  McDowell, 

Plaintiff -Appellant, 

V. 

AMERICAN  MAIL  LINE,  LTD., 
a  corporation, 

Defendunt-Appellee, 

FIREMAN'S  FUND  INSURANCE  COMPANY, 

Intervenor-Appellant, 


BRIEF  OF  APPELLANT  FIREMAN'S  FUND  INSURANCE  CO. 


Appeal  from  the  United  States  District  Court 
for  the  District  of  Oregon 

Honorable  John  F.  Kilkenny,  District  Judge 


JURISDICTIONAL  STATEMENT 

This  is  an  appeal  from  findings  of  fact,  conclu- 
sions of  law  and  judgment  rendered  in  favor  of  ap- 
pellees Henry  McDowell,  American  Mail  Line  and 
against  appellant  Fireman's  Fund  Insurance  Com- 
pany. 


The  action  was  commenced  by  the  filing  of  a  com- 
plaint (R.  1)  in  admiralty  alleging  that  the  plaintiff, 
a  longshoreman,  was  injured  aboard  the  defendant's 
vessel,  the  SS  OREGON  MAIL,  then  berthed  in  nav- 
igable waters  of  the  United  States.  Plaintiff's  inju- 
ries were  allegedly  caused  by  the  unseaworthiness  of 
the  SS  OREGON  MAIL. 

Fireman's  Fund  Insurance  Company  filed  a  mo- 
tion to  intervene  (R.  8)  and  claim  (R.  10)  asserting 
payment  of  compensation  and  medical  benefits  and 
seeking  reimbursement. 

The  claim  of  Fireman's  Fund  was  tried  as  a  seg- 
regated issue  upon  a  separate  Pretrial  Order  (R.  14). 

The  District  Court  by  Order  (R.  21)  of  April  28, 
1967,  and  findings  and  conclusions  (R.  29)  and  judg- 
ment (R.  33)  dismissed  the  claim  of  American  Mail 
Line. 

Fireman's  Fund  filed  a  motion  for  new  trial  (R. 
34)  which  was  denied  by  Order  of  May  31,  1967  (R. 
37). 

The  District  Court  had  jurisdiction  by  virtue  of 
28  use  §  1333  (Admiralty).  This  Court  has  juris- 
diction by  virtue  of  28  USC  §  1291  (appeal  from  a 
final  decision  of  a  District  Court) . 

STATEMENT  OF  THE  CASE 

Henry  McDowell  was  injured  aboard  the  SS  ORE- 
GON MAIL,  owned  by  American  Mail  Line.  He  filed 


a  claim  in  admiralty  against  American  Mail  Line  al- 
leging that  his  injuries  were  caused  by  the  unsea- 
worthiness of  the  vessel.  The  parties  agreed  that  he 
was  a  longshoreman  employed  by  American  Mail 
Line  and  that  he  was  injured  aboard  the  vessel  (R. 
23,  Pretrial  Order,  Agreed  Facts).  It  was  also  agreed 
that  Fireman's  Fund  paid  benefits  required  by  the 
Longshoremen's  and  Harbor  Workers'  Compensation 
Act  totalling  $6,693.45  (Tr.  25,  Ex.  2);  compensa- 
tion payments  were  $3,531.58,  medical  expense  pay- 
ments were  $3,161.87. 

The  defendant  had  other  insurance  which  would 
respond  to  any  judgment  in  excess  of  the  deductible 
(R.  17,  Pretrial  Order,  Agreed  Fact  #7). 

Prior  to  May  of  1964,  Fireman's  Fund  wrote  both 
P  &  I  (liability)  and  compensation  for  American  Mail 
Line  and  had  done  so  for  15  years  (Tr.  11). 

Thereafter  American  Mail  Line  and  Fireman's 
Fund  agreed,  as  a  result  of  the  Reed  v.  SS  YAKA 
decision,  that  direct  suits  against  American  Mail 
Line  would  be  handled  as  ordinary  third  party  cases 
(Tr.  12).  The  defendant  objected  to  the  introduc- 
tion of  evidence  of  such  an  agreement  as  violating 
the  parol  evidence  rule  and  as  not  within  the  issues 
of  the  case  (Tr.  12).  The  trial  judge  permitted  Fire- 
man's Fund  to  make  an  offer  of  proof  (Tr.  12,  13). 

American  Mail  Line  wanted  Fireman's  Fund  re- 
imbursed in  third  party  type  cases  in  order  to  show 
a  favorable  compensation  loss  record  to  better  its 
competitive  position  in  stevedoring  operations  (Tr. 
19,  20). 


The  agreement  was  carried  out  as  the  cases  arose, 
in  some,  Fireman's  Fund  was  reimbursed,  while  in 
others,  reimbursement  was  waived  in  order  to  assist 
in  effectuating  a  settlement  (Tr.  14).  Correspond- 
ence was  offered  (Tr.  17,  18;  Ex.  3,  4),  but  not  ac- 
cepted, showing  the  way  in  which  the  agreement  was 
handled  in  individual  cases. 

The  claim  of  Fireman's  Fund  was  denied  in  its 
entirety  and  the  previous  order  allowing  interven- 
tion was  rescinded  (R.  33,  Judgment). 

Simply  stated  the  case  involves  the  question  of 
which  carrier,  the  compensation  or  liability,  will  ob- 
tain the  benefit  of  prior  compensation  and  medical 
payments  when  damages  are  ultimately  awarded  to 
a  Reed  v.  SS  YAKA  type  plaintiff. 

SPECIFICATIONS  OF  ERROR 

1.  The  District  Court  erred  in  holding  that  Fire- 
man's Fund  Insurance  Company  had  no  right  to  in- 
tervene. 

2.  The  District  Court  erred  in  refusing  to  admit 
into  evidence  the  testimony  of  Mr.  Libby,  the  marine 
secretary  of  Fireman's  Fund,  concerning  the  oral 
agreement  between  American  Mail  Line  and  Fire- 
man's Fund  providing  for  reimbursement  of  Fire- 
man's Fund  (Tr.  12-25).  Counsel  for  American  Mail 
Line  objected  as  follows : 

"MR.  WHITE :  I  object  to  that,  your  Honor, 
THE  COURT:  I  am  inclined  to  sustain  the 


objection,  but  I  am  going  to  let  you  go  ahead 
so  you  can  make  your  record.  You  may  proceed. 
MR.  WHITE :  May  I  just  make  one  objection 
so  that  it  will  be  continuing?  I  object  to  any 
testimony  of  this  witness  unless  it  is  first  pointed 
out  whether  he  is  trying  to  say  there  is  ambigu- 
ity in  the  policy  which  justifies  this  evidence. 
Also,  I  object  to  any  testimony  regarding  any 
agreement  or  understanding  on  the  grounds  that 
it  is  not  within  the  issues  of  this  case  and  would 
be  irrelevant  in  any  event."  (Tr.  12) 

3.  The  District  Court  erred  in  finding  that  the 
agreement  providing  for  reimbursement  of  Fireman's 
Fund  was  indefinite  and  uncertain,  varied  the  terms 
of  the  written  policy,  and  in  any  event  not  applicable 
to  this  policy. 

4.  The  District  Court  erred  in  failing  to  grant 
reimbursement  as  a  matter  of  right  (law)  from  the 
plaintiff  McDowell  or  directly  from  American  Mail 
Line. 

SUMMARY  OF  ARGUMENT 

1)  Where  the  vesselowner-employer  of  an  injured 
longshoreman  has  two  underwriters,  compensation 
and  liability,  the  compensation  underwriter  should  be 
reimbursed  out  of  the  longshoreman's  recovery  as  an 
application  of  the  doctrine  of  Reed  v.  SS  YAKA  and 
the  Longshoremen's  and  Harbor  Workers'  Compensa- 
tion Act; 

2)  Fireman's  Fund  and  American  Mail  Line 
formed  a  clear  workable  agreement  supplementing 


the  written  portion  of  the  compensation  insurance 
contract  providing  for  reimbursement;  if  the  agree- 
ment is  not  enforced,  the  liability  carrier  who  has  de- 
fended the  case  and  paid  off  the  judgment  will  re- 
ceive an  undeserved  windfall. 

INTERVENTION 

Fireman's  Fund  Insurance  Company  paid  the 
compensation  and  medical  expenses  due  McDowell  un- 
der the  provisions  of  the  Longshoremen's  and  Har- 
bor Workers'  Compensation  Act.  Traditionally  the 
employer,  or  if  he  has  compensation  insurance,  the 
carrier,  has  a  right  to  intervene  in  the  employee's 
damage  suit  to  protect  recoupment  rights  granted  by 
33  use  §  933  (e)  and  (h).  See  Allen  v.  Union  Barge 
Line,  239  F.  Supp.  1004,  1966  AMC  1525  (E.D.  La., 
1965)  aff'd.  361  F.2d  217  (C.A.  5,  1966),  cert.  den. 
Jan.  1,  1967,  17  L.  Ed.  2d  545;  Mitchell  v.  SS  ETNA, 
138  F.2d  37,  1943  AMC  1126  (C.A.  3,  1943). 

Intervention  is  governed  by  Rule  24  of  the  Fed- 
eral Rules  of  Civil  Procedure.  The  rule  was  revised 
in  the  1966  amendments  but  nothing  in  the  amend- 
ment narrowed  the  former  rule.  See  Harris  v.  Gen- 
eral Coach  Works,  37  FRD  343  (E.D.  Mich.  1964) ; 
Johnson  v.  Standard  Oil  Co.  of  Cal,  30  FRD  329 
(D.  Alaska,  1962).  In  both  of  the  cited  cases,  the 
compensation  carrier  under  state  compensation  acts 
was  permitted  to  intervene  as  a  matter  of  right  to 
protect  its  interest  in  recouping  its  compensation 
payments. 


If  the  carrier,  here  Fireman's  Fund,  has  a  right 
to  be  reimbursed  in  this  type  of  case,  then  it  would 
seem  clear  that  it  has  a  right  to  intervene.  The  log- 
ical solution  appears  to  be  to  require  that  the  com- 
pensation carrier  be  deemed  a  necessary  party.  See 
Poleski  V.  Moore-McCormack  Lines,  21  FRD  579, 
(DMD  1958).  It  has  been  held  that  the  employer's 
failure  to  intervene  is  fatal  to  its  claim  for  reimburse- 
ment. U.  S.  Lines  v.  Jarka  Corp,,  265  F.  Supp.  811 
(D.  Mass.  1967). 

In  a  case  where  an  employee  sues  a  tort  feasor 
who  is  not  his  employer  and  recovers  a  judgment, 
the  cases  universally  hold  that  the  agency  paying 
Longshoremen's  and  Harbor  Workers'  Compensation 
Act  benefits  is  entitled  to  recoup  its  payments.  Mitch- 
ell V.  The  ETNA,  supra,  appears  to  be  the  lead  case. 

The  present  case  arises  as  a  result  of  Supreme 
Court  decisions  holding  that  an  employee  injured 
aboard  a  vessel  is  entitled  to  sue  the  vesselowner 
even  if  the  owner  is  also  his  employer.  Jackson  v. 
Lykes  S.  S.  Co.,  386  U.S.  731,  18  L.  Ed.  2d  488 
(1967) ;  Reed  v.  SS  YAKA,  373  U.S.  410,  10  L.  Ed. 
2d  448,  83  S.  Ct.  1349,  1963  AMC  672   (1963). 

In  Jackson  the  Court  stated:  "*  *  *,  the  fact  that 
the  longshoreman  was  hired  directly  by  the  owner  in- 
stead of  by  the  independent  stevedore  company  makes 
no  difference  as  to  the  liability  of  the  ship  or  its  own- 
er." 18  L.  Ed.  2d  488  at  491.  Should  the  compensa- 
tion carrier's  position  be  any  different? 

American  Mail  Line  not  only  stevedores  its  own 


8 

vessels  but  also  does  contract  stevedoring  for  other 
shipowners  (Tr.  19,  20).  If  one  of  the  American 
Mail  Line  longshoremen  sued  another  shipowner  for 
injuries,  Fireman's  Fund  would  be  entitled  to  recoup 
its  compensation  out  of  the  recovery  even  though 
American  Mail  Line  might  be  obligated  to  indemnify 
the  other  shipowner.  See  Allen  v.  Union  Barge  Line, 
supra;  Hugev  V.  Dampsk.  Int.,  170  F.  Supp.  601 
(S.D.  Cal.  1959)  affd  per  curiam  274  F.2d  875 
(C.A.  9,  1960). 

This  Court  has  been  concerned  with  Reed  v.  SS 
YAKA  type  cases  but  has  never  really  considered  the 
rights  of  the  compensation  carrier. 

In  Grace  Line  v.  Kanton,  366  F.2d  510,  1967 
AMC  514  (C.A.  9,  1966)  this  Court  in  a  per  curiam 
decision  affirmed  a  judgment  giving  the  defendant 
credit  for  compensation  benefits  paid  for  wage  loss 
but  refused  to  give  credit  for  payment  of  medical 
benefits.  In  its  endeavor  to  follow  the  decision  in 
Reed  v.  SS  YAKA,  and  extend  Kanton  the  benefits 
guaranteed  a  longshoreman  employed  by  a  third 
party  shipowner,  this  Court  went  too  far.  If  Kanton 
had  recovered  from  a  third  party,  he  would  have  been 
obliged  to  repay  the  medical  expenses  as  well  as  the 
compensation  benefits.  Mitchell  v.  The  ETNA,  supra. 
This  Court  in  effect  held  that  Kanton  was  entitled  to 
double  recovery,  a  windfall  never  envisaged,  it  is  sub- 
mitted, by  the  Reed  and  Jackson  cases. 

At  the  time  this  brief  is  written,  this  Court  has 
before  it  the  case  of  Shaver  Transportation  Company 


V.  Chamberlain,  #21871,  an  appeal  from  the  District 
Court  of  Oregon.  The  District  Judge  gave  credit  for 
both  compensation  and  medical  expenses  thus  giving 
the  employer's  liability  carrier  a  substantial  wind- 
fall totalling  $35,915.47  comprised  of  $28,967.47 
medical  expenses  and  $6,948  compensation  for  wage 
loss  to  the  time  of  trial.  The  compensation  carrier 
was  not  a  party  and  surely  cannot  be  bound  by  a 
holding  adverse  to  its  interest. 

Although  each  case  should  be  decided  on  its  own 
merits,  nevertheless  as  this  case  is  involved  in  a  new 
area  of  litigation  it  seems  relevant  to  point  out  for 
consideration  a  few  instances  where  problems  are 
bound  to  arise.  Various  combinations  of  insurance  and 
self  insurance  are  possible. 

The  shipowner-employer  can  be  fully  insured 
both  for  compensation  and  liability  with  the  same  in- 
surance company  in  which  event  no  real  problem  ex- 
ists as  the  payments  and  credits  could  be  handled  as 
a  bookkeeping  matter.  At  the  other  extreme  the  ship- 
owner-employer could  be  completely  self  insured,  and 
although  such  a  possibility  seems  remote,  if  such 
were  the  case,  no  problem  exists  as  once  again  pay- 
ments and  credits  could  be  handled  as  a  bookkeeping 
matter. 

The  shipowner-employer  could  be  self  insured  as 
to  compensation  and  fully  insured  as  to  liability.  If 
such  were  the  case,  then  if  the  judgment  were  re- 
duced by  the  amount  of  compensation  payments  the 
carrier  would,  in  effect,  be  getting  the  benefits  of  a 
deductible  policy  without  the  reduction  in  premium. 


10 

If  the  shipowner-employer  is  fully  insured  for 
compensation  but  has  a  deductible  provision  on  its 
liability  policy,  the  question  of  who  gets  credit  for 
compensation  payments,  if  there  is  to  be  no  repay- 
ment to  the  compensation  carrier,  depends  first  of  all 
whether  the  judgment  exceeds  the  deductible  portion. 
Secondly,  if  the  credit  is  against  the  deductible  por- 
tion, the  insured  would  be  getting  the  benefit  but  if 
it  is  "off  the  top,"  so  to  speak,  the  liability  carrier 
would  be  getting  the  benefit.  Here  Fireman's  Fund 
fully  insures  American  Mail  Line's  compensation  li- 
ability while  American  Mail  Line  had  a  deductible 
on  its  liability  coverage.' 

A  further  extension  of  the  holding  in  Kanton  is 
that  the  defendant  should  get  credit  not  only  for  past 
compensation  but  for  future  compensation  payments, 
there  being  no  reason  to  distinguish  between  credit 
for  past  and  future  wage  loss  reduced  by  compensa- 
tion. Pertinent  portions  of  a  pretrial  order  in  which 
the  liability  carrier  handling  the  defense  claimed  a 
credit  for  future  wage  loss  and  medical  benefits  is 
set  forth  in  the  appendix.  The  compensation  carrier 
had  no  voice  in  the  formation  of  the  issues.  The  case 
was  ultimately  settled  prior  to  trial  thus  disposing  of 
a  knotty  problem. 

Over  the  years  the  courts  have  built  up  workable 
rules  for  handling  reimbursement  in  the  ordinary 


1  American  Mail  Line's  deductible  was  $10,000.  American 
Mail  Line's  pretrial  contention  8  (R.  19)  asserted  that  repay- 
ment would  be  charged  against  American  Mail  Line  but  no 
evidence  to  support  this  contention  was  offered. 


11 

third  party  case  i.e.  repay  the  compensation  carrier.^ 

The  simple,  workable  and  sound  policy  is  to  apply 
the  same  rule  in  Reed  v.  SS  YAKA  type  cases  thus 
facilitating  administration  of  the  Longshoremen's 
and  Harbor  Workers'  Compensation  Act  and  round- 
ing out  the  Supreme  Court's  plan  of  eliminating  ar- 
bitrary distinctions.  The  Court  of  Appeals  for  the 
Fourth  Circuit  apparently  had  these  considerations  in 
mind  when  it  stated  that: 

'*If  the  plaintiff  succeeds  in  this  effort  and 
ultimately  in  his  suit,  the  employer  may  recoup 
the  amounts  already  paid  by  deducting  them 
when  satisfying  the  judgment.  In  the  event  the 
compensation  was  paid  by  one  insurer  and  the 
judgment  becomes  payable  by  another,  the  em- 
ployer as  the  legal  debtor  in  both  instances  may 
retain  from  the  settlement  of  the  judgment  the 
sums  necessary  to  reimburse  the  compensation 
carrier.  The  two  remedies  —  compensation  and 
suit — are  thus  made  complementary.  An  impor- 


2  Two  problem  areas  are  left  open  by  Reed,  Jackson,  Kan- 
ton  and  Biggs.  The  first  involves  disposition,  after  deductions, 
of  the  judgment  where  it  is  less  than  the  compensation  bene- 
fits. See  Fontana  V.  Perm.  Ry.,  106  F.  Supp.  461  (S.D.  N.Y. 
1952)  aff  d  205  F.2d  151  (C.A.  2,  1953)  cert.  den.  Fontana  V. 
Huron  Steve.  Co.,  346  U.S.  886;  Davis  V  U.  S.  Lines,  253  F.2d 
262  (C.A.  3,  1958)  ;  Haynes  v.  Rederi  A/S  Aladdin,  362  F.2d 
345  (C.A.  5,  1966).  The  second  involves  the  dilemma  of  the 
employer  who  wants  to  settle  but  who  suspects  that  the  long- 
shoreman will  recant  and  allege  that  the  settlement  is  less 
than  the  value  of  his  entitlements  under  the  Act  and  claim 
the  additional  compensation  benefits  promised  by  the  Act 
[33  U.S.C.  §  933  (g)].  It  has  been  held  that  where  the  em- 
ployer was  a  party  to  the  employee's  action  and  signed  the 
satisfaction  of  judgment,  but  was  not  a  party  to  the  release 
the  employer  had  consented  to  the  compromise  and  a  defi- 
ciency claim  was  authorized.  Dudley  v.  O'Hearne,  212  F.  Supp. 
763,  1963  AMC  1573  (D.  Md.  1963) . 


12 

tant  purpose  of  the  compensation  statutes,  to 
provide  immediate  relief  to  an  injured  employee, 
is  achieved,  and  the  injured  party's  opportunity 
to  press  further  remedies  remains  unabridged." 
Biggs  v.  Norfolk  Dredging  Co.,  360  F.2d  360, 
364,  1966  AMC  578  (C.A.  4,  1966). 


THE  AGREEMENT 

Fireman's  Fund  offered  evidence  of  an  oral  agree- 
ment with  American  Mail  Line  which  provided  that 
Reed  v.  SS  YAKA  type  cases  were  to  be  handled  as 
the  usual  third  party  case  in  the  sense  that  Fire- 
man's Fund  would  be  reimbursed  out  of  the  long- 
shoreman's judgment  or  settlement.  The  evidence  was 
ultimately  disregarded  on  three  grounds: 

1)  It  was  an  oral  variation  from  the  terms  of 
the  written  contract; 

2)  It  was  too  indefinite  to  be  enforceable; 

3)  It  was  not  applicable  to  this  policy  (R.  21, 
Order  April  28,  1967;  R.  29,  Findings  of  Fact).  The 
Court  had  initially  indicated  that  the  proferred  tes- 
timony of  Mr.  Libby  was  not  within  the  issues  (Tr. 
12)  but  after  hearing  the  testimony  the  Court  indi- 
cated the  question  was  whether  the  agreement  vio- 
lated the  parol  evidence  rule  and  whether  interven- 
tion proceedings  were  the  proper  forum  to  decide 
the  issues. 

There  is  nothing  in  the  written  portion  of  the  in- 
surance contract  which  would  answer  the  question  of 


13 

reimbursement.  The  question  can  only  be  answered  by 
going  outside  the  written  agreement.  This  necessity 
was  recognized  by  counsel  for  American  Mail  Line 
when  he  inserted  as  a  part  of  defendant  American 
Mail  Line's  pretrial  Order,  contentions  4  and  7.  In 
4,  it  was  contended  that  the  Fireman's  Fund  made  the 
payments  with  no  "expectation  or  agreement  to  have 
it  repaid"  and  in  7  it  was  contended  that  when  Fire- 
man's Fund  made  the  payments  to  McDowell  "it  did 
not  contemplate  securing  reimbursement"   (R.  19). 

The  written  policy  certainly  cannot  be  varied  or 
modified  by  parol  evidence  to  suit  the  desires  of  the 
parties  after  a  problem  arises,  but  the  courts  have 
long  held  that  parol  evidence  is  admissible  to  show: 

1)  A  collateral  agreement; 

2)  A  modification; 

3)  The  intention  of  the  parties. 

The  testimony  of  Mr.  Libby  was  admissible  on  any 
and  all  of  the  above  grounds.  The  testimony  did  not 
vary  or  contradict  any  provision  of  the  policy  and  as 
a  matter  of  fact  was  consistent  with  the  policy.  En- 
dorsement Number  Fourteen  reads  as  follows: 

"It  is  understood  and  agreed  that  this  policy 
excludes  any  and  all  liability  of  the  Insured  cov- 
ered by  or  under  the  Insured's  policies  of  pro- 
tection and  indemnity  insurance,  or  for  any  loss, 
damage  or  expense  which  would  have  been  pay- 
able under  the  terms  of  a  protection  and  indem- 
nity policy."  (Tr.  25,  Ex.  1) 


14 

The  parol  evidence  rule  bars  evidence  of  those 
aspects  of  the  contract  which  the  parties  intended  to 
include  in  the  writing.  Caldwell  v.  Wells,  228  Or.  389, 
395,  365  P2d  505  (1961).  "Whether  the  parties  in- 
tended to  integrate  their  agreement  in  the  writing 
is  a  question  of  fact  in  each  case."  Caldwell  v.  Wells, 
supra,  228  Or  at  395. 

Are  oral  insurance  policy  terms  enforceable?  The 
answer  is  yes.  Bird  v.  Central  Mfgrs.  Ins.  Co.,  168 
Or.  1,  120  P.2d  753  (1942).  The  insurance  contract 
is  enforceable  as  a  whole  even  though  it  is  partly 
oral  and  partly  written.  Cerino  v.  O.P.S.,  202  Or. 
474,  276  P.2d  397  (1954).  See  also  Mock  v.  Glens 
Falls  Indemnity  Co.,  210  Or.  71,  309  P.2d  180 
(1957). 

While  this  proceeding  was  not  a  suit  to  reform  a 
policy,  the  rules  applicable  to  such  cases  are  helpful 
to  show  that  oral  terms  are  enforceable.  In  deleting 
an  exclusion  relating  to  demolition  work,  the  Wis- 
consin Supreme  Court  held  that : 

"A  policy  of  insurance  may  be  changed  or 
modified  by  a  new  or  distinct  [oral]  agreement 
subsequently  entered  into  between  the  parties." 
Jeske  V.  General  Ace.  F.  &  L.  Ass.  Corp.,  83 
N.W.2d  167,  177  (Wise,  1957). 

See  also  Knickerbocker  L.  Ins.  Co.  v.  Norton,  96  U.S. 
234,  24  L.  Ed.  689  (1877)  where  agreements  chang- 
ing the  premium  payment  terms  were  upheld. 

The  defendant  objected  to  Mr.  Libby's  testimony 
as  a  violation  of  the  parol  evidence  rule.  However,  it 


15 

must  be  noted  that  as  Mr.  Libby's  testimony  tended 
to  explain  and  tell  the  court  what  the  parties  had  in- 
tended, his  testimony  was  directly  related  to  the  de- 
fendant American  Mail  Line's  pretrial  contentions  4 
and  7  above  noted. 

American  Mail  Line  offered  no  evidence  of  the  in- 
tention of  the  parties  in  support  of  the  quoted  con- 
tentions it  had  made.  Fireman's  Fund  offered  evi- 
dence on  the  issue.  The  District  Court  should  have 
given  full  credence  and  effect  to  the  testimony  of  Mr. 
Libby  which  was  not  only  uncontradicted  but  corrob- 
orated by  a  letter  from  American  Mail  Line  (Tr.  17, 
Ex.  4)  dated  February  3,  1966,  just  a  month  before 
Mr.  McDowell's  accident,  and  a  letter  from  counsel 
(Tr.  17,  Ex.  3)  dated  October  14,  1965. 

The  rule  to  be  applied  in  considering  the  dealings 
of  the  parties  is : 

"  'Previous  dealings  between  the  parties  are 
the  strongest  and  in  most  instances,  the  most 
definite  basis  for  implying  terms  of  a  contract.'  " 
Hamacher  v.  Tumy,  222  Or.  341,  350,  352  P.2d 
493  (1960)  quoting  Patterson,  Essentials  of  In- 
surance Law  (2d  Ed.)  p.  88. 

The  District  Court  as  noted  by  counsel  (Tr.  27)  has 
applied  the  same  principle.  See  Close-Smith  v.  Con- 
ley,  230  F.  Supp.  411  (D.  Or.  1964). 

The  California  Supreme  Court  has  explained  the 
rule  as  follows : 

"  'This  was  a  practical  construction  placed 
upon  this  contract  by   the   parties   themselves. 


16 

which  renders  it  immaterial  to  consider  what 
might  be  the  literal  construction  of  its  terms. 
Parties  to  a  contract  have  a  right  to  place  such 
an  interpretation  upon  its  terms  as  they  see  fit, 
even  when  such  an  interpretation  is  apparently 
contrary  to  the  ordinary  meaning  of  its  provi- 
sions.' [Quoting  Mitau  v.  Roddan,  149  Cal.  1,  84 
P.  145,  150] 

"This  rule  of  practical  construction  is  predi- 
cated on  the  common  sense  concept  that  'actions 
speak  louder  than  words'.  Words  are  frequently 
but  an  imperfect  medium  to  convey  thought  and 
intention.  When  the  parties  to  a  contract  per- 
form under  it  and  demonstrate  by  their  conduct 
that  they  knew  what  they  were  talking  about  the 
courts  should  enforce  that  intent. 

"Appellants  correctly  claim  that  this  doctrine 
of  practical  construction  can  only  be  applied 
when  the  contract  is  ambiguous,  and  cannot  be 
used  when  the  contract  is  unambiguous.  That  is 
undoubtedly  a  correct  general  statement  of  the 
law.  (citing  cases).  But  the  question  involved  in 
such  cases  is  ambiguous  to  whom?  Words  fre- 
quently mean  different  things  to  different  peo- 
ple. Here  the  contracting  parties  demonstrated 
by  their  actions  that  they  knew  what  the  words 
meant  and  were  intended  to  mean.  Thus,  even  if 
it  be  assumed  that  the  words  standing  alone 
might  mean  one  thing  to  the  members  of  this 
court,  where  the  parties  have  demonstrated  by 
their  actions  and  performance  that  to  them  the 
contract  meant  something  quite  different,  the 
meaning  and  intent  of  the  parties  should  be  en- 
forced. In  such  a  situation  the  parties  by  their 
actions  have  created  the  'ambiguity'  required  to 


17 

bring  the  rule  into  operation.  If  this  were  not  the 
rule,  the  courts  would  be  enforcing  one  contract 
when  both  parties  have  demonstrated  that  they 
meant  and  intended  the  contract  to  be  quite  dif- 
ferent." Crestview  Cemetery  Association  v.  Die- 
den,  8  Cal  Rptr  427,  433,  434  (1960). 

The  Supreme  Court  of  the  United  States  in  Reed 
V.  SS  YAK  A,  supra,  separated  ownership  liability 
from  employer's  liability  (or  at  least  the  ra- 
tionale of  separation  is  a  reasonable  analysis  of 
the  decision.)  The  defendant  American  Mail  Line 
when  sued  by  McDowell  was  liable  as  owner  of  the  SS 
OREGON  MAIL  on  which  McDowell  was  employed 
when  he  was  injured.  A  logical  extension  of  the  deci- 
sion in  Reed  v.  S.S.  YAKA  is  that  the  compensation 
carrier  is  to  be  allowed  recoupment  of  its  compensa- 
tion and  medical  payments  out  of  the  plaintiff's  judg- 
ment as  in  the  ordinary  third  party  case  where  its 
lien  is  enforced.  See  Haynes  v.  Rederi  A/S  Aladdin, 
362  F.2d  345  (C.A.  5,  1966).  The  defendant  owner, 
when  he  is  also  the  employer  is  only  exchanging  lia- 
bility dollars  and  if  he  has  liability  coverage  his  lia- 
bility carrier  is  only  paying  what  it  contracted  to  pay. 
It  has  been  held  that  as  between  competing  carriers 
the  workmen's  compensation  carrier  is  to  be  favored. 
Home  V.  Sup.  L.  Ins.  Co.,  203  Va.  282,  123  S.E.2d 
401  (1962). 

If  the  shipowner  has  a  high  deductible  and  the 
longshoreman's  recovery  is  within  the  deductible  as 
is  the  compensation  payments,  the  shipowner,  in 
making  the  payment  to  the   longshoreman  who  in 


18 

turn  repays  the  compensation  carrier,  is  only  carry- 
ing out  a  business  decision  made  for  his  own  eco- 
nomic reasons.  The  exchange  of  dollars  was  the  plan 
adopted  by  the  court  in  Biggs  v.  Norfolk  Dredging 
Co.,  supra. 

Even  if  this  Court  would  otherwise  feel  con- 
strained to  apply  the  rule  of  Grace  Line  V.  Kanton, 
supra,  and  allow  defendant  American  Mail  Line  an 
offset  for  compensation  payments  but  not  for  medical 
payments,  nevertheless,  the  Kanton  rule  is  not  <y)pll- 
cable  to  this  case  where  the  defendant  and  its  insur- 
ance carrier  have  specifically  contracted  for  the  han- 
dling of  such  cases. 

The  contract  between  American  Mail  Line  and 
Fireman's  Fund  provides  that  American  Mail  Line 
will  pay  the  plaintiff  his  full  damage  adjudged  and 
that  Fireman's  Fund  will  recoup  its  payments  from 
the  plaintiff.  The  plaintiff  will  not  receive  a  double 
recovery  or  windfall. 

The  proof  submitted  establishes  the  contract  and 
is  admissible  for  this  purpose  without  violating  the 
parol  evidence  rule. 

Having  established  the  right  of  Fireman's  Fund 
to  recoupment  the  question  is  whether  this  court  will, 
by  not  granting  an  offset,  enforce  the  terms  of  the 
insurance  contract.  The  question  can  also  be  asked  in 
this  form:  why  require  two  lawsuits  with  possible 
attendant  disparity  of  result  and  duplication  of 
effort  when  by  the  simple  expedient  of  allowing  Fire- 
man's Fund  to  recoup  its  payments  out  of  the  plain- 


19 

tiff's  judgment  the  whole  case  is  disposed  of  in  one 
proceeding. 

It  is  appropriate  to  quote  Judge  John  R.  Brown 
when  the  court  is  called  upon  to  fashion  a  suitable 
decree : 

"The  Chancellor  is  no  longer  fixed  to  the 
woolsack.  He  may  stride  the  quarter-deck  of  mar- 
itime jurisprudence  and,  in  the  role  of  admiral- 
ty judge,  dispense,  as  would  his  landlocked  broth- 
er, that  which  equity  and  good  conscience  im- 
pels." Compania  Anonima  Venezolana  de  Nav.  v. 
A.  J.  Perez  Exporting  Co.,  303  F.2d  692  (C.A.  5, 
1962)  at  page  699. 

CONCLUSION 

1.  Fireman's  Fund  believes  that  the  decision  in 
Reed  v.  SS  YAKA  establishes  that  the  shipowner 
(or  vessel  as  the  case  may  be)  is  a  third  party  with- 
in the  meaning  of  the  Longshoremen's  and  Harbor 
Workers'  Compensation  Act  and  accordingly  Fire- 
man's Fund  as  compensation  carrier  is  entitled  to 
recoup  its  payments  out  of  the  plaintiff's  recovery 
from  the  shipowner. 

2.  American  Mail  Line  and  Fireman's  Fund  con- 
tracted to  handle  suits  against  American  Mail  Line 
by  longshoremen  the  same  as  suits  against  a  third 
person.  The  terms  of  such  contract  was  proven 
by  oral  evidence  and  formed  a  binding  contract  which 
should  be  enforced  according  to  the  terms  pi'oven. 
Therefore,  even  if  Kanton  would  preclude  the  adop- 


20 

tion  of  Fireman's  Fund's  analysis  of  Reed  v.  SS 
YAKA,  the  court  should  follow  the  contract  made 
by  the  parties  and  permit  Fireman's  Fund  to  recoup 
its  payments  out  of  McDowell's  recovery. 

Respectfully  submitted, 

Gray,  Fredrickson  &  Heath 
Lloyd  W.  Weisensee 

Attorneys  for  Fireman's  Fund 

Insurance  Company 


CERTIFICATE  OF  COUNSEL 

I  certify  that,  in  connection  with  the  preparation 
of  this  brief,  I  have  examined  Rules  18  and  19  of  the 
United  States  Court  of  Appeals  for  the  Ninth  Circuit, 
and  that,  in  my  opinion,  the  foregoing  brief  is  in  full 
compliance  with  those  rules. 

Lloyd  W.  Weisensee, 

Attorney 


21 


APPENDIX 


''UNITED  STATES  DISTRICT  COURT 
FOR  THE  DISTRICT  OF  OREGON 


Civil  No. 

66-389 
Amended 
Pretrial 

Order 


GLEN  R.  SMITH,  ) 

Plaintiff,) 

V.  ) 

STATES   STEAMSHIP   COMPANY,) 

a  corporation,  ) 

Defendant. ) 

*  *     * 

AGREED  FACTS 

*  *     * 

"7.  Plaintiff  was  hired  by  defendant  through  the 
supercargos'  and  Checkers'  Union  hiring  hall  to  work 
as  a  checker  during  the  discharge  of  cargo  from  the 
ship  on  July  28,  1964.  Plaintiff's  duties  were  to  ob- 
serve, count  and  mark  the  cargo  being  discharged 
from  the  No.  2  hatch  on  the  night  shift  July  28, 
1964.  His  duties  required  him  to  work  on  both  the 
dock  and  the  vessel  and  to  enter  the  hold  of  the  ves- 
sel as  occasion  required. 

"8.  While  plaintiff  was  working  in  the  No.  2 
hatch  other  men  who  were  longshoreman  employees 
of  an  independent  contracting  stevedore  company 
and  not  employees  of  defendant  were  working  in  the 

hatch  discharging  the  cargo." 

*  *     * 

DEFENDANT'S  CONTENTIONS 

♦  sH  5H 

"5.  In  accordance  with  the  Longshore  (sic)  and 


22 

Harborworkers'  Compensation  Act  defendant  se- 
cured to  plaintiff  the  payment  of  all  of  his  medical 
expenses  incurred  as  a  result  of  the  injury  alleged 
herein,  in  the  amount  of  $193.00.  Plaintiff  is  not  en- 
titled to  recover  for  such  expenses  herein. 

"6.  In  accordance  with  the  Longshore  (sic)  and 
Harborworkers'  Compensation  Act  defendant  secured 
to  plaintiff  the  payment  of  compensation  in  the 
amount  of  $320.  Plaintiff  is  not  entitled  to  recover 
this  amount  by  way  of  past  wage  loss  herein. 

"7.  Plaintiff  is  not  entitled  to  recover  herein  for 
any  future  medical  expense  because  under  the  Com- 
pensation Act  his  rights  to  full  medical  benefits  are 
not  terminated  by  judgment  herein. 

"8.  Plaintiff  is  not  entitled  to  recover  herein  for 

loss  of  future  wages  except  insofar  as  it  is  proved 

that  such  future  wage  loss  exceeds  the  compensation 

for  disability  secured  to  plaintiff  by  defendant  in 

accordance  with  the  Compensation  Act." 

*     *     * 

ISSUES  OF  LAW 

*'2.  Is  plaintiff  precluded  from  recovering  past 
and  future  medical  expense  because  defendant  has 
provided  him  with  insurance  which  pays  such  ex- 
penses? 

"3.  Is  Plaintiff  precluded  from  recovering  past 
and  future  wage  loss  to  the  extent  that  defendant 
has  provided  him  with  insurance  which  pays  such 
loss? 


No.  22240 
United  States 

COURT  OF  APPEALS 

for  the  Ninth  Circuit 


HENRY  E.  McDowell, 

Plaintiff, 

V. 

AMERICAN  MAIL  LINE,  LTD., 
a  corporation, 

Defendant-Appellee, 

FIREMAN'S  FUND  INSURANCE  COMPANY, 

Intervenor-Appellant. 

Appeal  from  the  United  States  District  Court 
for  the  District  of  Oregon 

Honorable  John  F.  Kilkenny,  District  Judge 


BRIEF  OF  APPELLEE,  AMERICAN  MAIL  LINE,  LTD. 


fii:ed 


WILLIAM  F.  WHITE,  DEC  I  8  1967 

WHITE,  SUTHERLAND  &  GILBERTSON 

1200  Jackson  Tower  ijy..    p    .  , ,_^    ^,  ^ 

Portland,  Oregon  97205  ^^'  8-  ^UCK,  CLERK 

Attorneys  for  Appellee, 
American  Mail  Line,  Ltd. 

STEVENS-NESS  LAW  PUB.  CO..    PORTLAND.   ORE.  12-«7 


JAN 


SUBJECT  INDEX 

Page 

Supplementary  Statement  of  the  Case 2 

Summary  of  Argument 4 

Argument   5 

American  Mail  was  not  a  person  other  than  the 
employer  of  McDowell  and  hence  neither  the 
Act  nor  the  insurance  policy  entitled  Fireman's 
Fund  to  claim  reimbursement 5 

There  is  no  justification  for  this  Court  to  change 
its  decision  in  the  Kanton  case 11 

District  court  did  not  err  in  rejecting  testi- 
mony of  oral  agreement;  its  findings  that  such 
was  too  indefinite,  varied  terms  of  the  policy 
and  beyond  issues  was  not  clearly  en'oneous        15 

Certificate  of  Counsel  18 


TABLE  OF  AUTHORITIES 

Page 

Cases 

Biggs  V.  Norfolk  Dredging  Company  (4  Cir.,  1966) 
360  F.2d  360 14 

Grace  Line  v.  Kanton  (9  Cir.,  1966)  366  F.2d  510, 
cert.  den.  385  U.S.  1007  (1967)  4,  5, 11,  12 

Pacific  Inland  Navigation  Co.  v.  Course  (9  Cir., 
1966)  368  F.2d  540,  cert.  den.  March  13,  1967, 
386  U.S.  963 6,  8, 10 

Reed  v.  S.  S.  YAKA  (1963)  373  U.S.  410,  83  S.  Ct. 
1349,  10  L.  Ed.  2d  448 8,  9, 10 

Ryan  Stevedoring  Co.  v.  Pan- Atlantic  S.S.  Corp., 
(1956)  350  U.S.  124,  76  S.  Ct.  232,  100  L.  Ed. 
133  11,13 


Statutes  and  Codes 

Longshoremen's  and  Harbor  Workers'  Compensa- 
tion Act,  28  U.S.C.A.  §  901  et  seq. 
3,  4,  5,  6,  7, 10, 16 


No.  22240 
United  States 

COURT  OF  APPEALS 

for  the  Ninth  Circuit 


HENRY  E.  McDowell, 

Plaintiff, 

V. 

AMERICAN  MAIL  LINE,  LTD., 
a  corporation, 

Defendant-Appellee, 

FIREMAN'S  FUND  INSURANCE  COMPANY, 

Intervenor-Appellant 

Appeal  from  the  United  States  District  Court 
for  the  District  of  Oregon 

Honorable  John  F.  Kilkenny,  District  Judge 


BRIEF  OF  APPELLEE,  AMERICAN  MAIL  LINE,  LTD. 


With  plaintiff  Henry  E.  McDowell  having  aban- 
doned his  appeal  this  case  remains  as  one  where  Ap- 
pellant-Intervenor,  Fireman's  Fund  Insurance  Com- 
pany (hereafter,  "Fireman's  Fund")  is  appealing 
from  findings  of  fact,  conclusions  of  law  and  judg- 
ment rendered  in  favor  of  Appellee-Defendant,  Amer- 
ican Mail  Line,  Ltd.  (hereafter,  ''American  Mail"). 
American  Mail  agrees  with  Fireman's  Fund's  juris- 
dictional statement. 


SUPPLEMENTARY  STATEMENT  OF  THE  CASE 

To  supplement  and  clarify  Fireman's  Fund's 
statement  of  the  case  American  Mail  adds : 

The  District  Court  upon  trial  of  the  segregated 
issue  (from  which  appeal  was  taken)  made  the  fol- 
lowing 

FINDINGS  OF  FACT 

"1.  The  Court  incorporates  by  this  reference 
the  agreed  facts  set  forth  on  pages  2,  3  and  4 
of  the  pretrial  order  upon  segregated  issue  on 
claim  for  reimbursement. 

"2.  That  the  alleged  supplemental  contract 
between  defendant  and  intervening  claimant 
modifying  the  insurance  agreement  is  so  indef- 
inite and  uncertain  as  to  be  completely  unen- 
forceable. 

''3.  That  even  if  such  contract  was  suffi- 
ciently definite  for  enforcement,  the  same  would 
tend  to  change,  modify  and  contradict  the  terms 
of  the  insuring  agreement. 

"4.  The  alleged  agreement  mentioned  by  the 
witness  Libby,  even  if  definite  would  apply 
only  on  a  policy  to  policy  basis,  and,  therefore, 
unenforceable  as  to  this  particular  policy. 

"5.  That  the  alleged  claim  is  not  a  proper 
third  party  claim  in  this  action  and  the  Court 
would  exercise  its  discretion  against  permitting 
the  prosecution  of  the  claim  in  this  proceeding." 

and  the  following 


8 

CONCLUSIONS  OF  LAW 

"Based  upon  the  foregoing  findings,  the 
Court  concludes  that  the  petition  of  intervening 
claimant  for  intervention  should  be  denied  and 
the  claim  for  reimbursement  dismissed." 

A  further  fact  is  that  neither  in  its  motion  to 
intervene  (R.  8)  or  its  claim  for  reimbursement 
(R.  10)  or  the  carefully  worked  out  pretrial  order 
upon  the  segregated  issue  (R.  14)  did  Fireman's 
Fund  claim  or  contend  that  an  oral  agreement  ex- 
isted pertaining  in  any  way  to  modification  or  sup- 
plementation of  the  insurance  policy. 

It  was  agreed  as  a  fact  that  the  deductible 
amount  which  American  Mail  would  be  required  to 
pay  before  any  insurance  responded  to  the  claim  of 
longshoreman  McDowell  was  an  amount  in  excess  of 
Fireman's  Fund's  claim  of  $6,693.45. 

The  insurance  policy  provided,  among  other 
things,  that  Fireman's  Fund  would  "pay  promptly 
to  any  person  entitled  thereto,  under  the  Workmen's 
Compensation  Law  and  in  the  manner  therein  pro- 
vided, the  entire  amount  of  any  sum  due,  and  all  in- 
stallments thereof  as  they  become  due";  the  "Work- 
men Compensation  Law"  referring  to  the  Longshore- 
men's and  Harbor  Workers'  Compensation  Act,  28 
U.S.C.A.  §  901  et  seq.  (hereafter  the  "Act").  All 
of  the  provisions  of  the  Act  were  made  a  part  of  the 
policy  "as  fully  and  completely  as  if  written"  in  the 
policy  (R.  14,  Ex.  1). 


4 

The  "Subrogation"  Clause  of  the  policy  provided : 
*'K.  The  company  shall  be  subrogated  in  case 
of  any  payment  under  this  policy,  to  the  extent 
of  such  payment,  to  all  rights  of  recovery  there- 
for vested  by  law  either  in  this  employer  or  in 
any  employee  or  his  dependents  claiming  here- 
under, against  persons,  corporations,  associa- 
tions or  estates."  (R.  14,  Ex.  1). 

Section  33  of  the  Act  (28  U.S.C.A.  §  933)  reads 
in  part: 

"(a)  If  on  account  of  a  disability  or  death 
for  which  compensation  is  payable  under  this 
chapter  the  person  entitled  to  such  compensation 
determines  that  some  person  other  than  the  em- 
ployer or  a  person  or  persons  in  his  employ  is 
liable  in  damages,  he  need  not  elect  whether  to 
receive  such  compensation  or  to  recover  damages 
against  such  third  person. 


"(h)  Where  the  emiployer  is  insured  and  the 
insurance  carrier  has  assumed  the  payment  of 
the  compensation,  the  insurance  carrier  shall  be 
subrogated  to  all  the  rights  of  the  employer  under 
this  section." 


SUMMARY  OF  ARGUMENT 

The  District  Court  did  not  err  in  denying  Fire- 
man's Fund's  intervention  and  claim  for  reimburse- 
ment and  treating  benefits  paid  under  the  Act  to 
McDowell  in  accordance  with  this  Court's  holding  in 
Grace  Line  v.  Kafiton,  (9  Cir.,  1967)  366  F.2d  510, 
certiorari  denied  January  9,   1967,  385  U.S.   1007. 


Because  longshoreman  McDowell  was  suing  his 
employer  in  personam  and  not  some  other  person, 
Fireman's  Fund's  rights  could  not  be  equated  with  its 
rights  had  McDowell  sued  a  third  party.  No  law  or 
contract  supported  the  intervening  claim  of  Fire- 
man's Fund.  Handling  compensation  benefits  paid  a 
longshoreman  under  the  Act  (33  U.S.C.A.  §  901  et 
seq.)  as  sanctioned  in  Kanton,  supra,  did  not  create 
unjust  enrichment  or  windfalls  as  claimed  by  Fire- 
man's Fund  but  rather  prevented  them. 

The  District  Court  did  not  err  in  rejecting  oral 
testimony  which  sought  to  establish  an  agreement  be- 
tween American  Mail  and  Fireman's  Fund  to  treat 
a  two-party  case  as  a  three-party  case.  Not  only  was 
the  proffered  testimony  beyond  the  issues  of  the  in- 
tervention but  tended  to  vary  the  terms  of  the  writ- 
ten insurance  policy. 

ARGUMENT 

American  Mai!  was  not  a  person  other  than 
the  employer  of  McDowell  and  hence  neither 
the  Act  nor  the  insurance  policy  entitled 
Fireman's  Fund  to  claim  reimbursement. 

On  this  appeal  Fireman's  Fund  is  complaining 
that  longshoreman  McDowell  was  not  awarded  more 
than  he  was  entitled  to  so  that  it  could  assert  a  lien 
on  the  excess.  Otherwise  put.  Fireman's  Fund  con- 
tends the  District  Court  erred  in  following  this 
Court's  decision  in  Grace  Line  v.  Kanton,  (9  Cir., 
1966)   366  F.2d  510,  certiorari  denied  in  385  U.S. 


6r 

1007  (1967).  In  that  case  this  Court  approved  the 
deduction  from  a  longshoreman's  recovery  that  which 
was  paid  to  him  by  way  of  compensation  benefits  and 
refused  to  include  in  such  recoveiy  medical  ex- 
penses not  incurred  by  the  longshoreman. 

In  this  case  McDowell  sued  American  Mail,  his 
employer  in  personam  to  recover  damages  for  person- 
al injuries  arising  from  the  unseaworthiness  of  de- 
fendant's vessel.  Such  action  was  sanctioned  by  this 
Court  in  Pacific  Inland  Navigatio7i  Co.  v.  Course, 
(9  Cir.,  1966)  368  F.2d  540,  certiorari  denied  March 
13,  1967  in  386  U.S.  963. 

The  intervention  and  claim  of  Fireman's  Fund 
could  only  depend  upon  its  insurance  policy  and  the 
Act  incorporated  into  the  terms  of  its  policy.  Neither 
support  its  claim. 

The  Act  gives  Fireman's  Fund  as  a  compensation 
insurance  carrier  a  right  of  subrogation  only  in  the 
case  where  the  longshoreman  seeks  recovery  from 
"some  person  other  than  the  employer,"  33  U.S.C.A. 
§  933.  The  fact  that  American  Mail  owned  or  oper- 
ated the  vessel  upon  which  McDowell  was  injured 
does  not  alter  the  fact  of  employment.  As  we  see  it, 
no  fact  in  this  case  can  be  tortured  so  as  to  make 
American  Mail  a  person  other  than  the  employer  of 
McDowell. 

As  to  the  insurance  policy  it  must  be  considered 
in  the  light  of  the  Act  which  was  expressly  incorpor- 
ated therein.  Taken  by  its  four  corners  the  Act  is 
basically   one   requiring  American  Mail   as  an  em- 


ployer  to  pay  compensation  benefits  to  its  employees 
on  a  no-fault  basis.  It  is  American  Mail,  as  employer 
and  not  Fireman's  Fund  as  carrier  who  is  liable  for 
the  payment  of  benefits  under  the  Act  (33  U.S.C.A. 
§  904) ;  to  whom  receipts  for  payment  shall  be  given 
(33  U.S.C.A.  §  914  (1));  to  whom  notice  of  injury 
or  death  shall  be  given  (33  U.S.C.A.  §  912);  by 
whom  injury  or  death  shall  be  reported  (33  U.- 
S.C.A. §  930) ;  and  who  shall  secure  the  payment 
of  compensation  by  insuring  and  keeping  insured 
such  payments  (33  U.S.C.A.  §  932  (a)).  It  is  this 
Act  which  required  American  Mail  Line  to  take 
out  this  policy  of  insurance;  the  policy  which  ob- 
ligated Fireman's  Fund  to  pay  promptly  the  entire 
amount  of  any  sum  due  by  American  Mail  to  long- 
shoreman McDowell. 

The  poHcy  in  its  "Subrogation"  clause  "K"  gave 
Fireman's  Fund  a  right  to  become  subrogated  in  this 
case  to  all  rights  of  recovery  vested  by  law  in  either 
American  Mail  or  McDowell  and  against  any  per- 
sons, corporations,  associations  or  estates.  While  the 
express  language  ''some  person  other  than  the  em- 
ployer" is  not  used  in  the  policy  as  in  Section  33  of 
the  Act  the  subrogation  clause  could  scarcely  mean 
anything  else. 

Certainly,  McDowell  had  no  right  vested  by  law 
in  himself  to  be  paid  damages  without  regard  to  hav- 
ing set  off  from  those  damages  compensation  pay- 
ments which  he  had  already  received.  Fireman's 
Fund  by  stepping  into  the  shoes  of  McDowell  could 


8 

have  no  greater  right  than  McDowell.  Likewise,  it 
is  rather  ridiculous  to  conceive  that  American  Mail 
had  a  right  vested  in  law  to  collect  money  from  it- 
self or  that  Fireman's  Fund  by  stepping  into  its  shoes 
could  have  any  greater  rights.  Neither  law  nor  con- 
tract required  the  District  Court  to  create  a  fund  so 
that  Fireman's  Fund  might  impress  a  lien  upon  it 
for  purpose  of  reimbursement. 

The  sole  thrust  of  Fireman's  Fund  is  based  upon 
the  proposition  that  American  Mail  is  some  other 
person  than  the  employer  of  longshoreman  McDow- 
ell. This  proposition  is  contrary  to  the  agreed  fact 
(R.  14). 

In  a  rather  oblique  approach  Fireman's  Fund 
seeks  to  make  American  Mail  a  third  party  target 
for  McDowell's  action  by  claiming  that  an  applica- 
tion of  the  doctrine  of  Reed  v.  SS  YAK  A,  (1963)  373 
U.S.  410  requires  it.  Counsel  for  Fireman's  Fund 
knows  better.  It  was  only  last  year  that  counsel  for 
Fireman's  Fund  as  attorney  for  Appellant  in  Pacific 
Inland  Navigation  Co.  v.  Course,  (9  Cir.,  1966)  368 
F.2d  540  contended  that  the  in  rem  action  in  Yaka 
was  in  reality  a  three-party  situation  and  not  author- 
ity to  sanction  this  very  type  of  case  brought 
there  by  Course  and  here  by  McDowell  directly 
against  a  ship-owner  employer.  Also,  counsel  for 
American  Mail  appeared  in  the  Course  case  for  amici 
curiae  and  joined  appellant  in  the  same  contention. 
We  both  went  down  in  defeat.  In  the  Course  case 
this  Court  not  only  refused  to  see  a  three-party  sit- 


uation  in  Yaka  but  held  that  Yaka  sanctioned  a  di- 
rect in  'personam  action  by  a  longshoreman  against 
his  shipowner-employer  for  maintaining  an  unsea- 
worthy  ship.  Merely  because  the  Supreme  Court  in 
Yaka  may  have  ex  necessitate  read  Section  105  out 
of  the  Act  does  not  mean  that  this  Court  can  prop- 
erly hold  for  naught  the  rest  of  the  Act  and  the 
Fireman's  Fund  insurance  policy. 

Another  surprising  contention  is  made  by  Fire- 
man's Fund  though  under  the  wrong  heading  of  its 
brief.  On  page  17  of  its  brief  Fireman's  Fund  urges 
that  the  Supreme  Court  in  Yaka  by  its  rationale 
separated  ownership  liability  from  employer  liability 
of  the  defendant  and  hence  it  would  be  logical  for 
this  Court  to  extend  that  concept  by  treating  Amer- 
ican Mail  as  having  a  dual  personality.  We  do  not 
read  Yaka  as  does  Fireman's  Fund.  The  most  we 
see  in  Yaka  is  that  the  longshoreman  urged  that  it 
had  only  sued  the  ship  in  rem  and  not  the  shipowner 
employer  and  that  he  should  recover  against  the  ship 
irrespective  of  any  personal  liability  on  the  part  of 
the  shipowner.  It  was  this  "personification  of  the 
ship"  contention  that  the  Supreme  Court  found  un- 
necessaiy  to  decide.  However,  Mr.  Justice  Harlan,  in 
a  footnote  to  his  dissenting  opinion  (373  U.S.  410  at 
419)  made  it  clear  that  the  "personification  of  the 
ship"  concept,  if  it  ever  existed,  was  long  out  of 
style.  We  quote  in  part  from  the  footnote : 

".  .  .  The  reason  against  its  application  to 
create  substantive  liability  was  eloquently  stated 
by  Mr.  Justice  Bradley,  speaking  for  the  Court 


10 

in  The  City  of  Norwich,  118  U.S.  468,  503:  'To 
say  an  owner  is  not  liable,  but  that  his  vessel  is 
liable,  seems  to  us  like  talking  in  riddles.  .  .  . 
In  the  matter  of  liability,  a  man  and  his  property 
cannot  be  separated  .  .  .'  " 

With  the  Supreme  Court  apparently  being  of  the 
view  that  for  liability  reasons  a  ship  cannot  be  di- 
vorced from  her  owner,  it  scarcely  appears  that  it 
would  be  of  a  mind  to  fictionally  split  the  corporate 
entity  so  that  simultaneously  it  could  have  an  owner- 
liability  and  an  employer-nonliability.  Besides,  any 
fiction  to  make  American  Mail  in  whole  or  in  part 
someone  else  other  than  the  employer  of  McDowell 
would  be  repugnant  to  the  agreed  fact. 

The  woes  of  American  Mail  were  brought  about 
by  this  Court  in  Course  stripping  it  of  the  protection 
against  direct  action  by  an  employee  that  it  always 
considered  it  had  under  Section  105  of  the  Act  (33 
U.S.C.A.  §  905).  It  reached  its  result  by  refusing 
to  see  in  Yaka  a  three-party  situation.  Consistency 
and  fairness  should  leave  American  Mail  in  the  two- 
party  situation  where  this  Court  placed  it  unless  the 
Course  decision  is  to  be  undone.  It  should  be  too  late 
for  this  Court  to  be  influenced  by  the  argument  of 
Fireman's  Fund  that  a  simple,  workable  and  sound 
policy  is  to  now  treat  American  Mail  as  a  person 
other  than  the  employer  in  order  to  enable  Fireman's 
Fund  to  recoup  insurance  policy  payments  as  it  does 
in  third-party  actions.  Such  a  policy  would  be  far 
from  simple  as  it  would  destroy  the  right  of  Amer- 


11 

ican  Mail  to  indemnity  as  fashioned  by  the  Supreme 
Court  in  Ryan  Stevedoring  Co.  v.  Pan-Atlantic  S.S. 
Corp.,  (1956)  350  U.S.  124. 

There  is  no  justification  for  this  Court  to 
change  its  decision  in  the  Kanton  case. 

The  District  Court  did  not  err  in  following  this 
Court's  decision  in  Grace  Line  v.  Kanton,  (9  Cir., 
1966)  366  F.2d  510,  certiorari  denied  in  385  U.S. 
1007  (1967).  In  Kanton  this  Court  approved  the 
District  Court  deducting  from  what  it  would  other- 
wise award  a  longshoreman  the  amount  he  had  al- 
ready received  by  way  of  compensation  under  the 
Act  from  his  defendant-employer.  Where  the  long- 
shoreman's medical  expenses  v/ere  incurred  and  paid 
for  by  the  employer  and  not  the  longshoreman  they 
were  not  included  in  the  longshoreman's  award. 

While  this  simple  method  of  insuring  that  the 
longshoreman  is  not  unjustly  enriched  cannot  be  em- 
ployed where  the  longshoreman  is  suing  a  person 
other  than  his  employer,  this,  in  itself,  is  no  reason 
for  not  using  this  direct  method  where  he  is  suing 
his  employer.  The  charm  of  the  method  is  that  unjust 
enrichment  is  guarded  against  within  the  confines 
of  the  parties  and  issues  of  the  longshoreman's  ac- 
tion. Since  it  is  the  employer  and  not  his  insurance 
carrier  who  is  liable  to  pay  benefits  under  the  Act 
there  is  no  reason  why  a  District  Court  should  be- 
come obligated  to  broaden  issues  or  decide  collateral 
matters  between  the  defendant-employer  and  one  or 
more  of  its  insurance  carriers. 


12 

In  attacking  the  wisdom  of  Kanton,  Fireman's 
Fund  argues  that  this  Court  went  too  far  in  that  it 
gave  American  Mail  credit  for  compensation  pay- 
ments but  not  for  medical  payments.  From  this  it 
argues  that  had  American  Mail  been  a  third-party, 
McDowell  would  have  been  given  a  full  award  and 
then  be  required  to  repay  to  American  Mail  both 
compensation  and  medical  benefits  and  for  that  rea- 
son McDowell  secured  a  windfall.  We  disagree.  Un- 
der Kanton,  McDowell  was  compensated  only  for  his 
actual  money  loss.  With  his  award  offset  by  com- 
pensation previously  received  and  his  not  being  paid 
for  medical  expenses  which  he  had  not  incurred  Mc- 
Dowell received  no  windfall  and  hence  had  nothing 
to  pay  back.  Because  Fireman's  Fund  made  the  pay- 
ments for  American  Mail  instead  of  American  Mail 
making  the  payments  as  required  by  the  Act  and 
then  being  reimbursed  by  Fireman's  Fund  under  the 
policy  is  of  no  significance  so  far  as  McDowell  or 
American  Mail  is  concerned. 

However,  a  more  involved  windfall  argument  is 
made  by  Fireman's  Fund  in  respect  to  American 
Mail  and  its  P  &  I  insurance  carrier.  It  appears  that 
the  first  $10,000.00  of  McDowell's  $42,447.03  award 
was  paid  by  American  Mail  and  the  balance  by  its 
P  &  I  insurance  carrier.  The  District  Court  denied 
repayment  to  Fireman's  Fund  of  the  $6,693.45  which 
it  paid  on  behalf  of  American  Mail  for  compensation 
and  medical  benefits  because  such  was  not  included 
in  McDowell's  award. 


13 

Who  of  the  three  losers:  American  Mail,  Fire- 
man's Fund,  or  the  P  &  I  insurance  carrier,  gained 
a  windfall?  If  the  $6,693.45  ''credit"  was  taken  off 
the  bottom  of  the  $42,447.03  American  Mail  did  not 
have  to  pay  a  full  $10,000  and  if  taken  off  of  the 
top,  the  P  &  I  underwriter  was  saved  paying  what  it 
would  otherwise  possibly  have  paid  had  American 
Mail  been  a  third-party.  However,  there  is  another 
side  of  the  coin.  Had  the  matter  been  handled  with 
American  Mail  as  a  third  party.  Fireman's  Fund 
would  have  recouped  its  $6,693.45,  but  since  Ameri- 
can Mail  was  not  in  reality  a  third  party  it  would  be 
Fireman's  Fund  which  gained  a  windfall  to  the  full 
extent  of  its  recoupment.  Neither  the  Act  nor  the 
policy  contemplated  recoupment  of  money  paid  under 
the  policy  for  American  Mail  or  that  recoupment 
could  be  had  at  the  expense  or  detriment  of  its  in- 
sured. 

Moreover,  if  the  P  &  I  carrier's  position  is  viewed 
as  that  of  insuring  American  Mail  as  a  third-party 
shipowner,  we  find  it  not  gaining  a  windfall,  but 
rather  losing  along  with  American  Mail  the  right  to 
be  indemnified  under  Ryan  by  McDowell's  employer. 
Since  the  Fireman's  Fund  policy  insured  American 
Mail  as  McDowell's  employer,  including  any  con- 
tractual right-over  liability  to  a  third  person  (En- 
dorsement No.  12  to  policy),  Fireman's  Fund  would 
have  written  a  check  for  the  full  $42,477.03  as  well 
as  defense  expense.  In  short,  in  the  case  below  the 
only  one  for  certain  who  is  gaining  a  very  substan- 
tial windfall  by  the  District  Court  following  Kanton 


14 

is  Fireman's  Fund;  the  very  person  who  is  pointing 
its  "windfall"  fingers  at  others. 

Nor,  should  the  dicta  in  Biggs  v.  Norfolk  Dredg- 
ing Company,  (4  Cir.,  1966)  360  F.2d  360  persuade 
this  Court  to  change  its  position  in  the  Kanton  case. 
We  say  dicta  because  the  question  as  before  this 
Court  in  Kanton  was  not  before  the  Court  of  Appeals 
for  the  Fourth  Circuit  for  decision.  The  Biggs'  case 
was  actually  two  consolidated  appeals  by  workmen 
who  had  in  different  situations  applied  to  state  com- 
pensations commissions  for  compensation,  claiming 
they  were  not  seamen.  Thereafter,  each  brought  an 
action  against  their  respective  employers  in  the 
District  Court  claiming  each  was  either  a  "Jones 
Act"  or  a  "Sieracke"  seaman.  The  District  Court 
summarily  dismissed  both  cases.  The  Court  of  Ap- 
peals reversed,  holding  that  each  workingman  was  not 
estopped  by  having  made  application  for  compensa- 
tion from  going  to  trial  and  establishing,  if  he  could, 
his  actual  seaman  status.  It  was  only  in  such  context 
that  the  Court,  in  order  to  show  no  incompatability 
between  the  compensation  scheme  and  court  action, 
observed  how  the  problem  of  compensation  payments 
might  be  handled.  The  Court  merely  stated  that  if 
the  workingmen  were  successful  in  their  litigation 
the  defendant  in  each  case  "may  retain  from  the 
judgment  the  sums  necessary  to  reimburse  the  com- 
pensation carrier."  No  holding  was  made  to  require 
the  matter  to  be  handled  as  suggested. 

This  Court  should  adhere  to  its  Kanton  decision 


15 

and  leave  the  insurance  companies  exactly  where 
their  carefully  drafted  insurance  policies  place  them. 
They  are  thoroughly  capable  through  policy  endorse- 
ments or  the  adjustment  of  premiums  to  take  care 
of  themselves  and  make  equitable  contractual  ar- 
rangements in  light  of  Kanton. 

District  Court  did  not  err  in  rejecting  testimony 
of  oral  agreement;  its  findings  that  such  was 
too  indefinite,  varied  terms  of  the  policy 
and  beyond  issues  was  not  clearly  erroneous. 

Over  objection  of  American  Mail,  Mr.  Libby  of 
Fireman's  Fund  testified  that  there  was  an  agree- 
ment between  American  Mail  and  the  Fireman's 
Fund  that  "these  YAKA  cases"  would  be  handled 
the  same  as  a  third  party  case  (Tr.  12,  14).  The  Dis- 
trict Court's  findings  of  fact  that:  (1)  such  alleged 
agreement  was  too  indefinite  to  be  enforceable;  (2) 
would  tend  to  change,  modify  or  contradict  the  terms 
of  the  insurance  poHcy;  (3)  could  not  be  applicable 
to  the  specific  policy;  and  (4)  not  properly  the  basis 
for  the  third  party  claim  in  intervention  (R.  29) 
were  supported  by  the  evidence  and  were  not  clearly 
erroneous. 

American  Mail  upon  opening  statement  objected 
to  the  proof  of  an  oral  agreement  claiming  surprise 
in  view  of  such  contention  not  being  set  forth  in  the 
pre-trial  order  and  further  that  if  such  oral  agree- 
ment existed  it  should  be  litigated  in  a  separate  ac- 
tion (Tr.  7-8).  It  also  objected  to  the  evidence  being 
admitted  (Tr.  12). 


16 

As  to  this  oral  agreement  no  evidence  was  intro- 
duced to  show  between  what  individuals  it  was  made, 
or  when  or  where  it  was  entered  into.  Further,  it 
lacked  certainty  in  that  it  failed  to  show  how  the 
parties  had  agreed,  if  at  all,  to  handle  any  right- 
over  for  indemnity  if  American  Mail  was  to  be  treat- 
ed as  a  third  party  shipowner  while  the  same  Amer- 
ican Mail  was  to  be  treated  as  McDowell's  employer. 
These  among  other  things  made  the  evidence  of  the 
agreement  too  uncertain  for  enforcement. 

The  alleged  oral  agreement  varied  the  term  of 
the  policy  whose  subrogation  clause  coupled  with  Sec- 
tion 33  of  the  Act  (28  U.S.C.A.  §  933)  authorized 
recoupment  through  subrogation  which  could  only  be 
had  against  persons  other  than  the  insured. 

The  alleged  oral  agreement  appears  to  have  been 
made  before  the  present  policy  was  written,  although 
it  is  vague  in  this  respect.  If  so,  it  could  not  affect 
the  present  written  policy  which  would  have  super- 
seded any  prior  understandings.  Of  significance  here 
is  that  Endorsement  No.  12  to  the  policy  (R.  14,  Ex. 
1)  was  an  undertaking  in  writing  to  interpret  and 
clarify  a  portion  of  the  policy.  If  any  oral  agreement 
had  previously  existed  it  should  have  been  incorpo- 
rated into  the  policy  while  Endorsement  No.  12  was 
in  the  making.  Upon  the  offer  of  proof,  Mr.  Libby 
conceded  such  could  have  been  done  but  was  not  done 
(Tr.  24). 

The  most  that  Fireman's  Fund  "Agreement"  con- 
tention (p.  12)  in  its  brief  establishes  is  that  its  in- 


17 

itial  ''Intervention"  contention  (p.  6)  is  found  want- 
ing in  merit.  Neither  the  Act  nor  policy  established 
American  Mail  as  a  third  party.  Likewise,  Fireman's 
Fund  failed  to  establish  such  status  for  American 
Mail  by  an  oral  agreement. 

On  this  appeal  American  Mail  takes  the  same  po- 
sition as  it  did  at  the  trial.  On  opening  statement  its 
counsel  stated  (Tr.  7) : 

"...  I  see  nothing  in  the  insurance  policies 
which  have  been  exhibited  that  there  is  some 
agreement.  My  answer  to  that  is  that  if  there 
is  an  agreement  it  is  something  that  American 
Mail  Line  will  honor  just  as  much  as  Fireman's 
Fund  will  honor,  but  it  has  no  place  in  this  case." 

*'This  started  out  as  a  case  by  a  longshore- 
man against  American  Mail  for  a  second  bite  in 
the  apple,  and  the  interveners  had  an  interest 
here  on  this  compensation.  In  this  case  if  it  is 
a  question  of  handling  the  compensation,  the  pre- 
trial order  shows  that  under  the  Act  and  under 
the  policy  they  are  entitled  to  handle  this  com- 
pensation payment  the  way  they  contend  and 
the  way  we  contend.  I  am  certainly  going  to  ob- 
ject to  any  evidence  of  any  other  agreement  be- 
tween the  parties,  and  if  there  is  an  agreement 
it  is  not  for  this  Court  to  be  concerned  with.  It 
is  for  Fireman's  Fund  and  American  Mail  Line 
to  honor,  and  if  they  don't  honor  it  to  sue  or  to 
seek  declaratory  relief." 

"I  am  defending  a  very  serious  case  here  by 
a  longshoreman  against  the  American  Mail  Line, 
and  I  don't  think  we  should  be  getting  into  all 
of  these  collateral  matters,  especially  as  to  some 


1007  (1967).  In  that  case  this  Court  approved  the 
deduction  from  a  longshoreman's  recovery  that  which 
was  paid  to  him  by  way  of  compensation  benefits  and 
refused  to  include  in  such  recovery  medical  ex- 
penses not  incurred  by  the  longshoreman. 

In  this  case  McDowell  sued  American  Mail,  his 
employer  in  personam  to  recover  damages  for  person- 
al injuries  arising  from  the  unseaworthiness  of  de- 
fendant's vessel.  Such  action  was  sanctioned  by  this 
Court  in  Pacific  Inland  Navigation  Co.  v.  Course, 
(9  Cir.,  1966)  368  F.2d  540,  certiorari  denied  March 
13,  1967  in  386  U.S.  963. 

The  intervention  and  claim  of  Fireman's  Fund 
could  only  depend  upon  its  insurance  policy  and  the 
Act  incorporated  into  the  terms  of  its  policy.  Neither 
support  its  claim. 

The  Act  gives  Fireman's  Fund  as  a  compensation 
insurance  carrier  a  right  of  subrogation  only  in  the 
case  where  the  longshoreman  seeks  recovery  from 
"some  person  other  than  the  employer,"  33  U.S.C.A. 
§  933.  The  fact  that  American  Mail  owned  or  oper- 
ated the  vessel  upon  which  McDowell  was  injured 
does  not  alter  the  fact  of  employment.  As  we  see  it, 
no  fact  in  this  case  can  be  tortured  so  as  to  make 
American  Mail  a  person  other  than  the  employer  of 
McDowell. 

As  to  the  insurance  policy  it  must  be  considered 
in  the  light  of  the  Act  which  was  expressly  incorpor- 
ated therein.  Taken  by  its  four  corners  the  Act  is 
basically  one   requiring  American  Mail   as  an  em- 


ployer  to  pay  compensation  benefits  to  its  employees 
on  a  no-fault  basis.  It  is  American  Mail,  as  employer 
and  not  Fireman's  Fund  as  carrier  who  is  liable  for 
the  payment  of  benefits  under  the  Act  (33  U.S.C.A. 
§  904) ;  to  whom  receipts  for  payment  shall  be  given 
(33  U.S.C.A.  §  914  (1));  to  whom  notice  of  injury 
or  death  shall  be  given  (33  U.S.C.A.  §  912);  by 
whom  injury  or  death  shall  be  reported  (33  U.- 
S.C.A. §  930) ;  and  who  shall  secure  the  payment 
of  compensation  by  insuring  and  keeping  insured 
such  payments  (33  U.S.C.A.  §  932  (a)).  It  is  this 
Act  which  required  American  Mail  Line  to  take 
out  this  policy  of  insurance;  the  policy  which  ob- 
ligated Fireman's  Fund  to  pay  promptly  the  entire 
amount  of  any  sum  due  by  American  Mail  to  long- 
shoreman McDowell. 

The  policy  in  its  "Subrogation"  clause  "K"  gave 
Fireman's  Fund  a  right  to  become  subrogated  in  this 
case  to  all  rights  of  recovery  vested  by  law  in  either 
American  Mail  or  McDowell  and  against  any  per- 
sons, corporations,  associations  or  estates.  While  the 
express  language  "some  person  other  than  the  em- 
ployer" is  not  used  in  the  policy  as  in  Section  33  of 
the  Act  the  subrogation  clause  could  scarcely  mean 
anything  else. 

Certainly,  McDowell  had  no  right  vested  by  law 
in  himself  to  be  paid  damages  without  regard  to  hav- 
ing set  off  from  those  damages  compensation  pay- 
ments which  he  had  already  received.  Fireman's 
Fund  by  stepping  into  the  shoes  of  McDowell  could 


8 

have  no  greater  right  than  McDowell.  Likewise,  it 
is  rather  ridiculous  to  conceive  that  American  Mail 
had  a  right  vested  in  law  to  collect  money  from  it- 
self or  that  Fireman's  Fund  by  stepping  into  its  shoes 
could  have  any  greater  rights.  Neither  law  nor  con- 
tract required  the  District  Court  to  create  a  fund  so 
that  Fireman's  Fund  might  impress  a  lien  upon  it 
for  purpose  of  reimbursement. 

The  sole  thrust  of  Fireman's  Fund  is  based  upon 
the  proposition  that  American  Mail  is  some  other 
person  than  the  employer  of  longshoreman  McDow- 
ell. This  proposition  is  contrary  to  the  agreed  fact 
(R.  14). 

In  a  rather  oblique  approach  Fireman's  Fund 
seeks  to  make  American  Mail  a  third  party  target 
for  McDowell's  action  by  claiming  that  an  applica- 
tion of  the  doctrine  of  Reed  v.  SS  YAKA,  (1963)  373 
U.S.  410  requires  it.  Counsel  for  Fireman's  Fund 
knows  better.  It  was  only  last  year  that  counsel  for 
Fireman's  Fund  as  attorney  for  Appellant  in  Pacific 
Inland  Navigation  Co.  v.  Course,  (9  Cir.,  1966)  368 
F.2d  540  contended  that  the  in  rem  action  in  Yaka 
was  in  reality  a  three-party  situation  and  not  author- 
ity to  sanction  this  very  type  of  case  brought 
there  by  Course  and  here  by  McDowell  directly 
against  a  ship-owner  employer.  Also,  counsel  for 
American  Mail  appeared  in  the  Course  case  for  amici 
curiae  and  joined  appellant  in  the  same  contention. 
We  both  went  down  in  defeat.  In  the  Course  case 
this  Court  not  only  refused  to  see  a  three-party  sit- 


nation  in  Yaka  but  held  that  Yaka  sanctioned  a  di- 
rect in  personam  action  by  a  longshoreman  against 
his  shipowner-employer  for  maintaining  an  unsea- 
worthy  ship.  Merely  because  the  Supreme  Court  in 
Yaka  may  have  ex  necessitate  read  Section  105  out 
of  the  Act  does  not  mean  that  this  Court  can  prop- 
erly hold  for  naught  the  rest  of  the  Act  and  the 
Fireman's  Fund  insurance  policy. 

Another  surprising  contention  is  made  by  Fire- 
man's Fund  though  under  the  wrong  heading  of  its 
brief.  On  page  17  of  its  brief  Fireman's  Fund  urges 
that  the  Supreme  Court  in  Yaka  by  its  rationale 
separated  ownership  liability  from  employer  liability 
of  the  defendant  and  hence  it  would  be  logical  for 
this  Court  to  extend  that  concept  by  treating  Amer- 
ican Mail  as  having  a  dual  personality.  We  do  not 
read  Yaka  as  does  Fireman's  Fund.  The  most  we 
see  in  Yaka  is  that  the  longshoreman  urged  that  it 
had  only  sued  the  ship  m  rem  and  not  the  shipowner 
employer  and  that  he  should  recover  against  the  ship 
irrespective  of  any  personal  liability  on  the  part  of 
the  shipowner.  It  was  this  "personification  of  the 
ship"  contention  that  the  Supreme  Court  found  un- 
necessaiy  to  decide.  However,  Mr.  Justice  Harlan,  in 
a  footnote  to  his  dissenting  opinion  (373  U.S.  410  at 
419)  made  it  clear  that  the  "personification  of  the 
ship"  concept,  if  it  ever  existed,  was  long  out  of 
style.  We  quote  in  part  from  the  footnote : 

".  .  .  The  reason  against  its  application  to 
create  substantive  liability  was  eloquently  stated 
by  Mr.  Justice  Bradley,  speaking  for  the  Court 


10 

in  The  City  of  Norwich,  118  U.S.  468,  503:  To 
say  an  owner  is  not  liable,  but  that  his  vessel  is 
liable,  seems  to  us  like  talking  in  riddles.  .  .  . 
In  the  matter  of  liability,  a  man  and  his  property 
cannot  be  separated  .  .  .'  " 

With  the  Supreme  Court  apparently  being  of  the 
view  that  for  liability  reasons  a  ship  cannot  be  di- 
vorced from  her  owner,  it  scarcely  appears  that  it 
would  be  of  a  mind  to  fictionally  split  the  corporate 
entity  so  that  simultaneously  it  could  have  an  owner- 
liability  and  an  employer-nonliability.  Besides,  any 
fiction  to  make  American  Mail  in  whole  or  in  part 
someone  else  other  than  the  employer  of  McDowell 
would  be  repugnant  to  the  agreed  fact. 

The  woes  of  American  Mail  were  brought  about 
by  this  Court  in  Course  stripping  it  of  the  protection 
against  direct  action  by  an  employee  that  it  always 
considered  it  had  under  Section  105  of  the  Act  (33 
U.S.C.A.  §  905).  It  reached  its  result  by  refusing 
to  see  in  Yaka  a  three-party  situation.  Consistency 
and  fairness  should  leave  American  Mail  in  the  two- 
party  situation  where  this  Court  placed  it  unless  the 
Course  decision  is  to  be  undone.  It  should  be  too  late 
for  this  Court  to  be  influenced  by  the  argument  of 
Fireman's  Fund  that  a  simple,  workable  and  sound 
policy  is  to  now  treat  American  Mail  as  a  person 
other  than  the  employer  in  order  to  enable  Fireman's 
Fund  to  recoup  insurance  policy  payments  as  it  does 
in  third-party  actions.  Such  a  policy  would  be  far 
from  simple  as  it  would  destroy  the  right  of  Amer- 


11 

ican  Mail  to  indemnity  as  fashioned  by  the  Supreme 
Court  in  Ryan  Stevedoring  Co.  v.  Pmi- Atlantic  S.S. 
Corp.,  (1956)  350  U.S.  124. 

There  is  no  justification  for  this  Court  to 
change  its  decision  in  the  Kanton  case. 

The  District  Court  did  not  err  in  following  this 
Court's  decision  in  Grace  Line  v.  Kanton,  (9  Cir., 
1966)  366  F.2d  510,  certiorari  denied  in  385  U.S. 
1007  (1967).  In  Kanton  this  Court  approved  the 
District  Court  deducting  from  what  it  would  other- 
wise award  a  longshoreman  the  amount  he  had  al- 
ready received  by  way  of  compensation  under  the 
Act  from  his  defendant-employer.  Where  the  long- 
shoreman's medical  expenses  were  incurred  and  paid 
for  by  the  employer  and  not  the  longshoreman  they 
were  not  included  in  the  longshoreman's  award. 

While  this  simple  method  of  insuring  that  the 
longshoreman  is  not  unjustly  enriched  cannot  be  em- 
ployed where  the  longshoreman  is  suing  a  person 
other  than  his  employer,  this,  in  itself,  is  no  reason 
for  not  using  this  direct  method  where  he  is  suing 
his  employer.  The  charm  of  the  method  is  that  unjust 
enrichment  is  guarded  against  within  the  confines 
of  the  parties  and  issues  of  the  longshoreman's  ac- 
tion. Since  it  is  the  employer  and  not  his  insurance 
carrier  who  is  liable  to  pay  benefits  under  the  Act 
there  is  no  reason  why  a  District  Court  should  be- 
come obligated  to  broaden  issues  or  decide  collateral 
matters  between  the  defendant-employer  and  one  or 
more  of  its  insurance  carriers. 


12 

In  attacking  the  wisdom  of  Kanton,  Fireman's 
Fund  argues  that  this  Court  went  too  far  in  that  it 
gave  American  Mail  credit  for  compensation  pay- 
ments but  not  for  medical  payments.  From  this  it 
argues  that  had  American  Mail  been  a  third-party, 
McDowell  would  have  been  given  a  full  award  and 
then  be  required  to  repay  to  American  Mail  both 
compensation  and  medical  benefits  and  for  that  rea- 
son McDowell  secured  a  windfall.  We  disagree.  Un- 
der Kanton,  McDowell  was  compensated  only  for  his 
actual  money  loss.  With  his  award  offset  by  com- 
pensation previously  received  and  his  not  being  paid 
for  medical  expenses  which  he  had  not  incurred  Mc- 
Dowell received  no  windfall  and  hence  had  nothing 
to  pay  back.  Because  Fireman's  Fund  made  the  pay- 
ments for  American  Mail  instead  of  American  Mail 
making  the  payments  as  required  by  the  Act  and 
then  being  reimbursed  by  Fireman's  Fund  under  the 
policy  is  of  no  significance  so  far  as  McDowell  or 
American  Mail  is  concerned. 

However,  a  more  involved  windfall  argument  is 
made  by  Fireman's  Fund  in  respect  to  American 
Mail  and  its  P  &  I  insurance  carrier.  It  appears  that 
the  first  $10,000.00  of  McDowell's  $42,447.03  award 
was  paid  by  American  Mail  and  the  balance  by  its 
P  &  I  insurance  carrier.  The  District  Court  denied 
repayment  to  Fireman's  Fund  of  the  $6,693.45  which 
it  paid  on  behalf  of  American  Mail  for  compensation 
and  medical  benefits  because  such  was  not  included 
in  McDowell's  award. 


13 

Who  of  the  three  losers:  American  Mail,  Fire- 
man's Fund,  or  the  P  &  I  insurance  carrier,  gained 
a  windfall?  If  the  $6,693.45  "credit"  was  taken  off 
the  bottom  of  the  $42,447.03  American  Mail  did  not 
have  to  pay  a  full  $10,000  and  if  taken  off  of  the 
top,  the  P  &  I  underwriter  was  saved  paying  what  it 
would  otherwise  possibly  have  paid  had  American 
Mail  been  a  third-party.  However,  there  is  another 
side  of  the  coin.  Had  the  matter  been  handled  with 
American  Mail  as  a  third  party,  Fireman's  Fund 
would  have  recouped  its  $6,693.45,  but  since  Ameri- 
can Mail  was  not  in  reality  a  third  party  it  would  be 
Fireman's  Fund  which  gained  a  windfall  to  the  full 
extent  of  its  recoupment.  Neither  the  Act  nor  the 
policy  contemplated  recoupment  of  money  paid  under 
the  policy  for  American  Mail  or  that  recoupment 
could  be  had  at  the  expense  or  detriment  of  its  in- 
sured. 

Moreover,  if  the  P  &  I  carrier's  position  is  viewed 
as  that  of  insuring  American  Mail  as  a  third-party 
shipowner,  we  find  it  not  gaining  a  windfall,  but 
rather  losing  along  with  American  Mail  the  right  to 
be  indemnified  under  Ryan  by  McDowell's  employer. 
Since  the  Fireman's  Fund  policy  insured  American 
Mail  as  McDowell's  employer,  including  any  con- 
tractual right-over  liability  to  a  third  person  (En- 
dorsement No.  12  to  policy).  Fireman's  Fund  would 
have  written  a  check  for  the  full  $42,477.03  as  well 
as  defense  expense.  In  short,  in  the  case  below  the 
only  one  for  certain  who  is  gaining  a  very  substan- 
tial windfall  by  the  District  Court  following  Kanton 


14 

is  Fireman's  Fund;  the  very  person  who  is  pointing 
its  "windfall"  fingers  at  others. 

Nor,  should  the  dicta  in  Biggs  v.  Norfolk  Dredg- 
ing Company,  (4  Cir.,  1966)  360  F.2d  360  persuade 
this  Court  to  change  its  position  in  the  Kanton  case. 
We  say  dicta  because  the  question  as  before  this 
Court  in  Kanton  was  not  before  the  Court  of  Appeals 
for  the  Fourth  Circuit  for  decision.  The  Biggs'  case 
was  actually  two  consolidated  appeals  by  workmen 
who  had  in  different  situations  applied  to  state  com- 
pensations commissions  for  compensation,  claiming 
they  were  not  seamen.  Thereafter,  each  brought  an 
action  against  their  respective  employers  in  the 
District  Court  claiming  each  was  either  a  "Jones 
Act"  or  a  "Sieracke"  seaman.  The  District  Court 
summarily  dismissed  both  cases.  The  Court  of  Ap- 
peals reversed,  holding  that  each  workingman  was  not 
estopped  by  having  made  application  for  compensa- 
tion from  going  to  trial  and  establishing,  if  he  could, 
his  actual  seaman  status.  It  was  only  in  such  context 
that  the  Court,  in  order  to  show  no  incompatability 
between  the  compensation  scheme  and  court  action, 
observed  how  the  problem  of  compensation  payments 
might  be  handled.  The  Court  merely  stated  that  if 
the  workingmen  were  successful  in  their  litigation 
the  defendant  in  each  case  "may  retain  from  the 
judgment  the  sums  necessary  to  reimburse  the  com- 
pensation carrier."  No  holding  was  made  to  require 
the  matter  to  be  handled  as  suggested. 

This  Court  should  adhere  to  its  Kanton  decision 


15 

and  leave  the  insurance  companies  exactly  where 
their  carefully  drafted  insurance  policies  place  them. 
They  are  thoroughly  capable  through  policy  endorse- 
ments or  the  adjustment  of  premiums  to  take  care 
of  themselves  and  make  equitable  contractual  ar- 
rangements in  light  of  Kanton. 

District  Court  did  not  err  in  rejecting  testimony 
of  oral  agreement;  its  findings  that  such  was 
too  indefinite,  varied  terms  of  the  policy 
and  beyond  issues  was  not  clearly  erroneous. 

Over  objection  of  American  Mail,  Mr.  Libby  of 
Fireman's  Fund  testified  that  there  was  an  agree- 
ment between  American  Mail  and  the  Fireman's 
Fund  that  "these  YAKA  cases"  would  be  handled 
the  same  as  a  third  party  case  (Tr.  12,  14).  The  Dis- 
trict Court's  findings  of  fact  that:  (1)  such  alleged 
agreement  was  too  indefinite  to  be  enforceable;  (2) 
would  tend  to  change,  modify  or  contradict  the  terms 
of  the  insurance  policy;  (3)  could  not  be  applicable 
to  the  specific  policy;  and  (4)  not  properly  the  basis 
for  the  third  party  claim  in  intervention  (R.  29) 
were  supported  by  the  evidence  and  were  not  clearly 
erroneous. 

American  Mail  upon  opening  statement  objected 
to  the  proof  of  an  oral  agreement  claiming  surprise 
in  view  of  such  contention  not  being  set  forth  in  the 
pre-trial  order  and  further  that  if  such  oral  agree- 
ment existed  it  should  be  litigated  in  a  separate  ac- 
tion (Tr.  7-8).  It  also  objected  to  the  evidence  being 
admitted  (Tr.  12). 


16 

As  to  this  oral  agreement  no  evidence  was  intro- 
duced to  show  between  what  individuals  it  was  made, 
or  when  or  where  it  was  entered  into.  Further,  it 
lacked  certainty  in  that  it  failed  to  show  how  the 
parties  had  agreed,  if  at  all,  to  handle  any  right- 
over  for  indemnity  if  American  Mail  was  to  be  treat- 
ed as  a  third  party  shipowner  while  the  same  Amer- 
ican Mail  was  to  be  treated  as  McDowell's  employer. 
These  among  other  things  made  the  evidence  of  the 
agreement  too  uncertain  for  enforcement. 

The  alleged  oral  agreement  varied  the  term  of 
the  policy  whose  subrogation  clause  coupled  with  Sec- 
tion 33  of  the  Act  (28  U.S.C.A.  §  933)  authorized 
recoupment  through  subrogation  which  could  only  be 
had  against  persons  other  than  the  insured. 

The  alleged  oral  agreement  appears  to  have  been 
made  before  the  present  policy  was  written,  although 
it  is  vague  in  this  respect.  If  so,  it  could  not  affect 
the  present  written  policy  which  would  have  super- 
seded any  prior  understandings.  Of  significance  here 
is  that  Endorsement  No.  12  to  the  policy  (R.  14,  Ex. 
1)  was  an  undertaking  in  writing  to  interpret  and 
clarify  a  portion  of  the  policy.  If  any  oral  agreement 
had  previously  existed  it  should  have  been  incorpo- 
rated into  the  policy  while  Endorsement  No.  12  was 
in  the  making.  Upon  the  offer  of  proof,  Mr.  Libby 
conceded  such  could  have  been  done  but  was  not  done 
(Tr.  24). 

The  most  that  Fireman's  Fund  "Agreement"  con- 
tention (p.  12)  in  its  brief  establishes  is  that  its  in- 


17 

itial  "Intervention"  contention  (p.  6)  is  found  want- 
ing in  merit.  Neither  the  Act  nor  policy  established 
American  Mail  as  a  third  party.  Likewise,  Fireman's 
Fund  failed  to  establish  such  status  for  American 
Mail  by  an  oral  agreement. 

On  this  appeal  American  Mail  takes  the  same  po- 
sition as  it  did  at  the  trial.  On  opening  statement  its 
counsel  stated  (Tr.  7) : 

"...  I  see  nothing  in  the  insurance  policies 
which  have  been  exhibited  that  there  is  some 
agreement.  My  answer  to  that  is  that  if  there 
is  an  agreement  it  is  something  that  American 
Mail  Line  will  honor  just  as  much  as  Fireman's 
Fund  will  honor,  but  it  has  no  place  in  this  case." 

"This  started  out  as  a  case  by  a  longshore- 
man against  American  Mail  for  a  second  bite  in 
the  apple,  and  the  intervenors  had  an  interest 
here  on  this  compensation.  In  this  case  if  it  is 
a  question  of  handling  the  compensation,  the  pre- 
trial order  shows  that  under  the  Act  and  under 
the  policy  they  are  entitled  to  handle  this  com- 
pensation payment  the  way  they  contend  and 
the  way  we  contend.  I  am  certainly  going  to  ob- 
ject to  any  evidence  of  any  other  agreement  be- 
tween the  parties,  and  if  there  is  an  agreement 
it  is  not  for  this  Court  to  be  concerned  with.  It 
is  for  Fireman's  Fund  and  American  Mail  Line 
to  honor,  and  if  they  don't  honor  it  to  sue  or  to 
seek  declaratory  relief." 

"I  am  defending  a  very  serious  case  here  by 
a  longshoreman  against  the  American  Mail  Line, 
and  I  don't  think  we  should  be  getting  into  all 
of  these  collateral  matters,  especially  as  to  some 


18 

agreement  which  I  don't  know  anything  of  at 
this  moment." 

Contrary  to  Fireman's  Fund  the  District  Court 
did  not  "rescind"  its  intervention  but  rather  gave 
Fireman's  Fund  its  full  day  in  Court.  The  District 
Court  did  not  abuse  its  discretion  in  dismissing  the 
petition  and  denying  Fireman's  Fund's  claim  after 
giving  it  a  full  day  in  court. 

Respectfully  submitted, 

William  F.  White 
White,  Sutherland  &  Gilbertson 
1200  Jackson  Tower 
Portland,  Oregon 
Attorneys  for  Appellee, 
American  Mail  Line,  Ltd. 


CERTIFICATE  OF  COUNSEL 

I  certify  that,  in  connection  with  the  preparation 
of  this  brief,  I  have  examined  Rules  18  and  19  of  the 
United  States  Court  of  Appeals  for  the  Ninth  Cir- 
cuit, and  that,  in  my  opinion,  the  foregoing  brief  is 
in  full  compliance  with  those  rules. 

William  F.  White 

Attorney  for  Appellee 


No.  22240 
United  States 

COURT  OF  APPEALS 

for  the  Ninth  Circuit 


HENRY  E.  McDowell, 

Plaintiff-Appellant, 

V. 

AMERICAN  MAIL  LINE,  LTD., 
a  corporation, 

Defendant-Appellee, 

FIREMAN'S  FUND  INSURANCE 
COMPANY, 

Intervenor-Appellant. 


REPLY  BRIEF  OF  APPELLANT 
FIREMAN'S  FUND  INSURANCE  CO. 


Appeal  from  the  United  States  District  Court 
of  the  District  of  Oregon 

Honorable  John  F.  Kilkenny,  District  Judge 


GRAY,  FREDRICKSON  &  HEATH 

LLOYD  W.  WEISENSEE,  Esq. 

Commonwealth  Bldg.,  Portland,  Oregon  97204 
Attorneys  for  Intervenor-Appellant 
Fireman's  Fund  Insurance  Company 


STEVENS-NESS  LAW   PUB.   CO..    PORTLAND,   0|E. 


JAN  1  5 1968 
^U.  B.  LUCK,  CLERK. 


No.  22240 
United  States 

COURT  OF  APPEALS 

for  the  Ninth  Circuit 


HENRY  E.  McDowell, 

Plaintiff -Appellant, 

V. 

AMERICAN  MAIL  LINE,  LTD., 
a  corporation, 

Defendant-Appellee, 

FIREMAN'S  FUND  INSURANCE 
COMPANY, 

Intervenor-Appellant. 


REPLY  BRIEF  OF  APPELLANT 
FIREMAN'S  FUND  INSURANCE  CO. 


Appeal  from  the  United  States  District  Court 
of  the  District  of  Oregon 

Honorable  John  F.  Kilkenny,  District  Judge 


Intervention 

The  Appellee's  Brief  (pages  5-15)  is  mainly  con- 
cerned with  avoiding  the  application  of  the  rules  in 
the  usual  third  party  case  to  this  case. 


It  is  obvious  that  the  only  real  party  in  interest  on 
the  appellee's  side  is  the  P  &  I  (liability)  carrier. 
The  P  &  I  carrier  seeks  to  hide  behind  its  insured. 
It  offered  no  evidence  in  support  of  its  pretrial  con- 
tentions 4  and  7  (R.  19) ;  furthermore,  it  never  pro- 
duced its  policy.  The  P  &  I  carrier  now  asserts  (Br. 
13)  that  if  Fireman's  Fund  is  given  relief,  then  the 
P  &  I  carrier  should  be  awarded  indemnity  a-la 
Ryan.  Ryan  Stevedoring  Co.  v.  Pan- Atlantic  S.  S. 
Corp.  (1956),  350  U.S.  124,  76  S.  Ct.  232,  100  L. 
Ed.  133.  This  claim  was  not  made  below  and  it  can 
be  nothing  more  than  an  afterthought  calculated  to 
confuse  the  issues  before  this  Court.' 

The  Agreement 

Appellee  (Br.  15)  seeks  affirmance  of  the  Dis- 
trict Court  findings  regarding  the  agreement  on  two 
grounds:  (1)  uncertainty  of  terms  providing  for  re- 
imbursement; and,  (2)  surprise. 

The  District  Court  originally  allowed  the  testi- 
mony under  Rule  43  (c)  F.R.C.P.  relating  to  offers 
of  proof.  The  reviewing  court  can  consider  the  tes- 
timony even  if  disregarded  by  the  lower  court.  F.  H. 
McGraw  &  Co.  v.  Milcor  Steel  Co.,  149  F.2d  301,  306 
(CCA.  2,  1945). 


'  Appellee  urges  that  Endorsement  12  of  the  policy  would 
make  Fireman's  Fund  liable  on  an  indemnity  clairn.  This, 
of  course,  is  erroneous  as  Endorsement  12  of  the  policy  pro- 
vides coverage  for  negligence,  not,  as  now  asserted  in  the  P 
&  I  carrier's  behalf,  coverage  for  the  contractual  liability 
arising  out  of  a  breach  of  the  warranty  of  workmanlike 
service. 


The  proffered  testimony  of  Mr.  Libby  was  suffi- 
cient to  prove  the  point  sought  to  be  established  by 
Fireman's  Fund,  to-wit:  there  was  an  arrangement 
that  Fireman's  Fund  would  be  reimbursed  in  the 
event  of  a  direct  suit  by  the  injured  employee 
against  American  Mail  Line. 

An  offer  of  proof  need  only  be  sufficient  to  per- 
mit the  court  to  rule  intelligently  on  the  propriety  of 
the  offered  evidence.  Downey  v.  Traveler's  Inn,  243 
Or.  206,  211,  412  P.2d  359,  362  (1966).  There  were 
no  objections  at  the  trial  as  to  the  form  of  the  ques- 
tions or  answers,  no  questions  on  cross-examination 
as  to  any  of  the  issues  now  raised  as  to  the  names 
of  individuals,  the  exact  dates  or  places  of  the  agree- 
ment. 

The  appellee  could  hardy  claim  surprise  (Br.  15) 
or  that  it  was  unaware  of  the  agreement  or  practice 
sought  to  be  proven  by  Fireman's  Fund.  Counsel  for 
appellee  did  not  do  his  homework  either  in  engaging 
in  discovery  or  interviewing  American  Mail  Line 
personnel  or  the  P  &  I  carrier's  personnel.  The  agree- 
ment was  indisputably  made  and  followed.  No  evi- 
dence to  the  contrary  was  presented.  Appellee  al- 
leged there  was  no  intention  that  Fireman's  Fund  be 
reimbursed  but  offered  no  evidence  in  support  of  its 
allegations  regarding  the  intention  of  the  parties. 


CONCLUSION 

No  logical  reason  has  been  advanced  for  giving 
the  P  &  I  carrier  the  benefit  of  the  money  paid  by- 
Fireman's  Fund. 

Respectfully  submitted, 

Gray,  Fredrickson  &  Heath 
Lloyd  W.  Weisensee 

Attorneys  for  Fireman's  Fund 

Insurance  Company 


CERTIFICATE  OF  COUNSEL 

I  certify  that,  in  connection  with  the  preparation 
of  this  brief,  I  have  examined  Rules  18  and  19  of 
the  United  States  Court  of  Appeals  for  the  Ninth  Cir- 
cuit, and  that,  in  my  opinion,  the  foregoing  brief  is 
in  full  compliance  with  those  rules. 

Lloyd  W.  Weisensee 
Attorney 


No.  22242  "^ 
IN  THE 
UNITED  STATES  COURT  OF  APPEALS 
FOR  THE  NINTH  CIRCUIT 


ft 


ROBERT    LEE   SIMS, 

Petitioner, 

vs. 

FRANK  A.  EYMAN, 
Superintendent  of  Arizona 
State  Penitentiary, 

Respondent . 


FILED 

DECS    1967 
WM.  B.  LUCK,  CLERr 


APPELLEE'S  ANSWERING  BRIEF 


DARRELL  F.  SMITH 
The  Attorney  General 

CARL  WAAG 

Assistant  Attorney  General 
159  Capitol  Building 
Phoenix,  Arizona 


No.  22242 
IN  THE 
UNITED  STATES  COURT  OF  APPE/UJS 
FOR  THE  NINTH  CIRCUIT 


ROBERT  LEE  SIMS, 

Petitioner, 


PRANK  A.  EYMAN, 

Superintendent  of 

Arizona  State  Penitentiary, 


Respondent . 


APPELLEE'S  ANSWERING  BRIEF 


DARRELL  F.  SMITH 
The  Attorney  General 

'CARL  WAAG 

Assistant  Attorney  General 

Attorneys  for  Appellee 


INDEX 


Page 


ARGUMENT 


APPELLEE'S  ARGUMENT  ON  THE 
QUESTION  I-TtlETHER  WHERE  THE 
JURY  HAS  THE  POWER  TO  ASSESS 
THE  DEATH  PEITALTY  IN  A 
CAPITAL  CASE  AND  DOES  NOT 
HEAR  EVIDENCE  IN  MITIGATION 
OF  PUNISHMENT,  THERE  IS  A 
DENIAL  OF  EQUAL  PROTECTION 
OR  OF  DUE  PROCESS 


II 


APPELLEE'S  ARGUMENT  ON  THE 

QUESTION  WHETHER  THE  DUE 

PROCESS  CLAUSE  IS  VIOLATED 

BY  THE  EXCLUSION  OF  JURORS 

BECAUSE  OF  THEIR  OPPOSITION 

TO  THE  DEATH  PENALTY  4 

III 

APPELLEE'S  ARGUMENT  ON  THE 
QUESTION  WHETHER  A  STATE 
PROSECUTION  MAY  BE  INITIATED 
BY  INDICTMETMT  RATHER  THAN  BY 
INFORMATION  6 


IV 


APPELLEE'S  ARGQMENT  ON  THE 

QUESTION  WHETHER  THE  DEATH 

PENALTY  IS  UNCONSTITUTIONAL 

AS  VIOLATIVE  OF  THE  EIGHTH 

AND  FOURTEENTH  AMENDMENTS  12 


-1- 


Page 

ARGUMENT 

V 

APPELLEE'S  ARGUMENT  ON  THE 

QUESTION  VJHETHER  DUE  PROCESS 

PRECLUDES  THE  INTRODUCTION 

OF  THE  TESTIMONY  OF  AN 

ACCOMPLICE  WHOSE  TESTIMONY 

IS  SUSPECT  BY  REASON  OF 

INTEREST  17 

CONCLUSION  19 


-11- 


TABLE  OF  CASES  AND  AUTHORITIES 

Page 

Horner  v.    State 

168  So. 2d   137    (Fla.)  8 

Hurtado  v.  California 

110  U.S.  516  7 

Maxwell  v.  Dow 

176  U.S.  581  7 

Pope  V.  united  States 

372  F.2d  710  2 

Reynolds  v.  United  States 
98  U.S.  145 
(8  Otto.  145)  5 

Spencer  v.  Texas 
385  U.S.  554 
87  S.Ct.  648 
17  L.Ed. 2d  606  2 

State  V.  Essman  (1965) 
98  Ariz.  228 
403  P. 2d  540  10 

State,  ex  rel  Corbin  v.  Superior 
Court ,  In  and  For  the  County 
of  Maricopa 
357  P. 2d  144  (1966) 
100  Ariz.  236 

413  P. 2d  264 

opinion  modified  on  rehearing 
100  Ariz.  362 

414  P. 2d  738  10 

State  V,  Howard 
97  Ariz.  339 
400  P. 2d  332  18 

-iii- 


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Page 

State  V.  Narten 
99  Ariz.  116 
407  P. 2d  81  4 

State  V.  Taylor 
231  A. 2d  212 
(Supreme  Court  of  New  Jersey,  1967)      17 

State  V.  Waller 

382  S.W.2d  668  8 

Authorities 

Arizona  Revised  Statutes 

§  13-136  17 

§  13-453  5 

Constitution  of  Arizona 

Article  2,  §  30  6 

Laws  of  Arizona  1919 

Initiative  and  Referendum 

Measures,  pp.  17,  18,  20  5 

Rationale  of  Judicial  Evidence 


Specially  Applied  to  English 

Practice,  London.  Hunt  &  Clarke 

1827,  5  Volumes 

12 

Rules  of  Criminal  Procedure,  17  A.R.S. 

Rule  16 

9 

Rule  18 

9 

Rule  19 

9 

Rule  22 

9 

Rule  23 

9 

Rule  24 

10 

Rule  26 

9 

Rule  27 

9 

Rule  28 

10 

Rule  29 

18 

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ARGUMENT 

I 

APPELLEE'S  ARGUMENT  ON  THE  QUESTION 
WHETHER  WHERE  THE  JURY  HAS  THE  POWER 
TO  ASSESS  THE  DEATH  PENALTY  IN  A 
CAPITAL  CASE  AND  DOES  NOT  HEAR 
EVIDENCE  IN  MITIGATION  OF  PUNISHMENT, 
THERE  IS  A  DENIAL  OF  EQUAL  PROTECTION 
OR  OF  DUE  PROCESS 

Appellant's  argument  on  the  question 
presented  is  persuasive  of  the  proposition 
that  the  law  ought  to  be  amended  so  that 
evidence  in  mitigation  of  punishment  might 
be  presented  to  a  jury.   His  argument,  how- 
ever, falls  far  short  of  establishing  that 
Arizona's  procedure  denies  him  equal  pro- 
tection or  due  process.   Applicant  is  in  the 
wrong  forum.   The  relief  he  seeks  should  be 
sought  from  the  legislature  of  Arizona  or 
from  the  Arizona  judiciary  in  the  exercise  of 
its  rule-making  power. 

Appellant  questions  the  propriety  of  a 
trial  in  which  a  jury  passes  on  the  question 


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of  guilt  and  the  question  of  penalty.   in  Pope 

V.  U.S.,  372  F.2d  710,  370,  the  court  stated: 

"Our  conclusion  is  fortified  by 
the  supreme  court's  very  recent 
remarks  in  Spencer  v.  State  of 

Texas,  385  U.S.  ,  87  S.Ct. 

648,  17  L.Ed. 2d  (1967)  about 

two-stage  jury  trial  procedure. 
There,  Mr.  Justice  Harlan,  author 
of  the  principal  opinion,  said, 
'Two-part  jury  trials  are  rare  in 
our  jurisprudence;  they  have  never 
been  compelled  by  this  Court  as  a 
matter  of  constitutional  law,  or 
even  as  a  matter  of  federal  pro- 
cedure, '  " 

(Spencer  v.  Texas  is  found  at  385  U.S.  554, 
87  S.Ct,  648,  17  L.Ed. 2d  606.) 

The  legislature  of  Arizona  has  deter- 
mined that  the  choice  of  penalty  in  first 
degree  murder  shall  be  on  the  basis  of  an 
attempt  to  make  the  punishment  fit  the  crime, 
rather  than  the  criminal.   It  has  decreed 
that  the  determination  is  to  be  based  on  the 
facts  admissible  to  prove  the  crime  itself 
and  the  circumstances  surrounding  it ,  rather 


-2- 


than  the  facts  of  the  defendant's  history  and 
personality.   Nothing  in  our  constitution  pro- 
hibits such  a  decree,  however  much  modern 
penology  may  inveigh  against  the  wisdom  of 
the  decree. 


-3- 


ARGUMENT 


II 


APPELLEE'S  ARGUMENT  ON  THE  QUESTION 
WHETHER  THE  DUE  PROCESS  CLAUSE  IS 
VIOLATED  BY  THE  EXCLUSION  OF  JURORS 
BECAUSE  OF  THEIR  OPPOSITION  TO  THE 
DEATH  PENALTY 

The  trial  court  excused  certain  jurors. 
(See  Exhibit  A  attached  to  appellant's  appli- 
cation for  writ  of  habeas  corpus  herein.) 
They  were  not  excused  "because  of  their 
opposition  to  the  death  penalty" .   They  were 
excused  because  they  indicated  that  under  no 
circumstances  would  they  bring  in  a  verdict 
of  guilty  with  a  recommendation  of  the  death 
penalty. 

The  question  here  is  not  whether  a  person 
should  be  excused  from  a  jury  because  he  dis- 
approves of  capital  punishment,  but  whether 
he  should  be  excused  for  cause  if  in  no  case 
he  could  return  a  verdict  of  death.   State  v. 
Narten,  99  Ariz.  116,  407  P. 2d  81. 


-4- 


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The  people  of  the  State  of  Arizona,  by 
initiative  measure.  Laws  of  Arizona,  1919, 
Initiative  and  Referendum  Measures,  pp.  17, 
18,  20,  re-instituted  the  death  penalty  in 
Arizona  for  first  degree  murder,  5  A.R.S,  193, 
§  13-453.   Assuming  that  the  death  penalty 
itself  is  proper,  (infra.  Argument  IV,  p.  12) 
the  state  is  entitled  to  a  juror  who  can,  in 
the  proper  case,  inflict  that  proper  punish- 
ment, just  as  the  defendant  is  entitled  to  a 
juror  who,  in  the  proper  case   can  vote  to 
acquit.   The  state  as  well  as  the  defendant 
is  entitled  to  an  impartial  jury,  and  a  juror 
who  could  not  find  for  the  state  on  a  given 
issue,  regardless  of  the  evidence  which  might 
be  presented,  would  simply  not  be  an  impartial 
juror.   Reynolds  v.  United  States,  98  U.S. 
145  (8  Otto.  145). 


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ARGUMENT 


III 


APPELLEE'S  ARGUMENT  ON  THE  QUESTION 
WHETHER  A  STATE  PROSECUTION  MAY  BE 
INITIATED  BY  INDICTMENT  RATHER  THAN 
BY  INFORMATION 

Appellant  claims  that  there  is  a  trend 
in  the  direction  of  holding  that  rights 
guaranteed  by  the  first  ten  amendments  are 
secured  to  the  citizen  from  violation  by  the 
states  by  virtue  of  the  Fourteenth  Amendment; 
and  that  this  Court  should  find,  in  anticipa- 
tion of  such  finding  by  the  United  States 
Supreme  Court,  that  prosecution  by  prelimi- 
nary hearing  is  a  violation  of  due  process. 

Article  2,  §  30  of  the  Constitution  of 

the  State  of  Arizona  provides  as  follows: 

"No  person  shall  be  prosecuted 
criminally  in  any  court  of  record 
for  felony  or  misdemeanor,  other- 
wise than  by  information  or  indict- 
ment; no  person  shall  be  prosecuted 
for  felony  by  information  without 
having  had  a  preliminary  examina- 
tion before  a  magistrate  or  having 
waived  such  preliminary  examination." 


-6- 


This  constitutional  provision  is  implemented 

by  Rule  78,  Rules  of  Criminal  Procedure,  17 

A.R.S,  192,  which  provides  as  follows: 

"A.   Every  felony  and  every  misdemeanor 
of  which  the  superior  court  has  original 
jurisdiction  shall  be  prosecuted  by  in- 
dictment or  information,  and  every  mis- 
demeanor may  be  prosecuted  by  indictment 
or  information. "   (Emphasis  supplied) 

The  United  States  Supreme  Court  in  holding 
that  prosecution  by  information  is  constitu- 
tional the  Court  used  this  language  in  Hurt ado 
V.  California,  110  U.S.  516: 

"Tried  by  these  principles  we  are  unable 
to  say  that  the  substitution  for  a  pre- 
sentment or  indictment  by  a  grand  jury 
of  the  proceeding  by  information,  after 
examination  and  commitment  by  a  magis- 
trate, certifying  to  the  probable  guilt 
of  the  defendant,  with  the  right  on  his 
part  to  the  aid  of  counsel,  and  to  the 
cross-examination  of  the  witnesses  pro- 
duced for  the  prosecution,  is  not  due 
process  of  law." 

Maxwell  v.  Dow,  176  U.S.  581,  used  this  language 

"The  objection  that  the  proceeding  by 
information  does  not  amount  to  due  pro- 
cess of  law  has  been  heretofore  over- 
ruled, and  must  be  regarded  as  settled 
by  the  case  of  Hurtado  v.  California, 


-7- 


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110  U»S.  516 i   The  case  has  since  been 
frequently  approved i   Hal linger  v. 
Davis j  146  \iiSi    314 j  322?  McNulty  vj 
California^  149  U.S.  645;  Hodgson  Vi 
Vermont,  168  UiS.  262 ^  272;  HoldttH  \^; 
Hardy,  169  U;S.  366,  384;  Brown  Vi 
New  Jerseys  175  U.Sb  172>  176;" 

The  Missouri  case  of  State  v»  Wallert 

382  SiW.2d  668,  involved  e.   murder  prosecution 

by  information  which  was  affirmed.  The  Court 

9aidt 

"Finally,  appellant's  claim  that  he 
could  have  been  charged  with  a  capital 
offense  only  by  an  indictment,  and  not 
by  an  information  is  obviously  without 
merit  ,  ,  .   The  requirement  of  the 
Fifth  Amendment  to  the  Constitution 
of  the  United  States  has  no  application 
to  state  procedure  in  this  regard, 
Hurtado  v,  California,  110  U.S.  561, 
534,  4  S.Ct,  111,  28  L.Ed,  232;  State 
V,  Cooper,  Mo,  Sup,  344  S,W,2d  72 
(1-3)," 

See  also,  Horner  v.  state,  168  So, 2d 
137  (Fla.), 

There  is  a  strong  trend  in  the  decisions 
of  the  Supreme  Court  toward  preserving  to  th« 
citizen  substantial  rights  from  which  he  may 


-8- 


benefit.   It  is  not  a  trend  toward  the 
preservation  of  ancient  forms,  where  newer 
forms  have  bestowed  substantial  benefit 
upon  the  citizen  charged  with  crime. 

Rule  16,  Rules  of  Criminal  Procedure, 
17  A.R.S.  94,  provides  that  a  defendant 
brought  before  a  magistrate  after  arrest  on 
a  felony  charge,  has  a  right  to  an  immediate 
preliminary  examination  in  order  to  determine 
whether  or  not  there  is  probable  cause  to 
believe  the  defendant  is  guilty  of  any  offense. 

The  defendant  has  a  right  to  have  counsel 
present  at  such  examination.  (Rules  16,  18,  19) 
He  has  the  right  to  have  witnesses  summoned, 
to  have  their  testimony  heard,  and  to  have 
them  sequestered,  (Rules  22,  26,  27)   All  wit- 
nesses shall  be  examined  in  the  presence  of  the 
defendant  and  may  be  cross-examined,  (Rule  23) 
The  defendant  may  make  a  statement  concerning 
the  charges  against  him,  and  may  answer  the 


-9- 


charge  and  explain  the  facts  appearing 
against  him.   (Rule  24)   He  may  order  a 
transcript  of  the  entire  proceedings. 
(Rule  28) 

If  the  Rules  of  Criminal  Procedure  are 
not  followed,  or  if  the  evidence  is  not 
sufficient  to  support  a  finding  of  probable 
cause,  relief  is  available  by  habeas  corpus 
and  motion  to  quash.   State  ex  rel  Corbin  v. 
Superior  Court,  In  and  For  the  County  of 
Maricopa,  357  P. 2d  144  (1966),  100  Ariz.  236, 
413  P. 2d  264,  opinion  modified  on  rehearing 
100  Ariz.  362,  414  P. 2d  738.   Defense  counsel 
usually  ask  for  and  obtain  a  preliminary 
hearing  for  the  purpose  of  learning  the  nature 
of  the  prosecutor's  case.   State  v.  Essman, 
(1965)  98  Ariz.  228,  403  P. 2d  540,  at  542. 

Grand  jury  proceedings  are  secret.   The 
defendant  has  no  right  to  be  present;  his 
counsel  may  not  be  present;  defendant  may  not 

-10- 


have  witnesses  present,  nor  cross-examine 
the  witnesses  against  him.   There  is  even  no 
absolute  right  to  a  transcript  of  the  pro- 
ceedings.  The  preliminary  hearing,  rather 
than  violating  the  standard  of  due  process, 
has  raised  a  new  standard  of  fairness  to  the 
accused  and  has  placed  new  burdens  on  the 
prosecution  and  new  protection  around  the 
rights  of  the  accused.   It  is  significant 
that  neither  this,  nor  any  other  defendant, 
has  objected  to  prosecution  by  information 
before  the  time  of  the  trial.   If  any 
incursion  on  his  rights  were  involved,  he 
waived  his  right  to  complain  thereof  when  he 
enjoyed  the  benefits  of  the  preliminary 
hearing. 


-11- 


ARGUMENT 


IV 


APPELLEE'S  ARGUMENT  ON  THE  QUESTION 
WHETHER  THE  DEATH  PENALTY  IS 
UNCONSTITUTIONAL  AS  VIOLATIVE  OF 
THE  EIGHTH  AND  FOURTEENTH  AMENDMENTS 

Appellant  makes  a  cogent  argument  for 
the  proposition  that  the  death  penalty  is 
unwise,  immoral,  ineffective  and  unpopular; 
but  he  fails  to  reach  the  question  of  its 
cruelty,  unusualness  and  unconstitutionality. 

Mr.  Jeremy  Bentham,  in  his  Rationale  of 
Judicial  Evidence  Specially  Applied  to 
English  Practice,  London,  Hunt  &  Clarke, 
1827,  5  Volumes,  admonishes  judges  and  legis- 
latures to  refrain  from  formulating  unbending 
rules,  imposing  on  the  trier  of  fact  the 
obligation  of  reaching  certain  conclusions 
from  certain  evidence.   He  is  willing  to 
allow,  however,  that  where  the  mischief  of 
the  decision,  if  erroneous,  is  irreparable, 
there  is  some  prospect  that  such  unbending 

-12- 


IS 


rules  might,  on  the  whole^  prove  beneficial, 

He  says: 

"The  other  case  comprehends  in  its 
whole  extent  the  range  of  capital 
punishment:   the  only  species  of 
punishment  which  is  absolutely  and 
totally  irreparable.   But,  of  the 
consideration  of  this  irreparability, 
what  is  the  true  result?   The  im- 
propriety of  this  mode  of  punish- 
ment:  not  the  propriety  of  those 
unbending  rules. 

In  the  instance  in  question,  it  was 
the  consideration  of  the  nature  of 
the  punishment — of  the  property  thus 
belonging  to  it--that  called  into 
action  the  humane  temerity  of  the 
judge.   In  every  system  of  law  into 
which  this  irreparable  mode  of  punish- 
ment has  been  admitted, — but  most  of 
all  in  the  English  system,  in  which 
the  fondness  shewn  to  it  is  so  great, 
and  so  continually  upon  the  increase, -- 
the  system  of  procedure  in  general, 
and  of  the  law  of  evidence  in  particu- 
lar, teems  with  rules  and  practices 
tending  to  the  encouragement  of 
criminality  in  every  shape,  and  most 
of  all  in  such  as  are  most  mischievous, 
Capital  punishment  has  thus  been  all 
along  operating,  and  will  continue  to 
operate  with  continually  increasing 
force,  as  a  slow  poison  upon  the  whole 
system  of  procedure,  including  that  of 
evidence.   Thus  it  is  that  the  work  of 
real  inhumanity  and  of  false  humanity. 


-13- 


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of  folly  under  that  specious  name, 
go  on  together:  and,  while  substan- 
tive law,  with  its  favourite  and 
unwearied  instrument,  capital  punish- 
ment, is  straining  every  nerve  to  tighten 
the  bands  of  society, — adjective  law, 
with  its  prejudices  and  inconsistencies, 
is  as  pertinaciously  employed  in 
loosening  them." 

From  the  earliest  days  of  our  republic 
the  wisdom  of  the  irreparable  mode  of  punish- 
ment has  been  in  question,  but  the  Constitu- 
tion does  not  proscribe  folly,  it  proscribes 
cruelty  and  unusualness. 

When  appellant  asserts  that  "our  society 
has  progressed  to  the  point  where  our  stan- 
dards of  decency  which  are  the  measure  of  the 
Eighth  Amendment  deny  that  the  state  has  any 
inherent  right  to  impose  punishment  which 
either  exceeds  or  cannot  achieve  the  legiti- 
mate objectives  of  punishment" ,  he,  by  far, 
over-estimates  American  standards  of  decency. 

In  the  interests  of  our  convenience 
and  saving  of  time,  we  tolerate  the  violent 


-14- 


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deaths  of  thousands  in  traffic  aocidents. 
In  the  pursuit  of  amusement  to  while  away 
the  leisure  gained  at  such  cost,  millions  of 
viewers  watch  thousands  of  hours  of  indecently 
violent  behavior.   In  the  pursuit  of  undefined, 
and  undefinable,  goals,  we  applaud  the 
violent  destruction  of  our  "enemies". 

If  there  is  such  a  trend  toward  decency, 
it  is  for  the  legislatures  to  measure  the 
trend.   It  is  for  the  legislatures  to  act 
for  society  in  making  its  standards  of 
decency  the  law  of  the  land.   The  legislature 
is  equipped  to  discover  a  moral  consensus  and 
empowered  to  clothe  that  consensus  with  the 
force  of  law.   The  right  of  the  state  to 
sacrifice  the  lives  of  its  citizens,  or 
others,  to  the  state's  interests,  whether 
or  not  such  sacrifice  is  likely  to  secure 
the  state's  objectives,  can  be  questioned; 
but  the  questioner's  voice  will  echo  hollowly 


-15- 


■sii:t   6   flo. 


in  the  moral  wilderness  of  modern  America, 


•16- 


ARGUMENT 


V 


APPELLEE'S  ARGUMENT  ON  THE  QUESTION 
WHETHER  DUE  PROCESS  PRECLUDES  THE 
INTRODUCTION  OF  THE  TESTIMONY  OF  AN 
ACCOMPLICE  WHOSE  TESTIMONY  IS  SUSPECT 
BY  REASON  OF  INTEREST 

To  conceal  the  witness'  interest  would  be 
despicable  and  violative  of  due  process.   See, 
State  V.  Taylor,  231  A. 2d  212  (Supreme  Court 
of  New  Jersey,  1967)   To  bar  the  testimony  of 
all  interested  witnesses  would  place  an  insur- 
mountable, purposeless  stumbling  block  in  the 
path  to  truth. 

The  appellant  was  protected  by  legisla- 
tion and  court  rule  from  imposition  by  jury  or 
prosecutor.   5  A.R.S.  21,  §  13-136  reads  as 
follows: 

"A  conviction  shall  not  be  had  on  the 
testimony  of  an  accomplice  unless  the 
accomplice  is  corroborated  by  other 
evidence  which,  in  itself  and  without 
aid  of  the  testimony  of  the  accomplice, 
tends  to  connect  the  defendant  with  the 
commission  of  the  offense.   The  corro- 


-17- 


boration  is  not  sufficinet  if  it  merely 
shows  the  commission  of  the  offense  or 
the  circumstances  thereof." 

In  this  connection,  see  State  v.  Howard, 
97  Ariz.  339,  400  P. 2d  332. 

Rule  29,  Rules  of  the  Supreme  Court, 

17  A.R.S.  112,  reads  as  follows: 

"The  primary  duty  of  the  lawyer  engaged 
in  public  prosecution  is  not  to  convict 
but  to  see  that  justice  is  done." 

Due  process  can  ask  no  more. 


-18- 


CONCLUSION 

The  order  of  the  United  States  District 

Court  denying  petitioner's  petition  for  a 

Writ  of  Habeas  Corpus  should  be  affirmed. 

Respectfully  submitted, 

DARRELL  F.  SMITH 
The  Attorney  General 


CARL  WAAG 

Assistant  Attorney  General 


-19- 


STATE  OF  ARIZONA     ) 

)  ss. 
County  of  Maricopa  ) 

CARL  WAAG,  being  first  duly  sworn  upon 
oath,  deposes  and  says: 

I  certify  that,  in  connection  with  the 
preparation  of  this  brief,  I  have  examined 
Rules  18,  19  and  39  of  the  United  States 
Court  of  Appeals  for  the  Ninth  Circuit,  and 
that,  in  my  opinion,  the  foregoing  brief  is 
in  full  compliance  with  those  rules. 


CARL  WAAG 
SUBSCRIBED  AND  SWORN  to  before  me  this 
day  of  December,  1967. 


Notary  Public 
My  commission  expires: 


-20- 


COPY  of  foregoing  Appellee's 
Answering  Brief  mailed  this 
day  of  December,  1967  to: 

W.  EDWARD  MORGAN 

407  Tucson  Title  Insurance  Bldg. 

45  West  Pennington 

Tucson,  Arizona  85701 

WM.  E.  HILDEBRANDT 
1008  Transamerica  Bldg. 
Tucson,  Arizona  85701 

Attorneys  for  Petitioner 


-21- 


No.  22243  ^ 

United   States  Court  of  Appeals 
For  the  Ninth  Circuit 


Pacific  Inland  Navigation  Co.,  Inc.,  Appellant, 

vs. 
FiEEMAN^s  Fund  Insurance  Company,  Appellee. 


Lppeal  from  the  United  States  District  Court  for 

THE  Western  District  of  Washington 

Southern  Division 


REPLY  BRIEF  OF  APPELLANT 


Howard,  Le  Gros,  Buchanan  &  Paul 

Theodore  A.  Le  Gros 
Attorneys  for  Appellomt 

)ffice  and  P.  0.  Address  P  I  II  E  D 
Central  Building 

jeattle,  Washington  98104  _  .     Anna 

^Ain  3-4990  APR  1     ^^^^ 


BEATTLK,  WAMHINaTONl 


^im^ 


TfTUCK,  CLER^ 


No.  22243 


United   States   Court  of  Appeals 
For  the  Ninth  Circuit 


Pacific  Inland  Navigation  Co.,  Inc.,  Appellant, 

vs. 
Fireman's  Fund  Insurance  Company,  Appellee. 


Appeal  from  the  United  States  District  Court  for 

THE  Western  District  of  Washington 

Southern  Division 


REPLY  BRIEF  OF  APPELLANT 


Howard,  Le  Gros,  Buchanan  &  Paul 

Theodore  A.  Le  Gros 
Attorneys  for  Appellcmt 


Dffice  and  P.  O.  Address 
Central  Building 
Seattle,  Washington  98104 
MAin  3-4990 


ThkArbub  Prebs  ^tiWga^.  Seattle,  WAaHiNaraN 


No.  22243 

United   States   Court  of  Appeals 
For  the  Ninth  Circuit 


Pacific  Inland  Navigation  Co.,  Inc.,  Appellant, 

vs. 
Fireman's  Fund  Insurance  Company,  Appellee. 


Ajteal  from  the  United  States  District  Court  for 

THE  Western  District  of  Washington 

Southern  Division 


REPLY  BRIEF  OF  APPELLANT 


Howard,  Le  Gros,  Buchanan  &  Paul 

Theodore  A.  Le  Gros 
Attorneys  for  Appellant 


Office  and  P.  O.  Address 
Central  Building 
Seattle,  Washington  98104 
MAin  3-4990 


THEARQUB  PRCSa    1^^^)     SEATTUE,  WABHINaTDN 


INDEX 

Page 

I  Answer  To  Appellee's  Argument  That  the 
Hiimpla  Law  Suit  Was  Not  An 
Employer's  Liability 1 

II  Answer  To  Appellee's  Argument  That  Policy 
LS-1214  Covers  Only  Longshoremen's  And 
Harbor  Workers'  Act  Benefits  3 


TABLE  OF  CASES 

Aetna  Ins.  Co.  v.  Sacramento-Stockton  S.S.  Co., 
273  F.  55  at  58  (CA9,  1921)  5,  6 

Crowell  V.  Benson,  285  U.S.  22,  52  S.Ct.  285, 
76  L.Ed.  598   (1932)   5 

Indemnity  Insurance  Co.  v.  California 
Stevedore  <k  Ballast  Co., 
307  F.2d  513,  515,  n.l 2,  3 


I 


United  States  Coiurt  of  Appeals 
For  the  Ninth  Circuit 


Pacific  Inland  Navigation  Co.,  Inc., 

Appellant,  I 

^s-  >   No.  22243 

Fireman's  Fund  Insurance  Company, 

Appellee. 


Appeal  from  the  United  States  District  Court  for 

THE  Western  District  of  Washington 

Southern  Division 


REPLY  BRIEF  OF  APPELLANT 


ANSWER  TO  APPELLEE'S  ARGUMENT  THAT 

THE  HUMPLA  LAW  SUIT  WAS  NOT  AN 

EMPLOYER'S  LIABILITY 

Appellee  argues  that,  all  elements  of  construction 
aside,  Coverage  One  (b)  does  not  apply  to  a  Humpla- 
type  law  suit  since  the  liability  theory  under  which 
Humpla  asserted  his  claim  was  against  a  shipowner 
and  not  an  employer.  To  reach  this  conclusion  Appel- 
lee completely  ignores  the  status  of  Humpla  as  a  direct 
employee  of  Pacific  Inland  Navigation  Company, 

Appellee  argues  (Appellee's  brief,  p.  12,  13)  that 
historically   a   Humpla-type   law   suit  would  not   be 


covered  under  this  coverage.  This  does  not  follow. 
Humpla  was  undeniably  an  employee  of  Appellant. 
The  opening  statement  of  the  policy  in  question  em- 
phasizes the  basic  factor  of  the  employer-employee 
relationship  as  the  very  foundation  of  the  policy.  Only 
if  Coverage  One  (b)  can  be  read  out  of  the  policy  can 
coverage  be  escaped. 

Appellee  refers  often  to  compensation  coverage  and 
P&I  coverage,  implying  this  case  can  be  solved  merely 
by  defining  types  of  insurance  coverage  and  inserting 
such  facts  as  Appellee  chooses  (Appellee's  brief,  p.  13, 
14  and  16).  This  attempt  at  solution  by  classification 
completely  ignores  the  plain  language  of  the  contract 
of  insurance  in  question. 

The  fallacy  in  employing  this  argument  of  classifi- 
cation is  evidenced  in  Appellee 's  citation  of  Indemnity 
Insurance  Co.  v.  California  Stevedore  <&  Ballast  Co. 
(Appellee's  Brief  p.  13).  Appellee  cited  this  case  for 
the  rule  that  where  an  independent  stevedore  and  em- 
ployer is  sued  by  a  vessel  owner  for  injuries  occurring 
on  a  vessel  to  a  longshoreman,  the  liability  of  the 
stevedore-employer  is  within  its  public  liability  policy 
rather  than  its  employer's  liability  policy. 

The  Indemnity  case  is  clearly  distinguishable  from 
this  action  because  of  the  significant  differences  in 
wording  of  the  policies  involved.  The  pertinent  parts 
of  the  policy  of  insurance  in  Indemnity  are  cited  at 
307  F.2d  513,  515  n.  1.  Coverage  A  in  that  policy  per- 
tains to  coverage  for  bodily  injury  liability.  Exclu- 
sion (c)  makes  coverage  A  inapplicable  "except  with 
respect  to  liability  assumed  under  written  contract 
*  *  *  ."  Since  the  case  dealt  with  shipowner  indemnity 
from  a  stevedore-employer,  based  on  the  contractual 


I 


relation  between  the  two,  the  exception  stated  within 
Exclusion  (c)  rendered  that  exclusion  inapplicable, 
resulting  in  coverage  under  Clause  A. 

Exclusion  (c)  in  the  Indemnity  case,  as  Appellee 
points  out  in  its  brief  at  page  13,  referred  to  Work- 
men's Compensation  liability.  This  was  so  because  of 
the  particular  wording  of  Exclusion  (c) : 

"This  policy  does  not  apply  under  coverage  A 
...  to  bodily  injury ...  of  an  employee  of  insured 
. . .  other  than  a  domestic  employee  for  whose 
injury  benefits  are  not  payable  or  required  to  be 
provided  under  any  tvorkmen's  compensation  law; 
or  to  any  obligation  for  which  the  insured  . . .  may 
be  held  liable  under  any  workmen's  compensation 
law;...''  (Emphasis  added)  307  F.2d  513,  515, 
n.  1. 

In  this  particular  case,  under  Policy  LS-1214,  noth- 
ing in  Coverage  One  (b)  restricts  its  applicability  in 
the  manner  Appellee  contends.  Quite  to  the  contrary, 
since  Coverage  One  (a)  clearly  deals  with  compensa- 
tion. Coverage  One  (b)  is  left  to  cover  other  types  of 
liability  to  which  Appellant  may  be  subjected  by 
reason  of  the  employer-employee  relationship. 


n 

I      ANSWER  TO  APPELLEE'S  ARGUMENT  THAT 
POLICY  LS-1214  COVERS  ONLY  LONGSHOREMEN'S 
AND  HARBOR  WORKERS'  ACT  BENEFITS 

Only  by  excluding  Cove^  age  One  (b)  of  this  policy 
can  Appellee  escape  liability.  Where,  then,  is  the  ex- 
clusion ? 


It  is  clear  from  a  reading  of  the  policy  that  Cover- 
age One  (a)  and  Endorsement  No.  1  that  the  Long- 
shoremen and  Harborworkers '  Compensation  Act  is 
covered  by  this  policy.  As  Appellee  states  in  its  brief 
(p,  5),  Endorsement  No.  1  is  inclusive  and  not  restric- 
tive. As  Appellee  states,  other  compensation  acts  could 
presumably  be  added.  This  concession  by  Appellee 
indicates  the  very  reason  for  the  existence  of  En- 
dorsement No.  2,  that  is,  to  limit  the  compensation 
acts  covered  to  only  the  Longshoremen  and  Harbor 
Workers'  Compensation  Act. 

While  the  restriction  on  Coverage  One  (a)  is  clear, 
there  is  no  such  clear  restriction  on  Coverage  One  (b). 
The  second  paragraph  in  Endorsement  No.  2  falls  far 
short  of  the  clear  exclusion  or  restriction  of  Coverage 
One  (b)  that  the  rules  of  construction  require. 

Appellee  states  that  the  only  basis  for  the  presence 
of  Coverage  One  (b)  is  in  the  event  the  Longshoremen 
and  Harbor  Workers'  Compensation  Act  is  declared 
unconstitutional.  Yet  Appellee  cites  Crowell  vs.  Ben- 
son, 285  U.S.  22,  52  S.Ct.  285,  76  L.Ed.  598  (1932)  as 
upholding  the  constitutionality  of  that  Act.  The  mere 
citation  points  out  that  this  Act  has  been  recognized 
as  constitutional  for  over  thirty-two  years  at  the  time 
the  policy  in  question  was  written. 

Reading  typewritten  Endorsement  No.  4,  setting  up 
$100,000  limit  on  Coverage  One  (b),  without  any  other 
restriction  whatever  points  out  that  Coverage  One  (b) 
was  not  meant  to  be  limited,  as  Appellee  contends. 

Appellee's  brief  (p.  7)  points  out  that  the  Washing- 
ton King  County  Superior  Court  has  ruled  on  this 
identical  issue  in  favor  of  Firemen's  Fund.  It  is  im- 


I 


portant  to  note  in  that  context,  however,  that  the 
Superior  Court  in  its  Finding-  of  Fact  XII  took  judi- 
cial notice  of  the  District  Court  decision  from  which 
this  appeal  is  taken.  In  essence.  Judge  James  merely 
followed  Judge  Bolt's  earlier  opinion  and  perpetu- 
ated the  earlier  error. 

We  should  also  direct  the  Court's  attention  to  a 
very  similar  case  to  the  one  at  hand  from  this  Circuit, 
where  the  effect  of  an  endorsement  or  rider  was 
subject  to  construction.  In  the  case  of  Aetna  Ins.  Co. 
V.  Sacramento-Stockton  S.S.  Co.,  this  Court  stated: 

"It  is  contended  that  the  rider  was  intended  to 
express  all  the  risk  incurred  by  the  insurer.  We 
do  not  so  construe  it.  It  is  true  it  begins  with  the 
words  'This  policy  is  to  cover  only  as  follows:' 
but  we  think  the  words  mean  no  more  than  that 
the  insurer  intended  to  substitute  the  two  pro- 
visions contained  in  the  rider  for  corresponding 
provisions  in  the  body  of  the  policy,  and  that  as 
to  those  two  provisions  the  policy  was  'to  cover 
only'  as  expressed  in  the  rider.  One  of  the  sub- 
stituted provisions  is  the  collision  clause,  which 
differs  in  form  from  and  takes  the  place  of  the 
collision  clause  which  was  deleted  from  the  body 
of  the  Aetna  policy.  The  provision  in  the  riders  as 
to  loss  or  damage  caused  by  fire  appears  to  have 
been  inserted  for  the  purpose  of  limiting  such 
loss  to  the  'terms  and  conditions  of  the  regular 
California  standard  form  of  fire  policy  as  issued 
by  the  Aetna  Insurance  Company.'  In  the  body 
of  the  policy  fire  is  simply  mentioned  as  one  of  the 
risks  insured  against. 

"The  same  construction,  we  think,  should  be 
given  to  the  other  two  policies,  although  there  are 
no  deletions  therein.  They  each  contain  in  the 
body  of  the  policy  a  fire  risk  and  a  collision  clause. 
It  is  the  language  of  the  insurance  company  that 
we  are  called  upon  to  construe,  'and  it  is  both 


6] 

reasonable  and  just  that  its  own  words  should  be 
construed  most  strongly  against  itself.'  National 
Bank  v.  Insurance  Co.,  95  U.S.  673,  679,  24  L.Ed. 
563;  Thompson  v.  Phoenix  Ins.  Co.,  136  U.S.  287, 
10  Sup.  Ct.  1019,  34  L.Ed.  408.  Light  is  thrown 
upon  the  defendant's  own  understanding  of  the 
contract  by  the  fact  that  when  notified  of  the 
abandonment  of  the  vessel,  they  made  no  claim 
that  loss  occurred  from  a  cause  not  insured 
against,  but  wrote  to  the  plaintiff  that  their  poli- 
cies 'were  rescinded  and  voided  by  the  unsea- 
worthiness of  said  vessel  which  caused  her  loss.'  " 

Aetna  Ins.  Co.  v.  Sacramento-Stockton  S.S. 
Co.,  273  F.  55  at  58  (CA9,  1921). 

On  the  basis  of  the  contract  of  insurance  in  effect 
it  is  submitted  that  summary  judgment  should  be 
granted  as  requested  by  Appellant. 

Respectfully  submitted, 

Howard,  Le  Gros,  Buchanan  &  Paul 

Theodore  A.  Le  Gros 
Attorneys  for  Appellomt 

Office  and  P.  O.  Address 
Central  Building 
Seattle,  Washington  98104 
MAin  3-4990 


7 

CERTIFICATE 

I  certify  that,  in  connection  with  the  preparation  of 
this  brief,  I  have  examined  Rules  18  and  19  of  the 
United  States  Court  of  Appeals  for  the  Ninth  Circuit 
and  that,  in  my  opinion,  the  foregoing  brief  is  in  full 
compliance  with  these  rules. 

Theodore  A.  Le  Gros 
Attorneys  for  Appellant 


No.  22243 

IN  THE 

UNITED  STATES 
COURT  OF  APPEALS 

For  the  Ninth  Circuit 

Pacific  Inland  Navigation  Co.,  Appellant 

vs. 

Firemen's  Fund  Insurance  Company,  Appellee. 


Appeal  from  the  United  States  District  Court 

for  the  Western  District  of  Washington 

Southern  Division 


BRIEF  OF  APPELLEE 

ElUEB 

mcQ  Bogle,  Gates,  Dobrin, 

WAR  1  4  »yoo  Wakefield  &  Long 

Thomas  J.  McKey 
1^.  B.  LUCK,  CLtK  Attorneys  for  Appellee 


Office  and  P.O.  Address 

14th  Floor,  Norton  Building 
Seattle,  Washington  98104 
Mutual  2-5151 


RINTING   C0MPANYC6«^»SEATTLE  .    WASHINGTON 


f/y  /I . 


No.  22243 

IN  THE 

UNITED  STATES 
COURT  OF  APPEALS 

For  the  Ninth  Circuit 

Pacific  Inland  Navigation  Co.,  Appellant 

vs. 

Firemen's  Fund  Insurance  Company,  Appellee. 


Appeal  from  the  United  States  District  Court 

FOR  THE  Western  District  of  Washington 

Southern  Division 


BRIEF  OF  APPELLEE 


Bogle,  Gates,  Dobrin, 
Wakefield  &  Long 
Thomas  J.  McKey 
Attorneys  for  Appellee 


Office  and  P.O.  Address 

14th  Floor,  Norton  Building 
Seattle,  Washington  98104 
Mutual  2-5151 


No.  22243 

IN  THE 

UNITED  STATES 
COURT  OF  APPEALS 

For  the  Ninth  Circuit 


Pacific  Inland  Navigation  Co.,  Appellant 

vs. 

Firemen's  Fund  Insurance  Company,  Appellee. 


Appeal  from  the  United  States  District  Court 

for  the  Western  District  of  Washington 

Southern  Division 


BRIEF  OF  APPELLEE 


Bogle,  Gates,  Dobrin, 
Wakefield  &  Long 
Thomas  J.  McKey 
Attorneys  for  Appellee 


Office  and  P.O.  Address 

14th  Floor,  Norton  Building 
Seattle,  Washington  98104 
Mutual  2-5151 


SUBJECT  INDEX 

Page 

JURISDICTION  1 

STATEMENT  OF  THE  CASE 1 

SUMMARY  OF  ARGUMENT 3 

ARGUMENT 4 

I.  Policy  LS-1214  Covers  Only  Long- 
shoremen's and  Harbor  Workers' 
Act  Benefits  4 

A.  The  Ordinary  Meaning  of 

Policy  LS-1214  4 

B.  The  Entirety  of  the 

Agreement 8 

II.    The  Humpla  Lawsuit  Was  Not  an 

Employer's  Liability 12 


TABLE  OF  CASES 

Pcuge 
Boeing  Airplane  Co.  v.  Firemen's  Fund 

Indemnity  Co.,  44  Wn.  2d  488  at  496 11 

Crowell  V.  Benson,  285  U.S.  22,  52  S.Ct.  285, 
76  L.Ed.  598  (1932)  7 

Indemnity  Ins.  Co.  v.  California  Stevedore 

&  Ballast  Co.,  (CCA.  9, 1962),  307  F.  2d  513  ....13 

Insurance  Co.  of  North  America  v.  Firemen's 

Fund  Ins.  Co.,  King  County  Cause  No.  669599  ....  7 

Jackson  v.  Lykes  Bros.  S.  S.  Co.,  386  U.S.  731, 

18  L.Ed.  2d  488,  87  S.Ct.  1419  (1967)  14 

Pacific  Inland  Navigation  Co.  v.  Course, 

368  F.  2d  540  (CCA.  9,  1966)  10 

Reed  v.  S.S.  YAK  A,  373  U.S.  410, 10  L.Ed.  2d 

448,  83  S.Ct.  1349  (1963)  2,  8, 13, 14, 15 

Ryan  Stevedoring  Co.  v.  Pan- Atlantic 

Steamship  Corp.,  350  U.S.  124,  76  S.Ct.  232, 

100  L.Ed.  133  (1955)  5,13,14 

Safeco  Ins.  Co.  of  America  v.  McManemy, 

72  W.D.  2d  2112,  432  P.  2d  537  (1967)  4,  7,  8 

Seas  Shipping  Co.  v.  Sieracki,  328  U.S.  85, 

90  L.Ed.  1099,  66  S.Ct.  872  (1946)  12, 13, 14 

Watson  V.  Gulg  Stevedoring  Corp., 

(CCA.  5,  1967)  374  F.  2d  946 15 

White  V.  United  States  Lines, 

(D.C  Md.,  1965),  254  F.  Supp.  480  at  482 14 


STATUTES 

Page 

Longshoremen's  and  Harbor  Workers' 

Compensation  Act 2,  3,  5,  6,  7,  8,  9, 10, 11, 15 

33  U.S.C.  901  2 

33  U.S.C.  903  9 

33  U.S.C.  938  9 

Note,  The  Oregon  Employers'  Liability  Law 
and  the  Federal  Overlay,  I  Willamette 
Law  Journal  77  (1959)  9 


No.  22243 

IN  THE 

UNITED  STATES 
COURT  OF  APPEALS 

For  the  Ninth  Circuit 

Pacific  Inland  Navigation  Co.,  Appellant 

vs. 

Firemen's  Fund  Insurance  Company,  Appellee. 


Appeal  from  the  United  States  District  Court 

FOR  THE  Western  District  of  Washington 

Southern  Division 


BRIEF  OF  APPELLEE 


JURISDICTION 

The  basis  of  jurisdiction  is  set  out  in  Appellant's 
Brief  ( Brief  of  Appellant,  pp.  1-2 ) . 

STATEMENT  OF  THE  CASE 

Appellee  is  furnishing  a  Statement  of  the  Case  be- 
cause appellant's  statement  begins  by  begging  the 
question  which  is  being  appealed  and  omits  some  of 
the  pertinent  facts. 

Because  Friedolf  Humpla  was  on  navigable  wa- 
ters and  in  the  employ  of  Pacific  Inland  Navigation 
Co.,  Inc.,  when  he  was  injured  on  September  27, 
1964,  appellee  paid  $5,343.84  to  him  by  way  of  bene- 
fits under  the  Longshoremen's  and  Harbor  Work- 
ers' Act  in  accordance  with  Policy  No.  LS-1214,  a 
copy  of  which  is  attached  (Tr.  14  and  Ex.  A-1  at- 
tached thereto). 


Pacific  Inland  Navigation  Co.  owned  the  barge 
upon  which  Humpla  was  injured,  and  he  sued  that 
corporation  in  the  Circuit  Court  of  the  State  of  Ore- 
gon under  the  doctrine  of  Reed  v.  SS  YAKA,  373 
U.S.  410, 10  L.Ed.2d  448,  83  S.Ct.  1349  (1963)  Tr.  5) . 
That  suit  was  defended  by  appellant's  Protection 
and  Indemnity  insurer  (hereinafter  referred  to  as 
P&I)  because  it  insured  the  barge.  The  lawsuit  was 
settled  by  a  $30,000.00  contribution  from  the  P&I 
underwriter  and  a  waiver  of  the  lien  granted  the 
compensation  underwriter  (appellee  herein)  by  the 
Longshoremen's  and  Harbor  Workers'  Compensa- 
tion Act,  33  U.S.C.  901,  et  seq  (Tr.  Ex.  A-1  at  Pg. 
14) .  As  Exhibit  A-1  states,  the  contributions  toward 
settlement  were  made  without  prejudice  to  either 
party's  position  that  it  did  not  cover  the  lawsuit  by 
Humpla. 

Thereafter,  this  lawsuit  was  brought,  claiming 
coverage  by  appellee  under  compensation  policy 
LS-1214,  Paragraph  One  ( b )  ( Tr.  3 ) .  Appellee  denied 
coverage,  and  counter-claimed  for  its  lien,  on  the  ba- 
sis of  the  Endorsement  Restricting  Policy  Coverage 
(endorsement  No.  2)  to  pohcy  LS-1214  (Tr.  14, 15) , 
and  on  the  basis  that  the  Humpla  lawsuit  was  not 
within  the  scope  of  One(b)  in  any  event  because  it 
was  a  shipowner's  liability,  not  an  employer's  liabil- 
ity. 

Motions  for  Summary  Judgment  were  filed  by 
both  parties,  based  solely  on  the  pleadings  and  the 
compensation  policy  No.  LS-1214  (Tr.  19,  29;  Briefs 
at  Tr.  20,  31,  37).  Summary  judgment  was  entered 
in  favor  of  appellee  ( Tr.  45, 46 ) . 


SUMMARY  OF  ARGUMENT 

THE  ISSUE:  Appellee's  position  is  that  policy 
LS-1214  (attached)  is  a  compensation  poHcy  provid- 
ing only  coverage  under  the  Longshoremen's  and 
Harbor  Workers'  Act  and  $100,000.00  liability  cov- 
erage in  the  event  the  Longshore  Act  is  declared  un- 
constitutional, which  has  not  occurred.  Appellant's 
position  is  that  endorsement  No,  2  does  not  exclude 
coverage  One  ( b )  ( Employer's  Liability )  but  relates 
only  to  One  (A)  (Compensation)  and  that  the  Hum- 
pla  loss  is  covered  under  One  ( B ) . 

Appellee  will  develop  the  following  arguments 
supporting  its  position : 

I.  Policy  LS-1214  covers  only  Longshoremen's 
and  Harbor  Workers'  Act  benefits.  That  is  what 
the  policy  says,  both  by  the  ordinary  meaning  of 
its  terms,  particularly  Endorsement  Restricting 
Policy  Coverage  (endorsement  No.  2)  ("....  no 
other  liability  of  any  nature  whatsoever,  ....  is 
covered  hereunder")  and  by  the  entirety  of  the 
agreement  which,  from  the  declarations  page  to 
the  endorsements,  is  framed  solely  in  terms  of 
Longshore  Act  coverage. 

II.  Even  assuming  endorsement  No.  2  did  not  ex- 
ist, policy  LS-1214  would  not  cover  the  Humpla 
lawsuit  because  liability  to  Humpla  is  a  risk  of  a 
shipowner,  not  an  employer.  There  is  no  dispute 
that  the  policy  would  not  cover  a  suit  by  a  long- 
shoreman employed  by  a  third  party,  a  suit  by  a 
stevedore  employer  for  indemnity,  a  suit  by  any- 
one if  injured  ashore,  a  suit  by  a  crew  member, 
or  compensation  under  a  state  act  for  an  injury 
occurring  to  an  employee  ashore.  Since  Humpla, 
by  his  lawsuit,  sought  to  equate  himself  with  a 


longshoreman  employed  by  a  third  party,  his 
suit  is  similarly  not  a  risk  covered  by  this  policy. 

ARGUMENT 
I. 

Policy  LS-1214  Covers  Only  Longshoremen's  and 
Harbor  Workers'  Act  Benefits. 

A  reading  of  the  whole  of  policy  LS-1214  plainly 
shows  that  it  is  a  compensation  policy  providing 
coverage  for  liabilities  arising  under  the  Longshore- 
men's and  Harbor  Workers'  Act  and  providing 
$100,000.00  liability  coverage  in  the  event  the  Long- 
shore Act  is  declared  unconstitutional.  A  case  cited 
numerous  times  in  Appellant's  Brief,  Safeco  Ins.  Co. 
of  America  v.  McManemy,  72  W.D.2d  2112,  432  P.2d 
537  (1967),  states  the  first  of  "the  general  princi- 
ples to  be  followed  in  construing  insurance  con- 
tracts" to  be: 

"(1)  The  terms  of  the  insurance  policy  must 
be  given  their  usual,  popular  and  ordinary 
meaning  unless  the  entirety  of  the  agreement 
clearly  demonstrates  a  contrary  intent."  (Cita- 
tions omitted)  72  W.D.2d  at  213. 

Policy  LS-1214  is  only  a  compensation  policy  both 
by  the  "usual,  popular  and  ordinary  meaning"  of  its 
terms  and  by  the  "entirety"  of  the  agreement."  We 
will  now  explore  those  two  aspects  of  the  policy. 

A.   The  Ordinary  Meaning  of  Policy  LS-1214 

The  language  of  policy  LS-1214  states  plainly,  ex- 
pressly, explicitly  and  without  ambiguity  that  it 
covers  liability  of  the  assured  under  the  Longshore- 
men's and  Harbor  Workers'  Compensation  Act  and 
does  not  cover  any  other  liability  of  the  assured. 


The  agreement  begins  by  stating  that  Fireman's 
Fund  Insurance  Company  "does  hereby  agree  with 
this  employer,  named  and  described  as  such  in  the 
declarations  forming  a  part  hereof,  as  respects  per- 
sonal injuries  sustained  by  employees,  including 
death  at  any  time  resulting  therefrom,  as  follows:" 
That  opening  phraseology  eliminates  coverage  of 
many  losses  similar  to  the  Humpla  suit,  and,  indeed, 
those  which  gave  historical  birth  to  liabilities  such 
as  the  Humpla  suit.  It  is  obvious  that  the  policy 
does  not  cover  a  lawsuit  brought  by  a  longshoreman 
employed  by  an  independent  stevedore  company  and 
injured  aboard  appellant's  barge.  Nor  does  it  cover 
suits  by  any  other  person  not  an  employee  of  the  as- 
sured. It  would  not  cover  an  independnt  stevedore 
company's  suit  for  indemnity  under  Ryan  Stevedor- 
ing Co.  V.  Pan-Atlantic  Steamship  Corp.,  350  U.S. 
124,  76  S.Ct.  232,  100  L.Ed.  133  (1955). 

Coverage  One  (a)  (entitled  in  the  margin,  "Com- 
pensation") then  provides  coverage  for  benefits  un- 
der Workmen's  Compensation  statutes  "cited  and 
described  in  an  Endorsement  attached  to  this  poli- 
cy" and  further  provides  that  "nothing  herein  con- 
tained shall  operate  to  so  extend  this  policy  as  to  in- 
clude within  its  terms  any  Workmen's  Compensa- 
tion Law,  scheme  or  plan  not  cited  in  an  Endorse- 
ment hereto  attached."  By  the  plain  meaning  of  its 
words.  One  (a)  requires  an  endorsement  to  include 
coverage  for  the  Longshore  Act.  Endorsement  No.  1 
does  include  that  coverage.  (Endorsement  No.  1 
states,  "the  obligations  of  Coverage  A  of  the  Policy 
include  the"  Longshoremen's  Act.)  It  is  inclusive, 
and  not  restrictive  in  nature.  Presumably,  other 
Workmen's  Compensation  Acts  could  be  added  by 
further  endorsement. 


Coverage  One(b)  (entitled,  "Liability  for  Dam- 
ages") states  that  the  insurer  will  indemnify  the 
employer  against  loss  because  of  liability  to  employ- 
ees for  injuries.  It  needs  no  endorsement  to  be  effec- 
tive, such  as  One  (a)  needs.  Nonetheless,  there  is  an 
endorsement  pertaining  to  One  (b)  and  excluding  its 
coverage  from  the  policy. 

^'Endorsement  Restricting  Policy  Coverage 

No.  2. 

The  obligation  of  Paragraph  One  (a)  of  the 
policy  to  which  this  endorsement  is  attached 
shall  cover  only  the  Workmen's  Compensation 
Law  hereinafter  cited  and  described  and  none 
other : 

"Longshoremen's  and  Harbor  Workers'  Com- 
pensation Act'  (PubHc  Act  No.  803— 69th  Con- 
gress). 

It  is  mutually  understood  and  agreed  that  ex- 
cept as  this  policy  may  be  otherwise  extended 
by  endorsement,  no  other  liability  of  any  nature 
whatsoever,  except  as  defined  by  the  said 
'Longshoremen's  and  Harbor  Workers'  Com- 
pensation Act,'  is  covered  hereunder. 

It  is  understood  and  agreed,  hov/ever,  that 
the  above  will  not  operate  to  exclude  liability 
under  clause  No.  1-B  of  the  policy  in  respect  to 
those  employees  to  which  the  Federal  Long- 
shoremen's and  Harbor  Workers'  Compensation 
Act  should  be  declared  in  whole  or  in  part  un- 
constitutional." 

The  "usual,  popular  and  ordinary  meaning"  of  the 
plain  language  of  that  endorsement  limits  the  policy 
coverage  to  Longshore  Act  benefits  only.  By  its 
very  title,  the  endorsement  restricts  the  coverage  of 
the  entire  policy. 

The  first  paragraph  limits  One  (a)  to  the  Long- 
shore Act. 


The  second  paragraph  excludes  all  coverage  ex- 
cept the  Longshore  Act,  and  therefore  One  (b)  is  ex- 
pressly excluded.  That  the  second  paragraph  ex- 
cludes the  coverage  of  One(b)  is  confirmed  by  the 
fact  that  the  third  paragraph  replaces  One(b)  into 
the  policy  if  the  Longshore  Act  is  declared  unconsti- 
tutional. Not  only  has  the  Longshore  Act  not  been 
declared  unconstitutional,  but  its  constitutionality 
has  been  affirmatively  upheld.  Crowell  v.  Benson, 
285  U.S.  22,  52  S.Ct.  285,  76  L.Ed.  598  (1932). 

The  heart  of  endorsement  No.  2  is  the  plain  lan- 
guage of  the  second  paragra.ph,  "...  .no  other  liabili- 
ty of  any  nature  whatsoever,  except  as  defined  by 
the"  Longshore  Act,  "is  covered  hereunder".  Unless 
that  language  of  the  endorsement  restricts  the  cov- 
erage of  the  entire  policy  by  excluding  One(b),  the 
endorsement  is  superfluous.  Appellant's  Brief  (Pg. 
10 ;  cites  the  rule  that  each  part  of  the  policy  should 
be  construed  "so  that  all  parts  thereof  shall  have 
some  effect".  Safeco  Ins.  Co.  of  America  v.  Mc- 
Manemy,  supra,  at  Page  214.  Yet,  appellant  asserts 
that  endorsement  No.  2  is  attached  only  "to  particu- 
larly describe  the  precise  Workmen's  Compensation 
Law  intended,"  (Brief  of  Appellant,  Pg.  13)  a  func- 
tion which  was  already  accomplished  by  endorse- 
ment No.  1.  In  order  to  give  effect  to  endorsement 
No.  2,  it  must  be  read  as  appellee  reads  it. 

Nor  are  appellee  and  Judge  Boldt  alone  in  so  read- 
ing the  policy.  Judge  Frank  D.  James,  in  the  Superi- 
or Court  of  the  State  of  Washington  for  King  Coun- 
ty, was  faced  with  the  identical  issue  in  Insurance 
Co.  of  North  America  v.  Fireman's  Fund  Ins.  Co., 
King  County  Cause  No.  669599,  and  entered  the 
following  Conclusions  of  Law : 

"IL  As  the  IN  A  Protection  and  Indemnity 


8 

Policy  covers  the  Anderson  case  in  the  first  in- 
stance, the  sole  issue  for  decision  in  this  cause 
is  whether  the  Fireman's  Fund  policy  LS-1215 
provides  other  insurance. 

III.  Fireman's  Fund  policy  LS-1215  as  en- 
dorsed is  clear  and  unambiguous  and  requires 
no  interpretive  evidence  or  application  of  rules 
as  to  construction.  Endorsement  No.  4  deletes 
Clause  1-B  from  the  policy  except  if  the  Long- 
shoremen's and  Harbor  Workers'  Act  is  de- 
clared unconstitutional  or  except  where  1-B 
coverage  is  added  by  special  endorsement. 

IV.  Fireman's  Fund  policy  LS-1215  does  not 
provide  insurance  coverage  against  risks  such 
as  the  Lee  Anderson  case,  i.e.,  cases  arising  un- 
der the  doctrine  of  Reed  v.  SS  YAKA,  373  U.S. 
410, 10  L.Ed.2d  449  ( 1963) ." 

A  Judgment  of  Dismissal  was  entered  8  September, 
1967. 

The  ordinary  meaning  of  the  terms  of  policy  LS- 
1214  dictates  that  the  judgment  of  the  trial  court 
must  be  affirmed. 

B.    The  Entirety  of  the  Agreement 

The  Endorsement  Restricting  Policy  Coverage 
(No.  2)  and  its  meaning  fit  perfectly  into  the  overall 
pattern  of  Policy  LS-1214  as  an  agreement  provid- 
ing coverage  of  compensation  benefits  only.  A  read- 
ing of  the  terms  of  the  entire  policy  confirms  this. 

As  stated  by  the  Washington  court  in  Safeco  Ins. 
Co.  of  America  v.  McManemy ,  supra,  at  Pg.  214:  "To 
properly  interpret  the  policy,  one  must  start  with 
the  declarations".  Turning  to  the  Declarations  page, 
we  see  that,  Item  3,  the  Covered  Locations  are: 

''Territorial  waiers  of  the  States  of  Califor- 
nia, Oregon,  Washington  and  Alaska."  (Empha- 
sis supplied) 


9 

It  should  be  borne  in  mind  that  Section  3  of  the 
Longshore  Act  brings  within  the  purview  of  theAct 
only  those  injuries  ".  .  .  .  occurring  upon  the  naviga- 
ble waters  of  the  United  States  ( including  any  dry- 
dock)  .  .  .  ."  33  U.S.C.  903.  For  the  classification  of 
operations  on  those  waters  which  are  covered,  the 
Declarations  page  refers  the  reader  to  the  "Schedule 
of  Operations"  found  on  Endorsement  No.  6.  By  the 
terms  of  both  Endorsement  No.  6  and  the  Declara- 
tions page,  the  purpose  of  scheduling  these  opera- 
tions is  to  classify  the  activities  so  that  premium 
rates  can  be  established,  based  on  a  dollar  value  per 
hundred  dollars  of  payroll.  Thus,  "Stevedoring, 
N.O.C."  (Not  Otherwise  Classified)  is  covered  in  all 
four  states  while  ship  repair  activities  are  covered 
in  Oregon  and  Washir^gton.  Should  any  employee  of 
the  assured  involved  in  any  operation  so  named  be 
injured  on  navigable  waters,  even  though  his  pres- 
ence there  is  only  incidental  to  his  principal  duties, 
the  assured  is  covered  for  compensation  by  policy 
LS-1214  as  required  by  the  Longshore  Act.  33  U.S.C. 
938. 

Appellant's  Brief  refers  to  some  of  the  operations 
listed  in  Endorsement  No.  6  as  being  "without  the 
coverage"  of  the  Longshore  Act.  Yet  all  the  opera- 
tions shown  are  on  the  waterfront  with  the  inherent 
risk  that  an  employee  might  be  injured  on  navigable 
water,  be  he  chauffeur,  yard  worker  or  longshore- 
man. The  necessity  of  coverage  of  such  employees 
under  the  Longshore  Act  was  thoroughly  reviewed 
in  Note,  The  Oregon  Employers'  Liability  Law  and 
The  Federal  Overlay,  I  Willamette  Law  Journal  77 
(1959): 

"The  only  way  that  an  employer  can  protect 
himself  when  he  employs  maritime  workers  is 


10 

to  be  covered  under  both  acts,  state  and  Feder- 
al." (AtPg.90) 

The  compensation  situation  in  Oregon  at  the  time 
of  Mr,  Humpla's  accident  was  as  outhned  in  the  arti- 
cle. An  example  of  Longshore  Act  coverage  of  such 
operations  by  this  employer  is  Pacific  Inland  Navi- 
gation Co.  V.  Course,  368  F.2d  540  (CCA.  9,  1966), 
involving  a  harbor  worker  in  appellant's  yard  and 
which  stated,  "The  worker  was  covered  by  the 
Longshoremen's  and  Harbor  Workers'  Compensa- 
tion Act, " 

Thus,  One  (a)  with  Endorsement  No.  1  provides 
coverage  for  benefits  under  the  Longshore  Act. 
One(b),  Liability  for  Damages,  is  excluded  by  En- 
dorsement Restricting  Policy  Coverage  (endorse- 
ment No.  2)  unless  the  Longshore  Act  is  declared 
unconstitutional. 

In  the  event  of  a  declaration  of  unconstitu- 
tionality of  the  Longshore  Act,  One(B)  would  come 
into  play  to  protect  the  assured,  but  the  policy  lim- 
its must  be  defined.  Endorsement  No.  4  does 
that.  It  is  entitled,  "Limitation  of  Liability  En- 
dorsement Paragraph  One(b)"  and  states  that  lia- 
bility under  Paragraph  One(b)  is  limited  to  $100,- 
000.00.  Nowhere  does  that  endorsement  extend 
One  (b)  coverage  beyond  the  limitations  placed  on  it 
by  endorsement  No.  2.  In  fact,  endorsement  No.  4 
states:  "All  other  terms  and  conditions  remain  un- 
changed". 

Appellant's  argument  (Brief  of  Appellant,  Pg.  16) 
regarding  Paragraphs  Two,  Three  and  Four  is  irrel- 
evant, because  appellant  seeks  only  to  enforce 
One(b) ;  and  is  erroneous  because  Two,  Three  and 
Four  are  services  ancillary  to  One  (a)   as  well  as 


11 

One(b).  There  is  only  One  (a)  coverage  under  LS- 
1214  because  of  restrictive  endorsement  No.  2. 

Further,  Appellant's  Brief  (Pg.  16)  states  that  a 
premium  was  charged  for  One(b)  coverage.  Not 
only  is  there  no  evidence  below  to  support  that 
statement,  but  the  statement  is  false.  The  premium 
rates  v/ere  based  only  on  coverage  for  compensation 
under  the  Longshore  Act. 

Appellant's  Brief,  while  arguing  against  the  ex- 
press meaning  of  endorsement  No.  2  as  read  by  ap- 
pellee, a  District  Court  Judge,  and  a  Washington  Su- 
perior Court  Judge,  offers  no  substitute  meaning 
other  than  that  it  is  the  same  as  endorsement  No. 
1  (Pg.  13)  and  thereby  urges  violation  of  the  rule  it 
asserted  on  Page  10  that  all  parts  of  the  contract 
shall  have  some  effect.  A  summary  of  appellant's 
argument  would  appear  to  be  that  it  believes  en- 
dorsement No.  2  to  be  ambiguous  and  that  summary 
judgment  should  therefore  be  granted  in  appellant's 
favor  without  parole  evidence  on  the  intent  of  the 
parties,  in  spite  of  the  rule  to  the  contrary  as  enun- 
ciated in  Boeing  Airplane  Co.  v.  Fireman's  Fund  In- 
demnity Co.,  44  Wn.2d  488  at  496.  However,  even  if 
appellant  should  urge  remand,  this  court  can  dis- 
pose of  this  cumberson  litigation  and  avoid  further 
expense  by  deciding  a  controlling  question  of  law  as 
did  the  trial  court. 

A  reading  of  the  whole  of  policy  LS-1214  plainly 
shows  that  it  is  a  compensation  policy  providing 
coverage  for  liabilities  arising  under  the  Longshore- 
men's and  Harbor  Workers'  Act  and  providing 
$100,000.00  liability  coverage  in  the  event  the  Long- 
shore Act  is  declared  unconstitutional,  which  has 
not  occurred.  The  entirety  of  the  agreement  dictates 


12 

that  the  judgment  of  the  trial  court  must  be  af- 
firmed. 

II. 

Tlie  Humpla  Lawsuit  Was  Not  an  Employer's  Liability. 

For  purposes  of  Part  II  of  this  Argument,  it  can 
be  assumed  that  the  Endorsement  Restricting  Poli- 
cy Coverage  (endorsement  No.  2)  was  never  written 
or  made  a  part  of  policy  LS-1214  because  it  will  be 
shown  that,  even  without  endorsement  No.  2,  the 
lawsuit  brought  by  Mr.  Humpla  and  the  settlement 
of  it  does  not  fall  within  Coverage  One(b)  of  the 
policy. 

The  Humpla  lawsuit  was  not  an  action  against  his 
employer,  but  against  the  owner  of  the  barge  on 
which  he  was  injured.  That  fact  is  borne  out  by  the 
history  of  the  Humpla  cause  of  action,  the  theory  of 
the  cause  of  action,  and  the  very  wording  of  the 
Complaint.  The  Humpla  Complaint  never  even  men- 
tioned that  appellant  was  his  employer  (Tr.  5-9). 
Appellee's  denial  of  coverage  is  not  based  merely  on 
the  wording  of  the  Complaint,  however.  It  is  also 
based  on  the  nature  and  history  of  the  Humpla 
cause  of  action. 

One  (b)  of  policy  LS  1214  would  cover  none  of  the 
historical  antecedents  which  developed  the  theory 
of  and  provide  the  authority  for  the  Humpla  suit : 

(1)  Seas  Shipping  Co.  v.  Sieracki,  328  U.S.  85, 
90  L.Ed.  1099,  66  S.Ct.  872(1946),  would  have 
been  the  authority  for  Humpla's  suing  appellant 
as  the  barge  owner  if  he  were  employed  by  an  in- 
dependent stevedore  company.  That  lawsuit 
would  not  have  been  covered  by  employer's  lia- 
bility insurance,  because  he  would  not  have  been 


13 

an  employee.  Rather,  it  would  have  been  covered 
by  the  barge's  insurance,  presumably  P&I. 

(2)  Ryan  Stevedoring  Co.  v.  Pan- Atlantic 
Steamship  Corp.,  350  U.S.  124,  76  S.Ct.  232,  100 
L.Ed.  133  (1955),  would  authorize  a  lawsuit  by 
the  barge  owner  against  appellant,  as  the  steve- 
dore employer  of  Humpla,  for  indemnity  to  the 
barge  owner  for  its  liability  to  Humpla,  if  the 
barge  were  separately  owned.  Such  a  liability  of 
an  employer  of  longshoremen  was  held  to  fall 
within  its  general  or  public  liability  policy  rather 
than  its  employer's  liability  policy  by  the  trial 
court,  and  affirmed  by  this  court,  in  Indemnity 
Ins.  Co.  V.  California  Stevedore  &  Ballast  Co., 
(CCA.  9, 1962) ,  307  F.2d  513: 

"The  subject  with  which  Exclusion  (c)  is  con- 
cerned is  Workmen's  Compensation  or  Employ- 
er's Liability,  or,  perhaps,  both.  The  shipown- 
ers' claims  in  the  case  at  bar  dealt  with  nei- 
ther." 

Similarly,  Coverage  One(b)  of  policy  LS-1214 
is  only  employer's  liability,  and  would  not  cover 
such  a  lawsuit,  which  presumably  would  fall 
within  the  coverage  of  appellant's  public  liability 
or  general  liability  policy. 

(3)  Reed  v.  SS  YAK  A,  373  U.S.  410, 10  L.Ed.2d 
448,  83  S.Ct.  1349  (1963),  put  the  harbor  worker 
employed  by  the  vessel  owner,  e.g.,  Mr.  Humpla, 
in  the  same  position  as  Sieracki  through  the  rea- 
soning of  Ryan. 

"Thus,  there  can  be  no  doubt  that,  if  the  peti- 
tioner here  had  been  employed  to  do  this  partic- 
ular work  by  an  independent  stevedoring  com- 
pany rather  than  directly  by  the  owner,  he 
could  have  recovered  damages  for  his  injury 


14 

from  the  owner  who  could  have  then  under 
Ryan  shifted  the  burden  of  the  recovery  to  peti- 
tioner's stevedoring  employer."  (At  Page  414) 

"We  think  it  would  produce  a  harsh  and  in- 
congruous result,  one  out  of  keeping  with  the 
dominant  intent  of  Congress  to  help  longshore- 
men, to  distiAguish  between  liability  to  long- 
shoremen injured  under  precisely  the  same  cir- 
cumstances because  some  draw  their  pay  direct- 
ly from  a  shipowner  and  others  from  a  steve- 
doring company  doing  the  ship's  service.  Peti- 
tioner's need  for  protection  from  unseaworthi- 
ness v/as  neither  more  nor  less  than  that  of  a 
longshoreman  working  for  a  stevedoring  com- 
pany." (At  Page  415) 

Hence,  it  follows  that  Paragraph  One(b),  Em- 
ployer's Liability,  of  LS-1214  would  not  cover  the 
YAKA  situation,  which  would  be  covered  by  the 
same  policy  as  Sieracki:  the  P&I  insurance  on  the 

vessel. 

The  split  of  insurance  coverage  in  the  YAKA  situ- 
ation was  recognized  in  White  v.  United  States 
Lines,  (D.C.  Md.,  1965),  254  F.Supp.  480  at  482, 
holding  a  suit  by  a  longshoreman  injured  before  the 
YAKA  decision  to  be  barred  by  laches  where  the 
prejudice  necessary  to  laches  was  found  in  the  fact 
that  compensation  insurance  did  not  cover  lawsuits 
for  unseaworthiness  and,  understandably,  the  insur- 
ance carrier  covering  the  suit  did  not  recognize  the 
risk  and  investigate  the  accident. 

The  accuracy  of  the  whole  analysis  that  the 
YAKA  is  the  shipowner's  liability  rather  than  an 
employer's  liability  was  confirmed  by  the  Supreme 
Court  in  Jackson  v.  Lykes  Bros.  SS  Co.;,  386  U.S. 
731,  18  L.Ed.2d  488,  87  S.Ct.  1419  (1967).  The  Su- 
preme Court  held  that,  because  of  Sieracki,  Ryan, 


15 

and  YAKA^  a  longshoreman  could  sue  the  vessel 
owner  in  personam  in  state  court,  in  spite  of  the 
facts  that  the  Longshore  Act  protected  the  employ- 
er from  such  a  suit,  and  the  owner  and  employer 
were  the  same  person. 

"We  held  in  Yaka  that  a  longshoreman  employ- 
ed by  a  shipowner  as  a  longshoreman  could  sue 
the  owner  for  the  ship's  unseaworthiness."  (At 
386  U.S ,  18  L.Ed.2d  980) 

"In  this  case  as  in  Yaka^  the  fact  that  the 
longshoreman  was  hired  directly  by  the  owner 
instead  of  by  the  independent  stevedoring  com- 
pany makes  no  difference  as  to  the  liability  of 

the  ship  or  its  owner."   (At  386  U.S. ,  18 

L.Ed.2d  491) .  (Emphasis  supplied) 

Consequently,  Humpla's  Complaint  was  proper 
when  it  alleged  unseaworthiness  against  appellant 
herein  because  it  owned  the  barge  on  which  Humpla 
was  injured,  and  when  it  failed  to  mention  that  ap- 
pellant herein  was  Humpla's  employer,  because  that 
fact  was  totally  irrelevant  to  Humpla's  cause  of  ac- 
tion. 

The  lawsuit  of  Humpla  was  therefore  a  "liability 
of  the  ship  or  its  owner"  and  within  the  coverage  of 
the  insurance  on  the  barge.  Humpla's  injury  was  not 
an  employer's  liability  beyond  the  provisions  of  the 
Longshore  Act,  and  was  not  therefore  covered  by 
One(b)  of  policy  LS-1214  (still  assuming  that 
Endorsement  Restricting  Policy  Coverage 
[endorsement  No.  2]  did  not  exist) .  If  appellant  had 
not  owned  the  barge,  Humpla  could  not  even  have 
brought  a  lawsuit  against  appellant  because  of  the 
immunity  provision  of  the  Longshore  Act,  as  was 
held  recently  by  the  Fifth  Circuit  in  Watson  v.  Gulf 
Stevedoring  Corp.   (CCA.  5,  1967),  374  F.2d  946, 


16 

cert,  denied  November  6,  1967,  No.  472, U.S , 

19  L.Ed.2d  277. 

Since  any  liability  to  Humpla  was  not  that  of  ap- 
pellant as  an  employer,  coverage  for  that  liability 
should  not  fall  within  Employer's  Liability,  One(b) 
of  policy  LS-1214,  but  rather  within  the  P&I  insur- 
ance on  the  barge. 

CONCLUSION 

Fireman's  Fund  policy  No.  LS-1214,  by  its  unam- 
biguous terms,  excluded  coverage  of  all  liability  but 
that  for  Longshore  Act  benefits,  which  were  paid  by 
appellee.  Endorsement  Restricting  Policy  Coverage 
(endorsement  No.  2)  clearly  spells  that  out. 

Additionally,  One(b)  of  the  policy  covers  only 
Employer's  Liability  in  any  event.  Liability  to  Hum- 
pla was  not  that  of  employer  but  of  shipowner,  and 
therefore  within  the  coverage  of  the  P&I  insurance, 
not  appellee's  compensation  policy. 

The  judgment  below  is  proper  and  should  be  af- 
firmed. 

Respectfully  submitted, 

Bogle,  Gates,  Dobrin, 
Wakefield  &  Long 
Thomas  J.  McKey 
Attorneys  for  Appellee 


CERTIFICATE 

We  certify  that,  in  connection  with  the  prepara- 
tion of  this  brief,  we  have  examined  Rules  18  and  lO'^  ^  v 
of  the  United  States  Court  of  Appeals  for  the  Ninth 
Circuit  and  in  our  opinion,  the  foregoing  brief  is  in 
full  compliance  with  those  rules. 

THOMAS  J.  McKEY 

Of  Attorneys  for  Appellee. 


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860  days  "or  12  moatbs 100% 


I-250  B-52     9 


No.  22343 

In  The 

United  States  Court  of  Appeals 

For  The  Ninth  Circuit 


Angus  J,  De  Pinto, 

Appellant, 


V. 


Hjalmar  B.  Landoe,  Francis  I.  Sabo, 
and  Edwin  B.  Pegram, 

Appellees, 


BRIEF  OF  APPELLEES, 

Hjalmer  B.  Landoe,  Francis  I.  Sabo, 

and  Edwin   B.  Pegram 


FILED 


Joseph  B.  Gary  .^  ^  ^  ^qr-o 

Suite  1,   Professional   BIdg.  "!«"    C.    I    '^OO 

Bozeinan,  Montana 

Attorney  for  Appellees,  ^M»  S.  LUCK^  CLERK 

Hjalmer  B.  Landoe, 
Francis  I.  Sabo, 
Edwin   B.   Pegram 


wAR^giSCS 


i 


I 


7 

INDEX 

Page 

I.  Statement  of  the  Case 3 

II.  Argument  -  Preliminary  matters 

A,  Matter  is  Res  Judicata 7 

B.  The  Cross-claim  failed  to  State  a 
Claim  Upon  Which  Relief  Can  Be  Granted 
Against  Landoe,  Sabo  and  Pegram 11 


i 


I 


2 

TABLE  OF  AUTHORITIES 
Cases 


Page 
Blakely    Oil    v.    Crowder,  292   P.2d  842 7 

Builders  Supply  Company  v.  McCabe,  366  Pa.  322, 
77    A.2d    368,    371,   24  A.L.R.2d  319 8 

Busy    Bee    Buffet    v.    Ferrell,  310   P.2d  817—11 

De Pinto  v.  Provident  Security  Life  Ins.  Co., 

323   F.2d   826,  836 6 

De  Pinto  v.  Provident  Security  Life  Ins.  Co., 

374    F.2d  37 6 

Thornton   v.    Marlsco,  425   P.2d  869 H 

U.  S.  V.  State  of  Arizona,  et  al, 

214    F.2d  389 14 


3 

No.  22343 
In  The 

United  States  Court  of  Appeals 

For  The  Ninth  Circuit 


Angus  J.  De  Pinto, 

Appellant, 


V. 


Hjalmar  B.  Landoe,  Francis  I. 
Sabo,  and  Edwin  B.  Pegram, 

Appellees. 


BRIEF  OF  APPELLEES, 

Hjalmer  B.  Landoe,  Francis  \.  Sabo, 
and  Edwin  B.  Pegram 


/.  Statement  of  the  Case 

For  a  complete  statement  of  the  case,  the 
motion  for  Summary  Judgment  made  by  Defendant, 
Landoe  on  De  Pinto's  cross-claim  should  be  set 
forth.  The  motion  was  as  follows:  (Transcript 
128) 


I 


4 

"A.  The  m£tter  of  the  cross-claim  is 
res  judicata  for  the  reason  that  the  trial 
court  has  previously  dismissed  the  cross- 
claim,  an  appeal  to  the  Circuit  Court  of 
Appeals  did  not  reverse  the  trial  court 
on  this  ground  and  for  that  reason  the  matter 
is  res  judicata. 

B.  By  the  substantive  law  of  the  State 
of  Arizona,  the  matter  is  res  judicata  for 
reason  that  the  cross-claimant  Angus  J. 
De Pinto  has  been  found  liable  for  the  neg- 
ligence and  a  breach  of  fiduciary  duty  to  the 
plaintiff  by  a  jury,  the  Circuit  Court  of  Ap- 
peals has  affirmed  the  judgment,  and  under 
Arizona  law  there  is  no  right  of  contri- 
bution or  indemnification  between  joint  tort- 
feasors, and  therefore  there  is  no  genuine 
issue  as  to  any  material  fact. 

C.  The  cross-claim  of  defendant  De  Pinto 
against  defendant  Landoe  fails  to  state  a 
claim  upon  which  relief  can  be  granted  for 
the  reason  that  under  Arizona  law  there  is 
no  right  of  contribution  or  indemnification 
among  joint  tortfeasors." 

The  motion  of  Sabo  and  Pegram  was  identi- 
cal and  the  memorandum  on  behalf  of  Landoe 's 
motion  was  adopted  by  Sabo  and  Pegram.  (Tr.  136) 

The  Court  then  made  a  memorandum  order  of 
summary  judgment  dismissing  the  cross-claim 
(Tr.  139-140)  and  likewise  dismissed  on  Sabo  and 
Pegram's  motion.  (Tr.  142)  Judgment  was  en- 
tered accordingly. 

//.  Argument 

Preliminary  matters. 

In    the    long    and    arduous    trail  of  this  case. 


5 
counsel  for  appellee  recall  the  comment  by  one 
of  the  learned  judges  of  the  Circuit  Court  when 
he  was  appearing  before  that  court  on  or  about 
the  third  or  fourth  occasion,  when  the  Judge  said 
that  he  enjoyed  seeing  counsel  but  hoped  that 
they  might  not  return  again  on  this  same  case. 
But  such  is  not  the  luck  of  the  court  or  counsel, 
and  once  again,  we  are  here  before  this  court 
on  a  different  matter. 

In  Cause  18,245  in  the  U.  S.  Court  of  Appeals, 
Volume  IV  of  the  Transcript  of  Record,  Page 
1710,  it  is  shown  that  motions  were  made  by 
Landoe,  Sabo  and  Pegram  to  dismiss  the  cross- 
claims  of  DePinto  against  these  particular  mov- 
ing parties.  The  Trial  Court  stated  on  Page  1711 
of  this  transcript,  in  granting  the  motion  the  fol- 
lowing: (Tr.  130) 

"The  cross  claims  of  DePinto  and  Duhame 
are  predicated  on  the  contention  that  their 
liability,  if  any,  is  vicarious  and  secondary 
to  that  of  the  defendants  against  whom  the 
crossclaims  are  asserted.  The  named  defen- 
dants cite  an  Arizona  case  discussing  pri- 
mary and  secondary  tort  liability  and  author- 
izing recovery  of  contribution  or  reimburse- 
ment to  those  held  in  the  second  category 
from  those  in  the  first  category.  Busy  Bee 
Buffet  V.  Ferrell,  82  Ariz.  192;  310  P. 
2d  817.  Under  the  particular  facts  of  this 
case  neither  DePinto  nor  Duhame  qualifies 
as  having  only  secondary  liability  as  defined 
and  applied  in  the  cited  decision.  Both 
DePinto  and  Duhame  are  found  and  held  to  be 
primary  joint  tortfeasors  and  may  not  re- 
cover contribution  under  Arizona  law.  For 
these  reasons  the  motion  of  defendants  Sabo, 
Pegram  and  Landoe  to  dismiss  the  cross- 
claims  of  defendants  DePinto  and  Duhame  is 
hereby  granted." 


6 

Subsequent  to  that  time,  trial  was  had  against 
the  appellant  De  Pinto  and  the  issues  were  limited 
to  the  matters  that  took  place  on  or  about  Octo- 
ber 18,  1957  in  Phoenix,  Arizona.  (De Pinto  vs. 
Provident  Security  Life  Insurance  Company,  374 
F.2d  37,  40.)  We  deem  it  important  to  point 
out  to  this  Court,  and  as  this  Court  has  previously 
noted,  that  at  the  4:00  p.m.  meeting  of  the  Board 
of  Directors  of  United  on  October  18th,  1957, 
that  appellant,  De  Pinto,  was  present  at  the  meet- 
ing, the  minutes  were  expressly  approved  by  him 
and  signed  by  him.  (Tr.52)  At  a  meeting  held 
subsequent  to  that  time,  at  4:15  p.m.  on  Octo- 
ber 18th,  De  Pinto  was  also  present  and  the 
appellees,  Frank  I.  Sabo  and  Edward  B.  Pegram, 
were  not  present,  they  being  residents  of  Mon- 
tana, and  were  actually  in  the  State  of  Montana 
at  that  time.  (Tr.  55).  Although  Sabo  and  Pegram 
were  appointed  to  the  Board  of  Directors  of 
United  Security,  Landoe  never  was  on  the  Board 
of  Directors  of  United,  and  he  likewise  was  ab- 
sent from  Arizona  at  all  times  when  the  complain- 
ed of  transactions  took  place.  (Tr.  52-58) 

Furthermore  it  is  important  to  note  that  at 
no  subsequent  time  did  Landoe  ever  become  a 
director  of  United  and  in  the  initial  ruling  by  this 
Court,  the  Court  held  that  liability,  if  any,  of 
Landoe  must  be  predicated  upon  that  of  negli- 
gence and  not  a  breach  of  a  fiduciary  duty  for 
the  fact  that  he  was  never  a  member  of  the  Board 
of  Directors  of  United.  This  Court  in  De  Pinto 
vs.  Provident  Security  Life  Insurance  Company, 
323  F.2d  826,  836,  said: 

"One  ground  for  the  judgment,  applicable  to 
all  of  the  appellants,  is  gross  negligence. 
Another  ground,  applicable  to  all  appellants 
except  Landoe,  is  breach  of  fiduciary  duty. 


7 

Since  the  grounds  for  the  motion  for  summary 
judgment  were  threefold,  we  shall  argue  these 
grounds  in  two  parts- -one  on  the  question  of  the 
matter  being  res  judicata,  and  secondly  on  the 
ground  that  the  cross-claim  failed  to  state  a 
claim  upon  which  relief  can  be  granted  for  the 
reason  that  under  the  Arizona  law  there  is  no 
right  of  contribution  or  indemnification  among 
joint  tortfeasors.  (Tr.  128). 

A.  Matter  is  Res  Judicata 

It  may  be  conceded  that  since  the  Circuit 
Court  did  in  its  initial  opinion,  323  F2d  826,  at 
838  state  that  there  were  certain  other  questions 
presented  on  the  appeal  that  were  not  decided, 
and  one  was  the  cross-claim  of  De Pinto  against 
Landoe,  Sabo  and  Pegram,  that  the  absence  of  a 
ruling  on  this  cross-claim  would  not  make  this 
issue  of  the  claim  res  judicata.  However,  we 
respectfully  submit  that  under  substantive  law 
of  Arizona  that  it  is  res  judicata. 

It  is  universally  recognized  that  in  the  ab- 
sence of  a  statute,  joint  tortfeasors  have  no 
right  of  contribution  between  one  another.  This  was 
established  in  Arizona  in  Blakely  Oil  vs.  Crowder, 
292  P2d  842.  The  facts  are  briefly  that  one  Rich- 
mond  brought  an  action  against  Blakely  for 
damages  for  personal  injuries  suffered  by  him, 
and  Blakely  permitted  a  judgment  to  be  entered 
against  Blakely  Oil.  Thereafter,  Blakely  brought 
a  claim  against  Crowder  alleging  that  Crowder 
Cattle  Company  was  negligent  in  permitting  its 
cattle  to  strag  upon  a  public  highway,  and  alleged 
that  this  was  the  active,  primary  and  efficient 
proximate  cause  of  the  injuries  to  Richmond.  The 
cattle  company  filed  a  motion  to  dismiss  the  third 
party  complaint,  and  contended  that  under  provis- 


8 

ions  of  Section  21-446,  1952  Cum.  Supp.  A.C.A., 
1939,  the  action  was  not  maintainable.  The  Court, 
on  page   843,  considering  Section  21-446  stated: 

"It  will  be  seen  from  the  above  quotation,  as 
amended,  the  right  of  a  defendant  to  bring 
in  a  third-party  defendant  is  limited  to 
persons  only  who  are  secondarily  liable  to 
the  original  defendant  and  who  are  not  pri- 
rnarily  liable  to  the  plaintiff  in  the  original 
cause  of  action.  If  the  third-party  defendant 
is  primarily  liable  to  the  original  plaintiff 
he  then  becomes  at  most  a  joint  tortfeasor 
with  the  third-party  plaintiff  and  under  such 
circumstances,  according  to  all  the  authori- 
ties in  the  absence  of  statute,  the  original 
defendant,  third-party  plaintiff,  may  not 
maintain  an  action  against  him  for  contri- 
bution."  (emphasis  supplied) 

The  court  then  went  on  to  consider  the  ques- 
tion of  primary  and  secondary  liability  from 
Builders  Supply  Company  vs.  McCabe.  366  Pa. 
322,  77  A.2d  368,  371,  24  ALR  2d  319.  Primary 
and  secondary  liability  will  be  considered  more 
completely  in  the  next  portion  of  the  Brief,  but  the 
court  held  that  inasmuch  as  the  defendant  had 
permitted  a  judgment  on  the  negligence  aspect 
to  go  against  him,  that  it  was  res  judicata  as  far 
as  his  primary  negligence  was  concerned,  and 
there  was  no  right  of  contribution.  The  court  on 
this  issue  said  on  page  844: 

"In  the  case  of  concurrent  or  joint  tort- 
feasors, having  no  legal  relation  to  one 
another,  each  of  them  owing  the  same  duty 
to  the  injured  party,  and  involved  in  an  acci- 
dent in  which  the  injury  occurs,  there  is 
complete    unanimity    among  the  authorities 


9 

everywhere  that  no  right  of  indemnity  exists 
on  behalf  of  either  against  the  other;  in 
such  a  case,  there  is  only  a  common  lia- 
bility and  not  a  primary  and  secondary  one, 
even  though  one  may  have  been  very  much 
more  negligent  than  the  other.  The  univer- 
sal rule  is  that  when  two  or  more  contri- 
bute by  their  wrongdoing  to  the  injury  of 
another,  the  injured  party  may  recover 
from  all  of  them  in  a  joint  action  or  he  may 
pursue  any  one  of  them  and  recover  from 
him,  in  which  case  the  latter  is  not  entitled 
to  indemnity  from  those  who  with  him  caused 
the  injury. 

The  court  further  said: 

"Applying  this  rule  to  the  instant  case  and 
assuming  for  the  purposes  of  this  opinion, 
but  not  deciding  the  question,  that  the 
cattle  company  was  negligent,  it  is  clear 
to  our  minds  that  Blakely  is  not  in  a  position 
to  maintain  a  cause  of  action  against  the 
cattle  company.  It  suffered  a  judgment  to  be 
rendered  against  it  in  the  original  cause  of 
action  in  a  large  sum.  The  fact  that  a 
settlement  of  the  causeof  action  was  reached 
by  stipulation  of  counsel  for  the  respective 
parties  prior  to  its  submission  to  the  jury 
makes  the  judgment  none  the  less  res 
judicata  as  the  fact  of  negligence  on  the  part 
of  Blakely  in  proximately  causing  the  col- 
lision and  the  consequent  injury  to  plaintiff. 
A  reading  of  the  McCabe  case  will  show  that 
all  of  the  authorities  are  in  accord  with  this 
statement.  The  contention  of  counsel  for 
Blakely  therefore  that  because  the  case  was 
not  submitted  to  the  jury,  there  was  no 
finding  of  negligence  on  the  part  of  Blakely 


I 


I 


70 

is  without  merit.  The  cause  of  action  as 
alleged  in  Blakely's  third-party  complaint 
against  the  cattle  company  shows  upon  its 
face  that  under  the  provisions  of  section 
21-446,  supra,  it  cannot  be  maintained.  The 
third-party  complaint  should  have  been  dis- 
missed on  the  motion  of  the  cattle 
company  ..." 

The  jury  in  the  instant  case  found  against 
DePinto  ,  and  this  court  in  374  F2d  37,  44  held 
that  the  evidence  was  sufficient  in  finding  DePinto 
guilty  of  negligence,  and  said: 

"The  jury  could  have  found  that  De  Pinto's 
failure  to  make  a  reasonable  investigation 
as  to  whether  the  ultimate  plan  would  ad- 
versely affect  United,  his  resignation  from 
the  board  of  directors  in  compliance  with 
Kelly's  request  and  without  having  made 
such  an  investigation,  and  his  failure,  as  a 
member  of  the  board  of  United,  to  fight  for 
the  best  interests  of  United,  considered 
together,  constituted  negligence  and  a  breach 
of  fiduciary  duty  and  was  a  proximate  cause 
of  the  loss  sustained  by  United  as  a  result 
of  the  October  18,  1957  transaction. 

We  therefore  conclude  that  the  evidence 
was  sufficient  to  warrant  a  jury  finding 
against  DePinto  on  the  negligence,  breach  of 
fiduciary  duty,  and  proximate  cause  issues 
raised  by  what  DePinto  states  to  be  the 
controlling  charges  against  him — those  set 
forth  in  Counts  VI  and  VII  of  the  Doig  com- 
plaint. It  follows  that  the  trial  court  did  not 
err  in  denying  the  motions  for  a  directed 
verdict,  and  for  judgment  notwithstanding  the 


n 

verdict,  made  on  the  ground  that  the  evid- 
ence was  inadequate  in  this  regard." 

Therefore,  the  conclusion  is  compelling  that 
since  De  Pinto  was  guilty  of  negligence  and  a 
breach  of  a  fiduciary  duty,  this  issue  is  res 
judicata  under  Blakely  Oil  Company  vs.  Crowder, 
supra,  and  the  trial  court  granting  the  motion 
for  summary  judgment  on  the  basis  of  res  judicata 
was  correct,  and  the  judgment  should  be  affirmed 
as  to  all  three  of  these  appellees,  Landoe,  Sabo 
and  Pegram. 

B.  The  cross-claim  failed  to  state  a  claim 
upon  which  relief  can  be  granted  against 
Landoe,  Sabo  and  Pegram. 

As  stated  above,  the  basic  Arizona  decision  of 
Blakely  Oil  Company  vs.  Crowder  295  P2d  842, 
843  establishes  that  in  the  absence  of  statute 
there  is  no  right  of  indemnification  between  joint 
tortfeasors.  Appellant,  however,  attempts  to  dif- 
ferentiate Busy  Bee  Buffet  vs.  Ferrell,  310  P2d 
817,  a  case  wherein  the  Supreme  Court  of  Ari- 
zona held  that  there  was  such  a  thing  as  primary 
and  secondary  tort-liability  under  limited  circum- 
stances and  that  the  secondary  tortfeasor  had  a 
legitimate  claim  against  the  primary  tortfeasor 
for  indemnification.  We  submit,  however,  that  the 
facts  of  the  situation  against  Busy  Bee  Buffet 
vs.  Ferrell  certainly  are  different  that  the  actual 
situation  of  the  case  of  bar,  different  that  Blakely 
Oil  vs.  Crowder,  and  is  distinguished  by  a  later 
Supreme  Court  case  of  Arizona  not  cited  by 
appellant,  but  decided  in  1967,  being  Thorton  vs. 
Marisco,  425  P2d  869. 

To  understand  Busy  Bee  in  its  proper  per- 
spective, you  have  to  state  the  factual  situation. 
The   Buffet  Company  leased  to  one  Pastis  a  res- 


12 

taurant  building.  The  building  had  a  trap  door 
covering  an  opening  leading  into  the  basement. 
Pastis,  the  tenant  in  possession,  left  the  trap 
door  open,  and  the  plaintiff,  Ferrell,  fell  in  the 
trap  door.  The  Plaintiff,  Ferrell,  sued  the  Buffet 
and  the  Buffet  cross-claimed  against  Pastis, 
the  tenant,  on  the  theory  of  the  right  of  indemnifi- 
cation. Pastis  was  in  control  of  the  premises. 
Buffet  was  not.  Pastis  had  left  the  trap  door 
open,  and  the  Buffet  Company  had  no  knowledge 
that  the  trap  door  was  open.  The  court  held  that 
the  light  of  these  facts  Pastis  became  primarily 
liable  to  Ferrell  for  the  injuries  he  sustained,  and 
Buffet  was  only  secondarily  liable.  The  court  con- 
sidered Blakely  Oil  Company  vs.  Crowder  Cattle 
Company.,  Builders  Supply  Company  vs.  McCabe 
and  Fidelity  &  Casualty  Co.,  and  cited  from  Fi- 
delity &  Casualty  Co.  of  New  York  the  same 
citation  set  forth  on  Page  16  of  appellant's  brief, 
but  we  call  the  court's  attention  to  the  last  sen- 
tence   of   this  citation  from   Fidelity  as  follows: 

"It  does  not  mean  that  the  joint  tortfeasor 
whose  negligence  is  the  lesser  can  have 
indemnity  from  the  other  for  damages  caus- 
ed by  the  concurring  negligent  act  of  both." 

Consic|ering  whether  in  the  case  at  bar  DePinto 
is  the  lesser  or  greater  tortfeasor  under  the  last 
quoted  differentiation  is  not  important.  The 
question  is  that  he  was  a  tortfeasor,  and  breach- 
ed a  duty,  and  that  this  was  a  proximate  cause 
of  damages  suffered  by  United.  This  being  the 
situation,     he    has    no    right    of    indemnification. 

This  is  most  clearly  shown  in  the  case  of 
Thornton  vs.  Marsico.  425  P2d  869.  This  case  is 
one  in  which  the  plaintiff,  Marsico,  brought  an 
action    against    Thornton,    a    highway    patrolman 


73  i 

and  the  State  of  Arizona,  for  injuries  received 
while  the  highway  patrolman  was  driving  within 
the  scope  of  his  employment.  Thornton,  the  patrol- 
man, and  the  state  cross-claimed  against  the  con- 
tracting company  that  had  built  a  detour  and 
against  Fidelity  Deposit  Company  of  Maryland  as 
the  company  who  had  issued  the  bond  for  the 
Fisher  Contracting  Company.  The  cross- 
claim  contended  that  Fisher  had  negligently  con- 
structed a  detour,  and  that  Thornton  was  only 
passively  negligent  in  driving,  and  that  therefore 
under  Busy  Bee  they  were  entitled  to  indemnifi- 
cation from  Fisher  Contracting  Company.  The 
Fisher  Contracting  Company  as  third  party  de- 
fendant moved  the  court  to  dismiss  the  third 
party  complaint  for  failure  to  state  a  claim. 
This  motion  was  granted  and  an  appeal  taken. 
The  court,  in  considering  this,  held  that  if 
both  persons  were  negligent  they  were  joint 
tortfeasors    and    stated    on  page   872   as  follows: 

"The  general  rule  which  is  followed  in 
Arizona  is  that  contribution  is  not  allowed 
among  joint  tortfeasors.  Blakely  Oil,  Inc. 
V.  Crowder,  80  Ariz.  .72,  292  P.2d842  (1956); 
United  States  v.  State  of  Arizona. 
9  Cir.,  214  F.2d  389  (1954)  reh.  den.  216 
F.2d  248  (1954). 

(8)  It  is  argued  that  Busy  Bee  Buffet  v. 
Ferrell,  supra,  changed  the  general  rule 
where  one  party  is  actively  negligent  and  the 
other  party  is  only  passively  negligent. 
We  do  not  believe  this  to  be  so.  What  the 
Supreme  Court  of  Arizona  said  was  that  when 
one  was  liable  because  of  a  duty  imposed  by 
law  although  he  had  not  actively  participated 
in  the  wrong  which  was  the  immediate  cause 
of   the    injury,    then    that    one    had    a    right 


14 

to  indemnity  from  the  party  who  actively 
cause  the  injury.  7  Ariz.  L  Rev.  59,  69. 
This  is  an  expansion  of  the  law  of  indemnity 
and  not  an  abrogation  of  the  law  of  non- 
contribution  among  joint  tort  feasors.  As 
the  Supreme  Court  said  in  Busy  Bee: 

"The  term  'difference  in  kind  and  char- 
acter' between  the  negligence  of  the  Buffet 
and  Fastis  must  not  be  confused  with 
'comparative  negligence'  or  'degrees  of 
negligence. '  " 

When  Thornton  drove  the  patrol  car  he  acted. 
This  act  excludes  him  from  the  category  of 
"without  personal  fault"  and  therefore  the 
third  party  plaintiffs  do  not  come  within 
the  purview  of  Busy   Bee   Buffet  v.  Ferrell. 

The    granting    of  the  motion  to  dismiss 
was  proper  as  to  count  one. " 

This  court  in  U.  S.  vs.  State  of  Arizona 
et  al.  214  F.2d  389  recognized  and  affirmed 
the  Arizona  law  that  there  was  no  right  of  con- 
tribution by  the  joint  tortfeasors.  The  U.  S. 
brought  a  third  party  complaint  against  the  State 
of  Arizona  after  a  judgment  had  been  recovered 
against  the  U.  S.  from  an  unexploded  bazooka 
shell  injuring  a  young  boy.  A  motion  to  dismiss 
the  third  party  complaint  was  granted  by  the 
trial  court  and  appealed  to  the  Circuit  Court  of 
Appeals,  Ninth  Circuit,  which  affirmed  the  dis- 
missal and  stated  on  page  392: 

"We  hold  herein  that  the  judgment  of  dis- 
missal of  the  third  party  claim  should  be 
affirmed,  and  we  do  it  upon  the  ground  that 
the  third  party  complaint  failed  to  state  a 
claim  for  the  reason  that  in  Arizona  the  law 


?5 

of  the  state,  in  the  absence  of  a  contract, 
in  a  case  such  as  this,  does  not  permit  one 
tort-feasor  to  recover  contribution  from 
another  tort-  feasor  liable  for  the  same 
injury. " 

The   Court  went  on  further  to  state  on  page  393: 

"We  hold  that  if  a  dismissal  was  proper  on 
any  ground,  jurisdictional  or  failure  to  state 
a  claim,  the  judgment  should  be  affirmed 
here,  irrespective  of  the  nonassignment  of 
grounds  by  the  court  or  its  assignment  of 
the  wrong  ground.  See  Town  of  South  Tuc- 
son V.  Tucson  Gas,  Electric  Light  &  Power 
Co.,  9  Cir.,  149  F.2d  847;  Le  Tulle  v. 
Scofield,  308  U.S.  415,  60  S.Ct.  318,  84 
L.Ed.  355.  However,  as  shown above,Arizona 
did  move  to  dismiss  generally  on  the  ground 
of  failure  to  state  a  claim. " 

It  follows  then  conclusively  that  since  it  has 
been  adjudicated  that  De Pinto  breached  his 
fiduciary  duty  and  was  guilty  of  gross  negli- 
gence in  relation  to  United  in  his  capacity  of 
director,  that  he  was  a  primary,  proximate  cause 
tortfeasor.  Being  such,  he  has  no  right  of  indemni- 
fication and  the  Busy  Bee  case  cannot  be  distort- 
ed to  grant  him  a  claim  against  these  appellees, 
and  the  same  ruling  that  was  made  in  Thornton 
vs.  Marsico,  supra,  should  have  been,  and  was 
made  by  the  trial  judge  in  this  case,  and  should  be 
affirmed. 

This  conclusion  is  most  compelling  as  con- 
cerns Landoe  for  he  was  never  a  member  of 
the  board  of  United  and  never  ratified  and  con- 
firmed these  acts  while  a  member  of  American's 
board.  This  is  coupled  with  the  fact  that  he,  as  well 
as  Sabo  and  Pegram,  were  not  present  in  Phoenix 


T6 

an  the  fateful  day.  They  did  not  participate  in  any 
Df  the  acts  where  the  assets  were  transferred 
from  United  to  Kelly.  From  this  we  contend  that 
liability  should  not  be  imposed  at  all  upon  Landoe 
and  if  it  were  imposed  on  Sabo  and  Pegram 
:hey  would  at  most  qualify  as  secondary  tort- 
feasors and  would  be  entitled  to  endemnification 
from  De  Pinto,  However,  Sabo  and  Pegram  did 
lot  seek  this  relief  and  therefore,  we  submit, 
:hat  once  and  for  all  this  case  should  be  laid  at 
rest,  the  appeal  denied,  and  the  matter  termin- 
ated. 

Respectfully  submitted. 


Joseph  B.  Gary 
Attorney  for  Appellees, 
Hjalmar     B.     Landoe,    Francis    1, 
Sabo,  and  Edwin  B.  Pegram 


I  certify  that,  in  connection  with  the  pre- 
paration of  this  Brief,  I  have  examined  Rules 
18  and  19  of  the  United  States  Court  of  Ap- 
peals for  the  Ninth  Circuit,  and  that,  in  my 
Dpinion,  the  foregoing  Brief  is  in  full  compli- 
ance with  those  rules. 


17 

Herbert  Mallamo 
Evans,  Kitchel  &  Jenckes 
363  North  First  Avenue 
Phoenix,  Arizona  85003 
Attorneys  for  Appellant, 
Angus  J.  De  Pinto 


A.^^fS^ 


:^ 


Joseph  B.  Gary 


Three  true  copies  of  the  foregoing  Brief  of 
Appellees,  Hjalmar  B.  Landoe,  Francis  I.  Sabo, 
and  Edwin  B.  Pegram  served,  via  First  Class 
Airmail,  postage  prepaid,  this  -^^  dav  of  March, 
1968,  upon:  /,^^vx  n^,^/      ^/^<7^/u^ 


No.  22243 


United   States   Court  of  Appeals 
For  the  Ninth  Circuit 


Pacific  Inland  Navigation  Co.,  Inc.,  Appellwnt, 

vs. 
Fireman's  Fund  Insurance  Company,  Appellee. 


Appeal  from  the  United  States  District  Court  for 

THE  Western  District  of  Washington 

Southern  Division 


BRIEF  OF  APPELLANT 


I 


Howard,  Le  Gros,  Buchanan  &  Paul 

Theodore  A.  Le  Gros 
Attorneys  for  Appellant 


Office  and  P.  O.  Address 

Central  Building  ^^  /  #  > 

Seattle,  Washington  98104  '  ^^^>% 

MAin  3-4990  ^^           '^  tj 


THE  ARGUS  PRESS  „^^^fy^  S  EATTLE,  WAB»f  I.NOTDN 


FEbi.  "^^ 


No.  22243 


United   States   Court  of  Appeals 
For  the  Nieth  Circuit 


Pacific  Inland  Navigation  Co.,  Inc.;,  Appellant, 

vs. 
Fireman "s  Fund  Insurance  Company,  Appellee. 


Appeal  from  the  United  States  District  Court  for 

THE  Western  District  of  Washington 

Southern  Division 


BRIEF  OF  APPELLANT 


I 


Howard,  Le  Gros,  Buchanan  &  Paul 

Theodore  A.  Le  Gros 
Attorneys  for  Appellant 


Office  and  P.  O.  Address 
Central  Building 
Seattle,  Washington  98104 
MAin  3-4990 


The  Argus  Pregs  a^^^^  Seattle,  Washinqton 


INDEX 

Page 

Jurisdiction    1 

Statement  of  The  Case  2 

Specifications  of  Errors  4 

Summary  of  Argument  4 

Argument   5 

I.  Appellant's  Liability  to  Injured 
Longshoreman    5 

IL  Law  of  Forum  to  Apply  6 

III.  The  Contract  of  Insurance  9 

A.  Applicable  Washington  Rules 

of  Construction  9 

B.  Analysis  of  The  Policy  12 

Conclusion 16 

Certificate   18 


TABLE  OF  CASES 

Continental  Casualty  Co.   v.  Thompson, 
369  F.2d  157   (9  CA  1966)   8 

Employers  Mutual  LidbiUty  Insurance  Co.  of 
Wisconsin  v.  Pacific  Inland  Navigation  Co., 
358  F.2d  718,  1967  AMC  1855  (9CA,  1966)     ..6,  11 

Holthe  V.  Iskowitz,  31  Wn.2d  533, 

197  P.2d  999   (1948)   11 

H oiling sworth  v.  Rohe  Lbr.  Co., 
182  Wn.  74,  45  P.2d  614  (1935)  10 

Insurance  Co.  of  N.A.  v.  General  Aviation  Supply 
Co.,  283  F.2d  590,  592  (CA  8,  1960)  12 

Reed  v.  S/S  YAKA,  373  US  410,  10  L.ed.  2d 
448,  83  S.Ct.  1349  (1963)  3,  4,  5 


TABLE  OF  CASES 

Page 
Seas  Shipping  Co.  v,  Sieracki,  328  U.S.  85, 

90  L.ed.  1099,  66  S.Ct.  872  (1946)  5 

Safeco  Ins.  Co.  of  America  v.  McManemy, 

72  Wn.Dec.  2d  212,  432  P.2d  537  (1967)  10 

S.  L.  Rowland  Construction  Co.  v.  St.  Paul  Fire 
and  Marine  Ins.  Co.,  72  W.Dec.  2d  675,  434 
P.2d  725   (1967)   9 

Town  of  Tieton  v.  General  Ins.  Co.  of  America, 
61  Wn.2d  716,  380  P.2d  127  (1963)  10 

Wilhurn  Boat  Co.  v.  Fireman's  Fund  Insurance 
Co.,  348  U.S.  310,  99  L.ed.  337,  75  S.Ct.  368, 
55  AMC  467  (1955)  6 

OTHER  AUTHORITIES 

Title  28,  Section  1291 2 

use  Title  28,  Section  1332  2 

44  C.J.S.,  Insurance,  §300,  page  1206 11 

44  C.J.S.  Insurance,  §300,  page  1208  12 


RULES 

Rules  of  Civil  Procedure,  Rule  75  2 


United   States   Court   of  Appeals 

For  the  Ninth  Circmit 


Pacific  Inland  Navigation 
COv  Inc.,  Appellants 


^^-  \  No.  22243 


FiREMAN^s  Fund  Insurance 
Company,  Appellee. 


Appeal  from  the  United  States  District  Court  for 

THE  Western  District  of  Washington 

Southern  Division 


BRIEF  OF  APPELLANT 


JURISDICTION 


This  civil  actioii  at  law  was  conmienced  by  com- 
plaint filed  in  the  United  States  District  Court  at 
Tacoma  by  the  appellant,  Pacific  Inland  Navigation 
Co.,  Inc.  against  the  appellee,  Fireman's  Fund  In- 
surance Company.  The  complaint  alleged  that  the 
appellant  was  a  Washington  corporation  and  the 
appellee  was  a  California  corporation  and  the  amount 
in  controversy  was  in  excess  of  $10,000,  exclusive  of 
interest  and  costs  (Tr.  1). 

The  appellee's  answer  admitted  these  jurisdictional 
allegations  (Tr.  13). 


The  jurisdiction  of  the  United  States  District 
Court  for  the  Western  District  of  Washington,  South- 
ern Division  is  based  upon  USC  Title  28,  Section 
1332. 

Summary  Judgment  in  favor  of  appellee  was  signed 
and  filed  on  July  31,  1967  (Tr.  45).  Thereafter,  ap- 
pellant duly  filed  its  Notice  of  Appeal  on  August  29, 
1967  (Tr.  53).  Accompanjdng  Notice  of  Appeal  was. 
Appeal  and  Supersedeas  Bond  in  proper  amount  and 
form  in  accordance  with  Rule  75,  Rules  of  Civil  Pro- 
cedure (Tr.  49). 

The  jurisdiction  of  the  United  States  Court  of  Ap- 
peals for  the  Ninth  Circuit  is  based  upon  Title  28, 
USC,   Section  1291. 

STATEMENT  OF  THE  CASE 

Appellant  brought  this  civil  action  to  compel  ap- 
pellee to  honor  its  contractual  obligation  to  indemnify 
appellant  against  loss  by  reason  of  liabilitj^  imposed 
upon  it  by  law  for  damages.  The  contract  in  question 
is  Fireman's  Fund  Insurance  Company  Policy  No. 
LS-1214  effective  June  1,  1964.  The  particular  ac- 
cident was  suffered  by  a  longshoreman  Friedolf 
Humpla  while  directly  employed  by  appellant  aboard 
one  of  its  barges  in  the  Port  of  Portland,  Oregon  on 
September  27,  1964. 

Humpla  subsequently  brought  suit  against  appel- 
lant in  reliance  upon  the  case  of  Reed  v.  S/S  YAKA, 
373  US  410,  10  L.ed  2d  448,  83  S.Ct.  1349  (1963) 
(Tr.  5).  That  suit  was  subsequently  tendered  for  de- 
fense to  appellee  which  said  tender  was  rejected  (Tr. 
1,  13).  Thereafter,  appellant  settled  the  Humpla  suit 


for  $35,343.85.  Of  this  amoimt  $30,000.00  was  paid  by 
appellant  and  the  remaining  balance  was  contributed 
by  appellee  through  waiver  of  its  statutory  lien  under 
the  Longshoremen  and  Harbor  Workers'  Compensa- 
tion Act  for  medical  expenses  and  compensation  paid 
(Tr.  14). 

The  basis  of  this  suit  is  the  policy  of  insurance 
identified  above.  For  convenience,  copy  of  this  policy 
is  attached  to  this  brief  as  an  appendix.  The  coverage 
upon  which  appellant  relies  is  set  forth  in  paragraph 
One  (b)  stating  in  part: 

"To  indemnify  this  employer  against  loss  by 
reason  of  the  liability  imposed  upon  him  by  law 
for  damages  on  account  of  such  injuries  to  such 
of  said  employees  as  are  legally  employed  wher- 
ever such  injuries  may  be  sustained  within  the 
territorial  limits  of  the  United  States  of  America 
or  the  Dominion  of  Canada  ..." 


I 


The  appellee  has  denied  coverage  for  this  loss  suf- 
fered by  appellant  maintaining  that  endorsement  No. 
2  restricted  policy  coverage  only  to  the  Longshoremen 
and  Harbor  Workers'  Compensation  Act.  Both  ap- 
pellant and  appellee,  feeling  that  this  was  solely  a 
question  of  construction,  filed  motions  for  summary 
judgment  (Tr.  19,  29).  Both  motions  were  heard  by 
the  court  below  which  thereafter  entered  its  summary 
judgment  on  July  31,  1967,  stating  in  part: 

"*  *  *  and  the  Court  having  found  that  there 

I  is  no  dispute  of  material  facts  concerning  the  in- 
surance contract  and  endorsements  thereto  is- 
sued by  Fireman's  Fund  Insurance  Company  as 
Policy  No.  LS-1214,  and  concluding  that  the 
language  of  said  contract,  as  endorsed,  did  not 
cover  the  liability  of  the  plaintiff  assured  in  a 
lawsuit  brought  under  the  authority  of  Reed  vs. 


4 

The  Yaka,  373  U.S.  410  *  *  *  "  (Tr.  45) 

The  judgment  concludes  by  dismissing  appellant's 
complaint  and  awarding  the  appellee  judgment  on 
its  counter  claim  in  the  amount  of  $5,343.85  expended 
by  it  under  waiver  of  its  statutory  lien  (Tr.  46). 

SPECIFICATIONS  OF  ERRORS 

1.  The  District  Court  erred  in  "concluding  that  the 
language  of  said  contract  [of  insurance],  as  endorsed, 
did  not  cover  the  liability  of  the  plaintiff  assured  in 
a  lawsuit  brought  under  the  authority  of  Reed  vs. 
The  Yaka,  373  US  410."  (Tr.  45). 

2.  The  District  Court  erred  in  dismissing  appel- 
lant's complaint  (Tr.  45). 

3.  The  District  Court  erred  in  awarding  appellee's 
judgment  on  its  cross-complaint  in  the  amount  of 
$5,343.85   (Tr.  45). 

4.  The  District  Court  erred  in  not  concluding  that 
appellee  was  obligated  under  coverage  One  (b)  to 
indemnify  appellant  for  its  loss  as  pleaded. 

SUMMARY  OF  ARGUMENT 

Appellant's  argument  will  develop: 

I.  Appellant's  liabilit}^  to  injured  longshoreman  — 
the  employer-employee  relationship,  the  applica- 
tion of  Reed  v.  SS  YAK  A; 

11.  Law  of  forum  to  apply  —  diversity  rule  requires 
application  of  State  law  even  though  a  Marine 
Insurance  policy  is  involved; 


♦ 


III.  The  contract  of  insurance  —  applicable  Washing- 
ton rules  of  construction,  consideration  of  the 
actual  contract  of  insurance  under  those  rules. 

ARGUMENT 

I— APPELLANT'S  LIABILITY  TO 
INJURED  LONGSHOREMAN 

In  Seas  Shipping  Co.  v.  Sieraciki,  328  U.S.  85,  90 
L.ed  1099,  66  S.Ct.  872  (1946),  the  doctrine  of  sea- 
worthiness was  extended  to  longshoremen  even  though 
an  injured  longshoreman  was  employed  by  an  inde- 
pendent contractor.  The  effect  of  this  decision  was  to 
alford  the  injured  longshoreman  recovery  against  a 
shipowner  under  its  warranty  of  seaworthiness. 

Since  §905  of  the  Longshoremen  and  Harbor  Work- 
ers' Compensation  Act  states  that  the  liability  of  "an 
employer  prescribed  in  §904  of  this  title  shall  be 
exclusive  and  in  jDlace  of  all  other  liability  of  such 
employer  to  the  employee  .  .  ."  the  question  was 
destined  to  arise  whether  an  injured  longshoreman 
could  recover  under  the  warranty  of  seaworthiness 
when  his  employer  was  also  the  owner  or  bareboat 
charterer  of  the  vessel.  In  dealing  with  the  question, 
the  Supreme  Court  in  Reed  v.  S/S  YAKA,  373  US 
410,  10  L.ed  2d  448,  83  S.Ct.  1349  (1963)  stated: 

T  "We  conclude  that  petitioner  was  not  barred 

by  the  Longshoremen's  Act  from  relying  on  Pan- 
Atlantic's  liability  as  a  shipowner  for  the 
Yaka's  unseaworthiness  in  order  to  support  his 
libel  in  rem  against  the  vessel."  Reed  v.  S/S 
YAKA,  10  L.ed  2d,  448,  453. 

Humpla's  action  was  thus  based  on  his  right  against 


his  shipowner-employer  under  the  warranty  of  sea-. 
worthiness  as  made  available  by  the  YAKA  decision.- 
Appellant  as  an  employer  in  settling  with  Humpla, 
its  employee,  brought  itself  within  coverage  of  pro- 
vision One  (b)  of  the  contract  of  insurance  in  issue. 

II— LAW  OF  FORUM  TO  APPLY 

Neither  appellant  nor  appellee  has  pleaded  or  ar- 
gued any  law  other  than  the  common  law  of  the 
forum.  That  state  law  rather  than  Federal  Maritime 
Law  controls  the  rights  and  liabilities  under  Marine 
Insurance  policies  was  settled  in  Wilbuni  Boat  Co.  v. 
Fireman's  Fund  Insurance  Co.,  348  U.S.  310,  99  L.ed. 
337,  75  S.Ct.  368,  55  AMC  467  (1955).  The  court; 
stated : 

"The  whole  judicial  and  legislative  history  of 
insurance  regulation  in  the  United  States  warns 
us  against  the  judicial  creation  of  admiralty  rules 
to  govern  marine  policy  terms  and  warranties. 
The  control  of  all  t.ypes  of  insurance  companies 
and  contracts  has  been  primarily  a  state  function 
since  the  states  came  into  being." 

Wilburn  Boat  Co.  v.  Fireman's  Fund  Insur- 
ance Co.,  99  L.ed  337,  344  (1955). 

The  principle  that  State  law  will  control  the  con- 
struction of  marine  insurance  contracts  has  been  ex- 
pressly recognized  in  this  circuit  in  Employers  Mu- 
tual Liability  Insurance  Co.  of  Wisconsin  v.  Pacifc 
Inland  Navigation  Co.,  358  F.2d  718,  1967  AMC  1855 
(9CA,  1966).  This  case  involved  the  question  whether 
the  insurance  policy  as  endorsed  covered  liability  of 
the  insured  to  the  Port  of  Pasco  for  damage  caused 
to  the  Port's  dock  by  j&re  originating  on  a  barge 
owned  by  the  insured.  Jurisdiction  was  based  on  di- 


versity.  Regarding  the  applicable  law,  the  Court 
stated : 

"Federal  diversity  jurisdiction  is  invoked.  The 
law  of  Washington  governs.  [See.  Wilburn  Boat 
Co.  V.  Fireman's  Fund  Ins.  Co.,  348  U.S.  310,  75 
S.Ct.  368,  99  L.ed.  337  (1955)  ;  Erie  R.  R.  Co.  v. 
Tompkins,  304  U.S.  64,  58  S.Ct.  817,  82  L.ed. 
1188  (1938.]" 

Employers  Mutual  Liahility  Insurance  Co.  of 

Wisconsin   v.    Pacific   Inland  Navigation   Co., 

358  F.2d  718,  719,  1967  AMC  1855  (9CA,  1966). 

These  cases  clearly  demonstrate  the  applicability  of 
state  law  to  a  marine  insurance  contract  such  as  is 
involved  in  this  case.  In  the  absence  of  pleading 
and/or  proof  of  foreign  law,  the  law  of  the  forum, 
that  is  the  connnon  law  of  the  State  of  Washington, 
should  govern.  This  conflicts  of  law  principle,  "the 
local  law  theory"  is  advocated  both  by  Ehrenzweig 
in  his  treatise.  Conflicts  of  Laws,  and  Currie  in  his 
work.  Selected  Essays  on  the  Conflict  of  Laws. 

Currie 's  conclusions  on  the  local  law  theory  regard- 
ing the  applicability  of  the  law  of  the  forum  are 
sununed  up  as  follows: 

"1.  The  normal  l)usiness  of  courts  being  the 
adjudication  of  domestic  cases  and  the  normal 
tendency  of  lawyers  and  judges  being  to  think  in 
terms  of  domestic  law,  the  normal  expectation 
should  be  that  the  rule  of  decision  will  be  sup- 
plied by  the  domestic  law  as  a  matter  of  course. 

"2.  The  court  should  ordinarily  depart  from 
this  procedure  only  at  the  instance  of  a  party 
wishing  to  obtain  the  advantage  of  a  foreign  law. 

"3.  The  law  of  the  forum,  as  a  source  of  the 
rule  of  decision,  should  normall}'  l)e  displaced 
only  by  the  interested  party's  timely  invocation 


8 

of  the  foreign  law.  The  interested  party  invokes 
the  foreign  law  by  calling  attention  to  its  rele- 
vance and  its  superior  claim  to  be  applied,  and 
by  informing  the  court  of  its  tenor.  ..." 

Selected  Essays   on   the   Conflict   of  Law,  by 
Currie,  Page  75 

A  recent  Ninth  Circuit  decision,  Continental  Cas- 
ualty Co.  V.  Thompson,  369  F.2d  157  (9  CA  1966) 
evidences  an  acceptance  of  the  local  law  theory  of 
conflicts  of  law  advocated  by  Ehrenzweig  and  Currie. 
In  this  regard,  the  court  stated: 

''In  this  diversity  case,  we  are  of  course  bound 
to  apply  the  law  as  would  the  Supreme  Court  of 
Washington.  In  the  court  below  appellant  as- 
serted that  the  proper  choice  of  law  should  be 
that  of  Washington,  D.  C,  where  the  master  pol- 
icy under  which  Thompson  was  insured  had  been 
delivered.  The  District  Judge  ruled  that  since  it 
had  not  been  shown  that  the  law  of  Washington, 
D.  C.  differed  from  that  of  the  State  of  Wash- 
ington, the  courts  of  the  State  would  apply  their 
own  law.  This  is  not  disputed  on  appeal." 

Continental   Cas.   Co.   v.   TJiompson,  369   F.2d 
157,  158  n.l  (9CA  1966). 

Thus  in  the  absence  of  any  applicable  foreign  law 
being  pleaded  in  the  lower  court,  the  law  of  the 
forum,  that  is  the  law  of  Washington,  is  applicable 
in  construing  this  insurance  contract.  This  contention 
is  supported  by  the  fact  that  since  this  appeal  is  made 
from  a  summary  judgment,  there  is  nothing  in  the 
record  sufficient  to  form  a  basis  for  the  application 
of  foreign  law. 


9 
III— THE  CONTRACT  OF  INSURANCE 

A.  Applicable  Washington  Rules  of  Construction: 

The  following  are  rules  of  contriietion  applicable 
to  coiistruiiig  iusiirance  ijolicies  in  Washington: 

1.  Exclusionarif  clauses  in  insurance  contracts  are 
strictly  construed  against  the  insurer.  This  construc- 
tion principle  was  most  recently  applied  in  S.  L. 
Roivland  C on st ruction  Co.  v.  St.  Paul  Fire  and  Ma- 
rine Ins.  Co.,  72  W.Dee.  2d  675,  434  P.2d  725  (1967). 
This  case  involved  action  on  a  tire  insurance  policy 
issued  to  a  liuilding  contractor  following  a  fire  in  a 
newly  constructed  residence.  The  fire  was  caused  by 
the  contractor's  placing  a  joist  too  near  the  firebox 
of  an  ui^stairs  fireplace.  The  policy  contained  an  ex- 
clusion which  stated  that  the  policy  did  not  apply  to 

"...  injury  or  destruction  of: 

(4)  any  goods,  products,  or  containers  thereof 
manufactured,  sold,  handled  or  distributed  by  the 
Insured,  or  work  completed  by  or  for  the  Insured, 
out  of  tvhich  the  accident  arises,  nor  to  costs  of 
repair  or   replacement  thereof."    (Italics   ours). 

S.  L.  Rowland  Construction  Co.  v.  St.  Paul 
Fire  and  Marine  Insurance  Co.,  72  Wn.  Dec. 
2d,  675,  679. 

It  was  not  clear  whether  the  exclusion  pertained  to 
all  portions  of  the  damaged  structure  or  only  to  the 
particular  part  of  the  structure  that  was  defective. 
In  holding  the  latter,  the  court  interpreted  the  am- 
biguity against  the  insurer  with  the  following  state- 
ment : 

"[1]  Our  determination  of  this  question  is  gov- 
erned by  the  established  rule,  as  stated  in  Labher- 


10 

ton  V.  General  Cas.  Co.,  53  Wn.2d  180,  182,  332 
P.2d  250  (1958)  : 

'  [T]he  law  in  Washington  is  settled  by  a  long 
line  of  cases  recently  reaffirmed  by  Selective 
Logging  Co.  v.  General  Cas.  Co.,  49  Wn.(2d) 
347,  301  P.  (2d)  535,  that  exclusionary  clauses 
are  strictly  construed  against  the  insurer.'  " 

S.  L.  Rowland  Construction  Co.  v.  St.  Paid 
Fire  and  Marine  Insurance  Co.,  72  Wn.  Dec. 
2d  675,  681. 

2.  The  meaning  most  favorable  to  the  insured  must 
be  applied  where  a  part  of  the  policy  is  susceptible  to 
two  different  meanings.  This  principle  was  recently 
recognized  in  Safeco  Ins.  Co.  of  America  v.  McMan- 
emy,  72  Wn.Dec.  2d  212,  432  P.2d  537  (1967).  In  this 
case  the  court  was  dealing  with  the  uninsured  motor- 
ist clause  of  an  automobile  policy.  The  Washington 
Supreme  Court,  contrary  to  the  trial  court,  found  an 
ambiguity  in  the  contract  and  applied  this  principle 
of  law  to  find  in  favor  of  the  insured. 

3.  The  meaning  and  construction  most  favorable  to 
the  insured  must  be  applied  even  though  the  insurer 
may  have  intended  another  meaning.  Safeco  Ins.  Co. 
of  America  v.  McManemy,  supra.  Town  of  Tieton  v. 
General  Ins.  Co.  of  America,  61  Wn.2d  716,  380  P.2d 
127  (1963). 

4.  In  construing  the  contract,  each  part,  if  possible, 
should  be  construed  so  that  all  parts  thereof  shall 
have  some  effect.  Safeco  Ins.  Co.  of  America  v.  Mc- 
Manemy, supra;  U oiling s worth  v.  Robe  Lbr.  Co.,  182 
Wn.  74,  45  P.2d  614  (1935). 

5.  Riders  or  endorsements  do  not  modify  or  super- 
sede provisions  in  the  basic  policy  unless  expressly 


11 

so  stated  in  the  rider.  The  Washington  court  in  Holthe 
V.  Iskotvitz,  31  Wn.2d  533,  197  P.2d  999  (1948)  cited 
44  C.J.S.,  Insurance,  §300,  page  1206  with  approval: 

"Rider  or  attached  slip.  As  a  general  rule,  a 
lawful  slip  or  rider  which  is  properly  attached 
to  a  policy  and  referred  to  therein  is  a  part  of 
the  contract  and  should  be  constructed  in  con- 
nection with  the  other  provisions  of  the  policy, 
and  the  entire  contract  should  be  harmonized 
therewith  if  possible.  Notwithstanding  the  attach- 
ing of  a  rider,  provisions  in  the  body  of  the  policy 
are  still  parts  of  the  contract  and  are  not  super- 
seded, waived,  limited,  or  modified  by  the  pro- 
visions of  the  rider,  except  to  the  extent  that  it 
is  expressly  stated  in  the  rider  that  the  provisions 
thereof  are  substituted  for  those  appearing  in  the 
bod}^  of  the  policy,  or  that  the  provisions  of  the 
rider  have  the  eifect  of  creating  a  new  and  dif- 
ferent contract  from  that  of  the  original  policy; 
and  except  where  the  provisions  in  the  policy 
proper  and  those  in  the  rider  are  in  conflict,  in 
which  case  the  latter  control  in  construing  the 
contract,  especially  where  the  provisions  of  the 
rider  are  the  more  specific'  " 

Holthe  V.  Iskowitz,  31  Wn.2d  533  541-542,  197 
P.2d  999,  1004  (1948). 

6.  The  typewritten  provision  of  a  policy  of  insur- 
ance controls  where  inconsistent  with  printed  por- 
tions. Holthe  V.  IskowUz,  31  Wn.2d  533,  197  P.2d  999, 
1004  (1948).  Employers  Mutual  Liahility  Insurance 
Company  of  Wisconsin,  358  F.2d  718,  719  (1966)  and 
cases  cited  therein. 

The  following  construction  principles  have  not  been 
specifically  enumerated  by  the  Washington  Supreme 
Court  but  may  fairly  be  inferred  to  be  accepted  by 
the  Washington  Court,  basically  because  of  their  con- 


12 

sistency  with  the  principles  already  enumerated: 

1.  A  later  numbered  endorsement  controls  one  ivith 
cm  earlier  nufnher.  This  principle  is  pointed  out  in 
44  C.J.S.  Insurance,  §300,  page  1208. 

2,  ''Having  affirmatively  expressed  the  coverage  in 
a  broad  promise  to  defend  and  to  indemnify,  it  was 
incumbent  on  the  company  to  define  the  exclusions 
from  that  promise  in  clear  terms/'  Insurance  Co.  of 
N.A.  V.  General  Aviation  Supply  Co.,  283  F.2d  590, 
592  (CA  8,  1960).  In  this  case,  the  Eighth  Circuit 
Court  of  Appeals  found  coverage  under  an  omnibus 
clause  in  an  aircraft  liability  policy. 

B.  ANALYSIS  OF  THE  POLICY 

Fireman's  Fund  Policy  No.  LS-1214  provides  for 
two  basic  coverages: 

''One  (a)  TO  PAY  PROMPTLY  to  any  person 
entitled  thereto,  under  the  Workmen's  Compen- 
sation law  and  in  the  manner  therein  provided, 
the  entire  amount  of  any  sum  due,  and  all  in- 
stallments thereof  as  they  become  due  .  .  . 

One  (b)  TO  INDEMNIFY  this  employer 
against  loss  by  reason  of  the  liability  imposed 
upon  him  by  law  for  damages  on  account  of  such 
injuries  to  such  of  said  employees  as  are  legally 
employed  wherever  such  injuries  may  be  sus- 
tained within  the  territorial  limits  of  the  United 
States  of  America  ..." 

Both  coverages  by  their  terms  are  such  as  to  require 
endorsements  in  order  to  make  them  complete.  For 
that  reason  and  for  others,  a  total  of  ten  endorsements 
are  attached  to  the  policy.  With  regard  to  coverage 


13 

one  (a)  printed  endorsements  1  and  2  were  attached 
so  as  to  particularly  describe  the  precise  workmen's 
compensation  law  intended;  that  is,  the  Longshore- 
men and  Harbor  Workers'  Compensation  Act.  In  that 
manner,  the  requirements  of  one  (a)(1)  were  satis- 
fied. 

Appellee  to  avoid  coverage  for  appellant's  loss  oc- 
casioned by  the  Humpla  injury  must  now  find  an 
interpretation  of  the  policy  so  as  to  completely  vitiate 
coverage  afforded  under  section  one  (b).  Appellee 
in  the  court  below  has  argued  that  by  endorsement  2 
all  coverage  afforded  by  this  policy  has  been  elimi- 
nated save  liability  under  the  Longshoremen  and 
Harbor  Workers'  Compensation  Act.  Appellee  points 
to  the  second  paragraph  of  endorsement  2  reading: 

"It  is  mutually  understood  and  agreed  that  ex- 
cept as  this  policy  may  be  otherwise  extended  by 
endorsement,  no  other  liability  of  any  nature 
whatsoever,  except  as  defined  by  the  said  Long- 
shoremen's and  Harbor  Workers'  Compensation 
Act,  is  covered  hereunder," 

as  the  basis  for  this  contention.  How  patent  is  the 
fallacy  of  this  argument  is  borne  out  by  the  fact  that 
elsewhere  in  the  contract  of  insurance  hj  subsequent 
endorsement  6  entitled  "Schedule  of  Operations" 
Fireman's  Fund  charges  a  premium  rate  for  work 
performed  of  a  nature  not  possible  of  being  covered 
under  the  Longshoremen  and  Harbor  Workers'  Com- 
pensation Act.  We  specifically  address  attention  to 
Code  6872  of  the  schedule  of  operations  covering  Ore- 
gon and  Washington.  Under  that  classification,  work 
of  a  nature  without  the  coverage  provision  of  the 
Longshoremen  and  Harbor  Workers'  ComiDensation 
Act  is  provided  for. 


14 

Section    903    of    the    Longshoremen    and    Harbor 
Workers'  Compensation  Act  provides 

''(a)  Compensation  shall  be  payable  under  this 
chapter  in  respect  of  disability  or  death  of  an 
employee,  but  only  if  the  disability  or  death  re- 
sults from  an  injury  occurring  upon  the  navig- 
able waters  of  the  United  States  (including  any 
dry  dock)  and  if  recovery  for  the  disability  or 
death  through  workmen's  compensation  proceed- 
ings may  not  validly  be  provided  by  State  law. 


As  interpreted,  many  of  the  operations  included  in 
the  schedule  of  operations  enumerated  in  endorsement 
6  are  completely  without  the  coverage  of  the  Act  in 
question.  The  only  effect,  therefore,  in  including  those 
provisions  in  endorsement  6  is  to  bring  those  opera- 
tions of  appellant  company  within  the  coverage  of 
section  one  (b).  As  an  endorsement  subsequent  in 
number  to  endorsement  2,  endorsement  6  has  added 
force  and  effect. 

That  coverage  aiforded  under  section  one  (b)  is 
fully  effective  notwithstanding  endorsement  2  is 
borne  out  by  typewritten  endorsement  4  entitled 
"Limitation  of  Liability  Endorsement  Paragraph  One 
(b),"  Being  a  typewritten  endorsement  under  rules 
of  insurance  contract  construction  it  is  entitled  to 
greater  effect  than  the  printed  endorsements  prior  to 
it  in  number.  Endorsement  4  places  a  limit  of  $100,000 
on  Fireman's  Fund  liability  with  regard  to  its  obli- 
gations under  section  one  (b).  Nowhere  in  this  en- 
dorsement does  Fireman's  Fund  in  any  respect  limit, 
qualify  or  restrict  the  coverage,  force  and  effect  of 
one  (b). 

Not  only  do  we  feel  that  the  preceding  comments 


15 

have  established  the  obligation  of  appellee  but  there 
are  other  areas  of  this  contract  of  insurance  written 
by  Fireman's  Fund  which  have  created  areas  of  doubt 
and  confusion  to  which  the  particular  rules  of  con- 
struction of  insurance  contracts  are  applicable. 

Endorsement  2  begins  in  its  first  sentence  with  a 
specific  limitation  of  coverage  directly  keyed  to  para- 
graph one  (a).  Appellee  would  then  argue  that  the 
limitation  proceeds  from  the  specific  to  the  general 
so  as  to,  in  its  later  paragraph,  eliminate  any  other 
liability  whatsoever  under  the  policy.  Our  courts  have 
held,  however,  that  notwithstanding  the  attaching  of 
an  endorsement,  provisions  in  the  body  of  the  policy 
are  still  part  of  the  contract  and  are  not  superseded, 
waived  limited  or  modified  by  the  provisions  of  an 
endorsement  except  to  the  extent  that  it  is  expressly 
stated  in  the  endorsement  that  the  provisions  thereof 
are  substituted  for  those  appearing  in  the  body  of  the 
policy. 

We  submit  that  the  construction  of  endorsement  2 
as  contended  by  ai3pellee  falls  far  short  of  this  re- 
quirement   of    exactness. 

Appellee  argued  in  the  court  below  that  paragraph 
one  (b)  of  the  coverage  was  effective  only  in  the  event 
of  the  circumstance  detailed  in  paragraph  3  of  en- 
dorsement 2;  that  is,  if  the  Longshoremen  and  Har- 
bor Workers'  Compensation  Act  were  declared  un- 
constitutional. It  is  the  position  of  appellee  that  only 
in  that  event  is  there  any  coverage  afforded  under 
one  (b).  The  particular  limiting  paragraph  of  en- 
dorsement 2,  however,  nowhere  states  that  this  is  the 
only  circumstances  under  which  one  (b)  is  to  have 
force   and   effect.   Again,   appellee   fails  to   show  by 


16 

clear  and  cogent  language  that  coverage  under  one  '  | 
(b)  is  so  restricted.  i 

The  fourth  paragraph  of  endorsement  2  makes  the 
endorsement  "subject  to  all  the  terms,  conditions  and 
agreements  of  policy  LS-1214."  Of  course,  one  of  the 
terms  and  conditions  of  this  policy  is  coverage  under 
one  (b). 

If  endorsement  2  is  read  as  appellee  argues,  this 
policy  in  question  is  nothing  more  than  coverage 
under  the  Longshoremen  and  Harbor  Workers'  Com- 
pensation Act.  Not  only  would  section  one  (b)  be 
eliminated  but  also  all  of  the  obligations  of  the  con- 
tract whereby  in  paragraphs  2,  3  and  4  appellee 
undertook  to  serve  the  employer  in  certain  regards 
as  to  inspection  of  work  places,  investigation  of  in- 
juries, settlement  of  claims,  to  defend  the  employer 
and  to  pay  costs  taxed  against  the  employer. 

We  submit  that  Fireman's  Fund  cannot  by  the 
language  employed  in  endorsement  2  completely  alter 
the  entire  insurance  contract  eliminating  coverage 
for  which  it  was  charging  and  collecting  a  premium 
and  destroying  contractual  obligations  which  it  had 
incurred. 


CONCLUSION 

Pacific  Inland  Navigation  Company,  Inc.,  for  valu- 
able consideration,  purchased  a  policy  of  insurance. 
It  has  performed  all  of  its  obligations  and  now  asks 
that  Fireman's  Fund  Insurance  Company,  in  turn, 
perform  its  contractual  obligation. 

The  injured  party  was  an  employee  covered  under 


17 

section  five  of  the  policy.  The  particular  injury  in- 
volved was  an  injury  covered  under  section  six  of 
the  policy.  The  injury  occurred  during  the  policy 
period  as  provided  by  section  seven  of  the  policy.  The 
loss  suffered  by  the  employer  was  within  policy  limits 
and  of  a  nature  as  covered  by  section  one  (b)  of  the 
policy. 

Clearly,  appellant  is  entitled  to  a  reversal  of  the 
judgment  below  and  direction  of  entry  of  a  judgment 
in  its  favor  according  to  the  prayer  of  its  complaint. 

Respectfully  submitted, 

HOWARD;,  Le  Gros,  Buchanan  &  Paul 

Theodore  A.  Le  Gros 
Attorneys  for  Appellant 


Office  and  P.  O.  Address 
Central  Building 
Seattle,  Wasliington  98104 
MAin  3-4990 


i 


No.  22,244 


IN  THE 


United  States  Court  of  Appeals 
For  the  Ninth  Circuit 


GrEORGE  L.  SlNHTH, 

VS. 

United  States  op  Aimerica, 


Appellant, 
Appellee. 


BRIEF  FOR  APPELLANT 


Pease,  Mayhew  &  Kassis, 

455  Capitol  Mall,  Suite  835, 
Sacramento,  California  95814, 

Attorneys  for  Appellant. 


A  r 


FILED 

MAR  1  2  1968 


pchnau-walih  printino  oo.,  ban  rnANCiaaa 


I 


Subject  Index 

Page 

Jurisdictional  statement  1 

Statement  of  the  case  2 

1.  Negligence  under  Florida  law 2 

2.  The  facts  of  this  case  4 

Specification  of  eiTors  relied  on  9 

I  and  II 

Error  in  ignoring  uncontroverted  evidence  of  negligence  10 

in 

Grounds  for  a  motion  for  new  trial  19 

Conclusion    22 


Table  of  Authorities  Cited 


Cases  Pages 

Barber  v.  Turbei-ville  (1954),  218  P.2d  34,  94  U.S.App.D.C. 
335    19 

Boe  V.  U.S.  (C.A.N.D.  1965),  352  F.2d  551 2 

Christopher  v.  Russell  (1912),  62  Pla.  191,  58  So.  45 16 

DeWald  v.  Quamstrom  (1952),  60  So.2d  919 11 

Hall  V.  Holland  (1950),  47  So.2d  889  11, 12, 16 

Howland  Inc.  v.  Montis  (1940),  143  Fla.  189,  196  So.  472  .  .       11 

Jacksonville  Journal  Co.  v.  Gilreath  (1958),  104  So.2d  865. .       11 


ii  Table  of  Authorities  Cited 

Pages 

Laguna  Royalty  Co.  v.  Marsh  (1965),  350  F.2d  817 19 

McNulty  V.  Hurtey  (1957) ,  97  So.2d  185 11 

Smith  Electric  Co.  v.  Hinkley  (1929),  98  Fla.  132,  123  So. 

564 11 

Smith  V.  Stone  (1962),  308  F.2d  15 19 

StUwell  V.  Travelers  Ins.  Co.  (1964),  327  F.2d  931  19 

Williams  v.  U.S.  (C.A.Ga.  1965),  352  F.2d  477,  appeal  after 

remand  379  F.2d  719 2 

Rules 

Federal  Rules  of  Civil  Procedure,  Rule  60(b)    (28  U.S.C. 

Rule  60) 19 

Statutes 

Federal  Tort  Claims  Act  (28  U.S.C.  1346(b),  2671  et  seq.)  2,10 

28  U.S.C.  1291   2 

28  U.S.C.  2674  2 

Texts 

18  Florida  Law  and  Practice,  Section  2,  p.  3 3 

18  Florida  Law  and  Practice,  Section  2,  pp.  15,  16 4 

Restatement  of  Torts,  Section  343  16 


No.  22,244 

IN  THE 

United  States  Court  of  Appeals 
For  the  Ninth  Circuit 


GrEORGE  L.  SmITH, 

Appellant, 

vs. 

United  States  of  Aimerica, 

Appellee. 

BRIEF  FOR  APPELLANT 


^ 


JURISDICTIONAL  STATEMENT 
This  is  an  appeal  from  a  filial  judgment  for  the 
defendant  entered  on  Febniaiy  27,  1967,  ]>y  the 
United  States  District  Court  for  the  Eastern  District 
of  California  (TR  62,  63)  on  the  cause  of  action 
pleaded  in  the  complaint  (TR  1,  2),  and  from  the 
trial  court's  denial  of  a  motion  for  new  trial  (TR 
77-81). 

The  pleaded  act  of  negligence  of  defendant  occurred 
on  or  about  May  23,  1963,  at  the  United  States  Naval 
School  of  Aviation  Medicine,  an  agency  of  the  United 
States  of  America,  in  Pensacola,  Florida.  The  com- 
plaint was  tiled  on  March  22,   1965,   and  thus  was 


within  hvo  years  of  the  contended  act  of  negligence 
(TR  1).  The  suit  is  against  the  United  States  of 
America  and  is  governed  bj  the  Federal  Tort  Claims 
Act,  28  U.S.C.  13:46(b)  and  2671  et  seq.  (TR  38,  39). 

The  trial  court  granted  judgment  for  the  defendant 
on  the  basis  that  under  the  evidence  the  defendant  was 
not  shown  to  be  negligent  (TR  63,  65).  Plaintiff,  on 
March  8,  1967,  filed  a  motion  for  a  new  trial  (TR  69) 
which  was  denied  on  April  24,  1967  (TR  77-81). 

Plaintiff,  on  Jmie  22,  1967,  filed  in  this  court,  a 
timely  Notice  of  Appeal  imder  28  U.S.C.  1291 
(TR  82). 


STATEMENT  OF  THE  CASE 

This  is  an  action  brought  by  George  L.  Smith  for 
damages  due  to  injuries  suffered  by  him  through  the 
negligent  acts  of  employees  and  agents  of  the  United 
States  of  America. 

1.     Negligence  Under  Florida  Law 

Under  the  pro^dsion  of  28  U.S.C.  2674,  the  United 
States  is  liable  for  its  torts  in  the  same  manner  and 
to  the  same  extent  as  a  private  individual  imder  like 
circiunstances.  This  has  been  interpreted  as  requiring 
the  application  of  the  law^  of  the  State  where  the  tort 
was  committed  to  the  facts  of  the  case.  Boe  v.  XT.  S. 
(C.A.N.D.  1965),  352  F.2d  551;  WiUiams  v.  U.  S. 
(CA.Ga.  1965),  352  F.2d  477,  appeal  after  remand 
379  F.2d  719. 


On  page  3,  Section  2,  of  Voliune  18  of  Florida  Law 
and  Practice,  negligence  is  defined,  generally  as  the 
failure  to  exercise  such  care  as  the  circumstances  de- 
mand.   This  statement  is  elucidated  by  the  following 
excerpt  from  pages  3  and  4  of  the  above  cited  work: 
^'The    Supreme    Coui-t    of   Florida    has    defined 
negligence  as  the  failm*et  to  observe,  for  the  pro- 
tection of  another's  interest,  such  care,  precaution 
and  vigilance  as  the  circumstances  justly  demand, 
or   the   failure    to    do   what    a    reasonal>le    and 
prudent  person  would  ordinai-ily  have  done  imder 
the  circiunstances,  or  the  doing  of  what  such  a 
person  would  not  have  done  under  the  circum- 
stances. 

"Actionable  negligence  arises  where  the  injury 
to  one  person  is  proximately  caused  by  the  failure 
of  another  to  exercise  such  reasonable  care  and 
diligence  as  should  have  been  exercised  imder  the 
circumstances  in  view  of  the  relation  of  the 
parties  to  each  other  at  the  time."  Negligence  is 
measured  by  conditions  at  the  place  and  time  of 
injury,  and  in  an  action  for  an  injury  occasioned 
by  the  alleged  negligence  of  a  person,  the  negli- 
gence, if  any,  of  such  person,  or  of  the  person 
injured,  is  to  be  measured  by  the  condition  of 
things  at  the  place  where  the  injury  took  place, 
as  they  were  known  to  exist  by  each  of  the  parties 
at  the  time  the  acts  of  each  are  complained  of  as 
being  negligent.^ 

"The  amoimt  of  care  which  a  person  is  required 
to  exercise  depends  on  a  large  measure  on  the 
extent  to  which  his  conduct  may  involve  a  risk  of 
harm  to  others,  and  as  the  likeliliood  that  others 
may  be  injured  increases,  the  amount  of  care 
which  should  be  exercised  also  increases,  and  acts 


that  might  be  considered  prudent  in  one  case 
might  well  be  negligent  in  another.*"  (Footnotes 
omitted.) 

A  further  expression  of  Florida  law  mth  reference 
to  the  duty  owed  by  a  person  to  business  invitee  is 
foimd  on  pages  15  and  16  of  the  above  cited  volume: 
''Those  who  expressly  or  impliedly  invite 
others  upon  their  premises  for  purposes  of  lawful 
business,  must  use  ordinary  and  reasonable  care 
to  maintain  the  premises  in  a  reasonably  safe 
condition  for  their  use  and  are  liable  for  derelic- 
tions in  such  respect  of  which  they  knew,  or  by 
the  exercise  of  reasonable  and  ordinary  care 
should  have  known.  A  person  who,  under  the  cir- 
cumstances, comes  on  the  premises  for  the  pur- 
pose of  transacting  business  with  the  oivner  is 
known  in  the  laiv  a^  an  invitee.^^  In  order  for  the 
relationship  of  invitor  and  in^dtee  to  arise,  the 
person  entering  onto  the  premises,  the  invitee, 
must  have  done  so  for  purposes  which  would  have 
benefited  the  owner  or  occupant  of  the  premises, 
the  invitor,  and  this  ]>enefit  must  be  of  a  material 
or  commercial  nature,  rather  than  of  a  spiritual, 
religious  or  social  nature.^*"  (Footnotes  omitted; 
emphasis  added.) 

2.     The  Facts  of  this  Case 

The  Pensacola  Study  of  Naval  Aviators,  popularly 
known  as  the  "Thousand  Aviator  Study"  began  in 
1940  when  1,056  student  aviators  and  flight  instructors 
were  examined  on  a  variety  o£  physiological  and 
psychological  parameters.  This  longitudinal  study  has 
been  continued  with,  follow-up  examinations  in  1951, 
1957  and  1963. 


Greorge  L.  Smith,  appellant,  at  the  time  of  the  in- 
ception of  this  study,  was  in  a  flight  school  training 
program  with  the  United  States  Navy  and  was  re- 
quested to  volunteer  as  a  participant  in  the  Thousand 
Aviator  program.  This  experimental  gi'oup  consisted 
of  a  portion  of  the  officers,  cadets  and  enlisted  men 
imdergoing  flight  training  in  Pensacola,  Florida, 
from  July,  1940,  to  May,  1941.  Mr.  Smith  partici- 
pated in  the  testing  program  through  the  years  in 
accordance  with  the  requests  which  he  received  from 
the  United  States  Naval  School  of  Aviation  Medicine 
(Plaintife's  Exhibits  2-1,  2-2,  4  and  5,  RT  22,  23,  35). 

In  1962,  Dr.  Fregly  became  a  member  of  the 
Vestibular  Psychology  branch  of  the  Naval  Aviation 
School  of  Medicine  at  Pensacola,  Florida  (RT  53). 
He  began  as  a  collaborative  researcher,  and  has  been 
active  in  the  Thousand  Aviator  Study  since  1963 
(RT  54).  Within  that  study,  he  is  responsible  for  the 
Postural  Eiquilibriiun  Test  Battery,  commonly  known 
as  the  ''Graybiel-Fregly  Ataxia  Test"  (RT  54).  This 
battery  is  composed  of  four  tests:  (1)  Standing  on  the 
floor  in  a  heel-to-toe  position  with  eyes  closed  foi-  a 
prescribed  period  of  time;  (2)  Walking  heel-to-toe 
with  feet  tandemly  aliened  on  a  %-inch  wide  rail  with 
arms  folded  across  the  chest  and  eyes  open;  (3) 
Standing  heel-to-toe  with  feet  tandemly  aligned  on  a 
%-inch  rail,  anns  across  the  chest,  eyes  open ;  and 
(4)  Standing  heel-to-toe  with  feet  tandemly  aligned 
on  a  2y4-mc-\\  rail  with  eyes  closed  and  arms  folded 
across  the  chest  (RT  54,  55). 


The  purpose  of  these  tests  is  to  enable  a  study  of 
the  effect  of  age  on  the  organs  of  balance  to  be  made 
(RT  62).  With  reference  to  the  Graybiel-Fregly 
Ataxia  Test,  "ataxia"  is  defined  as  a  loss  of  motor 
ability  or  motor  control  (RT  77).  "Vestibular  ataxia" 
is  defined  as  locomotor  skill  or  postural  equilibrium, 
as  further  defined  in  standing  with  eyes  open  and/or 
closed  insofar  as  defects  in  the  inner  ear  can  be  at- 
tributable as  the  source  for  the  loss  of  motor  ability 
or  postural  equilibriiun  (RT  78).  It  is  further  defined, 
with  reference  to  the  study  of  the  cardiovascular 
effects  of  aging,  as  the  base  line  study  of  balance  as 
a  function,  or  as  it  changes,  in  aging. 

Dr.  Pregly  adapted  this  test  from  an  older  equi- 
libriiun test,  his  contribution  to  it  being  the  addition 
of  the  positioning  of  the  testee's  arms  folded  across 
his  chest  for  the  purposes  of  limiting  those  skills  of 
balance  which  would  tend  to  enable  the  testee  to  have 
a  more  capable  balancing  position  by  use  of  the  body 
and  its  extensions  (RT  55,  57,  79,  82).  In  other 
words,  it  is  a  test  of  body  capacity  for  balance, 
especially  of  the  irnier  ear,  apart  from  the  learned 
skills  of  the  person  or  the  body  postures  which  he  is 
accustomed  to  using  for  balance  (RT  79). 

With  regard  to  the  effects  of  aging  upon  the  in- 
herent ability  to  l^alance  oneself,  Dr.  Fregly's  tests,  at 
the  time  appellant  (Mr.  Smith)  was  being  tested,  had 
shown  significant  differences  in  the  results  of  the 
ataxia  test  in  different  age  groups  (RT  84).  For 
example,  in  the  standing  tests,  that  group  comprised 
of  testees  from  the  ages  of  17  to  42  attained  a  score 


of  103.8  as  opposed  to  a  score  of  52  for  those  in  the 
age  group  of  43  to  50  (RT  86).  In  the  walking-  tests, 
the  score  for  the  age  group  of  17  to  42  was  12.5  steps, 
as  opposed  to  a  score  of  only  10.4  steps  for  the  gToup 
comprised  of  testees  of  the  ages  of  43  to  50  (RT  86). 
At  the  time  he  took  the  tests,  Mr.  Smith  was  the  age 
of  47  and  this  fact  was  known  by  defendant  at  that 
time  (RT  87,  90;  Plaintiff's  Exliibit  8). 

In  devising  these  tests,  Dr.  Fregiy  intentionally 
provided  for  the  exclusion  of  the  most  commonly 
used  and  most  efficient  means  of  l^alance  that  a  person 
has,  his  arms,  so  that  it  would  be  a  true  test  of  the 
inherent  balance  ability  of  the  testee  and  not  merely 
a  test  of  his  ability  to  regain  )>alance  or  to  use  his 
arms  or  other  balancing  mechanisms  to  achieve  or 
maintain  his  balance  (RT  79).  With  this  in  mind,  a 
%-inch  rail  was  used  for  the  test,  since  it  was  found 
that  a  rail  of  that  particular  width  gave  a  gTeater 
distribution  of  scores  (RT  69).  In  other  words,  a 
rail  of  the  size  upon  which  appellant  fell  was  known 
by  defendant  at  the  time  of  the  accident  to  have  a 
propensity,  more  than  rails  of  other  sizes,  to  cause 
testees  to  lose  their  balance  in  such  a  way  that  a  grad- 
ing of  the  scores  could  be  maintained  (RT  69). 

In  addition,  Dr.  Fregiy  required  that  the  testee's 
primary  l>alancing  faculties,  his  arms,  be  immo)>ilized 
and  thus  rendered  useless  in  case  of  a  loss  of  balance, 
by  having  the  testee  fold  his  arms  across  his  chest 
(RT  12,  55).  He  also  required  tandem  aligmnent  of 
the  feet  so  that  the  testee  would  have  as  little  use  as 
possible  of  the  foot  platform  as  a  balancing  agent 
(RT  55,  87,  89). 


Having  never  taken,  nor  having  in  any  way  ex- 
perienced, the  Graybiel-Fregly  posture  test  in  any  of 
the  previous  sessions  of  the  Thousand  Aviator  Study 
in  which  he  participated,  Mr.  Smith  was  unaware  of 
any  danger  inherent  in  the  procedure,  and  had  no 
apprehension  or  fear  of  doing  something  dangerous 
(RT  24).  Examinees  were  given  no  warning,  either 
visual  or  oral,  as  to  the  nature  of  the  tests  with  rela- 
tion to  the  fact  that  the  test  was  designed  to  test  the 
balance  of  the  person  and  that  his  chances  of  losing 
Ms  balance  were  increased  because  his  natural  balanc- 
ing faculties  were  eliminated  by  the  postural  require- 
ments of  the  test  (RT  25).  In  the  plaintiff's  opinion, 
there  was  nothing  particularly  hazardous  about  the 
rail  or  the  test  that  he  was  aware  of  or  was  informed 
of  (RT  24,  32).  No  protective  devices  were  used  to 
aid  the  person  being  tested  in  case  he  did  lose  his 
iDalance.  No  railings  or  guards  were  provided  (RT 
16,  17),  no  carpeting  was  put  around  to  cushion  any 
falls  (RT  19),  nor  were  there  any  persons  standing 
near  to  help  the  testee  regain  his  balance,  should  he 
start  to  fall  (RT  13,  80,  81). 

In  taking  the  test,  Mr.  Smith  did,  while  explicitly 
follo\^^ng  the  instructions  of  the  technician  adminis- 
tering the  tests,  lose  liis  balance,  and  fall,  striking  the 
metal  rail  on  which  he  was  walking  mth  his  right 
hip.  As  a  result  of  this  fall,  and  the  damage  resulting 
from  it,  the  trauma  caused  asceptic  necrosis  in  the 
right  femoral  head,  which  continues  and  which  will 
completely  degenerate  the  head  in  the  course  of  time, 
disabling  plaintiff  (TR  2). 


In  his  complaint,  the  plaintiff  soug-ht  to  hold  the 
United  States  liable  for  the  negligence  of  its  agents 
in  administering  this  test  (TR  1,  2). 

The  coui-t  foimd  that  plaintiff  was  injured  when 
he  fell  from  the  metal  rail  along  which  he  was  walkiag 
while  jDai-ticipating  in  the  Graybiel-Fregly  Ataxia 
Test  as  a  part  of  the  Thousand  Aviator  Study  at  the 
Naval  School  of  Aviation  Medicine  in  Pensacola, 
Florida ;  that  neither  Dr.  F'regly  nor  any  other  agent, 
servant  or  employee  of  the  United  States  was  negli- 
gent or  careless  in  allowing  the  plaintiff  to  take  the 
test  as  he  did;  that  plaintiff  failed  to  establish  the 
negligence  of  defendant,  or  any  of  its  agents,  servants 
or  employees,  and  therefore,  was  entitled  to  recover 
nothing  by  his  complaint  (TR  65) .  On  March  9,  1967, 
plaintiff  moved  the  court  to  set  aside  the  judgment 
entered  on  the  27th  of  February,  1967,  and  to  grant  a 
new  trial  on  the  grounds  of  newly  discovered  evidence 
(TR  69).  The  motion  for  new  trial  was  denied  on 
April  24,  1967  (TR  81),  and  this  appeal  followed 
(TR  82). 


SPECIFICATION  OF  ERRORS  RELIED  ON 

This  appeal  is  based  on  three  en'ors  of  the  trial 
court : 

I.  The  District  Court  ei-red  in  ignoring  the  uncon- 
troverted  evidence  that  the  government's  agents,  who 
were  in  a  position  of  superior  knowledge  and  control 
and  upon  whom  plaintiff  had  a  right  to  rely,  were 
negligent  in  the  conduct  of  the  test  which   injured 


10 


plaintiff  and  were  further  negligent  in  not  infoiTning 
plaintiff  of  the  dangers  inherent  in  the  test,  which 
dangers  were  known  only  to  them  and  could  not  be 
discovered  or  avoided  by  plaintiff  through  reasonable 
care  and  actions,  and  were  further  negligent  in  not 
protecting  plaintiff  from  the  injury  flowing  as  a 
natural  consequence  from  the  dangerous  situation  in 
which  they  placed  plaintiff. 

II.  The  District  Court  erred  in  finding  that 
there  was  evidence  to  support  an  order  that  there  was 
no  negligence  on  the  part  of  defendant. 

III.  The  District  Coui-t-  erred  in  denying  a 
motion  for  a  new  trial  on  the  groimds  that  the  evi- 
dence could  have  been  discovered  with  the  exercise  of 
due  diligence  and  that  it  would  not  have  changed  the 
opinion  of  the  court  if  a  new  trial  had  been  gTanted. 


I  and  II 


ERROR  IN  IGNORING  UNCONTROVERTED 
EVIDENCE  OF  NEGLIGENCE 

In  defendant's  pretrial  memorandiun,  it  was  stipu- 
lated that  the  substantive  law  of  the  State  of  Florida, 
where  the  accident  occurred,  is  controlling  in  this  case. 
28  U.S.C.A.  1346(b)  (TR  39). 

The  Supreme  Court  of  Florida  has  defined  negli- 
gence as  the  failure  to  observe,  for  the  protection  of 
another's  interest,  such  care,  precaution  and  vigilence 
as  the  circiunstances  justly  demand,  where  the  failure 
to  do  what  a  reasonable  and  prudent  person  would 


11 


ordinarily  have  done  under  the  circumstances,  Smith 
Electric  Co.  V.  HinUey  (1929),  98  Fla.  132,  123:  So. 
564;  DeWald  v.  Quarmtrom.  (1952),  60  So.2d  919, 
921.  Under  the  law  of  Florida  the  amount  of  care 
which  a  person  is  required  to  exercise  in  each  situa- 
tion depends  to  a  great  extent  on  the  likelihood  that 
liis  conduct  may  involve  a  risk  of  harm  to  others,  and 
for  this  reason,  acts  that  migiit  be  considered  reason- 
able in  one  case  might  well  be  negligent  in  another, 
Jacksonville  Journal  Co.  v.  Gilreath  (1958),  104  So. 
2d  865. 

It  has  been  admitted  that  plaintiff  held  the  rela- 
tionship of  an  invitee  to  defendant  since  i^laintiff  was 
on  the  property  of  defendant  for  the  purposes  of 
conducting  business  for  and  with  defendant  (RT 
120).  It  is  Florida  law  that  the  owner  or  occupant 
of  a  place  of  business  owes  to  an  invitee  who  is  on 
the  premises  in  pursuit  of  business  the  duty  to  exer- 
cise reasonable  care  to  maintain  the  premises  in  a 
safe  condition  and  to  guard  against  subjecting  the 
invitee  to  dangers  which  are  known  to  the  owner  or 
which  the  owner  might  reasonably  anticipate.  How- 
land  Inc.  V.  Morris  (1940),  143  Fla.  189,  196  So.  472; 
McNulty  V.  Hurley  (1957),  97  So.2d  185,  188. 

In  the  case  of  Hall  v.  Holland  (1950),  47  So.2d 
889,  a  case  decided  in  the  Supreme  Court  of  Florida, 
the  court  stated,  at  page  891,  that  the  owner-occuj)ier 
of  a  premises  has  the  duty  to  an  invitee 

"to  use  reasonable  care  in  maintaining  the  prem- 
ises in  a  reasonably  safe  condition  and  to  have 
given    plaintiff   timely   notice    and    warning    of 


12 

latent  and  concealed  perils,  known  to  the  defend- 
ant, or  which  by  the  exercise  of  due  care  should 
have  been  known  to  him,  and  which  were  not 
known  by  the  plaintiff.  ..." 

On  page  892  the  court  expanded  this  statement  by 

saying, 

"The  duties  to  keep  the  premises  safe  for  in- 
vitees extends  to  all  portions  of  the  premises 
which  are  included  within  the  invitation  and 
which  it  is  necessary  or  convenient  for  the  iu- 
vitee  to  use  or  visit  in  the  course  of  the  business 
for  which  the  invitation  was  extended,  and  at 
which  his  presence  should  therefore  reasonably 
be  anticipated  or  to  which  he  is  allowed  to  go." 

The  facts  of  the  case  at  bar  blend  in  perfectly 
with  the  statements  and  reasoning  of  the  court  in 
Hall  V.  Holland.  Here  we  have  a  case  where  the 
plaintiff  had  come  on  to  the  property  of  defendant 
for  the  purpose  of  conducting  business  with  the  de- 
fendant and  to  be  subjected  to  tests  for  the  benefit 
of  defendant  at  defendant's  request  so  that  defend- 
ant could  continue  and  complete  the  Thousand  Avia- 
tor Study  (RT  6,  7,  22,  23,  35). 

The  portion  of  the  "Thousand  Aviator  Study"  with 
which  we  are  concerned  in  this  case  is  the  "Graybiel- 
Fregly  Ataxia  Test."  On  page  77  of  the  Reporter's 
Transcript  on  Appeal,  Dr.  Fregly  defines  the  term 
"ataxia"  as  "a  loss  of  motor  ability."  Further  on  page 
77  he  defines  the  testing  of  vestibular  ataxia  as  "a 
test  of  the  loss  of  locomotor  skill  in  one  instance  or 
of  postural  equilibrium  as  further  defined  as  standing 


13 


with  eyes  open  and  closed  insofai-  as  defects  in  the 
ear  can  be  attributed  as  a  source  for  the  loss  of  this 
ability."  Dr.  Fregly  testified  further  as  reported  on 
page  79  of  the  Reporter's  Transcript  that  the  test  was 
devised  to  develop  a  stringent  ])ody  position  which 
would  rule  out  any  ginmiicks  or  anything  that  would 
lessen  the  scores  for  maintaining  the  balance,  such  as 
swinging  the  arms  or  letting  the  subjects  ad  hoc  body 
postures  which  would  give  all  sorts  of  scores  which 
would  eventually  be  meaningless  to  interpret. 

Dr.  Fregly  is  a  research  psychologist  at  the  Naval 
Aerospace  Medical  Institute.  He  is  employed  in  the 
vestibular  psychology  branch,  medical  sciences  divi- 
sion. He  was  instrumental  in  developiiig  the  Glray- 
biel-Fregly  Ataxia  Test  and  is  directly  responsible 
for  the  postural  equilibrium  test  battery  in  the  Thou- 
sand Aviator  Study  (RT  53,  54). 

As  described  by  Dr.  Fregly,  the  test  ''involved 
(1)  Standing  on  the  floor,  head-to-toe;  (2)  walking 
a  %-inch  wide  rail,  8  feet  in  length,  with  ©yes  open; 
(3)  standing  on  the  rail  with  eyes  open ;  (4)  standing 
on  the  21/4-inch  wide  rail  with  eyes  closed"  (RT  54, 
55).  As  depicted  on  page  58  of  the  Reporter's  Tran- 
script of  the  trial,  the  body  position  is  designed  so 
that  all  means  of  maintaining  balance  except  for  the 
use  of  the  head  are  eliminated.  On  page  87  of  the 
Reporter's  Transcript,  Dr.  Fregly  describes  the  po- 
sition of  the  feet  of  the  testee  as  being  tandemly 
aligned  "so  the  tandem  alignment  narrows  the  base 
of  support  as  much  as  it  can  be  narrowed."  On  page 
88  he  amplified  this  by  a  statement  that  the  purpose 


14 


of  tlie  tandem  alignment  is  to  narrow  the  base  of 
support  to  get  more  at  the  mner  ear  contribution  to 
maintain  balance  and  to  make  a  greater  demand  on 
the  balance  sensation  from  the  imier  ear. 

Additionally,  on  pages  62  and  87  of  the  Reporter's 
Transcript,  Dr.  Fregly  states  that  the  balance  test  is 
used  to  study  the  effect  of  age  on  the  organs  of  bal- 
ance. He  testified  that  there  is  adequate  and  signifi- 
cant evidence  that  there  is  a  marked  change  in  the 
balance  results  of  tested  individuals  between  the  ages 
of  42  and  43.  In  the  group  from  17  to  42  years  old 
the  score  was  103.8  and  the  group  comprised  of  43 
to  50  year  olds  scored  52.  These  scores  were  compiled 
in  the  test  of  standing  with  eyes  closed  on  the  rail. 
In  the  test  of  walking  on  the  rail,  the  17  to  42  year 
old  group  scored  12.5  steps  while  the  43  to  50  year  old 
group  scored  only  10.4  steps.  At  the  time  of  the  test 
appellant  was  47  years  of  age  and  Dr.  Fregly  admit- 
ted that  at  the  time  he  tested  appellant  he  knew  that 
a  person  of  his  age  would  probably  be  less  successful 
on  the  rail  than  a  younger  person  would  be  (RT 
84,  86). 

Of  paramount  importance  in  this  case  is  the  re- 
lationship of  the  parties  in  terms  of  the  superior 
knowledge  of  defendant's  agent  and  the  right  of 
plaintiif  to  rely  thereon.  As  co-originator  and  co- 
designer  of  the  Graybiel-Pregly  Ataxia  Test,  Dr. 
Fregly  was  also  the  person  in  charge  of  conducting 
the  test  at  the  time  that  appellant  was  injured  (RT 
54).  As  detailed  above,  he  was  in  a  position  of  supe- 
rior and  prior  knowledge  as  to  not  only  the  nature 


15 


of  what  was  being  tested,  i.e.,  the  inherent  balance 
of  persons  of  differing  ages  and  how  this  balance 
was  affected  by  the  effects  of  age  and  aging,  but  also 
was  in  such  a  position  with  reference  to  the  dangers 
inherent  in  this  test  in  that  the  testing  of  balance 
necessitates  the  conclusion  that  some  testees  would 
lose  their  balance  (RT  82,  86).  Were  it  otherwise, 
no  "test"  would  occur,  for  it  proves  nothing  scien- 
tifically or  practically  if  all  parties  being  tested  are 
able  to  achieve  a  perfect  score. 

Plaintiff,  on  the  other  hand,  was  ignorant  not  only 
of  the  nature  of  the  test  but  of  its  dangers.  In  the 
previous  years  in  which  he  had  volunteered  his  serv- 
ices to  the  United  States  Government  in  the  conduct 
of  the  Thousand  Aviators  Study,  the  Graybiel- 
Fregly  Ataxia  Test  had  never  been  administered  (RT 
54).  Therefore,  he  was  completely  unfamiliar  with  it, 
its  results,  and  its  dangers  and  justifiably  relied  on 
the  persons  conducting  the  test  to  administer  it  in  a 
safe  manner  with  protection  from  dangers  inherent 
therein. 

This,  then,  adds  to  the  relationship  of  owner-occu- 
pier and  invitee  the  fact  that  the  owner-occupier  is 
in  a  position  of  superior  knowledge  in  a  situation  in 
which  the  invitee  is  relying  on  the  owner-occupier  for 
instructions,  guidance  and  counselling  in  the  conduct 
of  these  inherently  dangerous  tests. 

By  Dr.  Fregly's  own  admissions  the  very  purpose 
and  nature  of  these  tests  were  to  find  out  at  what 
point  and  how  frequently  the  testees  would  lose  their 


I! 

balance  under  certain  uniform  conditions  designed  to 
induce  the  loss  of  balance  (RT  48,  62,  78,  84).  As 
outlined  above,  a  test  of  balance  would  not  be  a  test 
at  all  if  it  were  not  probable  that  some  of  the  testees 
would  in  fact  lose  their  balance.  A  test  in  which  per-  ■ 
feet  results  may  be  reached  by  all  testees  is  not  a  test 
at  all,  but  a  mere  recordation  of  man's  normal,  ex- 
pected fimctions.  From  this,  then,  it  is  seen  that  it 
was  not  only  within  the  realm  of  possibility  that  a 
person  would  lose  his  balance  while  taking  the  Gray- 
biel-Fregly  Ataxia  Test,  but  it  was  a  great  proba- 
bility that  this  would  be  so,  and  in  fact  this  is  what 
happened  in  the  case  of  the  plaintiff,  who  lost  his 
balance,  and  fell  to  the  rail,  causing  the  injury  com- 
plained of  (RT  18,  TR  2,  65). 

Relating  this  back  to  the  statement  and  require- 
ments of  the  Florida  Supreme  Court  in  Hall  v.  Hol- 
land, supra,  appellant  was  given  neither  the  timely 
notice  of  or  warning  of  latent  and  concealed  perils 
which  were  known  to  the  defendant  and  not  known 
by  appellant,  nor  did  appellee  fulfill  his  duty  to  keep 
the  premises  safe  for  invitees  in  the  realm  of  things 
included  within  the  invitation  and  which  were  neces- 
sary and  convenient  for  the  invitee  to  use  or  visit  in 
the  course  of  the  business  for  which  the  invitation 
was  extended.  (See  Christopher  v.  Russell  (1912),  62 
Fla.  191,  58  So.  45;  Restatement  of  Toi-ts,  Sec.  343.) 

From  the  records,  as  related  above,  we  find  uncon- 
troverted  facts  which  show  that  defendant  was  con- 
ducting a  test  of  balance  on  a  person  who  not  only 
had  no  knowledge  of  the  purpose  and  dangers  of  the 


17 


test,  but  of  one  who  imknowingly  was  in  an  age 
bracket  in  which  the  dangers  of  losing  one's  balance 
were  much  greater  than  those  for  a  younger  person; 
that  appellee  knew  of  these  dangers  and  understood 
them  and  did  not  warn  appellant  of  them;  that  in 
instructing  appellant  in  the  manner  in  which  to  take 
the  test,  all  possible  means  of  restricting  and  elimi- 
nating appellant's  natural  balance  maintainmg  fac- 
ulties were  removed;  that  the  test  itself  was  inher- 
ently dangerous  since  it  required  a  person  to  walk 
on  a  very  narrow  metal  rail  without  benefit  of  the 
use  of  a  man's  normal  balancing  aids,  the  extremities, 
and  wdth  the  feet  placed  in  an  awkward  position,  a 
difficult  task  in  itself  even  when  not  performed  on 
a  rail. 

In  addition  to  these  factors,  and  will  full  cognizance 
of  the  above  described  dangers  and  a  full  realization 
of  the  fact  that  when  a  person  is  being  tested  for 
balance  it  is  reasonable  to  assume  that  a  few  wdll  lose 
theii'  balance  and  in  losing  their  balance  it  is  even 
more  reasonable  to  assume  that  some  may  fall,  de- 
fendant made  no  attempt  in  any  mamier  or  in  any 
way  to  guard  against  the  possibility  or  probability  of 
falls  resulting  from  the  loss  of  balance  following  as 
a  normal,  reasonal>le,  expected  result  of  the  test,  which 
falls  were  a  natural  consequence  of  the  test  being 
administered.  Nor  were  any  guard  rails,  hand  rails, 
padduigs,  or  other  special  attempts  made  to  minimize 
the  danger  of  injury  once  the  fall  occurred.  Only  one 
technician  was  in  any  proximity  of  plaintiff  when  he 
was  taking  the  test  and  that  person  not  only  was  too 


18 


far  away  to  be  of  any  assis-taiice,  but  he  was  occu- 
pied and  pre-occupied  with  the  technical  asiDects  of 
the  administration  of  the  test  to  each  individual  in 
that  he  was  recording  data  and  review^ing  the  list  of 
things  to  be  covered  in  the  test  (RT  13,  14,  80).  Dr. 
Fregiy  was  in  the  room  supervising  the  conduct  of  the 
test,  but  was  sitting  behind  a  desk  twelve  feet  away, 
was  not  watching  for  falls,  did  not  see  appellant  fall, 
and  could  not  have  helped  if  he  had  (RT  80,  81). 

In  conclusion  then  we  urge  that  the  court  look  to 
the  uncontroverted  facts  and  find  that,  as  a  matter 
of  law,  defendants  w^ere  negligent  to  the  invitee  who 
had  volunteered  his  services  for  the  benefit  of  the  de- 
fendant in  that  they  had  placed  him  in  a  potentially 
dangerous  situation  which  was  fully  appreciated  by 
defendant's  agents,  and  not  appreciated  or  understood 
at  all  by  appellant,  without  giving  apiDellant  any  warn- 
ing of  these  dangers,  and  that  in  so  doing,  they 
breached  the  duty  which  had  arisen  between  appel- 
lant and  appellee  because  of  the  inviter-invitee  rela- 
tionship. That  as  a  proximate  result  of  this  breach, 
IDlaintilf  was  caused  to  lose  his  balance  and  to  fall  m 
a  situation  al^out  which  he  had  no  warning  and  against 
which  he  was  prevented  from  protecting  himself  by 
the  nature  of  the  test,  thereby  striking  his  hij:)  upon 
the  iron  rail  injuring  himself  in  such  a  maimer  as  to 
be  crippled  for  life. 

For  these  reasons  and  on  these  facts,  we  urge  that 
defendant  be  held  negligent  as  a  matter  of  law  in  in- 
struetmg  plaintilf  to  take  a  test  of  balance,  knowing 
that  plaintift*  was  unaware  of  the  dangei^  inherent 


19 


therein,  in  sucli  a  maimer  as  to  deprive  plaintiff  of  his 
natural  balancing  safeguards  without  informing  plain- 
ti:ff  of  the  danger  and  without  making  any  pro\T.sion 
to  protect  him  from  that  danger. 


Ill 

GROUNDS  FOR  A  MOTION  FOR  NEW  TRIAL 

Rule  60(b)  of  the  Federal  Rules  of  Civil  Procedure 
(28  U.S.C.  Rule  60)  provides  that  the  court  may  re- 
lieve a  pai-ty  from  a  final  judgment  for  several  rea- 
sons, one  of  w^hich  is  "newly  discovered  evidence, 
which  by  due  diligence  could  not  have  been  discovered 
in  time  to  move  for  a  new  trial  mider  Rule  59(b)." 
It  is  well  settled  that  this  rule  should  be  given  a  lib- 
eral construction  in  order  to  do  justice  and  to  pre- 
vent hardship  upon  the  party.  Barber  v.  TurberviUe 
(1954),  218  F.2d  34,  94  U.S.App.D.C.  335;  Laguna 
Eoijalty  Co.  v.  Marsh  (1965),  350  F.2d  817. 

It  is  generally  held  that  motions  for  relief  from 
final  judgment  on  the  grounds  of  newly  discovered 
evidence  are  within  the  discretion  of  the  trial  judge. 
This  discretion  is  not  an  arbitrary  one,  but  must  be 
based  on  a  sound  discretion  guided  by  accepted  prin- 
ciples. Smith  V.  Stone  (1962),  308  F.2d  15,  17.  In  the 
case  of  Stilwell  v.  Travelers  Ins.  Co.  (1964),  327  F.2d 
931,  at  page  933,  the  court  held  that  the  trial  court's 
refusal  to  grant  relief  from  jud.gment  on  the  grounds 
of  newly  discovered  evidence  because^  the  trial  eourt 
concluded  that  the  moving  party  had  onh-  presented 


20 


a  different  opinion  based  on  facts  already  presented 
in  the  original  trial,  constituted  the  application  of  an 
incorrect  standard  and  an  abuse  of  the  trial  court's 
discretion. 

In  the  case  at  bai'  the  plaintiff  made  a  motion  for 
a  new  trial  on  the  groimds  that  he  had  discovered 
eWdence  of  which  he  was  ignorant  at  the  time  of  trial 
and  which  he  could  not  have  discovered  even  wdth  the 
exercise  of  due  diligence.  The  new  evidence  had  to 
do  wdth  three  areas  of  testimony  which  are  a  part  of 
the  record  (TR  70,  71,  72,  74,  75). 

The  first  such  area  of  testimony  had  to  do  with  the 
question  of  the  surface  of  the  rail  which  plaintiff 
walked  as  a  part  of  the  test  which  he  took  during 
the  Thousand  Aviator  Study.  Had  this  evidence  been 
introduced  at  the  time  of  trial  it  would  have  estab- 
lished the  fact  that  defendant  had  been  negligent  in 
conducting  the  test  on  a  rail  which  was  by  its  nature 
dangerous  because  there  was  no  provision  made  to 
prevent  slippage  of  the  testee's  foot  or  to  maintain 
the  rail  in  such  a  manner  as  to  prevent  the  deteriora- 
tion of  such  precautions  (TR  72,  76). 

For  the  second  area  of  testimony,  the  evidence 
would  show  that  contrary  to  the  statement  of  the 
exammer,  plaintiff  and  other  witnesses  had  not  been 
s-iven  written  instructions  on  how  to  take  the  test. 
For  that  reason  plaintiff  was  not  warned  and  had  no 
sufficient  miderstanding  of  the  nature  and  intrinsic 
dangers  of  the  test  as  claimed  by  defense  counsel 
(TR  72,  74). 


21 


The  third  area  of  testimony,  would,  if  introduced, 
establish  that  defendant  had  conducted  the  test,  not 
only  in  contravention  of  logic  and  reasonable  stand- 
ards of  safe  conduct,  but  also  contrary  to  the  instruc- 
tions and  the  rationale  of  the  person  who  had  invented 
the  test  in  that  the  test  booklet  requires  tliat  the  test 
be  given  with  the  amis  folded  across  the  chest  (TR 
78)  ;  however,  both  plaintiff  and  another  witness  would 
testify  that  contrary  to  this  insti'uction  they  were  al- 
lowed to  take  test  with  his  choice  of  either  folding 
his  arms  across  his  chest  or  holding  his  arms  flat 
against  his  sides  (TR  74,  78). 

Based  on  this  new  evidence,  the  coui't  w^ould  have 
to  find  that  defendant  was  negligent  in  administering 
tliis  test.  Therefore,  since  the  evidence  was  substantial 
and  was  discovered  in  due  course  only  after  the  trial 
through  the  diligence  of  plaintiff,  we  urge  that  the 
court  was  in  error  in  rejecting  the  motion  for  a  new 
trial  thereon  and  request  that  the  decision  be  reversed 
and  a  new  trial  be  granted. 


22 

CONCLUSION 

In  weighing  and  analyzing  the  evidence  outlined 
and  described  above,  the  following  conclusions  must 
be  reached: 

(a)  Defendant  deliberately,  intentionally  and  know- 
ingly tested  plaintiff  to  the  falling  point  with  further 
knowledge  that  plaintiff  was  not  awai'e  of  the  pur- 
poses or  dangers  of  this  test; 

(b)  Defendant  knew  that  by  the  very  nature  of 
the  test,  some  testees  tvould  fall ; 

(c)  Defendant  afforded  no  warnings  nor  protec- 
tion to  the  testees  in  the  event  of  a  fall ; 

(d)  Defendant  should  have  known,  if  defendant 
did  not  in  fact  know,  that  a  fall  would  cause  injury; 

(e)  Plaintiff  did  in  fact  fall  while  taking  this  test 
under  the  supervision  of  defendant  and  was  injured 
as  a  proximate  result  thereof;  and 

(f)  Defendant  was  therefore  negligent  as  a  mat- 
ter of  law. 

The  evidence  before  the  trial  court  proved  that  the 
defendant  was  negligent  as  a  matter  of  law  and  this 
appellate  court  should  reverse  the  judgment  of  the 
trial  court  and  direct  it  to  find  for  the  plaintiff  on  tlie 
issue  of  liability  and  to  further  try  this  case  on  the 
sole  issue  of  damages. 

If  this  appellate  court  camiot  come  to  this  re- 
quested conclusion  upon  this  record,  it  should,  and  is 
hereby  respectfully  requested  to,  reverse  the  trial 
court's  order  denying  appellant's  motion  for  new  trial 


i 


23 


and  order  this  case  retried  on  all  issues  in  tlie  trial 
court. 

Dated,  Sacramento,  California, 
March  7, 1968. 


Respectfully  submitted, 

Pease,  Mayhew  &  Kassis, 
By  James  E.  Kassis, 
Attorneys  for  Appellant. 


Certificate  of  Counsel 
I  certify  that,  in  connection  with  the  preparation 
of  this  brief,  I  have  examined  Rules  18,  19  and  39  of 
the  United  States  Court  of  Appeals  for  the  Ninth 
Circuit,  and  that,  in  my  opinion,  the  foregoing  brief 
is  in  full  compliance  with  those  rules. 

James  E.  Kassis, 

Attorney  for  AppeUmit. 


4 


No.  22,244 
United  States  Court  of  App^l§  2    1989 

For  the  Ninth  Circuit 


nUiE  L.  {SMITH, 


United  States  of  America 


A  ppellant, 


BRIEF  FOR  APPELLEE 


John  P.  Hyt.axi'. 

I  lilted  State:« 

.1  \MI  s  TT.    1  »  .1  I'ER, 
A  -I -I  mil  I  II )  I'M  -I  Ktee  Attorney, 
2202  Federal  Building. 
630  Capitol  Mall. 
Sacramento,  California 

.  I  ttonieys  for  AppclU 


FFLED 


.WM.  d,  lUc^ 


PI*NAU-HAL«H    PHINTINB    CO.,    IAN    rRANOIlOO 


Subject  Index 


Jurisdiction   1 

Statement  of  the  case  1 

Argument    4 

(1)  The  District  Court's  finding-  that  appellee  was  not 
negligent  wfis  supported  by  substantial  evidence 4 

(2)  If  there  was  any  risk  in  the  test,  appellant  assumed 
such  risk  as  a  matter  of  law  9 

(3)  If  appellee  was  negligent,  appellant  was  contributorily 
negligent  as  a  matter  of  law  in  failing  to  step  off  the 
rail  cautiously  enough  to  prevent  himself  from  falling    10 

(4)  The  Trial  Judge  did  not  err  in  denying  appellant's  mo- 
tion for  a  new  trial  when,  in  his  opinion,  allegedly 
new  evidence  offered  by  appellant  could  have  been 
discovered  prior  to  the  original  trial  and  when  such 
evidence  would  not  in  any  event  have  altered  his  de- 
cision in  the  case 11 

Conclusion   12 


Table  of  Authorities  Cited 

Cases  Pages 

Andrews  v.  Goetz  (Fla.  Sup.  Ct.  1958)  104  So.2d  653  ....  4, 11 

Bowles  V.  Elkes  Pontiae  Co.  (Fla,  Sup.  Ct.  1953)  63  So.2d 
769 11 

Christopher  v.  RusseU,  62  Fla.  189,  58  So.  45  (1912) 6,  7 

Crosier  v.  Joseph  Abraham  Ford  Company  (Dist.  Ct.  Fla. 
1963)  150  So.2d  723  4, 10 

Earley  v.  Morrison  Cafeteria  Co.  of  Orlando  (Fla.  Sup.  Ct. 
1952)  61  So.2d  477  7 

Hall  V.  Holland  (Fla.  Sup.  Ct.  1950)  47  So.2d  889 4,  6,  7 

Matson  v.  Tip-Top  Grocery  Co.  Inc.,  151  Fla.  247,  9  So.2d 
366  (1942) 4,  6 

Tutwiler  v.  Beverly  Nalle,  Inc.,  et  al.,  152  Fla.  479,  12  So. 
2d  163  (1943) 10 


Statutes 
28  United  States  Code: 

Section  1291   1 

Sections  1346(b) ,  et  seq 1, 4 


Texts 

6A  Moore's  Federal  Practice,  p.  3773  11 


I 


No.  22,244 

United  States  Court  of  Appeals 

For  the  Ninth  Circuit 


GrEORGE  L.  SmITH, 

Appellant, 

vs. 

United  States  op  America. 


Appellee. 


BRIEF  FOR  APPELLEE 


JURISDICTION 

This  is  ail  appeal  from  a  final  judgment  of  the 
United  States  District  Court  for  the  Eastern  District 
of  California  entered  on  February  27,  1967,  in  favor 
of  the  appellee.  United  States  of  America. 

Jurisdiction  in  the  District  Court  was  based  upon 
the  Federal  Tort  Claims  Act  (Title  28  U.S.C. 
§  1346(1))  ef  seq.).  Jurisdiction  of  this  Court  is  in- 
voked imder  Title  28  U.S.C.  §  1291. 


STATEMENT  OF  THE  CASE 

Appellant  George  L.  Smith  was  among  1,056  naval 
aviators  selected  in  1940  as  subjects  for  a  medical 
study.  The  study  was  followed  up  in  1952,  1957  and 


1963,  and  appellant  took  part  in  the  study  as  a  volun- 
teer, although  he  was  no  longer  in  the  service  and 
was  under  no  compulsion  of  any  kmd  to  do  so/ 

On  May  21,  1963,  appellant  was  in  Pensacola,  Flor- 
ida, for  the  express  piu-pose  of  taking  continuing 
tests  in  the  so-called  Thousand  Aviator  Study  de- 
scribed above.^  One  of  the  tests  was  the  Graybiel- 
Fregiy  Posture  Test,  ".  .  .  a  baseline  study  of  bal- 
ance as  a  function,  or  as  it  changes,  in  aging,  "^  There 
were  several  different  stages  of  the  posture  test,  the 
first  of  which  was  to  stand  on  the  floor  for  one  minute 
with  eyes  closed,  hands  across  chest  and  feet  in  a 
heel-to-toe  position.*  Appellant  was  given  a  perfect 
score  on  this  part.^  He  was  then  instructed,  orally 
and  in  writing,  to  walk  as  far  as  he  could  along  a 
%  inch  wide  metal  rail  mtli  a  sandblasted  top  sur- 
face lying  2  and  14  inches  above  the  floor.''  He  was 
to  keep  his  eyes  open,  cross  his  hands  over  his  chest 
and  walk  in  a  heel-to-toe,  tandem  fashion.  He  was 
told  that  he  would  have  five  trials  and  that  he  would 
be  scored  on  the  best  three  of  the  five  trials  since  he 
could  be  expected  to  lose  his  balance  at  least  two  out 
of  the  five  times.^  Appellant  proceeded  to  take  his 
fii'st  trial,  lost  his  balance  and  stepped  off  the  rail.* 


iReporter's  Transcript,  pp.  7,  25,  27,  and  49-50. 

nd.,  p.  10. 

Hd.,  p.  48. 

*Id.,  pp.  55-60. 

Hd.,  p.  67. 

«7cZ.,  pp.  72-73. 

'Id.,  p.  131. 

Hd.,  p.  109. 


y 

I 


On  the  second  attempt,  appellant  lost  his  balance 
again  and  then  fell,  in  a  maimer  that  he  was  unable 
to  establish  in  the  trial  below,  thereby  injuring  him- 
self.^ After  receiving  inquiries  and  assistance  from 
Dr.  Fregly  and  the  aide  who  had  explained  the  test 
to  him,  appellant  insisted  on  going  ahead  with  the 
test  and  completed  it.^°  At  no  tune  did  appellant  re- 
sist taking  the  rail  test,  before  or  after  the  fall,  al- 
though he  could  have  withdra\\m  from  it  at  any  time, 
as  other  volunteers  had  occasionally  done/^ 

At  least  740  people  of  many  ages  and  capacities 
had  taken  the  same  test  before  May  21,  1963,  without 
falling.  ^^ 

On  March  22,  1965,  appellant  filed  a  complaint  for 
damages  in  the  amount  of  $204,162  plus  costs,  and  on 
February  27,  1967,  judgment  was  entered  against  the 
appellant.  Appellant's  motion  for  a  new  trial  was 
denied  on  April  24,  1967.  Appellant  now  appeals  from 
said  judgment  and  from  the  order  denying  motion 
for  new  trial. 


nd.,  pp.  65-66. 
lo/d,  pp.  66-67. 
ii/d,  p.  50. 
i2Zd.,  pp.  74,  83. 


ARGUMENT 

(1)  THE  DISTRICT  COURT'S  FINDING  THAT  APPELLEE  WAS 
NOT  NEGLIGENT  WAS  SUPPORTED  BY  SUBSTANTIAL 
EVIDENCE. 

The  substantive  law  of  the  State  of  Florida,  where 
the  accident  occurred,  is  controlling  in  this  case  (Title 
28  U.S.C.  §  1346(b)).  Under  Florida  law,  the  United 
States  in  this  case  owed  appellant  the  same  duty  that 
any  businessman  owes  his  invitee :  to  warn  him  of  any 
latent  or  concealed  dangers  on  the  premises.  Hall  v. 
Holland  (Fla.  Sup.  Ct.  1950)  47  So.2d  889;  Andrews 
V.  Goets  (Fla.  Sup.  Ct.  1958)  104  So.2d  653.  The  in- 
vitor  need  not  warn  his  invitee  of  obvious  hazards 
nor  of  conceivably  dangerous  possibilities  that  a  pru- 
dent person  exercising  due  care  would,  on  his  own 
initiative,  observe,  comprehend  and  avoid.  Matson  v. 
Tip-Top  Grocery  Co.  Inc.,  151  Fla.  247,  9  So.2d  366 
(1942)  ;  Crosier  v.  Joseph  Abraham  Ford  Company 
(Dist.  Ct.  Fla.  1963)  150  So.2d  723. 

In  this  instance  appellant  had  willingly  agreed  to 
take  a  series  of  tests.  The  nature  and  purpose  of  any 
test  is  that  some  will  pass  and  some  will  fail — that 
some  will  do  better  than  others.  And  the  very  nature 
and  purpose  of  this  particular  test  was  that  some  of 
the  volunteers  would  better  maintain  their  balance 
while  walking  on  the  rail  than  others.  Had  a  certain 
percentage  of  the  subjects  not  lost  their  balance,  the 
test  would  have  had  no  meaning.  Appellant  must  be 
charged  with  the  obvious,  even  anticipated,  possibili- 
ties of  the  situation,  especially  since  he  must  have 
known  it  would  be  harder  to  maintain  his  balance 


with  his  arms  against  his  chest  and  his  feet  in  a  tan- 
dem, heel-to-toe  position. 

But  aside  from  the  self-evident  aspects  of  the  test, 
two  additional  circumstances  make  the  case  all  the 
stronger  for  appellee.  One  is  the  fact  that  appeUant 
was  specifically  told  that  he  was  taking  a  balancing 
test  and  that  he  would  be  scored  only  on  the  best 
three  of  five  attempts.  In  effect,  then,  appellant  was 
told  that  he  would  not  be  able  to  walk  the  full  length 
of  the  rail  in  his  fiirst  three  attempts,  even  if  appel- 
lant had  not  already  figured  that  out  for  himself.  ^^ 

The  second  factor  militating  against  the  claim  of 
appellee's  negligence  is  that  appellant  had  already 
taken  two  stages  of  the  equilibrium  test  before  he 
fell.  The  first  consisted  of  standing  with  eyes  closed 
and  feet  in  tandem  position  for  sixty  seconds.  The 
second  was  appellant's  jirst  trial  of  the  rail-walking 
test,  when  he  presumably  stepped  from  the  rail  with- 
out falling,  as  hundreds  had  done  before  him.  Appel- 
lant should  not  only  have  foreseen  the  likeliliood  of 
losing  his  balance;  not  only  was  he  told  that  he  would 
lose  his  balance;  he  had,  in  fact,  experienced  it  on 
the  first  trial,  thereby  removing  from  appellant's 
mind  any  mystery  that  might  have  shrouded  the  test 
before  he  took  it.  Having  lost  his  balance  once  and 
taken  the  obvious  precaution  of  stepping  off  the  rail 
rather  than  letting  himself  fall,  appellant  should  have 
been  all  the  more  prepared  to  do  so  on  the  second 
trial. 

is/d,  p.  131. 


In  view,  therefore,  of  what  he  should  have  known 
by  looking  at  the  test  situation,  what  he  was  in  fact 
told  about  the  test  situation  and  what  he  actually  ex- 
perienced on  his  first  attempt  to  walk  the  rail,  appel- 
lant must  be  presumed  to  have  been  aware  of  the 
possible  consequences  of  his  taking  the  test.  An  ordi- 
narily prudent  person  would,  if  anything,  be  espe- 
cially alert  and  inquisitive  in  a  new,  experimental 
situation.  Appellant's  case  is  not  that  of  the  unwary 
painter  falling  from  his  uivitor's  defective  awning 
that  was  seemingly  safe  to  stand  on  {Hall  v.  Holland, 
supra,  cited  in  Brief  for  Appellant,  pages  11,  12  and 
16).  Nor  is  it  the  case  of  a  ship  chandler's  customer 
falling  into  an  unguarded  and  unmarked  hole  in  a 
dark  storeroom  (Christopher  v.  Russell,  62  Fla.  189, 
58  So.  45  (1912),  cited  in  Brief  for  Appellant,  page 
16).  If  anything,  appellant's  case  is  analogous  to  that 
of  the  woman  in  Matson,  supra,  who  turned  and 
stepped  directly  from  a  lunch-counter  stool  to  the 
floor,  which  was  twelve  and  three  quarter  inches  be- 
low the  level  of  the  platform  edge  on  which  the  stool 
was  mounted.  In  holding  against  the  invitee,  the 
Florida  Supreme  Court  said  at  page  368  of  the  South- 
ern Reporter: 

"The  law  does  not  require  a  proprietor  of  a 
public  place  to  mamtain  his  premises  in  such 
condition  that  an  accident  could  not  possibly  hap- 
pen to  a  customer.  Plaintiff  in  turn  was  obligated 
to  exercise  a  reasonable  degree  of  care  for  her 
own  safety  .  .  .  there  is  no  duty  to  warn  of  an 
obvious  condition  which  is  not  in  itself  danger- 
ous." 


Another  opinion  more  applicable  to  appellant  than 
the  Hall  and  Christopher-  cases  he  cites  is  that  of 
Earleij  v.  Morrison  Cafeteria  Co.  of  OrUmdo  (Fla. 
Sup.  Ct  1952)  61  So.2d  477,  in  which  a  plaintiff 
tripped  over  a  one-half  inch  thick  mat  lying  on  a 
cafeteria  floor.  Agreeing  that  the  mat  may  not  have 
been  easy  to  see,  the  court  nevertheless  stated  at  page 
478  of  the  cited  opinion  that  "...  the  proprietor  has 
a  right  to  assume  that  the  invitee  will  perceive  that 
which  would  be  obvious  to  him  upon  the  ordinary 
use  of  his  own  senses." 

Not  only  did  the  test  situation  not  contain  latent 
or  concealed  peril,  but  it  was  not  essentially  danger- 
ous at  all.  While  it  was  inherent  in  the  test  that  the 
subjects  would  often  lose  their  balance,  the  probabil- 
ity of  those  subjects  falling  after  they  had  lost  their 
balance  was  not.  The  record  shows  that  at  least  740 
persons  had  taken  the  test  without  falling:  they  had 
simply  stepped  off  the  rail  on  one  side  or  another 
when  they  discovered  they  could  walk  no  further,  just 
as  appellant  had  discovered  on  his  first  trial. 

Appellant  attributes  great  significance  to  the  statis- 
tical results  of  the  Graybiel-Fregly  Test  and  theorizes 
from  those  results  that  appellant  ran  a  much  greater 
risk  of  falling  than  a  younger  man.^'* 

But  appellant's  conclusions  in  this  respect  are  un- 
warranted on  two  counts.  First,  the  test  results  are 
statistical  and  have  importance  only  in  terms  of  aver- 


i-»Brief  for  Appellant,  pp.  14-18. 


8 


age  group  performance.  As  the  trial  judge  noted/^ 
the  results  cannot  be  applied  to  appellant  as  an  indi- 
vidual and  have  nothing  to  do  with  appellant's  owm 
balancing  skills,  which  could  easily  be  greater  or  less 
than  the  norm.  Second,  one  of  the  originators  of  the 
test,  Dr.  Fregly,  testified  at  the  trial  that  the  differ- 
ence between  the  capabilities  of  17  to  42  year  old  men 
and  men  aged  43  to  50  with  specific  regard  to  the 
rail-walking  phase  of  the  test  was  relatively  insig- 
nificant.^" And  the  test  results  say  nothing  at  all  about 
the  propensities  of  the  test  subjects  to  fall  after 
losing  their  balance.  Even  in  terms  of  the  test  itself, 
then,  appellant's  argument  that  there  were  special 
dangers  in  the  test  for  appellant  because  of  his  age 
are  patently  unwarranted.  Dr.  Fregly's  practical  ob- 
servation of  the  fact  that  hundreds  of  subjects  of  all 
ages  and  skills  had  walked  the  rail  without  falling  is 
far  more  relevant  to  the  resolution  of  this  case  than 
are  the  statistical  results  of  the  entire  Graybiel- 
Fregly  Posture  Test. 

In  summary,  therefore,  appellee  contends  that  it 
was  not  required  under  Florida  law  to  protect  appel- 
lant against  all  imaginable  hazards  that  might  arise 
in  the  test.  Appellee's  duty  extended  only  to  latent 
or  concealed  dangers,  and  there  were  no  such  dangers 
in  this  instance  and  very  little  danger  at  all  in  the 
usual  sense  of  the  word.  All  life  is  a  danger  if  the 
definition  is   stretched  far   enough,   but  the  law   of 


isReporter's  Transcript,  p.  113, 
le/d,  p.  85. 


Florida  imposes  a  far  more  precise  and  limited  stand- 
ai'd  on  Liivitors,  and  appellee  clearly  fnlfilled  that 
standard  with  respect  to  Mr.  Smith. 


(2)     IF   THERE   WAS   ANY   RISK   IN   THE   TEST,    APPELLANT 
ASSUMED   SUCH  RISK  AS   A   MATTER  OF  LAW. 

Appellant  volunteered  to  travel  to  Pensacola  for 
the  tests;  he  was  imder  no  compulsion  to  do  so,  par- 
ticularly since  he  received  no  compensation  for  his 
services  other  than  out-of-pocket  expenses.  Once  in 
Florida,  he  could  have  withdrawn  from  the  tests  at 
any  time,  and  no  one  could  have  kept  him  there.  Ap- 
pellant could  also  have  withdrawn  at  the  point  when 
he  stood  in  the  test  room  and  faced  the  rail  on  May 
21,  1963,  and  he  could  have  refused  to  take  the  second 
trial  walk  along  the  rail  after  failing  to  complete  the 
distance  in  his  first  trial. 

In  reality,  however,  the  record  clearly  shows  that 
appellant  cooperated  with  the  testing  persomiel  and 
apparently  showed  no  reluctance  whatsoever  in  taking 
the  phase  of  the  test  in  which  he  fell.  Appellant  was 
so  cooperative  and  mlling,  in  fact,  that  he  continued 
with  the  tests  even  after  he  fell.^' 

If  there  was  any  risk  in  this  case,  it  was  that  the 
test  subject  would  step  off  the  rail  so  carelessly  as 
to  lose  his  footing  on  the  wooden  floor  and  fall.  Such 
a  risk  was  self-evident  and  Florida  foUows  the  gen- 
eral rule  that  an  injured  party  must  be  held  to  be 

I'/d.,  p.  67. 


10 


aware  of  an  obvious  risk  even  if  the  party  had  no 
actual  knowledge  of  it.  Crosier  v.  Joseph  Abraham 
Ford  Company,  supra.  Regardless  of  whether  or  not 
appellant  actually  knew,  then,  that  he  might  fall  when 
he  stepped  off  the  rail,  he  must  be  presmned  to  have 
known  of  the  possibility  and  to  have  assumed  that 
risk. 


(3)  IF  APPELLEE  WAS  NEGLIGENT,  APPELLANT  WAS  CON- 
TRIBUTORILy  NEGLIGENT  AS  A  MATTER  OF  LAW  IN 
FAILING  TO  STEP  OFF  THE  RAIL  CAUTIOUSLY  ENOUGH 
TO  PREVENT  HIMSELF  FROM  FALLING. 

In  the  Florida  Supreme  Court  case  of  Tutwiler  v. 
Beverly  Nolle,  Inc.,  et  al.,  152  Fla.  479,  12  So.2d  163 
(1943),  a  prospective  lessee  of  a  building  opened  a 
cellar  door  and  fell  down  a  flight  of  stairs  while  in- 
specting the  premises.  Although  the  cellar  steps  were 
unmarked  and  imlighted,  the  court  said  that  "The 
failure  of  the  appellant  to  exercise  ordinary  care  for 
her  own  safety  when  inspecting  the  property  by  open- 
ing a  closed  door  and  taking  a  step  forward  into  a 
dark  and  unlighted  stairway,  thereby  constributing 
to  her  own  injury,  as  a  matter  of  law,  w^ill  preclude 
a  recovery  on  her  part  .  .  ."^® 

In  this  instance,  appellant  failed  to  exercise  the 
ordinary  care  that  hmidreds  of  people  exercised  be- 
fore him  when  they  stepped  off  the  rail.  As  a  result 
he  fell  and  suffered  an  imfortunate  accident  for 
which  appellee  should  not  be  held  responsible.  Addi- 


1812  So.2d  at  p.  164. 


11 


tional  Florida  cases  denying  recovery  in  factnally 
similar  cases  involving  contributory  negligence  are: 
Bowles  V.  Elkes  Pontiac  Co.  (Fla.  Sup.  Ct.  1953)  63 
So.2d  769,  and  Ayidretvs  v.  Goetz,  supra. 


(4)  THE  TRIAL  JUDGE  DID  NOT  ERE,  IN  DENYING  APPEL- 
LANT'S MOTION  FOR  A  NEW  TRIAL  WHEN,  IN  HIS 
OPINION,  ALLEGEDLY  NEW  EVIDENCE  OFFERED  BY 
APPELLANT  COULD  HAVE  BEEN  DISCOVERED  PRIOR  TO 
THE  ORIGINAL  TRIAL  AND  WHEN  SUCH  EVIDENCE 
WOULD  NOT  IN  ANY  EVENT  HAVE  ALTERED  HIS 
DECISION  IN  THE  CASE. 

Appellant  moved  for  a  new  trial  on  the  grounds 
that  new  testimony  affecting  appellant's  case  could 
be  produced.  The  District  Court  concluded  (1)  that 
the  purportedly  new  evidence  could  have  been  made 
available  for  the  trial  and  (2)  that  had  such  evidence 
been  produced,  it  would  not  have  materially  influ- 
enced the  court's  decision.  The  trial  judge  was  prop- 
erly acting  within  the  broad  discretion  given  him  with 
respect  to  motions  for  new  trial,  and  his  action  in 
denying  the  motion  for  new  trial  cannot  be  consid- 
ered reversible  error.  "As  the  motion  for  new  trial  is 
addressed  to  the  discretion  of  the  trial  court,  ...  its 
ruling  on  such  motion  is  not  subject  to  reversal  un- 
less its  order  was  made  under  the  compulsion  of  a 
mistake  of  law,  or  it  failed  to  exercise  its  discretion, 
or  abused  its  discretion.  .  .  ."  (Footnotes  omitted.) 
6A  Moore's  Federal  Practice,  page  3773. 


12 


CONCLUSION 

The  question  of  whether  appellee  was  negligent  in 
its  duties  as  a  business  invitor  was  a  question  of  fact 
for  the  District  Court  to  resolve.  We  submit  that 
there  is  substantial  evidence  to  support  the  court's 
decision  in  that  regard.  The  evidence  did  not  estab- 
lish the  existence  of  any  latent  or  concealed  dangers 
on  the  premises  or  in  the  situation  in  which  appellant 
took  the  balancing  test.  Moreover,  we  submit  that  as 
a  matter  of  law  appellant  assumed  whatever  risk  was 
inherent  in  the  test  because  the  possible  consequences 
of  the  test  were  self-evident  and  because  appellant 
volimtarily  took  the  test. 

It  was  not  error  for  the  trial  judge  to  deny  appel- 
lant's motion  for  new  trial  when,  in  that  judge's 
opinion,  the  evidence  could  not  only  have  been  pro- 
duced in  the  trial  but  was  insufficiently  new  or  sig- 
nificant to  change  the  result  of  the  original  trial. 

We  therefore  submit  that  the  judgment  of  the  Dis- 
trict Court  should  be  affirmed. 

Dated,  Sacramento,  California, 
May  20,  1968. 

Respectfully  submitted, 
John  P.  Htlajstd, 

United  States  Attorney, 

James  H.  Daffer, 

Assistant  United  States  Attorney, 

Attorneys  for  Appellee 
United  States  of  America. 


\ 


13 


Certificate 

I  certify  that,  in  connection  with  the  preparation 
of  this  brief,  I  have  examined  Rules  18,  19  and  39 
of  the  United  States  Court  of  Appeals  for  the  Ninth 
Circuit,  and  that,  in  my  opinion,  the  foregoing  brief 
is  in  full  compliance  with  those  rules. 

James  H.  Daffer, 

Assistaait  United  States  Attorney. 


No.  22,244 


IN  THE 


United  States  Court  of 

For  the  Ninth  Circuit 


George  L.  Smith, 

vs. 
United  States  of  America, 


Appellant, 
Appellee. 


REPLY  BRIEF  FOR  APPELLANT 


Pease,  Mayhew  &  Kassis, 

455  Capitol  Mall,  Suite  835, 
Sacramento,  California  95814, 

Attorneys  for  Appellant. 


us  f969 


JUK7    1958 
^  B.  I.UCK.  CUERK 


PCRNAU-WALBH    PRINTING    CO.,    BAN    FRANCIICO 


< 


1 


I 
( 


Subject  Index 

Page 
Introduction    1 

Argument    5 

Parts  II  and  III  of  appellee's  argmnent  9 


Table  of  Authorities  Cited 

Cases  Page 

Farley  v.  Morrison  Cafeteria  Co.  of  Orlando   (Fla.Sup.Ct. 
1952) ,  61  So.2d  477  8 

Matson  v.  Tip-Top  Grocery  Co.,  Inc.   (1943),  151  Fla.  247, 
9  So.2d  366  8 


Statutes 

28  U.S.C: 

Section  1291   1 

Section  1346(b)    1 

Sections  2671,  et  seq 1 


i 


No.  22,244 

IN  THE 

United  States  Court  of  Appeals 
For  the  Ninth  Circuit 


George  L.  Sjveith, 

Appellant, 
vs. 

United  States  of  America, 

Appellee. 


y 


REPLY  BRIEF  FOR  APPELLANT 


INTRODUCTION 

As  seen  from  the  Brief  for  Appellee,  the  parties 
herein  are  in  accord  in  the  point  that  the  District 
Court  had  appropriate  jurisdiction  of  this  suit  based 
on  the  Federal  Tort  Claims  Act  (Title  28,  U.S.C, 
Section  1346(b),  and  Sections  2671,  et  seq.).  The  par- 
ties also  agree  that  this  coiu*t  has  appellate  jurisdic- 
tion under  28  U.S.C.,  Section  1291. 

However,  several  discrepancies  appear  in  the  appel- 
lee's recitation  of  the  facts,  beginning  on  page  2  of 
the  Brief  for  the  Appellee,  mider  the  heading  *' State- 
ment of  the  Case"  as  follows : 

1.  On  page  2  of  Brief  for  Appellee,  it  is  stated 
that  the  plaintiff  "...  was  then  instructed,  orally  and 


in  writing  .  .  ."  with  regard  to  body  positions  and  all 
other  instructions  relating  to  the  tests  in  the  Greybial- 
Fregley  Test  Battery.  In  support  of  this,  appellee 
cites  pages  72  and  73  of  the  Rejjorter's  Transcript. 
These  pages  contain  the  testimony  of  Dr.  Alfred  R. 
Fregley,  in  which  he  states  that  written  instructions 
were  given  to  all  testees  before  taking  the  test.  How- 
ever, there  is  no  statement  that  plaintiff  himself  had 
received  written  instructions.  Plaintiff  in  fact  stated 
(R.T.  14)  that  the  instructions  were  given  to  him 
verbally,  and  then  later  he  stated  that  he  did  not  re- 
call ever  having  received  or  seen  written  instructions 
and  that  his  memory  was  not  refreshed  by  seeing  a 
sample  copy  of  said  written  instructions  (R.T.  30-31). 

This  point,  then,  is  in  reality  a  question  of  fact  in 
contention  which  was  never  specifically  decided  by 
the  couii-  and  which  appellee  is  not  entitled  to  assume 
from  the  conflicting  evidence.  As  a  matter  of  fact, 
Joseph  F.  Sardoni,  in  his  affidavit  submitted  to  the 
court  as  partial  grounds  for  a  new  trial,  stated  that 
he  did  not  recall  being  handed  any  written  instruc- 
tions for  this  test  (T.R.  73),  and  George  Thomasini 
stated  in  a  similar  affidavit  that  ''oral  instructions 
were  given." 

2.  The  second  fallacious  assiunption  made  in  appel- 
lee's brief  was  that  the  plaintiff  was  told  that  he 
could  be  expected  to  lose  his  balance  at  least  two  out 
of  the  five  times  he  took  the  test.  For  authority, 
appellee  refers  to  page  131  of  the  Reporter's  Tran- 
script. There  is  no  statement  therein  or  anywhere 
else  in  plaintiff's  testimony  that  he  knew  he  would 


lose  Ms  balance  in  two  of  the  tests.  The  statements 
recorded  there  are  simply  an  exaimple  of  the  court 
prompting-  Dr.  Fregiey  by  a  series  of  leading  ques- 
tions to  make  assumptions  about  what  Mr.  Smith 
knew  or  did  not  know.  There  is  no  showing  that 
defendant  had  or  should  have  had  any  such  knowl- 
edge, and  from  the  facts  in  the  record,  appellee  can 
neither  assume  that  any  such  fuiding  was  made,  nor 
can  appellee  assume  that  plaintiff  had  such  knowl- 
edge. As  a  matter  of  fact,  all  that  this  testimony 
proves  is  that  the  doctor  himself  knew  that  a  testee 
could  be  expected  to  lose  his  balance  at  least  two  out 
of  the  five  times,  and  therefore,  he  and  perforce, 
the  government,  had  even  a  greater  responsibility  for 
the  safety  of  his  testees,  which  duty  for  safety  was 
ignored  and  breached  resulting  in  the  injury  to  plain- 
tiff. 

3.  Appellee  then  states  on  page  2  of  his  brief  that 
the  appellant  proceeded  to  take  his  first  tiial,  lost  his 
balance,  and  stepped  off  the  rail,  citing  as  authority 
therefor,  page  109  of  the  Reporter's  Transcript.  There 
is  no  statement  nor  inference  on  that  page  that  plain- 
tiff lost  his  balance  and  stepped  off  the  rail  on  his 
fii'st  attempt  to  take  this  test.  This  is  merely  another 
example  of  appellee  trying  to  assume  facts  with  no 
testimonial  basis,  and  for  which  no  foundational  basis 
had  been  laid. 

4.  ReferiTng  then  to  page  3  of  appellee's  brief, 
appellee  states  that  the  plaintiff  was  miable  to  estab- 
lish in  the  trial  below  the  manner  in  which  he  fell, 
and  cites  as  autliority  therefor  pages  65  and  66  of  the 


Reporter's  Transcript.  However,  both  of  those  pages 
report  the  testimony  of  Dr.  Fregley  as  being-  ex- 
amined by  Mr.  Shubb,  and  there  is  no  statement 
therein  by  the  plaintiif  concerning  the  manner  in 
which  he  fell  or  his  ability  or  inability  to  describe  it, 
nor  did  the  court  make  any  such  findings  as  to  cir- 
cumstances surrounding  this  fall. 

5.  Appellee  then  further  misstates  the  facts  by  a 
statement  that  plaintiff  "insisted  on  going  ahead  with 
the  test  and  completed  it  .  .  .  ,"  citing  as  evidence 
therefor  pages  66  and  67.  However,  a  true  statement, 
as  reported  in  the  record,  is  not  that  plaintiff  in 
fact  insisted  on  continuing,  but  that  the  doctor  re- 
members that  he  said  "that  there  was  nothing  here  to 
prevent  him  from  continuing  the  test,  and  he  did  so." 

6.  As  a  final  example  of  appellee's  misconstruing 
of  the  facts  as  reflected  in  the  record,  on  page  3  of 
appellee's  brief,  appellee  recites  as  a  fact  that  740 
people  took  the  test  without  falling,  and  cites  as  au- 
thority therefor  page  74  and  page  83  of  the  Re- 
porter's Transcript.  There  is  no  such  statement  on 
either  page  74  or  page  83  that  no  one  else  of  that  740 
people  had  fallen.  However,  on  page  75,  Dr.  Fregley 
does  state  that  no  one  to  his  Jcnowledge  had  ever 
fallen.  The  court  made  no  finding  of  fact  on  this 
and  it  is  improper  for  the  appellee  to  assmne  and 
use  this  as  authority  for  the  unfounded  premise  that 
no  one  else  had  fallen,  since  the  fact  that  the  doctor 
did  not  know  of  anyone  else  falling  does  not  establish 
that  no  one  else  actually  fell. 


ARGUMENT 

In  appellee's  argument,  beginning  on  page  4  of  his 
brief,  appellee  correctly  states  the  nature  and  purpose 
of  the  particular  tests  involved  in  this  case  and  cor- 
rectly states  that  by  their  very  nature,  the  tests  re- 
quired that  some  people  should  fall.  Appellee  also 
correctly  states  the  Florida  law  with  relation  to  the 
obligation  that  an  invitor  has  to  an  invitee.  How- 
ever, what  appellee  neglects  to  interject  in  this  argu- 
ment is  the  fact  that  appellant,  in  coming  to  the 
appellee  for  these  tests,  had  put  hmiself  imder  the 
control  of  and  in  the  hands  of  a  person  in  superior 
knowledge  of  the  intrinsic  dangers  of  this  test  on  the 
basic  imderstandmg  that  the  person  in  control  would 
not  put  him  in  any  danger  without  prior  warning.  Dr. 
Fregley  had  designed  this  test,  knew  what  its  piu'- 
poses,  aims  and  functions  were  for,  and  had  admin- 
istered the  test  at  least  740  times  before.  Plaintiff, 
on  the  other  hand,  had  no  mfonnation  regarding  the 
tests,  had  taken  other  tests  on  prior  occasions  and 
never  been  subjected  to  this  particidai'  test,  and  had 
no  way  of  knowing  the  intrinsic  dangers  of  the  test 
as  did  Dr.  Fregley.  Thus  arose  the  doctor's  duty 
toward  the  testee  (as  stated  with  more  particularity 
in  appellant's  brief),  which  duty  was  breached  in  the 
failure  to  take  precautions  necessary  as  outlined  in 
appellant's  opening  brief.  In  addition  to  this,  the 
doctor  knew  that  the  plaintiff  did  not  know  of  the 
dangers.  The  plaintiff  was  entitled  to  rely  upon  the 
judgment  of  the  doctor,  since  it  is  only  natural  for 
a  person  to  reh^  on  a  doctor  for  giiidance,  especially 


J 


in  areas  affecting  his  personal  physical  safety  and 
well  being-  with  relation  to  which  a  person  has  not 
had  any  experience  or  understanding. 

Therefore,  under  the  Florida  law,  the  defendant- 
appellee  is  liable  for  negligence  as  a  matter  of  law 
since  there  were  latent  or  concealed  dangers  inherent 
in  the  test,  as  to  which  only  the  defendant  and  its 
agents  had  knowledge.  The  doctor,  and  thereby  the 
defendant,  breached  this  duty  by  not  making  an 
active,  outright  warning  to  the  plaintiff  and  by  not 
taking  precautions  against  the  injiuies  which  could 
foreseeably  result  therefrom.  By  this  breach  of  duty, 
the  plaintiff  was  proximately  and  directly  injured  and 
has  suffered  damages  therefrom,  which  damages  he 
is  now  entitled  to  recover  from  the  defendant. 

On  page  5,  appellee's  argument  fails  as  a  non 
sequitur  based  on  proper  deductions  from  an  im- 
proper statement  of  facts  on  pages  2  and  3  of  its 
brief.  At  no  place  in  tlie  transcript  is  there  testi- 
mony which  indicates  that  appellant  was  told  that  he 
would  not  be  able  to  walk  the  full  length  of  the  rail 
in  his  first  three  attempts.  The  non  sequitur  results 
from  deducing,  or  attempting  to  deduce,  that  the  mere 
fact  that  plaintiff  would  be  scored  on  three  out  of  five 
tries  would  imply  that  he  was  told  he  would  fail  at 
least  two  times.  In  fact,  all  this  implies  is  that  it 
is  possible  to  do  it  three  times  in  a  row  without  any 
misses,  but  that  if  something  goes  wrong  a  testee 
would  be  given  two  extra  chances.  Appellee  again 
refers  in  the  next  paragraphs  to  plaintiff  being  told 


I 


that  he  would  lose  his  balance,  again  a  misstatement 
of  the  facts,  and  an  erroneous,  fallacious  assiunption. 

On  page  8  of  its  reply  brief,  appellee  states  that 
the  age  group  performance  results  cannot  be  applied 
to  the  appellant  as  an  individual  and  have  nothing  to 
do  with  the  appellant's  ovm  balancing  skills.  Even  if 
the  above  were  correct  statements  of  the  facts,  the 
appellee  caimot  deny  that  this  knowledge  must  be 
attributed  to  the  doctor  and  must  raise  in  him  a 
gi'eater  duty  with  relation  to  peojjle  in  this  age  group, 
since  he  knows  that  the  possibility  is  greater  for 
people  in  that  group  to  have  less  balancing  ability  or 
skill.  His  duty  thus  beiiig  greater,  his  breach  is  ob- 
viated even  more. 

In  the  concluding  paragraph  on  pages  8  and  9  of 
appellee's  brief  it  is  contended  that  an  invitor  does 
not  have  a  duty  to  guard  an  invitee  from  all  imagi- 
nable hazards.  It  has  never  been  appellant's  conten- 
tion that  the  defendant  has  to  protect  invitees  against 
any  imaijinahle  hazards,  let  alone  aU  imaginable 
hazards.  Howevei',  it  is  the  la^^•  in  that  state  that  real 
dangei's  must  be  protected  against.  Here  the  danger 
is  real,  as  is  seen  from  the  fact  that  the  accident 
happened.  The  hazard  was  hidden,  known  only  to  the 
doctor,  and  the  plaintiff  was  in  a  situation  wherein  he 
had  every  right  to  rely  on  the  judgment,  care  and 
watchfulness  of  the  doctor  for  his  protection,  and 
therefore,  was  not  put  on  notice  that  there  was  any 
danger  by  any  of  the  subtle,  extraneous  facts  sur- 
rounding him.    The  doctor,  knowing  these  facts  and 


8 


dangers,  and  ignoring  them  by  not  taking  any  steps  to 
prevent  the  falls  or  to  to  prevent  injury  if  a  fall 
should  occur,  breached  his  duty,  and  in  so  breaching 
it,  proximately  caused  the  injury  to  plaintiff  for 
which  damages  are  herein  being  claimed. 

With  relation  to  the  cases  cited  by  appellee  as  being 
analogous  to  this  case  and  upon  which  appellee  predi- 
cates nonliability  (Mafson  v.  Tip-Top  Grocery  Co., 
Inc.  (1943),  151  Fla.  247,  9  So.2d  366,  cited  by  ap- 
pellee at  pages  4  and  6 ;  Farley  v.  Morrison  Cafeteria 
Co.  of  Orlando  (Fla.Sup.Ct.  1952),  61  So.2d  477  cited 
by  appellee  at  page  7,  both  of  these  cases  are  distin- 
guisha.ble  from  this  case  on  an  obvious  and  intrinsic 
ground.  In  those  cases,  the  invitor  had  no  greater 
duty  imposed  upon  him  by  the  relation  of  the  parties 
or  by  his  superior  knowledge.  In  both  cases  the 
hazards  which  caused  the  injuries  were  open,  obvious 
and  avoidable  by  a  person  exercising  normal  care. 

In  this  case,  however,  defendant's  agents  had  a 
greater  degi*ee  of  care  and  responsibility  since  they 
had  knowledge  of  the  dangers  of  the  tests  to  which 
plaintiff  had  no  access.  Plaintiff  had  placed  himself 
at  the  disposal  of  defendant's  agents  for  purposes  of 
these  tests.  He  had  found  from  past  experience  that 
he  would  be  well  fallen  care  of  and  had  no  reason  to 
believe  that  precautions  were  any  less  stringent  at  the 
stage  of  testing  in  which  he  was  injured. 

In  addition  to  knowledge  of  the  hazards  intrinsic 
in  these  tests,  defendant's  agents  knew  that  plaintiff 
did  not  and  could  not  know  of  them,  because  he  had 


I 


I 


no  predictable  knowledge  of  their  design  or  purpose 
and  had  never  ta.ken  them  before.  Defendant's  agents 
should  then  have  been  placed  on  their  guard  and 
should  have  exercised  even  gi-eater  precautions  in 
administering  this  test,  all  of  which  they  failed  to  do. 

Plaintiff  did,  and  justifiably  so,  rely  on  defendant's 
agents  to  properly  protect  him  to  keep  him  from  en- 
dangering himself  and  thereby  subjected  himself  to 
the  tests  which  he  was  requested  to  take. 

Because  of  these  dangers  of  which  he  had  no  warn- 
ing and  because  of  the  failure  to  supply  protective 
and  preventive  defaces,  plaintiff  fell  and  was  in- 
jured. These  injuries  and  the  damages  sustained 
therefrom  were  the  proximate  and  direct  result  of  the 
negligence  of  the  defendant's  agents  as  outlined  above 
and  in  appellee's  brief.  On  this  basis,  defendant  is, 
and  should  be  fomid,  negligent  as  a  matter  of  law. 


PARTS  n  AND  m  OF  APPELLEE'S  ARGUMENT 

All  of  appellee's  argmnents  and  contentions  relating 
to  assumption  of  risk  and  eontributoiy  negligence  in 
appellee's  brief  are  in*elevant,  immaterial,  and  su- 
perfluous and  should  be  stricken  therefrom.  The 
court,  in  its  findings  of  facts  and  conclusions  of  law, 
made  no  iniling  with  relation  to  either  assmnption  of 
risk  or  contributory  negligence.  The  court  simply 
found  that  the  plaintiff  had  failed  to  carry  his  bur- 
den in  establishing  the  negligence  of  the  defendant  or 
any  of  its  agents,  servants  or  employees.    Since  no 


10 


finding  was  made  by  that  coui't  as  to  these  two  points, 
there  is  no  basis  for  raising  them  on  appeal,  and 
therefore,  all  argmnents  relating  to  them  are  not  only 
without  merit,  but  cannot  be  considered  here. 

Therefore,  the  only  issue  to  be  determined  and 
which  may  be  argued  is  that  of  the  negligence  of  the 
defendant,  which  mider  the  facts,  must  be  fomid  as  a 
matter  of  law. 

Dated,  Sacramento,  California, 
June  4,  1968. 

Respectfully  submitted. 

Pease,  Mayhew  &  Kassis, 
By  James  E.  Kassis, 

Attorneys  for  Appellant. 


Certificate  of  Counsel 

I  certify  that,  in  comiection  with  the  preparation 
of  this  brief,  I  have  examined  Rules  18,  19  and  39  of 
the  United  States  Court  of  Appeals  for  the  Ninth 
Circuit,  and  that,  in  my  opinion,  the  foregoing  brief 
is  in  full  compliance  with  those  rules. 
James  E.  Kassis, 

A  ttorney  for  Appellant. 


No.  22,248 
IN  THE 

Court  0f  ApptniSi 

FOR  THE  NINTH  CIRCUIT 


United  States  op  America,  Appellant, 

V. 

Harold  C.  and  Olive  B.  Isaak,  Appellees. 


On  Appeal  from  the  Judgment  of  the  United  States 

District  Court  for  the  Eastern  District  of 

Washington 


BRIEF  FOR  THE  APPELLANT 


Mitchell  Rogovin 

Assistant  Attorney  General. 

^  /  !■  X  Meyer  Rothwacks, 

^  ^*  *^  Harry  Baum, 

£.^  '^  LD  Louis  M.  Kauder, 

^^  I  g  If.  Attorneys, 

f.  '96q  Department  of  Justice, 

'  &.  If.  Washington,  D.C.  20530. 

Of  CounsekL^^^f^ 
Smithmoore  p.  Myers^ 

United  States  Attorney. 

UWTON  PRINTING,   INC.,   2-16-68—50  COPIES 


FEB23i:"3 


1 
INDEX 

Page 

Opinion  below 1 

Jurisdiction 1 

Question  presented 2 

Statutes  and  Regulations  involved 2 

Statement   2 

Specification  of  error  relied  upon 5 

Summary  of  argument 5 

Argument : 

A  taxpayer  who  elects  to  report  Commodity 
Credit  loans  as  income  in  the  year  received 
may  not  exclude  from  income  loans  re- 
ceived and  later  repaid  in  the  same  tax  year 
in  redemption  of  pledged  commodities 6 

Conclusion 22 

Appendix  A 23 

Appendix  B 27 

Appendix  C 32 


11 

CITATIONS 

Page 

Cases : 

Ahbot  V.  Welch,  31  F.  Supp.  369 21 

Autrey  v.  Commodity  Credit  Corp.,  143  F. 

Supp.  550 14 

Bancitaly  Corp.  v.  Commissioner,  34  B.T.A.  494_  21 

Branum  v.  Campbell,  211  F.  2d  147 21 

Metropolitan  Commercial  Corp.  v.  Commissioner, 
decided  April  25,  1963  (22  T.C.M.  533) 21 

Patterson  v.  Motter,  55  F.  2d  692 21 

Thompson  v.  Commissioner, 

322  F.  2d  122 15,  16,  17,  18,  19 

Weir  V.  Commissioner,  109  F.  2d  996, 

certiorari  denied,  310  U.S.  637 21 

Statutes : 

Internal  Revenue  Code  of  1939 : 

Sec.  113  (26  U.S.C.  1952  ed.,  Sec.  113) 9 

Sec.  123  (26  U.S.C.  1952  ed..  Sec.  123) 9 

Internal  Revenue  Code  of  1954: 

Sec.  77  (26  U.S.C.  1964  ed..  Sec.  77) 

3,  5,  6,  9,  12,  13,  15,  16,  18,  19,  21,  23,  24,  25,  26 

Sec.  1001  (26  U.S.C.  1964  ed.,  Sec.  1001) 13 

Sec.  1016  (26  U.S.C.  1964  ed.. 

Sec.  1016) 6,  9,  12,  13,  16,  18,  21,  23,  24 

Revenue  Act  of  1939,  c.  247,  53  Stat.  862,  Sec.  223_  9 


Ul 

CITATIONS   (Continued) 

Page 

Miscellaneous : 

84  Cong.  Record,  Part  7,  pp.  7804-7805___10,  12,  27 

S.  Rep.  No.  648,  76th  Cong.,  1st  Sess.,  p.  8 

(1939-2  Cum.  Bull.  524,  529) 9,  13 

Treasury  Regulations  on  Income  Tax: 

Sec.  1.77-1  (26  C.F.R.,  Sec.  1.77-1) 12,  24 

Sec.  1.77-2  (26  C.F.R.,  Sec.  1.77-2) 24,  25 

Sec.  1.1016-5  (26  C.F.R.,  Sec.  1.1016-5) __  25,  26 


No.  22,248 
IN  THE 

(iTourt  of  Appeals 

FOR  THE  NINTH  CIRCUIT 


United  States  of  Ameeica,  Appellant, 

V. 

Harold  C.  and  Olive  B.  Isaak,  Appellees. 


On  Appeal  from  the  Judgment  of  the  United  States 

District  Court  for  the  Eastern  District  of 

Washington 


BRIEF  FOR  THE  APPELLANT 


OPINION  BELOW 

The  opinion  of  the  court  below  is  reported  at  267  F. 
Supp.  595. 

JURISDICTION 

This  appeal  involves  federal  income  taxes  for  1957. 
On  July  7,  1963,  taxpayers  paid  a  deficiency  in  their 
taxes  for  1957  of  $5,796.51  (R.  2,  38.)  A  timely  claim 
for  refund  was  thereafter  filed  which  was  rejected  on 


June  23,  1964.  (R.  2,  4.)  Within  the  time  provided  in 
Section  6532  of  the  Internal  Revenue  Code  of  1954,  on 
March  21,  1966,  taxpayers  brought  this  timely  action 
in  the  District  Court  for  recovery  of  the  taxes  paid. 
(R.  1-3.)  Jurisdiction  was  conferred  on  the  District 
Court  by  28  U.S.C,  Section  1346(a).  The  judgment  of 
the  District  Court  in  favor  of  the  taxpayers  was  en- 
tered on  June  5,  1967.  (R.  41.)  Within  sixty  days 
thereafter,  on  August  1,  1967,  the  United  States  filed 
a  notice  of  appeal.  (R.  42.)  Jurisdiction  is  conferred 
on  this  Court  by  28  U.S.C,  Section  1291. 

QUESTION  PRESENTED 

Did  the  District  Court  err  in  holding  that  a  farmer- 
taxpayer  who  has  elected  under  Section  77  of  the  In- 
ternal Revenue  Code  of  1954  to  include  in  income 
amounts  received  as  loans  from  the  Commodity  Credit 
Corporation  may  nonetheless  exclude  from  income  so 
much  of  the  amounts  as  the  taxpayer  repays  before 
the  end  of  the  taxable  year  in  redemption  of  his  crops 
held  as  collateral  for  such  loans? 

STATUTES  AND  REGULATIONS  INVOLVED 

The  relevant  statutory  and  regulatory  provisions 
are  set  forth  in  Appendix  A,  mfra. 

STATEMENT 

The  facts  as  stipulated  and  found  by  the  District 
Court  are  as  follows: 

Taxpayers  are  husband  and  wife  who  own  a  wheat 


farm  of  approximately  3,000  acres  in  Grant  County, 
Washington.  (R.  37.)  They  report  their  income  on  a 
calendar  year  basis  and  maintain  their  books  on  a 
cash  basis.  (R.  26,  38.) 

From  time  to  time  prior  to  the  taxable  year  1957, 
taxpayers  borrowed  money  from  the  Commodity  Credit 
Corporation,  an  agency  of  the  United  States  Depart- 
ment of  Agriculture,  using  their  wheat  crops  as  col- 
lateral. (R.  38.)  Prior  to  1957,  taxpayers  elected,  pur- 
suant to  Section  77  of  the  Internal  Revenue  Code  of 
1954,  to  treat  Commodity  Credit  loans  as  income  on 
their  tax  returns,  and  that  election  was  in  effect  for 
1957,  (R.  38-39.)  During  1957  taxpayers  received  loans 
from  the  Commodity  Credit  Corporation  in  the  total 
amount  of  $35,884.21.  (R.  39.)  On  August  6,  1957,  they 
borrowed  the  sum  of  $25,341.86  from  the  Connnodity 
Credit  Corporation  and  pledged,  as  collateral,  wheat 
stored  at  a  grain  company  in  Hartline,  Washington. 
(R.  32,  39.)  On  August  14,  1957,  they  borrowed  the 
sum  of  $2,479.33  from  the  Commodity  Credit  Corpora- 
tion and  pledged  as  collateral  wheat  stored  at  a  grain 
company  in  Coulee  City,  Washington.  (R.  26,  33.) 
These  loans  were  repaid  by  the  taxpayers  on  December 
5,  1957  and  November  15,  1957,  respectively,  at  which 
times  the  pledged  crops  were  redeemed.  (R.  26,  39.) 
Thereafter,  and  within  the  taxable  year  1957,  taxpay- 
ers sold  a  portion  of  the  redeemed  crops  for  $12,000. 
(R.  27,  39.) 

Taxpayers  reported  as  income  on  their  joint  1957 


4 

tax  return  Commodity  Credit  loans  in  the  amomit  of 
17,749.10.  They  also  reported  as  income  the  $12,000 
received  from  the  sale  in  1957  of  a  portion  of  the  re- 
deemed wheat.  (R.  39.)  They  also  deducted  all  costs 
and  expenses  incidental  to  growing,  harvesting  and 
handling  the  wheat  pledged  as  security  to  the  Com- 
modity Credit  Corporation  (R.  40)  and  the  interest 
paid  on  the  loans  (R.  28).  The  wheat  that  was  redeemed 
and  not  sold  in  1957  was  sold  in  1958  and  the  amounts 
received  were  reported  as  income  by  the  taxpayers  in 
their  1958  return.  (R.  40.) 

The  Commissioner  in  determining  a  deficiency  for 
1957  increased  taxpayers'  taxable  income  in  the  amount 
of  $16,135,11,  representing  the  unreported  portion  of 
the  redeemed  Commodity  Credit  loans.  (R.  39.)  The 
adjustment  was  computed  as  follows  (R.  27,  40)  : 

Commodity  Credit  loans  received 

in  1957 $35,884.21 

Coimnodity  Credit  loans  reported 

in  1957 7,749.10 

Unreported  Income $28,135.11 

Less  Redeemed  Wheat  Sales  Reported 12,000.00 

Adjustment  to  Income $16,135.11 


i 


Taxpayers  paid  the  deficiency  and,  following  disallow- 
ance of  their  subsequent  claim  for  refund,  brought 
this  action.  (R.  25-26,  38.)  The  case  was  submitted  for 
decision  on  an  agreed  statement  of  facts  and  judgment 


ceived  ratlier  than  waiting  until  the  loan  expires  or 
the  pledged  connnodity  is  redeemed  and  resold  in  a 
later  year.  The  single  issue  in  this  case  is  whether  an 
electing  taxpayer  who  has  received  such  loans  may 
exclude  them  from  income  when,  later  in  the  same  tax 
year,  he  chooses  to  repay  the  loan  and  redeem  the  crops 
pledged  as  collateral.  The  Government's  position  is  that 
for  an  electing  taxpayer  a  Commodity  Credit  loan  must 
be  treated  as  if  it  were  a  sale  of  the  pledged  crop 
upon  execution  of  the  loan,  and  that  subsequent  re- 
demption of  the  crop  cannot  change  the  tax  effect  of 
the  original  transaction.  The  statute  and  its  legislative 
history  clearly  intend  that  the  sale  analogy  apply  to 
farmers  who  make  the  permitted  election,  and  to  per- 
mit an  electing  taxpayer  to  alter  the  tax  consequences 
of  the  original  transaction  by  choosing  later  in  the  year 
to  redeem  his  crops  would  distort  the  purpose  of  the 
statute  and  give  the  taxpayer  an  opportunity  to  ma- 
nipulate income  for  reasons  unrelated  to  the  statute's 
remedial  objective. 

The  present  taxpayers  had  made  their  election  to  in- 
clude Commodity  Credit  loans  in  income  when  received 
prior  to  1957,  and  that  election  w^as  in  effect  in  1957. 
At  harvest  time  in  the  summer  of  1957  taxpayers  pro- 
cured Commodity  Credit  loans  for  which  they  pledged 
portions  of  their  wheat  crop.  After  harvest,  but  before 
the  end  of  the  tax  year,  taxpayers  chose  to  redeem 
some  of  the  wheat  posted  as  collateral  for  the  loans. 
(R.  26.)  Some  of  the  redeemed  wheat  was  sold  in  the 


8 

tax  year  and  the  rest  in  the  next  year  (R.  27)  and, 
although  the  record  does  not  xjrovide  any  insight  into 
taxpayer's  motives,  it  may  be  presumed  that  it  was 
to  their  advantage  to  sell  the  wheat  themselves  at  a 
price  higher  than  the  amount  of  the  loan  or  to  include 
at  least  a  portion  of  the  proceeds  for  their  wheat  in 
their  income  for  the  following  year.  Neither  of  these 
motivations  suffice  to  permit  a  taxpayer  to  revoke 
a  completed  income  transaction  and  avoid  the  tax 
effect  of  the  prior  election  and  receipt  of  income,  and 
there  is  no  reason  grounded  in  the  language  or  policy 
of  Section  77  to  permit  the  present  taxpayers  that 
freedom  of  action. 

Section  77(a)  provides  that  "Amounts  received  as 
loans  from  the  Commodity  Credit  CorjDoration  shall, 
at  the  election  of  the  taxpayer,  be  considered  as  income 
and  shall  be  included  in  gross  income  for  the  taxable 
year  in  which  received."  Section  77(b)  provides  that 
the  election  allowed  by  Section  77(a)  "shall  be  ad- 
hered to  with  respect  to  all  subsequent  taxable  years 
unless  with  the  approval  of  the  Secretary  or  his  dele- 
gate a  change  to  a  different  method  is  authorized." 
Thus  the  language  of  the  statute  specifies  that  it  is 
the  receipt  of  the  proceeds  of  the  loan  that  is  the  tax- 
able event,  and  also  that  a  taxpayer  should  enjoy  no 
freedom  to  switch  back  and  forth  from  reporting  or 
not  reporting  loan  amounts  as  he  chooses  without  the 
approval  of  the  Commissioner. 


ceived  rather  than  waiting  until  the  loan  expires  or 
the  pledged  commodity  is  redeemed  and  resold  in  a 
later  year.  The  single  issue  in  this  case  is  whether  an 
electing  taxpayer  who  has  received  such  loans  may 
exclude  them  from  income  when,  later  in  the  same  tax 
year,  he  chooses  to  repay  the  loan  and  redeem  the  crops 
pledged  as  collateral.  The  Government's  position  is  that 
for  an  electing  taxpayer  a  Commodity  Credit  loan  must 
be  treated  as  if  it  were  a  sale  of  the  pledged  crop 
upon  execution  of  the  loan,  and  that  subsequent  re- 
demption of  the  crop  cannot  change  the  tax  effect  of 
the  original  transaction.  The  statute  and  its  legislative 
history  clearly  intend  that  the  sale  analogy  apply  to 
farmers  who  make  the  permitted  election,  and  to  per- 
mit an  electing  taxpayer  to  alter  the  tax  consequences 
of  the  original  transaction  by  choosing  later  in  the  year 
to  redeem  his  crops  would  distort  the  purpose  of  the 
statute  and  give  the  taxpayer  an  opportunity  to  ma- 
nipulate income  for  reasons  unrelated  to  the  statute's 
remedial  objective. 

The  present  taxpayers  had  made  their  election  to  in- 
clude Commodity  Credit  loans  in  income  when  received 
prior  to  1957,  and  that  election  was  in  effect  in  1957. 
At  harvest  time  in  the  summer  of  1957  taxpayers  pro- 
cured Commodity  Credit  loans  for  which  they  pledged 
portions  of  their  wheat  crop.  After  harvest,  but  before 
the  end  of  the  tax  year,  taxpayers  chose  to  redeem 
some  of  the  wheat  posted  as  collateral  for  the  loans. 
(R.  26.)  Some  of  the  redeemed  wheat  was  sold  in  the 


8 

tax  year  and  the  rest  iu  the  next  year  (R.  27)  and, 
although  the  record  does  not  provide  any  insight  into 
taxpayer's  motives,  it  may  be  presumed  that  it  was 
to  their  advantage  to  sell  the  wheat  themselves  at  a 
price  higher  than  the  amount  of  the  loan  or  to  include 
at  least  a  portion  of  the  proceeds  for  their  wheat  in 
their  income  for  the  following  year.  Neither  of  these 
motivations  suffice  to  permit  a  taxpayer  to  revoke 
a  completed  income  transaction  and  avoid  the  tax 
effect  of  the  prior  election  and  receipt  of  income,  and 
there  is  no  reason  grounded  in  the  language  or  policy 
of  Section  77  to  permit  the  present  taxpayers  that 
freedom  of  action. 

Section  77(a)  provides  that  "Amounts  received  as 
loans  from  the  Commodity  Credit  Corporation  shall, 
at  the  election  of  the  taxpayer,  be  considered  as  income 
and  shall  be  included  in  gross  income  for  the  taxable 
year  in  which  received."  Section  77(b)  provides  that 
the  election  allowed  by  Section  77(a)  "shall  be  ad- 
hered to  with  respect  to  all  subsequent  taxable  years 
unless  with  the  approval  of  the  Secretary  or  his  dele- 
gate a  change  to  a  different  method  is  authorized." 
Thus  the  language  of  the  statute  specifies  that  it  is 
the  receipt  of  the  proceeds  of  the  loan  that  is  the  tax- 
able event,  and  also  that  a  taxpayer  should  enjoy  no 
freedom  to  switch  back  and  forth  from  reporting  or 
not  reporting  loan  amounts  as  he  chooses  without  the 
approval  of  the  Commissioner. 


9 

The  Commissioner  treats  a  Commodity  Credit  loan 
transaction  for  income  tax  purposes  as  if  it  were  a  sale 
of  the  collateral  upon  execution  of  the  loan  and  a  re- 
purchase of  the  collateral  upon  redemption.  That 
analogy  and  the  resulting  tax  treatment  draw  explicit 
support  from  the  legislative  history  of  Section  77  and 
from  the  inclusion  in  the  basis  provisions  of  the  Code 
of  a  rule  prescribing  the  electing  farmer's  basis  in  re- 
deemed Commodity  Credit  loans.  Section  1016(a)(8), 
Internal  Revenue  Code  of  1954  (Appendix  A,  infra.) 
The  purpose  of  these  provisions  was  explained  by  the 
Senate  Finance  Committee  in  its  report  (S.  Rep.  No. 
648,  76th  Cong.,  1st  Sess.,  p.  8  (1939-2  Cum.  Bull. 
524,  529)),  which  accompanied  the  Revenue  Act  of 
1939,  c.  247,  53  Stat.  862,  Section  223(a)  of  which  added 
Sections  123  and  113(b)(1)(G)  (the  predecessors  of 
1954  Code  Sections  77  and  1016(a)(8))  to  the  Internal 
Revenue  Code  of  1939  (26  U.S.C.  1952  ed.,  Sees.  113, 
123),  as  follows: 

The  attention  of  your  committee  has  been  drawn 
to  the  fact  that  loans  by  the  Commodity  Credit 
Corporation  to  producers  of  agricultural  commod- 
ities, on  the  security  of  such  conmiodities,  though 
in  form  loans,  should  be  treated  for  income-tax 
purposes  as  though  such  commodities  had  been 
sold  in  the  year  of  the  loan  for  the  amount  of  the 
loan.  Nevertheless,  existing  law  requires  them  to 
be  treated  as  loans,  with  the  result  that  when  the 
pledged  commodities  are  eventually  sold  taxpayers 
are  required  to  take  up  a  large  amount  of  income 
and,  in  addition,  will  not  longer  have  available  to 
them  their  deductions  on  account  of  production 


10 

expenses.  In  order  to  avoid  this  harsh  result,  sec- 
tion 223  of  the  bill  adds  a  new  section  49  to  the  In- 
ternal Revenue  Code,  giving  taxpayers  an  election 
to  treat  such  loans  as  income.  An  election  once  so 
made  is  binding  as  to  all  future  years  unless  the 
Connnissioner's  approval  is  obtained  to  a  change 
of  method.  Section  223  also  adds  a  new  section 
113(b)l(G),  providing  for  proper  adjustments  of 
basis  in  the  event  it  ever  becomes  material  to  com- 
pute gain  or  loss  upon  a  subsequent  sale  or  other 
disposition  of  such  commodities. 

The  sale  analogy  and  the  prohibition  against  chang- 
ing one's  mind  after  a  transaction  has  been  completed 
were  spelled  out  even  more  clearly  in  the  House  debate 
on  the  Senate  amendment  which  added  Section  223(a) 
to  the  Revenue  Act  of  1939.  Representative  Cooper, 
spokesman  in  behalf  of  the  amendment,  explained  (84 
Cong.  Record  Part  7,  p.  7804  (1939))  :® 

Mr.  Cooper.    *  *  * 


The  next  amendment  appearing  at  the  bottom 
of  page  44  has  to  do  with  commodity-credit  loans. 
It  provides  in  simple  terms  that  where  a  farmer 
places  his  products,  cotton  or  whatever  the  product 
may  be,  in  what  is  commonly  termed  the  Govern- 
nient  loan,  he  receives  a  loan  on  that  product.  This 
provides  that  so  far  as  the  question  of  taxes  is 
concerned  the  transaction  mav  be  treated  the  same 


®The  full  text  of  the  House  discussion  of  Section  223(a) 
of  the  Senate-passed  bill  is  set  forth  in  Appendix  B, 
infra. 


11 

as  the  sale  of  that  product  so  far  as  the  amount  of 
money  he  receives  is  concerned.  The  point,  of 
course,  is  that  a  farmer  might  get  a  loan  this  year 
and  his  product  continue  in  the  Conmiodity  Credit 
Corporation.  Next  year  he  might  get  a  loan  and 
so  on.  The  result  might  be  that,  considered  as  a 
loan,  the  income  would  all  come  at  one  time,  so 
far  as  the  tax  is  concerned,  and  he  might  be  re- 
quired to  pay  a  tax  on  the  whole  amount  whereas 
he  had  been  receiving  these  loans  all  along.  The 
effect  of  this  amendment  is  simply  to  treat  these 
loans  to  the  farmer  so  far  as  internal  [sic]  taxes 
are  concerned  the  same  as  if  it  had  been  a  sale. 


Mr.  August  H.  Andresen.  In  the  case  of  corn, 
where  a  loan  of  57  cents  per  bushel  is  made  on  the 
corn,  and  we  will  assume  the  market  price  is  40 
cents,  is  it  optional  with  the  farmer  to  treat  that 
loan  either  as  a  sale  or  as  a  loan? 

Mr.  Cooper.  That  is  right. 

Mr.  August  H.  Andresen.  It  is  optional  with 
him? 

Mr.  Cooper.  It  is  optional  \^^th  the  farmer,  so 
far  as  the  income  tax  is  concerned,  whether  he 
wants  to  treat  it  as  a  loan  or  sale. 

Mr.  August  H.  Andresen.  Assuming  that  he 
does  treat  it  as  a  sale,  but  decides  after  he  has 
made  his  return  that  he  wants  to  treat  it  as  a  loan, 
and  he  loses  10  cents  a  bushel  on  the  corn. 

Mr.  Cooper.  He  cannot  do  that.  If  he  wants  to 
exercise  his  owai  option  and  treat  it  as  a  sale  and 
pay  his  income  tax  on  the  sale,  then  he  cannot  come 


12 

back  later  and  say,  "I  want  to  change  it  now  and 
treat  that  as  a  loan  and  not  as  a  sale."  He  has  to  do 
one  or  the  other. 

In  further  explaining  the  effect  of  a  farmer's  election 
to  treat  Commodity  Credit  loans  as  sales,  Representa- 
tive Cooper  stated  in  response  to  a  question  that,  al- 
though the  bill  permits  a  change  of  election  upon  the 
Commissioner's  approval  (see  Section  77(b),  Internal 
Revenue  Code  of  1954),  "there  is  no  permit  to  change 
with  respect  to  the  years  in  which  the  taxpayer  has 
already  elected  to  treat  such  loans  as  sales"  and  that 
"You  cannot  get  a  permit  to  change  after  you  once 
exercise  your  option  and  elect."  (84  Cong.  Record,  Part 
7,  p.  7804  (1939)).  Consistent  with  this  expression,  the 
Regulation  under  Section  77  requires  that  an  applica- 
tion for  permission  to  make  a  change  in  the  method 
of  accounting  in  a  year  subsequent  to  the  year  in  which 
the  loans  are  first  reported  as  sales  must  be  filed  mthin 
90  days  after  the  beginning  of  the  taxable  year. 
Treasury  Regulations  on  Income  Tax  (1954  Code), 
Section  1.77-1  (Appendix  A,  infra.)  Thus,  without  a 
formal  application  for  permission  to  make  the  change, 
the  farmer  is  presumed  to  have  chosen  to  remain  on 
the  sales  method  of  reporting  the  loans  and  that  method 
must  apply  to  all  loans  as  they  are  received  in  the 
taxable  year. 

The  basis  provision,  Section  1016(a)(8),  Internal 
Revenue  Code  of  1954,  establishes  that  Congress  an- 
ticipated continued  dealing  between  an  electing  farmer 


13 

and  the  Commodity  Credit  Corporation  with  respect  to 
particular  loans  after  they  were  first  negotiated  and 
provided  for  adjustments  to  basis  to  carry  through  the 
sale-repurchase  analogy.  Section  1016(a)(8)  provides 
that  basis  adjustments  shall  be  made  "in  the  case  of 
property  pledged  to  the  Commodity  Credit  Corpora- 
tion, to  the  extent  of  the  amount  received  as  a  loan  from 
the  Commodity  Credit  Corporation  and  treated  by  the 
taxpayer  as  income  for  the  year  in  which  received  pur- 
suant to  section  77  *  *  *."  Regulations  Section  1.1016- 
5(e)  (1954  Code)  (Appendix  A,  infra)  provides  that 
"the  basis  of  such  property  shall  be  increased  by  the 
amount  received  as  a  loan  from  such  corporation  and 
treated  by  the  taxpayer  as  income  for  the  year  in  which 
received  under  Section  77,  *  *  *."  The  basis  provi- 
sions of  the  Internal  Revenue  Code  generally  relate  to 
"the  sale  or  other  disposition  of  property"  (Section 
1001(a),  Internal  Revenue  Code  of  1954)  and  their 
invocation  necessarily  implies  a  sale  or  exchange  of 
property.  The  reference  in  the  Senate  report  on  the 
Commodity  Credit  loan  provisions  to  "proper  adjust- 
ments of  basis  in  the  event  it  ever  becomes  material  to 
compute  gain  or  loss  upon  a  sul^sequent  sale  or  other 
disposition  of  such  commodities"  (S.  Rep.  No.  648, 
supra,  p.  8  (1939-2  Cum.  Bull.  524,  529)  demonstrates 
that  the  sale  analogy  was  intended  to  continue  through- 
out the  transaction.  A  pertinent  "subsequent  sale  or 
other  disposition  of  such  commodities"  can  only  occur 
if  the  taxpayer  redeems  the  pledged  crop. 


14 

Under  the  Commodity  Credit  statutory  provisions, 
if  there  is  no  redemption  by  the  time  the  loan  expires 
the  transaction  is  at  an  end  and  the  Government  may 
dispose  of  the  crop  as  it  pleases,  but  without  recourse 
to  the  borrower  for  any  resulting  deficiency.  7  U.S.C., 
Section  1425  (1964) ;  Autrey  v.  Commodity  Credit 
Corp.,  143  F.  Supp.  550  (Ark.,  1956).®  It  is  therefore 
clear  that  an  electing  taxpayer  has  no  occasion  to  re- 
compute his  basis  in  the  crop  unless  he  redeems  it,  and 
Congress  has  prescribed  what  that  basis  is  upon  re- 
demption by  treating  the  transaction  as  a  sale  and  sub- 
sequent repurchase. 

The  taxpayers  apparently  do  not  contest  the  sale- 
repurchase  analogy  as  it  applies  to  loans  redeemed 
after  the  taxable  year  in  which  they  were  made.  How- 
ever, there  is  no  reason  to  consider  a  redemption  within 
the  taxable  year  of  the  loan  as  a  different  kind  of  trans- 
action than  a  redemption  in  another  taxable  year.  As  a 
practical  matter  the  transactions  are  the  same  except 
for  the  date  on  which  they  occur.  There  is  no  theory 


®Under  the  commodity  credit  program  the  farmer  has 
the  option  of  either  repaying  the  loan  by  the  maturity 
date  and  redeeming  the  pledged  crop,  or  allowing  the 
Commodity  Credit  Corporation  to  foreclose  and  sell 
it.  In  the  event  of  foreclosure  the  farmer-borrower  is 
not  personally  liable  for  any  deficiency.  Therefore 
no  loss  is  deductible  on  account  of  a  deficiency,  and 
any  excess  received  is  includible  in  income  in  the  year 
of  receipt.  See  Regulations  §1.77-2. 


15 

of  taxation  which  supports  a  retroactive  exclusion 
from  income  of  items  already  received  based  upon 
events  which  occur  later  in  the  taxable  year  but  which 
would  not  support  retroactive  exclusion  if  the  same 
later  event  occurred  in  a  different  taxable  year.  That 
is,  if  redemption  on  January  1  of  the  taxable  year 
following  the  year  of  the  loan  does  not  warrant  exclu- 
sion of  the  amount  from  income  on  the  date  received, 
redemption  on  December  31  of  the  taxable  year  of  the 
loan  cannot,  for  any  logical  or  policy  reason,  justify 
retroactive  exclusion.  In  short,  once  the  taxpayer  elects 
under  Section  77  to  treat  commodity  credit  loans  as 
sales  income,  the  election  is  binding  unless  and  until 
permission  to  change  such  method  of  accounting  is 
obtained  from  the  Commissioner. 

The  opinion  of  the  court  below  (R.  34-36)  offers  no 
independent  analysis  of  the  legal  issue  presented  here ; 
instead,  the  opinion  briefly  quotes  from  and  sununarily 
follows  the  holding  of  the  Fifth  Circuit  in  Thompson  v. 
Commissioner,  322  F.  2d  122  (1963),  a  case  which 
raised  the  very  issue  presented  here.  In  Thompson,  a 
majority  of  the  court  (Chief  Judge  Lumbar d,  sitting 
by  designation,  dissenting)  concluded  that  an  electing 
farmer  would  be  deprived  of  his  "free  ride  of  the 
market"  {Id.,  p.  130)  if  the  Commissioner's  rule  ap- 
plied, and  that  the  rule  poses  questions  which  the  Court 
felt  itself  unprepared  to  answer  regarding  the  "yet 
unexplored  right  to  treat  the  second  transaction  not 
specified  in  Section  77 — the  redemption  of  the  loan — as 


16 

a  sale  giving  rise  to  a  cost  basis."  {Id.,  p.  131),  In  Ms 
dissent,  Chief  Judge  Lumbard  observed  that  once  "the 
taxpayer  made  his  election  under  §  77  to  treat  the  loans 
as  income  at  the  time  of  receiving  the  proceeds  of  the 
loans  there  is  no  reason  why  he  should  not  abide  the 
consequences  of  that  decision,"  that  "there  is  no  reason 
why  the  courts  should  relieve  him  of  the  consequences 
[of  his  election]  for  one  year  when  it  appears  to  him 
that  it  would  be  more  advantageous  not  to  treat  the 
loans  as  income",  and  that  "It  is  just  as  if  a  taxpayer 
sells  his  property,  then  buys  it  back  and  sells  it  again." 
Id.,  p.  132. 

The  majority  views  in  Thompson  are  vulnerable  on 
two  counts:  first,  the  Government's  position  has  no 
effect  whatever  on  the  policy  behind  the  Commodity 
Credit  program  that  farmers  should  enjoy  flexibility 
in  taking  advantage  of  a  fluctuating  market,  and  sec- 
ond, the  court  made  no  reference  to  the  explicit  basis 
provision  applicable  to  Commodity  Credit  loans  (Sec- 
tion 1016(a)(8),  Internal  Revenue  Code  of  1954)  and 
thus  erroneously  inferred  that  Congress  had  not  con- 
sidered or  settled  the  taxpayer's  right  to  assert  a  cost 
basis  in  redeemed  crops.  With  respect  to  the  farmer's 
market  flexibility,  the  right  to  redeem  pledged  crops 
exists  through  to  the  maturity  date  of  the  loan  irrespec- 
tive of  the  farmer's  treatment  of  the  loan  amounts  for 
income  tax  purposes.  Commodity  Credit  loans  are  made 
at  a  rate  established  at  the  beginning  of  the  crop  year, 
based  upon  the  rates  of  the  nearest  Exchange.  That  rate 


17 

is  not  reduced  during  the  crop  year.  At  the  time  of  the 
announcement  of  the  support  rate,  the  maturity  date 
of  loans  is  also  announced,  a  date  that  always  extends 
into  the  next  calendar  year.  Not  only  may  the  farmer 
redeem  the  loan,  but  at  any  time  prior  to  one  month 
before  the  maturity  date  he  may  return  any  part  of  the 
redeemed  loan  in  order  to  obtain  another  loan  at  the 
established  rate.  (R.  29.)  Because  these  transactions 
may  occur  in  taxable  years  after  the  year  of  the  loan, 
their  subsequent  tax  treatment  must  reflect  the  fact 
that  the  original  amount  of  the  loan  was  already  re- 
ported as  income.  Thus  upon  redemption  the  farmer 
simply  assumes  a  basis  in  the  redeemed  crop  equal  to 
the  cost  of  the  redemption,  i.e.  the  amount  of  the  loan 
previously  reported  as  the  "sale"  price.  His  right  to 
redeem,  repledge,  redeem,  etc.,  depending  on  the  mar- 
ket advantage  to  him  in  doing  so,  is  unaffected  by  his 
inclusion  of  the  original  amount  in  income.  If  he  sells 
the  crop  either  in  the  taxable  year  of  the  loan  or  there- 
after for  an  amount  greater  than  his  basis,  that  incre- 
ment is  additional  income  to  him  as  of  the  date  of  sale. 
Likewise,  if  he  sells  at  less  than  his  basis,  he  realizes 
a  reportable  loss.  In  its  apprehension  regarding  cost 
basis  the  court  in  Thompson  failed  to  perceive  that 
the  problem  is  no  different  for  a  taxpayer  who  re- 
deems after  including  the  loan  in  income  in  the  previous 
year  than  it  is  for  a  taxpayer  who  redeems  in  the 
taxable  year  of  the  loan.  Since  Congress  did  provide  a 
statutory  answer  to  the  l^asis  problem,  although  un- 


18 

acknowledged  by  the  court  in  Tkompson,  there  is  no 
reason  for  concluding  that  the  basis  provision  was  in- 
tended to  operate  only  in  the  event  of  redemption  in 
the  year  following  the  year  of  the  loan.® 

The  result  reached  in  TJiompson  and  followed  by  the 
District  Court  in  the  present  case  puts  electing  tax- 
payers in  the  novel  position  of  being  able  to  revoke 
their  election  at  will  (contrary  to  the  express  Con- 
gressional mandate  in  Section  77),  assess  their  tax 
situation  as  each  year  comes  to  a  close,  and  negate 
transactions  which  at  the  time  entered  into  yielded 
reportable  income.  If,  for  example,  an  electing  tax- 
payer anticipated  a  poor  year  compared  to  the  year 
coming  to  an  end,  he  could  on  December  31  redeem  a 
Commodity  Credit  loan  and  exclude  the  amount  from 
income  in  that  year  and  repledge  the  crops  on  January 
1  in  anticipation  of  including  the  amount  of  the  loan 
in  income  in  the  later  taxable  year.  The  advantageous 
apportioning  of  gross  income  into  various  tax  years 


®  The  Government  must  bear  some  responsibility  for 
the  failure  of  the  court  in  TJiompson  to  refer  to  Sec- 
tion 1016(a)(8).  Although  the  Government  asserted 
in  its  brief  in  Thompson  that  a  redeeming  farmer 
assumes  a  cost  basis  in  the  redeemed  crop  equal  to  the 
amount  of  the  redemption,  the  assertion  was  not  sup- 
ported by  a  citation  to  Section  1016(a)(8).  See  page 
35  of  Brief  for  the  Respondent  in  Thompson  v.  Com- 
missioner, 322  F.  2d  122  (C.A.  5th,  1963),  relevant 
excerpts  of  which  were  appended  to  the  Government's 
brief  in  the  District  Court  in  the  present  case. 


19 

should  not  be  a  consideration  for  the  redemption  of 
Commodity  Credit  loans;  an  electing  taxpayer  must 
understand  that  once  he  elects  under  Section  77  to 
treat  the  loans  as  income,  he  realizes  taxable  income 
upon  receipt  of  loan  proceeds  in  the  year  of  receipt, 
just  as  if  he  had  sold  the  pledged  crops.  Moreover,  this 
result  is  not  as  inconsistent  with  the  Commodity  Credit 
loan  program  as  the  Fifth  Circuit  suggested  in  Thomp- 
son, supra.  A  Commodity  Credit  loan  is  essentially  a 
guarantee  to  the  farmer  that  he  will  realize  on  the 
pledged  crop  at  least  the  amount  of  the  loan,  for  if  the 
loan  is  not  redeemed  by  the  maturity  date  the  Corpora- 


20 

tion's  recourse  is  only  to  the  pledged  crop.  7  U.S.C. 
Section  1425.  Thus,  as  a  practical  matter,  the  loan  is 
more  in  the  nature  of  a  sale  for  a  guaranteed  minimum 
rather  than  a  standard  debt  transaction  in  which  the 
borrower  simply  pays  interest  for  the  use  of  principal 
over  a  given  period  of  time.® 


®The  sale  analogy,  however,  is  not  carried  through  to 
affect  the  character  of  interest  payments  made  by 
the  taxpayer  who  redeems  a  pledged  crop.  The  present 
taxpayers  paid  interest  when  they  redeemed  their 
crops  (R.  31  A,  32 A)  and  deducted  those  payments 
in  their  1957  return  (11.  28).  That  deduction  was  not 
challenged  by  the  Commissioner.  It  is  to  be  noted  that 
interest  is  due  upon  redemption  in  whatever  year  re- 
demption occurs,  but  that  upon  foreclosure  no  interest 
is  paid.  (R.  29-30.)  Thus,  the  allowance  of  the  interest 
deduction  to  the  present  taxpayers  is  no  different 
from  the  treatment  given  taxpayers  who  redeem  in  a 
subsequent  tax  year,  i.e.,  taxpayers  as  to  whom  the 
sale-repurchase  analogy  without  question  applies,  as 
the  court  in  Thompson  conceded. 


21 

Generally  speaking,  the  repurchase  of  property  by  a 
seller  does  not  negate  the  original  transaction  so  long 
as  the  original  sale  and  the  repurchase  transactions 
were  bona  fide.  Weir  v.  Commissioner,  109  F.  2d  996 
(C.A.  3d,  1940),  certiorari  denied,  310  U.S.  637 ;  Patter- 
son V.  Hotter,  55  F.  2d  692  (Kan.,  1931)  ;  Ahhot  v. 
Welch,  31  F.  Supp.  369  (Mass.,  1940).  A  repurchase 
of  property  in  the  same  tax  year  as  the  original  sale  is 
not  treated  as  a  recission  of  the  sale  and  does  not 
mitigate  the  gain  or  loss  realized  on  the  sale.  Branum  v. 
Campbell,  211  F.  2d  147  (C.A.  5th,  1954)  ;  Bancitaly 
Corp.  V.  Commissioner,  34  B.T.A.  494  (1936)  ;  Metro- 
politan Commercial  Corp.  v.  Commissioner,  decided 
April  25,  1963  (22  T.C.M.  533).  There  is  no  basis  in  the 
statutory  language  or  the  legislative  history  of  Sections 
77  and  1016(a)(8)  for  concluding  that  these  rules  do 
not  apply  to  Commodity  Credit  loans  which  Congress 
has  determined  should  be  taxed  as  sales  upon  the  tax- 
payer's election  to  so  treat  them. 


22 

CONCLUSION 

The  judgment  of  the  District  Court  should  be  re- 
versed with  directions  to  dismiss  the  complaint. 

Respectfully  submitted, 

Mitchell  Rogovin, 

Assistant  Attorney  General. 
Meyee  Rothwacks, 
Harry  Baum, 
Louis  M.  Kauder, 
Attorfieys, 

Department  of  Justice, 
Washington,  B.C.  20530. 
Of  Counsel: 
Smithmoore  p.  Myers, 

United  States  Attorney. 
February,  1968. 


CERTIFICATE 

I  certify  that,  in  connection  with  the  preparation  of 
this  brief,  I  have  examined  Rules  18,  19,  and  39  of  the 
United  States  Court  of  Appeals  for  the  Ninth  Circuit, 
and  that,  in  my  opinion,  the  foregoing  l)rief  is  in  full 
compliance  with  those  rules. 

Dated: day  of ,  1968. 

United  States  Attorney 


21 

Generally  speaking,  the  repureliase  of  property  by  a 
seller  does  not  negate  the  original  transaction  so  long 
as  the  original  sale  and  the  repurchase  transactions 
were  bona  fide.  Weir  v.  Commissioner,  109  F.  2d  996 
(C.A.  3d,  1940),  certiorari  denied,  310  U.S.  637 ;  Patter- 
son V.  Motter,  55  F.  2d  692  (Kan.,  1931) ;  Abbot  v. 
Welch,  31  F.  Supp.  369  (Mass.,  1910).  A  repurchase 
of  property  in  the  same  tax  year  as  the  original  sale  is 
not  treated  as  a  recission  of  the  sale  and  does  not 
mitigate  the  gain  or  loss  realized  on  the  sale,  Branum  v. 
Campbell,  211  F.  2d  147  (C.A.  5th,  1954)  ;  Bancitaly 
Corp.  V.  Commissioner,  34  B.T.A.  494  (1936)  ;  Metro- 
politan Commercial  Corp.  v.  Commissioner,  decided 
April  25,  1963  (22  T.C.M.  533).  There  is  no  basis  in  the 
statutory  language  or  the  legislative  history  of  Sections 
77  and  1016(a)(8)  for  concluding  that  these  rules  do 
not  apply  to  Commodity  Credit  loans  which  Congress 
has  determined  should  be  taxed  as  sales  upon  the  tax- 
payer's election  to  so  treat  them. 


22 

CONCLUSION 

The  jiidgment  of  the  District  Court  should  be  re- 
versed with  directions  to  dismiss  the  complaint. 

Respectfully  submitted, 

Mitchell  Rogovin, 

Assistant  Attorney  General. 
Meyer  Rothwacks, 
Haery  Baum, 
Louis  M.  Kauder, 
Attorneys, 

Department  of  Justice, 
Washington,  B.C.  20530. 
Of  Counsel: 
Smithmoore  p.  Myers, 

United  States  Attorney. 
February,  1968. 


CERTIFICATE 

I  certify  that,  in  connection  with  the  preparation  of 
this  brief,  I  have  examined  Rules  18,  19,  and  39  of  the 
United  States. Court  of  Appeals  for  the  Ninth  Circuit, 
and  that,  in  my  opinion,  the  foregoing  brief  is  in  full 
compliance  with  those  rules. 

Dated: day  of ,  1968. 

United  States  Attorney 


25 

(a)  If  a  taxpayer  elects  or  has  elected  under 
section  77,  section  123  of  the  Internal  Revenue 
Code  of  1939,  or  section  223(d)  of  the  Revenue 
Act  of  1939  (53  Stat.  897),  as  amended,  to  include 
in  his  gross  income  the  amount  of  a  loan  from  the 
Commodity  Credit  Corporation  for  the  taxable 
year  in  which  it  is  received,  then — 

(1)  No  part  of  the  amount  realized  by  the 
Conmiodity  Credit  Corporation  upon  the  sale 
or  other  disposition  of  the  commodity  pledged 
for  such  loan  shall  be  recognized  as  income  to 
the  taxpayer,  unless  the  taxpayer  receives  an 
amount  in  addition  to  that  advanced  to  him  as 
the  loan,  in  which  event  such  additional  amount 
shall  be  included  in  the  gross  income  of  the  tax- 
payer for  the  taxable  year  in  which  it  is  re- 
ceived, and 

(2)  No  deductible  loss  to  the  taxpayer  shall 
be  recognized  on  account  of  any  deficiency  re- 
alized by  the  Commodity  Credit  Corporation  on 
such  loan  if  the  taxpayer  was  relieved  from 
liability  for  such  deficiency. 


(26  C.F.R.,  Sec.  1.77-2.) 

§  1.1016-5     Miscellaneous  acljustments   to   basis. 


(e)  Loans  from  Commodity  Credit  Corpora- 
tion. In  the  case  of  property  pledged  to  the  Com- 
modity Credit  Corporation,  the  basis  of  such  prop- 
erty shall  be  increased  by  the  amount  received 
as  a  loan  from  such  corporation  and  treated  by 
the  taxpayer  as  income  for  the  year  in  which  re- 


26 

ceived  under  section  77,  or  under  section  123  of 
the  Internal  Revenue  Code  of  1939.  The  basis  of 
such  property  shall  be  reduced  to  the  extent  of 
any  deficiency  on  such  loan  with  respect  to  which 
the  taxpayer  has  been  relieved  from  liability. 


(26  C.F.R.,  Sec.  1.1016-5.) 


27 
APPENDIX  B 

84  Cong.  Record,  Part  7,  pp.  7804-7805 ; 
Mr.  COOPER.  *  *  * 


The  next  amendment  appearing  at  the  bottom  of 
page  44  has  to  do  with  commodity-credit  loans.  It 
provides  in  simple  terms  that  where  a  farmer 
places  his  prodncts,  cotton  or  whatever  the  product 
may  be,  in  what  is  commonly  termed  the  Govern- 
ment loan,  he  receives  a  loan  on  that  product.  This 
provides  that  so  far  as  the  question  of  taxes  is  con- 
cerned the  transaction  may  be  treated  the  same  as 
the  sale  of  that  product  so  far  as  the  amount  of 
money  he  receives  is  concerned.  The  point,  of 
course,  is  that  a  farmer  might  get  a  loan  this  year 
and  his  product  continue  in  the  Connnodity  Credit 
Corporation.  Next  year  he  might  get  a  loan  and  so 
on.  The  result  might  be  that,  considered  as  a  loan, 
the  income  would  all  come  at  one  time,  so  far  as 
the  tax  is  concerned,  and  he  might  be  required  to 
pay  a  tax  on  the  whole  amount  whereas  he  had 
been  receiving  these  loans  all  along.  The  effect 
of  this  amendment  is  simply  to  treat  these  loans 
made  to  the  farmer  so  far  as  internal  taxes  are 
concerned  the  same  as  if  it  had  been  a  sale. 

Miss  SUMNER  of  Illinois.  Will  the  gentle- 
man yield? 

Mr.  COOPER.  I  yield  to  the  gentlewoman 
from  Illinois. 

Miss  SUMNER  of  Illinois.  We  over  here  are 
wondering  if  that  paragraph  is  complete  enough 


28 

to  permit  him  to  deduct  when  he  makes  payment 
in  the  following  year  as  a  loss,  if  he  has  one  ? 

Mr.  COOPER.  Oh,  yes ;  it  permits  the  deduc- 
tion of  a  loss. 

Mr.  AUGUST  H.  ANDRESEN.  Will  the  gen- 
tleman yield "? 

Mr.  COOPER.  I  yield  to  the  gentleman  from 
Minnesota. 

Mr.  AUGUST  H.  ANDRESEN.  In  the  case 
of  corn,  where  a  loan  of  57  cents  per  bushel  is 
made  on  the  corn,  and  we  will  assume  the  market 
price  is  40  cents,  is  it  optional  with  the  farmer  to 
treat  that  loan  either  as  a  sale  or  as  a  loan? 

Mr.  COOPER.     That  is  right. 

Mr.  AUGUST  H.  ANDRESEN.  It  is  optional 
with  himi 

Mr.  COOPER.  It  is  optional  with  the  farmer, 
so  far  as  the  income  tax  is  concerned,  whether  he 
wants  to  treat  it  as  a  loan  or  sale. 

Mr.  AUGUST  H.  ANDRESEN.  Assuming 
that  he  does  treat  it  as  a  sale,  but  decides  after  he 
has  made  his  return  that  he  wants  to  treat  it  as 
a  loan,  and  he  loses  10  cents  a  bushel  on  the  corn. 

Mr.  COOPER.  He  cannot  do  that.  If  he  wants 
to  exercise  his  own  option  and  treat  it  as  a  sale 
and  pay  his  income  tax  on  the  sale,  then  he  cannot 
come  back  later  and  say,  "I  want  to  change  it  now 
and  treat  that  as  a  loan  and  not  as  a  sale."  He  has 
to  do  one  or  the  other. 


29 

Mr.  AUGUST  H.  ANDRESEN.  Then  title 
would  in  reality  pass  to  the  Government? 

Mr.  COOPER.  This  does  not  make  any  dif- 
ference so  far  as  title  is  concerned.  This  treats  it 
as  far  as  income-tax  payment  is  concerned  what- 
ever way  he  wants  to  treat  it. 

Mr.  AUGUST  H.  ANDRESEN.  It  seems  to 
me  this  is  going  to  be  rather  hard  on  the  cotton 
farmers  who  have  so  much  cotton  in  loan  with 
the  Govermnent. 

Mr.  COOPER.  As  long  as  it  is  optional,  I  do 
not  see  how  it  could  hurt  anybody. 

Mr.  BUCK.     Will  the  gentleman  yield? 

Mr.  COOPER.  I  yield  to  the  gentleman  from 
California. 

Mr.  BUCK.  Here  is  the  advantage  to  the 
farmer,  I  may  say  to  the  gentleman  from  IMinne- 
sota :  If  he  treats  it  as  a  sale  in  the  year  in  which 
he  gets  a  loan,  he  may  then  deduct  and  charge  off 
against  the  amount  the  cost  of  production,  which 
he  never  could  charge  off  if  he  waited  until  the 
loans  were  liquidated  in  another  year. 

Mr.  AUGUST  H.  ANDRESEN.     That  is  true. 

Mr.  COOPER.  That  is  one  definite  advantage. 
It  gives  him  the  opportunity  of  charging  off  his 
expenses  and  his  cost  at  the  time  he  asks  that  it 
be  treated  as  a  sale. 

Mr.  AUGUST  H.  ANDRESEN.  At  the  pres- 
ent price  levels,  very  few  farmers  have  any  in- 
come tax. 


30 

Mr.  THOMASON.  Will  the  gentleman  yield? 

Mr.  COOPER.  I  yield  to  the  gentleman  from 
Texas. 

Mr.  THOMASON.  Is  there  any  change  in  the 
excise  tax  on  copper? 

Mr.  COOPER.     No ;  no  change  in  that. 

Mr.  CRAWFORD.     Will  the  gentleman  yield? 

Mr.  COOPER.  I  yield  to  the  gentleman  from 
Michigan. 

Mr.  CRAWFORD.  How  does  this  amendment 
apply  to  those  who  have  during  the  last  3  years, 
say,  put  cotton  into  loan  and  who  have  not  yet 
reported  that  as  income  ?  They  treated  it  as  a  loan 
at  the  time  and  it  has  not  been  reported  as  income. 

Mr.  COOPER.  They  can  go  back,  if  they  want 
to,  and  treat  that  as  income  received  at  the  time 
the  loan  was  made. 

Mr.  CRAWFORD.  Through  amending  their 
tax  returns'? 

Mr.  COOPER.     That  is  right. 

Mr.  CRAWFORD.  Insofar  as  the  subsequent 
returns  are  concerned,  as  I  understand  the  gentle- 
man's explanation,  this  will  operate  almost  exactly 
as  making  returns  on  the  basis  of  an  accrual  or 
on  the  basis  of  cash  income  and  outgo.  In  other 
words,  having  made  the  decision  to  report  the 
income  on  the  basis  of  accrual,  they  have  to  stick 
to  that  plan  unless  they  get  permission  to  change. 


31 

Mr.  COOPER.     That  i.s  correct. 

Mr.  CRAWFORD.  And  this  will  operate  in  a 
similar  manner'? 

Mr.  COOPER.  That  is  correct,  but  there  is 
no  permit  to  change  with  respect  to  the  years  in 
which  the  taxpayer  has  already  elected  to  treat 
such  loans  as  sales. 

Mr.  CRAWFORD.  I  say,  you  will  have  to  get 
the  permit  from  the  Commissioner? 

Mr.  COOPER.  You  cannot  get  a  permit  to 
change  after  you  once  exercise  your  option  and 
elect. 

Mr.  CRAWFORD.  In  subsection  (1))  it  is 
stated : 

Unless  with  the  approval  of  the  Commission- 
er a  change  to  a  different  method  is  authorized. 

Mr.  COOPER.  Yes;  that  is  true.  I  beg  the 
gentleman's  pardon.  But  that  only  applies  to  fu- 
ture years. 

Mr.  CRAWFORD.  That  would  be  the  same 
whether  it  is  on  an  accrual  or  a  cash  basis'? 

Mr.  COOPER.     The  gentleman  is  correct. 

Mr.  CRAWFORD.  One  other  question.  Hav- 
ing reported  the  loan  money  received,  say,  in  1939 
as  income,  and  then  in  1940  at  the  time  the  loan 
is  closed  out  it  developing  that  there  is  an  addi- 
tional payment  to  be  made  to  the  farmer  as  a 
result  of  the  sale  of  the  products  at  a  higher  price 


32 

than  the  loan  amounted  to,  the  farmer  will  at  that 
time  include  the  additional  amount  as  income "? 

Mr.  COOPER.     Yes;  that  is  correct. 

Mr.  KERR.  Mr.  Speaker,  will  the  gentleman 
yield? 

Mr.  COOPER.  I  yield  to  the  gentleman  from 
North  Carolina. 

Mr.  KERR.  This  tax  would  have  to  be  collect- 
ed only  at  one  time,  whether  it  is  considered  as  a 
sale  or  a  loan? 

Mr.  COOPER.     The  gentleman  is  correct. 

Mr.  KERR.  And  if  he  continued  to  negotiate 
his  loan  after  he  had  paid  the  tax  one  time,  for 
the  first  loan,  he  would  not  have  to  pay  it  if  he 
negotiated  his  loan  in  subsequent  years  on  the 
same  crops'? 

Mr.  COOPER.     Oh,  no ;  of  course  not. 

APPENDIX  C 

Table    of   Exhibits   pursuant   to    Rule    18(2)  (F)    as 
amended : 

Exhibits  1  and  2  were  identified  and  admitted  in 
evidence  as  set  forth  in  the  Pre-Trial  Order  and  Agreed 
Facts.  (R.  24-31.)  The  exhibits  are  identified  at  pages 
26-27  of  the  Record  and  appear  at  pages  31A  through 
33  of  the  Record. 


IN  THE 

United  States  Court  of  Appeals 

For  the  ]\lmth  Circuit 


UNITED  STATES  OF  AMERICA, 

Appellant, 


HAROLD  C.  and  OLIVE  B.  ISAAK, 

Appellees. 


Mo.  22,248 


BRIEF  FOR  THE  APPELLEES 


FRANCIS  J.  BUTLER 
BUTLER  &  LUKINS 
Attorneys  at  Law 

725  Lincoln  Building 
F"  I  L.  E  D       Spokane,  Washington  99201 

Attorneys  for  the  Appellees 
APR  1  0 1968 

C.  W.  HILL  PRINTERS 


IN  THE 

United  States  Court  of  Appeals 

For  the  IVinth  Circuit 


,      UNITED  STATES  OF  AMERICA, 

M  Appellant, 

V. 


•\ 


I 


HAROLD  C.  and  OLIVE  B.  ISAAK, 

Appellees.  ^ 


.No.  22,248 


BRIEF  FOR  THE  APPELLEES 


FRANCIS  J.  BUTLER 
BUTLER  &  LUKINS 
Attorneys  at  Law 

725  Lincoln  Building 
Spokane,  Washington  99201 

Attorneys  for  the  Appellees 


i 

INDEX 

Page 

Opinion  Below 1 

Jurisdiction 1 

Question  Presented  2 

Statutes  and  Regulations  involved 2 

Statement 2 

Summary  of  Argument  and  Reply 6 

Argument: 

A  taxpayer  who  elects  to  report  Commodity 
Credit  loans  as  income  in  the  year  received 
may  exclude  from  income  loans  received  and 
later  repaid  in  the  same  taxable  year  in  re- 
demption of  pledged  commodities 7 

Conclusion   15 

CITATIONS 

Page 

Cases: 

Thompson  v.  Commissioner  (C.A.,  5-1963) 
322  F.2d  122 6,  8,  11, 12,  13,  14 

Statutes: 

Internal  Revenue  Code  of  1954: 

Sec.  77  (26  U.S.C.  1964  ed..  Sec.  77)  8 


IN  THE 

United  States  Court  of  Appeals 

Far  the  IVinth  Circuit 


UNITED  STATES  OF  AMERICA, 

Appellant, 


HAROLD  C.  and  OLIVE  B.  ISAAK, 

Appellees.  ^ 


Mo,  22,248 


BRIEF  FOR  THE  APPELLEES 


FRANCIS  J.  BUTLER 
BUTLER  &  LUKINS 
Attorneys  at  Law 

725  Lincoln  Building 
Spokane,  Washington  99201 

Attorneys  for  the  Appellees 


OPINION  BELOW 


The  Opinion  of  the  Court  below  is  reported  267  F.  Supp. 
595. 

JURISDICTION 

This  Appeal  involves  Federal  Income  Taxes  for  1957. 
On  July  7,  1963,  taxpayers  paid  a  deficiency  in  their  taxes 
for  1957  of  $5,796.51  (R.  2,  38).  A  Timely  Claim  for  Re- 


fund  was  filed,  which  was  rejected  on  June  23,  1964  ( R.  2, 
4).  Within  the  time  provided  in  Section  6532  of  the  In- 
ternal Revenue  Code  of  1954,  on  March  21,  1966,  taxpay- 
ers brought  a  timely  action  in  the  District  Court  for  re- 
covery of  the  taxes  paid  (R.  1-3).  Jurisdiction  was  con- 
ferred on  the  District  Court  by  28  U.S.C.  §  1346(a).  The 
judgment  of  the  District  Court  in  favor  of  the  taxpayer 
was  entered  on  June  6,  1967  ( R.  41 ) .  Within  60  days  there- 
after, on  August  1,  1967,  the  United  States  filed  a  Notice 
of  Appeal  (R.  42).  Jurisdiction  is  conferred  on  this  Court 
by  U.S.C.  §  1291. 

QUESTION  PRESENTED 

Was  the  District  Court  correct  in  holding  that  a  farmer- 
taxpayer,  who  has  elected  under  Section  77  of  the  Internal 
Revenue  Code  of  1954  to  include  in  income  amounts  re- 
ceived as  loans  from  the  Commodity  Credit  Corporation, 
may  exclude  from  income  amounts  repaid  before  the  end 
of  the  taxable  year  in  redemption  of  his  crops? 

STATUTES  AND  REGULATIONS  INVOLVED 

The  relevant  Statutes  and  Regulations  involved  are  set 
forth  in  Appendix  A  of  Appellee's  Main  Brief. 

STATEMENT 

The  entire  facts  were  stipulated  and  agreed  to  prior 
to  Argument  in  the  District  Court.  The  facts,  as  stipulated 
and  found  by  the  District  Court  are  as  follows: 


Taxpayers  are  husband  and  wife,  residents  of  Coulee 
City,  Washington,  who  own  a  wheat  farm  of  approxi- 
mately 3,000  acres  in  Grant  County,  Washington,  which 
they  have  farmed  since  approximately  1929  (R.  37). 

For  the  taxable  year  1957  the  Appellees  filed  a  timely 
Federal  Income  Tax  return  with  the  District  Director  of  In- 
ternal Revenue  for  the  District  of  Washington  and  paid 
the  tax  shown  as  due  thereon  (R.  28). 

Subsequent  to  the  time  that  the  Appellees  filed  their 
Federal  Income  Tax  return  for  the  taxable  year  1957,  the 
Commissioner  of  Internal  Revenue,  by  and  through  his 
agents,  conducted  an  audit  and  investigation  of  the  said 
income  tax  return  (R.  38). 

By  registered  letter  dated  November  28,  1962,  the  Com- 
missioner of  Internal  Revenue  notified  the  Appellees  that 
he  was  asserting  a  deficiency  in  Federal  Income  Tax  for 
the  taxable  year  1957  in  the  amount  of  $5,976.51.  The 
Commissioner's  determination  was  based  upon  the  as- 
sertion that  the  taxpayers  had  realized  income  from  the 
sale  of  grain  in  the  taxable  year  1957  (R.  38). 

In  response  to  the  assertions  by  the  Commissioner  of 
Internal  Revenue,  as  set  out  above.  Appellees,  on  or  about 
the  7th  day  of  July,  1963,  paid  the  Commissioner  the 
sum  of  $5,796.51.  Thereafter,  Appellees  filed  with  the 
District  Director  of  Internal  Revenue  for  the  District  of 
Washington  in  Tacoma,  Washington,  a  timely  Claim  for 
a  refund  of  Federal  Income  Taxes  for  the  taxable  year 


4 

1957,  requesting  a  refund  in  the  total  amount  of  $5,796.51, 
plus  interest  as  provided  by  law  ( R.  38 ) . 

Appellees  from  time  to  time,  in  the  years  prior  to  the 
taxable  year  1957,  borrowed  money  from  the  Commodity 
Credit  Corporation,  a  part  of  the  United  States  Depart- 
ment of  Agriculture  and  used  wheat  as  collateral.  Prior  to 
the  taxable  year  1957,  Appellees  treated  the  Commodity 
Credit  loans  as  income  on  their  Federal  Income  Tax  re- 
turns as  filed  for  said  prior  taxable  years  if  the  loan  had, 
in  fact,  not  been  repaid  prior  to  the  end  of  said  taxable 
year.  Appellees  have  always  maintained  their  book  and 
records  on  a  cash  basis  ( R.  38 ) . 

In  the  operation  of  the  wheat  farm.  Appellees  harvest 
the  wheat  in  July  and  August  of  each  year.  The  wheat  is 
either  stored  at  home,  or  commercially  in  the  State  of 
Washington.  Some  of  the  wheat  is  sold  either  prior  to 
harvest  or  after  harvest.  The  proceeds  from  the  sale  of 
wheat  have  always  been  reported  by  the  Appellees  on 
their  Federal  Income  Tax  Returns  (R.  39). 

During  the  taxable  year  1957,  Appellees  made  loans 
from  the  Commodity  Credit  Corporation  in  the  amount 
of  $35,884.21  (R.  39). 

On  the  6th  day  of  August,  1957,  Appellees  borrowed 
the  sum  of  $25,341.86  from  the  Commodity  Credit  Cor- 
poration and  pledged,  as  collateral,  wheat  that  was  stored 
in  the  Farmer's  Union  Grain  Company,  Hartline,  Washing- 


ton.  This  loan  was  repaid  December  5,   1957,  and  the 
wheat  returned  to  Appellees  (R.  39). 

The  Appellees,  on  their  1957  Federal  Income  Tax  re- 
turn reported  Commodity  Credit  loans  in  the  amount  of 
$7,749.10.  Of  the  wheat  that  was  redeemed  from  the 
Commodity  Credit  Corporation  in  the  year  1957,  as  set 
forth  above,  the  Appellees  actually  sold  $12,000.00  worth 
of  wheat  and  reported  the  $12,000.00  as  income  on  their 
Federal  Income  Tax  return  as  filed  for  the  taxable  year 
1957  (R.  39). 

The  Appellees  did  not  report,  as  income  in  the  tax- 
able year  1957,  the  remaining  portion  of  the  loans  from 
the  Commodity  Credit  Corporation  which  had  been  re- 
paid prior  to  the  taxable  year  1957  (R.  39). 

The  Commissioner  of  Internal  Revenue,  in  auditing  the 
appellee's  1957  Federal  Income  Tax  return,  increased  Ap- 
pellee's taxable  income  for  said  taxable  year  in  the  amount 
of  $16,135.11,  upon  the  theory  that  all  of  the  loans  from 
the  Commodity  Credit  Corporation  should  have  been  re- 
ported as  income  and  the  fact  that  some  of  the  loans  had 
been  repaid  prior  to  the  end  of  the  taxable  year  did  not 
change  the  tax  picture.  In  essence,  the  Internal  Revenue 
adjustment  was  computed  as  follows:   (R.  39) 

Commodity  Credit  loans  received  in  1957  .  $35,884.21 
Commodit  Credit  loans  reported  in  1957  7,749.10 

Unreported  Income  „  28,135.11 

Less  Redeemed  Wheat  Sales  Reported 12,000.00 

Adjustment  to  Income 16,135.11 


6 

The  wheat  that  was  redeemed  from  the  Commodity 
Credit  Corporation  by  repayment  of  the  loans  in  1957, 
and  not  reported  as  income  in  the  taxable  year  1957,  was 
sold  by  the  Appellees  in  the  taxable  year  1958  and  the 
income  from  the  said  wheat  was  reported  on  the  Ap- 
pellee's 1958  Federal  Income  Tax  return  as  filed  and  the 
tax  due  thereon  timely  paid  (R.  40). 

During  the  taxable  year  1957  Appellees  deducted  all 
costs  and  expenses  incidental  to  growing,  harvesting  and 
handling  the  wheat  that  was  placed  with  the  Commodity 
Credit  Corporation  in  August  of  1957  as  security  for  the 
loans  set  forth  above.  Appellee  also  deducted  as  an  in- 
terest expense  during  the  taxable  year  1957  the  interest 
paid  the  Commodity  Credit  Corporation  when  the  loans 
were  redeemed  in  December  of  1957  in  cormection  with 
the  repayment  of  the  loans  on  the  wheat  which  had  been 
made  earlier  ( R.  40 ) . 

The  District  Court,  in  holding  for  the  Appellees,  found 
that  the  Commodity  Credit  loans  which  the  Appellees  re- 
paid during  the  taxable  year  1957  were  not  income  for 
the  Appellees  for  said  taxable  year  relying  upon  Thomp- 
son V,  Commissioner  (CA-5,  1963)  322  F.2d  122. 

SUMMARY  OF  ARGUMENT 

The  Appellant,  in  his  Summary  of  Ai'gument  (Appel- 
lant's Brief  p.  5  and  6),  asserts  that  the  Federal  District 
Court  erred  in  this  case. 


Basically,  the  question  is  simple.  Appellee-Taxpayer 
borrowed  money  from  the  Commodity  Credit  Corpora- 
tion during  the  taxable  year  1957.  Prior  to  the  end  of  the 
said  taxable  year  two  loans  were  repaid.  For  prior  years 
Appellee  had  reported  income  under  Section  77  of  the 
Internal  Revenue  Code  which  provides  that  such  loan 
shall  at  taxpayer's  election,  be  treated  as  income  for  the 
year  in  which  received,  which  election  shall  be  binding 
for  subsequent  taxable  periods. 

The  Federal  District  Court  held  that  repayment  of  the 
loan  did  not  result  in  income  to  the  Appellee-Taxpayers 
where  the  amounts  of  the  loan  had  been  redeemed  prior 
to  the  end  of  the  taxable  year  ( District  Court  Opinion ) . 

ARGUMENT 

A  TAXPAYER  WHO  ELECTS  TO  REPORT  COM- 
MODITY CREDIT  LOANS  AS  INCOME  IN  THE  YEAR 
RECEIVED  MAY  EXCLUDE  FROM  INCOME  LOANS 
RECEIVED  AND  LATER  REPAID  IN  THE  SAME  TAX- 
ABLE YEAR  IN  REDEMPTION  OF  PLEDGED  COM- 
MODITIES. 

The  basic  issue  involved  in  this  controversy  is  very 
simple.  Appellee-Taxpayers  borrowed  money  from  the 
Commodity  Credit  Corporation  in  1957.  Prior  to  the  end 
of  the  taxable  year  1957,  Appellee-Taxpayers  repaid  some 
of  the  loans.  In  computing  their  Federal  Income  Tax  for 
the  taxable  year  1957  Appellee-Taxpayers  included  as  in- 
come the  loans  from  the  Commodity  Credit  Corporation 
which  had  not  been  redeemed  prior  to  the  end  of  the  tax- 
able year. 


8 

Section  77  of  the  Internal  Revenue  Code  of  1954  en- 
titled "Commodity  Credit  Loans"  provides  as  follows: 

( a )  Election  to  Include  Loans  in  Income.  — 
Amounts  received  as  loans  from  the  Commodity  Credit 
Corporation  shall,  at  the  election  of  the  taxpayer,  be 
considered  as  income  and  shall  be  included  in  gross 
income  for  the  taxable  year  in  which  received. 

(b)  Effect  of  Election  on  Adjustments  for  Sub- 
sequent Years.  —  If  a  taxpayer  exercises  the  election 
provided  for  in  subsection  (a)  for  any  taxable  year, 
then  the  method  of  computing  income  so  adopted 
shall  be  adhered  to  with  respect  to  all  subsequent 
taxable  years  unless  with  the  approval  of  the  Secre- 
tary of  his  delegate  a  change  to  a  different  method  is 
authorized. 

The  election,  referred  to  above,  under  Section  77  of 
the  Internal  Revenue  Code  is  made  by  treating  loans  as 
income  on  the  Federal  Income  Tax  returns  as  filed.  No 
fonnal  election  is  provided  for. 

Appellees,  prior  to  1957,  had  treated  Commodity  Credit 
loans  as  income  if  the  loan  had  not  been  repaid  prior  to 
the  end  of  the  taxable  year.  1957  was  no  different  than 
prior  years.  At  the  end  of  the  taxable  year  1957,  the  Ap- 
pellees had  repaid  some  of  the  loans  which  they  had  taken 
from  the  Commodity  Credit  Corporation.  The  loans  re- 
paid were  not  reported  as  income.  Some  of  the  wheat  used 
as  collateral  for  the  loans  was  sold  in  1957  and  the  income 
from  said  sale  reported  in  that  taxable  year.  The  remainder 
of  the  wheat  which  had  been  used  as  collateral  for  the 


9 

1957  loans  was  sold  in  1958  and  the  Federal  tax  paid  in 
that  taxable  year. 

The  Appellees  contend  that  the  Commodity  Credit  Cor- 
poration loans  that  were  repaid  during  the  taxable  year 
were  not  income  to  the  Appellees  for  said  taxable  year. 

The  Appellant,  on  the  other  hand,  contends  that  the  Ap- 
pellees elected  to  treat  the  Commodity  Credit  Loans  as 
income  under  Section  77  of  the  Internal  Revenue  Code  and 
that  having  chosen  to  report  their  income  in  this  manner 
they  must  treat  all  loans  consistently. 

There  is  only  one  case  considering  the  identical  question 
presented  herein. 

In  Thompson  v.  Commissioner,  (C.A.-5,  1963)  322  F. 
2d  122,  rev'g  in  part,  (1962)  38  Tax  Court  153,  the  Court 
stated  as  follows: 

"Concerning  the  problem  under  26  U.S.  C.A.  Section 
77,  the  facts  are  uncontradicted.  Taxpayer  was  on  a 
cash  basis.  He  had  never  used  crop  inventories  in 
computing  farm  income.  In  years  prior  to  1958,  Tax- 
payer had  sometimes  put  his  wheat  under  parity  price 
support  loans  with  Commodity  Credit  Corporation. 
Having  reported  some  of  these  loans  as  income  in 
prior  years,  he  had  elected  to  treat  loans  as  income 
under  Section  77.  In  July  of  1958  Taxpayer  put  two 
identified  lots  of  wheat  under  CCC  loans  aggregating 
$15,486.06.  In  December  of  1958,  acting  on  advice  or 
opinions  of  a  probabale  rise  in  the  wheat  market, 
Taxpayer  repaid  the  loans  as  to  the  two  lots  and  re- 
deemed the  wheat.  The  wheat  was  on  hand  at  the 
year's  end.  No  income  was  reported  for  the  disposi- 


10 

tion  of  these  lots.  This  redeemed  wheat  was  sold  in 
January  1959  and  reported  as  income  for  that  year. 
Costs  incurred  in  growing  and  harvesting  it  were 
taken  as  a  deduction  in  1958. 

"The  Tax  Court  determined  that  the  CCC  loan  was 
taxable  as  income  in  1958  even  though  the  loan  was 
repaid  and  the  wheat  redeemed  before  the  end  of  the 
taxable  year.  Considering  the  background  of  this  leg- 
islation, we  do  not  think  that  the  result  urged  by  the 
Government  and  sustained  by  the  Tax  Court  is  es- 
sential to  achieve  the  end  sought  by  Section  77.  Worse 
than  that,  it  opens  up  new  and  vexing  problems—  con- 
ceptual and  administrative— perhaps  requiring  the  ju- 
dicial creation  of  a  new  and  counter-fiction  to  offset 
this  consequence  of  the  congressionally  created  fiction 
that  a  loan  is  income." 

The  Court  then  explained  the  purpose  of  Section  77  of 
the  Internal  Revenue  Code.  In  so  doing  it  stated  as  follows : 

"This  section  was  not  enacted  as  a  revenue  measure. 
It  was  not  passed  to  increase  the  revenue.  Indeed,  in 
operative  effect,  its  consequence  is  just  the  opposite. 
Rather,  a  very  small  piece  to  fill  out  a  beneficent  and 
comprehensive  program  of  farm  relief,  it  was  enacted 
to  overcome  an  unintended,  but  conceptually  inescapa- 
ble, adverse  effect  on  the  objects  of  congressional  aid. 
Under  farm  legislation  the  so-called  crop  loans  are  an 
integral,  vital  part  of  the  scheme  of  price  supports. 

"Without  any  effort  to  describe  accurately  the  op- 
eration of  this  complex  program,  the  general  purpose 
of  the  crop  loan  is  to  enable  the  farmer  to  obtain  as 
a  minimum,  and  in  cash,  the  support  price  for  his 
crop  while  giving  him  a  free  ride  of  the  market  for 
possible  market  price  advances  until  expiration  of  the 
redemption  period.  As  conceived  and  practiced,  it  is, 
and  is  intended  to  be,  a  major  source  of  governmental 


11 

farm  support  payments.  But  for  these  grants,  the  Gov- 
ernment, as  the  so-called  lender,  must  look  solely  to 
the  crop  as  collateral  security  with  no  personal  lia- 
bility on  the  borrower." 

The  Government  in  the  Thotnpson  case  argued  that  the 
taxable  event  was  the  receipt  of  the  loan,  regardless  of  what 
took  place  thereafter,  and  that  the  so-called  "election  re- 
quirement" showed  a  congressional  purpose  to  exact  con- 
sistency of  farmers  so  that  they  could  not  play  fast  and 
loose  as  shifts  occurred  in  the  commodity  markets. 

The  Court  in  the  Thompson  case  pointed  out  that  the 
taxpayer  had  faithfully  adhered  to  his  election,  i.e.,  wheat 
loans  not  redeemed  at  the  end  of  the  taxable  year  had  in 
fact  been  included  in  income.  The  Court  stated  further  in 
answer  to  the  Government's  contentions  as  follows: 

"Actually,  the  construction  now  asserted  would  de- 
feat the  paramount  aim  of  Congress.  Farm  legislation 
was  intended  to  give  farmers  a  free  ride  of  the  mar- 
ket. However,  the  inescapable  income  tax  rulings  pre- 
vented that  when  the  loan  and  the  redemption  (or 
foreclosure)  overlapped  two  tax  years.  This  was  the 
problem,  and  the  only  problem.  There  was  no  prob- 
lem as  to  a  loan  received  and  repaid  within  the  same 
year.  If  the  Government's  view  is  accepted,  it  means 
that  as  to  an  area  in  which  there  was  no  problem. 
Congress  has  unwittingly  withdrawn  from  that  farmer 
the  right  to  ride  the  market  to  the  year's  end.  Thus  an 
amendment  to  the  Revenue  Code  designed  to  'avoid 
this  harsh  result'  (see  note  18,  supra)  becomes  itself 
a  new  instrument  to  frustrate  the  predominate  goal  of 
agricultural  relief. 

In  reviewing  the  Thompson  case  the  District  Court 
adopted  the  following  statement:  (R.  36). 


12 

"The  Facts  in  simple  outline  convince  us  that  Tax- 
payer is  right.  At  year  end  1958  Taxpayer  had  the 
wheat.  He  did  not  have  money.  In  1959  he  had  money, 
but  no  wheat.  Section  77  does  not  prescribe  that  tlie 
loan  is  income.  It  prescribes  that  it  should  be  'con- 
sidered as  income'  and  when  so  done,  the  'method  of 
computing  income  so  adopted  shall  be  adhered  to 
****.'  This  terminology  and  the  interpretation  we 
put  on  it  achieves  several  ends.  It  adheres  to  the  an- 
nual accounting  concept  of  income  tax  law.  It  makes 
possible  the  payment  of  the  tax  in  the  year  in  which 
the  income  is  realized  with  which  to  pay  the  tax.  It 
eliminates  either  the  peril  or  problems  of  the  tax- 
payers being  taxed  in  successive  years  on  the  same 
wheat  crop,  and  it  eliminates  vexing  problems  on  col- 
lateral elections."  (Emp.  Supp.) 

The  facts  in  the  instant  case  are  identical  to  the  facts  in 
the   Thompson  case.   Here,  Appellees  reported  on  their 

1957  Federal  Income  Tax  return  as  filed,  loans  made  from 
the  Commodity  Credit  Corporation  which  were  outstand- 
ing at  the  end  of  said  taxable  year.  As  to  loans  redeemed 
prior  to  the  end  of  the  taxable  years,  Appellees  did  not  in- 
clude those  on  the  Federal  Income  Tax  returns  as  filed.  As 
in  the  Thompson  case,  Appellee-Taxpayers  at  the  end  of 
the  year  1957  had  wheat.  They  did  not  have  money.  In 

1958  they  had  money  but  no  wheat.  They  have,  as  the  Court 
in  the  Thompson  case  indicated,  "Faithfully  adhered  to 
their  election." 

Here,  as  in  Thompson,  Appellees  were  on  a  cash  basis 
of  accounting.  Appellant's  position  would  place  them  on 
an  inventory  basis.  The  District  Court's  ruling  adheres  to 
the  annual  accounting  concept  of  income  tax  law  and  al- 
lows the  Appellees  to  pay  their  tax  when  the  income  is 
received. 


13 

^        Appellant's    Main   Argument    (Appellant's    Brief   p.    6 
through  21),  appears  to  be  two-fold: 

1.  The  Fiftli  Circuit  Court  of  Appeals  was  wrong  in 
Thompson  v.  Commissioner  (1963)  38  T.C.  153  reversed, 
(C.A.-5th,  1963)  322  F.2d  122,  and 

2.  Section  1016(a)  (8)  of  the  Internal  Revenue  Code 
of  1954  was  over-looked  by  the  Court  in  deciding  the 
Thompson  case. 

The  Appellant  first  refers  to  the  legislative  history  of 
Section  1016(a)  (8)  of  the  Internal  Revenue  Code  (Appel- 
lant's Main  Brief  p.  9  to  13  incl. ) .  The  Committee  reports 
referred  to  by  the  Appellant  all  refer  to  an  election  which 
is  binding  as  to  all  future  years  ( Appellant's  Main  Brief  p. 
10).  It  is  submitted  by  the  Appellee  that  nowhere  in  the 
Legislative  History,  cited  in  Appellant's  Main  Brief,  is 
there  a  situation  concerning  two  transactions  in  the  same 
taxable  year. 

It  is  true  that  once  a  taxpayer  elects  under  Section  77  to 
treat  Commodity  Credit  loans  as  sales  income,  the  elec- 
tion is  binding  in  all  future  years  unless  and  until  the  per- 
mission to  change  such  method  of  accounting  is  obtained 
from  the  Commissioner.  But,  this  reasoning  does  not  hold 
true  where  as  here,  the  Appellee-Taxpayer  had  all  of  their 
transactions  in  the  same  taxable  year. 

I         It  would  seem  rather  presumptions  to  Appellees  that  the 
Appellants  would  assume  that  the  Court  of  Appeals  over- 


14 

looked  a  section  of  the  Internal  Revenue  Code  if  that  sec- 
tion of  the  law  was  germaine  to  the  issue  involved  ( Appel- 
lant's Main  Brief  p.  18). 

It  is  noteworthy  that  Section  1016(a)  (8),  relied  upon 
so  emphatically  by  Appellant,  was  also  overlooked  by  the 
Tax  Court  of  the  United  States  in  its  Opinion.  Appellant, 
however,  fails  to  mention  this  fact. 

The  answer  is  obvious.  Section  1016(a)  (8)  is  contained 
in  the  Internal  Revenue  Code  of  1954  under  the  general 
heading  of  "Basic  Rules  of  General  Application".  The  en- 
tire chapter  applies  to  basis  of  property  sold  or  exchanged. 
Section  1016(a)  (8)  was  enacted  to  cover  the  situation 
where  "A"  pledged  wheat  as  collateral  in  1958,  paid  the 
tax  under  Section  77,  redeemed  the  wheat  in  1959,  and 
later  sold  it.  There  must  be  a  provision  insuring,  under 
the  facts  of  the  above  example,  that  the  pledged  wheat 
would  not  be  taxed  twice.  Section  1016(a)  (8)  is  that 
insurance. 

Section  1016(a)  (8)  has  nothing  whatsoever  to  do  with 
the  question  presented  in  this  case,  i.e.,  whether  wheat 
redeemed  in  the  year  of  the  loan  is  taxable  under  the 
provisions  of  Section  77  of  the  Internal  Revenue  Code  of 
1954. 

In  the  instant  case  the  factual  pattern  is  identical  to  the 
facts  in  the  Thompson  case,  above.  At  year's  end  the  Ap- 
pellees had  wheat  but  no  money.  The  repayment  of  the 
loan  before  years'  end  closed  an  otherwise  taxable  trans- 
action. 


15 
CONCLUSION 

The  Judgment  of  the  District  Court  should  be  affirmed. 

Respectfully  submitted, 

FRANCIS  J.  BUTLER 
BUTLER  &  LUKINS 
725  Lincoln  Building 
Spokane,  Washington 

CERTIFICATION 

In  connection  with  the  preparation  of  this  Brief,  I  have 
examined  Rules  18,  19  and  39  of  the  United  States  Court 
of  Appeals  for  the  Ninth  Circuit  and  that,  in  my  opinion, 
the  foregoing  Brief  is  in  full  compliance  with  those  rules. 


Dated  March  22,  1968. 


Francis  J.  Butler 
BUTLER  &  LUKINS 
725  Lincoln  Building 
Spokane,  Washington 
Attorneys  for  Appellees 


/ 


No,  22249 
IN  THE 
UNITED  STATES  COURT  OF  APPEALS 
FOR  THE  NINTH  CIRCUIT 


KARL  HINES  NARTEN, 

Appellant, 

vs. 

FRANK  A.  EYMAN,  Superintendent 
ARIZONA  STATE  PENITENTIARY, 

Appellee. 


APPELLEE'S  ANSWERING  BRIEF 


FILED 

DEC  1  2  1967 

:iA(M.  B.  LUCK,  CLERK 


DARRELL  F.  SMITH 

The  Attorney  General  of  the 

State  of  Arizona 


GARY  Ko  NELSON 
Assistant  Attorney  General 
159  Capitol  Building 
Phoenix,  Arizona   85007 

Attorneys  for  Appellee 


■^7 


No.  22249 
IN  THE 
UNITED  STATES  COURT  OF  APPEALS 
FOR  THE  NINTH  CIRCUIT 


KARL  HINES  NARTEN, 

Appe 1 lant , 

vs. 

FRANK  A.  EYMAN,  Superintendent 
ARIZONA  STATE  PENITENTIARY, 

Appe 1 lee . 


APPELLEE'S  ANSWERING  BRIEF 


DARRELL  F.  SMITH 

The  Attorney  General  of  the 

State  of  Arizona 


GARY  K.  NELSON 
Assistant  Attorney  General 
159  Capitol  Building 
Phoenix,  Arizona   85007 

Attorneys  for  Appellee 


INDEX 

Page 

JURISDICTIONAL   STATEMENT  1 

STATEMENT    OF    FACTS  1 

CONSTITUTIONAL   PROVISIONS    INVOLVED 

AND  QUESTIONS    PRESENTED  2 

ARGUMENT 

I  2 

II  6 

III  10 

IV  13 

V  15 
CONCLUSION  17 


-1- 


.'E^ 


11 


CASES  AND  AUTHORITIES  CITED 

Cases  Page 

Campbell  v.  Territory 
14  Ariz.  109 
125  Pac.  717  11 

DeLeon  v.  Territory 
9  Ariz.  161 

80  Pac.  348  16 

DeWoody  v.  State 
21  Ariz.  613 
193  Pac.  299  11 

Escobedo  v.  Illinois 
378  U.S.  478 
12  L.Ed, 2d  977 

84  S.Ct.  1758  16 

Estes  V.  Texas 
381  U.S.  532 
14  L.Ed, 2d  543 

85  S.Ct.  1628  4 

Billiard  v.  State  of  Arizona 

362  F.2d  908  5,  6 

Horner  v.  State 

168  So. 2d  137  8 

Hurtado  v.  California 
110  U.S.  516 
28  L.Ed.  232 
4  S.Ct.  Ill  7 

Irvin  V.  Dowd 
366  U.S.  717 
6  L.Ed. 2d  751 

81  S.Ct.  1639  3,  4 

Jones  V,  Eyman 

F . 2d  11 


-11- 


d.i: 


^\ 


^3  J2.  ..i^Ii--':.':- v^iL<K,&^^^^ 


\r^ns.i'.'.A    '1 


-  •.•:;>\^-£-.i. 


l^rr 


'.ih. 


:^1   .4^.c 


Cases  Page 

Leland  v.  Oregon 
343  U.S.  790 
96  L.Ed.  1302 
72  S.Ct.  1002  15 

Massiah  v.  United  States 
377  U.S.  201 
12  L.Ed. 2d  246 
84  S.Ct.  1199  16 

Maxwell  V.  Dow 

176  U.S.  581 

44  L.Ed.  597 

20  S.Ct.  448  7 

Miranda  v.  Arizona 
384  U.S.  436 
16  L.Ed. 2d  694 
86  S.Ct.  1602  16 

People  V.  Gorshen 
51  Cal.2d  716 
336  P. 2d  492  14 

Pope  V.  United  States 

372  F.2d  710  12 

Sheppard  v.  Maxwell 

384  U.S.  333,  356 

16  L.Ed. 2d  600,  616 

86  S.Ct.  1507  2,  3,  4 
Spencer  v.  Texas 

385  U.S.  554 

17  L.Ed. 2d  606 

87  S.Ct.  648  13 

Short  V,  State 
53  Ariz.  185 
87  P. 2d  266  12 


-111- 


c!  i 


S3:ie 


Case  Page 

State  V.  Coey 
82  Ariz.  133 
309  P. 2d  260  11 

State  V.  Essman 
98  Ariz.  228 
403  P. 2d  540  10 

State  V.  Jones 
95  Ariz.  4 
385  P. 2d  1019  11 

State  V.  LeVar 

98  Ariz.  217 

403  P. 2d  532  5 

State  ex  rel  Corbin  v.  Maricopa 
Superior  Court 
100  Ariz.  236 

413  P. 2d  264 
Opn.  mod.  on  reh. 
100  Ariz.  36  2 

414  P. 2d  738  9 

State  V.  Narten 

99  Ariz.  116 

407  P. 2d  81  2,  10,  14 

State  V.  Robinson 
89  Ariz.  224 
360  P. 2d  474  12 

State  V.  Schantz 
98  Ariz.  200 
403  P. 2d  521  14,  15 

State  V.  Waller 

382  S.W.2d  668  8 


■IV- 


Jt  i. 


^I 


Case  Page 

Sullivan  v.  State 

47  Ariz.  224 

55  P. 2d  312  11 

Turley  v.  State 

48  Ariz.  61 

59  P. 2d  312  11 

Ungar  v.  Sarafite 
376  U.S.  575 
11  L.Ed. 2d  921 
84  S.Ct.  841  5 

Welch  V.  United  States 

371  F.2d  287  5 


Authorities 

Constitution  of  Arizona 

Art.  2,  Sec.  30  6 

Arizona  Rules  of  Criminal  Procedure 

17  A.R.S.  94,  Rule  16  8 

17  A.R.S.  192,  Rule  78  3 

17  A.R.S.,  Rule  187  11 

17  A.R.S.,  Rule  225(1)  3 

17  A.R.S. ,  Rule  336  11 


-V- 


NO.  22249 
IN  THE 
UNITED  STATES  COURT  OF  APPEALS 
FOR  THE  NINTH  CIRCUIT 


KARL  HINES  NARTEN, 


Appe 1 lant , 


vs. 


FRANK  A.  EYMAN,  Superintendent, 
ARIZONA  STATE  PENITENTIARY, 

Appellee. 


JURISDICTIONAL  STATEMENT 

Appellee  accepts  appellant's  jurisdictional  statement. 

STATEMENT  OF  FACTS 

The  statement  of  facts  set  out  by  appellant  in  his 
brief  is  essentially  accurate  and  is  accepted  for  purposes 
of  this  appeal.   Appellee  would,  in  addition,  specifically 
incorporate  herein  by  reference  the  facts  as  found  by  the 
District  Court  and  by  the  Arizona  Supreme  Court  in  their 


-1- 


opinions.   To  avoid  unnecessary  duplication,  specific 
evidentiary  facts  will  be  set  out  in  the  argument  portion 
of  the  brief  as  required. 


CONSTITUTIONAL  PROVISIONS 
INVOLVED  AND  QUESTIONS  PRESENTED 


Appellee  accepts  appellant's  presentation  of  these 
matters  in  his  brief. 

ARGUMENT 

I 

APPELLANT  RECEIVED  A  FAIR  TRIAL  BY  A  COMPLETELY 
IMPARTIAL  JURY,  ADEQUATELY  PROTECTED  BY  THE  JUDGE 
FROM  OUTSIDE  INFLUENCE,  AND  FREE  FROM  ANY  PRE- 
JUDICIAL TAINT  AS  A  RESULT  OF  PRETRIAL  PUBLICITY. 

Murder,  sex,  mystery  and  an  old-fashioned  western 
chase  and  capture  in  old  Mexico  made  this  case  very  news- 
worthy, in  much  the  same  way  "murder  and  mystery,  society, 
sex  and  suspense"  focused  the  news  media  upon  Dr.  Samuel 
Sheppard,  Sheppard  v.  Maxwell,  384  U.S.  333,  356,  16  L.Ed. 
2d  600,  616,  86  S.Ct.  1507.   There  the  analogy  ends. 

No  one  can  read  any  version  of  the  facts,  either  from 
the  opinion  of  the  Arizona  Supreme  Court,  State  v.  Narten, 
99  Ariz.  116,  407  P. 2d  81,  the  order  of  the  district  court 


-2- 


herein,  or  as  set  out  in  appellant's  brief,  and  come  to 
any  other  conclusion  but  that  we  are  not  here  concerned 
with  the  Sheppard  decision  reincarnated,  or  anything  close 
to  it. 

The  vast  bulk  of  the  lurid  publicity  in  the  case 
occurred  at  the  time  of  the  killing,  the  subsequent  chase 
and  capture  in  Mexico,  and  the  return  of  appellant  to 
Tucson  for  preliminary  hearing.   After  the  preliminary 
hearing  the  publicity  dropped  off  almost  completely 
until  trial,  when  it  again  increased. 

Each  juror  was  carefully  questioned  on  voir  dire. 
There  was  no  disclosure  of  any  "pattern  of  deep  and  bitter 
prejudice",  Irvin  v.  Dowd,  366  U.S.  717,  6  L.Ed. 2d  751, 
81  S.Ct.  1639.   Indeed,  only  forty-nine  jurors  were 
required  to  be  questioned  to  obtain  the  necessary  thirty- 
two  prospective  jurors  prior  to  the  exercise  of  ten  peremp- 
tory challenges  allowed  each  side.  Rule  225  (1),  Arizona 
Rules  of  Criminal  Procedure,  17  A.R.S.   (In  Irvin  v.  Dowd, 
supra,  430  persons  were  voir  dired  in  2,783  pages  of 
transcript  to  arrive  at  a  jury) .   It  is  questionable 
whether  the  number  of  jurors  questioned  in  this  case 


-3- 


prior  to  the  empanelment  of  the  trial  jury  is  even  average 

for  a  cause  wherein  either  the  death  penalty  or  life 

imprisonment  can  be  imposed. 

As  was  stated  by  the  United  States  Supreme  Court  in 

Irvin  V.  Dowd,  supra: 

"It  is  not  required,  however,  that  the  jurors 
be  totally  ignorant  of  the  facts  and  issues 
involved.   In  these  days  of  swift,  widespread, 
and  diverse  methods  of  communication,  an 
important  case  can  be  expected  to  arouse  the 
interest  of  the  public  in  the  vicinity,  and 
scarcely  any  of  those  best  qualified  to  serve 
as  jurors  will  not  have  formed  some  impression 
or  opinion  as  to  the  merits  of  the  case.   This 
is  particularly  true  in  criminal  cases.   To 
hold  that  the  mere  existence  of  any  precon- 
ceived notion  as  to  the  guilt  or  innocence  of 
an  accused,  without  more,  is  sufficient  to 
rebut  the  presumption  of  a  prospective  juror's 
impartiality  would  be  to  establish  an  impos- 
sible standard.   It  is  sufficient  if  the  juror 
can  lay  aside  his  impression  or  opinion  and 
render  a  verdict  based  on  the  evidence  pre- 
sented in  court."   Irvin  v.  Dowd,  supra,  366 
U.S.  at  722. 

Nothing  in  the  later  decisions  in  Estes  v.  Texas,  381  U.S. 

532,  14  L.Ed. 2d  543,  85  S.Ct.  1628;  Sheppard  v.  Maxwell, 

supra,  has  lessened  the  import  of  this  language  as  it  be 

applied  to  the  case  at  bar. 

It  has  always  been  the  law  that  the  trial  court  judge 

has  a  wide  degree  of  discretion  in  determining  the  impar- 


-4- 


tiality  of  a  juror  and  in  weighing  the  reasons  for  grant- 
ing a  continuance  or  change  of  venue.   Hilliard  v.  State 
of  Arizona,  362  F.2d  908  (9th  Circ.  1966);  State  v.  LeVar, 
98  Ariz.  217,  403  P. 2d  532;  Ungar  v.  Sarafite,  376  U.S. 
575,  11  L.Ed. 2d  921,  84  S.Ct.  841. 

In  a  sense,  especially  in  pressing  the  importance  of 
the  testimony  of  Dr.  Tharp,  appellant  does  not  really 
argue  that  any  juror  was  improperly  seated  under  the  law, 
either  as  expressed  by  the  Arizona  Supreme  Court,  or  by 
the  United  States  Supreme  Court,  but  simply  that  in  a 
case  such  as  this,  an  accused,  in  all  probability  cannot 
get  an  absolutely  impartial  jury  to  try  him  and  therefore 
the  whole  procedure  is  unfair. 

The  Tenth  Circuit  characterized  the  problem  well  in 

Welch  V.  United  States,  371  F,2d  287  (10th  Circ.  1966),  a 

case  involving  the  prosecution  of  a  prominent  jurist 

for  income  tax  evasion: 

"Fairness  in  the  administration  of  justice  is 
not  a  one-way  street  to  be  approached  only 
through  an  entrance  limited  to  the  accused. 
His  cause  cannot  be  submitted  to  automated 
jurors  existing  in  complete  sterility."   371 
F.2d  at  291 

Quite  clearly  the  procedures  adopted  by  the  judge  to 


-5- 


insure  the  fairness  of  this  trial  and  the  impartiality  of 
this  jury  were  reasonably  directed  toward  and  effective 
for  the  accomplishment  of  that  purpose,   Hilliard  v. 
State  of  Arizona /  supra.   There  is  no  way  that  the  action 
or  inaction  of  the  trial  court  in  this  case  can,  under  any 
legitimate  view  of  the  facts,  be  magnified  into  a  denial 
of  appellant's  Federal  Constitutional  guarantees  of  a  fair 
trial  by  an  impartial  jury  of  his  peers, 

II 

NOTHING  IN  THE  FIFTH  AND  FOURTEENTH  AMENDMENTS  TO 
THE  UNITED  STATES  CONSTITUTION  REQUIRES  THE  STATE 
TO  PROSECUTE  APPELLANT  ONLY  BY  GRAND  JURY  INDICTMENT. 

Appellant  claims  that  there  is  a  trend  in  the  direc- 
tion of  holding  that  rights  guaranteed  by  the  first  ten 
amendments  are  secured  to  the  citizen  from  violation  by 
the  states  by  virtue  of  the  Fourteenth  Amendment;  and  that 
this  Court  should  find,  in  anticipation  of  such  finding 
by  the  United  States  Supreme  Court,  that  prosecution  by 
preliminary  hearing  is  a  violation  of  due  process. 

Article  2,  §  30  of  the  Constitution  of  the  State  of 

Arizona  provides  as  follows: 

"No  person  shall  be  prosecuted  criminally  in 
any  court  of  record  for  felony  or  misdemeanor, 

-6- 


otherwise  than  by  information  or  indictment; 
no  person  shall  be  prosecuted  for  felony  by 
information  without  having  had  a  preliminary 
examination  before  a  magistrate  or  having 
waived  such  preliminary  examination." 

This  constitutional  provision  is  implemented  by  Rule  78, 

Rules  of  Criminal  Procedure,  17  A.R.S.  192,  which  provides 

as  follows: 

"A.   Every  felony  and  every  misdemeanor  of  which 
the  superior  court  has  original  jurisdiction 
shall  be  prosecuted  by  indictment  or  information, 
and  every  misdemeanor  may  be  prosecuted  by 
indictment  or  information. "   (Emphasis  supplied) 

The  United  States  Supreme  Court  in  holding  that  prose- 
cution by  information  is  constitutional  the  Court  used 
this  language  in  Hurtado  v.  California,  110  U.S.  516,  28 
L.Ed.  232,  4  S.Ct.  Ill: 

"Tried  by  these  principles  we  are  unable  to  say 
that  the  substitution  for  a  presentment  or 
indictment  by  a  grand  jury  of  the  proceeding  by 
information,  after  examination  and  commitment 
by  a  magistrate,  certifying  to  the  probable 
guilt  of  the  defendant,  with  the  right  on  his 
part  to  the  aid  of  counsel,  and  to  the  cross- 
examination  of  the  witnesses  produced  for  the 
prosecution,  is  not  due  process  of  law." 

Maxwell  v.  Dow,  176  U.S.  581,  44  L.Ed.  597,  20  S.Ct. 

448,  used  this  language: 

"The  objection  that  the  proceeding  by  information 
does  not  amount  to  due  process  of  law  has  been 


-7- 


heretofore  overruled,  and  must  be  regarded  as 
settled  by  the  case  of  Hurtado  v.  California, 
110  U.S.  516.   The  case  has  since  been  fre- 
quently approved.   Hal linger  v.  Davis,  146  U.S. 
314,  322;  McNulty  v.  California,  149  U.S.  645; 
Hodgson  v.  Vermont,  168  U.S.  262,  272;  Holden 
V.  Hardy,  169  U.S.  366,  384;  Brown  v.  New 
Jersey,  175  U.S.  172,  176." 

The  Missouri  case  of  State  v.  Waller,  382  S.W.2d  668, 

involved  a  murder  prosecution  by  information  which  was 

affirmed.   The  Court  said: 

"Finally,  appellant's  claim  that  he  could  have 
been  charged  with  a  capital  offense  only  by 
an  indictment,  and  not  by  an  information  is 
obviously  without  merit.  .  .The  requirement 
of  the  Fifth  Amendment  to  the  Constitution  of 
the  United  States  has  no  application  to  state 
procedure  in  this  regard.   Hurtado  v.  Calif- 
ornia, 110  U.S.  561,  534,  4  S.Ct.  Ill,  28 
L.Ed.  232;  State  v.  Cooper,  Mo.  Sup.  344 
S.W.2d  72  (1-3) ." 

See  also,  Horner  v.  State,  168  So. 2d  137  (Fla.) 

There  is  a  strong  trend  in  the  decisions  of  the 

Supreme  Court  toward  preserving  to  the  citizen  substantial 

rights  from  which  he  may  benefit.   It  is  not  a  trend 

toward  the  preservation  of  ancient  forms,  where  newer 

forms  have  bestowed  substantial  benefit  upon  the  citizen 

charged  with  crime. 

Rule  16,  Rules  of  Criminal  Procedure,  17  A.R.S.  9.4, 

provides  that  a  defendant  brought  before  a  magistrate  after 

-8- 


arrest  on  a  felony  charge,  has  a  right  to  an  immediate 
preliminary  examination  in  order  to  determine  whether  or 
not  there  is  probable  cause  to  believe  the  defendant  is 
guilty  of  any  offense. 

The  defendant  has  a  right  to  have  counsel  present  at 
such  examination,   (Rules  16,  18,  19)   He  has  the  right 
to  have  witnesses  summoned,  to  have  their  testimony  heard, 
and  to  have  them  sequestered.   (Rules  22,  26,  27)   All 
witnesses  shall  be  examined  in  the  presence  of  the  defen- 
dant and  may  be  cross-examined.   (Rule  23)   The  defendant 
may  make  a  statement  concerning  the  charges  against  him, 
and  may  answer  the  charge  and  explain  the  facts  appearing 
against  him.   (Rule  24)   He  may  order  a  transcript  of 
the  entire  proceedings.   (Rule  28) 

If  the  Rules  of  Criminal  Procedure  are  not  followed, 
or  if  the  evidence  is  not  sufficient  to  support  a  finding 
of  probable  cause,  relief  is  available  by  habeas  corpus 
and  motion  to  quash.   State  ex  rel  Corbin  v.  Superior 
Court,  In  and  For  the  County  of  Maricopa,  100  Ariz.  236, 

413  P. 2d  264,  opinion  modified  on  rehearing  100  Ariz.  362, 

414  P. 2d  738.   Defense  counsel  usually  ask  for  and  obtain 


-9- 


a  preliminary  hearing  for  the  purpose  of  learning  the 
nature  of  the  prosecutor's  case.  State  v.  Essman,  98 
Ariz.  228,  403  P. 2d  540,  at  542. 

Grand  jury  proceedings  are  secret.   The  defendant 
has  no  right  to  be  present r  his  counsel  may  not  be  pre- 
sent,' defendant  may  not  have  witnesses  present,  nor  cross- 
examine  the  witnesses  against  him.   There  is  even  no 
absolute  right  to  a  transcript  of  the  proceedings.   The 
preliminary  hearing,  rather  than  violating  the  standard 
of  due  process,  has  raised  a  new  standard  of  fairness  to 
the  accused  and  has  placed  new  burdens  on  the  prosecution 
and  new  protection  around  the  rights  of  the  accused. 

Ill 

IT  IS  NOT  AN  UNREASONABLE  CLASSIFICATION  TO 
ALLOW  A  JURY  OF  LAYMEN  TO  ASSESS  PUNISHMENT 
UPON  DIFFERENT  EVIDENCE  THAN  WOULD  BE  AVAIL- 
ABLE TO  A  JUDGE,  WERE  THE  QUESTION  PUT  TO  HIM, 

It  is  unquestionably  the  law  in  Arizona  that  no  evi- 
dence in  mitigation  can  go  into  evidence  in  a  first  degree 
murder  case  tried  to  a  jury,  unless  it  has  some  relevancy 
toward  proving  the  accused's  guilt  or  innocence,  includ- 
ing the  proper  grading  of  the  offense.   State  v.  Narten, 


-10- 


;3bno^ 


od.  c 


BSHr.'':.r.:i  : 


•riJ  ^i^ 


99  Ariz.  116,  407  P. 2d  81;  Campbell  v.  Territory,  14 
Ariz.  109,  125  Pac.  717.   It  is  equally  true  that  evi- 
dence concerning  aggravation  cannot  be  introduced  before 
a  jury  against  a  defendant,  unless  it  too  has  some  rele- 
vance toward  proving  guilt  or  innocence,  or  grading  the 
offense.   Turley  v.  State,  48  Ariz.  61,  59  P. 2d  312. 

On  the  other  hand,  if  the  accused  pleads  guilty,  the 
trial  judge  may  take  into  consideration  many  things,  both 
favorable  and  unfavorable  to  the  defendant  which  the  jury 
may  not,  in  determining  which  of  the  two  punishments  to 
assess.   State  v.  Jones.  95  Ariz.  4,  385  P. 2d  1019, 
rendered  void  on  habeas  corpus  proceedings  in  other  grounds 

Jones  V.  Evman.  (No.  20,054,  9th  Cir.,  Nov.  24,  1965)  

F.2d  ;  Rules  336  and  187,  Rules  of  Criminal  Procedure, 

17  A.R.S. 

While  it  must  be  very  evident  that  many  items  of 
information  about  the  defendant  may  come  in  during  the 
disclosure  of  the  crime  itself  and  the  circumstances 
surrounding  it  (e.g..  State  v.  Coey,  82  Ariz.  133,  309 
P. 2d  260;  DeWoody  v.  State,  21  Ariz.  613,  193  Pac.  299; 
Sullivan  v.  State,  47  Ariz.  224,  55  P. 2d  312;  Short  v. 


-11- 


\iE  bs.g  e 


■H 


nj.      £:. 


state,  53  Ariz.  185,  87  P. 2d  266;  State  v.  Robinson,  89 
Ariz.  224,  360  P. 2d  474),  it  is  true  that  the  jury  must 
base  its  determination  as  to  punishment  solely  upon  the 
facts  legitimately  admissible  to  prove  the  crime  itself 
and  the  circumstances  surrounding  it c   Is  this  an  unrea- 
sonable classification  within  the  meaning  of  the  Equal 
Protection  Clause  of  the  Fourteenth  Amendment  of  the 
United  States  Constitution?   Obviously  it  is  not. 

Appellant's  argument  on  the  question  presented  may 
be  somewhat  persuasive  of  the  proposition  that  the  law 
ought  to  be  amended  so  that  evidence  in  mitigation  of 
punishment  might  be  presented  to  a  jury.   His  argument, 
however,  falls  far  short  of  establishing  that  Arizona's 
procedure  denies  him  equal  protection  or  due  process. 

Appellant  questions  the  propriety  of  a  trial  in 

which  a  jury  passes  on  the  question  of  guilt  and  the 

question  of  penalty  based  on  the  same  evidence.   In 

Pope  V.  United  States,  372  F.2d  710  (8th  Circ.  1967)  the 

court  stated; 

"Our  conclusion  is  fortified  by  the  supreme 
court's  very  recent  remarks  in  Spencer  v.  State 

of  Texas,  385  U.S.  ,  87  S.Ct.  648,  17  L.Ed. 

2d  (1967)  about  two-stage  jury  trial 


-12- 


:oi*=[ 


procedure.   There,  Mr.  Justice  Harlan,  author 
of  the  principal  opinion,  said,  'Two-part 
jury  trials  are  rare  in  our  jurisprudence; 
they  have  never  been  compelled  by  this  Court 
as  a  matter  of  constitutional  law,  or  even 
as  a  matter  of  federal  procedure.'  "   372  F.2d 
at  370. 

(Spencer  v.  Texas  is  found  at  385  U.S.  554,  17  L.Ed. 2d 
606,  87  S.Ct.  648.) 

The  legislature  of  Arizona  has  determined  that  the 
choice  of  penalty  in  first  degree  murder  shall  be  on  the 
basis  of  an  attempt  to  make  the  punishment  fit  the  crime, 
rather  than  the  criminal.   It  has  decreed  that  the  deter- 
mination is  to  be  based  on  the  facts  admissible  to  prove 
the  crime  itself  and  the  circumstances  surrounding  it, 
rather  than  the  facts  of  the  defendant's  history  and 
personality.   Nothing  in  either  state  or  federal  consti- 
tutions prohibits  such  a  classification,  however  much 
some  present  day  penologists  may  question  the  wisdom  of 
such  a  proceeding. 

IV 

UNDER  ARIZONA  AND  FEDERAL  LAW,  PETITIONER 
WAS  NCyr  PRECLUDED  FROM  PUTTING.  ON  PROPER 
DEFENSIVE  EVIDENCE. 

In  spite  of  its  direction  and  phraseology,  peti- 
tioner's argument  is  directed  against  the  M'Naghten  Rule 

-13- 


for  the  determination  of  criminal  responsibility,  which 
is  the  law  in  Arizona,  State  v.  Narten,  supra;  State  v. 
Schantz.  98  Ariz.  200,  403  P. 2d  521. 

It  is  siabmitted  that  the  series  of  California  cases 
cited,  and  particularly  People  v.  Gorshen,  51  Cal.2d  716, 
336  P. 2d  492,  is  a  not-too-heavily  veiled  attempt  by  the 
California  Court  to  force  the  legislature  to  adopt  a 
different  test  for  criminal  responsibility. 

A  careful  reading  of  Schantz,  supra,  together  with 
Dr.  Beaton's  preferred  testimony  (Transcript  of  Record, 
Volume  1,  Exhibit  E)  will  clearly  indicate  the  soundness 
of  the  Arizona  court's  reasoning  why  this  offered  evi- 
dence was  not  competent  under  M'Naghten  and  why  M ' Naght en 
is  still  the  best  test  available.   One  answer  of  Dr. 
Beaton  is  particularly  enlightening: 

"A.   The  opinion  again  is  two-fold.   I  am  not 
sure  intellectually  he  did  not  appreciate  his 
acts,  but  I  think  because  of  his  personality 
controls,  he  lacked  the  capacity  to  conform 
his  behavior  to  the  commands  of  the  law. " 
(Transcript  of  Record,  Volume  1,  Exhibit  E, 
supra;  Trial  Transcript,  pp.  1385-1386.) 

Clearly,  Dr.  Beaton's  testimony,  on  the  whole, 

supports  a  conclusion  that  any  deficiency  in  petitioner's 


•14- 


'-''>  r  ffv 


-i^     ». 


s    :•;  ji:^=^ 


tr;,'->      r,,^ 


mental  processes  went  to  his  volitional  processes  and  not 
his  perceptive  and  cognitive  processes,  and  thus,  evidence 
of  this  lack  of  volitional  control  would  be  inadmissible 
under  a  proper  interpretation  of  M'Naghten,  State  v. 
S chant Z/  supra. 

The  United  States  Supreme  Court  has  held  the  M'Naqhten 
test  to  be  constitutionally  sound.   Lei and  v.  Oregon,  343 
U.S.  790,  96  L.Ed.  1302,  72  S.Ct.  1002.   There  is  no 
valid  or  siibsisting  reason  to  change  that  position  at 
this  time.   Mr.  Narten  knew  full  well  what  he  was  doing 
at  the  time  of  the  shooting. 

In  weighing  these  conflicting  values  and  compelling 

interests  of  both  society  and  the  individual,  it  is  to  be 

hoped  that  the  interests  of  all  the  Rickel  Hansons  of 

this  land,  past,  present,  and  future,  whose  constitutional 

rights  are  rather  abruptly  terminated  without  due  process 

or  possible  appeal,  would  receive  extensive  and  careful 

consideration, 

V 

PETITIONER'S    STATEMENT  WAS    PROPERLY  RECEIVED 
INTO   EVIDENCE,    NOT    BEING  VIOLATIVE    OF   ANY 
GUARANTEE    OF   THE   FEDERAL   CONSTITUTION. 

Clearly  this  statement  does  not  fall  within  the 

-15- 


scope  of  Miranda  v.  Arizona,  384  U.S.  436,  16  L.Ed. 2d 
694,  86  S.Ct.  1602;  Escobedo  v.  Illinois,  378  U.S.  478, 
12  L.Ed.2d977,  84  S.Ct.  1758;  or  Massiah  v.  United 
States,  377  U.S.  201,  12  L.Ed. 2d  246,  84  S.Ct.  1199, 
There  was  no  compulsion,  no  interrogation,  no  state  action 
whatsoever.   The  conference  was  arranged  solely  for  the 
convenience  of  appellant's  wife,  who  worked  late  hours. 

Any  privilege  related  to  the  fact  of  marriage  was 
waived  when  the  participants  held  the  conversation  know- 
ing a  third  party  to  be  present.   (Trial  Transcript, 
hereinafter  referred  to  as  T.T.,  pp.  971-977).   De  Leon 
V.  Territory,  9  Ariz.  161,  80  Pac.  348.   There  is  no 
evidence  of  surreptitious  eavesdropping;  the  officer  was 
merely  insuring  the  continued  custody  of  this  man  charged 
with  a  capital  offense.   The  petitioner  was  talking  to 
his  wife.   At  times  they  would  both  ask  questions  of  the 
officer  (T.T.,  p.  972).   He  was  in  no  way  questioning 
the  petitioner.   He  was  only  present  for  security  reasons 
(T.T.,  p.  977). 

It  must  also  be  stated  that  the  substance  of  this 
conversation  was  not  brought  out  in  the  direct  examination 


■16- 


b^^f-t' 


of  this  witness  by  the  State.   It  was  only  after  the 
facts  of  the  conversation  were  alluded  to  in  cross- 
examination  that  this  statement  was  forthcoming  on 
redirect  examination  (T  .T .  959-951).   The  petitioner 
cannot  complain  of  this  evidence  interjected  into  the 
proceedings  at  his  insistence,  where  it  is  clear  the 
State  made  no  effort  to  obtain  the  statement,  and  did 
not  attempt  to  introduce  it  as  prima  facie  proof. 

CONCLUSION 
Appellant  received  a  full  and  fair  trial  by  an 
impartial  jury  of  his  peers.   Every  right  guaranteed  to 
him  by  both  State  and  Federal  Constitutions  was  judi- 
ciously protected  at  every  stage  of  the  proceedings. 
The  order  of  the  United  States  District  Court  denying 
appellant *s  petition  for  writ  of  habeas  corpus  should 
be  affirmed. 

Respectfully  submitted, 

DARRELL  F.  SMITH 
The  Attorney  General 

GARY  K.  NELSON 

Assistant  Attorney  General 

Attorneys  for  Appellee 
-17- 


sriT 


STATE  OF  ARIZONA    ) 

)   ss. 
County  of  Maricopa  ) 

GARY  K.  NELSON,  being  first  duly  sworn  upon  oath, 
deposes  and  says: 

I  certify  that,  in  connection  with  the  preparation 
of  this  brief,  I  have  examined  Rules  18,  19  and  3  9  of 
the  United  States  Court  of  Appeals  for  the  Ninth  Circuit, 
and  that,  in  my  opinion,  the  foregoing  brief  is  in  full 
compliance  with  those  rules. 

GARY   K.    NEI^ON 
SUBSCRIBED  AND   SWORN  to  before   me   this     //^    day   of 
December,    1967. 


:arv    Public  '/ 


-5,/  (r  (IV  (I 

Notary  Public 
My  Commission  Expires ; 

Copy  mailed  this  _Jj;^^da.Y   of 
December,  1967,  to: 

William  H.  Tinney  W.  Edward  Morgan 

210  Kelly  Building  407  Tucson  Title  Ins.  Bldg, 

Tucson,  Arizona  85719       Tucson,  Arizona   85701 


By  <->   kJA.va,  k  .  I  |£]Ll^^(MA-^ 

garykT^lson 


-18- 


22251'^ 


Wlnittb  ^tatesf 

Court  of  appeals! 

for  ti)e  i^intf)  Circuit 


ELLIS  ERNEST  MARSH, 

Appellant, 


vs. 
UNITED  STATES  OF  AMERICA, 


Appellee. 


On  Appeal  from  the  judgment  of  the  United  States 
District  Court  lor  the  District  of  Oregon 


BRIEF  OF  APPELLEE 


SIDNEY  I.  LEZAK 

United  States  Attorney 
District  of  Oregon 

RICHARD  C.  HELGESON 

Assistant  United  States  Attorney. 


GANN   PUBUSHING  CO.,   PORTLAND,   OREGON 


FILED 

MAR  4    1968 
JMM.  B.  LUCK.  CLERK 


WIARo    'ioC8 


INDEX 

Page 

COUNTER-STATEMENT  OF  FACTS  1 

ARGUMENT  2 

CONCLUSION 10 


CASE  CITED 

Bergmann  vs.  United  States,  144  F. 2d  34 

(C.A.  9,  1944) 6 


♦ 


No.  21272 


Court  of  Appeals; 

for  tlje  i^intfj  Circuit 


ELLIS  ERNEST  MARSH, 

Appellant, 


vs. 
UNITED   STATES   OF  AMERICA, 


Appellee. 


BRIEF  OF  APPELLEE 


COUNTER-STATEMENT  OF  FACTS 


Defendant  Ellis  Ernest  Marsh  obtained  a  book  of 
checks  of  the  First  Independent  Bank,  Battleground, 
Washington,  and  gave  it  to  his  friend  Cynthia  Marie 
Dunn,  who  cashed  a  number  of  the  checks  in  Port- 
land, Oregon,  on  the  nights  of  October  11  and  Octo- 
ber 12,  1966.  Miss  Dunn  without  permission  or  au- 
thority used  the  name  and  identification  of  a  Mary 
Jean  Hitchman  in  cashing  the  checks.  No  account 
existed  for  a  Mary  Jean  Hitchman  at  the  First  Inde- 


pendent  Bank,  Battleground,  Washington.  Defendant 
was  present  either  in  the  store  or  waiting  in  an 
automobile  when  Miss  Dunn  cashed  the  checks. 

At  trial  on  May  24,  1967,  in  the  United  States 
District  Court  for  the  District  of  Oregon  before  the 
Honorable  Robert  C.  Belloni  and  a  jury,  defendant 
was  convicted  on  two  counts  of  an  indictment  charg- 
ing him  with  violating  18  United  States  Code,  Sec- 
tion 2314,  in  that  he  did  unlawfully,  knowingly,  wil- 
fully and  feloniously  and  with  fraudulent  intent 
transport  and  cause  to  be  transported  in  interstate 
commerce  from  Portland,  Oregon  to  Battleground, 
Washington,  two  falsely  made,  forged  and  counter- 
feited securities,  namely,  check  No.  12,  in  the 
amount  of  $78.00,  dated  October  12,  1966,  and  check 
No.  13,  in  the  amount  of  $57.00,  dated  October  11, 
1966,  both  payable  to  and  cashed  at  Fred  Meyer, 
Inc.  at  Portland.  Oregon,  and  signed  Mary  Jean 
Hitchman,  drawn  against  the  First  Independent 
Bank,  Battleground,  Washington,  knowing  the  same 
to  be  falsely  made,  forged  and  counterfeited. 

ARGUMENT 

Appellant's  first  assignment  of  error  is  that  the 
trial  judge  erred  when  he  commented  to  the  jury 
during  defendant's  trial  counsel's  cross-examination 
of  Anthony  Criscola  who  was  an  accomplice  of  de- 


fendant  Marsh  and  was  testifying  to  the  facts  of 
the  crime  as  a  witness  on  behalf  of  the  Govern- 
ment. After  a  series  of  questions  by  defendant's 
trial  counsel  suggesting  that  Criscola  would  receive 
a  lighter  sentence  for  giving  his  testimony,  the 
trial   judge   commented   as   follows: 

"I  think  we  should  clear  up  one  matter.  Cer- 
tainly, nothing  this  man  says  at  this  trial  is 
going  to  have  the  slightest  bearing  upon 
what  sentence  he  may  receive  on  any  other 
offense;  and  I  don't  think  that  Mr.  Nieder- 
meyer  intends  to  convey  that  impression,  do 
you,  sir?"  (TR.  55) 

after  which  the  following  colloquy  occurred: 

"MR.  NIEDERMEYER:  No,  Your  Honor, 
I  do  not.  It  is  only  the  defendant's  subjective 
belief  that  I  am  trying  to  convey  to  the  Jury; 
that  if  the  defendant  believes  this,  that  it 
would  go  to  the  v/eight  of  his  testimony. 

"THE  COURT:  All  Right.  I  just  v/ant  the 
Jury  to  understand  that. 

"MR.  NIEDERMEYER :  I  am  not  alleging 
that  he  has  made  any  arrangement  with  the 
prosecutor  or  anything  else,  but  what  he  be- 
lieves is  proper  cross-examination  as  toi  the 
trustworthiness  of  his  present  testimony. 

"THE  COURT:  All  right."  (TR.55) 

Defendant's  trial  counsel  made  no  objection  to 
this  statement  by  the  Court  and,  in  fact,  placed 
upon   the   record   his   agreement   with   it    (TR.    55). 


It  was  a  fair  comment  upon  the  testimony  by  the 
Court  and  does  not  constitute  prejudicial  error  in- 
asmuch as  agreement  to  it  was  joined  by  defend- 
ant's trial  counsel. 

Appellant's  second  assignment  of  error  is^that  the 
Court  erred  in  its  instructions  to  the  jury  on  the 
credibility  of  witnesses.  As  to  witnesses,  the  Court 
instructed  as  follows: 

"An  accomplice  is  one  who  voluntarily  par- 
ticipates in  the  commission  and  planning  of 
a  crime.  The  testimony  of  an  accomplice 
should  be  received  with  caution  and  scruti- 
nized with  care.  You  should  give  it  such  weight 
as  in  your  judgment  it  is  fairly  entitled  to  re- 
ceive. You  may  convict  a  person  accused  of  a 
crime  upon  the  uncorroborated  testimony  of 
an  accomplice  only  if  you  believe  that  the 
testimony  of  the  accomplice  proves  the  guilt 
of  a  defendant  beyond  a  reasonable  doubt. 

"If  any  reference  by  the  Court  or  by  counsel 
to  matters  of  evidence  does  not  cciincide  with 
your  own  recollection  of  the  evidence,  it  is 
your  recollection  which  should  control  during 
your  deliberations.  If  you  believe  that  any 
witness  has  willfully  testified  falsely  with  re- 
spect to  any  material  fact  about  which  the 
witness  could  not  reasonably  be  mistaken, 
then  you  may,  if  you  deem  it  fit  to  do  so,  dis- 
regard all  or  any  part  of  the  testimony  of 
that  witness,  or  you  may  accept  such  portion 
of  his  testimony  as  you  find  worthy  of  belief." 
(TR.  139,  140) 


i 


"If  a  witness  who  could  have  given  material 
testimony  to  an  issue  in  this  case  was  pecul- 
iarly available  to  one  party,  but  was  not 
called  by  that  party,  and  his  absence  has  not 
been  sufficiently  accounted  for  or  explained, 
then  you  may,  if  you  deem  it  appropriate, 
infer  that  the  testimony  of  the  witness  would 
have  been  unfavorable  to  the  party  which 
failed  to  call  him."  (TR.  140,  141) 

"Every  witness  is  presumed  to  speak  the 
truth.  [Emphasis  added.]  This  presumption, 
however,  may  be  overcome  by  the  manner  in 
which  he  testifies,  the  character  of  his  testi- 
mony, or  by  evidence  affecting  his  character  or 
motives,  or  contradictory  evidence. 

"You  are  the  exclusive  judges  of  the  facts 
in  the  case  and  of  the  credibility  of  all  of  the 
witnesses.  The  power  of  judging  the  effect  or 
value  of  the  evidence,  however,  is  not  arbi- 
trary but  must  always  be  exercised  with  legal 
discretion  and  in  subordination  of  the  rules  of 
evidence.  You  are  not  bound  to  find  a  verdict 
in  conformity  with  the  testimony  of  any  num- 
ber of  witnesses  which  does  not  produce  con- 
viction in  your  minds  as  against  the  testimony 
of  a  lesser  number  or  against  a  presumption 
or  other  evidence  which  does  satisfy  your 
minds. 

"If  you  find  that  a  witness  has  testified 
falsely  in  any  one  material  part  of  his  testi- 
mony, you  may  look  with  distrust  upon  the 
other  evidence  given  by  such  witness;  and  if 
you  find  that  any  witness  has  testified  will- 
fully false,  you  will  be  at  liberty  to  entirely 


disregard  all  of  the  evidence  given  by  such 
witness  unless  corroborated  by  other  evidence 
which  you  do  believe."  (TR.  144) 

Appellant  objects  to  the  statement  contained  in 
these  instructions  (TR.  144,  line  1),  "Every  witness 
is  presumed  to  speak  the  truth."  However  this  com- 
ment represents  a  correct  statement  of  the  law  as 
decided  by  this  Court.  Bergmann  v.  United  States, 
144  F.  2d  34  (C.A.  9,  1944).  The  instruction  as  a 
whole  was  proper  and  adequately  cautioned  the  jury 
as  to  the  view  it  should  take  of  the  witnesses'  testi- 
mony. The  instruction  v.'as  neither  objected  to  by 
defendant's  trial  counsel  nor  did  he  take  an  excep- 
tion to  it  (TR.  146). 

Appellant's  third  and  final  assignment  of  error  is 
that  the  Court  erred  in  instructing  the  jury  on  the 
elements  of  tie  crime  as  follows: 

"***Those  material  allegations  are:  One. 
the  instrument  in  question  was  forged  or 
falsely  made  or  altered  or  counterfeited  by 
someone;  and,  two,  that  the  defendant  trans- 
ported it  or  caused  it  to  be  transported  in 
Interstate  or  Foreign  Commerce;  and,  three, 
that  he  did  so  with  specific  intent  to  defraud 
or  other  unlawful  purpose;  and,  four,  that  at 
the  time  the  defendant  transported  it  or 
caused  it  to  be  transported  in  Interstate  Com- 
merce, he  knew  it  to  be  forged  or  falsely 
made  or  altered  or  counterfeited;  and  lastly. 


I 


that  the  crime,  if  any,  was  committed  on  or 
about  the  date  alleged  and  within  the  District 
and  State  of  Oregon"  (TR.  p.  136). 


"***By  transportation  in  Interstate  or 
Foreign  Commerce  is  meant  transportation 
from  one  state,  territory,  or  the  District  of 
Columbia  to  another  state,  territory  or  the 
District  of  Columbia,  or  to  a  foreign  country 
or  from  a  foreign  country  to  any  state,  ter- 
ritory, or  the  District  of  Columbia.  A  forged  or 
falsely  made  or  altered  security  means  an  in- 
strument falsely  or  fictitiously  made,  signed 
or  altered  with  the  intent  to  defraud,  which 
would  be  legally  defective  if  genuine. 

It    is   not   necessary   that   the   security   be 
originally  forged  or  falsely  made  or  altered 
by  the  defendant"  (TR.  p.  137). 
(Appellant's  Brief,  pp.  4-5) 

The  foregoing  instruction,  which  appellant  cites 
as  error,  was  in  fact  defendant's  own  requested  in- 
struction No.  15,  which  the  Court  gave  verbatim. 
Defendant's  requested  instruction  No.  15  read  as 
follows : 

"The  essential  elements  of  the  offense  of 
interstate  transportation  of  forged  securities, 
each  of  which  the  Government  must  prove  be- 
yond a  reasonable  doubt,  are: 

"  (  1 )  That  the  instrument  in  question  was 
forged,  or  falsely  made  or  altered,  or  counter- 
feited by  someone;  and 


"  (  2  )  That  the  defendant  transported  it,  or 
caused  it  to  be  transported,  in  interstate  or 
foreign  commerce;  and 

"  (  3  )  That  he  did  so  with  specific  intent  to 
defraud  or  with  other  unlawful  purpose;  and 

"(4)  That  at  the  time  the  defendant 
transported  it,  or  caused  it  to  be  transported  in 
interstate  commerce,  he  knew  it  to  be  forged, 
or  falsely  made  or  altered,  or  counterfeited. 

"By  transportation  in  interstate  or  foreign 
commerce  is  meant  transportation  from  one 
State,  territory,  or  the  District  of  Columbia, 
to  another  State,  territory,  or  the  District  of 
Columbia,  or  to  a  foreign  country;  or  from 
a  foreign  country  to  any  State,  territory,  or 
the  District  of  Columbia. 

"A  'forged  or  falsely  made  or  altered'  se- 
curity means  an  instrument  falsely  or  ficti- 
tiously made,  signed,  or  altered,  with  the  in- 
tent to  defraud,  which  would  be  legally  ef- 
fective if  genuine. 

"It  is  not  necessary  that  the  security  have 
been  originally  forged,  or  falsely  made  or 
altered,  by  the  defendant. 

"Sheridan  v.  United  States,  329  U.S.  379" 

In  addition  to  giving  defendant's  requested  in- 
struction No.  15,  which  appellant  now  cites  as 
error,  the  Court  read  the  indictment  to  the  jury 
and  also  read  Title  18,  Section  2314  (TR.  134,  135). 


Defendant's  counsel  did  not  object  or  except  to  the 
giving  of  the  foregoing  instruction  (TR.  146).  De- 
fendant made  no  motion  at  the  close  of  the  evidence 
or  otherwise  to  limit  the  indictment  or  for  jugment 
of  acquittal  on  the  issue  of  whether  the  checks  may 
have  been  "counterfeit."  It  is  clear  from  the  Court's 
given  instruction  that  the  jury  was  instructed  that 
it  must  be  convinced  beyond  a  reasonable  doubt  of 
the  truth  of  every  material  allegation,  including 
"that  the  instrument  in  question  was  forged  or 
falsely  made  or  altered  or  counterfeited  by  some- 
one!" (TR.  136)   [Emphasis  added.] 


10 

CONCLUSION 

There  is  no  error.  Appellee  respectfully  prays  that 
the  judgment  of  conviction  be  confirmed. 


SIDNEY  I.  LEZAK 
United  States  Attorney 
District  of  Oregon 

RICHARD.  C.  HELGESON 
Assistant  United  States  Attorney 


11 

CERTIFICATE 

I  certify  that  in  connection  with  the  preparation 
of  this  brief,  I  have  examined  Rules  18,  19  and  39 
of  the  United  States  Court  of  Appeals  for  the  Ninth 
Circuit,  and  that,  in  my  opinion,  the  foregoing  brief 
is  in  full  compliance  with  those  rules. 

Dated  this  29th  day  of  February,  1968. 

RICHARD  C.  HELGESON 
Assistant  United  States  Attorney 


/ 

).     2  2  2  5  2 

^STATFS   r'Oi'}->T   OF   APPEALS 
'Hii:   JNINTH  ClKCUiT 


Appellant, 

NITED  STATES  OF  AMERICA, 

Appelb. 

APPELLEE'S  BRIEF 


F'  S  i-  E  L) 


APPEAL  FROM 

THE   UNITED  STATES  DISTRICT  COURT 

FOR  THE  SOUTHERN  DISTRICT  OF   CALIFORNIA 


WM.   MATTHEW  BYRNE.   JR.  . 

United  States  Attorney, 
ROBERT   L.   BROSIO, 

Assistant  U.   S.   Attorney, 

Chief,   Criminal  Division, 
CRAIG  B.   JORGENSEN, 

Assistant  U.   S.   Attorney, 

1200  U.  S.  Court  House 
312  North  Spring  Street 
Los  Angeles,   California  90012 

Attorneys  for  Appellee, 
United  States  of  America. 


NO.     2  2  2  5  2 

IN   THE   UNITED   STATES   COURT  OF  APPEALS 

FOR   THE    NINTH   CIRCUIT 

JOHN  C.    MEYER, 

Appellant, 
vs. 
UNITED   STATES   OF  AMERICA, 

Appellee. 

APPELLEE'S   BRIEF 


APPEAL  FROM 

THE   UNITED   STATES   DISTRICT  COURT 

FOR   THE   SOUTHERN   DISTRICT   OF    CALIFORNIA 


WM.    MATTHEW   BYRNE,    JR.  , 
United  States  Attorney, 

ROBERT   L.    BROSIO, 

Assistant  U.    S.    Attorney, 
Chief,    Criminal  Division, 

CRAIG   B.    JORGENSEN, 
Assistant  U.    S.    Attorney, 

1200  U.  S.  Court  House 
312  North  Spring  Street 
Los  Angeles,    California  90012 

Attorneys  for  Appellee, 
United  States  of  America. 


TOPICAL  INDEX 

Page 

Table  of  Authorities.  ii 

I  JURISDICTIONAL   STATEMENT.  1 

II  STATEMENT   OF    THE   CASE.  2 

III  QUESTIONS   PRESENTED.  5 

IV  STATEMENT   OF   FACTS.  5 

V  ARGUMENT.  10 

A.  THE   TRIAL   COURT   DID   NOT 
COMMIT    PLAIN   ERROR    IN 
FAILING  TO  SEVER    MEYER'S 

TRIAL.  10 

B.  PROCEEDING   WITH  THE   TRIAL 
IN   MEYER'S  ABSENCE    WAS 

PROPER.  16 

C.  A    MISSTATEMENT   OF   EVIDENCE 
BY  THE    PROSECUTOR   WAS   NOT 
PREJUDICIAL.  19 

CONCLUSION.  23 


TABLE   OF   AUTHORITIES 

Cases  Page 

Allen  V.    United  States, 

91  U.S.  App.    D.  C.    197, 

202  F.  2d  329  (D.  C.Cir.    1952), 

cert,    denied,    344  U.  S.    869(1952)  12 

Baker  v.    United  States, 

329  F.  2d  786,    (10th  Cir.    1964), 

cert,  denied,  379  U.  S.  853(1964)  12 

Bowles  V.  Texas, 

366  F. 2d  734  (1966)  18 

Brennan  v.    United  States, 

240  F.  2d  253  (8th  Cir.    1957), 

cert,    denied,    353  U.  S.    931(1957)  20 

Burley  v.    United  States, 

295  F.  2d  317  (10th  Cir.    1961)  22 

Cross  V.    United  States, 

325  F.  2d  629  (D.  C.    Cir.    1963)  16,    17 

D'Aquino  v.    United  States, 

192  F.  2d  338  (9th  Cir.    1951), 

cert,    denied,    343  U.  S.    935(1952)  20 

Dauer  v.    United  States, 

189  F.  2d  343  (10th  Cir.    1951), 

cert,    denied, 342  U.S.  898  (1951)  12,    15 

Davenport  v.    United  States, 

260  F.  2d  591  (9th  Cir.    1958), 

cert,    denied,    359  U.  S.    909(1959)  12 

De  Luna  v.    United  States, 

308  F.  2d  140  (5th  Cir.    1962), 

reh.    denied,    324  F.  2d  375  (1963)  14 

Diaz  V.    United  States, 

223  U.  S.    442  (1911)  16,    17 

Glasser  v.    United  States, 

315  U. S.    60  (1942)  17 

Isaacs  V.    United  States, 

301  F.  2d  706  (8th  Cir.    1962), 

cert,    denied,    371  U.S.    818(1962)  20 

ii 


Page 

Johnson  v.    Zerbst, 

304  U.  S.    458  (1938)  16,     17 

Kowalchuk  v.    United  States, 

176  F.  2d  873  (6th  Cir.    1949)  21 

Lewis  V.    United  States, 

277  F.  2d  378  (10th  Cir.    1960)  22 

Massey  v.    State, 

31Tex.Cr.    371,    20  S.  W.    758(1892)  18 

Moore  v.    Michigan, 

355  U.  S.    155  (1957)  17,     18 

Nabob  Oil  Co.   v.    United  States, 

190  F.  2d  478  (10th  Cir.    1951), 

cert,    denied,    342  U.S.    876  21 

Noto  V.    United  States, 

367  U.  S.    290  (1961)  17 

Opper  V.    United  States, 

348  U.S.    84  (1954)  11 

Parker  v.    Gladden, 

385  U. S.    363  (1966)  22 

Phillips  V.    United  States, 

334  F.  2d  589  (9th  Cir.    1964), 

cert,    denied,    379  U.  S.    1002(1965)  17,     18 

Sharp  V.    United  States, 

195  F.  2d  997  (6th  Cir.    1952)  12 

State  ex  rel  Shetsky  v.    Utecht, 

228  Minn.    44,    36  N.  W.  2d  126  (1949)  17 

Turner  v.    Louisiana, 

379  U.  S.    466  (1965)  18 

United  States  v.    Barrett, 

280  F.  2d  889  (2nd  Cir.    1960)  20 

United  States  v.    Bentvena, 

193F.Supp.    485(D.C.N.  Y.    1960), 

aff  d,    357  F.  2d  58  (1966). 

cert,    denied,    385  U.  S.    815(1966)  12 


111 


Page 

United  States  v.    Brown, 

375  F.  2d  310  (D.C.  Cir.    1966), 

cert,   denied,    388  U.  S.    915(1957)  11 

United  States  v.    Cohen, 

124  F.  2d  164  (2nd  Cir.    1941)  12 

United  States  v.    Davis, 

260F.Supp.    1009  (D.  C.  Tenn.    1966), 

aff'd,    365  F.  2d  251  (6th  Cir.    1966)  20 

United  States  v.    Echles, 

352  F.  2d  892  (7th  Cir.    1965)  11 

United  States  v.    Mucherino, 

311  F.  2d  172  (4th  Cir.    1962)  20 

United  States  v.    Parness, 

331  F.  2d  703  (3rd  Cir.    1964), 

cert,    denied,    377  U.  S.    993(1964)  14 

United  States  v.    Redfield, 

197F.Supp.    559(D.C.Nev.    1961), 

aff'd,    295  F.  2d  249  (9th  Cir.    1961), 

cert,    denied,    369  U.  S.    803(1962)  20 

United  States  v.    Steffes, 

228F.Supp.    491  (D.C.  Mont.    1964)  12 

United  States  v.   Valdes, 

262F.Supp.    474  (D.C.  P.  R.    1967)  11 

United  States  v.   Wallace, 

272F.Supp.    838(D.C.N.  Y.    1967)  13 

Vecks  V.    State, 

42    Ga-App.    451,    156  S.  E.    729(1931)  19 

Weiss  V.    United  States, 

122  F.  2d  675  (5th  Cir.    1941), 

cert,    denied,    314  U.  S.    687(1941)  20 

Statutes 

Title  15  United  States  Code 

§77c(a)(l)  and  (2)  1 

§77e(c)  1 

iv 


Page 

§77q(a)  3,    4 

Title  18  United  States  Code 

§1243  1 

§1343                                                                                               '  3 

§3231  2 

Title  28  United  States  Code 

§1291  2 

§1294  2 

Rules 

Federal  Rules  of  Criminal  Procedure 

Rule  8  10 

Rule  14  10,     11 

Rule  43  16 

Rule  52(a)  22 

Text 

Wigmore,    Evidence, 

§807,    p.    264,    3rd  ed.    1940  21 


NO.     2  2  2  5  2 

IN   THE   UNITED   STATES   COURT  OF  APPEALS 

FOR   THE   NINTH   CIRCUIT 

JOHN  C.    MEYER, 

Appellant, 
I  vs. 

UNITED   STATES   OF   AMERICA, 
■  Appellee. 


APPELLEE'S   BRIEF 


I 

JURISDICTIONAL  STATEMENT 

John  C.    Meyer  and  codefendants  Virgil  D,    Kvasnicka  and 
Eugene  M.    Murphy  were  indicted  on  January  12,    1966,   for  viola- 
tions of  Title  18,    United  States  Code,    Section  1243  (fraud  by  wire); 
Title  15,    United  States  Code,    Section  77c(a)  (1),    (2)  (sale  and 
delivery  of  unregistered  securities  by  mail);    and  Title  15,    United 
States  Code,    Section  77e(c)  (offer  to  sell  unregistered  securities 
by  mail).     Judgment  of  Conviction  against  Meyer  was  entered  on 
May  9,    1966  [R.  T.    2456].   -'     Judgment  After  Study  was  entered 
V  "R.  T.  "  refers  to  Reporter's  Transcript. 

1. 


on  August  23,    1966  [R.  T.    2481].     Meyer's  Notice  of  Appeal  was 
filed  on  August  23,    1966. 

Jurisdiction  of  the  District  Court  was  predicated  upon 
Title  18,    United  States  Code,    Section  3231.     This  Court  has 
jurisdiction  under  Sections  1291  and  1294  of  Title  28,    United 
States  Code. 

II 

STATEMENT   OF    THE   CASE 

The  sixteen  count  indictment,    filed  January  12,    1966, 
charged  Meyer  and  two  codefendants  with  six  counts  (Counts  One 
through  Six)  of  devising  a  scheme  to  fraudulently  obtain  money 
by  wire  from  certain  purchasers  of  fractional  interests  in  certain 
Oklahome  oil  and  gas  leases;    five  counts  (Counts  Seven  through 
Eleven)  of  delivering  by  mail  unregistered  securities,    namely, 
fractional  undivided  interests  in  certain  oil  and  gas  leases,    for 
the  purpose  of  sale  and  for  delivery  after  sale;    three  counts 
(Counts  Twelve  through  Fourteen)  of  using  the  mails  to  sell 
unregistered  securities,    namely,    undivided  interests  in  oil  and 
gas  leases;    one  count  (Count  Fifteen)  of  using  the  mails  to  offer 
to  sell  an  unregistered  security,    namely,    fractional  undivided 
interests  in  oil  and  gas  leases;    and  one  count  (Count  Sixteen)  of 
mailing  an  unregistered  security  for  sale  and  for  delivery  after 
sale. 

Meyer  was  arraigned  and  entered  a  plea  of  not  guilty  to 

2. 


all  counts  on  January  31,    1966.     Trial  by  jury  commenced  on 
February  14,    1966  before  the  Honorable  E.   Avery  Crary,    United 
States  District  Judge  [R.  T.    4].     A  verdict  of  guilty  on  Counts  One 
through  Fifteen  was  returned  on  April  18,    1966  [R.  T.    2428]. 
Judgment  of  Conviction  against  Meyer  was  entered  on  May  9, 
1966  [R.  T.    2456].     On  August  23,    1966,    Judgment  After  Study 
was  entered  [R.  T.    2481],    and  on  that  date,    appellant  filed  a  Notice 
of  Appeal. 

Title  18,    United  States  Code,    Section  1343  provides  in 


I 

part: 


Whoever,    having  devised  or  intending  to 
devise  any  scheme  or  artifice  to  defraud,    or  for 
obtaining  money  or  property  by  means  of  false  or 
fraudulent  pretenses,    representations,    or  promises, 
transmits  or  causes  to  be  transmitted  by  means  of 
wire,    radio,    or  television  communication  in  inter- 
state or  foreign  commerce,    any  writings,    signs, 
signals,    pictures,    or  sounds  for  the  purpose  of 
executing  such  scheme  or  artifice,    .    .    ■    [shall 
be  guilty  of  an  offense]. 

The  Securities  Act  of  1933  found  in  Title  15,    United  States 
Code,    Section  77q(a)  provides  in  part: 

(a)  It  shall  be  unlawful  for  any  person 

*  in  the  offer  or  sale  of  any  securities  by  the  use  of 

any  means  or  instruments  of  transportation  or 

3. 


communication  in  interstate  commerce  or  by  the 
use  of  the  mails,    directly  or  indirectly  -- 

(1)  To  employ  any  device,    scheme,    or 
artifice  to  defraud,    or 

(2)  To  obtain  money  or  property  by 
means  of  any  untrue  statement  of  a 
material  fact  or  any  omission  to  state 
a  material  fact  necessary  in  order  to 
make  the  statements  made,    in  the  light 
of  the  circumstances  under  which  they 
were  made,    not  misleading,    or 

(3)  To  engage  in  any  transaction,    practice, 
or  course  of  business  which  operates 
or  would  operate  as  a  fraud  or  deceit 
upon  the  purchaser. 

It  is  further  provided  in  the  Securities  Act  that  for  the 
purpose  of  the  statute  the  term  "security"  means: 

Any  note,    stock,    .    .    .    bond,    debeture,    .    .    . 
fractional  undivided  interest  in  oil,    gas  or  other 
mineral  rights,    or  in  general,    any  interest  or 
instrument  commonly  known  as  'security'. 


4. 


Ill 

QUESTIONS   PRESENTED 

1.  Did  the  trial  court  commit  plain  error  when  it 
failed  to  declare  a  mistrial  and  sever  Meyer's  trial  from  that  of 
his  codefendants  during  the  course  of  trial? 

2.  Was  it  a  violation  of  Meyer's  constitutional  rights 
to  continue  the  trial  in  his  absence? 

3.  Were  Meyer's  rights  to  a  fair  trial  and  to  confront 
witnesses  violated  by  the  argument  of  the  prosecution? 

IV 
STATEMENT   OF   FACTS 

Late  in  1962,    defendant  John  C.    Meyer  met  with  codefend- 
ants Eugene  Murphy  and  Virgil  Kvasnicka  and  suggested  a  plan 
to  the  codefendants  for  selling  fractional  interests  in  oil  wells  to 
be  drilled  by  Meyer  on  his  leases  [R.  T.    1633,    1657],     Meyer 
told  both  men  that,    among  other  things,    he  had  a  Ph.  D.    in  geology 
from  the  Colorado  School  of  Mines;    he  was  wealthy;    he  had  been 
successful  in  drilling  for  oil  in  the  past;    he  was  a  former 
Marine  officer;    he  owned  producing  oil  wells  all  over  the  world; 
he  owned  oil  leases  in  Oklahoma  which  were  on  Osage  Indian  land 
and  were  not  therefore  subject  to  production  controls;    that  the 
leases  were  subdivided  into  working  interests,    which  could  be 
sold  in  small  units  at  prices  from  $250  to  $1,  000  each,    and  that 

5. 


each  well  would  require  $32,000  for  drilling  [R.  T.    1628-9,    1650- 
2,    1670-3,    2074-100], 

Kvasnicka  and  Murphy  agreed  to  sell  these  interests  in 
$250  to  $1,  000  units  in  return  for  a  10%  commission  on  each  sale 
and  an  overriding  royalty  in  certain  of  the  oil  leases  [Ro  T.    1633, 
2074-6]. 

Kvasnick  and  Murphy  immediately  commenced  sales 
activities,    primarily  in  Idaho,    Utah,    and  California  [R.  T.    1658, 
2074-76,    2095].     In  the  process,    both  men  repeated  the  statements 
made  to  them  by  Meyer  about  Meyer's  background  and  expertise 
in  the  oil  producing  business  [R.  T.    1670-73,    2074-2090]. 

To  aid  Murphy  and  Kvasnicka  in  the  selling,    Meyer  pro- 
vided the  information  and  caused  to  be  prepared  a  brochure 
(Government's  Exhibit  lA)  [R.  T.    2189],    which  contained  numerous 
false  statements  and  misrepresentations. 

The  false  statements  in  the  brochure  included: 

(a)  That  there  was  a  high  probability  of  a  high-producing 
well  in  the  Tulsa-Osage  Counties  area  [R.  T.    I486]; 

(b)  That  the  bottom-hole  pressure  in  the  area  was 
1650  pounds  per  square  foot  [R.  T.    I486]; 

(c)  That  maintenance  costs  were  negligible  [R.  T.    1487, 
1490-1]; 

(d)  That  oil  migrates  and  replenishes  itself  in  good 
oil  fields  [R.  T.    1491-2]; 

(e)  That  wells  in  the  area  produced  20  -  30  barrels 
per  hour  [R.  T.    1492-4]; 

6. 


(f)  That  Meyer's  well  in  Illinois  produced  5,  000 

barrels  per  day  [R.  T,    1495]. 

Kvasnicka  and  Murphy  either  provided  a  copy  of  the  bro- 
chure or  related  the  misrepresentations  contained  in  it  to  investors. 
In  addition,    Meyer  met  with  many  of  the  purchasers  of  the  oil 
interests.     At  these  meetings,    Meyer  assisted  the  direct  selling 

by  making  the  same  misrepresentations  he  had  made  to  Kvasnicka 

2/ 
and  Murphy  and  in  the  brochure-   — 

In  addition  to  the  false  statements  in  the  brochure,    inves- 
tors were  told  by  Meyer  and  his  codefendants  other  facts  which 
were  false  in  the  following  particulars: 

(a)  Defendants  had  no  contract  to  sell  oil  to  Standard 
Oil  of  Ohio  [R.  T.    844-5;     1432-3]; 

(b)  None  of  the  land  described  in  receipts  given  to 
investors  was  conveyed  to  codefendants  Murphy  and  Kvasnicka  by 
Meyer  [R.  T.    789-98]; 

(c)  Much  of  the  property  described  in  the  receipts  given 
to  investors  was  never  leased  or  owned  by  any  of  the  defendants 


2_l  Meyer  met  with  the  following  victims  and  either  made  the 

misrepresentations  himself  or  was  present  when  another 
person  made  them:     Louise  Counsemano  [R.  T.    136,    145-8,    168]; 
Fred  Moore  [R.  T.    191,    193-202,    211,    219-21,    233];    Mervin 
Christensen  [R.  T.    356-7];     Harold  Harten  [R.  T.    400,    406-10]; 
Thomas  Robertson  [R.  T.    462-5,    468-9,    478-80];    Ed  Basteda 
[515-6];     Billy  Shekell  [R.  T.    562-3];    Delia  Bettendorf  [R.  T.    594, 
597-8,    616];    Anna~Krng  [R.  T.    632-46Tr~Donald  Mc"^tu  [R.  T.    769- 
70];    Richard  Jennings  TR-  T.    819-21,    835];     Phillip  Britton  [R.  T. 
1003-6,    1010-11];    j^rma  Mooter  [R.  T.    1078,    1082J;    Beverly 
Leos  [R.  T.    1118,    1125];    Marjorie  Stavenhagen  [R.  T.    1500,    1510, 
T5141. 


7. 


f 

[R.  T.    1258-73,    1290-92]; 
I  (d)  There  were  only  three  producing  oil  wells  on  the 

ranch  upon  which  Meyer  drilled  a  well  [R.  T.    1420]  and  these  wells 

produced  but  5  barrels  of  oil  per  day  [R.  T.    1287-8]; 

(e)  The  legal  descriptions  on  the  receipts  given  to 

investors  were  entirely  inaccurate  [R.  T.    1304-7,    1311-12]; 
P  (f)  No  oil  was  ever  produced  by  any  wells  owned  by 

Meyer  in  Tulsa  and  Osage  Counties  [R.  T.    1366-70]; 

k 

r  (g)  Meyer  did  not  hold  a  Ph.  D.    in  geology  from  the 

Colorado  School  of  Mines  [R.  T.    1578,    1581,    1606-7]; 

(h)  Meyer  was  never  an  officer  in  the  United  States 

Marine  Corps  [R.  T.    1599]; 

(i)  Meyer's  income  was  not  so  large  that  for  tax 

purposes  he  could  afford  to  give  away  income  from  oil  wells 
[R.  T.    1581,    1597,    1606-7]; 
W  (j)  Meyer  did  not  record,    nor  did  he  intend  to  record, 

any  assignments  of  "working  interests"  with  the  Tulsa  County  or 
Osage  County  recorders  [R.  To    2000-1]; 

(k)  The  wells  on  the  Indian  land  were  subject  to  pro- 

duction controls  [R.  T.    1286-7]. 
I  AH  of  the  money  from  sales  of  working  interests  collected 

by  codefendants  and  others  was  turned  over  to  Meyer  [R.  T.    1051, 
1176,    1244,    1644,    2040,    2133].     The  "working  interests"  were 
sold  in  $250  to  $1,  000  units;    the  total  amount  collected  was 
approximately  $140,  000  [R.  T.    1923,    2167,    1176].     Another 
$20,  000  was  collected  by  Murphy  and  Kvasnicka  from  sales  of 

8. 


"overriding  royalty  interests"  [R.  T.    1923,    2167].     No  purchaser 
received  a  return  on  his  money.     Meyer  did,    however,    drill  one 
well  on  a  lease  owned  by  him  at  a  cost  of  $17,  000  [R.  T-    1346] 
(not  $32,  000  as  represented).     The  well  never  produced  oil  [R.  T. 
1365-6].     Also,    Meyer  refunded  money  to  two  or  three  investors 
after  they  had  complained  to  him  [R.  T.    240,    2164]. 

At  no  time  were  there  any  registration  statements  filed 
with  the  Securities  Exchange  Commission  by  any  of  the  defendants 
[R.  T.    1608-9]. 

On  February  24,    1966,    the  fourth  day  of  trial,    Meyer 
absented  himself  from  the  trial  [R.  T.    861].     After  a  brief  hearing, 
the  trial  continued  in  Meyer's  absence  [R.  T.    860-938].     The 
following  Monday,    another  hearing  was  held  in  which  Meyer's 
wife  and  mother,    who  had  previously  testified  falsely,    testified 
that  Meyer  fled  because  he  was  afraid  of  getting  killed  and  that  he 
was  irrational  [R.  T.    950-66].      Proof  was  offered  that  Meyer  was 
on  a  helicopter  flight  frona  San  Bernardino  to  the  lx)S  Angeles 
International  Airport  on  the  morning  of  February  24,    1968  [R.  T. 
967].     Meyer's  motion  for  a  mistrial  was  denied  [R.  T.    974-5, 
982,    1618-19]. 


9. 


V 
ARGUMENT 


A.  THE    TRIAL  COURT  DID   NOT   COMMIT 

PLAIN   ERROR   IN   FAILING   TO  SEVER 
MEYER'S   TRIAL. 


Meyer  concedes  that  he  was  properly  joined  as  a  defendant 

3/ 
under  Rule  8,    Federal  Rules  of  Criminal  Procedure  [A.  B.    17].   _' 

At  the  commencement  of  trial,    Meyer  moved  for  severance 
under  Rule  14  of  the  Federal  Rules  of  Criminal  Procedure  — /  on 
the  ground  that  the  codefendants  Murphy  and  Kvasnicka  had  made 
statements  to  the  government  which  would  prejudice  Meyer  [R.  T. 
24].     The  motion  was  denied  [R.  T.    48].     The  government  repre- 
sented that  the  statements  of  neither  defendant  would  be  offered 
into  evidence  [R.  T.    24].       No  such  statements  were  introduced  by 
the  government.     Meyer's  motion  for  severance  was  never  renewed. 

Both  codefendants,    Murphy  and  Kvasnicka,    based  their 
defense  on  the  theory  that  they  were  participating  innocently  and 


3^/  "A.  B.  "  refers  to  appellant's  brief. 

4/  Rule  14.     Relief  from  Prejudicial  Joinder.     "If  it  appears 

~  that  a  defendant  or  the  government  is  prejudiced  by  joinder 

of  offenses  or  of  defendants  in  an  indictment  or  information  or  by 
such  joinder  for  trial  together,    the  court  may  order  an  election 
or  the  separate  trials  of  counts,    grant  a  severance  of  defendants 
or  provide  whatever  other  relief  justice  requires.     In  ruling  on  a 
motion  by  a  defendant  for  severance,    the  court  may  order  the 
attorney  for  the  government  to  deliver  to  the  court  for  inspection 
in  camera  any  statements  or  confessions  made  by  the  defendants 
which  the  government  intends  to  introduce  in  evidence  at  the  trial.  " 


10. 


I 

acting  in  good  faith  in  reliance  upon  representations  made  by 
Meyer  [R.  T.    83,    1620-2074,    2074-2154]. 
L  The  survey  of  the  case  law  interpreting  Rule  14  in  Appel- 

lant's Brief  [A.  B.    18-19]  and  the  standard  of  fairness  applied  in 
these  cases  is  accurate.     The  applicable  test  under  these  cases 
is  whether  the  joint  trial  is  fundamentally  fair;    that  determination 
turns  on  the  facts  of  each  particular  case.     United  States  v. 
Echeles>    352  F.  2d  892,    896  (7th  Cir,    1965)., 

Also,    it  is  settled  that  severance  rests  within  the  discre- 
tion of  the  trial  court,    United  States  v.    Brown,    375  F.  2d  310 
(D.  C.    Cir.    1966),    cert,    denied, 388  U.  S.    915(1957).     Absent  a 
showing  of  a  clear  abuse  of  discretion  by  the  trial  court,    this 
Court  should  not  disturb  the  conviction.     Opper  v.    United  States, 
348  U.S.    84  (1954). 

Meyer  argues  that  severe  prejudice  to  him  resulted  from 
the  trial  court's  failure  to  sever  his  case,  and  in  that  connection, 
asserts  three  factors. 

First,    Meyer  claims  that  his  codefendants  actively  prose- 
cuted him  in  order  to  persuade  the  jury  that  they,    too,    were  victims 
of  appellant's  fraudulent  scheme  [A.  B.    20-1]. 

He  relies  upon  United  States  v.    Valdes,    262  F.    Supp.    474 
(D.C.    P.  R.    1967).     In  Valdes,    the  District  Court  granted  a  pre- 
trial motion  for  severance  on  the  ground  that  prejudice  would 
result  from  one  defendant's  attempt  to  blame  his  codefendant  for 
the  commission  of  the  crime.     Here,    however,    Meyer  did  not  urge 
this  as  a  ground  in  his  motion  for  severance  before  trial,    or  at 

11. 


any  time  in  the  court  below.     Moreover,    research  discloses  no 
case  in  which  a  failure  to  sever  for  this  reason  was  plain  error. 
On  the  contrary,    the  overwhelming  weight  of  authority  is 
expressed  by  United  States  v.    Cohen,    124  F.  2d  164,    166  (2nd  Cir. 
1941): 

It  is  common  in  cases  of  joint  indictments 
that  there  is  hostility  of  some  of  the  defendants  to 
the  others  and  that  they  will  try  to  save  themselves 
by  placing  the  blame  on  their  associates  in  the  crime. 
The  jury  can,    and  does,    weigh  the  inductment  of 
some  defendants  to  implicate  others  in  determining 
guilt.     We  find  no  error  in  the  disposition  of  the 
motion  to  compel  severance  and  hold  that  the  order 
denying  it  should  be  affirmed. 
Accord,    Baker  v.    United  States.    329  F,  2d  786  (10th  Cir.    1964), 
cert,    denied,  379  U.  S-    853(1964);    Sharp  v.    United  States,    195 
F.  2d  997  (6th  Cir.    1952);    Dauer  v-    United  States,    189  F.  2d  343, 
344  (10th  Cir.    1951),    cert,    denied. 342  U.  S.    898(1951);    Allen  v. 
United  States,    91  U.  S.    App.    D.  C.    197,    202  F.  2d  329  (D.  C.    Cir. 
1952),    cert,    denied, 344  U.  S.    869(1952);    United  States  v.    Bentvena, 
193  F.    Supp.    485  (D.  C.    N.  Y.    1960),    aff'd.,  357  F.  2d  58  (1966), 
cert,    denied,  385  U.  S.    815(1966);     United  States  v.    Steffes,    228 
F.    Supp.    491  (D.C.    Mont.    1964). 

The  policy  for  rarely  granting  a  severance  was  summarized 
in  Davenport  v.    United  States,    260  F.  2d  591  (9th  Cir.    1958),    cert. 
denied  359  U.  S.    909(1959): 

12. 


'Where  two  or  more  defendants  are  indicted 
for  a  joint  transaction,    it  is  inadvisable  to  split  up 
the  case  into  many  parts  for  separate  trials,    in  the 
absence  of  very  strong  and  cogent  reason  therefor.  ' 

'A  man  takes  some  risk  in  choosing  his 
associates  and,    if  he  is  hailed  into  court  with  them, 
must  ordinarily  rely  on  the  fairness  and  ability  of 
the  jury  to  separate  the  sheep  from  the  goats.  ' 

A  strong  showing  of  prejudice  by  the  movant  is  required 
because,    as  stated  in  United  States  v.    Wallace,    272  F.    Supp.    838, 
841  (D.  C.    N-  Y.    1967): 

[A]  defendant's  desire  for  a  separate  trial 
must  yield  to  the  public  interest  in  avoiding  unneces- 
sary duplication  and  expense  and  in  utilizing  available 
facilities  and  personnel  to  best  advantage  toward 
assuring  speedy  trials  for  all  of  those  accused  .    .    . 
and  the  burden  is  upon  the  movant  to  come  forward 
with  facts  demonstrating  that  he  will  be  so  severely 
prejudiced  by  a  joint  trial  that  it  would  in  effect 
deny  him  a  fair  trial  altogether. 

Secondly,    Meyer  claims  that  he  was  prejudiced  because 
the  codefendants  testified  but  Meyer  did  not,    and  because  this  fact 
was  adverted  to  by  defense  counsel  [A.  B.    24]. 

13. 


Meyer  relies  upon  De  Luna  v.    United  States.    308  F.  2d  140 
(5th  Cir     1962),    reh__denied, 324  F.  2d  375  (1963),    in  which  com- 
ments on  a  defendant's  failure  to  testify  by  a  codefendant's  attorney 
constituted  error.      In  that  case,    however,    counsel  for  the  codefend- 

ant  referred  directly  to  De  Luna's  failure  to  testify  and  argued 

5/ 
that  an  honest  man  is  not  afraid  to  take  the  stand  and  testify.   — ' 

No  such  statements  were  made  in  Meyer's  trial,    and  no  reference 
was  made  to  Meyer's  silence.     Counsel  merely  said,    "He  [refer- 
ring not  to  Meyer  but  to  the  codefendant]  brought  those  receipts 
in  here  to  you"  [R.  T.    2297]  and  "the  two  defendants  here  have 
admitted  they  sold  these  interests.     They  have  admitted  they  made 
these  representations"  [R.  T,    2337]. 

These  remarks  do  not  refer  to  Meyer's  failure  to  take  the 
stand,    much  less  constitute  "inflammatory  and  prejudicial" 
comment.     It  should  be  noted  that  in  De  Luna,    the  court  emphasized 
that  the  comments  "were  not  casual  or  isolated  references;    they 
were  integral  to  Gomez's  defense". 

The  facts  here  are  closer  to  those  in  United  States  v. 
Parness,    331  F.  2d  703,    705  (3rd  Cir.    1964),    cert,    denied  377  U.  S. 
993  (1964).     Parness,    in  distinguishing  De  Luna,    limited  the 
latter  to  the  particular  facts  and  procedures  followed  at  that  trial, 
and  added: 


bj  "Well,    at  least  one  man  was  honest  enough  and  had  courage 

enough  to  take  the  stand  and  subject  himself  to  cross- 
examination  and  tell  you  the  whole  story.    .    .    .     You  haven't  heard 
a  word  from  this  man  [De  Luna].  "    308  F.  2d  at  142. 

14. 


Under  all  the  circumstances  of  this  case  we 
do  not  think  that  the  statement  that  Parness  took  the 
witness  stand  because  he  had  nothing  to  hide  as 
phrased  by  his  attorney,    was  outside  the  limits 
permitted  an  advocate  in  his  defense  summation. 
It  did  not  refer  to  the  failure  of  Grimmett  to  testify 

directly  or  by  inference.     We  cannot  fairly  hold  that 

6/ 
it  was  in  violation  of  appellant's  constitutional  rights.   — ' 

Thirdly,    Meyer  implies  that  the  statements  given  by 
Kvasnicka  and  Murphy  to  the  government  prior  to  trial  were  pre- 
judicial,   even  though  these  statements  were  not  used  in  the  trial 
[A.  B.    18]. 

This  same  situation  arose  in  Dauer  v.    United  States,    supra. 
Dauer  and  another  were  jointly  indicted.     Dauer's  codefendant 
had  made  a  written  confession  in  which  he  tried  to  vindicate  him- 
self at  the  expense  of  Dauer.     The  government  announced  that  it 
did  not  intend  to  use  and  did  not  introduce  the  codefendant's 
confession.     The  trial  court's  denial  of  the  motion  to  sever  was 
affirmed. 


6^/  In  Parness  one  defendant  testified,    and  one  did  not.      There 

was  no  objection  to  the  charge  given  below,    and  no  motion 
for  a  new  trial  involving  the  severance  issue.     The  issue  was 
raised  for  the  first  time  on  appeal.     The  court  went  on  to  state 
that  "the  Grimmett  defense  cannot  be  excused  for  not  having  asked 
for  a  mistrial". 

15. 


B.  PROCEEDING   WITH   THE    TRIAL  IN 

MEYER'S   ABSENCE   WAS   PROPER. 


Rule  43  of  the  Federal  Rules  of  Criminal  Procedure  pro- 
vides in  part  that: 

In  prosecutions  for  offenses  not  punishable 

by  death,    the  defendant's  voluntary  absence  after 

the  trial  has  been  commenced  in  his  presence  shall 

not  prevent  continuing  the  trial  to  and  including  the 

return  of  the  verdict. 
The  purpose  of  this  provision  "is  to  prevent  frustration  of  a  trial 
in  progress  by  the  escape  or  absconding  of  the  defendant".     Cross 
V.    United  States,    325  F.  2d  629,    631  (D.  C.    Cir.    1963). 

Rule  43  is  applicable  where,    as  here,   the  defendant  is  on 
bond.     Meyer  had  a  duty  to  appear  at  the  times  appointed  by  the 
court,    or  if  he  was  unable  to  do  so,    to  communicate  with  the 
court  or  counsel  concerning  his  absence.     Meyer  did  neither. 
See  Diaz  v.    United  States,    223  U,  S.    442  (1911). 

Meyer's  reliance  on  Johnson  v.    Zerbst,    304  U.  S.    458 
(1938)  is  misplaced.     That  case  involved  an  invalid  waiver  of  the 
right  to  counsel.     The  requirement  that  such  a  waiver  must  be 
voluntary  and  intelligent  was  emphasized.     It  does  not  assert  that 
Rule  43  requires  an  express  waiver  of  defendant's  presence  at 
trial,    after  trial  has  begun  and  the  defendant  has  absconded. 

Rule  43  requires  a  finding  that  defendant's  absence  was 
voluntary.     It  does  not  require  an  express  waiver  of  presence  by 

16. 


the  defendant.    If  he  voluntarily  leaves,    defendant  has  impliedly 
waived  his  right  to  be  present.     State  ex.    rel.    Shetsky  v.    Utecht, 
228  Minn.    44,    36  N.  W.  2d  126  (1949) ;    see  Phillips  v.    United 
States,    334  F.  2d  589  (9th  Cir.    1964),    cert,    denied,    379  U.  S.  1002 
(1965);    Cross  v.    United  States,    supra;    see  also,    Diaz  v.    United 
States,    supra. 

Furthermore,    Zerbst  emphasizes  that: 

"The  determination  of  whether  there  has 
been  an  intelligent  waiver  of  the  right  to  counsel 
miust  depend,    on  each  case,    upon  the  particular 
facts  and  circumstances  surrounding  that  case, 
including  the  background,    experience,    and  conduct 
of  the  accused.  "    304  U.  S.    at  464. 

At  Meyer's  trial,    the  court    found  such  an  implied  waiver. 
The  trial  judge  rejected  Meyer's  vague  assertions  that  his  life  had 
been  threatened  and  found  that  Meyer's  absence  was  voluntary. 
An  abundance  of  evidence  supports  this  finding    [R.  T.    860-938, 
950-974].     This  Court  will  not  disturb  such  a  factual  determination 
by  the  trier  of  fact.    Noto  v.    United  States,    367  U.  S.    290    (1961); 
Glasser  v.    United  States,    315  U.S.    60(1942). 

Moore  v.  Michigan,  355  U.  S.  155(1957),  relied  upon  by 
Meyer,  is  inapposite.  There,  a  17  year  old  Negro  boy  "waived" 
his  right  to  counsel  and  pleaded  guilty,  after  the  Sheriff  had  told 
him  that  he    (the  Sheriff)    might  not  be  able  to  protect  him. 


17. 


Obviously,    the  boy's  fear  of  attending  trial  affected  his  plea  of 
guilty  and  vitiated  his  waiver  of  counsel.     The  "waiver"  in  Moore 
was  induced  by  the  police  while  the  defendant  was  in  police  custody. 
Meyer,    however,    never  sought  protective  custody  of  the  court 
or  of  any  law  enforcement  agency,    nor  did  he  truthfully  advise  his 
own  attorney  of  his  disappearance,    or  the  alleged  reason  for  it 
[R.  T.    860-1.    950-66].     Assuming,,    arguendo,    that  Meyer  was 
threatened,    there  are  no  facts  to  bring  the  circumstances  of  his 
action  within  the  definition  of  coercion  or  duress.   — '     Meyer,    if 
believed,    chose  not  to  seek  protection,    but  to  flee. 

Turner  v.    Louisiana,    379  U.  S.    466  (1965)  is  also  distin- 
guishable.     It  deals  with  the  conduct  of  prosecution  witnesses  in 
influencing  the  jury  outside  the  courtroom.      The  arresting  officers, 
who  also  took  a  confession  from  the  defendant,    ate,    conversed, 
and  continuously  associated  with  the  jury  during  the  three  day  trial. 
Clearly,    the  probability  of  prejudice  resulting  from  this  activity 
is  great.     No  such  activity  was  present  in  the  instant  case.     Com- 
pare,   Bowles  V.    Texas,    366  F.  2d  734  (1966). 

In  any  event,    the  trial  court  rejected  the  vague  testimony 
that  Meyer  acted  under  duress  which  was  offered  by  Meyer's  wife 
and  mother;    the  credibility  of  witnesses  is  to  be  determined  by  the 
fact-finder.    — ' 


]_!  See  Phillips  v.    United  States,    334  F.  2d  589,    591  (9th  Cir. 

1964)  (defining  coercion,    compulsion  and  necessity). 

8^/  Research  reveals  no  federal  case  on  the  question  of  coer- 

cion or  duress  under  Rule  43.     In  Massey  v.    State,    31  Tex. 
Cr.    371,    20  S.  W.    758(1892),    a  defendant  was  moved  to  another 

(Continued) 
18. 


A  MISSTATEMENT  OF  EVIDENCE  BY 
THE  PROSECUTOR  WAS  NOT  PREJU- 
DICIAL. 


Meyer  contends  that  the  Assistant  United  States  Attorney's 
reference  in  argument  to  Meyer's  1962  arrest  for  obtaining  money 
by  false  pretenses  was  such  a  misstatement  of  the  evidence  as 
to  be  plain  error.      The  only  evidence  regarding  the  arrest  was 
that  it  involved  an  oil  venture  in  Michigan  [R   T.    at  2182]. 

On  direct  examination,    co-defendant  Murphy  testified  that 
Meyer  had  been  arrested  in  1962  and  that  Meyer  told  him  (Murphy) 
that  it  was  a  mistake,    that  it  was  Meyer's  father  whom  the  police 
intended  to  arrest  [R.  T.    2096-2099]. 

On  cross-examination,    the  government  showed  Murphy  a 
newspaper  clipping  to  refresh  his  memory  about  the  incident. 
Murphy  silently  read  the  article  which  apparently  referred  to  the 
charges  of  obtaining  money  by  false  pretenses.     The  judge  excluded 
the  newspaper  from  evidence  and  carefully  instructed  the  jury  to 
disregard  the  showing  of  the  newspaper  [R.  T.    2187].     Murphy 
stated  again  that  Meyer  told  him  the  trouble  involved  Meyer's 
father  and  that  an  oil  venture  in  Michigan  was  involved  [R.  T.    2188]. 


8^/  Continued: 

county  for  fear  that  his  jail  cell  would  be  attacked  by  a  mob.     The 
judge  and  county  attorney  advised  the  defendant  to  waive  his  right 
to  be  present  at  his  trial.     The  court  held  that  his  waiver  was 
invalid.     In  Vecks  v.    State,    42  Ga,  App.    451,    156  S.  E.    729(1931) 
the  defendant's  absence,    as  a  result  of  threats  made  on  his  life, 
was  determined  to  be  voluntary  and  his  conviction  was  affirmed. 


19. 


The  prosecutor  mentioned  in  argument  that  Meyer  was  arrested 
for  obtaining  money  by  false  pretenses  [R.  T.    2377,    2348].     In 
response  to  Meyer's  objection,    the  court  stated  that  there  was 
no  evidence  with  respect  to  obtaining  money  by  false  pretenses, 
but  only  that  Meyer  had  been  arrested  in  connection  with  an  oil 
venture.     Meyer  did  not  move  for  a  mistrial  [R.  T.    2348]. 

The  test  to  be  applied  is  whether  the  prosecutor's  mis- 
statement was  so  prejudicial  that  defendant  was  denied  a  fair  trial. 
Isaacs  V.    United  States,    301  F.  2d  706  (8th  Cir.    1962),    cert,    denied, 
371  U.S.    818  (1962);     United  States  v.    Davis,    260  F.    Supp.    1009 
(D.  C.    Tenn.    1966),    aff'd.,  365  F.  2d  251  (6th  Cir,    1966). 

In  this  connection  some  latitude  is  allowed  counsel  in 
argument,    unless  the  statements  are  untruthful  or  plainly  prejudi- 
cial.    United  States  v.    Mucherino,    311  F.  2d  172  (4th  Cir.    1962); 
See  United  States  v.    Barrett,    280  F.  2d  889  (2nd  Cir.    1960).     Only 
in  cases  of  clear  abuse  by  a  prosecutor  will  a  conviction  be  set 
aside  because  of  improper  argument.     Cf.     United  States  v.    Red- 
field,    197  F.    Supp.    559  (D.C.    Nev.    1961).    aff'd.,  295  F.  2d  249 
(9th  Cir.    1961),    cert,    denied.369  U.  S.    803(1962);    Brennan  v. 
United  States,    240  F.  2d  253  (8th  Cir.    1957),    cert.    denied,353  U.  S. 
931(1957);    Weiss  v.    United  States,    122  F.  2d  675,    690  (5th  Cir. 
1941),    cert,    denied, 314  U.  S.    687(1941);    D'Aquino  v.    United 
States.    192  F.  2d  338  (9th  Cir.    1951),    cert,    denied, 343  U.  S.    935 
(1952).     (These  cases  involve  inflammatory  remarks  by  the 
prosecution.  ) 


20. 


Wigmore  explains  that: 

[S]ince  misunderstandings  constantly  arise 
as  to  the  tenor  and  effect  of  evidence,    and  since  in 
the  strain  and  fervor  of  argument  honest  errors  of 
memory  may  easily  occur,    improper  assertions 
may  come  to  be  made  unwittingly.     For  such  contin- 
gencies,   on  the  one  hand,    judicial  charity  should  be 
shown  in  excusing  the  counsel  from  the  guilt  of  knowing 
misconduct.  =!'  -^  *     Wigmore,    Evidence  §1807,    p.    264 
(3d.    Ed.    1940). 
The  instant  case  falls  within  the  category  of  cases  cited  above. 
Although  the  newspaper  clipping  was  shown  to  Murphy  in  front  of 
the  jury,    the  court  instructed  the  jury  to  disregard  it  [R.  T.    2187]. 
There  is  no  reason  to  presume  that  the  jury  did  not  follow  that 
instruction.     See  Nabob  Oil  Co.    v.    United  States,    190  F.  2d  478, 
481  (10th  Cir.    1951),    cert.    denied,342  U.  S.    876;     Kowalchuk  v. 
United  States,    176  F.  2d  873,    877  (6th  Cir.    1949). 

Additionally,    at  the  prosecutor's  request  [R.  T.    2192], 
the  judge  instructed  the  jury  that  the  testimony  concerning  Meyer's 
arrest  was  not  evidence  on  the  guilt  or  innocence  of  any  of  the 
defendants,    but  that  it  was  admitted  only  for  consideration  on  the 
issue  of  whether  Murphy  and  Kvasnicka  relied  in  good  faith  upon 
the  representations  Meyer  made  involving  his  oil  ventures  [R.  T. 
2195].     Also,    the  trial  court  corrected  the  slight  misstatement  by 
the  prosecutor  and  informed  the  jury  as  to  the  correct  state  of  the 
evidence  [R.  T.    2348].     Finally,    the  misstatement  of  fact  was 

21. 


slight  compared  to  the  amount  of  evidence  offered  in  this  lengthy, 
complicated  trial,    and  the  evidence  against  Meyer  was  overwhelm- 
ing. 

It  is  fundamental  that  the  government  must  prosecute  upon 
the  highest  level  of  fair  play;    however,    a  prosecutor's  slight 
oversight  should  not  frustrate  the  administration  of  justice.     See 
Lewis  V.    United  States,    277  F.  2d  378  (10th  Cir.    1960),    sub  nom, 
Burley  v.    United  States,    295  F.  2d  317  (10th  Cir.    1961). 

Parker  v.    Gladden,    385  U.  S.    363(1966),    relied  upon  by 
Meyer  is  entirely  distinguishable  on  its  facts.     In  Parker,    the 
bailiff  of  the  court  commented  that  the  defendant  was  guilty  and  a 
wicked  man.     This  comment  was  overheard  by  three  jurors. 
Because  of  the  bailiff's  official  status,    his  opinion  probably 
weighed  heavily  with  the  jury,    and  there  was  evidence  that  one  of 
the  jurors  was  prejudiced  by  the  bailiff's  statements.      The  court 
held  that  these  facts  raised  such  a  probability  of  prejudice  that  the 
defendant  was  denied  due  process  of  law.     Obviously,    the  facts 
before  this  Court  do  not  present  such  a  probability  of  prejudice. 

Rule  52(a)  of  the  Federal  Rules  of  Criminal  Procedure 
provides:    "Any  error,    defect,    irregularity  or  variance  which 
does  not  affect  substantial  rights  shall  be  disregarded.  "    The 
prosecutor's  misstatement  of  the  evidence  in  the  context  of  this 
case  falls  squarely  within  Rule  52(a)  and  was  therefore  harmless. 


22, 


CONCLUSION 

For  the  reasons  stated  above,   the  conviction  should  be 

affirmed. 

Respectfully  submitted, 

WM.    MATTHEW   BYRNE,    JR. 

United  States  Attorney, 

ROBERT    L.    BROSIO, 

Assistant  U.    S.    Attorney, 
Chief,    Criminal  Division, 

CRAIG  B.   JORGENSEN, 

Assistant  U.   S.    Attorney, 

Attorneys  for  Appellee, 
United  States  of  America. 


23. 


©IPY 


No.  22255 


/ 


IN  THE  UNITED  STATES  COURT  OP  APPEALS 
FOR  THE  NINTH  CIRCUIT 


GRANTON  STANWOOD  McHENRY, 

Appellant, 

vs. 

LAWRENCE  E.  WILSON,  Warden, 
California  State  Prison, 
San  Quentin, 

Appellee . 


FILED 

NOV  1    1967 
>m.  B.  i-UCK.  CLEp 


APPELLEE'S  BRIEF 


THOMS  C.  LYNCH,  Attorney  General 
of  the  State  of  California 

DERALD  E.  GRANBERG 

Deputy  Attorney  General 

MICHAEL  J.  KELLY 

Deputy  Attorney  General 

6000  State  Building 

San  Francisco,  California  9^102 

Telephone:   557-325^ 


Attorneys  for  Appellee 


TABLE  OF  CONTENTS 

Page 

JURISDICTION  1 
STATEMENT  0?  TKE  CASE 

A.  Proceedings  in  the  state  courts  1 

B.  Proceedings  in  the  federal  courts  3 

APPELLANT'S  CONTENTIONS  4 

SUMMARY  OP  APPELLEE'S  ARGUMENT  5 

ARGUMENT 

I.   THE  DISTRICT  COURT  PROPERLY  DENIED 
APPELLANT'S  PETITION,  CORRECTLY 
CONCLUDING  THAT  IT  WAS  IvITHOUT  MERIT        5 

II.   THE  DISTRICT  COURT  PROPERLY  REFUSED 

APPELLANT'S  REQUEST  FOR  COUNSEL  7 

CONCLUSION  8 


1 . 


TABLE  OP  CASES 


Page 

Eskridge  v.  Rhay 

3^5  F.2d  7TB(9th  Clr.  ly65) 

cert,  denied,  382  U.S.  996  (1966)  7 

Hatfield  v.  Ballleaux 

290  P. 2d  632  (9th  Cir.  I96I) 

cert,  denied,  368  U.S.  362  (I96I)  7 

Machibroda  v.  United  States 

36b  U.S.  487  (1962)  6 

Schlette  v .  California 

284   F.2d    827    (9th   Cir.    I96O) 

1^1:1'    clenied,    366   U.S.    9^0    (1961)  7 

In  re  Swain 
3T"Cal.2d  300 
209  P. 2d  793  (1956)  6 

United  States  v .  Pay 

33^F.2d  272  (2nd  Cir.  1964)  6 


ii 


IN  TPIE  UNITED  STATES  COURT  OP  APPEALS 
FOR  THE  NINTH  CIRCUIT 


GRANTON  STANV/OOD  McHENRY, 

Appellant , 

vs. 

LAWRENCE  E.  WILSON,  Warden, 
California  State  Prison, 
San  Quentin, 

Appellee. 


No.  22255 


APPELLEE'S  BRIEF 


JURISDICTION 


The  jurisdiction  of  the  United  States  District 
Court  to  entertain  appellant's  petition  for  a  writ  of  habeas 
corpus  was  invoked  under  Title  28,  U.S.C.,  section  1915. 
The  jurisdiction  of  this  Court  is  conferred  by  Title  28, 
U.S.C,  section  2253,  which  makes  an  order  in  a  habeas  corpus 
proceeding  reviewable  in  the  Court  of  Appeals  when,  as 
here,  a  certificate  of  probable  cause  has  been  issued. 
STATEMENT  OF  THE  CASE 

Appellant  appeals  from  the  order  of  the  United 
States  District  Court  for  the  Northern  District  of  California, 
denying  his  petition  for  writ  of  habeas  corpus. 

A.   Proceedings  In  the  state  courts. 

On  October  18,  i960,  appellant  was  convicted  of 
1. 


violating  California  Penal  Code  section  261.1  (statutory 
rape).   He  was  sentenced  to  be  imprisoned  for  the  term 
prescribed  by  lav;  (TR  88-89).   There  was  no  appeal. 

On  April  25,  1963,  appellant  was  released  on 
parole  from  state  prison  with  regard  to  the  above  con- 
viction for  rape  (TR  79). 

Thereafter,  on  January  28,  1965,  appellant  was 
convicted  of  violating  California  Penal  Code  section  12021 
(possession  of  a  weapon  by  a  felon).   This  judgment  and 
conviction  also  reflects  as  a  charged  and  proved  or 
admitted  prior  felony  conviction  the  above  conviction 
for  statutory  rape  in  I96O.   Appellant  v;as  sentenced  to 
be  imprisoned  for  the  term  prescribed  by  law  (TR  86-87). 
There  was  no  appeal. 

Appellant's  parole  was  subsequently  canceled 
and  his  term  on  the  i960  rape  conviction  was  refixed  at 
the  maximum  (TR  79-81). 

On  September  15,  I965,  the  Monterey  County 
Superior  Court  denied  without  opinion  appellant's  peti- 
tion for  writ  of  habeas  corpus.   The  California  Court  of 
Appeal,  First  Appellate  District,  denied  a  similar  peti- 
tion on  October  22,  I965.   Subsequently,  the  California 
Supreme  Court  denied  without  opinion  appellant's  petition 

2. 


1/ 

for  v;rlt  of  habeas  corpus  on  December  22,  I965  (TR  5). 

B.   Proceedings  In  the  federal  courts. 

Appellant  petitioned  for  writ  of  habeas  corpus 
in  the  United  States  District  Court  for  the  Northern 
District  of  California  on  J/larch  10,  I966  (TR  1).   On 
May  26,  1966,  the  district  court  denied  appellant's 
petition,  concluding  that  appellant  vjas  barred  by  McIJally 
V.  Hill,  293  U.S.  131,  y:>   S.Ct.  2^1,  79  L.Ea.  238  (193^). 
Appellant  filed  a  raotion  for  rehearing  on  June  10,  I966, 
which  was  denied  on  July  22,  I966  (TR  6I,  6^0.   Appellant 
then  filed  a  motion  for  certificate  of  probable  cause  on 
August  ^,  1966  (TR  63),  and,  on  September  1,  I966,  the 
district  court  vacated  the  order  of  dismissal  and  dismissed 
the  cause  with  leave  to  amend  on  the  grounds  that  appellant 
had  set  forth  allegations  in  his  motion  for  certificate  of 
probable  cause  which,  if  true,  might  merit  further  consid- 
eration by  the  court  of  the  petition  for  writ  of  habeas 
corpus,  if  properly  amended  (TR  69).   Appellant  filed  an 
amended  petition  on  September  15,  I966  (TR  70),  and  an  order 
to  show  cause  was  issued  on  January  6,  I967  (TR  73). 

A  return  to  the  order  to  show  cause  and  points 
and  authorities  in  opposition  to  the  petition  for  writ  of 


1.   "TR"  refers  to  the  transcript  of  record  on  the 
proceedings  in  the  district  court. 

3. 


habeas  corpus  was  filed  by  the  California  Attorney  General 
on  January  30,  I967  (TR  7o).   Appellant  filed  a  traverse 
on  February  15,  196?  (TR  96).   The  district  court  ordered 
a  supplement  to  the  above  return  on  February  10,  I967 
(TR  9^),  which  was  complied  with  by  the  California  Attorney 
General  on  February  20,  I96Y  (TR  100).   Appellant  filed  a 
traverse  to  the  supplemental  return  on  March  3,  I967 
(TR  112). 

On  May  22,  1967,  the  district  court  denied 
appellant's  petition  for  writ  of  habeas  corpus  (TR  II8- 
125).   Appellant  filed  motions  for  rehearing  and  for 
appointment  of  counsel  on  May  29,  I967  (TR  126-129), 
which  were  denied  on  June  8,  I967  (TR  I3O-I31).   Judge 
Zirpoli  granted  appellant's  application  for  certificate 
of  probable  cause  on  June  26,  1967  (TR  135),  and  granted 
permission  to  appeal  in  forma  pauperis  on  September  6, 
1967  (TR  139).   Notice  of  Appeal  waf  filed  on  September  6, 
1967  (TR  140). 

APPELLANT'S  CONTENTIONS 

1.  The  district  court  misconstrued  appellant's 
pleadings  and  thereby  erred  in  refusing  to  grant  an  evi- 
dentiary hearing. 

2.  The  district  court  should  have  appointed 

counsel  to  assist  appellant  in  arguing  the  merits  of  his 

petition. 

4. 


SUMMARY  OF  APPELLEE'S  ARGUMENT 
I.   The  district  court  properly  denied  appel- 
lant's petition,  correctly  concluding  that  it  was  without 
merit , 

II.   The  district  court  properly  refused 
appellant's  request  for  counsel. 

ARGUMENT 
I 

THE  DISTRICT  COURT  PROPERLY 
DENIED  APPELLANT'S  PETITION, 
CORRECTLY  CONCLUDING  THAT  IT 
WAS  WITHOUT  MERIT. 

Appellant  argues  that  the  district  court  mis- 
construed the  facts  stated  in  his  petition  and  conse- 
quently the  order  denying  appellant's  petition  was 

2/ 
erroneous  (AOB  8),    Although  the  district  court  may 

have  misstated  certain  facts  alleged  in  the  petition, 
those  facts  did  not  form  the  basis  for  the  court's  deci- 
sion and  therefore  appellant's  argument  is  without  merit. 

The  district  court  dismissed  appellant's 
petition  because  the  facts  as  alleged  were  unreasonable 
in  the  absence  of  some  indication  that  appellant's 
counsel  was  inadequate  or  that  he  at  least  had  informed 


2.   Appellant  sets  forth  several  examples  of  instances 
where  the  court's  interpretation  of  the  pleaded  facts 
differs  insignificantly  from  the  facts  as  stated  in  the 
petition  (AOB  10-13). 

5. 


his  counsel  of  the  Incredible  plot  against  him  (TR  12^-25). 
The  court  points  out  that  appellant  does  not  say  what  role, 
if  any,  his  counsel  played  in  the  decision  to  change  pleas, 
and  concludes  that  "it  would  be  unreasonable  ...  to 
assume  that  [appellant]  .  .  .  did  not  consult  with  counsel 
with  respect  to  the  advisability  of  entering  a  plea  of 
guilty  .  .  .  ."   (TR  125:1^1-17).   The  court  found  this 
omission  more  significant  in  light  of  appellant's  alleged 
fear  of  asexualization  (TR  125). 

In  the  absence  of  some  reference  to  the  role  of 
his  counsel,  appellant's  allegations  are  ''palpably  incre- 
dible" and  the  denial  of  his  petition  was  proper.  Machibroda 
V.  United  States,  368  U.S.  487,  ^95  (1962);  United  States 
V.  _Fay,  336  F,2d  272  (2nd  Cir.  1964). 

We  can  only  conclude,  as  the  district  court 
implies,  that  the  only  reason  appellant  does  not  allege 
any  communication  with  his  counsel  respecting  the  plot  to 
coerce  his  plea  of  guilty  is  that  no  such  plot  ever  existed 
and  his  change  of  plea  was  purely  voluntary.   Certainly 
some  minimum  degree  of  candor  must  be  exacted  from  state 
prisoners  seeking  federal  habeas  corpus  relief.   Compare 
In  r£  Swain,  34  Cal.2d  300,  209  P. 2d  793  (1956).   In  this 
respect,  it  should  also  be  noted  that  appellant  waited 
some  five  years  after  entry  of  his  plea  to  present  this 

6. 


story  to  the  courts,  and  then  did  so  only  after  he  had 

committed  an  offense  which  resulted  in  a  second  conviction 

and  revocation  of  his  parole. 

II 

THE  DISTRICT  COURT  PROPERLY 
REFUSED  APPELLANT'S  REQUEST 
FOR  COUNSEL. 

Appellant  also  alleges  that  the  district  court 
should  have  appointed  counsel  to  argue  the  merits  of  his 
petition  (AOB  15). 

With  respect  to  counsel  in  habeas  corpus  pro- 
ceedings in  the  federal  courts,  it  has  long  been  recog- 
nized that  "indigent  state  prisoners  are  not  entitled  to 
court-appointed  counsel  unless  under  the  circumstances 
of  the  particular  case  this  is  required  in  order  to  attain 
due  process  of  law."   Eskridge  v.  Rhay,  3^5  F.2d  778,  782 
(9th  Cir.  1965),  cert,  denied,  382  U.S.  996  (1966);  accord, 
Hatfield  v.  Bailleaux,  290  F.2d  632,  635  (9th  Cir.  I96I), 
cert,  denied  368  U.S.  862  (I96I);  Schlette  v.  California, 
284   F.2d  827,  836  (9th  Cir.  196O),  cert,  denied,  366  U.S. 
940  (1961).   Obviously,  the  district  court  was  of  the  opinion 
that  appellant's  case  did  not  merit  appointment  of  counsel 
and  it  was  within  his  discretion  to  so  order. 

/ 

/ 

7. 


CONCLUSION 

For  the  foregoing  reasons,  it  is  respectfully 
submitted  that  the  order  of  the  District  Court  denying  the 
writ  of  habeas  corpus  should  be  affirmed. 

DATED:   November  1,  I967. 


THOMAS  C.  LYNCH,  Attorney  General 
of  the  State  of  California 

DERALD  E.  GRANBERG 

Deputy  Attorney  General 


MJK:em 

CR  SP 
66-962 


MICHAEL  J.  KELLY 

Deputy  Attorney  General 

Attorneys  for  Appellee. 


8. 


CERTIFICATE  OP  COUNSEL 

I  certify  that  in  connection  with  the  preparation 
of  this  briefj  I  have  examined  Rules  18,  19  and  39  of  the 
United  States  Court  of  Appeals  for  the  Ninth  Circuit  and 
that,  in  my  opinion,  this  brief  is  in  full  compliance  with 
these  rules. 

DATED:   November  1,  196? . 


MICHAEL  J.  KELLY 
Deputy  Attorney  General 


9. 


/  FILED 

■^  A  sTI^  At  M<\Y^-1968 

'^    0-    S'C>  ,N     THB 


v^^M    B.  LUCK 


COURT   OF   APPEAL 

OP     T  H  K 


FE3  2'..t2r 

State  of  California 

^^   !    -y)    i"  h     APPFI  I  ATF   DISTRICT 


t         \A/>  IJQ.  ^    SKe|t(f^y) /\~tj-o>y)<-j   yr^  }ir 


vs. 


rt-fD>^V)6ys       Tor-     bi7^^"h  h<sJ<sy-<^  /  9^u/7)^s     ^  >)<:5/ 


COTTB    FORM    718 


INDEX 


pages 
FORE  PAGE  5 

ERROR  IN  LAW 

Points  and  Authorities  14  -  20 


INJURY  AND  LOSS  (general) 
INJURY  AND  LOSS  (family) 
INJURY  AND  LOSS  (Appellant) 

LEGAL  ISSUES     (sxunraary) 
LEGAL  ISSUES    (AUTHORITIES) 


PRAYER  '    aO 


STATEMENT  OF  FACT  5  -   8 


8 

4 

-   5 

4 

-5-8 

-20 
14 

15  - 

20 

WILLA  G.  SK ELTON 
2444  W.  255 
Lomita,   California 
P.O.Box  161 
Attorney  Pro  Per 


UNITIilD  STATES  COURT  OF  APPEALS 
FOR  THE  NINTH  CIRCUIT 


WILLA  G.  SKELTON, 

Appellant. 


vs. 


RICHARD   R.  CLEMENTS,   TRUSTEE  - 
HERBERT  A.  "WOLAS ,  ATTORNEY  FOR  TRUSTEE, 
FIRST  FEDERAL  SAVINGS  AND  LOAN 
ASSOCIATION,  SANTA  MONICA  CALIFORNIA 
and  COUNSEL  FOR  SAID  FIRST  FEDERAL 
MICHAEL  FITZPATRICK,  ATTORNEY. 


Appellee  and 
ASSOCIATED  CONSPIRATORS. 


NO. 22256  and 
222 56A 


BRIEF, OF  APPEAL 


APPEAL  FROM  THE  UNITED  STATES  DISTRICT  COURT 
CENTRAL  DISTRICT  OF  CALIFORNIA 
(RE:  3809  FW  -  BANKRUPTCY  ) 


f^' 


ITILLA  G.  SKELTON 
2444  W.  255 
Lomita,  California 
P.O.  Box   L6L 

Attorney  Pro  Per 


UNITED  STATES  COURT  OF  APPEALS 
FOR  THE  NINTH  CIRCUIT 


VvTT.TA  G 

.  SKET,.TON,    : 

NO.  22256  and  22256A 

Appellant.  ] 

I 

)       STATEMENT  OF  FACTS  RE:  ■ 

vs. 

1           NATURE  OF  APPEAL 

RICIiARD 

R.  CLEMENTS,: 

>                 II 

TRUSTEE 

et  al,      ] 

)       LEGAL  ISSUES  OF  APPEAL 
)           AND  ERRORS  IN  LAW 

Appellee.    ] 

>                  III 

)       INJURY  AND  LOSS  SUFFERED 

)                           BY  APPELLANT 

STATEMENT  OF  FACTS  RE:  NATURE  OF  APPEAL 


Appellant,  WILLA  G.  SKELTON,  filed  a  petition  in 
Voluntary  Bankruptcy  Proceedings,  November  21,1966.   With 
said  petition,  appellant  filed  a  list  of  creditors  with 
debts  owino:  and  a  FINANCIAL  BALANCE  SHEET.  ^ 

Appellant's  husband,  CHARLES  W.  SKELTON,  now  deceased 
11/14/67,  also  filed  a  petition   in  conjunction  with  the 
above  listed  petition  of  November  21,1966. 

Appellant  filed  the  above  listed  petition  for  the 
purpose  of  placing  appellants  property  under  the  juris- 
diction of  the  Bankruptcy  Court, 
foot-note  1,   TRANSCRIPT  OF  RECORD  pgs.  2-7. 


& 


M^wt— rmnTMi[«in»)imif  ii»iriiirvririiri»Ti 


Therafter,  this  Appellant  filed  detailed  schedules 
on  December  1,1966.   Then  on  December  27, 1966, a  Creditors 
Meeting  was  held  and  the  Appellant's  and'  appellant's 
husband's   petitions  in  Banlcruptcy  were  accepted  as  filed. 

REFEREE  J.J.  RIFKIND  appointed  RICHARD  CLEMENTS, 
AS  TRUSTEE. 

This  Appellant  and  husband  CHARLES  W.  SKELTON  In 
good  faith  entrusted  to  the  Bankruptcy  Court  real  property 
valued  at  $270,000.00  according  to  Court  Appraisal. 

This  Appellant  and  husband  CHARLES  W.  SKELTON  owed 
no  personal  debts  whatsoever.   All  the  debts  listed  in 
Bankruptcy  were   the  costs  of  construction  in  completing 
the  apartment  complex  as  listed  in  COURT  APPRAISAL.^ 

Appellant  accepted  the  pledge  of  the  UNITED  STATES 
G0VSR3SMBNT  as  set  forth  in  the  BANKRUPTCY  ACT  to  protect 
the  property  of   this  petitioner  in  Bankruptcy  Proceedings 
through  the  authority  and  agency  of  the  Federal  Courts. 

Today  that  pledge  of  immunity  and  protection 
of  a  Bankrupt  and  the  Bankrupt's  property  has  been  violated 
by  open  seizure  of  the  Appellant's  property  in  spurious 
replevin  actions   that  are  unlatvful  in  the  STATS  OP 
CALIFORNIA  re:   Real  Property  -  and  which  are  not  legally 
allowable   under  the  BANKRUPTCY  ACT. 

Acts  of  fraud  and  trickery  by  the  TRUSTEE  ,  this 
Appellant  avers   have  been  the  aid  and  means  by  which 

*footnote  See  exhibit  A.  ^ 


■  M^..^  ■ii..».jv,.^-«.iM^^».>^rM»tut.--»»/-»^— 


Respondent  FIRST  FEDERAL  SAVINGS  AND  LOAN  ASSOCIATION  of 
Santa  Monica  has  defied  and  made  mockery  of  the  legal 

process  of  laxv?  and  order  under  the  BANKRUPTCY  ACT. 

This  Appellant  has  suffered  physical  violence  at  the 
hands  of  the  ageRtJS  pf  the  Appellees  of  the  present  Appeal. 

Great  and  irreparable  loss  and  damage  is  now  suffered 
by  this  Appellant  because  of  the  seizure  of  my  family's' 
home,  of  my  family's  eviction  therefrom  by  armed  gangsters 
even  while  Appellant  and  family  trusted  to  the  immunity  of 
said  possession   of  their  home  under  the  lawful  BANKRUPTCY 
PROCEEDURES  duly  invoiced  by  this  Appellant  by  the  filing 
of  PETITION  FOR  BANKRUPTCY  PROCEEDINGS  on  November  21,1966.^ 
IN  BRIEF,  the  purpose  of  this  appeal  is  to  establish 
truth  and  justice  where  now  stands  libel,  fraud  and  utter 
disregard  for  law  and  order  in  the  actions  and  files  of 

16  Bankruptcy  Proceedings   in  this  Appellant's  Case  #3809  FW. 

17  The  statement  of  facts' as  made  herein  are  set  forth  in  the 
following  or  second  part  of  this  BRIEIF  as  legal  issues  with 
statute  and  case  law  as  authorities  thereon. 


*  Exhibit  B  verified  copy  of  Affidavit  submitted  to  HONORABLE 

FRANCIS  E.  WHELAN 


f 


r-i-r-iriT-witmtifnrri'aninrfTiMrTrr-'' — 


II 

LEGAL  ISSUES  OF  APPEAL,  nee  ERROR  IN  LAW 
(1) 

On  January  6,  1967,  Respondent  FIRST  FEDERAL  SAVINGS  AND 
LOAN  ASSOCIATION  of  Santa  Monica,  California, 

a.  defied  the  .jurisdiction  of  the  FEDERAL  COURTS 
OF  THE  UNITED  STATES  OF  AMERICA; 

b.  mocked  the  l&vs  of  CONGRESS  of  these  Ul^ITED  STATES 
STATES  OF  AI^ERIGA; 

C.coiCToitted  planned  criminal  acts  of  violence  and 
seizure , using  armed  -gangsters   as  acting 
agents; ^  ,         "     ■ 

evicted  vith  violence  and  assault  and  battery 
this  Appellant  and  family  from  legally  possessed 
home  as  impounded  under  BANKRUPTCY  PROCEEDINGS 
5808  FW  and  5809  FW. 

e.  Trustee  RICHARD  R.  CLEMENTS  turned  his  head  the 
other  way,  disqualified  himself  as  trustee. by 
acting  thereafter',  unbonded ,  and  in  utter  contempt 
of  the  duties  imposed  by  the  lavs   re;  duties  of 
Trustee  'in  Bankruptcy  Proceedings  under  the 
Bankruptcy- Act-' 6:^  CONGRESS. 


*  footnotel  See  verified  'exhibit  C 
"    2  See  verified  exhibit  D 


.•iv?i«  Vf" 


y 


(2) 

Respondent  FIRST  FEDERAL  SAVINGS  AND  LOAN  ASSOCIATION, 
(hereinafter  called  FIRST  FEDERAL)   chose  to  resort  to  criminal 
methods  and  gan.^^ster  tactics  of  seizure  of  legally  impounded 
property  of  Bankruptcy  Proceedings  3808  FW  and  this  Appellants 
Proceedings  under  the  Bankruptcy  Act, 
BECAUSE: 

7 

8  a.  On  January  5,1967  one  day  before  the  seizure 

was  made,   HERBERT  WOLAS  Attorney  was  approved 
by  REFEREE  RIFKIND   as  THE  TRUSTEE'S  ATTORNEY, 

b.  HERBERT  WOLAS'  was  also  FIRST  FEDEEIAL'S 
Attorney  and  through  and  by  him  FIRST  FEDERAL 

was  confident  a  fortune  could  be  seized,  the 
property  would  net  First  Federal  after  bribes,! 
and  pay  offs  were  made  at  least  $60,000.00. 

I 

c.  After  January  5,  1967,  TRUSTEE  RICHARD  R. 

1 

CLEMENTS  BEGAl^lE  A  PUPPET  TRUSTEE;   and  there-   j 
after  held  himself  aloof  from  actual  partici- 
pation of  any  kind  in  the  BANKRUPTCY  PROCEEDINGS 
AFTER  JANUARY  5  and  6,  1967  trustee  RICHARD  R. 
CLE^^ENTS  defaulted   in  each  and  every  duty 
as  set  forth  in  H  USC  75«.  under  Bankruptcy  AC|T 
d.  THE  TRANSCIPT  OF  RECORD  by  its  lack  of 

Trustee  Reports   attests  to  the  averments  mi 

part  c  of  this  section.  | 

*  footnote  1  See  exhibit  E  _zl^L~-.  -1 


1 

2 
5 

5 
6 
7 
8 
9 
10 


irwrwn  ■■■ni»nninirmniriTnu.>tj-vtT/T..as  .irrnu»_— 


Respondent  FIRST  FEDERAL  SAVINGS  AND  LOAN  ASSOCIATION 
SELF  INCRIMINATED  ITSELF,   when  this  Appellant  filed  an  order 
TO  SKOV?  CAUSE  if  said  respondent  had  any  right  whatsoever  to 
seize  and  hold  Bankmiptcy  impounded  property  and  to  institute 
STATE  COURT  ACTIONS  subseqent  to  Bankruptcy  Proceedings.  SAID 
Respondent  replied  t<v  the  OSC  of  this  Appellant   thus: 

1.  BECAUSE  ,   said  respondent  held  a  TRUSTEE'S 
FORECLOSURE  SALE  DEED, 

2,  BECAUSE  ,   said  respondent  was  not  enjoined  from 


seizure  by  the  referee  at  the  FIRST  MEETING  OF 

2 

111  CREDITORS. 

12  DID  the  advanced  rights  as  listed  above  entitle 

13  the  above  listed  Respondent  to  coraraitt  acts  of  ag;,^re5sion  , 

14  at  said  respondent's  own  pleasure   upon  the  property 

15  impounded  by  this  Appellant  on  the  filing  a  Voluntary  Pe- 

16  tition  in  BANKRUPTCY  PROCEEDINGS  November  21,1966. 

17  11  use  lla""^  Courts  of  Bankruptcy  are  .   invested  witfi 
ISJ  original  jurisdiction  in  proceedings  under  the  BANKRUPTCY  ACT. 
19            The  power  of  Bankruptcy  Court  as  to  property  under 


21 

22 

23 

24 

26 


its  Jurisdiction  is  paramount. 

(Petition) 
Portland  Electric  Pov7er  Co. 
D.G.Or  1943,  976  Supp  877 

Property  of  which  a  Bankruptcy  Court  has  taken  po- 
session  is-fehaiaGby  is  thereby  withdrawn  from  the  jurisdiction 

of  all  other  Courts  . 

HOWARD  LANNIN  MUSIC  CORP  D  C  PA   19  37 
18F  Supp  383  * 

*  footnote  1  TRANSCRIPT  OF  RECORD  pages   46  to  50 
^         ''  "51       '  fj 


R2;  FIRST  FEDERi\L'S  DEED  ^ 

The  FORECLOSURE  sale  deed  is  worthless  and  not  worth 
the  paper  it  is  written  on  because  the  first  trust  deed  was 
recorded  after  materials  and  labor  was  delivered  to  the  listed 
apartment  complex  before  the  FIRST  TRUST  DEED  ^OF  FIRST  FEDERAL 
WAS  RECORDED,  and  FIRST  FEDERAL  FORECLOSED  without  bonding  same|. 
C.C.T203.56  -  in  CALIFORNIA  CODES  the  costs  of  cons- 
struction,   if  holder  of  first  trust  deed  does  not 
bond  a  foreclosure  in  amount  of  construction  liens  or 
file  a  notice  of  notice  of  non-responsibility  before 
foreclosure  then  that  foreclosure   is  invalid  on  the 
property  so  foreclosed  and  the  ovmer  has  a  right  to 
file  and  foreclose  a  lien  to  right  the  record  in  title. 
Any  use  of  said  invalid  foreclosure  ^ SALE  DEED  in 
transfer  is  a  fraudulent  act.    CHARLES ,  W.  SKELTON 
on  JANUARY  16,1967  filed  lien  2440  Btc  M  2444  pg  714^ 
in  the  amount  of  $88,000.00  for  his  costs  and  con- 
solidated liens  of  all  construction  CREDITORS.   SAID 
LIEN  is  perfected  by  foreclosure  and  is  ready  for 
execution  as  soon  as  this  Appeal  is  completed  or  the 
foreclosure  is  executed.   CASE  PRECEDENT  is  most  famous 
case  of  such  redemption  from  invalid  foreclosure  sale 
BATEMEN  and  KELLOGG  '59CA  464  as  explained  and  clarified 
in  reference  text  CALIFORNIA  REAL  PROPERTY  LAW  OGDSN 
1952   page  664."^''""-.. 
♦footnote  See  exhibit ^H  for  copy  of  lien. 


/i- 


(4) 

.;ANSWER  OF  THIS  APPELLANT  AGCORDDING  TO  LAW 


Now,  this  Appellant  declares   said  Respondent  FIRST 
FEDERAL  has  no  defense  whatsoever,  according  to  law  for  the 
criainal  sei2ure  and  possession  of  real  property;  for  the  filing 
and  misrepresentation  of  replevin  actions  against  the 
Appellant  as  legitimate  processes  of  law;fr6mo  the  wanton  act^ 
injury  and  damages  have  accrued  directly,  upon  not  only 
upon  this  Appellant  but  u^n   the  family  of  this  Appellant, 
THIS  APPELLANT  has  trusted  to  the  due  process  of  law, 
while  like  the  giant  MAFIA, this  criminal,  this  coward  to  accepi 
said  due  process  hires  guns,  falsely  imprisons,   and  kills, 
just  as  surely  as  if  this  respondent  had  deliberatly  put 
a  bullet  from  those  branished  guns,  IN  SAID  ADVERSARY'S  HEAD. 

WHAT  does  it  do  to  a  man,  to  see  his  family  displaced  | 
S[  at  a  point  of  gun  from  the  only  home  possessed  by  them,  to 
7  see  his  wife  made  to  accept  degradation  of  imprisonment  in 
8j  a  COUNTY  JAIL  because  that  wife  trusted  the  authority  of  our 
9  FEDERAL  LA\>S  THE  PRTECTION  of  laws  duly  invoked  under  the 
^j  Bankruptcy  Act?  Each  time  one  of  the  harassments  took  place 

1  CHARLES  W.  SKELTON'S  heart  faltered  and  weakened,  his  trust 

2  faltered  in  decency  and  law,  'finally  it  was  too  much  for 
5|  his  overburdened  heart  to  bear.   HYPERTENSION  was  the  direct 

cause  of  CHARLES  W.  SKELTON'S  untimely  death  on  November  14, 
1967. 

And  that  same  Respondent  dares  to  defend  such  wanton 

/3 


acts,  such  criminal  acts  by  smugly  stating: 

1.  I  ovm(a  scrap  of  paper)  a  TRUSTEE'  Sale  Deed. 

2.  Referee  Rifkind  specifically  refused   to  enjoin 
rae  so  I  now  have  the  right  to  enter  and  possess 
as  I  see  fit. 

Now  ,  this  Appellant  has  made  made  the  above  statementjs 

not  verbatim  from  the  response  on  page,  51  of  TRANSCRIPT  GF 

RECORD.  The  above  statements  are  the  underlying  meaning  in 

those  defenses  offered(to  the  OSC  ORDER  filed  by  the  Appellant 

January  31,1967)  by  the  monied  and  powerful  respondent  FIRST 

FEDERAL. 

This  Appellant  in  the  above  ANSWER  has  first  applied 

the  principle  of  common  law- 

VJhat  is  the  truth  in  this  controversy? 

UTiat  is  right  and  Just? 

\<lh.at   crime  has  been  committed  against  Justice  and 

Right? 

Now  lycis  a  layman, make  ANSVJER(  to  the  best  of  my 

ability  as  pro  per)  to  FIRST  FEDERAL  by  submitting  to  the 

Honorable  APPELLATE  JUDGES   statutes  and  case  lgw(I  personally 

have  searched  out  from  the  COUNTY  LAW  LIBRARY). 

This  Appellent,  herewith  submits  said  POINTS  AND 

AUTHORITIES   in  the  section  of  this  BRIEF  titled  ERRORS  IN 

LAW. 

To  substantiate  the  preceeding  ANSWER  made  according 

to  common  law  I  submit  with  this  Brief   a  petition  for 

pertinent  RSPRTERS  TRANSCRIPTS  be  submitted   herewith. 

/3  - 


IIA 
ERRORS  IN  LAW  (continued) 
POINTS  AND  AUTHORITIES  (Statute  and  Case  Lav;) 

This  Appellant  avers  that  BANKRUPTCY  PROCEEDINGS  in 
GASES  3S08  FW  and  3809  FW  being  tried  herewith  in  the 
present  Appeal  are  designated  herewith  as  Referee  Orders 
April  21  and  27  -  Appeal22256  and  Order  Of  May  2-  Appeal 
22256  A. 

This  Appelant  therefor  submits  the  f ollov^ing  ERRORS 

IN  LAW  for  a  reversal  of  the  above  listed  ORDERS.   The  ERRORS 
IN  LAW  ara: 

a.  INSUFFICIENCY  of  evidence  to  support  the  ORDERS, 

b.  ORDERS  are  prejudicial  and  not  according  to  LAW, 

c.  ORDERS  violate  AMENDMENTS  V  and  XIV  of  the 
UNITED  STATES  OF  AMERICA,  abridging  same,, 

d.  ORDERS  condone  violence  and  lawbreaking, 

e.  ORDERS  exceed  the  authority  of  the  BANKRUPTCY 
COURT,  and  normal  procedures  at  law, 

f .  ORDERS  were  submitted  by  unqualified  TRUSTEE. 

g.  OFDERS  are  predominated  by  libel   and  are 
products  of  intrigue  and  fraud  upon  the  BANKRUPTCY 

COURT.   '" 
h.  No  Ad judicatioa  of  petitioners  either  by  statute 

or  COURT  JUDGMENT. 
i.  EXCESSIVE-:  DAMAGE  SUFFERED  BY  ORDERS.    .  ' 


n 


1 

2 
3 

4 

.  5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 


POINTS  AND  AUTHORITIES -continued 

On  November  21,1966,  this  Appellant  and  husband  filed 
petitions   IN  BANKRUPTCY' PROCEEDINGS  UNDER  THE  BANKRUPTCY  ACT. 
A  list  of  creditors  was  filed  xs^ith  the  petition  in  advance 
of  schedules.  See  footnotes  1  and  2. 

BANKRUPTCY  ORDER  12c  provides"  If  a  bankrupt  files  - 
the  list  of  creditors  in  advance  of  schedules,  the  referee 
shall  call  the  first  meeting  of  creditors  without  awaiting  the 
filing  of  schedules". 

REFEREE  RIFKIND  AV7AITED  '  r---  filing  of  schedules  before 
calling  the  first  meeting  of  creditors  which  was  an  error  in 
law. 


18 
19 

20 
21 

22 
23 

24 

55 


THE  PETITIONERS  were  solvent  and  committed  no  act  of 
{   BANICRUPTCY  in  the  petition  filed  by  them  NOVEMBER  21,1966. 
le|  IX  USC(1$>)  ^'^   STATUTE  THE  PETI ONERS'.  WERE  SOLVENT 

*'  "  A  person  shall  be  deemed  insolvent  within  the 

provisions  of  this  ACT  whenever  the  aggregate  of  his  property 

shall  not  at  a  fair  valuation  be  sufficient  to  pay  his  debts . 

(  The  debts  listed  in  the  petitions  were  iraprovenent 

of  real  property  that. was  the  asset  listed  in  said  petitions. 

THESE  debts  were  charges  against  the  property  on  x^72Lich  was 

placed  materials  and  labor  for  such  improvement.  Labor  and 

materials  for  said  improvement  was  delivered  and  labor  used 

FEBRUARY  15,1965  over  5  months  before  trust  deeds   were 

26!   recorded  against  the  property.) 


/  o 


7 
8 
9 
10 
11 
12 
13 
14 
15 
16 
17 
18 


SO 
21 

22 
23 
24 
2P 


THE  PETITIONERS  IN  BANKRUPTCY  WERE  NEVER  ADJUDIGATSD 


BANKRUPT  EITHER  BY  DEGREE  or  by  operation  by  law. 

IIUSC  (1) 

••ADJUDICATION"    shall  mean  a  determination  whether  by 
decr<ic  or  operation  of   lax-J,    that  a  person  is     BANICRUPT. 

11  use   41   (f X 

The  filing  of  voluntary  petition  under  aiAPTSR  I  TO -VII 

of  this  ACT shall  operate  as  an  adjudication      ' 

with  the  same  force  and  effect  §s  q   decree  of 
adjudication. 

The  ORIGINAL  PETITION  filed  NOVEMBER  21,1966,  was  not 
filed  under  CHAPTERS  I  to  VII.   THE  PETITIONERS  were  solvent 
at  time  of  petition, (in  BANKRUPTCY)  ,  was  filed  so  no  inferred 
placement  in  CHAPTERS  I  to  VII   could  have  bean  made  because 
the  face  of  the  petition  voided  such  a  placement. 

No  automatic  adjudication  was  made  by  REFEREE  RIFKIND 
on  the  ORIGINi^  PETITION  filed  NOVEMBER  21,1966  therefor., 
REFEREE  again  committed  an  error  in  lav?.  REFEREE 
^^!  KINNISON  in. DISCHARGE  OF  BANKRUPT  supplied  an  untrue  statemend 
or  a  statement  contrary  to  evidence  .  IN  the  4th  line  of  sai 
document  it  is  stated  that  Willa  g.  Skelton, present 
Appellant  was  adjudged  a  BANKRUPT  on  a  petition  filed  by  him  on 
the  first  day  of  DECSI'IBER  1966. 

SAID  REFEREE  made  an  error  in  law  which  caused 
great  loss  and  damage  to  this  Appellant.   NO  PETITION  was 
20   filed  DECEMBER  1,1966  only  a  schedule  of  affairs. 

M^ 


2 

3 

<. 

5 

G 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 
18 
IS 
20 
21 

22 
23 
24 
25 
26 


ON  page  53  of  TRANSCRIPT  OF  RECORD  REF2RE2  KINNISON  has 
stated  in  a  document  titled  DISCHARGE  OF  BANKRUPTr   that, 

"WILLA  G.  SKELTON  V7as  duly  judged  a  bankrupt   on  a 

petition  filed  by  him  (her)   on  the  1st  day  of  DECEI^IBER  1966." 

SUCH  an  adjudication  was  not  by  decree  so  it  had  to  be 
by  exercise  of  law,  which  would  be  an  automatic  adjudication 
under  11  USC  41f ,  v;hich  can  only  be  made  on  the  ORIGINAL  PETlTIOfJ, 

SUCH  an  automatic  adjudication  by  exercise  of  law  is 

void  because  no  petition  in  BANKRUPTCY  was  filed  December  I, 

1966.   SCHEDULES  were  filed  on  December  1,  1966  and  it  is  to 

these  schedules  the  referee  refers,  because  on  the  forepage  of 

the  schedules  this  Appellant,  inadvertently  failed  to  cross 

out  the  word  petition  and  write  in  SCHEDULES. 

SUCH  AN  INADVERTENT  MISTAKE  is  automatically  voided 

since  only  the  ORIGINAL' PETITION  was  filed  according  to  the 

BANKRUPTCY  ACT  in  the  office  of   CLERK  ' '  OF  THE  DISTRICT  COURT 

of  THE  Ul^ITED  STATES,  CENTRAL  DIVISION,  LOS  ANGELES,  November  21 

^^^^*    PLEASE  refer  to   exhibit  G,  the  undeleted  DOCKET 

of  the  REFEREE  as  originally  was  of  record  in  file  3808  and 

3809  FW   BANKRUPTCY  CASES,  in  the  BANKRUPTCY  COURT  presided  by 

RAY  H.  KINNISON  .  -NOTE.   The  verified  document  filed  on  page 

197  is  a  false  and  badly  executed  false  document  especially 

prepared  and  filed  in  the  TRANSCRIPT  OF  RECORD  to  hide  the 

many  errors  in  law  made  by  the  administration  of  unlawful 

procedures , not  allowable  in  a  BANKPJJPTCY  COURT  under  the 
BANICRUPTCY   -ACT;  ' 


/7_„: 


i 


AUTHORITIKS  RE: 
FIRST  FEDERAL'S  SEISURE  OF  PROPERTY 

FIRST  FEDERAL  admitted  guilt  of  seizing  BANKRUPTCY 
PROPERTY  by  advancing  rights  in  the  said  seizure  by  FIRST 
FEDERAL.   See  page  51  in  TRANSCRIPT  OF  RECORD  and   exhibit 
BOTH  are  copies  of  two  reponses   made  to  OSC  Order. 

SINCE  FIRST  FEDERAL  admitted  the  seizure,  the  question 

inlaw  to  be  answered  next  is, 

V/hen  property  is  in  costructive  possession  of  the  Bankruptdy 
Court,  can  a  third  party  file  a  Replevin^ ACTION  in  a  STATS 
COURT  and  use  same  fraudulently  as  restitution  of  premises  j 

after  foreclosure  especially  when  BANKRUPTCY  COURT  held  custod^ 

PRQPIZHTY  l-m^l^   SPXZSP  V^f?  IN  WSTOD-Y  QF  CQUES 
(explanation  by  REFEREE  RIFKIND  after  appointment  of  TRUSTEE) 

COURT:  The  TRUSTEE  is  the  administrator  of  the  estate.  ' 

The  Court  hears  matters  and  determines  matters . 

He  is  charged  with  the  responsibility  of 

administering  the  estate.  All  right,  this  Court  will 

Page  66 

stand  recessed  ^  REPORTER'S  TRANSCRIPT  of 

FIRST  MEETING  OF  CREDITORS 
December  27,  1966. 

SINCE  Courts  of  Bankruptcy  are  created  and  perform 
by  statute  of  CONGRESS  of  the  UNITED  STATES  any  act  against 
Authority  of  the  Bankruptcy  Court  is  also  in  defiance  to 
the  UNITED  STATES  OF  AMERICA'S  Federal   laws. 

\^HAT  IS  LEGAL  PROCESS  TO  GET  RELEASE  OF  PROPERTY? 
If  the  Bankrupt  or  agent  is  in  possession  of  property 
at  the  time  of  filing  of  a  BANKRUPTCY  PETITION,    (next page) 

*footnote  -   SEE  replevin  Bond  pg  33  in  TRANSCRIPT  OF  RECORD 
USED  FRAUDULENTLY  TO  SEIZE  Bankruptcy  Property 
Calif.  Codes  limit  replevin  to  personal  property 


r6 


A  SUSEQUENT  ATTEMPT  TO  SEIZE  THE  PROPERTY  BY  REPLEVIN 

is  an  interference  vith  the  custory  of  the  Bankruptcy  COURT. 

ONCE  custody  or  constructive  possession  of  the  propertj' 

has  come  to  the  BANKRUPTCY  COURT  through  institution  of 

Bankruptcy  Proceedings  the  only  proper  method  of  obtaining 

release  of  the  property  is  PETITION  TO  RECLAIM,  , 

PARAGRAPH  2070 
page  165  vol  5 
REMNINGTON  ON  BANKRUPTCY. 

Where  property  is  in  custody  of  the  Bankruptcy  Court 

no  party  may  seize  it  by  legal  process  or  otherwise  without 

the  leave  of  the  Bankruptcy  Court, 

In  Re  Bergin  55  F  Supp   32 

Miller  v  Mangus 
125  22  D  507 

In  re  Ripp  242  F  2d  849 . 

In  11  use  110c  the  trustee  may  have  the  benefits  of 
all  defenses  available  to  the  Bankrupt  as  against  third  persons 

and  the  trustee  AT  THE  DATE  OF  BANKRUPTCY,   SHALL  BE 

deemed  vested  as  of  such  date  with  all  the  rights,  remedies  and 

powers  of  a  creditor  holding, a  lien  as  to  all  property, 

11  use  c  gives  the  TRUSTEE  creditor's  rights  against  the 
property  of  third  parties  through  doctrines  of  ostensible 


ownership,  or  related  legislation  such  as  factors  acts. 

annotation  pagel27 

The  Bankruptcy  Act 
by 
JAMES  ANGELL  MACLACHLAN 


77 


\ 

1  FALSE  ARREST 

2  APPELLANT ' INJURED 

The  Bankruptcy  Act  provides  immunity  under  section 
11  use  25  (10)   under  the  BANKRUPTCY  ACT  and  the  FIFTH 
Amendment   to  the  CONSTITUTION  OF  THE  UNITED  STATES,  TO 
THE  BANKRUPT  for  any  information  -testimony   given  at    a 
the  First  Creditors  Meeting.  Such  testimony  is  not    [^' 
to  be  used  as  evidence  in  any  criminal  proceeding  in 

^ToJTe    Coo.'-r  \fc><TV    R.af>ar-T'«iv.  i  ^r-<vv*^cr»;  f*T" 

any  court  whatsoever.  .     k 

This  Appellant  upon  the  cooperation  and  help  of 

TRUSTEE  RICHARD  R.  CLEMENTS,  under  an  old  obselete 

restraining  order  not  to  collect  rents  under  case 

SV7C  9551  now  the  subject  of  Appeal  22256  wherein,  FIRST 

FEDERAL  would, if  the  order  is  not  reversed,   gain  immunity 

from  future  law  suits  for  injury  sustained  in  the  false 

arrest,  wherefor  ORDER  of  April  21  and  27  violate  CONSTIUTION 

THIS  APPELLANT  submits  the  transcript  now  held  in 

JUDGE  WHELAN'S  DISTRICT  COURT,  Los  Angeles,   AND  INCORPORATES 

SAME  BY  REEERENCE(AS  IF  SAME  V^/ERE  repeated  verbatim)   in 

this  BRIEF  as  evidence.   TRANSCRIPT  so  referred  to  is, 

REPORTER'S  TRANSCRIPT  HEARING  SWG  9551  January  25,26,  1967. 

^-niEREFOR,  this  Appellant  now  prays  that  the  COURT 

reverse  the  ORDERS  April  21,  April  27  and  May  2,  and  award 

deemed  ,•j^^tif.jLe4.;.. by.  this  COURT,  ^y      IL       fj 

April  13,1968  WILLA  G.  SKELTON  - 

Appellant-  PRO  PER      j2.0 


County  of  Loa   Angeles )j, 
Stai:c  of  California)  Y'^ 

Affidavit  of  Mailim/, 


ira  a  citizen  of  the  United  States  and  a  resident 


the  cdurvtyof  Los  An;..:eles.  Galifornia.  I  am  over  18  years  of  age 
i   am  not  a  oarty  to  the  foregoing  legal  case  at  law. 

j./^u-l    /f-,  i-y      I  served  the  attached  document  named  a  BRIITJP 

the  rcj?pondentR  herein  by  depositing  a  copy  thereof  enclosed  in 
separate,  sealed  and  addressed  envelope  v?ith  postage  thfireon 
lly  paid,   in  the  UNITrj)  r.TAT-'ilS  MAIL  at  Lomit^Galif on\ia,  each  of 
i;;hich  envelopes  uas  addressed  respectively  as  followa: 


H'.nright  r.lliott  and  Betz 

oi.iite.  703  -606South  Hill 
Los  Angeles,  California 

(Attorneys  for 

Fi -ST  ?:.^D!i:pjit:  savings  t>m}  loan 

ASSOCIATION 

0?   SANTA  MONICA  CALIFORNIA) 


ATTORN -Ty  Fj.HRBillRT  A.    W0LA3 

Suite510 

408  South  opring 

Los  Angeles  California 

Attorney  for 

TRU;iT:.^a  RICHARD  R.  CLO^IENTS 


B\;ear  and  attest  the  foregoing  statements  are  true 
id  correct. 


cuted  on  April   /5~ 


1960. 


I    certify   that,    \n   connection  v.iti   the    preparation 
;hi3    brief,    I    havo   exarrjined   rJulea    lb,    19   and   39   of   the 
:ed  --i^tcT-*;    Court    of   Aprils], s    fcT.-   the      inth    'jircirJt,    or;d   that, 
iy  opinio. n,    the    rcref-;oi '■.',.:;   brief   is    in   full   cc.npliance   v.it.b 


V  ^--^  /^  '^^^  ^ 


/ 


MUJLJL^zk^J 


]';r:t 


teflte.u  ar.d  -e.ff irr.od   before   cjo 


x-~x     r    I 


I  I  I  ^  }  I  /r 


UNITED  STATES  COURT  OF  APPEALS 
FOR  THE  NINTH  CIRCUIT 


WILLA  G.    SKELTON  and 
CHARLES  W.    SKELTON, 

,        Appellants, 

vs. 

RICHARD  R.    CLEMENTS, 
Trustee, 

Appellee. 


No. 


22256 
22256A 


APPELLEE'S  OPENING  BRIEF 


ROBINSON,   WOLAS  &  HAGEN 
Attorneys  at  Law 
408  South  Spring  Street,    Suite  510 
Los  Angeles,   California    90013 

Attorneys  for  Appellee 


FfLED 

JUN4    1968 
WM.  B.  LUCK,  CLERK 


TOPICAL  INDEX 


Page 

Introduction 1 

Argument 

Re  Orders  of  April  21  and  April  2  7,   1967. 3 

Re  Order  of  May  2,   1967 5 

Conclusion 8 


TABLE  OF  AUTHORITIES  CITED 

Page 

Castaner  vs.    Mora,    216  F.   2d  189  5 

Gershing  vs.    Shinberg,   140  F.   2d  706  8 

Goodrich  vs.   England,    262  F.   2d  298  7 

Hartmann  Corporation  of  America  vs.   U.S.,  304  F.   2d  429                   5 

In  re  Henry  Wood  Sons  Co.,   279  F.   60  5 

In  re  Strunk  Lane,   64  F.   Sup.    731  7 

In  re  Riordan,    95  F.   2d  454  7 

In  re  Weare,    87  F.    Sup.    413  7 

Robinson,   vs.   Carmona,    336  F.   2d  518  3 

Rogers  vs.  Bank  of  America,   142  F.   2d  128  4,5,6 

Bankruptcy  Act,    Section  70a(5)  3 

Bankruptcy  Act,   Section  39(c)  4 

Bankruptcy  Act,   Section  47a  4 

California  Code  of  Civil  Procedure,    §688.1  3 

General  Order  in  Bankruptcy  No.   47  5,  6 


UNITED  STATES  COURT  OF  APPEALS 
FOR  THE  NINTH  CIRCUIT 


WILLA  G.    SKELTON  and 
CHARLES  W.    SKELTON, 

Appellants, 

vs. 

RICHARD  R.    CLEMENTS, 
Trustee, 

Appellee. 


No.      22256 
22256A 


APPELLEE'S  OPENING  BRIEF 


TO  THE  HONORABLE  JUDGES  OF  THE  UNITED  STATES  COURT  OF 
APPEALS  FOR  THE  NINTH  CIRCUIT: 

Now  comes  RICHARD  R.    CLEMENTS,   Trustee  in  Bank- 
ruptcy for  the  bankrupt  estates  of  WILLA  G.   SKELTON  and  CHARLES 
W.   SKELTON,  Appellee  herein,   and  submits  his  Appellee's  Opening 
Brief. 

INTRODUCTION 


1.     This  appeal  is  but  another  attempt  by  Appellants  to 
use  the  process  of  this  and  other  Courts  to  their  own  end.     (It  should  be 
noted  that  CHARLES  W.   SKELTON  has  become  deceased  during  the 
pendency  of  this  Appeal.  )    It  should  also  be  noted  that  only  WILLA  G. 
SKELTON  is  appealing  the  Order  of  May  2,   1967,   whereas  WILLA  G. 
and  CHARLES  W.   SKELTON  are  the  named  appellants  with  reference 

-1- 


to  the  Orders  of  April  21st  and  April  27th,   1967. 

2.  Appellants,   in  an  effort  to  forestall  a  foreclosure 
proceeding  on  certain  real  property,    filed  proceedings  under  Chapter  XI 
of  the  Bankruptcy  Act  in  May,    1966.     Ultimately,    the  Chapter  XI  pro- 
ceedings were  dismissed  in  September,   1966.     Thereafter,  Appellants 
filed  a  voluntary  petition  in  Bankruptcy  on  November  21,   1966,   (CLK 

Tr  Page  2)  and  Appellee  herein  was  appointed  Trustee  in  Bankruptcy  for 
both  estates. 

3.  Lawsuits  were  brought  by  Appellants  against 
FIRST  FEDERAL  SAVINGS  &  LOAN  ASSOCIATION  OF  SANTA  MONICA, 
TITLE  INSURANCE  &  TRUST  COMPANY  and  others.     During  the  course 
of  the  administration  of  these  bankrupt  estates,   the  Trustee  examined 
into  said  suits  and  has,   with  the  approval  of  the  Bankruptcy  Court,   com- 
promised certain  of  said  suits.     The  action  against  FIRST  FEDERAL 
SAVINGS  &  LOAN  ASSOCIATION  OF  SANTA  MONICA  was  settled  by  pay- 
ment to  the  bankrupt  estates  of  Two  thousand  two  hundred  fifty  and 
no/loo  ($2,  250.  00)  Dollars  by  FIRST  FEDERAL  SAVINGS  &  LOAN 
ASSOCIATION  OF  SANTA  MONICA.     Additionally,   the  suit  against 
TITLE  ir^SURANCE  &  TRUST  COMPANY  has  been  settled  and  TITLE 
INSURANCE  &  TRUST  COMPANY  has  paid  to  the  bankrupt  estate  the  sum 
of  Five  thousand  ($5,  000.  00)  Dollars.     Additionally,   the  Trustee  in 
Bankruptcy  has  invalidated  certain  security  interests  on  personal  pro- 
perty and  said  personal  property  has  been  sold  by  the  Trustee  in  the 
course  of  administration  of  this  estate. 

4.  Appellants  continuing  their  attempts  to  frustrate 
the  administration  of  these  bankruptcy  estates  are  now  seeking  to  review 


(a)  The  Order  of  the  Referee  dated  April  21,   1967, 
(CLK  Tr  Page  75)  approving  the  compromise  of  controversy  with 
FIRST  FEDERAL  SAVINGS  &  LOAN  ASSOCIATION  OF  SANTA  MONICA; 

(b)  The  Order  of  April  27,   1967,    (CLK  Tr  Page  85) 
approving  the  sale  of  personal  property;  and 

(c)  The  Order  of  May  2,   1967,   (CLK  Tr  Page  6  of 
Supplemental  Transcript)  denying  the  application  by  WILLA  G. 
SKELTON  to  dismiss  her  bankruptcy  proceedings. 

5.  On  July  6,   1967,   the  District  Court  Judge  WHELAN 

dismissed  the  petition  for  review  of  the  Orders  of  April  21  and  April  2  7, 

1967,    (CLK  Tr  Page  154)  and  on  October  5,    1967,    the  District  Court 

Judge  WHELAN  confirmed  the  Order  of  the  Referee  made  on  May  2, 

1967,   (CLK  Tr  Page  6,   Appeal  No.   22256A). 

ARGUMENT 
RE  ORDERS  OF  APRIL  21  AND  APRIL  2  7,   196  7 

6.  These  Orders  dealt  with  the  administration  of  the 
bankruptcy  estates.     The  former  dealing  with  the  settlement  of  a  lawsuit 
and  the  latter  dealing  with  a  sale  of  personal  property.     Both  assets 
were  subject  to  administration. 

7.  The  Trustee  in  Bankruptcy  was  vested  with  the 
causes  of  action  pending  at  the  date  of  the  filing  of  the  bankruptcy. 
Section  70a(5)  of  the  Bankruptcy  Act;  Section  688.1  of  the  California 
Code  of  Civil  Procedure:  ROBINSON  vs.   CARMONA,    336  F.   2d  518. 
Likewise,   the  personal  property  of  the  bankrupts  passed  to  the  Trustee, 
Section  70a  of  the  Bankruptcy  Act,   and  the  Orders  with  regard  to  the 
settlement  of  the  suit  against  FIRST  FEDERAL  SAVINGS  &  LOAN 

-3- 


ASSOCIATION  OF  SANTA  MONICA  and  the  sale  of  personal  property 
were  procured  in  conjunction  with  the  duties  imposed  by  law  on  the 
Trustee  to  collect  and  reduce  to  money  the  property  of  the  estates  for 
which  he  is  Trustee. 

Section  47a  of  the  Bankruptcy  Act. 

8.  The  Trustee  filed  his  petition  to  sell  certain  personal 
property  on  February  13,    1967,    and  same  was  sold  to  the  highest  bidder 
in  open  court  per  order  of  April  27,   1967,    and  the  Trustee  filed  his 
application  to  compromise  controversy  with  FIRST  FEDERAL  SAVINGS 
&  LOAN  ASSOCIATION  OF  SANTA  MONICA  on  March  21,    1967,    and 
same  was  confirmed  by  the  Referee  on  April  21,    1967.     In  both  instances 
notice  of  the  hearing  was  given  to  creditors  as  required  by  the  Bank- 
ruptcy Act  and  said  Orders  were  confirmed  after  hearing.     No  creditors 
opposed  the  entry  of  the  Orders.     The  reviews  were  filed  by  the  bank- 
rupts. 

9.  It  is  quite  clear  that  a  review  of  a  Referee's  order 

may  be  taken  only  by  a  "person  aggrieved  by  the  order". 

Section  39(c)  of  the  Bankruptcy  Act, 
11  U.S.C.   67(c). 


10.     The  authority  conferred  by  Section  3  9(c)  of  the 
Bankruptcy  Act  to  petition  for  review  of  a  Referee's  order  is  restricted 
and  is  granted  only  to  those  who  have  immediate  interests  in  the  bank- 
rupt estate  as  such  and  does  not  include  those  who  would  be  indirectly 
affected  by  the  order. 

ROGERS  vs.   BANK  OF  AMERICA  NATIONAL 
TRUST  &  SAVINGS  ASSOCIATION.   142  F  2d 
128,   129. 


-4- 


11.  The  bankrupts  were  not  persons  aggrieved  by  the 

Orders  (of  April  21  and  27,    1967)  of  the  Referee  with  regard  to  the 

liquidation  of  the  bankrupt  estate. 

HARTMAN  CORPORATION  OF  AMERICA 
vs.    U.    S.,    304  F.    2d  429. 
CASTANER  vs.    MORA.    216  F.    2d  189. 
See  also  In  re  HENRY  WOOD  SONS  CO.  , 
279  F.    60. 

12.  Even  if  the  review  herein  was  by  a  "person  aggrieved" 

there  is  no  showing  that  the  Orders  of  April  2  1  and  27,   1967,   were  not 

proper  or  that  the  Referee  was  clearly  erroneous  in  confirming  said 

sale  and  said  compromise. 

General  Order  in  Bankruptcy  No.   47. 
ROGERS  vs.   GARDNER.    226  F.    2d  864. 

ARGUMENT  RE  ORDER  OF  MAY  2.    1967 

13.  On  March  8,   1967,   the  bankrupt  filed  a  Petition  for 
Abandonment  of  Bankruptcy  Petition  and  Proceeding.     Subsequent  there- 
to,  notice  was  given  pursuant  to  Section  58  and  59(g)  of  the  Bankruptcy 
Act,    and  the  matter  was  set  for  hearing  for  April  2  7,    1967.     At  said 
hearing  the  bankrupt  appeared  in  Pro  Per,   and  the  Trustee  appeared  by 
and  through  his  counsel,    ROBINSON,   WOLAS  &  HAGEN,    and  a  creditor, 
FIRST  FEDERAL  SAVINGS  AND  LOAN  ASSOCIATION  OF  SANTA 
MONICA,   appeared  by  and  through  its  counsel,   ENRIGHT,   ELLIOTT 

&  BETZ,     Counsel  for  the  Trustee  on  behalf  of  general  creditors  and 
counsel  for  FIRST  FEDERAL  SAVINGS  AND  LOAN  ASSOCIATION  OF 
SANTA  MONICA  opposed  the  application  to  dismiss.     As  a  result  of 
said  hearing  the  Order  of  May  2,   1967,   denying  the  application  for  dis- 
missal of  bankruptcy  proceedings  was  made  and  entered,   which  Order 


is  now  being  reviewed  by  WILLA  G.    SKELTON. 

14.  The  bankruptcy  proceedings  of  WILLA  G.    SKELTON 
were  commenced  as  a  voluntary  petition  under  the  Bankruptcy  Act  filed 
on  November  21,   1966.     That  since  the  filing  of  these  bankruptcy  pro- 
ceedings a  Trustee  has  been  appointed  and  the  estate  has  been  adminis- 
tered.    During  the  course  of  the  administration,    two  lawsuits  have  been 
compromised  pursuant  to  Order  of  Court,   liens  of  various  secured  credi 
tors  have  been  invalidated,   and  the  Trustee  in  Bankruptcy  has  sold  assets 
to  third  party  purchasers.     A  further   review  of  the  claims  on  file  in  the 
bankruptcy  proceedings  of  WILLA  G.    SKELTON  will  reveal  that  there 
are  approximately  eleven  (11)  creditors  who  have  filed  proof  of  claim 

and  the  total  indebtedness  due  said  eleven  (11)  creditors  exceeds 
$39,000.00. 

15.  The  Referee  in  Bankruptcy,   having  full  knowledge  of 
all  of  the  facts  of  this  case,    has  exercised  his  discretion  in  determining 
that  it  was  in  the  best  interests  of  creditors  of  this  estate  that  these 
bankruptcy  proceedings  not  be  dismissed.     The  power  of  the  Court  in 
the  exercise  of  judicial  discretion,    to  dismiss  a  bankruptcy  proceeding, 
when  the  prescribed  conditions  have  been  complied  with  is  clearly  im- 
plied but  the  Bankruptcy  Act  does  not  confer  upon  the  bankrupt  or  any 
other  applicant  an  absolute  right  to  have  the  proceedings  dismissed. 
Furthermore,   the  Order  of  the  Referee  will  not  be  disturbed  unless 
said  Order  is  clearly  erroneous. 

General  Order  in  Bankruptcy  No.    47. 
ROGERS  vs.   GARDNER,    Supra. 

There  is  nothing  in  the  record  before  this  Court  to  indicate 


that  the  Order  of  the  Referee  affirmed  by  the  District  Court  is  clearly- 
erroneous  and  quite  to  the  contrary,    it  is  in  the  best  interests  of  credi- 
tors of  this  bankrupt  estate  that  said  bankruptcy  administration  continue 
and  creditors,    in  fact,    oppose  the  dismissal  of  said  bankruptcy  pro- 
ceedings. 

In  re  STRUNKS  LANE  (D.  C.K.  Y.   1946)  64  F.    Sup.    731. 

16.  The  law  is  well  setted  that  there  is  no  right  by  the 
bankrupt  to  withdraw  a  voluntary  petition  in  bankruptcyj    after  adjudica- 
tion. 

GOODRICH  vs.   ENGLAND  (9th  Cir.    1958)  262  F.   2d 

298. 

In  re  WEARE  (D.  C.N.Y.    1949)  87  F.    Sup.    413. 

17.  There  is  nothing  in  the  record  which  would  indicate 

that  creditors  or  any  other  party  in  interest  has  consented  or  would 

consent  to  the  vacation  of  the  adjudication.     While  there  have  been  cases 

where  orders  have  been  granted  vacating  adjudication,   they  have  been 

made  upon  the  consent  of  all  of  the  creditors  and  all  parties  who  have 

interests  in  the  proceeding.     It  is  the  rule  founded  upon  sound  principles 

that  permission  to  vacate  an  adjudication  in  bankruptcy  will  not  be 

granted  where  it  would  result  in  either  reducing  or  effecting  the  claim 

of  creditors  in  the  bankruptcy. 

In  re  WEARE  (D.  C.  N.  Y.   1949)  87  F.    Sup..  413. 
In  re  RIORDAN,    95  F.   2d  454. 

18.  In  the  event  there  would  be  a  dismissal  of  these  bank- 
ruptcy proceedings,    there  is  no  assurance  that  the  assets  would  be  made 
available  for  the  payment  of  the  creditors'  claims.     A  review  of  the 
bankruptcy  schedules  show  that  the  bankrupt  herein  scheduled  secured 


creditors  in  the  approximate  amount  of  $147,  000.  00  and  general  un- 
secured creditors  in  the  amount  of  $51,  593.00.     The  Petition  to  Dismiss 
the  bankruptcy  proceedings  was  not  accompanied  by  consents  of  credi- 
tors,   contained  no  offer  for  the  settlement  of  the  claims  of  creditors 
and  offered  no  assurance  that  the  assets  in  the  hands  of  the  Trustee 
would  be  made  available  for  the  payment  of  creditors'  claims  nor  was 
there  any  offer  to  pay  the  costs  of  the  bankruptcy  proceedings  already 
incurred. 

GERSING  vs.    SHINBERG  (C.C.D.C.   1944) 
140  F.   2d  706. 

CONCLUSION 
19.     For  the  foregoing  reasons,   the  Orders  of  the  Referee 
of  April  21  and  2  7,   1967,    as  confirmed  by  the  District  Court  on  July  6, 
1967,   and  the  Order  of  the  Referee  of  May  2,   1967,    as  confirmed  by  the 
District  Court  on  October  5,   1967,    should  be  affirmed. 


Respectfully  submitted, 
ROBINSON,   WOLAS  &  HAGEN 


HERBERT  WOLAS 
Attorneys  for  Appellee 


1 

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7 

8 

9 

10 

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13 

14 

15 

16 

17 

18 

19 

20 

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24 

25 

26 


AFFIDAVIT  OF  SERVICE  BY  MAIL 

STATE  OF  CALIFORNIA  ) 

ss. 
COUNTY  OF  LOS  ANGELES    ) 

Ruth  Miranda,   being  first  duly  sworn,    says:    That  affiant 
is  a  citizen  of  the  United  States,   a  resident  of  the  County  of  Los  Angeles, 
California;  over  the  age  of  eighteen  years  and  not  a  party  to  the  within 
action  or  proceeding;  that  affiant's  business  address  is  408  South  Spring 
Street,    Los  Angeles,   California;  that  on  May  10,   196  8,   affiant  served  the 
within  Appellee's  Opening  Brief  on  the  Appellants  in  said  action  by 
placing  a  true  copy  thereof  in  an  evelope  addressed  to  the  parties  listed 
below  as  follows:    WILLA  G.    SKELTON  and  CHARLES  W.   SKELTON, 
2444  W.   255  Street,   Lomita,   California,   and  then  sealing  said  envelope 
and  depositing  same,   with  postage  prepaid  thereon,   in  the  United  States 
Post  Office,   at  Los  Angeles,    California;  that  there  is  a  regular  com- 
munication by  mail  from  said  Post  Office  of  deposit  to  the  place  so 
addressed.     I  certify  (or  declare)  under  penalty  of  perjury  that  the 
foregoing  is  true  and  correct.     Executed  on  June  3,   1968,   at  Los 
Angeles,   California. 


Ruth  Miranda 


Subscribed  and  sworn  this  3rd  day 
of  June,    1968. 


Notary  Public  in  and  for 
said  County  and  State. 


STATE  OF  CALIFORNIA  ) 


ss. 


COUNTY  OF  LOS  ANGELES    ) 

I  certify  that  in  connection  with  this  brief,    I  have 
examined  Rule  18,   19  and  39  of  the  United  States  Court  of  Appeals 
for  the  Ninth  Circuit,    and  that  in  my  opinion  the  foregoing  brief  is  in 
full  compliance  with  those  rules. 


oXe-o 


HERBERT  WOLAS 


Subscribed  and  sworn  this  3rd  day 
of  June,    1968. 


o     , 


V-K  0^ 


-CMj^-^ 


Notary  Public  in  and  for 
said  County  and  State. 


OFFICIAL  SEAL  V 

RUTH  MIRANDA       c 

NOTARY  PUBLIC,  CALIFORNIA  J 

PRINCIPAL  OFFICE  IN  *^ 

_^  LOS   ANGELES  COUNTY        ', 

My  Commission  Expires  Nov.  20,  1971^     \ 


NO.     22257'^ 
IN   THE  UNITED  STATES  COURT  OF   APPEALS 
FOR  THE  NINTH  CIRCUIT 

JOHN  SCOTT  MAYHEW. 

Appellant, 
vs. 
UNITED  STATES  OF   AMERICA, 

Appellee. 


APPELLEE'S   BRIEF 


APPEAL  FROM 
THE  UNITED  STATES  DISTRICT  COURT 
FOR  THE   CENTRAL  DISTRICT  OF   CALIFORNIA 


I 


FILED 

JUN  1  1 1958 


WM.  B.  LUCK,  CLERK 


WM.     MATTHEW   BYRNE,    JR.  , 

United  States  Attorney, 
ROBERT   L.     BROSIO, 

Assistant  U.    S,    Attorney, 

Chief,    Criminal  Division, 
JOHN  W.    HORNBECK, 

Assistant  U.    S.   Attorney, 

1200  U.  S.  Court  House 
312  North  Spring  Street 
Los  Angeles,   California   90012 

Attorneys  for  Appellee, 
United  States  of  America 


NO.     2  2  2  5  7 

IN   THE  UNITED  STATES  COURT  OF   APPEALS 

FOR  THE  NINTH  CIRCUIT 

JOHN  SCOTT  MAYHEW, 

Appellant, 
vs. 
UNITED   STATES  OF   AMERICA, 

Appellee. 


APPELLEE'S   BRIEF 


APPEAL  FROM 
THE   UNITED   STATES   DISTRICT   COURT 
FOR   THE   CENTRAL  DISTRICT  OF    CALIFORNIA 


WM.     MATTHEW   BYRNE,    JR.  , 
United  States  Attorney, 

ROBERT   L.    BROSIO, 

Assistant  U.    S.    Attorney, 
Chief,    Criminal  Division, 

JOHN   W.     HORNBECK, 

Assistant  U.    S.   Attorney, 

1200  U.  S.  Court  House 
312  North  Spring  Street 
Los  Angeles,    California   90012 

Attorneys  for  Appellee, 
United  States  of  America 


TOPICAL  INDEX 

Page 

I  JURISDICTIONAL  STATEMENT  1 

II  STATUTE   INVOLVED  2 

III  STATEMENT   OF   FACTS  3 

IV  ARGUMENT  4 

THE   TRIAL  COURT   DID   NOT    ERR   IN 

PERMITTING  ADMISSIONS   MADE   BY 

DEFENDANT   IN  THE   FURTHERANCE   OF 

THE   CONSPIRACY   TO  BE   INTRODUCED 

INTO   EVIDENCE.  4 

V  CONCLUSION  7 
CERTIFICATE                                                                                                     8 

TABLE   OF  AUTHORITIES 

Cases 

Berger  v.    United  States, 

295  U.S.    78,    79  L.Ed.    1314,    55  S.  Ct.    629  6 

Carbo  v.    United  States, 

314  F.  2d  718  (1963)  6 

Enriquez  v.    United  States, 

314  F.  2d  703  (1963)  6 

Statutes 

Title  18,   United  States  Code,    §3231  2 

Title  21,    United  States  Code,    §176(a)  1,    2 

Title  28,   United  States  Code,    §1291  2 

Title  28,    United  States  Code,    §1294  2 


NO.     2  2  2  5  7 
IN   THE  UNITED   STATES  COURT  OF   APPEALS 
FOR   THE  NINTH  CIRCUIT 

JOHN  SCOTT  MAYHEW, 

Appellant, 
vs. 
UNITED   STATES  OF   AMERICA, 

Appellee. 


APPELLEE'S   BRIEF 


I 
JURISDICTIONAL  STATEMENT 


This  is  an  appeal  from  a  conviction  of  conspiracy  to 
receive,    conceal  and  facilitate  the  transportation  of  marihuana 
after  illegal  importation  in  violation  of  Title  21,    United  States 
Code,    Section  176(a).    Appellant,    co-defendant   SANDRA    LEE 
HALLOCK,    and  indicted  co-conspirator   THOMAS  J.    WORKMAN, 
were  indicted  on  January  11,    1967    [C.  T.  2].  —       Appellant  and 
co-defendant  both  entered  a  plea  of  not  guilty  and  trial  by  jury 
commenced  on  April  9,    1967,   before  the  Honorable  Jess  W. 
Curtis,    United  States  District  Judge,    Central  District  of 


1_/  C.  T.    refers  to  Clerk's  Transcript. 

1. 


California.    On  April  7,    1967,   both  defendants  were  found  guilty 
and  appellant  was  sentenced  to  six  years  imprisonment  on  April 
24,    1967    [C.  T.  16].    Jurisdiction  of  the  District  Court  was  based 
on  Section  176(a),     Title  28,    United  States  Code  and  Section  3231, 
Title  18,    United  States  Code.    Jurisdiction  of  this  Court  to  enter- 
tain the  appeal  is  derived  from  Sections  1291  and  1294,    Title  28, 
United  States  Code. 


II 

STATUTE   INVOLVED 

Title  21,   United  States  Code,   Section  176(a)    provides  in 
pertinent  part: 

"...    whoever,    knowingly,    and  with   intent 
to   defraud  the  United  States  .     .     .     receives,    conceals, 
.     .     ,    or  in  any  manner  facilitates  the  transportation, 
(or)  concealment  ...    of  such  marihuana  after  being 
imported  or  brought  in,    knowing  the  same  to  have  been 
imported  or  brought  into  the  United  States  contrary  to 
law,    or  whoever  conspires  to  do  any  of  the  foregoing 
acts,    shall  be  imprisoned  not  less  than  five  years  or 
more  than  twenty  years  and,    in  addition,    may  be  fined 
not  more  than   $20,  000  .     .     . 

"Whenever  on  trial  for  a  violation  of  this  sub- 
section, the  defendant  is  shown  to  have  or  to  have  had 
the  marihuana  in  his  possession,    such  possession  shall 

2. 


be  deemed  sufficient  evidence  to  authorize  conviction 
unless  the  defendant  explains  his  possession  to  the 
satisfaction  of  the  jury.  " 

III 
STATEMENT   OF   FACTS 

On  December  4,    1966,    Ronald  McAuley  attended  a  pre- 

2/ 
arranged  meeting   [R.  T.    86,    87]  —     at  the  Carriage  Inn  Motel, 

Van  Nuys,    California,    at  which  time  appellant  stated  that  he 
desired  someone  to  bring  marihuana  into  the  United  States  from 
Mexico    [R.  T.    90].     Several  conversations  ensued  in  the  next  few 
days  before  a  meeting  was  accomplished  between  McAuley,    appel- 
lant,   and  co-defendant  Hallock  on  December  17,    1966    [R.  T.    92] 
at  which  time  definite  plans  were  made  for  McAuley  to  drive  a 
load  of  marihuana  from  Mexico  into  the  United  States    [R.  T.    95]. 
A  car  was  purchased  in  Los  Angeles  by  the  appellant  to  transport 
the  marihuana   [R.  T.    98].    Appellant  then  met  McAuley  in  Mexico 
[R   T.    105],    on  December  17,    1966,    confirmed  the  transportation 
of  the  contraband  and  gave  McAuley  a  telephone  number  to  call 
when  the  marihuana  was  in  the  United  States    [R.  T.    109].    On 
December  18,    1966    [R.  T.    113]   McAuley  entered  the  United  States 
driving  the  car  previously    purchased  by  appellant    [R.  T.    112]. 
After  meeting  with  customs  officials    [R.  T.    114],    a  phone  call 


2_/  R.  T.    refers  to  Reporter's  Transcript. 

3. 


was  placed  to  the  number  supplied  by  appellant  and  details  were 
arranged  as  to  the  pick-up  of  the  marihuana  in  North  Hollywood, 
California   [R.  T.  116,    119].     The  automobile  was  then  driven  to  the 
location  designated  in  the  phone  call  made  by  McAuley  where  it  was 
picked  up  and  driven  away  by  co-defendant  Workman   [R.  T.    119]. 

IV 
ARGUMENT 


THE   TRIAL  COURT   DID  NOT   ERR  IN   PER- 
MITTING  ADMISSIONS   MADE    BY   DEFENDANT 
IN   THE   FURTHERANCE   OF    THE   CONSPIRACY 
TO   BE   INTRODUCED   INTO   EVIDENCE 


To  support  his  allegation  that  the  Government  made 
repeated  references  to  the  appellant's  involvement  in  the  field  of 
narcotics  which  so  prejudiced  the  appellant  that  he  was  denied  a 
fair  trial  and  impartial  trial,    counsel  for  the  appellant  cites  page 
52,    lines  17  through  24,   of  the  United  States  Attorney's  opening 
statement  which  said  that,     "During  this  meeting,    the  two  defen- 
dants were  present  with  Mr.    McAuley.     Mr.    McAuley  was  advised 
by  defendant  Mayhew  that  he  was  expecting  marihuana  from  Mexi- 
co,   that  he  was  experiencing  trouble  with  his  runners;    the  people 
who  actually  drove  the  loaded  vehicle  up  from  Mexico  with  the 
marihuana.    He  referred  to  these  people  as  his  astronauts.  " 
There  is  nothing  in  that  quotation  or  in  any  other  portion  of  the 
opening  statement  that  was  not  later  substantiated  by  competent 
evidence.    It  is  submitted  that,    from  the  defendant's  point  of  view, 

4. 


every  allegation  by  the  Government  of  facts  that  it  intends  to  prove 
in  support  of  the  charges  contained  within  the  indictment  is  preju- 
diced,  but  it  is  axiomatic  that  the  prosecution  has  a  right  to  state 
those  facts  which  the  Government  intends  to  prove.    Corroboration 
of  the  contested  opening  remarks  was  provided  by  customs  agent 
Norman  Noordenvier  on  page  166,    lines  2,    3  and  4  of  the 
Reporter's  Transcript,    in  which  Agent  Noordenvier  quoted  a  con- 
versation in  which  appellant  used  the  exact  terminology,    referring 
to  his  runners,    as  the  United  States  Attorney  presented  to  the  jury 
in  his  opening  statement. 

Counsel  for  appellant  then  accuses  the  United  States 
Attorney  on  page  1  of  his  opening  brief  of  alleging  the  statement 
found  on  page  85,    lines  9  through  12.    A  reading  of  the  transcript 
reveals  that  the  debated  remark  was  actually  made  by  a  Govern- 
ment witness  in  explaining  a  conversation  made  by  the  co-defen- 
dant Hallock  in  setting  up  the  first  meeting  with  the  witness  and 
appellant. 

The  remaining  instances  cited  by  counsel  for  appellant  as 
constituting  prejudicial  error  involve  admissions  by  the  appellant 
contained  in  conversations  made  in  furtherance  of  the  conspiracy 
for  which  he  was  convicted.    For  instance,    counsel  for  appellant 
objects  to  a  conversation  on  pages  88  through  92  in  which  the  Gov- 
ernment's witness  testified  that  appellant  outlined  the  difficulties 
that  he  was  having  in  obtaining  people  to  smuggle  loads  of  mari- 
huana and  his  desire  for  "a  family  type  of  person"  to  transport  the 
marihuana.    Again,    the  admissions  by  appellant  to  which  his 

5. 


counsel  objected,   which  are  contained  on  pages  96  and  107,    related 
to  the  details  of  the  plan  to  introduce  marihuana  into  the  United 
States  from  Mexico  and  appellant's  prior  activities  in  smuggling 
narcotics.     Corroboration  of  the  witnesses'  testimony  was  afforded 
by  a  customs  agent  whose  responses  to  questions  by  the  United 
States  Attorney  are  contested  by  appellant  on  page  3  of  his  opening 
brief.    As  the  trial  court  properly  stated  on  page  166,    lines  12  and 
13,    "He    (Agent  Noordenvier)    is  recalling  or  stating  the  conversa- 
tion which  took  place".    Thus,    in  making  his  objections  to  admis- 
sions made  by  the  appellant  in  furtherance  of  the  conviction  for 
which  he  was  indicted  and  convicted,    counsel  for  appellant  has 
failed  to  take  cognizance  of  the  basic  rules  of  evidence  relating 
to  the  admissibility  of  admissions  of  a  defendant. 

Carbo  V.    United  States,    314  F.  2d  718   (1963); 

Enriquez  v.    United  States,    314  F.  2d703    (1963). 
A  reading  of  the  transcript  reveals  no  such  improprieties 
on  the  part  of  the  United  States  Attorney  as  counsel  for  appellant 
has  suggested.     The  Government  welcomes  the  obligation  placed 
upon  it  as  a  servant  of  all  the  citizens  of  the  United  States  and  the 
prosecuting  attorney  in  this  case  followed  the  mode  of  conduct 
proscribed  by  the  Supreme  Court  in  Berger  v.    United  States, 
295  U.S.    78,    79  L.  ed.    1314,    55  S.  Ct.    629,       in    presenting  com- 
petent,   relevant  testimony  concerning  the  appellant's  admissions 
as  to  his  involvement  in  the  conspiracy  for  which  he  was  charged. 


6. 


V 
CONCLUSION 

For  the  foregoing  reasons  it  is  respectfully  submitted 

that  appellant  was  not  prejudiced  by  the  introduction  of  his  own 

admission  into  evidence  and  the  judgment  of  the  trial  court  should 

be  affirmed. 

Respectfully  submitted, 

WM.    MATTHEW   BYRNE,   JR. 
United  States  Attorney 

ROBERT   L.    BROSIO 

Assistant  U.    S.    Attorney 
Chief,    Criminal  Division 

JOHN  W.    HORNBECK 

Assistant  U.    S.    Attorney 

Attorneys  for  Appellee, 
United  States  of  America 


7. 


CERTIFICATE 

I  certify  that,    in  connection  with  the  preparation  of  this 
brief,   I  have  examined  Rules  18,    19  and  39  of  the  United  States 
Court  of  Appeals  for  the  Ninth  Circuit,   and  that,    in  my  opinion, 
the  foregoing  brief  is  in  full  compliance  with  those  rules. 

I  si    John  W.    Hornbeck 


JOHN  W.     HORNBECK 


No.  22,259 


In  the  United  States  Court  of  Appeals 
for  the  Ninth  Circuit 


National  Labor  Relations  Board,  petitioner 

V. 

Levinson's  Owl  Rexall  Drugs,  Inc.,  respondent 


On  Petition  for  Enforcement  of  an  Order  of  the 
National  Labor  Relations  Board 


BRIEF  FOR  THE  NATIONAL  LABOR  RELATIONS 
BOARD 


Arnold  Ordman, 

General  Counsel, 

DOMINICK  L.  Manoli, 

Associate  General  Counsel, 

EjT^  Marcel  Mallet-Prevost, 

__  i-^  Assistant  General  Counsel, 

Glen  M.  Bendixsen, 
ntC  ^  ^  ^^  Julius  Rosenbaum, 

Attorneys, 

MKA   B   l-UCKj  OLt^"^-'         National  Labor  Relations  Board. 


INDEX 

Page 
Jurisdiction  1 

Statement  of  the  case 2 

I.    The  Board's  findings  of  fact 2 

A.  The  advent  of  the  Union;   the   Company's 
coercive  antiunion  campaign  3 

B,  The   discharge   of   union   adherent   Beverly 
Marsh  5 

II.    The  Board's  conclusions  and  order 7 

Argument   9 

Substantial  evidence  on  the  record  as  a  whole 
supports  the  Board's  finding  that  the  Company 
violated  Section  8(a)(3)  and  (1)  of  the  Act 
by  discharging  employee  Beverly  Marsh  to  dis- 
courage membership  in  or  activities  on  behalf 
of  the  Union  9 

Conclusion 17 

Certificate   17 

Appendix  A 18 

Appendix  B  21 

AUTHORITIES  CITED 
Cases : 

Aeronca  Mfg.  Co.  v.  N.L.R.B.,  F.  2d  

(C.A.  9),  No.  21,305,  dec.  Nov.  1,  1967,  66 
LRRM  2574 12, 14, 16 

American  Fire  Appartus  Co.  V.  N.L.R.B.,  380  F.  2d 

1005  (C.A.  8)  10 

Bon  Hennings  Logging  Co.  v.  N.L.R.B.,  308  F.  2d 

548  (C.A.  9) 11 

Cheney  Calif.  Lumber  Co.  V.  N.L.R.B.,  319  F.  2d 

375  (C.A.  9)  10-11 

F.C.C.  V.  Allentown  Broadcasting  Corp.,  349  U.S. 

358   11 


II 

Cases — Continued  Page 

N.L.R.B.  V.  A.P.W.  Products  Co.,  316  F.  2d  899 

(C.A.  2)    14 

N.L.R.B.  V.   Carroll-Naslund  Disposal,   Inc.,  359 

F.  2d  779  (C.A.  9) ,  enf  g,  152  NLRB  861 10 

N.L.R.B.  V.  Dant,  207  F.  2d  165  (C.A.  9)  14, 15 

N.L.R.B.  V.  Eastern  Mass.  Street  Ry  Co.,  235  F.  2d 

700  (C.A.  1),  cert,  denied,  352  U.S.  951  15 

N.L.R.B.  V.  Globe  Wireless,  Ltd.,  193  F.  2d  748 

(C.A.  9),  enf g,  88  NLRB  1262 16 

N.L.R.B.  V.  Griggs  Equipment,  Inc.,  307  F.  2d  275 

(C.A.  5)    15 

N.L.R.B.  V.  Howell  Chevrolet  Co.,  204  F.  2d  79 

(C.A.  9),  aff'd,  346  U.S.  482  12 

N.L.R.B.  V.  Int'l  Ass'n  of  Machinists,  Lodge  9Jf2, 

263  F.  2d  796  (C.A.  9),  cert,  denied,  362  U.S. 

940   10 

N.L.R.B.  V.  Int'l  Union  of  Operating  Engineers, 

Local  66,  357  F.  2d  841  (C.A.  3)  10 

N.L.R.B.  V.  Johnson,  Tom,  Inc.,  378  F.  2d  342 

(C.A.  9)    11 

N.L.R.B.  V.  McCormick  Longmeadow  Stone  Co., 

374  F.  2d  81  (C.A.  1)  15 

N.L.R.B.  w.  M  &  B  Headwear  Co.,  349  F.  2d  170 

(C.A.  4)  14 

N.L.R.B.  V.  Morrison  Cafeteria  Co.  of  Little  Rock, 

311  F.  2d  534  (C.A.  8)  14 

N.L.R.B.  V.  Mrak  Coal  Co.,  322  F.  2d  311  (C.A.  9) ..  14 
N.L.R.B.  V.  Security  Plating  Co.,  Inc.,  356  F.  2d 

725  (C.A.  9)  11 

N.R.L.B.  V.  Solo  Cup  Co.,  237  F.  2d  521  (C.A.  8)  ..  16 
N.L.R.B.  V.  Southern  Desk  Co.,  246  F.  2d  53  (C.A. 

4)    16 

N.L.R.B.  V.  Superex  Drugs,  Inc.,  341   F.  2d  747 

(C.A.  6)    15 

N.L.R.B.  V.  Tonkin  Corp.,  352  F.  2d  509    (C.A. 

9)    11 

N.L.R.B.  V.  U.S.  Divers  Co.,  308  F.  2d  899  (C.A. 

9)    12 

N.L.R.B.  V.  West  Coast  Casket  Co.,  205  F.  2d  902 

(C.A.  9)    16 


Ill 

Cases — Continued  Page 

N.L.R.B.  V.  West  Side  Carpet  Cleaning  Co.,  329 

F.  2d  758  (C.A.  6) 16 

N.L.R.B.  V.  Wix  Corp.,  336  F.  2d  824  (C.A.  4)  14 

Oil,  Chemical  &  Atomic  Workers,  Local  i-2i3  V. 

N.L.R.B.,  362  F.  2d  943  (C.A.D.C.)  10 

Shattuck  Denn  Mining  Corp.  V.  N.L.R.B.,  362  F. 

2d  466  (C.A.  9)  12, 16 

Universal   Camera   Corp.   v.   N.L.R.B.,   340   U.S. 

474  11 

Statute : 

National  Labor  Relations  Act,  as  amended  (61 
Stat.  136,  73  Stat.  519,  29  U.S.C,  Sec.  151,  et 
seq. ) 1 

Section  7  2 

Section   8(a)(1)    2,9 

Section  8(a)(3)  2,9 

Section  10(c) 10 

Section  10(e)  1,10 

Miscellaneous : 

N.L.R.B.  Rules  and  Regulations  (29  C.F.R.,  Part 

102,  Sec.  102.46,  102.46(h),  102.48(a))  10 


In  the  United  States  Court  of  Appeals 
for  the  Ninth  Circuit 


No.  22,259 
National  Labor  Relations  Board,  petitioner 

V. 

Levinson's  Owl  Rexall  Drugs,  Inc.,  respondent 


On  Petition  for  Enforcement  of  an  Order  of  the 
National  Labor  Relations  Board 


BRIEF  FOR  THE  NATIONAL  LABOR  RELATIONS 
BOARD 


JURISDICTION 

This  case  is  before  the  Court  upon  the  petition  of 
the  National  Labor  Relations  Board  pursuant  to  Sec- 
tion 10(e)  of  the  National  Labor  Relations  Act,  as 
amended  (61  Stat.  136,  73  Stat.  519,  29  U.S.C,  Sec. 
151,  et  seq.),^  for  enforcement  of  its  order  issued 
against  Levinson's  Owl  Rexall  Drugs,  Inc.,  herein  re- 

^  Pertinent  provisions  of  the  Act  are  reprinted  as  Appendix 
A  to  this  brief,  infra,  pp.  18-20. 

(1) 


ferred  to  as  respondent  or  Company,  on  December  6, 
1966.  The  Board's  decision  and  order  (R.  56-63)' 
are  reported  at  161  NLRB  No.  133.  This  Court  has 
jurisdiction  of  the  proceeding,  the  unfair  labor  prac- 
tices having  occurred  in  Napa,  California,  where  the 
Company  is  engaged  in  the  business  of  selling  drugs, 
cameras,  and  other  products  at  retail.  No  jurisdic- 
tional issue  is  presented. 

STATEMENT  OF  THE   CASE 

I.   The  Board's  Findings  of  Fact 

Briefly,  the  Board  found  that  the  Company  violated 
Section  8(a)  (1)  of  the  Act  by  interfering  with,  re- 
straining, and  coercing  employees  in  the  exercise  of 
rights  guaranteed  in  Section  7.  The  Board  further 
found  that  the  Company  violated  Section  8(a)(3) 
and  (1)  of  the  Act  by  discriminatorily  discharging 
employee  Beverly  Marsh  to  discourage  membership  in 
or  activities  on  behalf  of  the  Union.^  The  evidence 
upon  which  the  Board's  findings  are  based  is  sum- 
marized below. 


2  References  to  the  pleadings,  decision  and  order  of  the 
Board,  the  Trial  Examiner's  recommended  decision  and  order, 
and  other  papers  reproduced  as  "Volume  I,  Pleadings,"  are 
designated  "R."  References  to  portions  of  the  stenographic 
transcript  reproduced  pursuant  to  Court  Rules  10  and  17  are 
designated  "Tr."  References  designated  "GCX"  and  "RX" 
are  to  exhibits  of  the  General  Counsel  and  respondent,  re- 
spectively. Whenever  in  a  series  of  references  a  semicolon 
appears,  those  preceding  the  semicolon  are  to  the  Board's 
findings ;  those  following  are  to  the  supporting  evidence. 

» Retail  Store  Employees  Union,  Local  373,  Retail  Clerks 
International  Association,  AFL-CIO. 


A.  The  advent  of  the  Union;  the  Company's  coercive 
antiunion  campaign 

In  March  1965/  the  Union  began  an  organizational 
campaign  among  the  employees  of  the  Company  at  its 
Bel-Air  Shopping  Center  store  (R.  16;  Tr.  469). •'  In 
April,  a  number  of  the  employees  signed  cards  au- 
thorizing the  Union  to  be  their  collective  bargaining 
representative  (R.  16;  Tr.  469,  OCX  2,  4,  7).  Dur- 
ing the  Union's  organizing  campaign  in  April,  Com- 
pany Secretary-Treasurer  and  Store  No.  2  Manager 
John  Frommelt  called  employee  Anita  Joyce  Baierline 
into  the  employee  coffee  room  and,  vv^ith  the  door 
closed,  inquired  whether  she  had  been  approached  by 
the  Union  (R.  15-16;  Tr.  90).  When  Baierline  re- 
plied in  the  negative,  Frommelt  stated  that  the  Union 
would  probably  communicate  with  her.  He  told  her 
that  if  the  store  became  unionized  the  employees 
would  make  less  money,  besides  having  to  pay  dues. 
Frommelt  also  stated  that  it  was  possible  that  em- 
ployees' "P.M.'s  would  be  taken  away."  "  He  further 
stated  that  the  Company  had  never  been  unionized 
and  did  "not  intend  to  become  Union  now,"  and  that 
if  he  should  learn  that  Baierline  was  "for  the  Un- 
ion" she  would  be  "fired."     (R.  16;  Tr.  90-91). 


*  Unless  otherwise  noted,  all  dates  herein  refer  to  1965. 

*  The  Company  operates  two  stores  in  Napa.  The  Bel- Air 
Shopping  Center  store,  also  referred  to  in  the  record  as  Store 
No.  2,  is  involved  in  this  proceeding.  The  other  store,  re- 
ferred to  in  the  record  either  as  Store  No.  1  or  the  main  store, 
is  not  involved  herein  (Tr.  151-152). 

*  P.M.  refers  to  premium  money  paid  by  certain  companies 
when  their  products  are  sold ;  P.M.'s  are  paid  to  employees  in 
addition  to  their  regular  wages  (Tr.  91). 


On  the  same  day,  John  Frommelt  called  employee 
Charlotte  McDonald  into  the  employee  coffee  room 
and  inquiringly  stated  that  he  assumed  she  knew  that 
the  Union  was  contacting  the  Company's  employees. 
When  McDonald  answered  afRiTnatively,  he  remarked 
that  "any  extra  wages  [the  employees]  might  make 
joining  the  Union  [they]  would  just  pay  back  ...  in 
dues,  that  Levinson's  was  not  Union,  that  they  would 
never  be  Union  and  if  [McDonald]  had  any  intentions 
of  joining  a  Union  or  trying  to  get  a  Union  in  the 
store,  [she]  would  no  longer  have  a  job  there." 
(R.  16;  Tr.  9-11). 

On  the  same  day.  Store  Manager  Frommelt  also 
called  employee  Beverly  Marsh  into  the  employee  coffee 
room  and,  like  employees  Baierline  and  McDonald, 
was  interviewed  in  private.  Frommelt  alluded  to  her 
"many  years"  of  employment  and  stated  that  "the 
Union  has  become  active  again — [the  Company] 
would  appreciate  [her]  loyalty  in  this  matter.  [The 
Company]  just  [doesn't]  want  any  Union  .  .  .  [she] 
knew  how  [the  Company]  felt  about  the  Union." '' 
(R.  16,  57;  Tr.  35,  37,  45). 

In  addition,  John  Frommelt  interrogated  employees 
Carl  Shimell  and  Lillian  Beem  as  to  whether  they 
were  contacted  by  the  Union  (R.  16-17;  Tr.  131, 
307).    Altogether,    John    Frommelt   separately   and 


'  Marsh  testified  that  in  1957  or  1958,  the  Union  attempted 
to  organize  the  Company's  employees  at  Store  No.  1 ;  at  that 
time,  Store  Manager  Al  Frommelt  told  Marsh,  who  was  then 
employed  at  Store  No.  1,  that  the  store  was  not  union,  had  no 
intention  of  becoming  union,  and  that  the  employees  would  be 
dismissed  if  a  union  contract  were  signed   (Tr.  38-40). 


privately  interviewed  7  or  8  of  the  11  nonsupervisory 
store  employees  concerning  their  Union  affiliation  and 
activities  (R.  16;  Tr.  242-243). 

During  the  Union's  organizational  campaign,  the 
Company  required  job  applicants  to  fill  in  an  employ- 
ment application  form,  which  included  a  question  as 
to  the  applicant's  "union  affiliation"  and  a  space  for 
his  reply.  During  the  6-month  period  prior  to  date 
of  service  of  the  charge  in  this  proceeding,  24  individ- 
uals applied  for  jobs  and  executed  the  employment  ap- 
plication form,  of  which  8  left  the  union  affiliation 
space  blank,  2  indicated  a  union  affiliation,  and  14  an- 
swered in  the  negative  (R.  15;  Tr.  138,  141-142,  GCX 
5(a),  5(b),  5(c)). 

On  May  3,  the  Union  distributed  a  leaflet,  dated 
May  1,  to  the  Company's  employees,  wherein  it  set 
forth  wage  rates  and  medical,  retirement,  holiday, 
vacation,  and  arbitration  benefits  provided  in  a  union 
contract  and  the  suggestion  that  they  be  compared 
with  those  provided  by  the  Company  (R.  21;  Tr.  470, 
GCX  3). 

B.  The  discharge  of  union  adherent  Beverly  Marsh 

Beverly  Marsh  was  first  employed  by  the  Company 
in  August  1946  and  quit  in  March  1948,  went  back  to 
work  with  the  Company  in  March  1954  and  termi- 
nated her  employment  in  September  1961,  and  again 
reentered  employment  in  July  1963.  During  most  of 
her  long  tenure  of  employment  with  the  Company,  in- 
cluding her  last  period  of  employment.  Marsh  worked 
in  the  camera  department  (Tr.  33).  On  April  13, 
1965,  she  signed  a  union  authorization  card  (GCX  4). 


A  few  days  after  receiving  the  Union  leaflet  dated 
May  1,  Marsh  brought  it  to  the  store  with  a  view  to 
discussing  its  contents  with  management.  During  a 
discussion  with  Assistant  Store  Manager  Robert 
Frommelt  concerning  the  leaflet,  Marsh  remarked  that 
Levinson's  "didn't  seem  to  stack  up  too  well"  with  the 
benefits  being  offered  by  the  Union  (R.  21,  57;  Tr.  45- 
46,  391).  Frommelt  defended  the  store's  current  em- 
ployee benefits,  while  Marsh  compared  the  Company's 
benefits  unfavorably  with  those  offered  by  the  Union 
in  the  leaflet.  She  specifically  mentioned  that  her 
wages  were  lower  than  those  shown  in  the  leaflet;  nor 
were  the  Company's  hospital  benefits  adequate  (R. 
21;  Tr.  47,  391). 

On  June  25,  Marsh  prepared  unsold  greeting  cards 
for  return  to  the  supplier,  for  which  the  store  would 
receive  credit,  dividing  the  cards  into  separate 
groups.  She  prepared  necessary  instructions  for  ship- 
ment and  gave  them,  with  additional  instructions  to 
ship  the  packages  separately,  to  the  employee  who 
packs  and  ships  store  merchandise.  Each  package 
was  shipped  by  parcel  post,  rather  than  by  freight  in 
a  single  package,  which  resulted  in  an  additional  ship- 
ping cost  of  $7  or  $8  (R.  21;  Tr.  54,  437-439,  442- 
443,  447).  Shortly  thereafter.  Store  Manager  John 
Frommelt  approached  Marsh  at  the  camera  depart- 
ment and  loudly  and  angrily  berated  her  for  causing 
the  unnecessary  shipping  cost  expenditure  (R.  21-22, 
57;  Tr.  55,  169-170).  Frommelt  then  walked  out  of 
the  store  (Tr.  55,  170,  219).  Marsh,  who  was  emo- 
tionally upset  because  of  the  reprimand,  telephoned 
her  physician  and  was  advised  to  come  to  his  office 


immediately  (R.  22,  57;  Tr.  55-56).  Unable  to  locate 
either  John  or  Robert  Frommelt  in  the  store,  Marsh 
told  Floorlady  Helen  Duncan  to  inform  John  From- 
melt that  she  was  leaving  the  store  (R.  22,  57-58;  Tr. 
56,  283).  She  left  the  store  about  4:40  p.m.,  and 
went  to  her  physician's  office  (R.  22,  58;  Tr.  56). 
Marsh  returned  to  the  store  after  an  absence  of  ap- 
proximately 20  minutes  of  her  working  time,^  sought 
out  John  Frommelt,  and  asked  him  not  to  admonish 
her  publicly  again.  Frommelt  thereupon  discharged 
her  for  the  stated  reason  of  her  absence  from  work 
(R.  22-23,  58;  Tr.  58,  182,  208,  210). 

II.    The  Board's  Conclusions  and  Order 

The  Board,  in  agreement  with  the  Trial  Examiner, 
found  that  during  the  course  of  the  Union's  organi- 
zational campaign  in  April  1965,  the  Company  vio- 
lated Section  8(a)(1)  of  the  Act  by  interrogating 
employees  in  private  inter\dews  as  to  whether  they 
had  been  contacted  by  the  Union,  by  interrogating 
job  applicants  as  to  their  union  affiliation,  by  stating 
to  employee  Baierline  that  premium  pay  would  be  dis- 
continued in  the  event  of  unionization,  by  threatening 
to  discharge  Baierline  if  the  Company  found  out  that 
she  favored  the  Union,  by  stating  to  employee  Mc- 
Donald that  she  "would  no  longer  have  a  job"  at  the 
store  if  she  had  any  intention  of  joining  a  union  or 
"trying  to  get  [one]  in  the  store,"  and  by  telling  these 


8  Marsh  returned  to  the  store  at  about  5:55  p.m.  Her  regu- 
larly scheduled  dinner  period  was  from  5:00  to  6:00  p.m.  Her 
absence  during  working  time  was  therefore  about  20  minutes. 
(R.  22;  Tr.  57-58,  182). 


8 

two  employees  that  the  Company  would  never  be  un- 
ionized.'^  The  Board,  contrary  to  the  Trial  Examiner, 
also  found  that  the  reason  given  by  the  Company  for 
discharging  employee  Beverly  Marsh — her  20-minute 
absence  from  work — was  a  pretext  to  conceal  its  de- 
termination to  rid  itself  of  a  senior  employee  because 
she  revealed  herself  as  a  Union  adherent  in  spite  of 
the  Company's  unlawful  attempt  to  dissuade  employ- 
ees, and  that  she  was,  in  fact,  discharged  on  June  25, 
1965,  during  the  organizational  campaign  among  the 
Company's  employees,  in  order  to  discourage  member- 
ship in  or  activities  on  behalf  of  the  Union,  in  viola- 
tion of  Section  8(a)  (3)  and  (1)  of  the  Act.  (R.  20, 
28,  56-57,  58-59). 

The  Board's  order  requires  the  Company  to  cease 
and  desist  from  the  unfair  labor  practices  found  and 
from  in  any  other  manner  interfering  with,  restrain- 
ing, or  coercing  its  employees  in  the  exercise  of  their 
statutory  rights.  Affirmatively,  the  order  requires  the 
Company  to  offer  reinstatement  to  employee  Beverly 
Marsh,  to  make  her  whole  for  any  loss  of  pay  suffered 


s  At  the  Board  hearing,  the  Trial  Examiner  granted  the 
General  Counsel's  motion  to  amend  the  complaint  by  adding 
the  allegation  that  "on  or  about  April  2,  1965,  in  Respondent's 
Store  No.  2,  John  A.  Frommelt  interrogated  an  employee 
concerning  his  Union  membership,  interest  and  activity,  and 
threatened  to  terminate  that  employee  if  he  selected  the  Union 
to  represent  him  for  purposes  of  collective  bargaining  or  if  he 
gave  any  aid  or  assistance  to  the  Union"  (Tr.  370,  377).  The 
Board,  in  agreement  with  the  Trial  Examiner,  dismissed  this 
portion  of  the  complaint  (R.  19,  62). 


as  a  result  of  the  discrimination  against  her,  and  to 
post  appropriate  notices.     (R.  60-61). 

ARGUMENT 

Substantial  Evidence  on  the  Record  as  a  Whole  Sup- 
ports the  Board's  Finding  That  the  Company  Vio- 
lated Section  8(a)(3)  and  (1)  of  the  Act  by  Discharg- 
ing Employee  Beverly  Marsh  to  Discourage  Member- 
ship In  or  Activities  on  Behalf  of  the  Union 

As  shown  in  the  Statement,  in  April  of  1965  many 
of  the  Company's  employees  began  signing  Union  au- 
thorization cards  and  engaging  in  other  organization- 
al activity  to  select  the  Union  as  a  collective  bargain- 
ing spokesman.  The  Trial  Examiner  found  that  there- 
after the  Company,  primarily  through  Store  Manager 
John  Frommelt,  prevented  the  employees'  complete 
freedom  of  choice,  in  violation  of  Section  8(a)  (1)  of 
the  Act,  by  coercively  interrogating  applicants  for 
employment  and  current  employees  concerning  their 
union  activity  and  views,  telling  employees  that  the 
Company  would  never  accept  unionization,  and  threat- 
ening employees  with  loss  of  job  benefits  and  their 
jobs  if  they  supported  the  union  effort.  The  Company 
filed  no  exceptions  to  the  Trial  Examiner's  findings 
that  it  had  engaged  in  this  clearly  unlawful  conduct. 
The  General  Counsel  and  the  Union,  however,  filed 
exceptions  to,  inter  alia,  the  Trial  Examiner's  dis- 
missal of  the  allegation  that  employee  Beverly  Marsh 
had  been  discharged  to  discourage  union  activity. 
The  Company  submitted  a  brief  in  answer  to  these 
exceptions  in  which  it  urged  affirmance  of  the  Trial 


10 

Examiner's  decision  and  entered  no  cross-exceptions 
to  his  findings  of  violations  of  Section  8(a)(1), 
which,  accordingly,  were  adopted  by  the  Board.  In 
these  circumstances,  under  the  statute  and  Board  pro- 
cedures promulgated  thereunder,^"  those  8(a)  (1)  find- 
ings are  final  and  not  subject  to  attack  in  the  review- 
ing court.^^  Thus,  the  only  issue  presented  is  the 
propriety  of  the  Board's  finding  that  Marsh  was  dis- 
charged for  anti-union  reasons,  in  violation  of  Section 
8(a)(3)  and  (1).  We  show  below  that  the  record 
amply  supports  tJiat  finding/^ 


"  See  Section  10(c)  and  (e)  of  the  Act,  infra  pp.  18-20,  and 
Rules  and  Reflations  of  the  National  Labor  Relations  Board, 
as  amended,  Section  102.46  and  102.48(a)  (29  C.F.R.,  Part 
102,  Sec.  102.46  and  102.48(a)),  and  specifically  Section 
102.46(h)  which  provides  that  "No  matter  not  included  in 
exceptions  or  cross-exceptions  may  thereafter  be  urged  before 
the  Board,  or  in  any  further  proceeding." 

"  See  e.g.,  N.L.R.B.  V,  International  Association  of  Ma- 
chinists, Lodge  H2,  AFL-CIO,  263  F.  2d  796,  798-799  (C.A. 
9),  cert,  denied,  362  U.S.  940;  N.L.R.B.  V.  Carroll-Naslund 
Disposal,  Inc.,  359  F.  2d  779  (C.A.  9),  enforcing  152  NLRB 
861;  American  Fire  Apparatus  Co.  V.  N.L.R.B.,  380  F.  2d 
1005,  1006  (C.A.  8).  See  also,  N.L.R.B.  v.  Intermitional 
Union  of  Operating  Engineers,  Local  66,  etc.,  357  F.  2d  841, 
846  n.  10  (C.A.  3). 

^2  The  Board's  disagreement  with  the  Trial  Examiner  on 
this  issue  does  not  significantly  detract  from  the  substantiality 
of  the  support  for  the  Board's  result.  The  Examiner's  reso- 
lution of  conflicting  testimony  was  not  disturbed.  The  dis- 
agreement related  solely  to  the  inferences  to  be  drawn  from 
the  whole  record  and  the  proper  application  of  the  statute. 
In  such  a  case,  "the  presumptively  broader  gauge  and  experi- 
eShce  of  members  of  the  Board  have  a  meaningful  role." 
0^7,  ChcTnical  &  Atomic  Worke7's  Int'l.  Union,  Local  U-2US  V. 
N.L.R.B.,  362  F.  2d  943,  946   (C.A.  D.C.).  Accord:  Cheney 


11 

The  discharge  of  a  leading  union  adherent  in  a 
small  unit  of  employees  is  a  classic  method  of  under- 
mining an  organizational  campaign.  Marsh  was  con- 
spicuous in  her  support  of  the  Union,  but  the  Com- 
pany contended  that  the  sole  reason  for  her  discharge 
was,  as  she  was  informed  at  the  time,  her  20  minute 
absence  during  working  hours.  The  Board,  however, 
after  full  consideration  of  the  proffered  explanation, 
found  that  this  was  simply  a  pretext  with  which  the 
Company  sought  to  conceal  its  discriminatory  pur- 
pose. The  issue,  therefore,  is  the  real  reason  for  the 
discharge:  "[t]he  existence  of  some  justifiable  ground 
for  discharge  is  no  defense  if  it  was  not  the  moving 
cause."  N.L.R.B.  v.  Security  Plating  Co.,  356  F.  2d 
725,  728  (C.A.  9) ;  N.L.R.B.  v.  Tonkin  Corp.,  352  F. 
2d  509,  511  (C.A.  9).  This  issue  is  one  of  fact,  as  to 
which  the  Board's  determination,  if  supported  by  sub- 
stantial evidence  including  all  inferences  fairly  drawn 
from  that  evidence,  is  entitled  to  afRnnance.^^  As  this 
Court  has  repeatedly  recognized:  "When  supported 
by  credible  evidence,  the  Board's  choice  between  two 
conflicting  views  may  not  be  displaced,  'even  though 


California  Lumber  Co.  V.  N.L.R.B.,  319  F.  2d  375,  377  (C.A. 
9)  ;  F.C.C.  v.  Allentown  Broadcasting  Corp.,  349  U.S.  358, 
364 ;  Universal  Camera  Corp.  v.  N.L.R.B.,  340  U.S.  474,  496. 
Cf.  N.L.R.B.  V.  Tom  Johnson,  Inc.,  378  F.  2d  342,  343-344 
(C.A. 9). 

"  As  this  Court  has  stated,  "[T]he  Supreme  Court  .  .  .  has 
laid  to  rest,  quite  properly,  any  contention  that  the  uncon- 
tradicted evidence  of  an  employer  as  to  his  motive  for  a  cer- 
trin  course  of  action  must  be  accepted  by  the  Board."  Bon 
Hennings  Logging  Co.  v.  N.L.R.B.,  308  F.  2d  548,  554 
(C.A.  9). 


12 

the  court  would  justifiably  have  made  a  different 
choice  had  the  matter  been  before  it  de  novo.' " 
N.L.R.B.  V.  Howell  Chevrolet  Co.,  204  F.  2d  79,  85, 
affd.  346  U.S.  482;  N.L.R.B.  v.  U.S.  Divers  Co.,  308 
F.  2d  899,  905;  Shattuck  Denn  Mining  Corp.  v. 
N.L.R.B.,  362  F.  2d  466,  469-470  (C.A.  9) ;  Aeronca 

Mfg.  Co.  V.  N.L.R.B., F.  2d (C.A.  9),  No. 

21,305,  November  1,  1967,  66  LRRM  2574.  We  show 
below  that  the  Board's  finding  has  the  requisite  evi- 
dentiary support. 

As  shown  in  the  Statement,  supra,  pp.  4,  5,  on 
April  13,  Marsh  signed  a  union  authorization  card. 
Subsequently,  Store  Manager  John  Frommelt  called 
Marsh  from  her  counter  at  the  camera  department 
for  a  private  interview,  similar  to  separate  inter- 
views with  over  half  of  the  other  10  employees  where- 
in coercive  means  to  discourage  unionization  of  the 
employees  were  applied.  Frommelt  alluded  to  Marsh's 
long  tenure  of  employment  with  the  Company  (11 
years)  and  appealed  to  her  ''loyalty"  in  resisting  the 
Union.  Notwithstanding  this  appeal.  Marsh  mani- 
fested an  interest  in  union  benefits  in  a  discussion  she 
initiated  with  management  in  early  May,  stating  that 
benefits  provided  by  the  Company  did  not  compare 
favorably  with  those  provided  by  a  union  contract 
(supra  p.  6).  Marsh  did  not  explicitly  proclaim 
her  union  affiliation.  Her  expression  of  union  sym- 
pathy, however,  was  clear  enough  for  the  Company 
to  suspect  her  capacity  for  the  "loyalty"  which  man- 
agement had  requested  from  her. 

Subsequently,  Marsh  was  implicated  in  mailing  one 
set  of  returned  goods  in  separate  packages  when  they 


13 

could  have  been  freighted  together  7  or  8  dollars 
cheaper.  Store  Manager  Frommelt  immediately  re- 
acted in  a  manner  unprecedented  in  his  long  relation- 
ship with  Marsh,  who  had  been  responsible  for  many 
shipments  over  a  long  period  of  time.  His  reprimand 
in  a  public  area  of  the  store  was  so  intemperate  as 
to  cause  Marsh  to  telephone  her  doctor  and  to  respond 
to  the  doctor's  request  to  come  to  his  office.  Marsh 
reported  to  Floorlady  Duncan  that  she  was  leaving, 
since  neither  the  store  manager  nor  the  assistant  man- 
ager was  available  in  the  store."  She  returned  to  the 
store  after  a  20-minute  absence  from  work,  and  con- 
fronted Frommelt  to  complain  of  the  treatment  ac- 
corded her.  Frommelt  summarily  discharged  her 
because  of  her  absence,  without  inquiring  why  she 
had  left  the  store  (supra,  p.  7). 

The  evidence  of  record  shows  that  the  Company 
had  no  rigid  rule  with  respect  to  short  absences  from 
work.  Nor  was  the  store  policy  inflexible  concerning 
when  an  employee  should  sign  out  on  his  time  card 
for  an  absence  during  working  hours  (Tr.  227). 
Marsh's  short  absence  to  visit  her  physician  for  treat- 
ment resulted  from  John  Frommelt's  unprecedented 
public  reprimand  for  a  minor  mistake.  Because  nei- 
ther Frommelt  was  available  at  the  time  of  her  leav- 
ing. Marsh  reported  to  a  responsible  individual  in  the 
store.  Her  absence  was  thus  of  the  Company's  own 
making,  was  taken   with   sensible  precautions  and, 


"Pursuant  to  Marsh's  request  (supra,  p.  7),  Store 
Manager  John  Frommelt  was  advised  of  her  absence  as  soon 
as  he  returned  to  the  store  (Tr.  170,  283). 


14 

surely,  her  attempt  on  return  to  voice  a  protest  over 
Frommelt's  outburst  reasonably  warranted  manage- 
ment's toleration.  As  the  Fourth  Circuit  stated  in 
N.L.R.B.  V.  M  d  B  Headwear  Co.,  349  F.  2d  170, 
174:  "An  employer  cannot  provoke  an  employee  to 
the  point  where  she  commits  ...  an  indiscretion  .  .  . 
and  then  rely  on  this  to  terminate  her  employment. 
.  .  .  The  more  extreme  an  employer's  wrongful  pro- 
vocation the  greater  would  be  the  employee's  justified 
sense  of  indignation  and  the  more  likely  its  excessive 
expression  .  .  .  ."  Accord :  N.L.R.B.  v.  Mrak  Coal  Co., 
322  F.  2d  311  (C.A.  9) ;  N.L.R.B.  v.  A.P.W.  Products 
Co.,  316  F.  2d  899,  904  (C.A.  2) ;  N.L.R.B.  v.  Morri- 
son Cafeteria  Co.,  311  F.  2d  534,  538  (C.A.  8). 

It  is  also  significant  that  the  record  further  shows 
that  no  other  employee  had  ever  been  discharged  for 
the  offense  of  unauthorized  absence  from  work,  if, 
indeed,  the  absence  under  these  circumstances  may 
fairly  be  characterized  as  unauthorized.  See,  e.g., 
N.L.R.B.  V.  Wix  Corp.,  336  F.  2d  824,  826  (C.A.  4). 
Moreover,  other  than  an  incident  involving  theft,  no 
other  employee  had  been  discharged  during  the  period 
of  time  pertinent  to  this  proceeding,  or  for  the  past 
3   years    (Tr.   241-242).    Cf.   Aeronca  Mfg.   Co.  v. 

N.L.R.B.,  supra,  F.  2d  at  ,  66  LRRM  at 

2576.  And  in  these  circumstances,  "[T]he  fact  that 
[Marsh  was]  abruptly  discharged  without  warning 
is  itself  sufficient  to  make  the  alleged  discharge  for 
cause  suspect  .  .  ."  N.L.R.B.  v.  Dant,  207  F.  2d  165, 
168  (C.A.  9).  Further,  as  the  Trial  Examiner  noted 
(R.  28),  the  penalty  of  discharge  for  an  employee  of 


15 

such  long  tenure  because  of  a  20-minute  absence  was 
"much  out  of  proportion  to  her  offense."  This  served 
to  enhance  the  possibility  that  resort  to  the  ultimate 
penalty  of  discharge  would  be  a  potent  reminder  to 
employees  that  management  had  this  power  to  thwart 
the  organizational  effort,  as,  it  is  not  contested,  From- 
melt  had  unlawfully  threatened/' 

In  sum,  the  Company's  action  is  not  explained  on 
the  basis  of  the  evidence  it  offered,  while  the  evidence 
as  a  whole  points  to  a  discharge  action  taken  in  re- 
prisal against  the  employee  who  had  openly  revealed 
herself  as  a  Union  supporter  and  appeared  unshaken 
by  management's  resort  to  unlawful  means  to  dis- 
suade employees  from  union  representation.  The  in- 
ference that  Marsh's  termination  was  motivated  by 
her  union  adherence  gains  strong  support  from  the 
failure  of  the  reason  advanced  by  the  Company  to 
withstand  scrutiny.  See,  N.L.R.B.  v.  Dant,  supra,  207 
F.  2d  at  167.  Accord:  N.L.R.B.  v.  Griggs  Equipment, 
Inc.,  307  F.  2d  275,  278  (C.A.  5).  "Nor  is  the  trier 
of  fact  .  .  .  required  to  be  any  more  naif  than  is  a 
judge.  If  he  finds  that  the  stated  motive  for  a  dis- 
charge is  false,  he  certainly  can  infer  that  there  is 
another  motive.    More  than  that,  he  can  infer  that 


"  See,  e.g.,  N.L.R.B.  v.  McCormick  Longmeadotv  Stone  Co., 
374  F.  2d  81,  82  (C.A.  1)  ;  N.L.R.B.  v.  Superex  D7-ugs,  Inc., 
341  F.  2d  747,  748-749  (C.A.  6)  ;  N.L.R.B.  V.  Eastern  Massa- 
chusetts Street  Raihvay  Co.,  235  F.  2d  700,  708  (C.A.  1),  cert, 
denied,  352  U.S.  951,  for  the  principle  that  excessive  penalties 
for  minor  violations  during  an  organizational  effort  give  sup- 
port to  a  finding  that  the  penalties  were  imposed  because  of 
union  activity. 


16 

the  motive  is  one  that  the  employer  desires  to  conceal 
— an  unlawful  motive — at  least  where,  as  in  this  case, 
the  surrounding  facts  tend  to  reinforce  that  infer- 
ence." Shathick  Demi  Mining  Corp.  v.  N.L.R.B., 
supra,  362  F.  2d  at  470.  The  Board,  we  submit, 
could  draw  that  inference  here,  and  reasonably  con- 
clude that  this  senior  employee  and  advocate  of  union 
representation  was  not  discharged  for  the  reason 
given,  but  to  discourage  membership  in  or  activities 
on  behalf  of  the  Union.  Ae7vnca  Mfg.  Co.  v.  N.L.R.B., 

supra,  F.  2d  at ,  66  LRRM  at  2576.    Cf. 

N.L.R.B.  v.  West  Coast  Casket  Co.,  205  F.  2d  902, 
907  (C.A.  9) ;  N.L.R.B.  v.  Southern  Desk  Co.,  246  F. 
2d  53,  53-54  (C.A.  4) ;  N.L.R.B.  v.  West  Side  Carpet 
Cleaning  Co.,  329  F.  2d  758,  761  (C.A.  6) ;  N.L.R.B. 
V.  Solo  Cup  Co.,  237  F.  2d  521,  524-525  (C.A.  8). 
The  Board's  order,  therefore,  should  be  enforced. 
N.L.R.B.  V.  Globe  Wireless,  Ltd.,  193  F.  2d  748,  752 
(C.A.  9),  enforcing  88  NLRB  1262,  1269. 


17 
CONCLUSION 

For  the  reasons  stated,  it  is  respectfully  submitted 
that  a  decree  should  issue  enforcing  the  Board's  order 
in  full. 


Arnold  Ordman, 

General  Counsel, 

DOMINICK  L,  Manoli, 

Associate  General  Counsel, 

Marcel  Mallet-Prevost, 

Assistant  General  Counsel, 

Glen  M.  Bendixsen, 

Julius  Rosenbaum, 

Attorneys, 

National  La.bor  Relations  Board. 
December  1967. 


Certificate 

The  undersigned  certifies  that  he  has  examined  the 
provisions  of  Rules  18  and  19  of  this  Court  and,  in 
his  opinion,  the  tendered  brief  conforms  to  all  require- 
ments. 


Marcel  Mallet-Prevost, 

Assistant  General  Counsel, 

National  Labor  Relations  Board. 


18 
APPENDIX  A 

The  relevant  provisions  of  the  National  Labor  Rela- 
tions Act,  as  amended  (61  Stat.  136,  73  Stat.  519,  29 
U.S.C.,  Sees.  151,  et  seq.)  are  as  follows: 

Rights  of  Employees 

Sec.  7.  Employees  shall  have  the  right  to  self- 
organization,  to  form,  join,  or  assist  labor  organiza- 
tions, to  bargain  collectively  through  representatives 
of  their  own  choosing,  and  to  engage  in  other  con- 
certed activities  for  the  purpose  of  collective  bargain- 
ing or  other  mutual  aid  or  protection,  and  shall  also 
have  the  right  to  refrain  from  any  or  all  of  such 
activities  except  to  the  extent  that  such  right  may  be 
affected  by  an  agreement  requiring  membership  in  a 
labor  organization  as  a  condition  of  employment  as 
authorized  in  section  8  (a)    (3). 

Unfair  Labor  Practices 

Sec.  8  (a)  It  shall  be  an  unfair  labor  practice  for 
an  employer — 

(1)  to  interfere  with,  restrain,  or  coerce  em- 
ployees in  the  exercise  of  the  rights  guaranteed 

in  section  7; 

*         *         *         * 

(3)  by  discrimination  in  regard  to  hire  or 
tenure  of  employment  or  any  term  or  condition 
of  employment  to  encourage  or  discourage  mem- 
bership in  any  labor  organization:  *  *  * 

Prevention  of  Unfair  Labor  Practices 

*        *        *        * 

[Sec.  10] 

(c)  *  *  *  If  upon  the  preponderance  of  the  testi- 
mony taken  the  Board  shall  be  of  the  opinion  that 


19 

any  person  named  in  the  complaint  has  engaged  in  or 
is  engaging  in  any  such  unfair  labor  practice,  then 
the  Board  shall  state  its  findings  of  fact  and  shall 
issue  and  cause  to  be  served  on  such  person  an  order 
requiring  such  person  to  cease  and  desist  from  such 
unfair  labor  practice,  and  to  take  such  affirmative  ac- 
tion including  reinstatement  of  employees  with  or 
without  back  pay,  as  will  effectuate  the  policies  of 
this  Act:  *  *  *  in  case  the  evidence  is  presented  be- 
fore a  member  of  the  Board,  or  before  an  examiner 
or  examiners  thereof,  such  member,  or  such  examiner 
or  examiners,  as  the  case  may  be,  shall  issue  and 
cause  to  be  served  on  the  parties  to  the  proceeding  a 
proposed  report,  together  with  a  recommended  order, 
which  shall  be  filed  with  the  Board,  and  if  no  excep- 
tions are  filed  within  twenty  days  after  service  there- 
of upon  such  parties,  or  within  such  further  period 
as  the  Board  may  authorize,  such  recommended  order 
shall  become  the  order  of  the  Board  and  become  effec- 
tive as  therein  prescribed. 

*         *         *         * 

(e)  The  Board  shall  have  power  to  petition  any 
court  of  appeals  of  the  United  States,  .  .  .  within  any 
circuit  .  .  .  wherein  the  unfair  labor  practice  in  ques- 
tion occurred  or  wherein  such  person  resides  or  trans- 
acts business,  for  the  enforcement  of  such  order  and 
for  appropriate  temporary  relief  or  restraining  order, 
and  shall  file  in  the  court  the  record  in  the  proceed- 
ings, as  provided  in  section  2112  of  title  28,  United 
States  Code.  Upon  the  filing  of  such  petition,  the 
court  shall  cause  notice  thereof  to  be  served  upon  such 
person,  and  thereupon  shall  have  jurisdiction  of  the 
proceeding  and  of  the  question  determined  therein, 
and  shall  have  power  to  grant  such  temporary  relief 
or  restraining  order  as  it  deems  just  and  proper,  and 


20 

to  make  and  enter  a  decree  enforcing,  modifying,  and 
enforcing  as  so  modified,  or  setting  aside  in  whole  or 
in  part  the  order  of  the  Board.  No  objection  that  has 
not  been  urged  before  the  Board,  its  member,  agent, 
or  agency,  shall  be  considered  by  the  court,  unless 
the  failure  or  neglect  to  urge  such  objection  shall  be 
excused  because  of  extraordinary  circumstances.  The 
findings  of  the  Board  with  respect  to  questions  of 
fact  if  supported  by  substantial  evidence  on  the  rec- 
ord considered  as  a  whole  shall  be  conclusive.  If 
either  party  shall  apply  to  the  court  for  leave  to  ad- 
duce additional  evidence  and  shall  show  to  the  satis- 
faction of  the  court  that  such  additional  evidence  is 
material  and  that  there  were  reasonable  grounds  for 
the  failure  to  adduce  such  evidence  in  the  hearing 
before  the  Board,  it  member,  agent,  or  agency,  the 
court  may  order  such  additional  evidence  to  be  taken 
before  the  Board,  its  member,  agent,  or  agency,  and 
to  be  made  a  part  of  the  record  ....  Upon  the  filing 
of  the  record  with  it  the  jurisdiction  of  the  court 
shall  be  exclusive  and  its  judgment  and  decree  shall 
be  final,  except  that  the  same  shall  be  subject  to  re- 
view by  the  .  .  .  Supreme  Court  of  the  United  States 
upon  writ  of  certiorari  or  certification  as  provided  in 
section  1254  of  title  28. 


21 
APPENDIX  B 

This  appendix  is  prepared  pursuant  to  Rule  18(f) 
of  the  Rules  of  this  Court.  References  are  to  pages 
of  the  original  transcript  of  record. 

GENERAL  COUNSEL'S  EXHIBITS 


Received  in 

No. 

Identified 

Offered 

Evidence 

1(a) -1(f) 

6 

5 

6 

2 

8 

8 

8 

3 

14 

14 

14 

4 

35 

35 

35 

5(a) -5(c) 

149 

148 

149 

6 

298 

298 

298 

7 

434 

434 

434 

RESPONDENT'S  EXHIBITS 

1  256        256        256 

2  299        302        303 


•if    u.  s.  eovmNHEKT  PKiHTiNa  orrict;  I9S7  284232       467 


No.  22,259 


In  The 


United  States  Court  of  Appeals 


For  The  Ninth  Circuit 


National  Labor  Relations  Board, 

Petitioner, 
VS. 
Levinson's  Owl  Rexall  Drugs,  Inc., 

Respondent. 

BRIEF  FOR  THE  RESPONDENT 

On  Petition  for  Enforcement  of  an  Order  of  the 
National  Labor  Relations   Board. 


CORBETT  &  WeLDEN 

By  Laurence  P.  Corbett 
Jacques  R.  Welden 
Edward  G.  Scholtz 


Fit     1^  r\  2821  Telegraph  Avenue 

'  ^  C,  U  Berkeley,  California  94705 

Jam  1  g  iggg  Attorneys  for  Respondent 
"M.  e.  tucK,  CLERK 


INTER-CITV    PRINTINS    COMPANY,    OAKLAND,    CALIFORHIA    94607 


SUBJECT  INDEX 

Page 
Jurisdiction I 

Statement  of  the  Case 1 

Argument 9 

The  Trial  Examiner's  finding  that  the  Company  did  not  dis- 
charge Beverly  Marsh  to  discourage  membership  in  or  activi- 
ties on  behalf  of  the  Union  should  not  have  been  reversed  by 
the  Board  in  the  absence  of  substantial  evidence  showing  the 
incorrectness  of  his  determination 9 

I.  The  evidence  does  not  support  a  finding  that  Beverly 
Marsh  was  discharged  by  John  Frommelt  because  she  was 
a  revealed  Union  adherent 10 

II.  The  evidence  does  not  support  a  finding  that  the  termina- 
tion of  Beverly  Marsh  for  being  absent  without  permis- 
sion was  a  pretext  to  conceal  an  unlawful  motive  for  the 
discharge 15 

III.  The  evidence  relied  upon  by  the  Trial  Examiner  with  re- 
spect to  the  reason  for  the  discharge  based  upon  his  deter- 
mination of  the  credibility  of  witnesses  cannot  be  dis- 
regarded by  the  Board 19 

Conclusion 22 

Certificate 23 

Appendix  A 25 


AUTHORITIES  CITED 

Cases 

Page 

Boeing  Airplane  Co.  v.  N.L.R.B.,  217  F.  2d  369  (C.A.  9) 21 

Farmers  Co-Operative  Co.  v.  N.L.R.B.,  208  F.  2d  296  (C.A.  9) 17 

N.L.R.B.  V.  Atlanta  Coca-Cola  Bottling  Co.,  293  F.  2d  300  (C.A.  5)  14 

N.L.R.B.  V.  Citizen-News  Co.,  134  F,  2d  970,  973  (C.A.  9) 16 

N.L.R.B.  V.  Condenser  Corporation,  128  F.  2d  67  (C.A.  3) 17 

N.L.R.B.  V.  Hamilton  Plastic  Molding  Co.,  312  F.  2d  723  (C.A.  6) ..  19 

N.L.R.B.  V.  Kaiser  Aluminmn  and  Chemical  Corp.,  217  F.  2d  366 

(C.A.  9) 21 

N.L.R.B.  V.  Local  294,  International  Bros,  of  Teamsters,  317  F.  2d 

746  (C.A.  2) 17 

N.L.R.B.  V.  Montgomery  Ward  &  Co.,  157  F.  2d  486  (C.A.  8) 14, 15 

N.L.R.B.  V.  Redwing  Carriers,  Inc.,  284  F.  2d  397  (C.A.  5) 14 

N.L.R.B.  V.  South  Rambler  Co.,  324  F.  2d  447  (C.A.  8) 18 

N.L.R.B.  V.  United  Parcel  Service,  Inc.,  317  F.  2d  912  (C.A.  1) 17 

N.L.R.B.  V.  Universal  Camera  Corp.,  190  F.  2d  429  (C.A.  2) 20 

N.L.R.B.  V.  Wagner  Iron  Works,  220  F.  2d  126  (C.A.  7) 22 

Ore-Ida  Potato  Products,  Inc.  v.  N.L.R.B.,  284  F.  2d  542   (C.A. 

10) 14 

N.L.R.B.  V.  Whitin  Machine  Works,  204  F.  2d  883  (C.A.  1) 11, 17 

Ore-Ida  Potato  Products,  Inc.  v.  N.L.R.B.,  283  F.  2d  542   (C.A. 

9) 14,15 

Osceola  Co.  Co-Operative  Creamery  Association  v.  N.L.R.B.,  251  F. 

2d  62  (C.A.  8) 14 

Radio  Officers'  Union  v.  N.L.R.B.,  347  U.S.  17 16 

Sardis  Luggage  Co.  v.  N.L.R.B.,  234  F.  2d  190  (C.A.  5) 20 

Schwob  Manufacturing  Co.  v.  N.L.R.B.,  297  F.  2d  864  (C.A.  5)....  14 

Universal  Camera  Corp.  v.  N.L.R.B.,  340  U.S.  474 20 


Statutes 
National  Labor  Relations  Act,  as  amended 

Section  8(a)    (1)  1,3,17 

Section  8(a)    (3)  2,16,22 

Section  10(e) 1 


No.  22,259 

In  The 


United  States  Court  of  Appeals 


For  The  Ninth  Circuit 


National  Labor  Relations  Board, 

Petitioner, 
VS. 
Levinson's  Owl  Rexall  Drugs,  Inc., 

Respondent. 

BRIEF  FOR  THE  RESPONDENT 

On  Petition  for  Enforcement  of  an  Order  of  the 
National  Labor  Relations   Board. 


JURISDICTION. 

This  case  is  before  the  Court  upon  the  petition  of 
the  National  Labor  Relations  Board  pursuant  to  Sec- 
tion 10(e)  of  the  National  Labor  Relations  Act,  as 
amended,  for  enforcement  of  its  order  issued  against 
Respondent,  Levinson's  Owl  Rexall  Drugs,  Inc.,  on 
December  6,  1966.  This  Court  has  jurisdiction  of  the 
proceeding.  No  jurisdictional  issue  is  presented. 

STATEMENT  OF  THE  CASE. 

In  the  above-entitled  case,  the  Trial  Examiner 
found  the  Respondent  had  engaged  in  unfair  labor 
practices  within  the  meaning  of  Section  8(a)    (1)  of 


the  National  Labor  Relations  Act  of  1947  as  amended. 
Further,  the  Trial  Examiner  specifically  found  the 
record  did  not  establish  that  Beverly  Marsh  was  dis- 
charged in  violation  of  the  Act.  (R.  29).'  The  Board 
upheld  the  Trial  Examiner's  finding  with  respect  to 
the  8(a)  (1)  violation,  to  which  Respondent  did  not 
take  exception.  But  the  Board,  without  the  advantage 
of  observing  and  hearing  the  witnesses,  reversed  the 
Trial  Examiner  and  found  a  Section  8(a)  (3)  viola- 
tion in  the  discharge  of  Beverly  Marsh.  (R.  59). 
Respondent  contends  that  the  Board  is  in  error  by  so 
reversing  the  Trial  Examiner  and  seeks  to  have  this 
Court  deny  enforcement  of  that  portion  of  the  Board's 
order  which  is  based  upon  violation  of  8(a)  (3).  The 
evidence  upon  v/hich  the  Trial  Examiner's  findings 
are  based  is  summarized  below. 

Respondent  Levinson's  Owl  Rexall  Drugs,  Inc., 
herein  referred  to  as  the  Company,  is  a  small  cor- 
poration which  operates  two  drug  stores  in  Napa, 
California.^  For  several  years  the  Company  has  been 
the  subject  of  organizing  activity  by  the  Retail  Store 
Employees   Union,   Local   373,   Retail   Clerks   Inter- 


1.  References  to  the  pleadings,  decision  and  order  of  the  Board,  the  Trial 
Examiner's  recommended  decision  and  order,  and  other  papers  reproduced  as 
"Volume  I,  Pleadings,"  are  designated  "R."  References  to  portion  of  the  stenographic 
transcript  are  designated  "Tr."  References  designated  "GCX"  and  "RX"  are  to 
exhibits  of  the  General  Counsel  and  respondent,  respectively.  Whenever  in  a  series 
of  references  a  semicolon  appears,  those  preceding  the  semicolon  are  to  the  Trial 
Examiner's  findings;  those  following  are  to  the  supporting  evidence. 

2.  Although  the  Company  operates  two  stores  in  Napa,  only  the  Bel-Air 
Shopping  Center  store,  also  referred  to  in  the  record  as  Store  No.  2,  is  involved 
in  this  proceeding. 


national  Association,  AFL-CIO,  herein  referred  to  as 
the  Union.  It  is  uncontroverted  that  two  previous 
organizational  campaigns  leading  to  elections  had 
taken  place,  one  in  1957-58  and  the  other  in  1960-61. 
(Tr.  191).  In  neither  case  did  the  employees  select 
the  Union  as  their  representative.  In  this  long  history 
of  organizational  activity,  there  is  no  showing  that 
unfair  labor  practice  charges  have  ever  before  been 
filed  against  the  Company. 

In  the  latter  part  of  April,  1965,  it  came  to  the 
attention  of  John  Frommelt,  Manager  of  Store  No.  2, 
that  the  Union  was  again  active,  at  least  with  respect 
to  the  downtown  store.  No.  1.  (Tr.  152).  Believing 
the  stores  to  be  faced  with  yet  another  organizing 
campaign  and  desiring  to  inform  the  employees  of 
the  store's  past  relationship  with  the  Union,  John 
Frommelt  held  individual  interviews  with  several  of 
the  non-supervisory  employees  of  Store  No.  2  (R.  16; 
Tr.  153,  155).  Whether  the  interviews  were  viola- 
tions of  Section  8(a)  (1)  of  the  National  Labor  Rela- 
tions Act,  as  held  by  the  Trial  Examiner,  is  not 
relevant  to  this  proceeding,  since  the  Company  did 
not  file  exceptions  to  the  Trial  Examiner's  finding  on 
that  count.  Although  there  was  conflicting  testimony 
as  to  the  content  of  John  Frommelt's  statements  to 
the  employees  during  the  interviews  (R.  16;  Tr. 
9-11,  90,  155),  there  was  no  allegation  and  no  evidence 
whatsoever  of  any  coercive  interrogation  of  Beverly 


Marsh.  According  to  Mrs.  Marsh  herself,  John  From- 
melt  did  not  make  any  threats.  He  simply  appealed  to 
her  loyalty  in  the  light  of  her  knowledge  that  the  Com- 
pany preferred  not  to  be  organized.  (R.  16;  Tr.  37, 
60). 

Beverly  Marsh  was  working  in  the  camera  depart- 
ment of  the  store  during  April  and  May  of  1965. 
(R.  21 ;  Tr.  33) .  On  or  about  May  4, 1965,  Mrs.  Marsh 
took  the  Union  leaflet  dated  May  1,  1965  to  work. 
(R.  21;  Tr.  470,  GCX  3).  During  the  course  of  the 
day,  she  brought  the  leaflet  to  the  attention  of  Robert 
Frommelt,  the  Assistant  Store  Manager,  by  pointing 
to  the  listed  benefits  and  saying  the  Company  ''didn't 
stack  up  too  well"  (R.  21;  Tr.  45-46,  62).  Bob 
"jokingly"  replied  that  he  had  also  received  a  leaflet. 
(Tr.  61).  Mrs.  Marsh  and  Bob  Frommelt  then  dis- 
cussed the  listed  benefits,  concluding  with  discussion 
of  a  vacation  schedule  of  three  weeks'  vacation  with 
pay  after  five  years  of  employment.  (Tr.  62).  This 
caused  Bob  to  comment:  "I  would  sure  be  happy  to 
get  three  weeks  myself."  (Tr.  391).  According  to 
Beverly  Marsh,  "We  (she  and  Bob)  didn't  have  an 
angry  conversation."  (Tr.  63). 

After  this  conversation  which,  according  to  her, 
was  not  an  angry  one,  Mrs.  Marsh  alleges  that  Bob 
Frommelt's  attitude  toward  her  changed.  Bob  became 
bossy,  (R.  23;  Tr.  49)  and  was  "rarely  there"  (mean- 
ing in  her  area  of  the  camera  department).  (Tr.  49). 


As  for  John,  Mrs.  Marsh  says  he  began  to  give  her 
direct  orders  instead  of  asking  her  if  she  would  do 
something.  (Tr.  51).  (emphasis  supplied)  Mrs.  Mc- 
Donald, a  fellow  employee,  first  stated  that,  after  the 
leaflet  conversation,  Bob  was  not  too  friendly  with 
Mrs.  Marsh  (R.  26;  Tr.  17),  but  that  he  never  got 
sarcastic  or  rough  or  mean.  (Tr.  19).  Later,  Mrs. 
McDonald  said  that  she  thought  initially  this  incident 
of  the  leaflet  was  "just  a  joke"  but  then  she  noticed 
"people  weren't  friendly  with  anybody"  and  this  cool 
atmosphere  involved  all  employees — not  just  Beverly 
Marsh.  (R.  26;  Tr.  26). 

Another  witness,  Mrs.  Baierline,  could  not  recall 
when  Bob  ever  criticized  Mrs.  Marsh's  work,  (R.  26; 
Tr.  115),  and  only  once  could  she  recall  criticism  by 
John.  The  constant  "picking"  on  Mrs.  Marsh  alleged 
by  Mrs.  Baierline  (R.  26;  Tr.  94)  was  eventually 
defined  as  the  assignment  of  more  work  than  Mrs. 
Marsh  could  handle  (R.  26;  Tr.  115),  but  Mrs. 
Baierline  could  not  recall  any  evidence  that  Mrs. 
Marsh  had  not  completed  any  particular  job.  (R.  26; 
Tr.  116). 

Mrs.  Marsh  herself  alleged  that  her  workload  was 
increased  after  the  conversation  with  Bob  about  the 
leaflet  because  John  Frommelt  closed  the  so-called 
"wild  drawer."  (R.  23-24;  Tr.  51).  However,  John 
said  that  by  closing  the  drawer,  efficiency  was  im- 
proved, since  Mrs.  McDonald,  the  clerk  in  charge  of 


6 

the  liquor  counter,  could  devote  her  full  attention  to 
her  department.  The  change  also  improved  the  Com- 
pany's check  on  discrepancies  in  the  cash  count  be- 
tween so-called  "D"  and  "E"  drawers.  (R.  24;  Tr. 
187-188).  Bob  Frommelt  stated  that  the  change 
actually  resulted  in  less  work  for  Mrs.  Marsh,  and 
Bob  McCromick,  Mrs.  Marsh's  immediate  supervisor, 
said  it  relieved  camera  department  personnel  from 
covering  the  liquor  department.  (R.  24;  Tr.  396,  351). 
In  fact,  it  was  Al  Frommelt,  owner  of  the  Company, 
who  ordered  the  change,  (Tr.  395),  and  there  is  not 
even  an  allegation  on  the  record  that  he  was  un- 
friendly to  Mrs.  Marsh. 

The  excise  tax  project  also  was  alleged  to  show  an 
increase  in  Mrs.  Marsh's  work,  despite  the  fact  this 
task  was  assigned  to  all  personnel  in  the  department. 
Larry  Dent  stated  that  he  did  about  twenty-five  per 
cent  of  the  excise  tax  work  and  he  said  that  Bob 
Frommelt,  Bob  McCormick  and  Beverly  Marsh  each 
contributed  to  the  project.  (Tr.  340). 

On  June  25,  1965,  Mrs.  Marsh  prepared  greeting 
cards  for  shipment  to  one  company.  She  divided  them 
into  three  bundles,  according  to  three  specific  holidays. 
She  indicated  by  written  instructions  that  the  pack- 
ages were  to  be  shipped  separately.  The  testimony  of 
John  and  Bob  Frommelt  and  Helen  Duncan  showed, 
and  the  Trial  Examiner  so  found,  that  Mrs.  Marsh 


had  the  authority  and  the  responsibility  to  designate 
how  packages  should  be  shipped.  (R.  25-26;  Tr.  180, 
383,  290-292). 

It  is  uncontroverted  that  shipping  packages  of  over 
twenty  pounds  by  freight  rather  than  by  parcel  post 
is  considerably  less  expensive.  When  John  Frommelt 
noticed  that  three  packages  all  weighing  under  twenty 
pounds — but  of  a  combined  weight  of  substantially 
over  twenty  pounds — were  all  shipped  to  the  same 
company,  he  investigated.  Upon  learning  from  Mr. 
Gaston  that  Mrs.  Marsh  had  given  the  instructions, 
John  Frommelt  angrily  and  publicly  reprimanded 
Mrs.  Marsh.  (R.  21-22;  Tr.  55,  169-170,  323).  This 
apparently  upset  Mrs.  Marsh  and  she  left  the  store 
without  explanation  twenty  to  thirty  minutes  before 
her  meal  break.  She  did  not  inform  anyone  in  author- 
ity but  merely  told  one  of  the  other  girls,  Mrs.  Duncan, 
that  she  was  leaving.  (R.  22;  Tr.  56,  283,  324-325). 

Returning  to  the  store  five  minutes  before  her 
dinner  hour  was  over,  Mrs.  Marsh  sought  out  John 
Frommelt  before  she  reported  to  her  station.  She  con- 
fronted him  in  the  pharmacy  sales  section  of  the  store 
where  she  upbraided  him  for  criticizing  her  publicly. 
(R.  23;  Tr.  58,  182,  308).  This  rebuke  did  not  serve 
to  calm  John  Frommelt  since  he  had  already  been 
informed  that  Mrs.  Marsh  had  left  the  job  without 
permission.  He  asked  her  to  come  to  the  privacy  of  his 


8 

office  and  there  he  demanded  to  know  whether  or  not 
she  had  in  fact  walked  off  the  job.  When  she  admitted 
this  action  and  offered  no  explanation,  John  Frommelt 
terminated  Beverly  Marsh.  A  highly  emotional 
woman,  Mrs.  Marsh  said,  ''That's  O.K.  with  me," 
picked  up  her  time  card,  wrote  "gratis"  for  the  bal- 
ance of  the  day  and  left  the  store.  (Tr.  77). 

The  Board,  after  consideration  of  the  transcript, 
found  that  John  Frommelt  seized  upon  Mrs.  Marsh's 
twenty-minute  absence  as  a  pretext  to  conceal  his 
determination  to  rid  the  Company  of  a  senior  em- 
ployee because  she  revealed  herself  as  a  Union  ad- 
herent. (R.  59).  In  a  carefully  reasoned  analysis, 
after  having  seen  and  heard  the  witnesses  testify 
before  him,  the  Trial  Examiner  found  it  did  not 
appear  plausible  that  the  reason  given  by  John  From- 
melt was  a  pretext  and  that  the  Company  would  wait 
almost  two  months  after  Mrs.  Marsh's  alleged  mani- 
festation of  Union  interest  to  discharge  her,  espe- 
cially at  a  time  when  her  department  was  short- 
handed.  The  Trial  Examiner  further  stated  that  he 
had  no  reason  to  doubt  John  Frommelt  was  genuinely 
angry  over  the  shipping  waste.  If  he  were  looking  for 
a  pretext  to  support  a  discharge,  he  could  have  then 
seized  upon  this  incident.  Instead,  the  discharge  took 
place  after  Mrs.  Marsh  returned  to  work  and  sought 
out  John  Frommelt  to  reproach  him  for  criticizing 
her  in  public.  It  was  not  until  Mrs.  Marsh  had  failed, 


in  the  ensuing  conversation,  to  offer  any  explanation 
for  her  absence  when  given  the  opportunity  to  do  so, 
that  she  was  terminated.  (R.  28). 

ARGUMENT. 

THE  TRIAL  EXAMINER'S  FINDING  THAT  THE  COMPANY 
DID  NOT  DISCHARGE  BEVERLY  MARSH  TO  DISCOURAGE 
MEMBERSHIP  IN  OR  ACTIVITIES  ON  BEHALF  OF  THE 
UNION  SHOULD  NOT  HAVE  BEEN  REVERSED  BY  THE 
BOARD  IN  THE  ABSENCE  OF  SUBSTANTIAL  EVIDENCE 
SHOWING  THE  INCORRECTNESS  OF  HIS  DETERMINATION. 

On  June  25,  1965,  a  highly  emotional  Beverly 
Marsh  confronted  John  Frommelt,  the  young,  hot- 
tempered  son  of  the  store  owner,  and  publicly  re- 
proached him  for  his  outburst  at  her  earlier  in  the 
afternoon  for  the  shipping  mistake.  Later  that  same 
evening,  in  the  privacy  of  his  office,  she  gave  no 
explanation  why  she  had  walked  off  the  job  some 
twenty  minutes  or  more  before  the  end  of  her  shift. 
Consequently,  she  was  terminated  for  being  absent 
from  work  without  permission. 

After  a  reading  of  the  cold  record,  the  National 
Labor  Relations  Board  concluded  that  a  termination 
under  these  circumstances  was  much  out  of  proportion 
to  the  offense  charged  and  could  only  be  explained  as 
a  manifestation  of  hostility  toward  the  only  employee 
who,  according  to  the  Board,  had  disclosed  to  the 
Respondent  her  interest  in  the  benefits  which  the 
Union  claimed  to  offer.  (R.  58).  The  Trial  Examiner, 


10 

who  heard  the  evidence,  who  could  visually  appraise 
the  demeanor  and  credibility  of  the  witnesses  appear- 
ing before  him,  and  who  could  logically  assess  on  the 
spot  the  thrust  of  their  testimony,  did  not  find  the  act 
of  termination  a  pretext  to  conceal  an  unlawful  motive 
for  discharge.  (R.  28). 

In  the  Board's  decision  and  order,  three  errors 
were  committed.  The  relationship  between  Beverly 
Marsh  and  the  Union  and  her  alleged  disclosure  of 
interest  in  the  Union  to  the  Respondent  are  greatly 
exaggerated  by  the  Board  in  terms  of  what  the  record 
actually  shows  and  the  impact  of  the  alleged  dis- 
closure. Furthermore,  the  Board  arrives  at  an  un- 
substantiated conclusion  that,  because  in  its  opinion 
the  stated  cause  for  discharge  was  insufficient,  the 
Company  must  necessarily  have  intended  to  discrimi- 
nate against  Mrs.  Marsh  by  discharge  because  she 
was  a  "revealed  adherent"  of  the  Union.  Finally,  the 
Board  is  in  error  by  disregarding  the  determinations 
of  credibility  of  witnesses  made  by  the  Trial  Exam- 
iner in  deciding  what  the  real  motivation  for  the  dis- 
charge was. 

I. 

THE  EVIDENCE  DOES  NOT  SUPPORT  A  FINDING  THAT 
BEVERLY  MARSH  WAS  DISCHARGED  BY  JOHN  FROMMELT 
BECAUSE  SHE  WAS  A  REVEALED  UNION  ADHERENT. 

If  John  Frommelt  discharged  Beverly  Marsh  be- 
cause she  was  a  Union  adherent,  he  must  be  shown 


11 

to  have  known  of  her  Union  interest  and  activities 
and  to  have  acted  upon  that  knowledge.  NLRB  v. 
Whitin  Machine  Works,  204  F.  2d  883,  884  (C.A.  1). 

Nowhere  in  the  record  has  the  General  Counsel  proved 
that  this  was  the  case. 

Beverly  Marsh  signed  a  Union  pledge  card  on 
April  13,  1965,  but  there  is  no  evidence  in  the  record 
or  allegation  therein  that  John  Frommelt  knew  this 
fact  before  the  trial  date  of  this  proceeding,  February 
8,  1966.  (Tr.  36). 

When  John  Frommelt  met  individually  with  Mrs. 
Marsh  in  the  coffee  shop  of  Store  No.  2,  he  did  not 
infer  or  assume  she  was  a  Union  member  or  inter- 
ested in  the  Union.  Quite  to  the  contrary,  he  treated 
her  as  a  knowledgeable  employee  who  was  aware  of 
Union  activity  occurring  a  few  years  before  and  whose 
continued  loyalty  to  the  Company,  as  distinguished 
from  the  Union,  would  be  appreciated.  (R.  16;  Tr. 
37).  Using  Mrs.  Marsh's  recollection  of  this  meeting 
as  the  uncontroverted  basis  for  conclusions,  there  is 
no  evidence  of  improper  or  coercive  statements  by 
John  Frommelt,  and  no  evidence  Mrs.  Marsh  volun- 
teered any  information  about  the  Union  or  any  con- 
nection she  may  have  had  with  such  an  organization. 

Therefore,  the  episode  involving  the  Union  leaflet 
must  be  the  straw  at  which  the  Board  is  grasping  to 


12 

reveal  Mrs.  Marsh  as  an  aggressive,  militant  adherent 
of  the  Union,  one  whom  the  Company  would  appar- 
ently on  the  basis  of  such  incident  keep  in  mind  for 
some  two  months  thereafter  to  discharge  at  the  first 
opportunity.  According  to  Mrs.  Marsh,  she  brought 
the  leaflet  to  work  on  or  around  May  4,  1965  to 
discuss  the  benefits  with  the  Frommelts.  In  fact,  she 
did  discuss  the  benefits  with  Bob,  at  first  in  a  joking 
manner  and  then  more  seriously,  but  never  in  angry 
conversation.  (Tr.  63).  It  is  significant  that  Beverly 
Marsh's  discussion  was  an  entirely  personal  one  with 
reference  to  her  own  wage  scale,  health  benefits  and 
vacation.  All  that  can  be  drawn  from  the  discussion 
is  that  Mrs.  Marsh  would  personally  have  liked  to 
have  had  certain  improvements  in  benefits,  but  at  no 
time  did  she  refer  to  Union  organization,  her  mem- 
bership or  interest  in  the  Union,  or  use  of  the  Union 
as  a  vehicle  for  obtaining  her  objectives.  (Tr.  47). 
Bob  Frommelt  recalls  concluding  the  discussion  with 
a  wishful  statement  that  he  would  be  happy  to  get 
three  weeks'  vacation  himself.  (Tr.  391).  Although 
the  benefits  outlined  in  the  leaflet  were  subsequently 
discussed  by  the  Frommelts  in  the  interest  of  being 
defensible  in  the  community  with  respect  to  wages  and 
conditions,  Bob  Frommelt  regarded  the  discussion 
with  Mrs.  Marsh  so  lightly  that  he  did  not  even  report 
it  to  his  brother,  John.  (Tr.  392).  Attempts  to  show 
that  the  Frommelt  brothers  became  extremely  cool 
and  heaped  work  on  Mrs.  Marsh  following  the  above- 


13 

described  episode  appear  painfully  contrived  to  the 
extent  that  the  Trial  Examiner  merely  repeats  the 
charges  without  giving  them  weight.  (R.  23,  24). 
References  above  in  the  Statement  of  the  Case  to 
conflicting  testimony  with  respect  to  coolness  toward 
Mrs.  Marsh,  picking  on  her,  eliminating  the  "wild 
drawer,"  and  assigning  excise  tax  work,  demonstrate 
on  their  face  how  unconvincingly  the  allegations  were 
supported  and  why  the  Trial  Examiner  was  justified 
in  giving  them  little  or  no  weight. 

What  does  impress  the  Trial  Examiner  is  the 
lapse  of  time  between  the  incident  of  the  leaflet  on 
May  4,  1965  and  Beverly  Marsh's  discharge  on  June 
25,  1965.  The  most  the  Trial  Examiner  can  draw 
from  the  facts  is  that  Mrs.  Marsh  did  manifest  an 
interest  in  the  level  of  Union  benefits  to  Robert  From- 
melt  on  May  4,  1965,  but  he  is  unable  to  substantiate 
from  the  record  any  causal  connection  between  that 
isolated  incident  and  John  Frommelt's  intemperate 
behavior  toward  Mrs.  Marsh  two  months  later.  There 
is  no  evidence  in  the  record  that  following  May  4, 
1965,  Mrs.  Marsh  engaged  in  any  further  discussion 
of  benefits,  that  the  Union  continued  its  organization 
efforts,  or  that  Mrs.  Marsh  was  identified  with  the 
Union  cause.  To  impute  to  John  Frommelt  knowledge 
of  a  discussion  of  Union  benefits  between  Mrs.  Marsh 
and  his  brother  and  as  a  consequence  thereof  to 
assume  John  Frommelt  regarded  Mrs.  Marsh  as  a 


14 

revealed  Union  adherent  whom  he  would  have  to  find 
a  pretext  to  discharge  does  violence  to  the  burden  of 
proof  which  the  Board  must  sustain  by  substantial 
evidence.  Consequently  the  Board  cannot  support  its 
finding  on  mere  suspicion,  for  it  is  clear  from  case  law 
that  an  allegation  that  the  discharge  of  an  employee 
was  motivated  by  Union  activity  must  be  based  upon 
evidence,  direct  or  circumstantial.  Osceola  Co.  Co-op. 
Cream.  Assn.  v.  NLRB,  251  F.  2d  62,  69  (C.A.  8) ; 
NLRB  V.  Montgomery  Ward  &  Co.,  157  F.  2d  486, 
491  (C.A.  8) ;  Schwob  Manufacturing  Co.  v.  NLRB, 
297  F.  2d  864,  867  (C.A.  5) ;  NLRB  v.  Western  Bank 
&  Office  Supphj  Co.,  283  F.  2d  603,  606  (C.A.  10). 
Nor  does  an  employer's  general  hostility  to  Unions, 
without  other  support,  supply  an  unlawful  motive  to 
a  specific  discharge.  NLRB  v.  Atlanta  Coca-Cola 
Bottling  Company,  293  F.  300,  304  (C.A.  5),  rehear- 
ing denied,  296  F.  2d  896;  Ore-Ida  Potato  Products, 
Inc.  V.  NLRB,  284  F.  2d  542,  545-546  (C.A.  9); 
NLRB  V.  Redwing  Carriers,  Inc.,  284  F.  397,  402 
(C.A.  5). 

In  the  absence  of  proof  that  the  discharge  was 
discriminatorily  motivated,  the  Board  must  find  that 
John  Frommelt  terminated  Beverly  Marsh  for  the 
reason  he  stated. 


15 
II. 

THE  EVIDENCE  DOES  NOT  SUPPORT  A  FINDING  THAT  THE 
TERMINATION  OF  BEVERLY  MARSH  FOR  BEING  ABSENT 
WITHOUT  PERMISSION  WAS  A  PRETEXT  TO  CONCEAL  AN 
UNLAWFUL  MOTIVE  FOR  THE  DISCHARGE. 

The  Trial  Examiner  found  that  John  Frommelt 
discharged  Beverly  Marsh  because  she  was  absent 
without  permission  and  without  explanation.  (R.  28). 
To  reverse  this  finding,  the  Board  must  prove  with 
substantial  evidence  that  Mrs.  Marsh  was  terminated 
for  discriminatory  reasons  and  not  for  the  reason 
given.  And  the  burden  of  proving  an  improper  motive 
for  discharge  is  upon  the  Board.  NLRB  v.  Mont- 
gomery Ward  &  Co.,  157  F.  2d  486,  491  (C.A.  8) ; 
Ore-Ida  Potato  Products,  Inc.  v.  NLRB,  284  F.  2d 
542,  545-546  (C.A.  9). 

According  to  the  Trial  Examiner,  he  took  into 
account  the  lapse  of  time  between  the  leaflet  discus- 
sion and  the  events  of  June  25,  1965.  (R.  28).  On 
that  date,  he  found  that  John  Frommelt  was  genuinely 
angry  when  he  scolded  Mrs.  Marsh  for  her  shipping 
error,  but  significantly  John  Frommelt  did  not  termi- 
nate her  on  the  spot.  Had  he  been  lying  in  wait  for  a 
pretext  to  discharge  Mrs.  Marsh,  this  would  have  been 
his  opportunity.  Actually,  it  was  Mrs.  Marsh  who 
later  provoked  her  termination  by  seeking  out  John 
Frommelt  to  reproach  him  for  the  manner  in  which 
he  publicly  criticized  her.  When  asked  for  an  explana- 


16 

tion  of  her  absence  from  the  store  following  this 
incident,  she  was  silent.  Whether  the  sanction  of  dis- 
charge under  these  circumstances  was  too  severe  for 
the  offense  is  not  for  the  Board  to  decide  unless 
discrimination  is  involved. 

The  Board  must  prove  that  the  Company  violated 
Section  8(a)  (3)  of  the  Act  by  discriminatory  dis- 
charge having  as  its  object  encouraging  or  discourag- 
ing membership  in  a  labor  organization.  In  construing 
this  Section  of  the  Act,  the  United  States  Supreme 
Court  said : 

"The  language  of  Section  8(a)  (3)  is  not 
ambiguous.  The  unfair  practice  is  for  an  em- 
ployer to  encourage  or  discourage  membership 
by  means  of  discrimination.  This  section  does 
not  outlaw  the  encouragement  or  discourage- 
ment of  membership  in  labor  organizations; 
only  such  as  is  accomplished  by  discrimination 
is  prohibited.  Nor  does  this  section  outlaw  dis- 
crimination in  employment  as  such;  only  such 
discrimination  as  encourages  or  discourages 
membership  in  a  labor  organization  is  pro- 
scribed." {Radio  Oijicers'  Union  v.  NLRB,  347 
U.S.  17,  42-43) 

Cases  arising  under  Section  8(a)  (3)  are  clear 
that  the  discharge  of  an  employee,  with  or  without 
reason,  is  not  substantial  evidence  of  intent  to  affect 
labor  unions  or  to  affect  the  rights  of  employees  under 
the  Act.  NLRB  v.  Citizen-News  Co.,  134  F.  2d  970, 


17 

973  (C.A.  9).  Indeed  an  employer  may  hire  and  dis- 
charge at  will  so  long  as  his  action  is  not  based  on 
opposition  to  union  activities.  Farmers  Co-Operative 
Co.  V.  NLRB,  208  F.  2d  296,  303-304  (C.A.  9); 
NLRB  V.  United  Parcel  Service,  Inc.,  317  F.  2d  912, 
914  (C.A.  1);  NLRB  v.  Local  29 If,  International 
Brotherhood  of  Teamsters,  Etc.,  317  F.  2d  746,  749 
(C.A.  2). 

As  to  the  sufficiency  of  the  cause  for  discharge, 
"The  Board  does  not  dispute  the  contention  that  an 
employee  may  be  discharged  by  the  employer  for  a 
good  reason,  a  poor  reason,  or  no  reason  at  all,  so 
long  as  the  terms  of  the  statute  are  not  violated." 
NLRB  V.  Condenser  Corporation,  128  F.  2d  67,  75 
(C.A.  3). 

Thus,  if  John  Frommelt  discharged  Beverly  Marsh 
for  a  trivial  occurrence  in  the  heat  of  anger,  it  is  not 
a  discriminatory  discharge  unless  it  is  proved  (not 
assumed)  that  the  employer  knew  the  employee  was 
engaged  in  protected  activity  and  actually  effected 
the  discharge  for  that  reason.  NLRB  v.  Whitin  Ma- 
chhie  Works,  204  F.  2d  883,  884  (C.A.  1). 

Reference  is  made  to  conduct  of  the  Company, 
more  than  two  months  before  the  discharge,  which  the 
Trial  Examiner  found  was  a  violation  of  8(a)  (1). 
No  cross  exceptions  to  these  findings  were  entered 
because  the  manner  in  which  the  interviews  were 


18 

conducted  in  itself  may  well  have  run  afoul  of  the 
Act,  and  disputing  what  was  said  in  the  individual 
interrogations  would  have  been  a  useless  exercise. 
However,  violation  of  one  section  of  the  Act  does  not 
in  any  way  prove  violation  of  another  section.  A  case 
in  point,  although  much  more  extreme,  is  NLRB  v. 
South  Rambler  Co.,  324  F.  2d  447,  449-450  (C.A.  8). 
There  an  employer  violated  the  Act  by  interrogating 
his  employees  as  to  their  Union  activities,  threatening 
that  his  automobile  agency  would  be  closed  down  and 
discharging  an  employee  for  initiating  the  drive  to 
unionize  the  agency.  The  Court  held  that  the  Board 
must  have  substantial  supporting  evidence  that  the 
discharge  of  another  employee  was  also  illegal  where 
the  sole  Union  activity  of  the  other  employee  was 
signing  a  Union  pledge  card.  Consequently  the  Board's 
order  requiring  reinstatement  of  the  employees  could 
not  be  enforced  because  the  inference  drawn  by  the 
Board  to  the  effect  that  the  employee's  discharge  was 
motivated  by  his  Union  activity  was  based  upon  mere 
suspicion. 

In  the  instant  case,  the  Board's  finding  that  be- 
cause the  penalty  of  discharge  was  much  out  of  pro- 
portion to  Mrs.  Marsh's  offense  and  could  only  be 
explained  by  reason  of  her  manifested  interest  in 
Union  benefits  is  mere  conjecture  based  on  suspicion. 
No  evidence,  direct  or  circumstantial,  supports  such  a 
conclusion. 


19 
III. 

THE  EVIDENCE  RELIED  UPON  BY  THE  TRIAL  EXAMINER 
WITH  RESPECT  TO  THE  REASON  FOR  THE  DISCHARGE 
BASED  UPON  HIS  DETERMINATION  OF  THE  CREDIBILITY 
OF  WITNESSES  CANNOT  BE  DISREGARDED  BY  THE  BOARD. 

The  question  of  what  was  in  the  mind  of  John 
Frommelt  at  the  time  he  terminated  Beverly  Marsh 
is  crucial  to  this  case.  Only  through  the  examination 
of  witnesses  including  John  himself  and  the  surround- 
ing circumstances  can  the  question  of  motivation  be 
determined.  And  where  there  is  a  conflict  of  testimony, 
someone  must  resolve  the  matter  of  who  is  to  be 
believed,  preferably  someone  who  can  observe,  hear, 
appraise  and  evaluate  firsthand  those  who  testify. 

Courts  of  law  have  established  the  general  rule 
that  the  jury  or  trial  judge  sitting  without  a  jury 
are  the  exclusive  judges  of  the  credibility  of  witnesses 
and  the  weight  of  the  evidence.  It  is  respectfully  sub- 
mitted that  the  general  rule  in  Board  practice  is  the 
same  and  that  the  Trial  Examiner  sits  as  the  exclusive 
judge  of  the  matter  of  credibility.  The  duty  to  pass 
upon  the  weight  of  the  evidence  and  to  determine  the 
credibility  of  witnesses  rests  upon  the  Trial  Examiner 
and  when  disagreement  arises  between  the  Board  and 
the  Examiner,  the  reviewing  Court  may  not  disregard 
the  superior  advantages  enjoyed  by  the  Trial  Exam- 
iner for  determining  the  witnesses'  credibility.  NLRB 
V.  Hamilton  Plastic  Molding  Co.,  312  F.  2d  723,  727 


20 

(C.A.  6).  Where  the  Trial  Examiner  finds  the  testi- 
mony of  a  witnesses  truthful  and  there  is  nothing  to 
render  the  testimony  improbable  or  incredible,  the 
finding  of  the  Trial  Examiner  should  not  be  disre- 
garded by  the  Board.  In  fact,  contradictory  findings 
of  the  Board  will  be  set  aside  on  judicial  review. 
NLRB  V.  Universal  Camera  Corp.,  190  F.  2d  429,  431 
(C.A.  2).  Where  conflicts  arise  in  unfair  labor  prac- 
tice decisions,  the  judgment  of  the  Trial  Examiner  as 
to  which  witnesses  are  telling  the  truth  is  rarely 
subject  to  reversal.  Sardis  Luggage  Co.  v.  NLRB,  234 
F.  2d  190,  194  (C.A.  5).  As  the  United  States  Su- 
preme Court  said  in  Universal  Camera  Corp.  v. 
NLRB,  340  U.S.  474,  495:  ''Nothing  in  the  statute 
suggests  the  Labor  Board  should  not  be  influenced  by 
the  Examiner's  opportunity  to  observe  the  witnesses 
he  hears  and  sees  and  the  Board  does  not." 

The  critical  determination  of  credibility  which  the 
Trial  Examiner  made  in  the  instant  case  is  his  accept- 
ance of  John  Frommelt's  statement  that  unauthorized 
absence  was  the  actual  reason  for  the  discharge  of  Bev- 
erly Marsh.  (R.  28).  In  support  of  this  determination, 
he  gives  no  credence  to  testimony,  offered  to  prove  other 
motivation  for  the  discharge,  that  the  Frommelt 
brothers  turned  unfriendly  to  Mrs.  Marsh  after  the 
leaflet  incident,  constantly  picked  on  her,  loaded  her 
with  work  and  went  out  of  their  way  to  increase  the 
burden  of  her  work.  (R.  26,  27).  What  he  finds  is  a 


21 

period  between  May  4,  1965  and  June  25,  1965  in 
which  nothing  bearing  on  the  discharge  of  Beverly 
Marsh  took  place.  On  the  basis  of  live  testimony  which 
he  has  seen  and  heard,  with  an  opportunity  to  observe 
and  question  the  witnesses,  he  warns  against  reaching 
beyond  the  evidence  for  opinions  and  conclusions 
which  cannot  be  supported.  (R.  27). 

Where  Board  findings  have  conflicted  with  those 
of  the  Trial  Examiner,  the  reviewing  Court  has  set 
them  aside  where  the  Board  could  not  make  such 
determinations  without  discrediting  a  witness  who 
was  credited  by  the  Trial  Examiner.  Boeing  Airplane 
Co.  V.  NLRB,  217  F.  2d  369,  375-376  (C.A.  9) ;  NLRB 
V.  Kaiser  Aluminum  &  Chemical  Corp.,  217  F.  2d  366, 
369  (C.A.  9).  Short  of  a  showing  by  substantial  evi- 
dence that  the  Trial  Examiner  was  incorrect,  the 
Board  cannot  reverse  his  finding,  based  upon  a  deter- 
mination of  credibility  of  testimony,  that  John  From- 
melt  was  in  a  genuine  rage  and  discharged  Beverly 
Marsh  for  the  reason  he  stated. 

In  summary,  John  Frommelt  was  found  by  the 
Trial  Examiner,  the  trier  of  fact,  to  have  discharged 
Beverly  Marsh  for  being  absent  without  permission. 
That  John  did  so  in  a  fit  of  anger,  for  a  reason  which 
may  not  have  called  for  such  drastic  action,  and  that 
she  did  not  offer  explanation  and  seek  reconsideration, 
are    matters    beyond    the    purview    of    the    Board's 


22 

authority  to  consider.  In  the  absence  of  proof  of 
unlawful  motive,  the  Board  may  not  substitute  its 
judgment  as  to  the  sufficiency  of  the  cause  for  dis- 
charge for  that  of  the  employer.  NLRB  v.  Wagner 
Iron  Works,  220  F.  2d  126,  133  (C.A.  7). 

CONCLUSION. 

For  the  reasons  herein  stated,  it  is  respectfully 
submitted  that  the  petition  for  enforcement  of  that 
portion  of  the  Board's  decision  and  order  which  finds 
the  Respondent  has  violated  Section  8(a)  (3)  of  the 
Act  and  orders  the  reinstatement  of  Beverly  Marsh 
should  be  denied. 

Dated:  January  16,  1968,  at  Berkeley,  California. 

Respectfully  submitted, 

CORBETT  &  WELDEN 

By  Laurence  P.  Corbett 
Jacques  R.  Welden 
Edward  G.  Scholtz 

Attorneys  for  Respondent 


23 
CERTIFICATE. 

The  undersigned  certifies  that  he  has  examined 
the  provision  of  Rules  18,  19  and  39  of  this  Court 
and,  in  his  opinion,  the  tendered  brief  conforms  to  all 
requirements. 

CORBETT  &  WELDEN 

Laurence  P.  Corbett 
Attorneys  for  Respondent 


APPENDIX 


25 
APPENDIX  A 

This  appendix  is  prepared  pursuant  to  Rule 
18(f)  of  the  Rules  of  this  Court,  References  are  to 
pages  of  the  original  transcript  of  record. 

GENERAL  COUNSEL'S  EXHIBITS 


No. 
1(a) -1(f) 
2 

Identified 
6 
8 

Offered 
5 
8 

Received  in 
Evidence 
6 
8 

3 

14 

14 

14 

4 

35 

35 

35 

5(a) -5(c) 
6 

149 

298 

148 
298 

149 
298 

7 

434 

434 

434 

RESPONDENT'S  EXHIBITS 

1 

256 

256 

256 

2 

299 

302 

303 

IN  THE 


United  States  Court  of  Appeals 

FOR  THE  NINTH  CIRCUIT 


No.  22260 


RICHARD  WALTER  BURTON, 
Appellant, 

vs. 

UNITED  STATES  OF  AMERICA, 
Appellee. 


APPELLANT'S  OPENING  BRIEF 


FILED 

J.  B.  TiETZ 

FEB  1  3  1968  ^^^  Douglas  Building 

Los  Angeles,  California  90012 
:WM.  B.  LUCK^  CLERK  Attorney  for  Appellant 


E.  L.  Menrrnhall.  Inc.,  926  Cherry  Street,  Kansas  City,  Mo.  6410«,  HArrisnn  1-3nsn 


INDEX 

Jurisdiction 1 

Statement  of  the  Case 2 

Facts  - 2 

Question  Presented  and  How  Raised 4 

Specification  of  Error  4 

Summary  of  Argument  5 

Argument — The  Order  to  Report  Was  Invalid  and  No 

Conviction  May  Be  Based  on  It  5 

Conclusion  16 

Certification  - 16 

Appendix  17 

Table  of  Cases 

Ashauer  v.  U.  S.,  9  Cir.,  1954,  217  F.2d  788  11 

Dickinson  v.  United  States,  346  U.S.  389  (1953)  10 

Eagles  v.  Samuels,  67  S.Ct.  313  (1946)  15,  16 

Ex  Parte  Asit  Ranjan  Ghosh,  S.D.  Calif.,  1944,  58  F. 

Supp.   851    13 

Ex  Parte  Barnal,  1951,  S.D.  Calif.,  101  F.  Supp.  348  ....  11 

Glover  v.  U.  S.  A.,  8th  Cir.,  1961,  286  F.2d  84 14 

Levy  V.  Cain,  2  Cir.,  1945,  145  F.2d  339  13 

Mang  v.  United  States,  9  Cir.,  1964,  339  F.2d  369  10 

Talcott  V.  Reed,  9  Cir.,  1954,  217  F.2d  363  11 

Tietz  V.  Gen.  Abbott,  1946,  N.D.  Calif.,  66  F.  Supp.  765  11 

Tyrrell  v.  U.  S.,  9  Cir.,  1952,  200  F.2d  8 15 

U.  S.  A.  V.  Avery,  No.  27550(2),  E.D.  Mo.,  Nov.  27,  1953  12 


n  Index 

Regulations,  Rules  and  Statutes 

32  C.F.R.  §§1660.1  et  seq -.       6 

Rule  37  (A)    (1)  and  (2),  Federal  Rules  of  Criminal 
Procedure  2 

Title  18,  United  States  Code,  Section  3231 2 

Title  50,  United  States  Code  App.,  Section  462  1 

UMT  &  S  Act  of  1951,  as  amended,  §6(j),  50  USCA 
App.    §456(j)    6 


IN  THE 

United  States  Court  of  Appeals 

FOR  THE  NINTH  CIRCUIT 


No.  22260 


RICHARD  WALTER  BURTON, 
Appellant, 

vs. 

UNITED  STATES  OF  AMERICA, 
Appellee. 


APPELLANT'S  OPENING  BRIEF 


JURISDICTION 


This  is  an  appeal  from  a  judgment  rendered  by  the 
United  States  District  Court  for  the  Central  District  of 
California. 

The  appellant  was  sentenced  to  the  custody  of  the 
Attorney  General  for  a  period  of  three  years  after  a  one 
count  conviction  for  violation  of  Title  50,  United  States  Code 
App.,  Section  462   (knowingly  fail  and  refuse  to  perform 


work  assignment,  as  ordered),  Universal  Military  Training 
and  Service  Act  [Tr.  24].^ 

Title  18,  United  States  Code,  Section  3231,  conferred 
jurisdiction  in  the  District  Court  over  the  prosecution  of  this 
case.  The  United  States  Court  of  Appeals  for  the  Ninth 
Circuit  has  jurisdiction  of  this  appeal  under  Rule  37  (A) 
(1)  and  (2)  of  the  Federal  Rules  of  Criminal  Procedure. 
Notice  of  Appeal  was  filed  in  the  time  and  manner  required 
by  law  [Tr.  25]. 

STATEMENT  OF  THE  CASE 

The  indictment  charged  appellant  with  a  violation  of 
the  Universal  Military  Training  and  Service  Act  for  refus- 
ing to  perform  a  work  assignment,  as  ordered  [Tr.  2]. 

Appellant  pleaded  "not  guilty"  and  was  tried  by  the 
Honorable  W.  J.  Ferguson,  District  Judge,  jury  trial  hav- 
ing been  waived.  Appellant  was  found  guilty  and  sentenced 
to  imprisonment  for  a  period  of  three  years  [Tr.  24]. 

A  written  motion  for  judgment  of  acquittal  was  filed 
during  the  trial  [Tr.  20]. 

FACTS 

The  facts  are  found  in  two  places: 

(1)  The  complete  Selective  Service  System  file   (the 
government's  exhibit)  and 

(2)  The  oral  testimony,  and  defendant's  exhibits  (two 
photos). 


1.     Tr.  refers  to  the  Transcript  of  Record. 


The  essential  parts  of  the  written  evidence  shows: 

On  December  20,  1964,  appellant  filed  his  Classifica- 
tion Questionnaire  (SSS  Form  No.  100)  and  answered  all 
applicable  portions.  [Ex.*  4-12]. 

On  October  21,  1965  he  filed  his  Special  Form  for  Con- 
scientious Objection  (SSS  Form  No.  150).  [Ex.  18-23]. 

Although  he  was  thereafter  initially  classified  in  Class 
I-A  he  was  given  the  Class  I-O  classification  he  desired,  at 
the  time  he  met  with  the  local  board.  [Ex.  11]. 

On  May  19,  1966,  he  was  mailed  the  form  (SSS  Form 
No.  152 )  that  asks  registrants  so  classified  to  nominate  three 
types  of  civilian  work  that  contribute  to  the  national  health, 
safety  or  interest  that  they  feel  best  qualified  to  do.  [Ex. 
44]. 

He  timely  replied  by  filling  in  "SERIES  II— APPLICA- 
TION FOR  APPROVED  EMPLOYMENT— If  you  have  ap- 
plied to  an  approved  employer  for  civilian  work  con- 
tributing to  the  national  health,  safety,  or  interest,  and  he 
has  accepted  your  application,  indicate"  as  follows: 

"Name  of  Employer — City  of  Los  Angeles,  Recreation 
Parks  Dept.  (Civil  Service) 

Address    of    Employer — Griffith    Park    zoo,        L.    A. 
(Number    &    Street       (City) 

California 
(State) 

Type  of  Employment — Animal  Keeper 


*Ex.  refers  to  the  government's  exhibit,  the  complete  Selec- 
tive Service  System  file  of  the  appellant. 


Remarks — As  a  civil  service  employee,  I  have  a  six 
month  probation  period  to  go  through  two  of  which 
are  finished. 

Richard  W.  Burton 

(Signature  of  Registrant) " 
[Ex.  44] 

The  local  board's  only  reaction  was  to  send  the  file 
to  State  Headquarters,  asking,  by  its  routine  letter,  for  three 
types  of  work  to  submit  to  the  registrant  [Ex,  49]. 

Therefore,  despite  the  many  explanations  by  appellant 
of  the  valuable  nature  of  his  work,  he  was  ordered  to  work 
in  the  Los  Angeles  County  General  Hospital  and  he  refused. 
Prosecution  followed. 

At  the  trial  the  implicit  suitability  of  his  work  choice 
was  explicitly  shown.  This  will  be  detailed  in  Argument, 
below. 

QUESTION  PRESENTED  AND  HOW  RAISED 

I 

Was  the  rejection  of  appellant's  choice  of  work  arbi- 
trary, unfair,  and  a  denial  of  due  process?  This  question 
was  raised  by  the  Motion  of  Judgment  of  Acquittal  (CT  20- 
21).* 

SPECIFICATION  OF  ERROR 

I 

The  district  court  erred  in  failing  to  grant  the  Motion 
for  Judgment  of  Acquittal. 


^CT  refers  to  the  Clerk's  Transcript  of  Record. 


SUMMARY  OF  ARGUMENT 

I 

The  Order  to  Report  Was  Invalid  and  No  Conviction 
May  Be  Based  On  It,  for  each  of  the  following  reasons: 

The  local  board  deprived  defendant  of  his  elected  civil 
work  choice,  contrary  to  law. 

The  order  was  based  on  an  illegal  abdication  of  its  duty 
and  responsibility  by  the  local  board,  its  order  being  an  act 
based  on  a  direction  that  usurped  the  authority  of  the  local 
board  and  illegally  controlled  it. 

The  regulations,  as  interpreted  and  applied,  conflict 
with  the  Act. 

The  Act,  as  construed  and  applied  by  the  regulations, 
the  local  board  and  the  State  Director  is  unconstitutional 
because  it  deprives  the  defendant  of  due  process  of  law 
contrary  to  the  Fifth  Amendment  to  the  United  States  Con- 
stitution. 

ARGUMENT 

The  Order  to  Report  Was  Invalid  and  No  Conviction 
May  Be  Based  on  It. 

It  is  clear  that  this  appellant  wanted  to  do  civilian  work 
contributing  to  the  national  interest,  at  all  times. 

It  is  also  clear  that  he  actually  was  in  such  work. 
Further,  that  all  work  done  by  him  at  all  times  thereafter, 
and  currently,  is  work  that  he  believed  should  be  consid- 
ered a  contribution  to  the  national  interest,  as  distinguished 
from  essentially  money-making  work. 


6 

The  questions  here  are — 

(1)  Since  the  law  gives  the  I-O  registrant  the 
option  to  initiate  a  request  for  assignment  to  three 
work  choices  of  his  selection  must  he  choose  only  from 
those  on  an  "approved"  list,  moreover  an  inflexible  list 
compiled  by  the  State  Director? 

(2)  After  the  registrant  responds  to  an  invitation 
by  his  local  board  to  initiate  such  a  request  may  his 
choices  be  rejected  with  no  more  explanation  than 
"it  is  not  on  the  State  Director's  list"? 

The  statute*  in  essential  part  reads: 

"(j)  Conscientious  objectors  .  .  .  shall  ...  be 
ordered  ...  to  perform  .  .  .  such  civilian  work  con- 
tributing to  the  maintenance  of  the  national  health, 
safety,  or  interest  as  the  local  hoard  may  deem  ap- 
propriate and  any  such  person  who  knowingly  fails 
or  neglects  to  obey  any  such  order  from  his  local  board 
shall  be  deemed,  for  the  purposes  of  section  12  of  this 
title,  to  have  knowingly  failed  or  neglected  to  perform 
a  duty  required  of  him  under  this  title."  (Emphasis 
supplied) 

The  applicable  regulations  (32  C.F.R.  §§  1660.1  et  seq.) 
in  essential  parts  read: 

"1660.1  Definition  of  Appropriate  Civilian  Work. —  (a) 
The  types  of  employment  which  may  be  considered 
under  the  provisions  of  section  6  (j)  of  title  I  of  the 
Universal  Military  Training  and  Service  Act,  as 
amended,  to  be  civilian  work  contributing  to  the  main- 
tenance of  the  national  health,  safety,  or  interest,  and 
appropriate  to  be  performed  in  lieu  of  induction  into 


*UMT  &  S  Act  of  1951,  as  amended,  §6(j),  50  USCA  App. 
§456(j)- 


the  armed  forces  by  registrants  who  have  been  classi- 
fied in  Class  I-O  shall  be  limited  to  the  following: 

(1)  Employment  by  the  United  States  Government,  or 
by  a  State,  Territory  or  possession  of  the  United 
States  or  by  a  political  subdivision  thereof,  or  by 
the  District  of  Columbia. 

*     *     * 

(b)  Except  as  provided  in  subparagraph  (2)  of  para- 
graph (a)  of  this  section,  work  in  private  employment 
shall  not  be  considered  to  be  appropriate  civilian  work 
to  be  performed  in  lieu  of  induction  into  the  armed 
forces  by  registrants  who  have  been  classified  in  Class 
I-O." 

Nowhere  is  there  a  specification  that  this  work  must  be 
approved  by  the  State  Director  or  that  he  is  to  have  an 
"approved"  list.  Congress  and  the  President  have  made 
their  intentions  clear. 

Appellant,  by  his  own  evidence,  and  by  that  of  several 
zoo  officials  showed  the  nature  of  his  work  and  of  its  value 
to  the  national  interest. 

An  analysis  of  this  evidence  shows: 

1.  The  testimony  of  Charles  J.  Sedgewick:  "A.  I  am  a 
Doctor  of  Veterinary  Medicine.  I  am  the  clinician  for  the 
Los  Angeles  Zoo  animals."  [RT  27].*  His  work  dealt  with 
using  macaque  blood  for  human  transfusions  [RT  28]  in 
connection  with  the  Children's  Hospital  [RT  29].  "Mr. 
Burton  is  a  highly  qualified  primate  animal  keeper  and  he 
makes  it  possible  for  me  to  have  healthy  animals  so  that 
this  program  could  be  taken  care  of"  [RT  29]  and  "it 
requires  great  skills  and  certain  innate  capabilities,  and 


^RT  refers  to  the  Reporter's  Transcript. 


8 

persons  with  Mr.  Burton's  background  and  capabilities  are 
rather  rare.  We  have  a  few  working  at  the  zoo  in  addition 
to  Mr.  Burton,  but  his  skills  are  very  worthwhile  and  de- 
sirable." [RT  30]. 

He  further  testified: 

"There  is  another  research  activity  that  we  just  re- 
cently received  which  I  understand  is  some  federal 
grant  money  involved,  anesthesia  in  all  classes  of  ani- 
mals. 

Q.  That  is  in  connection  with  the  pictures  that 
we  exhibited — 

A.    Yes. 

Q.    —A  and  B? 

A.    Yes. 

Q.  And  is  the  defendant,  Mr.  Burton,  a  part  of 
that  work? 

A.  Yes.  It  is  very  necessary  to  have  an  experi- 
enced man,  animal  handler,  because  an  animal,  a  very 
excited  animal  or  an  animal  that  is  unduly  stressed 
prior  to  innoculation  will  not  give  you  the  proper  re- 
sponse. It  is  very  important  that  the  animals  have  the 
appropriate  handler."  [RT  33-34]. 

2.    The  testimony  of  Edward  Alonso,  Principal  Keeper: 

".  .  .  he  is  an  excellent  employee.   He  handles  himself 
quite  well  with  the  public."  [RT  41]. 


'It  is  difficult  really  to  find  anyone  that  really  is  seri- 
ous about  one  particular  type  of  animals.  Most  of  the 
people  get  a  little  bit  tired  of  what  they  are  doing 
and  would  prefer  to  transfer  from  one  place  to  an- 
other. It  is  difficult  to  find  a  man  that  is  extremely 
interested  in  one  particular  area.  And  not  that  this  is 
just  his  sole — 


Q.  Do  you  mean  that  he  is  interested  extremely 
in  what  he  is  doing  now? 

A.  Yes.  In  animals  generally,  I  am  sure,  but  par- 
ticularly in  primates.  He  indicated  this  to  me. 

As  an  example,  I  tried  to  encourage  him  to  take 
the  last  senior  exam,  due  to  the  fact  that  he  is  not  only 
qualified  but  he  was  also  eligible  due  to  the  fact  that 
he  has  some  college  experience. 

And  he  wouldn't  take  it,  the  primary  reason  I  think 
was  because  he  indicated  he  would  prefer  to  stay  where 
he  is.  The  promotion  would  mean  that  he  would  have 
to  move  to  other  areas,  move  over  to  another  string 

So  this  indicates  to  me  that  he  wants  to  stay  in 
the  the  area  he  is  in,  which  is  mainly  dealing  with 
primates.   Some  of  the  others  are  Asiatic  and  African 
mammals  but  primarily  primates."  [RT  43]. 
*     *     * 

"I  have  examined  the  records — I  do  go  by  them  daily. 
Richard  on  his  own  has  taken  a  very  active  part  in 
this  and  active  to  the  extent  that  he  has  brought  out 
things  that — at  least  pointed  out  things  to  myself  and 
to  his  direct  superior,  things  that  unfortunately  neither 
he  nor  I  were  familiar  with.  His  records  are  quite 
extensive,  not  only  extensive  but  extremely  good.  I 
think  they  will  be  of  great  benefit  to  the  zoo  some  day, 
and  are  at  this  present  time."  [RT  45]. 

4.  Defendant  testified  he  had  examined  the  "approved 
lists"  of  the  56  (not  1956,  as  the  reporter's  transcript  has  it) 
State  Directors  and  that  some  of  them  listed  work  with 
animals  [Rep.  Tr.  17]. 

On  cross-examination  it  appeared  (by  arithmetic)  that 
except  for  school  and  part-time  furniture  moving  that  all 
of  his  adult  life  was  in  work  with  animals  [Rep.  Tr.  20]. 


10 

The  above  oral  evidence  from  the  four  witnesses  is 
what  distinguishes  this  case  from  Mang  v.  United  States,  9 
Cir.,  1964,  339  F.2d  369.  In  Mang  the  appellant  delayed  em- 
ployment, although  initially  starting  in  satisfactory  civilian 
work,  "over  sixteen  months  after  he  had  quit"  [370]  and 
M^ng  did  not  present  explicit  evidence  for  the  record  that 
his  work  [with  the  Quakers]  met  the  statutory  require- 
ments. Appellant  Burton  actually  was  established  (as  a 
probationer)  in  work,  civilian  work  that  met  the  statutory- 
requirements. 

The  Act  and  the  regulations  place  the  responsibility 
for  work  selection  on  the  local  board.  This  responsibility 
must  be  met  reasonably  and  fairly. 

The  local  board  may  not  arbitrarily  reject  the  regis- 
trant's work  choices,  it  must  give  a  rational  reason  for  its 
conduct,  it  must  "build  a  record."  Dickinson  v.  United 
States,  346  U.S.  389  (1953).  [74  S.  Ct.  at  159]. 

The  local  board  may  seek  information  or  advice  from 
any  source,  and  information  or  advice  may  be  given  to  it 
by  anyone. 

The  record  however,  shows  an  abdication  of  its  pre- 
rogative and  a  shirking  of  its  plain  duty  by  the  local  board; 
also,  and  even  less  excusable,  a  usurpation  of  prerogative 
by  the  State  Director. 

"Outside  influence"  may  be  valuable,  it  may  be  harm- 
less, or  it  may  be  considered  binding.  We  contend  this  was 
so  in  this  instance.  "Binding"  outside  influence  has  been 
held  to  invalidate  the  "decision"  of  local  boards  in  a  num- 
ber of  different  kinds  of  studies.  Some  instances  are  the 
following: 


11 

In  Talcoti  v.  Reed,  9  Cir.,  1954,  217  F.2d  363,  it  appeared 
there  had  been  interference  with  board  action  by  Gen. 
Hershey's  Operation  Bulletin  No.  57.  The  Director's  action 
was  disapproved: 

■'We  think  the  contents  of  the  Bulletin  are  morally 
and  legally  wrong.  It  invades  the  most  sacred  precinct 
of  family  life  at  a  time  when  there  should  be  the  most 
complete  mutuality  between  the  spouses  and  in  the 
face  of  nature's  most  demanding  and  significant  urge 
in  nature's  scheme  for  propagating  the  species.  It 
obliquely  charges  the  youth  of  the  land  with  corrupting 
the  family  relation  into  a  way  of  avoiding  service  for 
cowards."  [363] 

In  Tietz  v.  Gen.  Ahhott,  1946,  N.D.  Calif.  66  F.  Supp. 
765,  the  use  by  the  local  board  of  the  ".  .  .  inadequate 
report  of  the  [farm]  Investigator  .  .  ."  was  held  to  be  basis 
tor  granting  a  writ  of  habeas  corpus.  [766] 

In  Ex  Parte  Barrial,  1951,  S.D.  Calif.,  101  F.  Supp.  348, 
a  writ  of  habeas  corpus  (against  the  Marine  Corps)  was 
issued  because  there  had  been  an  invalid  resolution  by  the 
local  board,  one  ".  .  .  contrary  to  Selective  Service  Regula- 
tion 1622.15  (a)  (1)  ..."  [349].  Although  the  opinion  does 
not  show  why  the  board  so  rashly  acted  we  represent  to  the 
Court  that  the  record  showed  conclusively  it  was  because 
of  the  State  Director's  SHQ  #14  (a  bulletin)  that  "in- 
formed" the  boards  they  could  disregard  marriages  con- 
tracted after  the  crossing  of  the  34th  Parallel  by  North 
Korean  troops. 

In  Ashauer  v.  17.  S.,  9  Cir.,  1954,  217  F.2d  788,  one  of  the 
principal  questions  was  whether  the  board  was  unduly  in- 
fluenced by  the  Department  of  Justice.    This  Court  laid 


12 

down  the  rule  to  be  followed,  stating:  ".  .  .  there  is  noth- 
ing in  the  case  which  compels  us  to  conclude  that  the  board 
surrendered  its  right  to  reach  its  own  judgment.  .  ."  [791] 
The  record  in  this  appeal  cannot  meet  this  test. 

In  U.S.A.  V.  Avery,  No.  27550(2),  Eastern  District  of 
Missouri,  November  27,  1953,  we  quote  more  lengthily  be- 
cause it  is  an  unreported  decision: 

"Defendant  is  entitled  to  the  independent  judg- 
ment of  the  local  board  in  making  his  classification. 
We  do  not  understand  the  local  board  is  without  power 
to  classify  a  conscientious  objector  and  that  such  clas- 
sification can  only  result  from  the  Attorney  General's 
opinion.  Yet  defendant's  Exhibit  B  carries  with  it  this 
implication.  If  the  defendant's  classification  as  I-A  on 
June  8,  1952,  was  in  response  to  the  letters  from  the 
Legal  Officer  of  the  State  Headquarters  and  the  Chair- 
man, the  defendant  was  deprived  of  a  substantial  right, 
namely  the  independent  judgment  on  his  classifica- 
tion by  the  local  board." 

*     *     * 

"We  are  unwilling  to  base  a  conviction  on  presump- 
tions and  inferences  in  the  face  of  testimony  to  the 
contrary.  Therefore  we  are  not  convinced  of  the  guilt 
of  the  defendant  beyond  a  reasonable  doubt. 

"Questions  upon  which  we  have  a  reasonable  doubt 
are: 

(1)  Was  the  act  of  the  local  board  in  putting  the 
defendant  in  classification  I-A  in  fact  the  act  of  the 
local  board  and  not  the  result  of  acts  of  the  State 
Selective  Service  office  through  the  local  board's 
misinterpretation  of  the  meaning  of  defendant's  ex- 
hibits B  and  C;  and 


13 

(2)  Was  all  of  the  information  given  to  the 
local  board  orally  at  the  August  12,  1952,  hearing, 
substantially  incorporated  in  written  documents  in 
the  defendant's  file  and  therefore  no  summary  neces- 
sary? 

"Our  disposition  of  this  case  means  the  Govern- 
ment must  start  with  its  local  board  and  proceed  with 
the  classification  of  this  defendant  as  provided  by  the 
regulations,  and  conform  to  the  regulations  in  every 
respect  necessary  to  protect  the  substantial  rights  of  the 
defendant  in  classifying  him  under  the  Selective  Service 
System. 

"ORDER 

"The  defendant  is  discharged, 

/s/  Rubey  M.  Hulen 
Judge" 

In  Ex  Parte  Asit  Ranjan  Ghosh,  S.D.  Calif.,  1944,  58 
F.  Supp.  851,  we  have  an  excellent  discussion  of  these  State 
Director's  directives  by  a  district  judge  who  had  been  a 
Selective  Service  official,  the  most  thorough  discussion  of 
this  subject  known  to  counsel.  In  Ghosh  a  writ  was  granted, 
the  court  observing  "And  the  State  Director  is  not  em- 
powered under  the  Act  to  promulgate  rules  or  regulations 
nor  to  substitute  his  judgment  for  that  of  the  local  or  appeal 
boards."  [857] 

In  Levy  v.  Cain,  2  Cir.,  1945,  145  F.2d  339,  the  Court 
reversed  an  order  where  a  writ  had  been  denied.  It  ap- 
peared the  local  board  had  made  use  of  a  report  by  a  panel 
of  experts.  The  opinion,  by  Judge  Learned  Hand  held  that 
such  use  must  be  a  restricted  one,  that  ".  .  .  they  must 
not  be  made  a  substitute  for  the  boards  themselves."  [341] 


14 

The  Court  concluded  that  the  form  of  the  recommendation 
made  it  improper  for  the  board  to  act  upon  it;  that  "... 
it  was  a  decision  upon  the  very  issue  to  be  decided."  [941] 

The  problem  in  our  case  seems  akin  to  that  decided  by 
the  court  in  Glover  v.  U.S.A.,  8th  Cir.,  1961,  286  F.2d  84. 
Glover  had  complained  he  had  been  reclassified  ".  .  .  by 
the  reason  of  an  unpublished  directive  to  the  local  board 
from  State  Headquarters,  the  context  of  which  was  not  gen- 
erally circulated  or  made  known.  This  directive,  in  turn, 
was  based  upon  advice  and  recommendations  contained  in 
Operations  Bulletin  No.  123,  as  amended,  from  National 
Headquarters  to  State  Headquarters.  Said  Bulletin  was 
also  unpublished,  and  was  an  interdepartmental  communi- 
cation publicly  unobtainable."  [89-90] 

The  court  held  "The  maintenance  of  fair  procedures  is 
essential  to  the  administration  of  justice.  According  to 
Congressional  declaration  (62  Stat.  605,  50  U.S.C.A.,  Ap- 
pendix, §  415(c)),  the  overall  operations  of  the  Act  and 
regulations  pertinent  thereto  were  designed  to  be  fair  and 
just.  Under  the  circumstances  here  existing,  the  failure  on 
the  part  of  the  local  board  to  convey  to  defendant  any  rea- 
son or  explanation  for  the  repetitious  fifth  classification  of 
I- A  was  contrary  to  our  concept  of  fairness  and  basic  jus- 
tice." [90] 

We  believe  the  failure  of  Burton's  local  board  to  itself 
consider  the  merits  of  his  work  choices  is  contrary  to  the 
statute,  the  regulations,  and  to  basic  justice. 

In  Eagles  v.  Samuels,  67  S.Ct.  313  (1946),  our  argu- 
ment by  analogy  is  further  supported.  There,  the  Court 
stated:    "It  is  plain  that  the  local  boards  and  the  boards  of 


15 

appeal  may  not  abdicate  their  duty  by  delegating  to  others 
the  responsibility  for  making  classifications.  That  is  their 
statutory  function.     Section  10(a)    (2)."  [319] 

In  Eagles,  however,  the  Court  decided  that  the  city  di- 
rector [The  New  York  City  Director  is  the  equivalent  of  a 
State  Director]  had  "...  submitted  the  panel's  report  with 
the  admonition  that  it  was  advisory  only  and  that  it  was 
the  hoard's  responsibility  to  make  the  classification.  The 
recommendation  of  the  panel  was  followed.  But  Samuels 
was  subsequently  given  not  only  one  but  two  hearings  be- 
fore the  local  board  and  a  hearing  before  the  board  of  ap- 
peal. There  is  no  indication  either  hoard  relied  solely  on 
the  panel's  report  or  considered  itself  hound  hy  it.  In  fact 
both  boards  received  additional  evidence  submitted  by 
Samuels  and  considered  it.  The  record  does  not  bear  out 
the  suggestion  that  either  board  was  a  rubber  stamp  for 
the  panel."  [319-320]  (Emphasis  added) 

This  court,  by  implication,  has  already  agreed  with 
our  argument.  In  Tyrrell  v.  U.  S.,  9  Cir.,  1952,  200  F.2d 
8,  the  problem  of  the  use  of  lists  was  discussed  and,  in 
that  case  this  Court  concluded: 

"It  is  clear  that  the  list  was  issued  and  used 
solely  as  a  guide  to  the  draft  boards  so  as  to  facilitate 
their  consideration  of  classification  problems  that 
might  come  before  them.  It  was  not  an  inflexible 
standard."  [13] 

We  believe  this  conclusion  should  be  reached:  Appel- 
lant was  illegally  deprived  of  consideration  of  his  elected 
work  choice  by  the  local  board.  Therefore,  the  order  to 
report  on  which  the  conviction  is  based  was  not  in  con- 
formity with  the  established  administrative  process. 


16 
CONCLUSION 

For  the  reasons  given  the  judgment  should  be  reversed. 
Respectfully, 

J.  B.  TiETZ 

410  Douglas  Building 
Los  Angeles,  California  90012 
Attorney  for  Appellant 

February  9,  1968 

I  certify  that,  in  connection  with  the  preparation  of  this 
brief,  I  have  examined  Rules  18  and  19  of  the  United 
States  Court  of  Appeals  for  the  Ninth  Circuit,  and  that, 
in  my  opinion,  the  foregoing  brief  is  in  full  compliance 
with  those  rules. 


J.  B.  TiETZ,  Attorney 


17 


APPENDIX 

Plaintiff's  Exhibits: 

For  Identification 

In  Evidence 

1 

6 

Defendant's  Exhibits: 

A 

14 

15 

B 

14 

15 

NO.     2  2  2  6  0 

IN   THE   UNITED  STATES  COURT  OF  APPEALS 

FOR   THE   NINTH  CIRCUIT 

RICHARD   WALTER   BURTON, 

Appellant, 
vs. 
UNITED   STATES  OF  AMERICA, 

Appellee. 

APPELLEE'S   BRIEF 


APPEAL  FROM 

THE    UNITED   STATES   DISTRICT  COURT 

FOR    THE   CENTRAL  DISTRICT   OF   CALIFORNIA 


FILED 

MAR  1  4  1968 
WM.  B,  LUCK,  CLERK 


WM.    MATTHEW   BYRNE,    JR.  , 
United  States  Attorney, 

ROBERT   L.    BROSIO, 

Assistant  U.    S.    Attorney, 
Chief,    Criminal  Division, 

DENNIS   E.    KINNAIRD, 

Assistant  U.   S.   Attorney, 

1200  U.  S.  Court  House 
312  North  Spring  Street 
Los  Angeles,    California  90012 

Attorneys  for  Appellee, 
United  States  of  America. 


ur\ 


NO.     2  2  2  6  0 
IN  THE   UNITED  STATES  COURT  OF  APPEALS 
FOR    THE   NINTH   CIRCUIT 

RICHARD  WALTER  BURTON, 

Appellant, 
vs. 
UNITED   STATES   OF  AMERICA, 

Appellee. 

APPELLEE'S   BRIEF 


APPEAL  FROM 

THE    UNITED   STATES   DISTRICT  COURT 

FOR   THE   CENTRAL  DISTRICT   OF   CALIFORNIA 


WM.    MATTHEW   BYRNE,    JR.  , 
United  States  Attorney, 

ROBERT    L.    BROSIO, 

Assistant  U.    S.   Attorney, 
Chief,    Criminal  Division, 

DENNIS   E.    KINNAIRD, 

Assistant  U.   S.   Attorney, 

1200  U.  S.  Court  House 
312  North  Spring  Street 
Los  Angeles,    California  90012 

Attorneys  for  Appellee, 
United  States  of  America. 


TOPICAL  INDEX 

Page 

Table  of  Authorities  ii 

I  JURISDICTIONAL  STATEMENT  1 

II  STATUTES  INVOLVED  2 

III  STATEMENT   OF   FACTS  4 

IV  QUESTION:    SPECIFICATION  OF   ERROR  7 

ARGUMENT  7 

THE   ORDER   TO  REPORT   FOR   CIVILIAN 
WORK    WHICH  THE   APPELLANT   DISOBEYED 
WAS  A   VALID   ORDER   AND  THE   CONVICTION 

SHOULD   BE  AFFIRMED.  7 

CONCLUSION  11 

CERTIFICATE  12 


TABLE   OF  AUTHORITIES 

Cases  Page 

Mang  V.    United  States, 

339  F.  2d  369  (9th  Cir.    1964)  7,   8,    9,    10,    11 

United  States  v.    Lawson, 

337  F.  2d  800  (3rd  Cir.    1964)  8,    9,    10 

Statutes 

Title  18,    United  States  Code,    §3231  2 

Title  18,   United  States  Code,    §4208(a)(2)  1 

Title  28,    United  States  Code,    §1291  2 

Title  28,   United  States  Code,    §1294  2 

Title  50  App.  ,    United  States  Code,    §456(j)  3 

Title  50  App.  ,    United  States  Code,    §462  1,    2 

Regulations 

Title  32,    Code  of  Federal  Regulations: 

§1660.  20(d)  10 

§1660.  21(a)  10 


11 


NO.     2  2  2  6  0 

IN   THE   UNITED  STATES  COURT  OF  APPEALS 

FOR   THE   NINTH   CIRCUIT 

RICHARD   WALTER   BURTON, 

Appellant, 
vs. 
UNITED   STATES   OF  AMERICA, 

Appellee. 

APPELLEE'S   BRIEF 


I 

JURISDICTIONAL  STATEMENT 

The  Federal  Grand  Jury  for  the  Central  District  of  California 
returned  Indictment  No.    379-(WF)-CD,    on  March  8,    1967,    charging 
appellant  with  violation  of  the  Universal  Military  Training  and  Service 
Act,    Title  50  App.  ,    Section  462,  United  States  Code.     On  May  16, 
1967,    the  appellant  was  tried  by  the  court  and  the  case  was  continued 
to  May  25,    1967.     On  May  25,    1967,    the  appellant  was  found  guilty. 
On  June  22,    1967  appellant  was  sentenced  to  three  years  in  the 
custody  of  the  Attorney  General,    pursuant  to  Title  18,    United  States 
Code,   Section  4208(a)(2). 

1. 


The  District  Court  had  jurisdiction  to  try  the  case  under 
Title  18,    United  States  Code,    Section  3231.     This  Court  has  juris- 
diction to  entertain  this  appeal  pursuant  to  the  provisions  of  Title 
28,    United  States  Code,    Sections  1291  and  1294. 

II 
STATUTES   INVOLVED 

Title  50  App.  ,   Section  462,    United  States  Code,    provides 

in  part: 

"Any  member  of  the  Selective  Service  System 
or  any  other  person  charged  as  herein  provided  with 
the  duty  of  carrying  out  any  of  the  provisions  of  this 
this  title  ...    or  the  rules  or  regulations  made  or 
directions  given  thereunder,    who  shall  knowingly 
fail  or  neglect  to  perform  such  duty  ...    or  who 
otherwise  evades  or  refuses  .    .    .    service  in  the  armed 
forces  or  any  of  the  requirements  of  this  title  ...    or 
who  in  any  manner  shall  knowingly  fail  or  neglect  or 
refuse  to  perform  any  duty  required  of  him  under  or 
in  the  execution  of  this  title  ...    or  rules,    regulations 
or  directions  made  pursuant  to  this  title  .    .    .    shall, 
upon  conviction  in  any  District  Court  of  the  United 
States  of  competent  jurisdiction,    be  punished  by  im- 
prisonment for  not  more  than  five  years  or  a  fine  of 
not  more  than  $10,  000,    or  by  both.    ..." 

2. 


Title  50  App.  ,    Section  456(j)  states: 

"(j)         Conscientious  objectors.     --  Nothing 
contained  in  this  title  shall  be  construed  to  require 
any  person  to  be  subject  to  combatant  training  and 
service  in  the  armed  forces  of  the  United  States  who, 
by  reason  of  religious  training  and  belief,    is  con- 
scientiously opposed  to  participation  in  war  in  any 
form.    .    .    .     Any  person  claiming  exemption  from 
combatant  training  and  service  because  of  such  con- 
scientious objections  whose  claim  is  sustained  by 
the  local  board  shall,    if  he  is  inducted  into  the  armed 
forces  under  this  title,    be  assigned  to  noncombatant 
service  as  defined  by  the  President,    or  shall,    if  he 
is  found  to  be  conscientiously  opposed  to  participation 
in  such  noncombatant  service,    in  lieu  of  such  induction, 
be  ordered  by  his  local  board,    subject  to  such  regula- 
tions as  the  President  may  prescribe,    to  perform  for 
a  period  equal  to  the  period  prescribed  in  Section  4(b) 
such  civilian  work  contributing  to  the  maintenance  of 
the  national  health,    safety,    or  interest  as  the  local 
board  may  deem  appropriate  and  any  such  person  who 
knowingly  fails  or  neglects  to  obey  any  such  order 
from  his  local  board  shall  be  deemed,    for  the  purpose 
of  Section  12  of  this  title,    to  have  knowingly  failed  or 
neglected  to  perform  a  duty  required  of  him  under 
this  title.  " 

3. 


Ill 

STATEMENT  OF  FACTS 

The  following  factual  information  is  abstracted  from  the 
appellant's  Selective  Service  File,    a  photostatic  copy  of  which  was 
received  into  evidence  as  Plaintiff's  Exhibit  No.    1,    and  from  the 
oral  testimony  presented  at  trial.     This  file,    Plaintiff's  Exhibit 
No.    1,    is  pencil  paginated  at  the  bottom  of  each  sheet  and  is  here- 
inafter referred  to  by  sheet  number. 

On  November  12,    1964,    the  appellant  registered  with  Local 
Board  No.    117  (hereinafter  referred  to  as  "The  Board")  [p.    1]. 

On  January  14,    1965,    appellant  was  classified  II-S.     Appel- 
lant made  no  request  for  a  SSS  Form  150  (Conscientious  Objector's 
Form)  [pp.    7,    11].     On  October  21,    1965,    The  Board  received  a 
SSS  Form  150  from  appellant  [pp.    18-23].     The  Board  reclassified 
appellant  as  1-A  and  so  notified  him.     However,    on  April  7,    1965, 
appellant  appeared  before  The  Board  and  a  hearing  was  held  con- 
cerning appellant's  request  for  a  I-O  classification  [pp.    30-31]. 
Subsequent  to  this  hearing  The  Board  classified  appellant  as  I-O 
[p.    11].     Appellant  was  duly  notified  of  his  I-O  classification  on 
April  7,    1966. 

On  May  5,    1966,    appellant  appeared  for  a  physical  examina- 
tion.    On  May  12,    1966,    appellant  was  notified  that  he  was  acceptable 
for  induction  into  the  Armed  Services,    or  for  civilian  work  in  lieu 
thereof  [p.    40]. 

On  May  6,    1966,    appellant  notified  The  Board  that  it  was 

4. 


his  intention  to  serve  his  required  civilian  work  assignment  as  an 
animal  keeper  for  the  Los  Angeles  City  Zoo  [p.   41]. 

On  May  31,    1966,    appellant  returned  SSS  Form  152,    "Special 
Report  for  Class  I-O  Registrants",   omitting  to  fill  out  the  portion 
of  the  form  entitled  "Work  Qualifications".     On  this  form  appellant 
did  apply  for  his  employment  as  an  animal  keeper  to  be  approved  as 
satisfying  his  civilian  work  assignment  [pp.    43,    44].     In  addition, 
appellant  submitted  a  letter  stating  that  he  had  not  checked  the  list 
of  approved  work.     Appellant  also  reiterated  his  position  that  he 
desired  to  fulfill  his  obligation  by  continuing  as  an  animal  keeper 
for  the  Los  Angeles  City  Zoo  [p.    45]. 

On  June  13,    1966,    The  Board  sent  a  letter  to  appellant 
informing  him  of  three  employment  opportunities  which  were    avail- 
able and  approved.     The  appellant  was  requested  to  designate  his 
preference  for  the  employment  specified.     Appellant  responded  to 
this  letter  by  stating  that  he  did  not  wish  to  perform  any  of  the 
employment  offered  by  The  Board  [p.    51].     Appellant  explained  his 
position  by  contending  that  his  present  employment  as  an  animal 
keeper  in  the  zoo  was  the  greatest  benefit  he  could  perform  for  the 
general  public  [p.    52]. 

On  August  3,    1966,    pursuant  to  the  request  of  The  Board, 
appellant  met  with  Major  Miller  and  The  Board  for  a  discussion 
concerning  the  type  or  work  available  for  appellant  to  satisfy  his 
obligation.     At  this  meeting  appellant  read  the  State  Director's  List 
of  Approved  Civilian  Work  Assignments  and  claimed  that  none  were 
acceptable  [pp.    59-60].     The  Board  explained  that  it  was  refusing  to 

5. 


accept  appellant's  request  to  perform  his  civilian  work  assignment 
at  the  Los  Angeles  City  Zoo  for  the  reason  that  it  was  not  on  the 
approved  list  provided  by  the  State  Director  [p.    59]. 

Appellant  was  ordered  to  report  to  the  Los  Angeles  County 
Department  of  Charities  at  10:00  A.  M.    on  October  5,    1966,    for 
work  as  an  institutional  helper  [p.    67].     On  October  7,    appellant 
informed  The  Board  that  he  had  refused  to  report  for  work  as 
ordered  by  The  Board  [p.    69].     The  Board  was  also  notified  by  the 
Personnel  Officer,    Los  Angeles  County  General  Hospital  that 
appellant  refused  any  and  all  assignments  [p.    70]. 

On  March  8,    1967,    an  indictment  was  returned  by  the  Grand 
Jury  charging  appellant  with  refusing  to  perform  his  civilian  work 
assignment. 

At  the  trial  of  this  case  appellant  admitted  that  he  had 
refused  to  accept  any  of  the  offered  civilian  work  assignments,    and 
specifically  the  work  assignment  at  the  Los  Angeles  County  Depart- 
nnent  of  Charities  [R.  T     26-27].   — '     Appellant  endeavored  to  show 
that  his  work  as  a  primate  keeper  at  the  Los  Angeles  City  Zoo  was 
important  and  was  in  the  public  interest.     This  fact  was  not  con- 
tested by  appellee  in  the  trial. 


1_/  R.  T.    refers  to  Reporter's  Transcript. 

6. 


IV 
QUESTION:    SPECIFICATION  OF   ERROR 

Was  the  order  to  report  for  civilian  work  invalid  because  it 
constitutes  an  abdication  by  the  Local  Board  of  its  duly  designated 
function? 

ARGUMENT 


THE   ORDER    TO  REPORT   FOR   CIVILIAN   WORK 
WHICH   THE   APPELLANT  DISOBEYED   WAS   A 
VALID   ORDER  AND    THE   CONVICTION  SHOULD 
BE   AFFIRMED. 


The  specific  question  now  before  this  Court  is  that  the 
appellant  while  appearing  to  be  willing  and  able  to  perform  civilian 
work  has  refused  to  perform  any  of  the  civilian  work  assignments 
specified  on  the  State  Director's  list  of  approved  jobs.     The  appel- 
lant recognizes  that  employment  as  a  primate  keeper  is  not  on  the 
State  Director's  list  of  approved  jobs  and  this  is  the  only  work  that 
appellant  has  expressed  a  willingness  to  perform.     The  specific 
question  raised  by  appellant  was  recently  decided  in  Mang  v.    United 
States,    339  F.  2d  369  (9th  Cir.    1964).     In  that  case  Mang  had  taken 
employment  with  a  Quaker  social  service  organization,    known  as 
the  Friends  Committee  on  Legislation.     This  work  was  not  approved 
by  the  Local  Board  and  Mang  was  ordered  to  report  to  the  Los 
Angeles  County  Department  of  Charities.     He  refused  to  so  report 
and  his  indictment  followed  shortly  thereafter.     The  contention 

7. 


presented  to  the  court  in  Mang,    ibid.  ,   was  identical  to  the  issue 
now  before  this  Court;     i.  e.  ,   the  Local  Board  relied  on  the  State 
Director's  list  of  approved  organizations,    and  appellant  charges 
this  constitutes  an  abdication  of  the  Local  Board's  duties;    an  illegal 
usurpation  of  authority  by  the  State  Director;    and  a  denial  of  due 
process.     The  court  specifically  held,    "...    We  find  no  merit  in 
appellant's  position.  "    Id.    at  370. 

In  the  Mang  case,    ibid.  ,   the  court  placed  reliance  on  United 
States  V.    Lawson,    337  F.  2d    800  (3rd  Cir.    1964).     In  that  case  Mr. 
Lawson  refused  to  accept  any    employment  that  was  on  the  approved 
list  prepared  by  the  State  Director.      Lawson  contended  that  his 
employment  at  Goodwill  Industries  satisfied  his  obligation.     Id^   at 
805.     The  Board  notified  Mr.    Lawson  that  Goodwill  Industries  was 
not  approved  by  the  State  Director  for  New  Jersey,    although  it  was 
approved  in  other  States.     Id^    at  806.     In  that  case,    Lawson  raised 
precisely  the  same  objection  as  raised  by  appellant  herein,    in  that 
he  contended  an  abdication  by  the  Local  Board  of  its  statutory  func- 
tion by  utilizing    the  State  Director's  list  for  the  selection  of  pro- 
posed employment  for  a  conscientious  objector.     As  the  court  there 
stated,    "...    It  becomes  apparent  that  the  Board,    by  permitting 
itself  to  be  guided  in  the  selection  of  the  proposed  employer  of  this 
conscientious  objector,    abandoned  none  of  its  autonomy  with  which 
the  Selective  Service  Act  vested  it.     Indeed,    it  is  difficult  to  under- 
stand how  uniformity  of  treatment  of  all  conscientious  objectors  with 
regard  to  engagement  in  public  welfare  work  could  otherwise  be 
practiced.  "    Id.    at  816. 

8. 


Appellant  endeavors  to  distinguish  Mang,    supra,    and  Lawson, 
supra,    on  the  grounds  that  in  the  instant  case  appellant  did  present 
evidence  that  established  the  fact  that  employment  as  a  primate 
keeper  was  in  the  public  interest.     As  the  court  in  both  Mang,    supra, 
and  Lawson,    supra,    recognized,    it  was  immaterial  that  the  work 
chosen  was  in  the  public  interest,    the  crucial  factor  was  that  it  was 
not  on  the  State  Director's    list  of  approved  places  of  employment. 
The  court  found  that  the  local  board  had  not  abdicated  any  of  its 
vested  autonomy  in  being  guided  by  the  State  Director's  list  of 
approved  places  of  employment.     It  can  hardly  be  doubted  that 
employment  with  Goodwill  Industries  was  in  the  public  interest,    but 
yet  it  was  not  acceptable  in  New  Jersey,    and  therefore  Lawson 
could  not  satisfy  his  obligation  by  working  for  the  Goodwill  Indus- 
tries.    Id.    at  806.      The  crucial  point  overlooked  by  appellant  is  that 
The  Board  can  rely  on  the  State  Director's  List  of  Approved  Em- 
ployment. 

Appellant's  argument  is  defective  because  of  the  emphasis 
placed  upon  classification  cases  to  support  the  proposition  submitted 
in  the  present  case.     The  question  of  classification  is  particularly 
local  in  nature,    because  classification  is  an  individual  subject  best 
determined  by  the  local  board  that  has  direct  dealings  with  a  regis- 
trant.    Once  a  registrant  is  classified  the  situation  is  altogether 
different.     While  the  regulations  do  provide  for  the  local  board  to 
play  an  important  role  in  determining  as  I-O  civilian  work  assign- 
ment,   the  final  approval  for  the  order  to  perform  civilian  work  is 
placed  in  the  hands  of  the  National  Director  of  Selective  Service. 

9. 


Title  32,    Code  of  Fed.    Reg.  ,   Section  1660.  20(d).     The  National 
Director  has  delegated  to  the  State  Director  the  authority  to  pre- 
pare lists  of  approved  institutions  and  agencies  for  civilian  work 
assignments. 

In  the  present  case  The  Board  relied  upon  the  State  Direc- 
tor's list  in  rejecting  appellant's  request  to  perform  his  civilian 

employment  obligation  as  a  primate  keeper  for  the  Los  Angeles 

2/ 
City  Zoo.   —      In  both  Mang,    supra,    and  Lawson,    supra,    the  local 

boards  rejected  the  registrant's  request  for  the  identical  reason. 

Appellant  was  well  aware  of  the  fact  that  his  job  as  a  primate  keeper 

was  not  on  the  list  of  approved  employment  [R.  T.    23-24].      There 

does  not  exist  any  meaningful  allegation,    argument  or  fact  that 

distinguishes  the  present  case  from  the  aforementioned  precedents 

supporting  The  Board's  ruling  on  appellant's  case. 


2j  In  this  respect  it  may  be  noted  that  appellant  was  earning 

approximately  $500  per  month  as  an  animal  keeper  [R.  T. 
19],   whereas,    as  an  institutional  helper  the  pay  was  approximately 
$240  per  month  [p.    51].     For  this  reason,    among  others,    the  regu- 
lations indicate  an  intent  that  an  individual  performing  civilian 
employment  in  lieu  of  military  service  not  be  allowed  to  satisfy  his 
obligation  by  continuing  in  his  regular  civilian  employment.     32  Code 
Fed.   Reg.    Section  1660.  21(a). 

10. 


CONCLUSION 

For  the  reasons  cited  in  the  case  of  Mang  v.    United  States, 

339  F.  2d  369  (9th  Cir.    1964),    and  the  reasons  above  mentioned  in 

argument,    appellee  respectfully  submits  that  the  conviction  should 

be  affirmied. 

Respectfully  submitted, 

WM,    MATTHEW   BYRNE,    JR., 
United  States  Attorney, 

ROBERT    L.    BROSIO, 

Assistant  U.   S.   Attorney, 
Chief,    Criminal  Division, 

DENNIS   E.    KINNAIRD, 

Assistant  U,   S.    Attorney, 

Attorneys  for  Appellee, 
United  States  of  America. 


11. 


CERTIFICATE 

I  certify  that,    in  connection  with  the  preparation  of  this 
brief,    I  have  examined  Rules  18,    19  and  39  of  the  United  States 
Court  of  Appeals  for  the  Ninth  Circuit,    and  that,    in  my  opinion, 
the  foregoing  brief  is  in  full  compliance  with  those  rules. 

/s/        Dennis  E.    Kinnaird   

DENNIS   E.    KINNAIRD 


12. 


IN  THE 

United  States  Court  of  Appeals 

FOR  THE  NINTH  CIRCUIT 


/ 

No.  22261 


THOMAS  JERRY  YEATER, 
Appellant, 

vs. 

UNITED  STATES  OF  AMERICA, 
Appellee. 


APPELLANT'S  OPENING  BRIEF 


HILED 


J.  B.  TiETZ 


P£g  1  5  iQcp  410  Douglas  Building 

°  257  South  Spring  Street 

^M.  B    /  //rtc  ^^^  Angeles,  California  90012 

'  CLERK  Attorney  jor  Appellant 


E.  L.  Mbnoenhall,  Inc.,  926  Cherry  Street.  Kansas  City,  Mo.  64106,  HArrison   1-3030 


''£6151958 


INDEX 

Jurisdiction   1 

Statement  of  the  Case  2 

Facts   2 

Questions  Presented  and  How  Raised 4 

Specification  of  Errors  -  5 

Summary  of  Argument 5 

Argument — 

I.  There   Was   No   Basis-in-Fact   for   Denying   the 

Registrant  a  Deferred  Classification  5 

A.  His  prima  facie  claims  6 

B.  When  and  how  they  were  ignored 6 

II.  The  Local  Board  Illegally  Failed  to  Reopen  His 

Classification  7 

Conclusion  12 

Certification 12 

Appendix  13 

Table  of  Cases 

Olvera  v.  United  States,  5  Cir.,  1955,  223  F.2d  880 9 

U.  S.  V.  Adragna,  No.  26196,  S.D.  Calif.,  January  27, 

1958  10 

U.  S.  V.  Nelson,  CR.  No.  45202,  E.D.N.Y.,  March  19,  1958  10 

Statutes  and  Regulations 

32  C.F.R.  §  1604.56  7 

32  C.F.R.  §  1625.2 6 

Rule  37   (A)    (1)  and   (2),  Federal  Rules  of  Criminal 

Procedure    2 

Title  18,  U.S.C,  Section  3231  2 

Title  50,  U.S.C.  App.,  Section  462 1 


IN  THE 

United  States  Court  of  Appeals 

FOR  THE  NINTH  CIRCUIT 


No.  22261 


THOMAS  JERRY  YEATER, 
Appellant, 


vs. 


UNITED  STATES  OF  AMERICA, 
Appellee. 


APPELLANT'S  OPENING  BRIEF 


JURISDICTION 


This  is  an  appeal  from  a  judgment  by  the  United  States 
District  Court  for  the  Central  District  of  California. 

The  appellant  was  sentenced  to  the  custody  of  the 
Attorney  General  for  a  period  of  three  years  after  a  one 
count  conviction  for  violation  of  Title  50,  United  States 
Code  App.,  Section  462  (knowingly  fail  and  refuse  to  be 
inducted  into  the  Armed  Forces  of  the  United  States), 
Universal  Military  Training  and  Service  Act  [Tr.  4].^ 


1.     Tr.  refers  to  the  Transcript  of  Record. 


Title  18,  United  States  Code,  Section  3231,  conferred 
jurisdiction  in  the  District  Court  over  the  prosecution  of  this 
case.  The  United  States  Court  of  Appeals  for  the  Ninth 
Circuit  has  jurisdiction  of  this  appeal  under  Rule  37  (A)  (1) 
and  (2)  of  the  Federal  Rules  of  Criminal  Procedure.  Notice 
of  Appeal  was  filed  in  the  time  and  manner  required  by  law 
[Tr.  5]. 

STATEMENT  OF  THE  CASE 

The  indictment  charged  appellant  with  a  violation  of 
the  Universal  Military  Training  and  Service  Act  for  refus- 
ing to  submit  to  induction  [Tr.  2]. 

Appellant  pleaded  not  guilty  and  was  tried  by  the 
Honorable  Irving  Hill,  District  Judge,  sitting  alone  without 
a  jury.  Appellant  was  found  guilty  and  sentenced  to  im- 
prisonment for  a  period  of  three  years  [Tr.  4]. 

FACTS 

The  relevant  facts  in  this  appeal  are  found  in  (1)  the 
Selective  Service  file  [Ex.  1-154]*  and  in  (2)  the  reporter's 
transcript  of  the  trial  [RT  1-1-4],**  both  being  parts  of 
the  designated  record  on  appeal. 

1.  Appellant  claimed  he  had  a  disqualifying  physical 
defect,  to  wit:  one  leg  one-half  inch  shorter  than  the  other 
[RT  21/16]  by  reason  of  an  "old  fractured  right  tibia." 
[RT  42/13-80/8,  Ex.  108]. 


*Ex.  refers  to  the  government  Exhibit  #1,  the  complete  SSS 
file  of  appellant. 

**RT  refers  to  the  reporter's  transcript. 


The  appellant  had  sent  his  local  board  a  letter  from 
his  doctor  (Ascher)  which  showed,  by  measurement,  that 
his  legs  had  a  half-inch  discrepancy  in  length  [Ex.  133]. 

It  was  stipulated  that  this  would  be  the  sworn  testi- 
mony of  Dr.  Ascher,  if  put  on  the  witness  stand  [RT  28/3]. 

The  senior  army  medical  officer  at  the  Armed  Forces 
Examining  Station  in  Los  Angeles  [RT  30/24]  testified 
that  "...  there  is  nothing  in  the  record  that  indicates  we 
actually  measured  [the  legs]  .  .  ."  [RT  54/21]. 

This  doctor  testified  that  the  standards  governing  ac- 
ceptability are  in  AR  40-51,  Chapter  2,  Change  15:  ".  .  . 
would  be  that  an  extremity  which  is  one-half  inch  shorter 
than  the  other,  if  it  produces  gross  lameness  or — I  am  grop- 
ing for  the  word  they  use — limping,  is  disqualifying." 
[RT  53/5]. 

Appellant  testified  that  his  injured  leg  prevented  him 
holding  ".  .  .  down  my  regular  type  of  position  from  my 
inability  to  move  objects  .  ,  ."  [RT  84/24];  "I  can't  walk 
for  long  lengths  of  time"   [RT  85/15]. 

The  army  doctor  could  only  guess  [RT  56/22]  that 
there  was  no  gross  limping  and  that  he  had  no  reason  to 
doubt  Dr.  Ascher's  measurements   [RT  56/9]. 

When  finally  asked  ".  .  .  why  he  was  not  acceptable 
in  August  of  1965  and  why  he  is  acceptable  in  July  of  1966, 
based  upon  the  criteria  that  you  have  already  explained 
to  us."  [RT  59/18],  he  could  not  give  an  evaluation  [RT 
60/5]. 

2.  Appellant  claimed  his  mother  was  dependent  on 
him. 


4 

On  December  13,  1963,  he  answered  a  questionnaire 
(SSS  Form  No.  118)  showing  his  mother  was  dependent  on 
him.  He  was  classified  in  Class  III-A  on  January  8,  1964 
[Ex.  13  and  63]. 

When  he  had  a  leg  fractured  in  5  places  [Ex.  108J  and 
so  notified  the  board,  in  a  letter  they  received  February 
8,  1965  [Ex.  64]  an  entry  in  the  Minutes  of  Action  was 
made  on  the  same  date  "He  had  an  accident,  not  work, 
therefore  unable  to  support  anyone"  and  another  entry 
was  made  on  March  2,  1965  showing  the  board  voted  to 
reclassify  him  in  Class  I-A  [Ex.  13]. 

However,  when  evidence  of  his  mother's  dependency 
on  him  was  presented  on  June  22,  1966  [Ex.  123]  and  on 
July  2,  1966  [Ex.  126]  a  refusal  to  "reopen"  letter  was  sent, 
by  the  clerk  [Ex.  128]  with  the  notation  in  the  Minutes  of 
Action  "Bd.  members  contacted — ^Postponement  Denied." 
[Ex.  15]. 

QUESTIONS  PRESENTED  AND  HOW  RAISED 

I 

Was  there  a  basis  in  fact  for  denying  appellant  a  de- 
ferred classification?  This  question  was  raised  by  the 
presentation  in  evidence  of  the  entire  Selective  Service 
System  file,  and  the  oral  evidence  during  the  trial,  and 
the  dialog  between  court  and  counsel. 

II 

Was  there  a  denial  of  due  process  in  the  failure  of  the 
local  board  to  reopen  the  classification,  when,  in  June  and 
July,  1966  facts  not  "considered"  when  he  was  classified 


in  Class  I-A,  facts  which  if  true  required  classification? 
This  question  was  raised  by  the  above  mentioned  exhibit 
of  the  government. 

SPECIFICATION  OF  ERRORS 

I 

The  district  court  erred  in  convicting  the  defendant 
and  entering  a  judgment  of  guilty  against  him. 

SUMMARY  OF  ARGUMENT 

1.  Appellant  presented  a  prima  facie  case  for  a  IV-F 
(physically  unfit)    classification. 

The  evidence  in  the  record  does  not  rebut  it. 

Appellant  presented  a  prima  facie  case  for  a  III-A  (de- 
pendency) classification. 

There  was  no  evidence  to  rebut  it. 

In  any  event  his  request  for  a  reopening  of  his  classi- 
fication was  mishandled  and  he  was  illegally  deprived  of 
his  administrative  opportunities  for  relief,  namely,  an  Ap- 
pearance Before  Local  Board  and  an  appeal. 

ARGUMENT 


There  Was  No  Basis-in-Fact  for  Denying  the  Registrant 
a  Deferred  Classification. 

Appellant  made  two  claims  that  were  ignored:  one 
for  a  physical  unacceptability  classification  and  one  for 
a  hardship  classification.  Why  they  were  ignored  will  be 
discussed  below,  in  "B",  "A"  being  devoted  to  the  prima 
facie  quality  of  these  two  claims. 


A.  His  prima  facie  claims. 

1.  In  our  FACTS,  above,  we  recited  the  details  of 
appellant's  showing  concerning  his  physical  unacceptability. 
These  made  out  a  prima  facie  case. 

2.  In  our  FACTS,  above,  we  referred  to  the  details 
concerning  his  revived  dependency  situation  and  the  evi- 
dence in  support.  Here,  too,  he  made  out  a  prima  facie 
deferred  classification  showing. 

It  would  appear,  therefore,  that  he  was  entitled  either 
to  one  of  such  classifications  or  to  have  his  claims  and 
evidence  handled  by  the  local  board  according  to  another 
of  the  regulations,  that  is,  the  one  that  (1)  gives  the  local 
board  the  right  to  form  an  initial,  adverse  judgment  but 
that  (2)  preserves  the  right  of  the  registrant  to  his  subse- 
quent administrative  remedies,  32  C.F.R.  §  1625.2. 

B.  When  and  how  they  were  ignored. 

We  can  sympathize  with  the  local  board  in  the  long 
and  burdensome  processing  required  by  this  registrant. 
However,  none  of  the  lengthy  processing  was  due  to  any 
stalling,  evasion  or  just  plain  stubbornness  on  his  part. 

Therefore,  there  was  no  legal  excuse  for  the  board  ig- 
noring the  applicable  law.  That  all  are  required  to  know 
that  the  law  applies  with  even  more  force  to  officialdom 
and,  especially,  to  a  body  dealing  with  very  young  men. 

The  board  had  once  given  him  a  III- A  classification,  on 
the  dependency  of  his  mother.  We  do  not  contend  he  had 
a  vested  right  in  a  III-A,  forever.  However,  assuming,  (but 
not  conceding)   that  the  board  was  justified  in  ratifying 


the  1965  conclusion  of  its  clerk  [we  refer  to  the  entry  in  the 
Minutes  of  Action,  under  date  of  February  8,  1965,  that  he 
"Had  an  accident,  not  working,  therefore  unable  to  support 
anyone,"  Ex.  13]  at  its  next  meeting,  what  rationale  is  there 
for  its  subsequent,  1966  conduct,  when  his  leg  had  healed 
to  the  extent  that  he  could  again  work  and  his  mother 
again  showed  her  needy  condition?  This  was  in  both  June 
and  July  of  1966. 

No  reason  was  given  this  time.  There  was  no  basis  in 
fact  for  it. 

II 

The  Local  Board  Illegally  Failed  to  Reopen 
His  Classification. 

There  are  two  further  reasons  to  consider  the  conduct 
of  this  agency  illegal. 

A.  Its  regulations  require  a  consideration  by  the 
board. 

The  presumption  of  official  regularity  (that  this  was 
done)  is  overcome  by  its  own  records. 

First,  the  regulations,  32  C.F.R.  §  1604.56: 

1604.56  Organization  and  Meeting. — Each  local  board 
shall  elect  a  chairman  and  a  secretary.  A  majority  of  the 
members  of  the  local  board  shall  constitute  a  quorum  for 
the  transaction  of  business.  A  majority  of  the  members 
present  at  any  meeting  at  which  a  quorum  is  present  shall 
decide  any  question  or  classification.  Every  member  pres- 
ent, unless  disqualified,  shall  vote  on  every  question  or 
classification.     In  case  of  a  tie  vote  on  any  question  or 


8 

classification,  the  board  shall  postpone  action  on  the  ques- 
tion or  classification  until  it  can  be  decided  by  a  majority 
vote.  If  any  member  is  absent  so  long  as  to  hamper  the 
work  of  the  local  board,  the  chairman  of  the  local  board 
shall  recommend  to  the  State  Director  of  Selective  Service 
that  such  member  be  removed  and  a  new  member  appointed. 
Next,  the  record.  The  Minutes  of  Action  of  the  Local 
Board,  on  page  15  of  the  Exhibit  recites:  "Jul  6,  1966  Bd. 
Members  contacted — Postponement  Denied.  July  6,  1966 
Letter  to  registrant's  mother,  cc  to  registrant." 

The  Exhibit,  on  page  128,  shows  there  is  more  to  this 
event  than  just  the  above  two  lines.  There  is  a  letter  on 
page  128  showing  that  a  "reopening  of  his  classification" 
was  also  denied.    The  date  of  this  letter  is  July  5,  1966! 

Our  point  is  not  that  this  is  government  by  the  clerk; 
it  may  be  that  but,  in  addition  it  is  clear  enough  that  the 
board  never  met  to  consider  the  evidence;  that  they  were 
"contacted."  This  justifies  the  conclusion  it  was  a  telephone 
call,  a  polling  of  the  board.  We  assert  that  the  board  mem- 
bers should  have  had  the  evidence  before  them,  not  pre- 
digested  (or  even  read)  by  a  clerk.  "Business"  may  operate 
in  such  a  manner  but  the  regulations  of  this  agency  require 
that  a  quorum  be  present  at  a  meeting. 

Our  conclusion  is  buttressed  by  further  inspection  of 
the  Minutes  of  Actions.  In  several  instances  where  rela- 
tively innocuous  decisions  were  made  there  is  a  vote  en- 
tered.   Here,  on  a  crucial  question,  there  was  no  vote. 

Finally,  since  this  is  a  criminal  case  the  benefit  of  any 
doubt  that  may  exist  is  due  the  defendant. 


9 

The  observations  of  various  courts  on  the  principle  in- 
volved may  be  of  help. 

In  Olvera  v.  United  States,  5  Cir.,  1955,  223  F.2d  880, 
882  the  Fifth  Circuit  pointed  out  that— 

"The  Supreme  Court  has,  in  a  line  of  cases^  start- 
ing in  1955,  sought  to  reconcile  the  fundamental  prin- 
ciples of  liberty  and  due  process  with  the  failure  of  the 
Universal  Military  Training  and  Service  Act  (50  United 
States  Code,  App.,  Section  451  et  seq.)  to  make  specific 
provision  for  judicial  review  of  board  action  and  for 
a  jury  trial  on  the  controlling  issues  of  fact." 

The  court  went  on  to  state  (p.  882): 

"This  principle,  that  when  every  requirement  of 
due  process  has  been  observed  by  the  board,  its  fact 
decisions,  unless  wholly  unsupported  are  not  subject 
to  review.  .  .  .  Under  this  principle,  it  is  of  the  essence 
of  the  validity  of  board  orders  and  of  the  crime  of  dis- 
obeying them  that  all  procedural  requirements  be 
strictly  and  faithfully  followed,  and  that  a  showing  of 
failure  to  follow  them  with  such  strictness  and  fidelity 
will  invalidate  the  order  of  the  board  and  a  conviction 
based  thereon. 

"The  reaction  against  and  retreat  from  the  rigors 
of  the  Falbo  decision,  that  board  orders  on  which  con- 
viction of  crime  and  deprivation  of  liberty  are  based, 
convictions  in  effect  by  administrative  fiat,  are  unre- 
viewable, was  to  some  extent  begun  in  the  earlier 
decisions.  It  remained  however  for  these  latest  cases 
to  bring  the  reaction  almost  full  circle  around  by  point- 
ing out  the  essentiality  to  due  process  of  the  recognition 
of  principle  that  if  the  deprivation  of  liberty  is  to  be 
in  effect  accomplished  by  the  action,  in  the  stress  and 


10 

pressure  of  a  war  effort,  of  administrative  bodies  of 
laymen,  strict  compliance  with  every  procedural  re- 
quirement is  essential  to  the  board's  jurisdiction  and 
the  validity  of  its  orders.  .  .  ." 

In  U.  S.  V.  Adragna,  No.  26196,  S.D.  Calif.,  January 
27,  1958,  Judge  Harry  Westover  decided  this,  and  other, 
submitted  cases,  he  had  tried  in  the  Fall  of  1957.  Counsel 
has  a  12  page  reporter's  transcript  of  the  January  27,  1958 
proceedings. 

In  this  Adragna  case  the  same  ("phony  meeting")  point 
was  raised.  There  was  some  preliminary  rehashing  of 
other  points  involved  and  then  the  following  took  place: 

"Now,  Your  Honor,  my  point  is  that  that  is  no 
meeting.    That  is  no  reconsideration. 

THE  COURT:     Is  this  the  phone  case? 

MR.  TIETZ:     Yes,  that  is  the  phone  case. 

THE  COURT:  I  Avill  ask  the  United  States  At- 
torney, can  you  have  a  meeting  of  the  board  by  phone 
and  just  asking  them?  They  are  supposed  to  consider 
the  problem.  They  are  not  supposed  to  take  the  re- 
port of  somebody  over  the  phone,  a  hearsay  report 
as  to  what  is  in  the  file,  what  is  in  the  report. 

^  Hf  It: 

THE  COURT:  I  don't  think  some  clerk  can  call 
up  a  local  board  and  say  so-and-so  has  filed  a  form 
and  this  is  what  it  contains.  I  think  the  board  should 
consider  the  evidence,  not  the  statement  of  what  the 
evidence  is  from  somebody  else." 

He  then  found  the  defendant  not  guilty. 

In  U.  S*.  v.  Nelson,  CR.  No.  45202,  E.D.N.Y.  decided 
March  19,  1958,  Byers,  Ch.  J.,  said: 


11 

"This  defendant  was  tried  to  the  court  on  Feb- 
ruary 27,  1958,  a  jury  having  been  duly  waived,  on  an 
indictment  charging  him  with  violating  the  Selective 
Service  Act  (Title  50  U.S.C.  App.  §  456  (j))  being  the 
offense  comprehended  in  §  462  (b)  (6)  of  that  statute." 

"The  only  important  argument  made  for  the  de- 
fendant is  that  his  local  board  did  not  adequately  con- 
sider his  application  for  a  reclassification,  because  it 
was  not  made  the  subject  of  a  hearing  before  the  board 
at  which  he  could  have  an  opportunity  to  be  present 
and  offer  the  testimony  of  witnesses  concerning  his  al- 
leged change  of  status  within  the  hierarchy  of  his  sect. 

"It  is  undisputed  that  the  unanimous  vote  of  the 
local  board  denying  the  application,  was  the  result 
of  a  canvass  of  all  members  taken  over  the  telephone 
by  the  clerk  of  the  board,  who  read  to  each  member 
the  defendant's  letter  dated  August  11,  1957.  Therein 
he  asserted  that  he  had  been  appointed  a  full-time 
Pioneer  Minister  on  August  1,  1957  in  consequence  of 
which  his  former  status  as  a  part-time  minister  had 
been  superceded,  wherefore  a  reclassification  was 
sought. 

"This  court  is  of  the  opinion  that  the  taking  of  the 
vote  over  the  telephone  did  not  accord  to  the  defend- 
ant the  process  contemplated  by  the  Regulation  1604.56 
which  in  material  part  reads: 

'*  *  *  A  majority  of  the  members  of  the  local 
board  shall  constitute  a  quorum  for  the  transaction 
of  business.  A  majority  of  the  members  present  at 
any  meeting  at  which  a  quorum  is  present  shall  de- 
cide any  question  or  classification  *  *  *.' 

"Regulation  1625.1  specifies  that  no  classification 
is  permanent,  and  subsequent  paragraphs   deal  with 


12 

the  procedure  involved  in  the  various  aspects  of  the 
matter. 

"Regulation  1625.2  seems  to  cover  the  situation  in- 
volved in  this  case. 

"The  local  board  was  here  confronted  with  the 
duty  of  examining  into  the  subject  of  the  registrant's 
actual  vocation  and  his  alleged  avocation,  with  a  view 
to  reaching  a  decision  based  upon  evidence.  That  func- 
tion could  not  be,  and  was  not  adequately  discharged 
in  the  manner  here  employed. 

See  U.  S.  v.  Diercks,  223  F.  2d  12; 
U.  S.  v.  Ransom,  223  F.  2d  15." 

CONCLUSION 

For  the  reasons  above  stated,  the  judgment  of  the  dis- 
trict court  should  be  reversed  and  an  order  entered  direct- 
ing the  district  court  to  render  and  enter  a  judgment  of  ac- 
quittal. 

Respectfully  submitted, 

J.   B.   TiETZ 

Attorney  joi-  Appellant 
February  19,  1968. 

I  certify  that,  in  connection  with  the  preparation  of 
this  brief,  I  have  examined  Rules  18  and  19  of  the  United 
States  Court  of  Appeals  for  the  Ninth  Circuit,  and  that, 
in  my  opinion,  the  foregoing  brief  is  in  full  compliance 
with  those  rules. 

J.  B.   TiETZ 

Attorney  for  Appellant 


13 


APPENDIX 

Plaintiff's  Exhibits: 

For  Identification 

In  Evidence 

1.    SSS  File 

13 

25 

2.    Vol.  App. 

13 

26 

3,    Waiver  of  Rights 

14 

26 

NO.     2  2  2  6  1 

IN  THE   UNITED  STATES  COURT  OF  APPEALS 

FOR   THE   NINTH  CIRCUIT 

THOMAS   JERRY   YEATER, 

Appellant, 
vs. 
UNITED   STATES   OF   AMERICA, 

Appellee. 

APPELLEE'S   BRIEF 


APPEAL  FROM 

THE    UNITED   STATES   DISTRICT   COURT 

FOR   THE    CENTRAL  DISTRICT   OF  CALIFORNIA 


WM.    MATTHEW   BYRNE,    JR., 

United  States  Attorney, 
ROBERT    L,    BROSIO, 

Assistant  U.    S.    Attorney, 
Chief  Criminal  Division, 
r-^  I   I      I—  r^  ARNOLD   G.    REGARDIE, 

r    I    L.  E  D  Assistant  U.    S.    Attorney, 


MAR  1  5 1968 
WM.  e.  LUCK,  CLERh 


1200  U.  S.  Court  House 
312  North  Spring  Street 
Los  Angeles,    California  90012 

Attorneys  for  Appellee, 
United  States  of  America. 


NO.     2  2  2  6  1 

IN   THE    UNITED   STATES   COURT  OF  APPEALS 

FOR    THE    NINTH  CIRCUIT 

THOMAS   JERRY   YEATER, 

Appellant, 
vs. 
UNITED   STATES  OF   AMERICA, 

Appellee. 

APPELLEE'S   BRIEF 


APPEAL  FROM 

THE    UNITED   STATES   DISTRICT   COURT 

FOR    THE    CENTRAL  DISTRICT   OF   CALIFORNIA 


WM.    MATTHEW   BYRNE,    JR.  , 
United  States  Attorney, 

ROBERT    L.    BROSIO, 

Assistant  U.    S.    Attorney, 
Chief  Criminal  Division, 

ARNOLD   G.    REGARDIE, 
Assistant  U.    S.    Attorney, 

1200  U.  S.  Court  House 
312  North  Spring  Street 
Los  Angeles,    California  90012 

Attorneys  for  Appellee, 
United  States  of  America. 


TOPICAL  INDEX 

Page 

Table  of  Authorities  ii 

I               JURISDICTIONAL  STATEMENT  1 

n             STATUTE  INVOLVED  2 

III  QUESTIONS   PRESENTED  3 

IV  STATEMENT   OF   FACTS  3 
ARGUMENT  10 

A.  APPELLANT   IS   PRECLUDED   FROM 
ARGUING   THE   IMPROPRIETY   OF    HIS 
CLASSIFICATION  BY   VIRTUE   OF    HIS 
FAILURE   TO   EXHAUST    HIS  ADMINIS- 
TRATIVE  REMEDIES.  10 

B.  APPELLANT   IS   PRECLUDED   FROM 
ASSERTING   DENIAL  DUE    PROCESS   BY 
THE   FAILURE   OF   THE   LOCAL   BOARD 
TO  REOPEN   HIS   CLASSIFICATION  AFTER 
HE   HAD   BEEN  ORDERED   TO  REPORT 

FOR   INDUCTION.  12 

CONCLUSION  19 

CERTIFICATE  20 


TABLE  OF  AUTHORITIES 

Cases  Page 

Ayers  v.    United  States, 

58  F.  2d  607  (8th  Cir.    1932)  13 

Davis  V.    United  States, 

374  F.  2d  1  (5th  Cir.    1967)  14 

Doty  V.    United  States, 

218  F.  2d  93  (8th  Cir.    1955) 

Evans  v.    United  States, 

252  F.  2d  509  (9th  Cir.    1958) 

Jeffries  v.    United  States, 

169  F.  2d  86  (10th  Cir.    1948) 

Lucas  v.    United  States, 

343  F.  2d  1  (8th  Cir.    1965) 

Maddox  v.    United  States, 

264  F.  2d  243  (6th  Cir.    1959) 

Miller  v.    United  States, 

9th  Cir.  ,    No.    21,417,    December  29,    1967 

Olvera  v.    United  States, 

223  F.  2d  880  (5th  Cir.    1955) 

Skinner  v.    United  States, 

215  F.  2d  767  (9th  Cir.    1954), 
cert,    denied  348  U.  S.    981 

Swaczyk  v.    United  States, 

156  F.  2d  17  (1st  Cir.    1946), 
cert,    denied  329  U.  S.    726 

United  States  v.    Kauten, 

133  F.  2d  703  (2nd  Cir.    1943) 

United  States  v.    Miller, 

316  F.  2d  81  (6th  Cir.    1963), 
cert,    denied  375  U.S.    935 

United  States  v.    Nichols, 

241  F.  2d  1  (7th  Cir.    1957) 

United  States  v.    Palmer, 

223  F.  2d  893  (3rd  Cir.    1955), 
cert,    denied  350  U.S.    873 

ii 


Page 

Williams  v.    United  States, 

203  F.  2d  85  (9th  Cir.    1953), 

cert,    denied  345  U.S.    1003  11 

Woo  V.    United  States, 

350  F.  2d  992  (9th  Cir.    1965)  16 

Statutes 

Title  18,   United  States  Code,    §3231  2 

Title  28,    United  States  Code,    §1291  2 

Title  28,    United  States  Code,    §1294  2 

Title  50,    United  States  Code,  Appendix  §462  1,   2 

Rules  and  Regulations 

Title  32,    Code  of  Federal  Regulations: 

§1604.58  18 

§1624.  1(a)  12 

§1625. 2  14,  15,  17 

§1625.4  17 

§1641. 2(b)  12 

Federal  Rules  of  Criminal  Procedure: 

Rule  18  2 

Rule  37(a)  2 


NO.     2  2  2  6  1 

IN   THE    UNITED   STATES   COURT  OF  APPEALS 

FOR   THE   NINTH  CIRCUIT 

THOMAS   JERRY   YEATER, 

Appellant, 
vs. 
UNITED   STATES   OF   AMERICA, 

Appellee. 

APPELLEE'S   BRIEF 


I 

JURISDICTIONAL  STATEMENT 

The  appellant,    Thomas  Jerry  Yeater,    was  indicted  on  April  26, 
1967.     The  indictment  was  brought  under  Title  50,    United  States  Code, 
Appendix  §462  and  charged  that  the  appellant  failed  and  refused  to  be 
inducted  into  the  armed  forces  of  the  United  States  as  so  notified  and 
orderedtodo[C.T.  2].   -'    On  May  22,    1967,    appellant  pleaded  not 
guilty.      The  case  proceeded  to  trial  before  the  Honorable  Irving  Hill 
on  June  27,    1967,    trial  by  jury  having  been  waived.     Appellant  was 


ly  "C.  T.  "  refers  to  Clerk's  Transcript  of  Proceedings. 

1. 


found  guilty  and  sentenced  on  July  24,    1967  to  three  years  imprison- 
ment [C.T.    4]. 

Appellant's  Notice  of  Appeal  was  timely  filed  on  July  26, 
1967  [C.  T.    5]. 

The  jurisdiction  of  the  District  Court  was  based  upon  Title 
50   U.S.C.    App.    §462,    Title  18  U.  S.  C.    §3231  and  Rule  18  of  the 
Federal  Rules  of  Criminal  Procedure.     This  Court  has  jurisdiction 
to  review  the  judgment  of  the  District  Court  pursuant  to  Title  2  8 
U.S.C.    §§  1291  and  1294  and  Rule  37(a)  of  the  Federal  Rules  of 
Criminal  Procedure. 

II 

STATUTE   INVOLVED 

Title  50    U.S.C.   App.    §462,    provides  in  pertinent  part  as 
follows: 

"Any  member  of  the  Selective  Service  System 
or  any  other  person  charged  as  herein  provided  with 
the  duty  of  carrying  out  any  of  the  provisions  of  this 
title  ...    or  the  rules  or  regulations  made  or  direc- 
tions given  thereunder,    who  shall  knowingly  fail  or 
neglect  to  perform  such  duty  ...    or  who  otherwise 
evades  or  refuses  .    .    .    service  in  the  armed  forces 
or  any  of  the  requirements  of  this  title  ...    or  who 
in  any  manner  shall  knowingly  fail  or  neglect  or  refuse 
to  perform  any  duty  required  of  him  under  or  in  the 

2. 


execution  of  this  title  ...    or  rules,    regulations  or 
directions  made  pursuant  to  this  title  .    .    .    shall,    upon 
conviction  in  any  district  court  of  the  United  States  of 
competent  jurisdiction,    be  punished  by  imprisonment 
for  not  more  than  five  years  or  a  fine  of  not  more  than 
$10,  000,    or  by  both.    ..." 

Ill 

QUESTIONS    PRESENTED 

A.  Is  Judicial  Review  of  Appellant's  Classification  Possible 
Where  Administrative  Remedies  Have  Not  Been  Exhausted? 

B.  Was  Appellant  Denied  Due  Process  By  the  Failure  of  the 
Local  Board  to  Reopen  His  Classification  After  He  Had 
Been  Ordered  to  Report  for  Induction? 

IV 

STATEMENT   OF   FACTS 

At  the  time  of  the  trial  of  this  case  a  photographic  copy  of 
the  Official  Selective  Service  File  of  appellant  was  offered  and 

admitted  in  evidence  as  Government's  Exhibit  No.    1  [R.  T.    25,    lines 

2/ 
22-23].   —      This  copy  had  attached  to  it  a  certificate  by  Captain 

T.    D.    Proffitt,    U.  S.A.  F.    (Ret.),    District  Coordinator,    Selective 


2j  "R.  T.  "  refers  to  Reporter's  Transcript  of  Record. 

3. 


Service  System,    that  it  was  a  full,    true  and  correct  copy  of  the 
original  file  of  which  he  had  legal  custody.     Also  attached  was  a 
certificate  and  seal  of  the  Staff  Secretary,    Headquarters,    Southern 
Area,    Selective  Service  System,   to  the  effect  that  Captain  Proffitt 
was  the  District  Coordinator  and  had  custody  of  the  original  selec- 
tive service  file  of  the  appellant. 

This  file  revealed  the  following  events  with  respect  to 
appellant's  registration  status  in  the  Selective  Service  System: 

On  June  30,    1958  appellant  registered  at  Local  Board  No.  100, 
Los  Angeles,    California  [pp.    1-3].   i/    On  May  1,    1959  the  Local 
Board  mailed  him  a  classification  questionnaire  which  he  completed 
and  returned  to  the  Board  on  May  5,    1959  [pp.    5-11].     In  Series  6 
of  this  form,    appellant  stated  that  he  was  not  a  minister.     He  did 
not  sign  the  conscientious  objector  claim  in  Series  7,    which  instructs 
the  registrant  to  sign  if  he  claims  to  be  a  conscientious  objector  and 
tells  him  not  to  sign  unless  he  claims  exemption  as  a  conscientious 
objector  [p.    7].     Appellant  also  left  blank  Series  8  of  the  question- 
naire requesting  the  names  of  any  dependents  who  are  wholly  or 
partially  dependent  upon  him  for  support  [p.    7]. 

On  August  17,    1961  appellant  was  classified  1 -A  and  on 
August  21,    1961  he  was  mailed  notice  of  that  classification  [p.    12], 
Appellant  did  not  appeal  from  this  classification.     On  March  11, 
1963  the  Local  Board  mailed  him  an  order  to  report  for  armed  forces 
physical  examination  on  April  5,    1963  [p.    23].     Appellant  was 


3^/  Refers  to  pages  of  appellant's  Selective  Service  File, 

Government's  Exhibit  No.    1. 

4. 


examined  on  the  latter  date  and  found  fully  acceptable  for  induction 
[p.    24]. 

On  September  10,    1963  the  Local  Board  mailed  appellant 
an  order  to  report  for  induction  on  September  30,    1963  [p.    28].     On 
September  17,    1963  he  appeared  at  the  Local  Board  office  and  handed 
the  Board  a  written  request  for  a  Form  150  for  conscientious  objec- 
tors [pp.    12,    29].     Appellant  stated  that  the  request  was  made  "due 
to  the  fact  that  I  am  one  of  Jehovah's  Witnesses  and  cannot  accept 
military  duty.  "    He  further  said,    "l  did  not  report  this  information 
sooner  as  I  assumed  this  would  be  taken  up  at  examination  for  induc- 
tion. "    [p.    29].     The  Local  Board  handed  appellant  a  Form  150  on 
September  17,    1963  which  he  completed  and  returned  on  September 
23,    1963  [pp.    12,    34].     Upon  receiving  appellant's  Form  150,    the 
Local  Board  requested  permission  to  postpone  and  reopen  his  case 
for  the  purpose  of  evaluating  his  claim  [p.    31].     This  permission 
was  given  [p.    41].     His  induction  was  postponed  until  further  notice 
[p.    32].     On  October  28,    1963  the  Local  Board  scheduled  an  interview 
with  the  appellant  [p.    42].     Appellant  appeared  at  the  interview  after 
which  the  Board  decided  that  he  was  not  a  conscientious  objector  and 
classified  him  1-A  [pp.    12,    43-44].     Appellant  did  not  appeal  from 
this  classification. 

On  November  19,    1963  the  Local  Board  mailed  appellant  an 
order  to  report  for  induction  on  December  9,    1963  [p.    45].     On 
December  5,    1963  the  Local  Board  received  a  handwritten  letter 
addressed  to  the  Los  Angeles  Examining  and  Induction  Station  from 
appellant's  naother  in  which  it  stated  in  part:     "I  need  him  home.    He 

5. 


has  been  paying  the  rent  of  $90  a  month  for  us  as  my  husband  has 
been  in  and  out  of  the  hospital  since  last  July  and  is  not  able  to 
work,    so  the  only  income  is  his  pension.     I  am  also  under  the  doc- 
tor's care  with  peptic  ulcers.     I  don't  understand  the  reason  for 
taxpayers  to  support  these  men  when  they  have  means  of  taking  care 
of  there  (sic)  family.  "    [pp.    46-47].     Also  on  December  5,    1963 
appellant's  mother  telephoned  the  Local  Board  and  in  response  to 
that  phone  call  the  Local  Board  sent  appellant  a  dependency  question- 
naire to  be  completed  by  him  [pp.    50-51].     On  December  6,    1963 
appellant  telephoned  the  Board  and  requested  the  postponement  to 
permit  consideration  of  his  mother's  dependency  status  [p.    52]. 
The  Local  Board  thereafter  requested  postponement  of  appellant's 
induction  [p.    53].     His  induction  was  postponed  [p.    54]. 

On  December  31,    1963  the  Local  Board  received  a  dependency 
questionnaire  completed  by  appellant  [pp.    57-60].     On  this  form 
appellant  indicated  that  he  was  working  as  an  appliance  repairman 
but  did  not  disclose  his  salary  or  wages  or  his  income  as  requested 
[p.    57].     In  Series  3  of  the  form,    appellant  indicated  that  he  contri- 
buted $140  per  month  to  the  support  of  his  mother  [p.    58].     Appellant's 
mother  signed  a  statement  that  he  "pays  rent,    utilities,    and  helps 
with  my  medicine.  "    [p.    60].     On  January  8,    1964  the  Local  Board 
classified  appellant  3-A  and  on  January  16,    1964  he  was  mailed 
notice  of  this  classification  [p.    13]. 

On  January  2  8,    1965  the  Local  Board  mailed  appellant  another 
dependency  questionnaire  which  he  returned  on  February  8,    1965 
together  with  a  handwritten  letter  [pp.   64-70].     In  this  letter 

6. 


appellant  stated  that  he  was  laid  off  from  his  job  in  April  of  1964 
and  was  injured  in  May  of  that  year  and  therefore  "I'm  not  able  to 
support  anyone.  "    [p.    65].     On  March  9,    1965  the  Local  Board 
requested  that  appellant  have  his  physician  provide  the  Local  Board 
with  a  letter  verifying  his  injury  [p.    71].     On  April  22,    1965  the 
Local  Board  wrote  appellant's  treating  physician  but  received  no 
reply  and  requested  appellant  to  contact  the  doctor  and  obtain  a 
letter  from  him  [pp.    77-78].     No  letter  from  the  physician  was 
forthcoming,    and  on  June  22,    1965  the  Local  Board  mailed  appellant 
an  order  to  report  for  induction  on  July  13,    1965  [p.    82].     On  June 
30,    1965  appellant  wrote  the  Board  asking  for  postponement  of  his 
induction  and  gave  details  of  his  injury  [pp.    84-85].     On  July  1,    1965 
appellant's  induction  was  postponed  [p.    86]. 

On  July  23,    1965  the  Local  Board  mailed  appellant  an  Order 
to  Report  for  Armed  Forces  Physical  Examination  on  August  18, 

1965  [p.    88].     Appellant  reported  and  subsequently  was  notified  that 
he  had  been  temporarily  rejected  but  that  he  should  return  for 
further  examination  on  or  about  February  1966  [p.    89].     On  October 
5,    1965  appellant  was  classified  1-Y  (qualified  for  military  service 
only  in  time  of  war  or  national  emergency)  and  on  October  7,    1965 
he  was  mailed  notice  of  this  classification  [pp.    13,    90-91].     On 
January  25,    1966  the  Local  Board  mailed  him  another  order  to 
report  for  Armed  Forces  Physical  Examination  on  February  10, 

1966  [p.  92].  Appellant  reported  for  the  examination  and  was  found 
fully  acceptable  for  induction  [p.  93].  On  March  31,  1966  appellant 
was  classified  1 -A  and  on  April  5,    1966  he  was  mailed  notice  of  this 

7. 


classification  [pp.    14,    96-97].     Appellant  did  not  appeal  from  this 
classification. 

On  April  19,    1966  the  Local  Board  mailed  appellant  an 
Order  to  Report  for  Induction  on  May  24,    1966  [p.    98].     This  order 
was  returned  to  the  Local  Board  by  the  Post  Office  with  the  notation 
that  appellant  had  moved  and  left  no  address  [p.    99].     The  Local 
Board  thereafter  wrote  several  letters  attempting  to  locate  appellant 
[pp.    100-105].     On  May  13,    1966  the  Local  Board  received  a  letter 
from  appellant  stating  that  he  had  received  the  Board's  letter  telling 
him  to  prepare  for  induction  on  May  24,    1966  [pp.    106-116].     In 
this  letter  appellant  stated  that  he  had  flat  feet  [p.    lll].and  that  his 
injured  leg  was  one-half  inch  shorter  than  his  other  leg  [p.    112]. 
Appellant  did  admit  that  about  a  week  after  he  was  classified  3 -A  in 
January  1964  he  lost  his  job  and  was  out  of  work  [pp.    107-108]. 
Appellant  further  claimed  that  it  would  be  a  hardship  on  his  mother 
for  him  to  be  inducted  since  his  mother  had  acquired  obligations 
which  he  would  have  to  pay  [p.    113].     On  May  16,    1966  the  Local 
Board  postponed  appellant's  induction  until  further  notice  [p.    118]. 

On  May  17,    1966  the  Local  Board  mailed  to  the  Armed 
Forces  Examination  and  Entrance  Station  a  copy  of  a  letter  from 
appellant's  physician  [p.    120].     The  letter  from  appellant's  physician 
stated:    "I  have  seen  and  treated  this  young  man  because  of  pain  in 
his  right  leg.     Sometime  ago  he  had  a  very  severe  fracture  of  the 
right  leg  which  presently  shows  good  healing  of  the  tibia.     He  has 
however  been  left  with  a  short  right  leg,    the  right  leg  measuring 
35-3/4",    the  left  measuring  36-1/4",    and  I  have  prescribed  for 

8. 


him  a  3/16"  general  heel  lift  on  the  right.     This  injury  occurred 
in  1964,    and  the  patient  was  in  a  cast  approximately  seven  months.  " 
[p.    133].     The  Armed  Forces  Examination  Station  noted  that  despite 
the  1/2  inch  shortness  in  his  leg  he  remained  acceptable  for  mili- 
tary service  [pp.    120-121]. 

On  June  21,    1966  the  Local  Board  ordered  appellant  to 
report  for  induction  on  July  12,    1966.     On  June  27,    1966  the  Local 
Board  received  a  letter  from  appellant's  mother  stating  that  appel- 
lant pays  $100  a  month  expenses  on  her  behalf  [p.    123].     On  July  1, 
the  Local  Board  reviewed  appellant's  file  and  decided  that  the  facts 
presented  by  his  mother  did  not  warrant  a  postponement  of  his 
induction  [pp.    14,    125].     On  July  2,    1966  appellant's  mother  wrote 
another  letter  to  the  Local  Board  in  which  she  mentioned  that  he 
was  needed  at  home  to  pay  $100  per  month  of  her  expenses  and  that 
he  had  flat  feet  and  a  leg  1/2  inch  shorter  than  the  other  [p.    126]. 
On  July  5,    1966  the  Local  Board  notified  appellant's  mother  that 
her  letter  had  been  received  and  the  Board  had  decided  that  the  facts 
contained  therein  did  not  warrant  postponement  of  his  induction  or 
reopening  of  his  classification  [p.    128]. 

On  July  12,    1966  appellant  appeared  at  the  induction  station 
as  ordered.     His  medical  examination  was  brought  up  to  date  and  he 
was  given  a  physical  inspection  and  an  orthopedic  consultation 
[pp.    130,    138].     Appellant  had  previously  completed  a  report  of 
medical  history  in  which  he  claimed  to  have  or  have  had  swollen  or 
painful  joints,    dizziness  or  fainting  spells,    ear,    nose,    or  throat 
trouble,    running  ears,    pain  or  pressure  in  chest,    cramps  in  legs, 

9. 


coughed  up  blood,   frequent  or  painful  urination,    and  foot  trouble 
[p.    136].     During  his  examination  appellant  indicated  that  he  was 
refusing  to  go  into  the  armed  services  because  of  possible  residual 
problems  from  his  injured  leg  [pp.    130,    138].     During  appellant's 
processing  for  induction  he  left  the  induction  station  and  never 
returned  [p.    130]. 

ARGUMENT 


A.  APPELLANT   IS   PRECLUDED   FROM 

ARGUING   THE   IMPROPRIETY   OF   HIS 
CLASSIFICATION   BY   VIRTUE   OF   HIS 
FAILURE    TO  EXHAUST   HIS   ADMINIS- 
TRATIVE  REMEDIES. 


Appellant  contends  that  there  was  no  basis  in  fact  for  the 
denial  by  his  Local  Board  of  a  draft  deferment  based  on  either 
(1)  physical  disability  or  (2)  hardship  [Appellant's  Brief,    p.    6]. 

It  is  a  moot  point.     Appellant  was  classified  1-A  on  March  31, 
1966  and  was  mailed  a  notice  thereof  on  April  5,    1966.     Appellant 
did  not  appeal  from  this  classification,    nor  any  prior  1-A  classifica- 
tion [Ex.    1,    pp.    12-15;    R.  T.    78,    lines  2-7].     Subsequent  to  the 
mailing  on  May  9,    1966  of  the  Order  to  Report  for  Induction,    appel- 
lant raised  questions  concerning  his  physical  condition  and  his 
mother's  financial  dependency  on  him  [Ex.    1,    pp.    14,    15]. 

The  general  rule  is  that  a  selective  service  registrant  who 
believes  that  he  has  been  rendered  subject  to  military  service  by 
an  erroneous  classification  or  arbitrary  action  of  his  local  board 

10. 


must  exhaust  all  his  administrative  remedies  before  his  claim  may 
be  heard  in  court. 

United  States  v.    Kauten,    133  F.  2d  703 

(2nd  Cir.    1943); 
Swaczyk  v.    United  States,    156  F.  2d  17 

(1st  Cir.    1946),    cert,    denied  329  U.S.    726; 
Jeffries  v.    United  States,    169  F.  2d  86 

(10th  Cir.    1948); 
Williams  v.    United  States,    203  F.  2d  85 

(9th  Cir.    1953),    cert,    denied  345  U.S.    1003; 
Doty  V.    United  States,    218  F.  2d  93 

(8th  Cir.    1955); 
United  States  v.    Palmer,    223  F.  2d  893 

(3rd  Cir.    1955),    cert,    denied  350  U.S.    873; 
United  States  v.    Nichols,    241  F.  2d  1 
(7th  Cir.    1957). 
Failure  to  appeal  from  his  last  classification  by  the  local 
board  will  preclude  a  registrant  from  claiming  such  classification 
was  improper. 

Skinner  v.    United  States,    215  F.  2d  767 

(9th  Cir.    1954),    cert,    denied  348  U.  S.    981; 
Evans  v.    United  States,   252  F.  2d  509 

(9th  Cir.    1958); 
Maddox  v.    United  States.    264  F.  2d  243 
(6th  Cir.    1959). 
The  selective  service  regulations  expressly  provide  for 

11. 


appeal  by  a  registrant  "if  he  files  a  written  request  therefor  within 
ten  days  after  the  local  board  has  mailed  a  notice  of  classification 
to  him.  " 

32  C.F.R.    §1624.  1(a). 

The  regulations  further  provide  that  "[i]f  a  registrant  or  any 
other  person  concerned  fails  to  claim  and  exercise  any  right  or 
privilege  within  the  required  time,    he  shall  be  deemed  to  have 
waived  the  right  or  privilege.  " 

32  C.F.R.    §1641.  2(b). 

Therefore,    in  view  of  appellant's  failure  to  appeal  his  1 -A 
classification  he  cannot  now  be  heard  to  complain  that  such  classifi- 
cation was  without  basis  in  fact. 


B.  APPELLANT   IS   PRECLUDED   FROM 

ASSERTING   DENIAL  DUE    PROCESS   BY 
THE    FAILURE    OF   THE    LOCAL   BOARD 
TO  REOPEN   HIS   CLASSIFICATION  AFTER 
HE    HAD   BEEN  ORDERED    TO  REPORT 
FOR   INDUCTION. 


Appellant  urges  that  the  question  of  denial  of  due  process 
was  raised  by  the  mere  presentation  in  evidence  of  his  Selective 
Service  System  file  [Appellant's  Brief,    p.    5].     However,    he  cites  no 
legal  authority  to  uphold  his  unique  theory.     No  such  issue  was  raised 
in  the  trial  court  [R.  T.    100,    lines  13-17].     A  reviewing  court  will 
not  consider  a  constitutional  question  raised  for  the  first  time  on 
appeal. 


12. 


( 


United  States  v.    Miller.    316  F.  2d  81,    83 

(6th  Cir.    1963),   cert,   denied  375  U.S.    935. 
A  court  on  appeal  will  only  review  rulings  made  by  a  trial 
court  on  questions  brought  to  its  attention  and  passed  upon  by  it. 
Error  cannot  be  predicated  upon  the  reception  of  evidence  with 
respect  to  which  no  challenge  has  been  made  in  the  trial  court. 
Ayers  V.    United  States,    58  F.  2d  607,    608 

(8th  Cir.    1932); 
Lucas  V.    United  States.    343  F.  2d  1,   4 
(8th  Cir.    1965). 
Even  if  the  issue  had  been  litigated  at  trial,    appellant's  con- 
tention could  not  be  hpheld,    as  explained  below. 

Appellant  claims  that  the  local  board  illegally  failed  to  reopen 
his  classification.     Appellant  was  classified  1-A  on  March  31,    1966. 
and  on  April  19.    1966  was  ordered  to  report  for  induction  on  May  24, 
1966.     This  date  was  subsequently  postponed  to  July  12,    1966  [Ex. 
1,    pp.    14,    122].      Letters  from  appellant's  mother  claiming  financial 
dependence  on  her  son  were  received  on  June  27,    1966  and  July  5, 
1966  [Ex.    1,    pp.    14,    15,    123,    126],    approximately  three  months 
after  he  had  been  classified  1-A. 

The  law  is  clear  on  the  point  in  issue.     The  Board  may 
determine  whether  to  reopen  and  reclassify  on  its  own  motion  unless 
an  order  to  report  for  induction  has  been  issued.     After  the  issuance 
of  such  an  order  the  local  board  cannot  reopen  "unless  [it]  first 
specifically  finds  there  has  been  a  change  in  the  registrant's  status 
resulting  from  circumstances  over  which  the  registrant  had  no 

13. 


control.  " 

32  C.F.R.    §1625.  2. 
This  issue  was  considered  recently  in  Davis  v.    United  States, 

374  F.2d  1,    4  (5th  Cir.    1967)  where  the  court  stated: 

"The  pertinent  regulation  categorically  declares 
that  the  classification  of  a  registrant  shall  not  be  re- 
opened after  an  order  to  report  for  induction  has  been 
mailed  unless  there  is  a  specific  finding  by  the  local 
board  of  'a  change  in  the  registrant's  status  resulting 
from  circumstances  over  which  the  registrant  had  no 
control'  ....     The  Board  found  no  such  change  of 
status.     The  validity  of  this  regulation  (1625.  2)  has 
been  consistently  upheld.  "    (Citations  omitted). 

Cases  where  a  claimed  change  of  status  is  made  before  the 
induction  notice  is  mailed  must  be  distinguished.     This  was  the 
situation  in  Olvera  v.    United  States,    223  F.  2d  880  (5th  Cir.    1955), 
cited  by  appellant  [Appellant's  Brief,    p.    9].     There,    a  claim  of 
change  of  status  was  made  before  the  induction  notice  was  mailed 
and  when  the  defendant  first  registered. 

The  foregoing  authorities  clearly  indicate  that  a  registrant's 
classification  will  not  be  reopened  after  he  has  been  ordered  to 
report  for  induction  unless  the  board  specifically  finds  a  change  in 
circumstances  over  which  the  registrant  had  no  control.     In  the  case 
at  bar  no  such  finding  was  made  [Ex.    1,    p.    12  5].      The  phrase  "cir- 
cumstances over  which  the  registrant  had  no  control"  implies  a 

14. 


sudden  event  -  something  that  has  not  arisen  before.     There  is  no 
evidence  in  the  file  that  appellant's  mother  became  "suddenly" 
financially  dependent  on  him.     In  fact  the  evidence  points  to  a  con- 
trary conclusion  since  this  question  of  a  dependency  deferment  on  a 
hardship  basis  for  appellant  was  first  considered  by  the  board  and 
granted  on  January  8,    1964  [Ex.    1,    p.    13],    and  was  again  brought  to 
the  board's  attention  by  appellant's  letter  dated  May  11,    1968  [Ex.    1, 
pp.    106-116]. 

The  board  reviewed  appellant's  file  and  denied  a  postpone- 
ment of  induction  on  July  1,    1966  after  receiving  a  letter  from 
appellant's  mother  on  June  27,    1966,    wherein  she  claimed  financial 
dependence  on  him  [Ex.    1,    pp.    123,    125].     Note  that  the  Board  did 
reconsider  appellant's  classification,    in  accordance  with  32  C.  F.  R. 
§1625.  2,    but  found  no  change  of  status  warranted.     Appellant's  brief 
makes  no  mention  of  this  fact.     Another  letter  from  appellant's 
mother  was  received  on  July  5,    1966  [pp.    126,    127]  reiterating  her 
financial  dependence  on  the  appellant.     The  board  again  denied  a 
postponement  of  induction  on  the  same  day  [p.    12  8].     Appellant  points 
to  this  particular  denial  as  error  [Appellant's  Brief,    p.    8]   claiming 
that  appellant's  classification  should  have  been  reopened.     In  fact, 
as  explained  above,    the  board  did  reconsider  appellant's  classifica- 
tion when  his  mother's  first  letter  was  received. 

"This  is  not  a  case  where  the  registrant  had  presented 
new  facts  to  the  board  for  the  first  time  in  support  of 
his  prayer  for  reopening  ....     We  hold  that  a  local 
board  does  not  act  arbitrarily  and  unreasonably  in 

15. 


refusing  to  consider  a  claim  of  exempt  status  by  a  con- 
scientious objector  when  the  same  claim  has  previously 
been  considered  and  rejected  and  the  registrant  has 
not  invoked  the  administrative  remedies  which  would 
have  brought  about  a  thorough  investigation  and  hear- 
ing of  all  aspects  of  his  claim.  "    [Emphasis  added] 
Woo  V.    United  States,    350  F.  2d  992,    995 
(9th  Cir.    1965). 
While  the  claim  in  question  in  Woo  was  conscientious  objection  and 
not  hardship,    as  here,    the  logic  is  quite  applicable  to  this  situation. 

A  review  of  appellant's  selective  service  file  indicates  an 
almost  frantic  last  minute  attempt  to  avoid  induction.     Appellant's 
reaction  on  this  occasion  appears  to  have  been  largely  a  duplication 
of  a  past  effort,    in  that  on  September  17,    1963,    after  being  ordered 
to  report  for  induction  on  September  30,    1963,    he  appeared  before 
his  local  board  and  requested  a  conscientious  objector  form.     Classi- 
fication as  a  conscientious  objector  was  subsequently  denied  and 
appellant  again  ordered  to  report  for  induction  on  December  9,    1963. 
Appellant  then  requested  a  dependency  deferment  and  this  was 
granted.     "Simply  by  refusing  or  neglecting  to  invoke  the  administra- 
tive machinery  for  thorough  investigation,    such  a  registrant  could 
always  create  a  one-sided  record  before  the  board  which  would 
enable  him  to  require  reconsideration  whenever  induction  became 
imminent.  "    Such  conduct  would  create  a  shambles  of  this  area  of 
selective  service  classification. 

Woo  V.    United  States,    supra,    at  995,    996. 
16. 


In  view  of  these  events,    it  is  difficult  to  comprehend  how 
appellant  can  claim  that  "new  facts"  were  presented  to  the  board  on 
July  5,    1966  so  as  to  make  a  "prima  facie  case  for  a  new  classifica- 
tion",   within  the  purview  of  Miller  v.    United  States,    9th  Cir.  , 
December  29,    1967,    No.    21,417.     It  is  equally  incredulous  that 
appellant  can  allude  to  a  foreclosure  of  his  administrative  rights 
when  he  never  appealed  any  of  his  1-A  classifications  [Appellant's 
brief,    p.    12a]. 

One  remaining  point  must  be  considered.     Appellant  makes 
a  strong  and  serious  implication  of  a  "phony  meeting"  by  the  local 
board,    in  connection  with  the  above-discussed  issue  of  the  reopening 
of  his  classification  [Appellant's  Brief,    p.    10].     In  a  case  where  the 
board  has  refused  to  reopen  a  registrant's  classification,    "...    the 
local  board  by  letter,    shall  advise  the  person  filing  the  request  that 
the  information  submitted  does  not  warrant  the  reopening  of  the 
registrant's  classification  and  shall  place  a  copy  of  the  letter  in  the 
registrant's  file.     No  other  record  of  the  receipt  of  such  a  request 
and  the  action  taken  thereon  is  required.  "    32  C.  F.  R.    §1625.4 
(Emphasis  added). 

Since  §1625.2  of  the  Selective  Service  regulations  is  silent 
as  to  what  action  a  board  must  take  following  a  finding  of  no  change 
in  registrant's  status  resulting  from  circumstances  beyond  his  con- 
trol,   after  an  Order  to  Report  for  Induction  has  been  mailed,    it  is 
logical  to  read  §1625.  4  in  conjunction  with  it,    since  the  latter  section 
deals  generally  with  a  refusal  to  reopen  and  reconsider  a  registrant's 
reclassification. 

17. 


The  purport  of  the  regulations  when  read  together  is  that 
members  are  not  required  to  be  present  at  a  meeting  of  the  board 
to  specially  consider  the  question  of  reclassification  when  no  new 
facts  arising  from  circumstances  over  which  the  registrant  had  no 
control  which  would  justify  a  change  in  status  have  been  adduced, 
as  here.     The  board  in  this  instance  went  beyond  its  record-keeping 
requirements:     it  recorded  its  decision  in  the  minutes,    while  the 
only  requirement  was  to  place  a  copy  of  the  letter  to  the  registrant 
in  his  file.     No  other  record  of  the  action  taken  was  required.     It 
follows  that  if  no  other  record  is  required  than  no  entry  in  the 
minutes  is  required.     A  fortiori,    if  no  entry  in  the  minutes  is 
required  then  no  board  meeting,    of  which  the  nninutes  are  a  record, 
is  required. 

"Each  local  board  shall  keep  a  record  of  each  meeting 
of  the  board  on  Local  Board  Actions  and  Minutes  (SSS 
Form  No.    112)  which  shall  be  filed  by  the  local  board 
as  minutes  of  its  meetings.  " 
32  C.F.R.    §1604.  58. 

It  is  important  to  note  that  the  board  did  review  appellant's 
file  in  response  to  the  first  letter  from  his  mother,    received  by  the 
board  on  June  27,    1966  [Ex.    1,    pp.    123,    125].     While  the  board's 
response  to  the  second  letter  from  his  mother  does  not  say  that  the 
file  was  again  reviewed  [Ex.    1,    p.    128],    to  do  so  would  be  of  no 
effect  since  appellant  was  urging  the  board  to  reconsider  a  matter 
it  had  just  reviewed  a  few  days  previously.     To  require  a  board  to 

18. 


hold  a  meeting  each  time  a  registrant  wrote  a  letter  to  it,   where 
the  information  presented  was  non-cumulative  in  effect  and  had  been 
previously  considered,    would  be  inconsistent  with  the  goal  of  an 
orderly,    efficient  selective  service  system.     A  contrary  conclusion 
would  place  an  undue  burden  on  local  boards. 

CONCLUSION 

For  the  foregoing  reasons  it  is  respectfully  submitted  that 

the  decision  of  the  trial  court  should  be  affirmed. 

Respectfully  submitted, 

WM.    MATTHEW   BYRNE,    JR., 
United  States  Attorney, 

ROBERT    L.    BROSIO, 

Assistant  U.    S.    Attorney, 
Chief,    Criminal  Division, 

ARNOLD   G.    REGARDIE, 
Assistant  U.   S.   Attorney, 

Attorneys  for  Appellee, 
United  States  of  America. 


19. 


CERTIFICATE 

I  certify  that,    in  connection  with  the  preparation  of  this 
brief,    I  have  examined  Rules  18,    19  and  39  of  the  United  States 
Court  of  Appeals  for  the  Ninth  Circuit,    and  that,    in  my  opinion, 
the  foregoing  brief  is  in  full  compliance  with  those  rules. 


/s/        Arnold  G.    Regardie 
ARNOLD    G.    REGARDIE 


20. 


IN  THE 


United  States  Court  of  Appeals 

FOR  THE  NINTH  CIRCUIT 


No.  22261 


THOMAS  JERRY  YEATER, 
Appellant, 


vs. 


UNITED  STATES  OF  AMERICA, 
Appellee. 


APPELLANT'S  CLOSING  BRIEF 


''"-eo 


/^pn  ,  J-  B.  TiETZ 


^      1968  410  Douglas  Building 


^Q[^  Q  257  South  Spring  Street 

~         ^^  il(C/f  Q,  ^^  Los  Angeles,  California  90012 


Attorney  for  Appellant 


E.  L.  Mbndenhall,  Inc.,  926  Cherry  Street,  Kansas  City.  Mo.  64106,  HArrison  1-8080 


TABLE  OF  AUTHORITIES 

Cases  Cited 

Brown  v.  U.  S.,  9  Cir,  1954,  216  F.2d  258 3 

Hull  V.  Stalter,  7  Cir.,  151  F.2d  633 2 

Statutes 

32  C.F.R.  §  1625.1  2 

32  C.F.R.  §  1625.2 3 


IN  THE 


United  States  Court  of  Appeals 

FOR  THE  NINTH  CIRCUIT 


No.  22261 


THOMAS  JERRY  YEATER, 
Appellant, 

vs. 

UNITED  STATES  OF  AMERICA, 
Appellee. 


APPELLANT'S  CLOSING  BRIEF 

Appellee  argues  "In  view  of  these  events,  it  is  difficult 
to  comprehend  how  appellant  can  claim  that  'new  facts' 
were  presented  to  the  board  on  July  5,  1966  so  as  to  make 
a  'prima  facie  case  for  a  new  classification',  within  the  pur- 
view of  Miller  v.  United  States,  9th  Cir.,  December  29, 
1967,  No.  21,417."    [Appellee's  Br.  p.  17] 

The  "events"  appellee  refers  to  are  stated  by  it  as  fol- 
lows: "A  review  of  appellant's  selective  service  file  indi- 
cates an  almost  frantic  last  minute  attempt  to  avoid  induc- 
tion." [p.  16] 

To  wait  until  one  is  in  jeopardy  is  an  almost  universal 
characteristic,  one  that  is  especially  prevalent  in  young  men. 


We  believe  truth,  rather  than  time,  is  the  test,  excepting 
only  that  the  time  be  timely.  Timeliness  has  been  con- 
strued to  mean  before  induction.  Hull  v.  Stalter,  7  Cir.,  151 
F.2d  633. 

"We  see  no  reason  why  a  registrant  with  a  non-exempt 
status  at  the  time  of  registration  should  not  sub- 
sequently be  permitted  to  show  that  his  status  has 
changed  or,  conversely,  why  one  who  is  exempt  at  the 
time  of  registration  should  not  afterwards  be  shown 
to  be  non-exempt.  In  fact,  the  latter  situation  seems 
to  be  contemplated  by  §  5(h)  of  the  Act,  which  pro- 
vides that  'no  *  *  *  exemption  or  deferment  *  *  *  shall 
continue  after  the  cause  therefor  ceases  to  exist.'  The 
point  perhaps  is  better  illustrated  by  referring  to  cer- 
tain officials  who  are  deferred  from  military  service 
while  holding  office.  Suppose  a  registrant  who  held 
no  office  at  the  time  of  his  registration  and  was  there- 
fore liable  for  military  service  should  subsequently  be 
elected  or  appointed  judge  of  a  court  or  any  other  of- 
fice mentioned  in  the  Act.  We  suppose  it  would  not 
be  seriously  contended  but  that  he  would  be  permitted 
to  show  his  changed  status  any  time  prior  to  his  in- 
duction into  service  and  therefore  be  entitled  to  a 
deferment."  [635,  Emphasis  supplied] 

Appellee  argues  "It  is  equally  incredulous  that  appel- 
lant can  allude  to  a  foreclosure  of  his  administrative  rights 
when  he  never  appealed  any  of  his  I-A  classifications". 

That  a  registrant  "never  appealed  his  I-A  classifica- 
tion" can  be  ascribed  to  the  belief,  correct  no  doubt,  that 
at  the  time  each  came  he  had  no  basis  for  an  appeal.  That 
a  registrant's  status  may  change  is  a  fact  of  life  expressly 
recognized  by  the  law.  32  C.F.R.  §  1625.1  says:  "Classifi- 
cation Not  Permanent. —  (a)  No  classification  is  per- 
manent." 


We  argue  that  appellant  was  wronged  at  the  time  in 
1966  he  presented  "new  and  further  information."  At  that 
time  he  was  deprived  of  the  administrative  procedures  that 
could  help  him:  the  Appearance  and  the  appeal.  32  C.F.R. 
§  1625.2. 

"1625.2  When  Registrant's  Classification  May  Be 
Reopened  and  Considered  Anew. — The  local  board  may 
reopen  and  consider  anew  the  classification  of  a  regis- 
trant (a)  upon  the  written  request  of  the  registrant, 
the  government  appeal  agent,  any  person  who  claims 
to  be  a  dependent  of  the  registrant,  or  any  person  who 
has  on  file  a  written  request  for  the  current  deferment 
of  the  registrant  in  a  case  involving  occupational  de- 
ferment, if  such  request  is  accompanied  by  written  in- 
formation presenting  facts  not  considered  when  the 
registrant  was  classified,  which,  if  true,  would  justify 
a  change  in  the  registrant's  classification,  or  (b)  upon 
its  own  motion  if  such  action  is  based  upon  facts  not 
considered  when  the  registrant  was  classified  which, 
if  true,  would  justify  a  change  in  the  registrant's  classi- 
fication; provided,  in  either  event,  the  classification  of 
a  registrant  shall  not  be  reopened  after  the  local  board 
has  mailed  to  such  registrant  an  Order  to  Report  for 
Induction  (SSS  Form  No.  252)  or  an  Order  to  Report 
for  Civilian  Work  and  Statement  of  Employer  (SSS 
Form  No.  153)  unless  the  local  board  first  specifically 
finds  there  has  been  a  change  in  the  registrant's  status 
resulting  from  circumstances  over  which  the  registrant 
had  no  control." 

Although  the  wording  is  permissive  it  is  a  gross  abuse 
of  discretion  to  fail  to  reopen.  Brown  v.  U.  S.,  9  Cir.,  1954, 
216  F.2d  258: 

"If  a  change  of  status  was  disclosed  it  was  the  duty  of 
the  board  to  take  it  into  consideration  and  to  classify 
him  in  the  light  of  the  new  evidence  presented. 


United  States  ex  rel.  Hull  v.  Stalter,  7  Cir.,  151 
F.2d  633,  635;  Knox  v.  United  States,  9  Cir.,  200  F.2d 
398,  401;  Dickinson  vs.  United  States,  supra,  346  U.S. 
p.  392,  74  S.  Ct.  152;  Jewell  v.  United  States,  6  Cir., 
208  F.2d  770,  771."    [260] 

CONCLUSION 

For  the  reasons  given  the  judgment  should  be  reversed. 
Respectfully, 

J.  B.  TiETZ 

410  Douglas  Building 
Los  Angeles,  California  90012 
Attorney  for  Appellant 

March  22,  1968. 

I  certify  that,  in  connection  with  the  preparation  of 
this  brief,  I  have  examined  Rules  18  and  19  of  the  United 
States  Court  of  Appeals  for  the  Ninth  Circuit,  and  that,  in 
my  opinion,  the  foregoing  brief  is  in  full  compliance  with 
those  rules. 

J.  B.  TiETZ,  Attorney 


IN  THE 

United  States  Court  of  Appeals 

FOR  THE  NINTH  CIRCUIT 


JU 
No.  22261 


'Q 


THOMAS  JERRY  YEATER, 
Appellant, 


vs. 


UNITED  STATES  OF  AMERICA, 
Appellee. 


PETITION  FOR  REHEARING 


J.   B.   TiETZ 

410  Douglas  Building 
257  South  Spring  Street 
Los  Angeles,  California  90012 
Attorney  for  Appellant 


=^ 


K.  L.  Mendenhall,  Inc.,  926  Cherry  Street,  Kansas  CSty,  Mo.  K4flf)9,t'BAmson  1-3030 


men      "'' 


IN  THE 

United  States  Court  of  Appeals 

FOR  THE  NINTH  CIRCUIT 


No.  22261 


THOMAS  JERRY  YEATER, 
Appellant, 

vs. 

UNITED  STATES  OF  AMERICA, 
Appellee. 


PETITION  FOR  REHEARING 

Comes  now  the  appellant,  by  his  attorney,  and  files 
this  his  Petition  for  Rehearing  of  Judgment  entered  by 
the  Court  on  June  27,  1968,  affirming  the  judgment  of  the 
court  below. 

Appellant  reserves  his  argued  position  as  to  each  of 
the  points  of  appeal,  but  in  this  petition  addresses  him- 
self solely  to  certain  features  of  the  decision  wherein  he 
believes  the  Court  may  be  convinced  its  opinion  should  be 
reversed. 

Appellant  respectfully  urges  that  the  opinion  over- 
looks a  feature  of  the  case,  presented  in  oral  argument. 


namely,  that  the  action  of  the  board  on  May  16,  1966  [Ex. 
118]  postponing  the  Order  to  Report  for  Induction  "until 
FURTHER  NOTICE"  gave  appellant  a  new  start,  a  rebirth, 
in  his  Selective  Service  System  life. 

During  oral  argument  appellant  cited  Hamilton  v. 
Commanding  Officer,  9  Cir.,  1964,  328  F.2d  799,  802  and 
gave  the  clerk  the  tip-in  sheets  for  this  citation.  Hamil- 
ton shows  that  such  a  postponement  is  actually  a  cancella- 
tion. 

Thus,  appellant's  prior  failure  to  administratively  ap- 
peal was  immaterial. 

Respectfully,  appellant  asserts  (1)  this  born-anew 
posture  requires  reopening  by  the  local  board  and  (2)  the 
board's  neglect  to  reopen  presents  a  plain,  fundamental 
error  involving  appellate  cognizance. 

Counsel  further  represents  and  certifies:  In  counsel's 
judgment  this  Petition  is  well  founded  and  is  not  inter- 
posed for  delay. 

J.   B.   TiETZ 

Attorney  for  Appellant 
July  26,  1968. 


/ 

NO.     2  2  2  6  3 
IN  THE   UNITED  STATES   COURT   OF   APPEALS 
FOR   THE   NINTH   CIRCUIT 

HECTOR  QUEVEDO, 

Appellant, 
vs. 
UNITED  STATES   OF  AMERICA, 

Appellee. 


APPELLEE'S   BRIEF 


APPEAL  FROM 
THE    UNITED  STATES   DISTRICT   COURT 
FOR   THE   CENTRAL   DISTRICT   OF   CALIFORNIA 


WM.    MATTHEW   BYRNE,    JR., 
United  States  Attorney, 

ROBERT    L.     BROSIO 

Assistant  U.    S.    Attorney 
Chief,    Criminal  Division 

MICHAEL   HEUER 

Assistant  U.   S.   Attorney 

1200  U.  S.  Court  House 
312  North  Spring  Street 
Los  Angeles,    California  90012 

w^  s  ¥  -  »— »  Attorneys  for  Appellee 

p^  I  L  E]  D  United  States  of  America. 

JUN  1  C 1968 

WM.  B.  LUCK,  CLERK 


NO.     2  2  2  6  3 
IN  THE   UNITED  STATES   COURT   OF   APPEALS 
FOR   THE    NINTH   CIRCUIT 

HECTOR  QUEVEDO, 

Appellant, 
vs. 
UNITED  STATES   OF  AMERICA, 

Appellee, 


APPELLEE'S   BRIEF 


APPEAL  FROM 
THE   UNITED  STATES   DISTRICT   COURT 
FOR   THE   CENTRAL   DISTRICT   OF    CALIFORNIA 


WM.    MATTHEW   BYRNE,    JR., 
United  States  Attorney, 

ROBERT    L.     BROSIO 

Assistant  U.    S.    Attorney 
Chief,    Criminal  Division 

MICHAEL   HEUER 

Assistant  U.    S.    Attorney 

1200  U.  S.  Court  House 
312  North  Spring  Street 
Los  Angeles,    California  90012 

Attorneys  for  Appellee 
United  States  of  America. 


TOPICAL  INDEX 

Page 

Table  of  Authorities  ii 

I  STATEMENT   OF    PLEADINGS  AND  FACTS 
DISCLOSING   JURISDICTION.  1 

II  STATUTES  INVOLVED  3 

III  QUESTIONS    PRESENTED  5 

IV  STATEMENT   OF   THE   FACTS  5 

V  ARGUMENT  8 
CONCLUSION  12 
CERTIFICATE  13 


TABLE   OF  AUTHORITIES 

Cases  Page 

Hill  V.    United  States, 

261  F.  2d  483  (9th  Cir.    1958)  9 

Masciale  v.    United  States, 

356  U.S.    386  (1958)  10 

Notaro  v.    United  States, 

363  F.  2d  169  (9th  Cir.    1966)  9 

Sherman  v.    United  States, 

356  U.  S.    369  (1956)  9,    10 

United  States  v.    Whiting, 

321  F.  2d  72  (1st  Cir.    1963)  11 

Statutes 

Title  18,   United  States  Code,    §3231  3 

Title  21,    United  States  Code,    §176a  3 

Title  26,    United  States  Code,    §4742(a)  5 

Title  28,    United  States  Code,    §1291  3 

Title  28,    United  States  Code,    §1294(1)  3 


11 


NO.    2  2  2  6  3 

IN  THE   UNITED  STATES   COURT   OF  APPEALS 

FOR  THE   NINTH  CIRCUIT 

HECTOR  QUEVEDO, 

Appellant, 
vs. 
UNITED  STATES   OF   AMERICA, 

Appellee, 


APPELLEE'S   BRIEF 


STATEMENT   OF   PLEADINGS 

AND  FACTS 

DISCLOSING  JURISDICTION 


On  September  14,    1966,   the  Federal  Grand  Jury  for  the 

Southern  District  of  California  returned  an  indictment  in  three 

counts  against  appellant  Hector  Quevedo.     This  indictment  was 

1/ 
as  follows:     [C.  T.    2] 

"Count  One.     On  or  about  April  14,    1966,    in  Los 

Angeles  County,    California,    within  the  Central  Division 


1/  C.  T.    refers  to  Clerk's  Transcript  herein. 

1. 


of  the  Southern  District  of  California,    defendant  HECTOR 
QUEVEDO,    with  intent  to  defraud  the  United  States, 
knowingly  received,    concealed  and  facilitated  the  trans- 
portation and  concealment  of  2,  786.  700  grams  of 
marihuana,    which  said  marihuana,    as  the  defendant  then 
and  there  well  knew,   theretofore  had  been  imported  and 
brought  into  the  United  States  contrary  to  law. 

"Count  Two.     On  or  about  April  14,    1966,    in  Los 
Angeles  County,    California,    within  the  Central  Division 
of  the  Southern  District  of  California,    defendant    HECTOR 
QUEVEDO,    with  intent  to  defraud  the  United  States,    know- 
ingly sold  to  Agent  David  Westrate  of  the  Federal  Bureau 
of  Narcotics  and  an  undercover  assistant  of  the  Federal 
Bureau  of  Narcotics  2,  786.  700  granas  of  marihuana,    which 
said  marihuana,    as  the  defendant  then  and  there  well  knew, 
theretofore  had  been  imported  and  brought  into  the  United 
States  contrary  to  law. 

"Count  Three.     On  or  about  April  14,    1966,    in  Los 
Angeles  County,    California,    within  the  Central  Division  of 
the  Southern  District  of  California,    defendant  HECTOR 
QUEVEDO,    knowingly  and  unlawfully  transferred 
2,  786.  700  grams  of  marihuana  to  Agent  David  Westrate  of 
the  Federal  Bureau  of  Narcotics  and  an  undercover 
assistant  of  the  Federal  Bureau  of  Narcotics  without 
obtaining  from  either  of  them  a  written  order  on  a  form 
issued  for  that  purpose  by  the  Secretary  of  the  Treasury 

2. 


of  the  United  States.  " 

Pursuant  to  appellant's  plea  of  not  guilty,    entered  on 
September  19,    1966,    trial  by  jury  was  set  for  October  17,    1966. 
On  the  latter  date,   trial  was  continued  to  November  7,    1966. 
Appellant  waived  his  right  to  trial  by  jury  and  trial  commenced  on 
November  8,    1966,    before  the  Honorable  Albert  Lee  Stephens,   Jr. 

On  November  9,    1966,   the  court  found  appellant  guilty  on 

2/ 
all  counts  of  the  indictment  [R.T.    176]. 

On  December  5,    1966,    appellant  was  sentenced  to  serve  a 
term  of  five  years  imprisonment  on  Counts  One,   Two  and  Three  of 
the  indictment,        said       term  to  run  concurrently  on  all  three 
counts.      [C.T.    50]. 

A  timely  notice  of  appeal  was  filed  on  December  8,    1966 
[C.T.    51]. 

Jurisdiction  of  the  District  Court  was  based  on  Title  21, 
United  States  Code,   Section  176a,    and  on  Title  18,    United  States 
Code,    Section  3231. 

Jurisdiction  of  this  Court  is  based  on  Title  28,    United 
States  Code,   Sections  1291  and  1294(1). 

II 

STATUTES   INVOLVED 
Title  21,    United  States  Code,   Section  176a  reads  as 
follows: 


2/  R.T.    refers  to  Reporter's  Transcript  herein. 

3. 


"Notwithstanding  any  other  provision  of  law, 
whoever,    knowingly,    with  intent  to  defraud  the  United 
States,    imports  or  brings  into  the  United  States  marihuana 
contrary  to  law,    or  smuggles  or  clandestinely  introduces 
into  the  United  States  marihuana  which  should  have  been 
invoiced,    or  receives,    conceals,   buys,    sells,    or  in  any 
manner  facilitates  the  transportation,    concealment,    or 
sale  of  such  marihuana  after  being  imported  or  brought  in, 
knowing  the  same  to  have  been  imported  or  brought  into 
the  United  States  contrary  to  law,    or  whoever  conspires 
to  do  any  of  the  foregoing  acts,    shall  be  imprisoned  not 
less  than  five  or  more  than  twenty  years  and,    in  addition, 
may  be  fined  not  more  than  $20,  000.     For  a  second  or 
subsequent  offense  (as  determined  under  section  7237(c)  of 
the  Internal  Revenue  Code  of  1954),   the  offender  shall  be 
imprisoned  for  not  less  than  ten  or  more  than  forty  years 
and,    in  addition,    may  be  fined  not  more  than  $20,  000. 

"whenever  on  trial  for  a  violation  of  this  sub- 
section,  the  defendant  is  shown  to  have  or  to  have  had  the 
marihuana  in  his  possession,    such  possession  shall  be 
deemed  sufficient  evidence  to  authorize  conviction  unless 
the  defendant  explains  his  possession  to  the  satisfaction  of 
the  jury. 

"As  used  in  this  section,   the  term  'marihuana'  has 
the  meaning  given  to  such  term  by  section  4761  of  the 
Internal  Revenue  Code  of  1954. 

4. 


Title  26,    United  States  Code,   Section  4742(a)  reads  as 
follows: 

It  shall  be  unlawful  for  any  person,    whether  or 
not  required  to  pay  a  special  tax  and  register  under 
sections  4751  to  4753,    inclusive,   to  transfer  marihuana, 
except  in  pursuance  of  a  written  order  of  the  person  to 
whom  such  marihuana  is  transferred,    on  a  form  to  be 
issued  in  blank  for  that  purpose  by  the  Secretary  or  his 
delegate. 

Ill 

QUESTIONS    PRESENTED 

Is  the  evidence  sufficient  to  sustain  the  Court's  finding 
that  no  entrapment  of  appellant  occurred? 

IV 

STATEMENT   OF   THE   FACTS 

Both  Lonnie  Van  de  Ford  and  Don  Schutz  were,    during 

April  1966  and  for  a  few  months  prior  thereto,    working  with  the 

Federal  Bureau  of  Narcotics  as  special  employees,    i.  e.  ,    as 

undercover  assistants  [R.  T.    40,    73-74].     Both  were,    at  the  time 

of  trial  below,    facing  federal  charges  for  the  illegal  transportation 

of  marihuana  [R.T.    40,    73].     Both  participated  in  the  negotiations 

with  appellant  for  the  purchase  from  appellant, on  behalf  of  the 

Federal  Bureau  of  Narcotics,    of  the  marihuana  described  in  the 

5. 


indictment  herein.     That  purchase  was  consummated  on  the  night 
of  April  14,    1966. 

Van  de  Ford  and  Schutz  had  been  aware  of  appellant's 
identity  for  several  years  [R.  T.    42,    75].     Schutz  in  particular 
had  telephoned  appellant  and  visited  his  residence  on  several 
occasions  during  a  period  of  several  months  prior  to  April  14, 
1966,    and,    although  he  did  not  ask  appellant  to  sell  him  marihuana 
during  that  period,    he  was  aware  that  appellant  was  selling  mari- 
huana to  other  persons  [R.  T.    85].     Van  de  Ford  first  m.et  appellant 
in  April  of  1966,    at  the  apartment  of  two  personal  friends  of 
appellant  named  Bunny  and  Bones,    a  male  and  a  female,    at 
7114  Ethel  Street  in  the  San  Fernando  Valley  [R.  T.    44].     Prior  to 
April  14,    1966,    Van  de  Ford  saw  appellant  bring  two  kilograms  of 
marihuana  to  Bunny  and  Bones'  apartment  [R.  T.    44]. 

At  the  trial  below,    appellant  took  the  stand  and  testified 
that  prior  to  April  14,    1966,    probably  in  March,    he  had  sold  a 
kilogram  of  marihuana  to  one  Larry  Brittenham  [R.T.    144-145]. 
Appellant's  source  of  supply  was  one  Barrel  Williams,   and  he  had 
been  buying  from  Williams  for  a  year  or  two  prior  to  April,    1966 
[R.  T.    145].     Appellant  also  sold  a  kilogram  of  marihuana  to 
Bunny  and  Bones  prior  to  April  14,    1966  [R.T.    146].     Prior  to 
April  14,    1966,    appellant  had  sold  a  total  of  about  ten  kilograms  of 
marihuana  to  Brittenham,    according  to  Brittenham's  testimony  at 
trial  [R.  T.    108-109]. 

The  first  time  when  Van  de  Ford  and  Schutz  asked  appellant 
to  get  some  marihuana  for  them  was  on  April  12,^1  966  [R.  T.    148], 

6. 


On  that  evening  Van  de  Ford  introduced  appellant  to  Agent  David 
Westrate  of  the  Federal  Bureau  of  Narcotis;  the  meeting  took 
place  at  Bunny  and  Bones'  apartment  at  7114  Ethel  [R.  T.    18,    46]. 
At  that  time  Westrate,    in  the  presence  of  Van  de  Ford,   had  a 
discussion  with  appellant  about  marihuana;  appellant  told  Westrate 
that  he  could  furnish  marihuana  to  Westrate  in  kilogram  quantities 
[R.  T.    19].     However,    appellant  said  he  would  be  unable  to  secure 
any  marihuana  on  that  evening  [R.  T.    19]. 

On  the  evening  of  April  14,    1966,    Westrate  and  Van  de  Ford, 
together  with  Charles  Walker,    another  agent,    again  went  to  Bunny 
and  Bones'  apartment  [R.T.    21]  but  failed  to  find  appellant  there. 
They  telephoned  appellant  [R.T.    23]  and  held  a  conversation 
with  appellant  regarding  the  purchase  of  marihuana;  appellant 
advised  them  that  he  was  prepared  to  sell  three  kilograms  of 
marihuana  to  Westrate  and  the  informants  and  that  he  would  meet 
Westrate  and  the  others  at  the  apartment  in  one  half  hour  [R.  T.  24]. 
Appellant  arrived  at  the  apartment  and  asked  for  $300  to  pay  for 
the  marihuana  [R.  T.    25];    he  told  Westrate  that  he  would  get  in 
touch  with  him  at  the  Laurel  Room,    a  bar  in  North  Hollywood, 
later  that  night;  apellant  then  departed  [R.  T.    26].     Then  Westrate, 
Walker  and  Van  de  Ford  together  with  Schutz,    who  had  since 
arrived,    left  the  apartment  and  went  to  the  Laurel  Room  [R.  T.    27]; 
these  four  sat  at  a  table  in  the  Laurel  Room  from  early  in  the 
evening  until  11 :30  or  11 :45  P.  M.    [R.T.    28].     At  that  time,   Schutz 
left  the  bar,    having  seen  appellant  drive  up  outside  [R.  T.    28]. 
Schutz  then  met  with  appellant  outside  the  bar  and  drove  away  in 

7. 


his  own  car,    following  appellant  back  to  the  apartment  [R.T.    80,  81 
There  appellant  delivered  to  Schutz  a  sack  containing  three 
kilograms  of  marihuana  [R.  T.    81].     Schutz  then  left  the  scene, 
drove  a  few  blocks  and  met  with  Westrate  and  Van  de  Ford 
[R.T.    82];  Schutz  delivered  to  the  agents  the  marihuana  which 
he  had  purchased  from  appellant  [R.  T.    83]  and  which  was 
admitted  into  evidence  at  the  trial. 


ARGUMENT 

The  sole  issue  on  this  appeal,    as  framed  by  appellant's 
brief,    is  whether  the  evidence  at  trial  supports  the  judgment 
of  conviction  with  respect  to  the  issue  of  entrapment  which  was 
raised.     Appellant  concedes,    at  page  5  of  his  brief,   that  entrap- 
ment as  a  defense  can  have  been  established  here  only  if  the 
evidence  shows  that  appellant  was  induced  to  sell  marihuana  by 
governmental  conduct  which  was  shocking  or  offensive  per  se. 
Specifically,    appellant  contends  that  the  activities  of  special 
employees  Schutz  and  Van  de  Ford  in  ingratiating  themselves 
with  appellant  for  the  purpose  of  making  purchases  of  marihuana 
from  him  was  conduct  which  should  not  be  tolerated  in  a  free 
society. 

Decisions  of  the  Ninth  Circuit  support  the  propriety  of 
the  activities  of  the  government  informers  here.     By  appellant's 
own  testimony,    it  is  clear  that  he  was  "ready  and  willing  to 

8. 


commit  the  offense  whenever  the  opportunity  was  offered.    ..." 
Notaro  v.    United  States,    363  F.  2d  169  at  175 

(9th  Cir.    1966); 
See  also.    Hill  v.    United  States,  261  F.  2d  483 
(9th  Cir.    1958). 
Appellant  himself  testified  that,    prior  to  April  14,    1966, 
he  had  sold  marihuana  in  kilogram  quantities  both  to  Larry 
Brittenham  and  to  Bunny  and  Bones  [R.  T.    144-146].     The  informant, 
Don  Schutz,    knew  appellant  as  a  seller  of  marihuana  [R.  T.    85]. 
Most  important,    appellant  testified  that  neither  Schutz  nor  Van  de 
Ford  nor  any  government  agent  asked  him  to  sell  marihuana  prior 
to  April  12,    1966  [R.  T.    148].     Thus  only  two  days  elapsed 
between  the  first  broaching  of  the  subject  and  the  sale  by  appellant 
as  charged  in  the  indictment.     This  case  is  thus  not  comparable 
to  Sherman  v.    United  States,    356  U.  S.    369(1956),    wherein  the 
Supreme  Court  held  that  entrapment  existed  as  a  matter  of  law. 
In  Sherman    the  informer,    representing  himself  as  a  narcotics 
addict,    implored  the  defendant  repeatedly  to  obtain  narcotics  for 
him  in  order  to  alleviate  his  suffering.     No  such  implorings  were 
necessary  in  order  to  persuade  appellant  Quevedo  to  sell  mari- 
huana; the  evidence  is  clear  that  he  was  ready  and  willing  to  sell 
to  Agent  Westrate,   who  had  been  vouched  for  by  Schutz  and  Van 
de  Ford,    just  as  he  had  previously  sold  to  Brittenham  and  Bunny 
and  Bones. 

But  appellant  contends  that  he  would  not  have  sold  to 
Westrate  if  Schutz  and  Van  de  Ford  had  not  ingratiated  themselves 

9. 


as  his  friends,    since  appellant  sold  marihuana  only  to  his  friends, 
and  that  creating  a  friendship  for  the  purpose  of  buying  marihuana 
on  behalf  of  the  Government  is  a  practice  which  should  not  be 
tolerated  in  a  civilized  society.     In  other  words,    appellant 
argues  that  he  was  willing  to  sell  marihuana  only  to  bona  fide 
friends;  Schutz  and  Van  de  Ford  were  not  such  friends;  therefore 
appellant  was  not  ready  and  willing  to  sell  to  them,    and  he  was 
entrapped.     This  argument  is  without  support  in  decided  cases. 
If  it  were  accepted  by  this  Court,    no  prosecution  for  sale  of 
marihuana  or  narcotics  based  on  undercover  negotiations  could 
ever  succeed,    for  every  such  sale  is  based  upon  the  mistaken 
assumption  that  it  is  being  made  to  a  "friend"  of  the  seller. 
It  is  submitted  that  to  state  appellant's  argument  is  to  refute  it, 
and  that  the  activities  of  the  informants  here  were  perfectly 
proper  police  practices.     As  the  Supreme  Court  stated  in 
Sherman  v.    United  States,    supra: 

".    .    .    the  fact  that  governnaent  agents  'merely 
afford  opportunities  or  facilities  for  the  comnmission 
of  the  offense  does  not'  constitute  entrapment. 
Entrapment  occurs  only  when  the  criminal  conduct 
was  'the  product  of  the  creative  activity  of  law- 
enforcement  officials.  "    (356  U.S.    at  372). 
The  use  of  special  employees  and  government  agents 
posing  as  go-betweens  is  clearly  permissible. 

Masciale  V.    United  States,     356  U.S.    386(1958) 
It  needs  to  be  pointed  out  that  neither  Schutz  nor  Van  deFord 

10. 


nor  appellant  himself  ever  stated  at  trial  that  there  existed 
between  appellant  and  either  informant  a  close  friendship  which 
had  been  manufactured  for  the  purpose  of  making  purchases  of 
marihuana.     Such  a  friendship  is  solely  an  importation  of 
appellant's  brief.     In  fact  Van  de  Ford  testified  [R.  T.    63]  that 
although  he  had  seen  appellant  around  the  North  Hollywood  area 
prior  to  April  1966,    it  was  only  in  April,    not  more  than  two  weeks 
prior  to  the  sale,    that  he  became  personally  acquainted  with 
appellant,    and  appellant  confirmed  this  [R.T.    147-148].     The  con- 
clusion is  inescapable  that  appellant  was  ready  and  willing  to  sell 
to  anyone  whom  he  considered  a  "safe"  buyer. 

Contrary  to  appellant's  contention,   the  case  of  United 
States  V.    Whiting,    321  F.2d  72  (1st  Cir.    1963)  does  not  support 
his  position  in  this  regard.     Indeed,    in  that  case  the  Court  stated: 
".    .    .    .    we  hold  that  it  is  not  per  se  offensive 

conduct  for  the  government  to  initiate  inducement 

without  a  showing  of  probable  cause. 
And: 

"If  the  type  of  identity  misrepresentation  made 

in  this  case  is  to  be  outlawed  generally  the  whole 

structure  of  law  enforcement  involving  government 

decoys  must  collapse.  "    (321  U.S.    at  77). 
Just  so  in  the  present  case:    if  the  efforts  of  Schutz  and  Van  de 
Ford  to  ingratiate  themselves  with  appellant  are  to  be  found 
shocking  and  offensive  per  se,    when  by  appellant's  own  admission 
there  was  evidence  that  the  informants  knew  that  appellant  had 

11. 


previously  sold  marihuana  (Appellant's  Brief,    page  5),   then  the 
entire  Government  system  of  purchasing  marihuana  and  narcotics 
through  undercover  activities  designed  to  lull  the  seller  will  be 
destroyed. 

CONCLUSION 


For  the  reasons  stated  above,   the  judgment  of  conviction 

should  be  affirmed. 

Respectfully  submitted, 

WM.    MATTHEW  BYRNE,   JR. 
United  States  Attorney 

ROBERT   L.    BROSIO 

Assistant  United  States  Attorney 
Chief,    Criminal  Division 

MICHAEL  HEUER 

Assistant  United  States  Attorney 

Attorneys  for  Appellee 
United  States  of  America 


12. 


CERTIFICATE 

I  certify  that,    in  connection  with  the  preparation  of  this 
brief,    I  have  examined  Rules  18,    19  and  39  of  the  United  States 
Court  of  Appeals  for  the  Ninth  Circuit,    and  that,    in  my  opinion, 
the  foregoing  brief  is  in  full  compliance  with  those  rules. 

/s/         Michael  Heuer 


MICHAEL   HEUER 


13, 


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