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https://www.courtlistener.com/api/rest/v3/opinions/1531237/ | 72 B.R. 634 (1987)
In re Lyle Joseph FISCHER, Lillian Ruth Fischer, Debtors.
Bankruptcy No. 85-12463.
United States Bankruptcy Court, D. Kansas.
January 8, 1987.
*635 Tim J. Larson, Talkington, Larson & Chase, Iola, Kan., for debtors.
William S. Woolley, Asst. U.S. Trustee, Wichita, Kan., for U.S. trustee.
Michael G. Christensen, Asst. U.S. Atty., Wichita, Kan., for Farmers Home Admin.
Eric D. Bruce, Bruce & Davis, Wichita, Kan., for Federal Land Bank.
MEMORANDUM OF DECISION
JOHN K. PEARSON, Bankruptcy Judge.
On November 13, 1986, the debtors in the above captioned Chapter 11 filed a motion to convert their case to Chapter 12. The matter came on for hearing before the Court after the effective date of the new Chapter 12 provision. The parties were directed to submit briefs and the United States Trustee, Farmers Home Administration and the debtors have done so. The United States Trustee objects to conversion of the case as does the Farmers Home Administration. The matter is ready for ruling.
The material facts are not in dispute. The debtors operate a dairy farm and decorating business in the vacinity of Fort Scott, Kansas. The total scheduled debt is $569,558.02. The debtors filed a Chapter 11 petition on December 19, 1985 and a creditors' meeting under § 341 of the Code was held by the United States Trustee on January 31, 1986. The Federal Land Bank was granted relief from the stay to begin its foreclosure proceeding April 3, 1986. On June 18, 1986 the Farmers Home Administration filed a motion for a deadline for the filing of the plan. The Court entered an order setting the deadline as August 25, 1986.
The debtors filed a plan and disclosure statement August 22, 1986. Both the Farmers Home Administration and the Federal Land Bank have lodged objections to the plan and disclosure statement.
On October 9, 1986 the disclosure statement came on for approval. Upon the objections of the creditors, the Court noted several material problems with the disclosure statement and directed the debtors to make another attempt. It now appears that the creditors will not agree to any Chapter 11 plan that the debtors can perform, because of the amount of the debt and differences over the values of the assets.
The debtors now seek to convert to Chapter 12 and allege that they intend to file a plan within thirty (30) days of the entry of an order of conversion. As indicated, the United States Trustee and the Farmers Home Administration oppose the conversion.
ISSUES BEFORE THE COURT
Does the Bankruptcy Judges, United States Trustees and Family Farmer Bankruptcy Act of 1986 (the "1986 Act") permit conversion of existing cases to Chapter 12 after the effective date?
If conversion is permitted, should conversion be allowed under the facts of this particular case?
SUMMARY OF RULING
While the Court concludes that in an appropriate case it may order the conversion of a Chapter 11 case, filed prior to November 26, 1986, to Chapter 12, conversion should not be permitted in this case because of the age of the case and the debtors' prior inability to effectuate a plan.
DISCUSSION
Should the conversion be permitted? The 1986 Act was cobbled together and adopted in some haste as the Ninety-ninth Congress rushed to adjourn. Congress recognized the desperate need to change some of the provisions of the Bankruptcy Code not only to facilitate, but to encourage *636 bankruptcy as a salvage option for the troubled family farm. To the extent that the Legislature is capable of having an intent, it is eminently clear that the Congress intended to provide farmers with special tools under the Bankruptcy Code to salvage the family farm. The haste with which Congress acted resulted in a number of drafting problems. The Act itself is silent as to the conversion of existing cases. The provision on effective dates, § 302(c)(1),[1] can be read in two ways: that the provisions of Chapter 12 were not to apply to existing cases before the effective date or that conversion would not be allowed at all. Both the Farmers Home Administration and the United States Trustee urge the latter position.
The accompanying committee statement states indirectly that conversion should be possible.[2] The debtors suggest that the Bankruptcy Code and transition provisions themselves are ambiguous and that resort to the legislative history, including the committee statement, is essential to determine the legislative intent. The United States Trustee and the Farmers Home Administration perceive no ambiguity and suggest that resort to the legislative history is not permitted.
"In determining legislative intent, the courts are not bound to an examination of the language alone, but may properly look into the causes which impel a statute's adoption." Maxi Sales Co. v. Critiques, Inc., 796 F.2d 1293, 1297 (10th Cir.1986). But where the statute is plain and unambiguous resort to legislative history is inappropriate absent rare and exceptional circumstances. Wilson v. Harris Trust & Savings Bank, 777 F.2d 1246 (7th Cir. 1985). However, an examination of legislative history is permissible to determine whether support exists for alternative meanings. In re Tandem Group, Inc., 61 B.R. 738 (Bankr.C.D.Cal.1986); Ernst & Ernst v. Hochfelder, 425 U.S. 185, 200, 96 S. Ct. 1375, 1384, 47 L. Ed. 2d 668 (1976). "Moreover, an extraordinary showing of contrary intentions justifies a limitation on the plain meaning." In re Tandem, 61 B.R. at 740 citing as authority Garcia v. United States 469 U.S. 70, 105 S. Ct. 479, 483, 83 L. Ed. 2d 472 (1984).
The Court concludes that conversion in an appropriate case is permitted. The transition provisions of § 302 can be read in at least two ways suggesting an ambiguity. The legislative history is overwhelmingly in favor of conversion of existing cases where appropriate and equitable. Thus the Court concludes that for at least some short period of time after November 26, 1986 the Court may permit the conversion of existing Chapter 11 and 13 cases to Chapter 12. The Court then turns to the factors which should be considered in permitting conversion.
The Conversion Checklist:
The legislative history baldly states that it is expected that the courts will exercise discretion in each case, allowing conversion only where it is equitable to do so and further suggests that chief among the factors the courts should consider is whether there is a substantial likelihood of successful reorganization under Chapter 12. *637 It goes on to state that where a reorganization has been filed and where the parties have substantially relied on "current law", conversion should not be permitted. The Court concludes that the following factors should be among those considered in determining whether conversion of a particular case should be permitted:
1. The debtors' eligibility for relief under Chapter 12;
2. The probability of "success" meaning the likelihood that the debtor will survive as a family farmer and be able to service the debt retained;
3. The length of time that the pending case has been before the court;
4. The amount of activity in the pending case, including motions for relief and deadlines for filing plans, etc.; and
5. Whether existing creditors have elected under § 1111(b) or other provisions of Chapter 11 which do not apply in Chapter 12.
In the instant case it appears that the debtors are eligible. The total listed debt is less than $600,000.00 and no one has suggested that the debtors' gross income from the decorating business exceeds fifty percent of the gross income.
The legislative history suggests that the Court consider the "substantial likelihood of successful reorganization under Chapter 12." Success in a bankruptcy context is generally in the eye of the beholder. What a secured creditor would consider as a successful Chapter 12 is certainly not the same thing that the debtor would consider successful. In this context, a "successful" Chapter 12 plan is one under which the debtor survives as a family farmer and will be able to make all the payments on the retained debt under the plan. See § 1225(a)(6). The § 1225(a)(6) feasibility test is considerably less stringent than the comparable feasibility provision in Chapter 11 found in § 1129(a)(10). The Court has been presented with a prospective cash flow analysis which shows that the debtors would have slightly over $32,000.00 net cash flow in 1987 and substantially greater amounts in each succeeding year. There is provision for only $10,000.00 in family living expense. If the Court were to find that the land in question had a current value of $80,000.00, it would require twenty-five annual payments of approximately $8,800.00, assuming an interest figure of ten percent.[3] The debtors list further approximately $171,000.00 in machinery and equipment. Assuming again a ten percent interest figure and an eight-year payout, on that debt (without deciding that either is appropriate), it would require annual payments of approximately $24,900.00 to retire the debt. Any major variation in those values would, of course, affect the net result, but it appears that the debtors would be in a position to make substantial payments under a plan of reorganization under Chapter 12 even though the trustee would also be entitled to payments.
The legislative history strongly suggests that the Court must consider the length of time that the case has been pending. This case has been before the Court for approximately one year. In that time two creditors, including the Land Bank, have been granted relief from the automatic stay. The Court notes that the debtors originally listed the Federal Land Bank as virtually fully secured with a debt of approximately $288,000.00. It appears from the motion and memorandum in support thereof that the debtors are asserting that the Federal Land Bank has, in the past year, become undersecured to the extent of approximately $200,000.00. The debtors are now taking the position apparently that the land is worth only $80,000.00. That rather startling change in value, while not affecting eligibility for Chapter 12, bears on the conversion considerations. No creditor has sought to make an § 1111(b) election.
Under the circumstances the Court concludes that a case that has been pending over a year and in which one unconfirmable plan has been filed, should not be converted.
CONCLUSION
Given all of the circumstances surrounding this particular case, the Court, in its *638 discretion, declines to convert the pending case to Chapter 12.[4]
The foregoing constitutes findings of fact and conclusions of law as required by Fed.R.Civ.P. 52(a) and Fed.R.Bankr.P. 7052. A separate judgment will be entered giving effect to the determinations reached herein.
NOTES
[1] Which reads: "The amendments made by sub-title B of title II shall not apply with respect to cases commenced under title 11 of the United States Code before the effective date of this Act." (Emphasis added.)
[2] The Committee statement is:
APPLICABILITY OF CHAPTER 12 TO PENDING CHAPTER 11 AND 13 CASES
It is not intended that there be routine conversion of Chapter 11 and 13 cases, pending at the time of enactment, to Chapter 12. Instead, it is expected that courts will exercise their sound discretion in each case, in allowing conversions only where it is equitable to do so.
Chief among the factors the court should consider is whether there is a substantial likelihood of successful reorganization under Chapter 12.
Courts should also carefully scrutinize the actions already taken in pending cases in deciding whether, in their equitable discretion, to allow conversion. For example, the court may consider whether the petition was recently filed in another chapter with no further action taken. Such a case may warrant conversion to the new chapter. On the other hand, there may be cases where a reorganization plan has already been filed or confirmed. In cases where the parties have substantially relied on current law, availability to convert to the new chapter should be limited.
[3] The Court is merely assuming ten percent and not suggesting that it is appropriate.
[4] Both the United States Trustee and the Farmers Home Administration refer to In re Waetjen, Case No. 4-86-3335. Slip Op., a Minnesota bankruptcy case, and an opinion filed therein on November 26, 1986. In that case there is a statement to the effect that conversion should not be permitted. It is clear, however, from the context that Judge Kressel's statement is purely dictum and is not a ruling on the issue. That case is not authority for the statements made by both the United States Trustee and the Farmers Home Administration. It is clear from the court's opinion that the issue of convertability was not being addressed, but that the court was merely suggesting some of the underlying authority. In any event, this Court is not bound by Judge Kressel's decision and certainly is not persuaded by it. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1531269/ | 72 B.R. 476 (1987)
PRAIRIE STATE BANK, Complainant/Appellee,
v.
Lynn D. ALLISON, Trustee; William Bradley Dudgeon and Martha Sue Dudgeon, Debtors, Defendants/Appellants.
No. 85-1560.
United States District Court, D. Kansas.
April 16, 1987.
*477 Michael G. Coash, El Dorado, Kan., for complainant/appellee.
Lynn D. Allison, Donald Clark, Wichita, Kan., for defendants/appellants.
MEMORANDUM AND ORDER
CROW, District Judge.
This case is on appeal from the orders of August 30, 1984 and April 30, 1985, of the bankruptcy court which granted complainant, Prairie State Bank, the relief sought in its complaint for reclamation. The debtors, William and Martha Dudgeon, filed their voluntary petition under Chapter 7 on January 25, 1984. On May 18, 1984, Prairie State Bank filed its complaint alleging an indebtedness owed to it by debtors and secured by a real estate mortgage on a mobile home park in Butler County, Kansas. Complainant prayed for a judgment of foreclosure on the real estate and for possession of the real estate, rents and profits, and the listed personal property, free and clear of debtor's claims, other creditor's claims, or the bankruptcy estate. The trustee answered contending that complainant was entitled to such relief only if the mortgage was foreclosed.
After a hearing on August 17, 1984, the court entered an order, entitled "Order of Reclamation," on August 30, 1984, granting judgment on behalf of Prairie State Bank and awarding it the mobile home park and certain personal property. Relying on the bankruptcy court's statement that the proceedings were tantamount to a foreclosure proceeding, the trustee filed a motion to reconsider contending that she had been denied the right of redemption and possession of the real estate during the period of foreclosure and redemption. After a hearing on this motion, the bankruptcy court entered an order on April 30, 1985, ruling that trustee was entitled to a 6-month redemption period commencing August 17, 1984, and that at the end of this period, if the property is not redeemed, the Trustee was to furnish the Prairie State Bank with a Trustee's deed to the real property. The Trustee appeals these orders of the bankruptcy court.
The Trustee first contends the bankruptcy court lacked jurisdiction to foreclose complainant's real estate mortgage on the mobile home park. Calling attention to the ongoing legal controversy regarding jurisdiction of bankruptcy courts, the Trustee concludes the basic question of whether an action to foreclose a real estate mortgage is a core proceeding can only be answered in the negative. Complainant first takes issue with the characterization of the bankruptcy court's order as a judgment of foreclosure. Instead, it contends "that the bankruptcy court did not foreclose the bank's mortgage but rather awarded possession *478 of the real estate in question pursuant to the mortgage so that the bank could realize on the collateral securing its indebtedness from the debtors." Complainant considers such an order as within the core proceedings suggested at 28 U.S.C. § 157(b)(2)(K) and (O).
Complainant's interpretation of the August 30, 1984, order of reclamation is an argument of semantics lacking a legal basis. Complainant has not offered any authority for the proposition that short of a judgment of foreclosure a real estate mortgagee can be awarded possession of the real estate upon a Trustee's deed with the authority to sale or liquidate that real property. This is not an ordinary action for reclamation of personal property alleged to be sold to debtor by fraud under the terms of 11 U.S.C. § 546(c). Complainant has not offered any authority for its right to "reclaim" real estate upon which it has a mortgage, absent a foreclosure action pursuant to state law. See Misco Industries, Inc. v. Board of Sedgwick County, Comm'rs, 235 Kan. 958, Syl. ¶ 2, 685 P.2d 866 (1984). In effect, the bankruptcy court's order gave complainant a judgment on the promissory notes and foreclosed on that property securing those notes.
The Supreme Court decision in Northern Pipeline Construction Co. v. Marathon Pipeline Co., 458 U.S. 50, 102 S. Ct. 2858, 73 L. Ed. 2d 598 (1982), did away with any notion that bankruptcy courts have broad jurisdiction to entertain state law causes of action. An action to foreclose a real estate mortgage does not fall within any of the listed core proceedings in 28 U.S.C. § 157(b)(2). A bankruptcy court in Wisconsin recently stated:
A mortgage foreclsoure action is not a core proceeding. It is an action that is "otherwise related to a case under Title II" and, therefore, falls within the category of non-core proceedings.
In re Mill-Craft Bldg. Systems, Inc., 57 B.R. 531, 533-34 (Bkrtcy.E.D.Wis.1986). The Marathon decision precludes the expansive construction of category (O) of 28 U.S.C. § 157(b)(2) argued by complainant. The bankruptcy court lacked jurisdiction to enter the order of reclamation.
IT IS THEREFORE ORDERED that the bankruptcy court's orders of August 30, 1984, and April 30, 1985, are set aside for lacking jurisdiction, and the case is remanded for proceedings consistent with this opinion. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1531265/ | 72 B.R. 779 (1987)
In re COBHAM ENTERPRISES, INC. d/b/a Studio 54, Debtor,
David D. BERDON, as Trustee, Appellant,
v.
254 WEST 54 VENTURE COMPANY, Appellee.
No. 86 Civ. 5374 (JMW).
United States District Court, S.D. New York.
April 15, 1987.
Jules Teitelbaum, New York City, for appellant.
Howard T. Peltz, Robert Mark Wasko of the firm Epstein, Reiss & Goodman, New York City, for appellee.
OPINION
WALKER, District Judge:
INTRODUCTION
Appellant creditor David D. Berdon, as Trustee for a group including Debtor's transferor, ("Berdon") appeals from an Order of the Honorable Howard C. Buschman III, Bankruptcy Judge. The Order denied Berdon's motion for approval of a Stipulation in which Cobham Enterprises, Inc. ("Debtor" or "Cobham") agreed to surrender possession of leased premises located at 254 West 54th Street, New York, New York, to Berdon. The Order further directed *780 Cobham to surrender possession of the premises to Appellee 254 West 54 Venture Company ("Landlord"), pursuant to 11 U.S.C. § 365(d)(4) (Supp.1986), 62 B.R. 191 (Bankr.S.D.N.Y.1986).
For the reasons stated below, Judge Buschman's Order is affirmed.
FACTS
The lease that is the subject of this appeal was originally held by Broadway Catering Company ("Broadway"). It is for premises located at 254 West 54th Street, New York, New York.
In May 1981 Broadway entered an agreement to assign the lease and sell certain of its assets to Cobham. As consideration, Cobham executed a promissory note for the sum of $3,660,000 and as collateral security for payment Cobham reassigned the lease to Broadway. Pursuant to an escrow agreement between Broadway, Cobham and an Escrow Agent, dated May 1, 1980 Cobham delivered the lease reassignment to the Escrow Agent. The original landlord to the premises, Jisa Associates, consented to the assignment of the lease and entered into the new lease which referred to the lease reassignment. The lease, assignment and reassignment were never recorded. Broadway and Cobham also entered into a security agreement giving Broadway a security interest in "[a]ll fixed assets of the Debtor located at Debtor's Studio 54 Discotheque, 254 West 54th Street, New York, New York." This Security Agreement was executed and recorded.
In 1981, under an Administration and Foreclosure Trustee Agreement entered into by Broadway, the Internal Revenue Service, and the New York State Department of Taxation and Finance, Appellant David D. Berdon was appointed Trustee for Broadway to collect payments from Cobham. Under the Agreement Berdon is authorized to resort to any remedies available to Broadway.
In early 1985, Cobham defaulted on its payments to Berdon under the terms of the promissory note. On July 15, 1985, Berdon allegedly made a demand upon the Escrow Agent for the lease reassignment. The Escrow Agent, however, never physically delivered the reassignment to Berdon.
In September 1985, the Landlord (successor in interest to Jisa Associates) served Cobham and Berdon with a Notice to Cure and Notice of Termination. The Landlord claimed that Cobham had failed to comply with the insurance coverage provision of the lease which required Cobham to maintain $3,000,000/$5,000,000 public liability insurance on the leased property. Prior to the expiration of the period within which it could cure the default, Cobham brought an action in the Supreme Court of the State of New York, New York County, for a preliminary and final injunction against termination of the lease and a declaration that Cobham was not in default of the lease. The court granted Cobham an ex parte temporary restraining order which stayed the effect of the Landlord's Notice and tolled the time within which Cobham could cure its defaults.
On November 12, 1985, Cobham filed a petition with the Bankruptcy Court, Southern District of New York, pursuant to 11 U.S.C. § 1101, which entitled it to the protection of the automatic stay of § 362(a).
On or about December 27, 1985, the Landlord filed a motion under § 362(d) and § 105 seeking relief from the automatic stay. The Landlord requested the Bankruptcy Court to (1) declare Debtor in default of the lease, (2) direct Debtor to cure the default within a reasonable time, and (3) compel Debtor to vacate and surrender the premises to the Landlord if the defaults were not cured. As an alternative, the Landlord sought a preliminary injunction compelling Cobham to close its business to the public until the defaults were cured.
On January 10, 1986, the Bankruptcy Court held a hearing on the motion for the preliminary injunction. The court denied the motion since the landlord could not show irreparable harm and ordered an expedited trial. The trial, however, was adjourned numerous times at the request of the parties. Pursuant to § 365(d)(4), the Bankruptcy Court also extended the time *781 for Debtor to assume or reject the lease.[1] During this time Cobham attempted to obtain the required insurance, but was unsuccessful.
On April 7, 1986, the Bankruptcy Court ordered Cobham to close its doors to the public because Cobham had failed to fulfill its obligations as lessee. The court extended the time for Cobham to assume or reject the lease to April 16, 1986. Assumption of the lease, however, was conditioned upon acquisition of insurance, delivery of an insurance binder to Landlord's attorney and the payment of one month's rent by April 11, 1986.
On April 11, 1986, Berdon moved by Order to Show Cause for approval of a Stipulation entered into between Cobham and Berdon. Under the terms of the Stipulation Cobham agreed to surrender possession of the leased premises and fixtures and to deliver the lease reassignment to Berdon. The Stipulation stated that the debtor owed $2,210,594 on the promissory note at the time the petition was filed and that post-petition payment arrears totalled $244,200.
As of April 16, 1986, Debtor Cobham had obtained no insurance and paid no rent to the Landlord and, therefore, was unable to assume the lease. The Bankruptcy Court refused Cobham's request for yet another extension of time to assume or reject the lease. Accordingly, by Decision and Order dated May 14, 1986, that court determined that Cobham's lease was "deemed rejected" pursuant to 11 U.S.C. § 365(d)(4) on the grounds that the lease was in default and could not be cured and directed Cobham to surrender the leased premises to the Landlord. Berdon's motion seeking approval of the Stipulation was denied. These are the orders from which this appeal is taken.
DISCUSSION
Berdon argues that he owned the lease prior to the filing of Cobham's petition under Chapter 11 and, therefore, it is not property of the estate. He claims that title to the lease passed to him on July 15, 1985 pursuant to the terms of the Escrow Agreement when he demanded the lease reassignment from the Escrow Agent. Alternatively, he argues that he obtained legal title to the lease upon the execution of the Security Agreement.
The Bankruptcy Court accurately described the legal relationship between Berdon and Cobham, stating "[t]here can be but little doubt that the arrangement presented here, so typical of sales of restaurants in New York, constitutes a security agreement and thus that Berdon is to be viewed as a potentially secured creditor rather than an assignee." In re Cobham Enterprises, Inc., 62 B.R. 191, 194 (Bankr. S.D.N.Y.1986). The Purchase and Escrow Agreements, viewed in context of the entire transaction, indicate that the parties intended to enter a security agreement, not an assignment, when they executed the lease reassignment and placed it in escrow. See In re 48th Street Steakhouse, Inc., 61 B.R. 182, 190 (Bankr.S.D.N.Y.1986). Berdon, indeed, does not dispute this.
Berdon claims, however, that his interest in the lease changed on July 15, 1985 when he demanded the lease reassignment from the Escrow Agent following Cobham's default on payments against the promissory note. He contends that by virtue of the doctrine of "deemed delivery" he obtained title to the lease at that time and now stands in the position of an assignee rather than a secured creditor.
Under New York law ownership of escrowed property, such as the lease reassignment at issue here, remains with the party depositing the property into escrow until the conditions of the escrow agreement are fulfilled. Press v. Marvalan Industries, Inc., 422 F. Supp. 346, 349 (S.D.N.Y.1976); Alexander v. Quality Leather Goods Corp., 150 Misc. 577, 580, 269 N.Y.S. 499, 502 (Sup.Ct.1934). In this case, the Escrow Agreement conditioned transfer of title of the lease reassignment upon default by the Debtor and delivery to the *782 Seller.[2] Landlord interprets this condition to mean that the lease reassignment must be physically delivered to Berdon to effect transfer of title, whereas Berdon argues that actual physical delivery is not necessary.
The doctrine of "deemed delivery" does not apply under the circumstances presented here. In In re Ellison Associates, 63 B.R. 756, 763 (S.D.N.Y.1983) this Court held that under New York law physical delivery of escrowed property is ordinarily required to transfer title. "What is more, the concept of `deemed delivery' . . . as a means of getting around the requirement for actual physical delivery is a protection against wrongful conduct on the part of an escrowee towards his fiduciaries." Id; See Rapp v. Cansdale, 29 Misc. 2d 236, 245, 214 N.Y.S.2d 522, 532 (1960), aff'd, 12 A.D.2d 884, 211 N.Y.S.2d 1002 (4th Dep't 1961). Accordingly, in the absence of wrongful conduct by the Escrow Agent, there must be physical delivery of the escrowed property to effect transfer of title.[3]In re Ellison, 63 B.R. at 763.
In this case Berdon has not alleged that the Escrow Agent wrongfully withheld the lease reassignment. Nor has he alleged facts from which the Court might reasonably infer that a wrongful withholding occurred. Therefore the doctrine of "deemed delivery" is inapplicable and title to the lease remains with the debtor.
Berdon also argues that "legal title" to the lease passed to him upon the execution of the Security Agreement and, therefore, he owned the lease prior to the filing of the petition. This position is meritless. Regardless of whether or not "legal title" to the lease somehow passed to Berdon upon the execution of the security agreement, Cobham retained at least an equitable interest in the leasehold. This equitable interest became part of the bankrupt's estate and was properly subject to the order of the Bankruptcy Court. 11 U.S.C. § 541(a) (estate includes "all legal or equitable interests of debtor in property as of the commencement of the case.") (emphasis added); In re 48th Street Steakhouse, Inc., 61 B.R. 182 (Bankr.S.D.N.Y. 1986) ("By virtue of section 541, which is meant to be read broadly, the commencement of a case creates an estate comprising all the debtor's legal and equitable interests."); See also United States v. Whiting Pools, Inc., 462 U.S. 198, 204, 103 S. Ct. 2309, 2313, 76 L. Ed. 2d 515 (1983).
Since the lease became part of the bankrupt's estate when the bankruptcy petition was filed, Cobham's ability to assign it was contingent upon his assumption of it pursuant § 365(b) and upon adequate assurance of the assignee's future performance. 11 U.S.C. § 365(f)(2); See In re Fifth Avenue Originals, 32 B.R. 648 (Bankr.S.D.N.Y.1983). Section 365(b)(1) provides that a Trustee in bankruptcy (or debtor-in-possession)[4] may only assume a lease upon which a debtor has defaulted if the Trustee (or debtor-in-possession), at the time of the assumption of the lease
(A) cures, or provides adequate assurance that the trustee will promptly cure, such default;
(B) compensates, or provides adequate assurance that the trustee will promptly compensate, a party other than the debtor to such contract or lease, for any actual pecuniary loss to such party resulting from such default; and
*783 (C) provides adequate assurance of future performance under such contract or lease.
11 U.S.C. § 365(b)(1) (Supp.1986).
In this case the Bankruptcy Court required Cobham to obtain adequate insurance, deliver an insurance binder to the landlord and pay one month's rent in order to cure the defaults and thus assume the lease. It is undisputed that Cobham was unable to satisfy these conditions. Nor was Cobham able to render adequate assurance that it or anyone else, including Berdon, could do so in the future.
Berdon's position is merely that of a secured creditor and hence his rights to the collateral are limited by Cobham's inability to assume the lease (due to Cobham's defaults under the insurance and rental payment provisions) which is a prerequisite to its reassignment to Berdon. The Stipulation by which Cobham sought to transfer the lease to Berdon failed to provide for cure of default or assurance that it would be cured by either the Debtor or Berdon or adequate assurance that Berdon as assignee would perform tenant's obligations under the lease. 11 U.S.C. §§ 365(b)(1) and 365(f) (Supp.1986).
Since Cobham was unable to assume the lease within the period fixed by the Bankruptcy Court, the lease is deemed rejected under § 365(d)(4).
Berdon's argument that this Court has no jurisdiction to decide this case under 28 U.S.C. § 1334 is meritless. This Court has determined that the lease is property of the Debtor's estate and, therefore, the dispute is properly subject to this Court's jurisdiction under 28 U.S.C. § 1334.
CONCLUSION
The leased property located at 254 West 54th Street, New York, New York is property of the debtor's bankruptcy estate. Since Debtor did not properly assume such lease under 11 U.S.C. § 365(d) (Supp.1986), it is deemed rejected and thus may not be assigned to the secured creditor. The Order of the Bankruptcy Court disapproving the stipulation between Cobham and Berdon purporting to effect the assignment is affirmed. The order of the Bankruptcy Court directing Cobham to surrender possession to the landlord is also affirmed.
SO ORDERED.
NOTES
[1] Under 11 U.S.C. § 365 (Supp.1986) the trustee in bankruptcy or the debtor in possession may "assume" the lease and continue to exercise control over the leasehold estate or "reject" it and surrender the leased premises to the landlord. 11 U.S.C. §§ 365, 1107 (Supp.1986).
[2] The Escrow agreement states:
. . . In the event of a default by the Purchaser in the performance of any of its obligations under the Purchase Agreement which has not been cured within the permissible time period, the Escrow Agent shall deliver the Reassignment of the lease to the Seller, which delivery shall be binding upon the Purchaser and the Seller as to Purchaser's rights to possess and occupy the premises covered by said Reassignment of lease. . . .
[3] The cases relied upon by Berdon are not to the contrary. For example, in Alexander v. Quality Leather Goods Corp., 150 Misc. 577, 579, 269 N.Y.S. 499 (Sup.Ct.1934), the court held that title of a stock certificate held in escrow could pass only upon performance of the specified condition in the escrow agreement. Since the contingency to signal change in ownership never occurred, the court did not address the issue of actual versus "deemed" delivery.
[4] 11 U.S.C. § 1107 (Supp.1986). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1531271/ | 117 A.2d 374 (1955)
Mary READY
v.
Arthur PETERS and Peerless Casualty Company.
No. 310.
Supreme Court of Vermont. Chittenden.
October 4, 1955.
*375 Leary & Leddy, Burlington, for plaintiff.
Edmunds, Austin & Wick, Burlington, for defendant.
Before JEFFORDS, C. J., CLEARY and CHASE, JJ., and HOLDEN and SHANGRAW, Superior Court Judges.
CLEARY, Justice.
This is an action in tort for alleged negligence resulting in injury to the plaintiff. Trial was by jury. The case is here on the plaintiff's exceptions to the exclusion of evidence and to the granting of defendants' motion for a directed verdict at the close of the plaintiff's case.
In passing upon such a motion the evidence must be taken in the light most favorable to the plaintiff and the effect of modifying evidence is to be excluded. If there is any substantial evidence fairly and reasonably tending to support the plaintiff's claim, the question is for the jury. Campbell v. Howard Nat. Bank & Trust Co., 118 Vt. 182, 183, 103 A.2d 96; Fletcher v. Manning, 118 Vt. 240, 241-242, 105 A.2d 264; Conger v. Gruenig, 117 Vt. 559, 562, 96 A.2d 821; Silveira v. Croft, 116 Vt. 420, 421-422, 77 A.2d 911.
On May 10, 1951, which was a bright day with the sun shining, the plaintiff was injured in getting out of a taxicab owned by the defendant Peters and insured by the defendant Peerless Casualty Company. At the time Peters was furnishing two taxicabs to carry passengers attending a funeral and was paid by the funeral director. Peters drove one of the taxicabs and his employee drove the other one. A person named Boucher, who was assisting the funeral director, and a policeman named Beauvais helped persons into the taxicabs at the church and out of the taxicabs at the cemetery. The taxicab in which the plaintiff was a passenger was driven by Peters' employee. This cab was equipped with a footrest fastened to the floor in front of the rear seat by bolts and brackets so that it could be moved forward and backward on the brackets which acted as hinges. When in a backward position the footrest was close to the rear seat and when in a forward position it was about in the middle of the rear floor and about two inches above it. The taxicab was a seven passenger car, equipped with two jump seats, almost the width of the rear seat and wider than the footrest. When not in use, the jump seats folded flush with the back of the front seat and when in use fitted closely together.
*376 The plaintiff's amended declaration alleged that on May 10, 1951, the defendant Peters was the owner of the jitney involved in the accident, insured by the defendant insurance company, duly licensed and regularly used for carrying passengers for hire; that the plaintiff was such a passenger; that it was the duty of defendant Peters to provide a properly equipped and safe vehicle and to warn the plaintiff of the dangers and hazards therein; but that Peters violated his duties and negligently equipped the jitney and caused and permitted it to be equipped with a large footrest which could be moved forward and backward, thereby creating and resulting in a dangerous and unsafe condition, unknown to the plaintiff; that Peters failed and neglected to warn the plaintiff of the existence and location of the footrest; and that the plaintiff while exercising due care and caution and while free from contributory negligence, suffered injury by reason of Peters' negligence.
V.S.1947, § 10044, subsec. IX defines a jitney as a motor vehicle regularly used for carrying passengers for hire. The evidence showed defendant Peters' taxicab was a jitney as defined by our statute. Therefore he was a common carrier, Schott v. Weiss, 92 N.J.L. 494, 105 A. 192, 193, and assumed all the obligations incident to that calling. Chaput v. Lussier, 132 Me. 48, 165 A. 573, 574. He was bound to exercise the utmost care that no injury befall the plaintiff. Sprague v. Smith, 29 Vt. 421, 427. The law required from him the highest degree of care respecting his taxicab and its footrest. Wiley v. Rutland Railroad Co., 86 Vt. 504, 512, 86 A. 808. His duty to his passenger required of him the most watchful care and the most active diligence for her safety. Strong v. Burlington Traction Co., 80 Vt. 34, 36, 66 A. 786, 12 L.R.A.,N.S., 197; Hadley v. Cross, 34 Vt. 586, 588. There was evidence from which the jury, acting fairly and reasonably, could have found that a dangerous condition existed when the footrest was in its forward position and that it was in that position both when the passengers entered the taxicab at the church and when they got out at the cemetery; that when in that position and the jump seats were open for use the footrest could not be seen by a person sitting in a normal position in the rear seat; that the driver who had driven taxicabs, including seven passenger cars, for twenty-five years knew or should have known the above stated facts, knew the number of his passengers and that all the seats were occupied, and should have warned the plaintiff of the existence and position of the footrest and of the danger, especially so, because of her build and size, and her apparent weight and age. Under the circumstances disclosed by the evidence the question whether Peters, either personally or through his employee, was negligent in failing to warn the plaintiff as alleged in the amended declaration should have been submitted to the jury. Silveria v. Croft, 116 Vt. 420, 422, 77 A.2d 911.
The defendants claim they owed no duty to warn the plaintiff because the existence and position of the footrest was obvious and cite Terrill v. Spaulding, 115 Vt. 342, 61 A.2d 611. In that case the plaintiff was a tenant of the defendant and was injured by falling into an opening where a furnace register had been removed by the landlord in order to lay a new rug. The plaintiff knew the register had been removed and that the hole was there and there was no evidence that the defendant saw the plaintiff or knew of her presence before she stepped into the hole. Under such circumstances this Court held the defendant owed no duty to warn the plaintiff. It is clearly distinguishable from the present case.
The defendants also claim that Peters was not directing or controlling the operation of his taxicab at the time of the accident and that Peters' employee was then acting as the servant of the funeral director. They cite 35 Am.Jur. 970, § 541 and Salowitch v. Kres, 147 Md. 23, 127 A. 643. The Maryland case is not in point because the evidence there showed that the defendant without recompense loaned his truck and its driver to another for purposes *377 not connected with the defendant's business. The rule governing such cases in this jurisdiction has been stated repeatedly in our decisions. The master test is: Who has a right to control the offending servant in the performance of his work at the time in question? Various circumstances and things are for consideration, to be sure, in their bearing upon the question just stated, but when that question is answered, the investigation comes to an end. This idea runs through all of our cases. Pappillo's Adm'x v. Prairie, 105 Vt. 193, 195, 164 A. 537, and cases there cited.
In the present case the taxi driver was employed by and paid by the defendant Peters, and was directed by Peters to go to the funeral and to carry the mourners. The plaintiff was one of them. The driver was an experienced one, especially at funerals such as this. He knew where to go and the positions to take with his cab at the church, in the funeral procession and at the cemetery. The only evidence of any control exercised over him by others than the defendant was that after his passengers were seated in his taxicab at the church those assisting at the funeral gave him a signal to go ahead and at the cemetery gave him a signal to pull up and stop and where to go after the passengers were out of the cab. Morris v. Trudo, 83 Vt. 44, at pages 47-48, 74 A. 387, 25 L.R.A.,N.S., 33, and Pappillo's Adm'x v. Prairie, 105 Vt. 193, at pages 195-196, 164 A. 537, are two of our cases in point. In both cases the facts were more favorable to the defendant than in the present case but in each case our Court held that the employee involved in the accident was the servant of the owner of the vehicle since that relation had not been suspended. Because there was evidence fairly and reasonably tending to show that defendant Peters directed and controlled the operation of the taxicab and that the driver was the servant of Peters at the very time of the accident the question was one for the jury to decide. Morris v. Trudo and Pappillo's Adm'x v. Prairie, supra.
The defendants contend that the plaintiff was guilty of contributory negligence as a matter of law. It is true that in order to free herself from contributory negligence it was necessary for the plaintiff to look where she was going and to look effectively. She was required to look with the degree of care that a careful and prudent person would have exercised under like circumstances. It will be presumed that she saw what was within the range of her vision, if she looked. It will not avail her to say that she looked and did not see what she could not have helped seeing if she looked. Bressett v. O'Hara, 116 Vt. 118, 121, 70 A.2d 238. The plaintiff had the right to assume that the defendant Peters would exercise the care which the law required of him. Her care and diligence are to be measured in view of this assumption. But she could not for that reason omit any care which the law required of her, as the rule applies only in favor of one whose own conduct measures up to the standard of care. Hill v. Stringer, 116 Vt. 296, 300, 75 A.2d 657, and cases cited. The trouble with the defendants' position is that it is predicated upon evidence that makes most strongly against the plaintiff rather than on that which is most favorable to her.
At the time of her injury the plaintiff was 68 years old, weighed about 174 pounds, was about five feet in height, had some arthritis in her left knee and ordinarily wore glasses to sew or read. She was not wearing glasses at the time she was injured.
The plaintiff entered the taxicab through its opened right rear door at the church after the funeral service. At this time her daughter was seated on the left of the rear seat and her grandson, Paul, Jr., was seated on the opened left jump seat. The plaintiff looked to see just where she was going, looked where she was placing her feet as she entered the taxicab, was careful, and then had to look up to get hold of a strap that could be used to assist one in getting in the cab. A man behind her was pushing her in. She took hold of the strap, then looked at the seat, turned around and sat down. It took her a little time to turn around and get into her seat. She had just turned around to sit down *378 when her grandson Robert got into the jump seat in front of her which someone had opened for him. The plaintiff's son-in-law and the driver rode in the front seat of the cab.
When they reached the cemetery the driver did not get out of the cab and did not at any time say anything to the plaintiff about the footrest. When the car stopped in the cemetery Robert got out and immediately thereafter two men reached in and took the plaintiff by the arms to assist her. As she started to get out the plaintiff looked where she was placing her feet and stood right up as quickly as she could, her left foot caught in the footrest, she hollered "Oh, my leg is broken", sort of sat down on it, and the men lifted her up. The plaintiff did not see the footrest at any time while she was getting in or out or while she was in the taxicab. When she got in the taxicab one half of the footrest was covered by the open left jump seat. While standing outside and before he got into the taxicab the plaintiff's grandson Robert, then 11 years old, could see some of the footrest but not too well. The footrest was brown in color and covered with fabric of the same substance and color as the floor of the cab. The plaintiff was an elderly person, short and heavy, had some arthritis and failing eyesight. She needed assistance in getting in and out of the cab and was hurried by those who were assisting her and she was giving careful attention to where she was placing her feet. The jury might well have found that the footrest was not an obvious danger and that the plaintiff had no reasonable cause to apprehend the danger. Under the circumstances as disclosed by the evidence it cannot be said as matter of law that the plaintiff was guilty of contributory negligence in failing to observe the footrest as she entered and started to leave the cab.
While on the witness stand the plaintiff was asked by her counsel: "Had there been any footrest in any automobile which you have ridden in, in recent years?" On objection the question was excluded and the plaintiff allowed an exception. The plaintiff's counsel then asked to make an offer and, after being granted permission, said: "It seems to us, Your Honor, the witness's knowledge of other vehicles in which she has ridden in recent years, and her experience would have some bearing on whether she should have anticipated the existence of a footrest here." The evidence was excluded and the plaintiff allowed an exception. The plaintiff claims that her knowledge and experience in this connection would have some probative value as to whether the plaintiff should have anticipated the existence of a footrest in the cab, it's location on the floor and her duty to look for it and protect herself from injury; also whether she had the right to assume that the floor of the car was reasonably safe for her exit. As so often held by this Court, any fact or circumstance, which tends to render a claimed fact more or less probable is relevant and admissible in evidence to show whether the fact exists or not. Gilfillan v. Gilfillan's Estate, 90 Vt. 94, 101, 96 A. 704 and cases there cited; Gomez & Co. v. Hartwell, 97 Vt. 147, 155, 122 A. 461; State v. Vadney, 108 Vt. 299, 301, 187 A. 381. Any fact, though it be collateral, which renders a material fact more probable or improbable is proper evidence and may be considered in determining whether such fact exists. Davis v. Randall, 85 Vt. 70, 72, 81 A. 250; Atwood v. Joyce, 109 Vt. 30, 33, 192 A. 11; Loomis v. Graves, 116 Vt. 438, 439, 77 A.2d 838. Here, the plaintiff had alleged that she was free from contributory negligence. The excluded evidence tended to render that issue more or less probable and she should have been allowed to introduce it.
Judgment reversed and cause remanded. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1531328/ | 208 Md. 222 (1955)
117 A.2d 573
WARCZYNSKI
v.
BARNYCZ
[No. 13, October Term, 1955.]
Court of Appeals of Maryland.
Decided November 8, 1955.
The cause was argued before BRUNE, C.J., and DELAPLAINE, COLLINS, HENDERSON and HAMMOND, JJ.
*225 Marion A. Figinski, for appellant.
Mary Arabian and Frank Petro, for appellees
BRUNE, C.J., delivered the opinion of the Court.
The appellant, Anna Warczynski, and the appellees, John Barnycz and Anna Barnycz, his wife, owned adjoining pieces of property known respectively as 1803 and 1805 Fleet Street, in Baltimore City. There is a covered passageway at ground level between the houses on the two lots; and above this passageway starting below the second floor level, there is a party wall dividing the two buildings. The appellant wished to build an additional half-story on her building, and suggested that the appellees do likewise with their house and join in increasing the height of the party wall. The appellees, on learning that the cost would be $700, declined to do so; but the appellant went ahead with the project, and in so doing increased the height of the party wall. The appellees claimed that the appellant also widened the wall and thereby encroached on their property. After the wall had been built they filed a bill of complaint in the Circuit Court #2 for Baltimore City for a mandatory injunction to require the appellant to remove that part of the wall which extended beyond the line of the original party wall and so overhung and encroached upon the appellees' property. The appellant filed a demurrer which was overruled. The appellant then filed an answer and the case went to trial. At its conclusion the lower Court refused to grant an injunction, but found that there was an encroachment and assessed damages therefor at $300 and entered a monetary decree for that amount against the appellant. The appeal is from that decree.
The appellant's brief states that there are three questions presented, but two of the three are double, so that there are really five. The appellees filed no brief, but the appellant consented to their counsel arguing the case orally. The five questions, which we shall take up in the order stated below, are as follows:
*226 1. Whether the appellant's demurrer should have been sustained because the appellees did not file with their bill as exhibits either originals or copies of deeds or of the survey involved in the proceeding.
2. Whether the appellant's demurrer should have been sustained because the suit was not filed until after the wall had been completed.
3. Whether evidence pertaining to a survey showing the asserted encroachment was properly admitted.
4. Whether there was in fact any encroachment.
5. Whether damages were sufficiently proven.
1. THE OMISSION OF EXHIBITS
A portion of General Equity Rule 4 provides in substance that no injunction or restraining order shall issue until the originals or duly certified copies of all deeds or other instruments of record and verified copies of all other documents or papers not of record necessary to show the character and extent of the plaintiff's interest in the suit should have been filed, if they are available to the plaintiff.
At this stage of the proceedings the appellant's objection based upon the appellees' not having filed copies of the deeds and surveys seems academic. It is to be noted that when the bill was filed no immediate injunction or restraining order was sought, and that at the conclusion of the case no injunction was issued. Furthermore, during the trial of the case, proof of the legal descriptions of the properties, as well as proof of the sources of title of the respective parties, were put in evidence by stipulation, and the appellees' ownership of their property was admitted. See Butler v. Rahm, 46 Md. 541, 549. There exhibits, for lack of which an injunction might have been refused, were put in evidence on the hearing of a motion to dissolve the injunction and this was held sufficient. See also Haldas v. Commissioners of Charlestown, 207 Md. 255, 113 A.2d 886, 889-890, and Clark v. Todd, 192 Md. 487, 64 A.2d 547, in each of which cases it was held unnecessary to file as exhibits with the *227 bill all written documents which are items of proof as links in the chain of evidence. These two cases last cited dispose of any objection to the absence of the survey as an exhibit with the bill. It was introduced during the trial. It is also pointed out in the Haldas case that although failure to file necessary exhibits precludes injunctive relief, it does not preclude any general relief to which the plaintiff may be entitled.
2. TIME OF SUIT AFTER WALL BUILT.
Another of the grounds of demurrer was that the suit, as appeared from the bill, was not filed until about twenty-one months after the wall had been built.
Equity has jurisdiction to restrain an encroachment (Long v. Ragan, 94 Md. 462, 51 A. 181). The appellant does not seem to challenge this proposition here, but she cites Crise v. Slagle, 129 Md. 453, 99 A. 669, to support her contention that the fact that the work complained of had been done bars the suit. In the Crise case it was held that it would be futile to review an order refusing an injunction to prevent a sale of mortgaged premises where the sale had been made before the case came up on appeal. Here the suit was not for an injunction to prevent action already taken but for an injunction to require the action already taken to be undone. The Crise case is therefore not in point. See Phillips Roofing Co. v. Maryland Broadcasting Co., 184 Md. 187, 40 A.2d 298, where the trial court had refused an injunction to prevent interference with the performance of a contract and where by reason of the passage of time between the trial and the decision on appeal the time for performance of the contract had expired. An injunction thereafter would have been nugatory, but the case was remanded for the purpose of determining damages. See also Shipley v. Fink, 102 Md. 219, 62 A. 360. Compare Easter v. Dundalk Holding Co., 199 Md. 303, 86 A.2d 477.
The appellant also relies upon Salisbury v. Camden Sewer Co., 135 Md. 563, 109 A. 333, in support of her claim that the suit is barred because it was brought too *228 late. The facts as alleged in the bill, which were before the trial court on demurrer, included statements to the effect that when the encroachment was being made, the appellees saw it and protested, that the appellant at that time denied any encroachment, and that the appellees thereafter caused a survey to be made which showed an encroachment of 4 1/2 inches. We think that these allegations did not establish laches or acquiescence on the part of the appellees. There was nothing resembling the complete absence of objection or the standing by for a period of years, such as were two of the bases for the decision in the Salisbury case. Likewise, no municipal corporation was involved here, and there was no question here concerning the preservation of the health of the community.
Going beyond the allegations of the demurrer and considering the testimony at the trial, we find no basis for imputing laches or acquiescence to the plaintiffs. The testimony at the trial differed somewhat from the allegations of the bill. At the trial the testimony of one of the appellees showed that while the construction of the wall was in progress there was a canvas covering over the work which prevented the appellees from actually seeing any encroachment until the wall was built and the covering was removed and that the work took about one or two days. When the wall was exposed to view the appellees noted the bulge and promptly protested and were then assured by the appellant or her contractor that everything was quite in order. The appellees then consulted counsel and he caused the survey to be made.
3. ADMISSIBILITY OF EVIDENCE PERTAINING TO A SURVEY.
The appellees produced as a witness Mr. Louis Evans, a surveyor who was in the employ of a registered surveyor, Mr. Vernon C. Lutz. Mr. Evans was permitted to introduce into evidence and to testify with regard to a plat prepared by Mr. Lutz's office and also with regard to field notes of a survey upon which the plat was based. *229 The witness himself had not made the plat nor had he participated in making the actual survey. The plat was authenticated by the signature of Mr. Lutz, which Mr. Evans identified. Mr. Lutz's absence was due to illness. The chief surveyor in charge of the party which made the survey, who was the individual who made the field notes, was also unavailable as a witness because he had moved out of the State.
The witness had been engaged in surveying work for thirteen years and had been in the employ of Mr. Lutz for four years. He testified that the survey had been made by individuals employed by Mr. Lutz's office, that the field notes were made in the ordinary course of business, that the plat was prepared by being computed and plotted from the field notes, and that the plat was prepared under the supervision of Mr. Lutz and was signed by him.
We think that the witness was sufficiently qualified as an expert to interpret the plat and the field notes. He met the test stated in Refrigerating Co. v. Kreiner, 109 Md. 361, 71 A. 1066, where the Court stated: "It must be shown that the witness possesses such intelligence and such familiarity with the subject as in the sound discretion of the court will enable him to express a well-informed opinion in regard thereto." See also Wightman v. Campbell, 217 N.Y. 479, 112 N.E. 184, in which the appellant objected to the admissibility of the testimony of a surveyor who testified how he had located certain lines with the aid of field notes made in the year 1851 by a surveyor then deceased who had surveyed the property. The Court said: "Field book entries made by a deceased surveyor for the purpose of a survey on which he was professionally employed, are admissible in evidence as being made in the discharge of professional duty. * * * If the proper foundation had been laid for the introduction of the notes in evidence, as easily might have been done by showing that they were made within the scope of professional *230 employment, and the notes put into evidence, the witness, himself a surveyor and competent to interpret them, could have testified therefrom as to the location of boundary lines of the Taylor farm and the evidence would have been entirely proper."
The records from which Mr. Evans testified were shown to have been made or kept in the regular course of a business or profession, and as such they were admissible as evidence under Code (1951), Article 35, Section 68. Bethlehem-Sparrows Point Shipyards, Inc. v. Scherpenisse, 187 Md. 375, 50 A.2d 256; Frush v. Brooks, 204 Md. 315, 104 A.2d 624; Shirks Motor Express v. Oxenham, 204 Md. 626, 106 A.2d 46.
4. ENCROACHMENT.
The appellant claims that she was entitled to increase the height of the party wall. In this contention she relies strongly upon the case of Sorensen v. J.H. Lawrence Co., 197 Md. 331, 79 A.2d 382, where a suit was brought to restrain a defendant from increasing the height of a party wall and to require the defendant to restore it to its original condition. Judge Delaplaine there stated that, "Public policy favors the presumption that either owner of a party wall under an agreement has the right to make the wall higher than it was built originally. * * * The public interest is not promoted by putting impediments in the way of erecting buildings and the law will not be swift to construe the acts of parties so as to produce that effect."
However, in the Sorensen case no encroachment was shown. The wall was built upon its original base, without being widened. In the present case the wall was widened so as to overhang the appellees' property, as was shown both by the testimony of one of the appellees, based upon observation, and by the surveyor's plat and the field notes upon which it was based. The trial court found as a fact that there was an encroachment; and the evidence is ample to sustain this finding.
*231 5. SUFFICIENCY OF PROOF OF DAMAGES
The evidence with regard to damages is scanty. There are positive findings by the Chancellor (a) that there was an encroachment and (b) that there were damages. There is, however, no testimony whatever which we have been able to find as to the amount of damages sustained by the appellees, and the brief oral statement of the Chancellor which was recorded and included in the record does not show the basis upon which he computed damages at $300. In Levi v. Schwartz, 201 Md. 575, 95 A.2d 322, Judge Delaplaine, writing for the Court, said: "The general rule is that a person whose real property has been injured by another's negligent and wrongful act is entitled to such damages as will compensate him for the injury or loss sustained." In Mullan v. Hacker, 187 Md. 261, 49 A.2d 640, Judge Delaplaine also said: "There is no question that the measure of damages for property is the cost of restoring it, if it can be restored to the condition it was in before the injury without cost disproportionate to the injury; but where the cost of restoring is greater than diminution in the market value, the correct measure is the difference between the value of the property before the injury and after." See also Superior Construction Co. v. Elmo, 204 Md. 1, 102 A.2d 739, and the Restatement, Torts, § 929 and Comment b on Clause (a) i.
Because of the complete absence of evidence as to the impairment of market value of the appellees' property we must remand the case for redetermination of the amount of damages to which the appellees may be entitled. Cf. Phillips Roofing Co. v. Maryland Broadcasting Co., supra.
In accordance with the views above expressed, the portion of the decree is affirmed which holds that the appellant has encroached upon the property of the appellees and is liable for such encroachment, but that portion of the decree which fixes the amount of damages is reversed *232 and the case is remanded for the ascertainment of the amount of the appellees' damages.
Decree affirmed in part and reversed in part, and case remanded for further proceedings in accordance with this opinion, the appellant and the appellees to pay their respective costs on this appeal. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1531340/ | 117 A.2d 431 (1955)
Max CZECH et al.
v.
Joseph F. ZUROMSKI et al.
Ex. No. 9571.
Supreme Court of Rhode Island.
May 9, 1955.
Supplemental Opinion November 4, 1955.
Corcoran, Foley & Flynn, Francis R. Foley, Pawtucket, for plaintiffs.
Woolley, Blais & Quinn, John S. Lennon, Pawtucket, for defendants.
CONDON, Justice.
This is an action of the case by lessees against their lessors for money had and *432 received as advance payment of rent under a covenant therefor in an indenture of lease. The case is here on the defendants' exception to the trial justice's decision for the plaintiffs in the sum of $500 plus interest of $107.50.
The defendants contend that such decision is against the law and the evidence and the weight thereof. They argue that the evidence shows plaintiffs had entered into a lease for one year under which they were obligated to keep the rent paid three months in advance; that the amount of $500 for which they brought suit was a portion of such advance rent; and that in law they were not entitled to a refund thereof when they voluntarily vacated the demised premises before the expiration of the lease.
The plaintiffs contend that no lease existed at the time they surrendered possession. On the contrary they claim that they were merely tenants holding over from month to month or at most from year to year. The trial justice found that there was no lease and that plaintiffs were holding over as tenants from year to year. Therefore the basic question here is one of fact. Does the evidence show that plaintiffs were tenants under a lease for a year or under some less definitive form of tenancy?
It appears from the evidence that plaintiffs became defendants' tenants originally under the following terms and conditions. In 1946 defendants leased a store at 19 Dexter street in the city of Pawtucket to Shetley's Stores, Inc., for a term of three years commencing September 1, 1946 at a yearly rent of $3,000 payable in the following manner: "Said Lessee shall pay said rent in equal monthly payments in advance of Two Hundred Fifty ($250.00) Dollars each on the 1st business day of each and every month succeeding the date hereof until said rent is paid in full, and shall keep said rent paid three months in advance; and said Lessors do hereby acknowledge that said rent is now paid in advance for three months and that the payment of said monthly rent as aforesaid will keep said rent paid three months in advance as required by this lease."
In accordance with that covenant Shetley's Stores, Inc., paid defendants $750 and also the monthly rent in advance as long as they remained in possession. However, in June 1948 they, as sellers, and plaintiffs, as buyers, entered into a written agreement whereby plaintiffs came into possession of the leased premises. A portion of such agreement which is pertinent here reads as follows:
"Whereas the Seller has paid to Joseph F. Zoromski of the City of Central Falls, County of Providence, State of Rhode Island and Arnold Wood of the City of Pawtucket, County of Providence, State of Rhode Island the sum of seven hundred fifty dollars pursuant to the terms of a certain lease dated March 31, 1947, entered into between the said Joseph F. Zoromski and Arnold Wood as lessors and Shetley's Stores Inc., as lessees, and
"Whereas the Buyers are desirous of re-imbursing to the Seller the said sum of seven hundred fifty dollars,
"Now, Therefore, it is mutually Agreed as follows:
"1. That the Seller hereby sells to the Buyers and the Buyers hereby purchase from the Seller all the Seller's right, title and interest in and to all of the furniture and fixtures set forth in 'Schedule A' annexed hereto in the sum of one thousand seven hundred dollars, and the Buyers further covenant to pay to the Seller the aforesaid sum of seven hundred fifty dollars heretofore paid by the Seller pursuant to the terms of the lease * * *."
Thereafter plaintiffs were recognized by defendants as the lessees and they regularly paid the monthly rent in advance until December 1949. They voluntarily surrendered possession of the leased premises on the last day of that month pursuant to their written notice of intention to quit *433 which they had previously served on defendants. In the meantime, however, plaintiff Czech and defendant Zuromski entered into negotiations in June 1949 for a new lease to run for one year from the date of the expiration of the old lease, August 31, 1949. They orally agreed on a lease for such period under the same terms and conditions as the old lease. This agreement was thereafter reduced to writing and signed by defendants. It was then delivered to plaintiff Czech who also signed it.
The plaintiff Peter Kielbasa at that time was out of town. After signing the lease Czech left it on the desk for Kielbasa to sign when he returned, if he wished to. However, Czech testified that upon his return Kielbasa refused to sign because he thought the rent should be reduced. Kielbasa did not testify. After he refused to sign the lease Czech eradicated his own signature therefrom but he did not return the lease to defendants until plaintiffs were about to quit the premises. Nevertheless plaintiffs continued to occupy the premises after the old lease expired and they paid the monthly rent of $250 in advance as stipulated therein for September, October, and November 1949. And during that period they did not ask for the return of the $750 which kept the rent paid three months in advance as required by the lease.
The plaintiffs are partners. Czech attended to the store while Kielbasa was employed as a salesman on the road for an employer not involved here. The defendants Zuromski and Arnold Wood are the owners of the leased premises but it appears that Zuromski acted for both in the instant transaction. All negotiations for the new lease appear to have been conducted solely by Czech and Zuromski. In the circumstances there is no question but that each had the authority to enter into an agreement binding upon his associate. The defendants concede this. The plaintiffs seek to avoid the effect of Czech's conduct by claiming the negotiations were incomplete and did not result in a binding agreement in the absence of Kielbasa's written assent to the lease.
There is some conflict in the testimony on that point. Zuromski testified that he and Czech orally agreed in June 1949 that plaintiffs could continue in possession after August 31, 1949 under the same terms and conditions set out in the old lease except that the tenancy would run only for a year. He further testified that such agreement was reduced to writing in the form of a new indenture of lease which he and Wood signed and thereafter delivered to Czech. He heard no more from Czech about the lease until plaintiffs gave notice that they were moving out in December 1949. It was Zuromski's understanding that after August 31, 1949 plaintiffs remained in possession under the new lease and that he had heard nothing from Czech to the contrary.
Apparently this was also Czech's understanding of their negotiations when he received the written lease, since on that point he testified on cross-examination as follows:
"Q. I will ask you, Mr. Czech, whether or not in June of 1949 you agreed with Mr. Zuromski for the renewal of the lease for a period of one year on the same terms and conditions as the Shetley lease? A. That is right.
"Q. And, as a result of that agreement, I drew up this typewritten form? A. Correct.
"Q. And Mr. Zuromski and Mr. Wood signed it? A. That is right.
"Q. It was delivered to you? A. Yes, sir.
"Q. You signed it? A. I signed it."
In his direct examination he had sought to put a different light on such negotiations as shown by the following testimony:
"Q. Will you tell the Court precisely what the discussions were about? A. Well, we felt that the lease price, the rental, was a little too high and so we asked for a reduction from our landlords *434 and under those circumstances maybe we could sign another lease.
"Q. Well, what happened? Prior to August 31 did they agree to give you a reduction? A. No, he did not.
"Q. And did you have some talk with either Mr. Zuromski or Mr. Wood with reference to a new lease? A. Yes, we did.
"Q. And will you tell the Court what that was? A. Well, we felt that since our lease was running out we wanted another one so that we would be safe in continuing in the premises.
"Q. What was that, please? A. I said that we asked for another lease and that we wanted to be safe in having another so that we could remain on the premises.
"Q. Was your partner, Kielbasa, in town at the time you had this talk? A. No. Peter Kielbasa was on the road. He was with a clothing outfit.
"Q. Now, did the landlords prepare or have a lease prepared for a new, term ? A. Yes. When we couldn't arrive at any reduction, I felt that I ought to go ahead and get a lease prepared for Peter's look-see when he comes back."
From our examination of the transcript we are of the opinion that such conflict in the testimony can be satisfactorily resolved only by a consideration of it in the light of plaintiffs' conduct after the original lease had expired on August 31, 1949. After that date their rights and obligations under the terms and conditions of such lease ceased, unless they contracted with defendants to renew or extend them. In the absence of such an agreement plaintiffs were entitled to demand and receive from defendants the $750 paid to them to keep the rent paid three months in advance.
The plaintiffs did not demand that sum and continued to pay monthly rent in advance. If they were not holding over under a lease with the same terms and conditions as the old lease they were entitled, after August 31, 1949, to receive that sum or they could have refrained from paying rent for the months of June, July and August 1949 and could have had the $750 applied to such rent. Apparently they did not choose to avail themselves of either right because they desired to continue to occupy the leased premises under the same terms as the old lease, but at a reduced rent if possible. Hence the negotiations in June 1949 for a new lease. As a result of those negotiations, although no reduction was granted, Czech did obtain an extension of the old lease for another year whereby defendants were entitled to retain the $750 and to continue to receive the monthly rent of $250 in advance. The plaintiffs by refraining from demanding the $750 and by paying the monthly rent as usual in advance after August 31, 1949 acted consistently with the understanding that a new lease had been negotiated.
If, when Kielbasa refused to sign and Czech eradicated his signature from the new lease, plaintiffs understood they had no lease after August 31, 1949, why did they continue to pay monthly rent of $250 in advance while at the same time defendants retained $750 of their money under an agreement which had expired? It seems to us that such conduct is consistent only with the fact that they had obtained an extension of the old lease for a year under precisely the same terms and conditions. Therefore, we are of the opinion that the trial justice's decision that there was no lease is clearly wrong.
The absence of Kielbasa's signature on the written lease is of no consequence. A lease for a year is not required to be in writing in order to be valid. General Laws 1938, chapter 481, § 1. And even if a writing were necessary Czech's signature alone would bind the plaintiffs. As Kielbasa's partner he had the authority to bind him in this partnership transaction, and he effectually did so when he concluded his negotiations with Zuromski. By eradicating his name from the written lease after Kielbasa refused to sign it, he did *435 not cancel the agreement which he had entered into orally with Zuromski.
The plaintiffs remained obligated under the lease thus agreed upon. Their failure to pay the monthly rent for December was a breach of the lease. The surrender of the keys to the premises and their acceptance by the lessors at the end of that month did not cure such breach so as to entitle plaintiffs to demand a refund of the $750 minus $250 for the December rent. Their voluntary surrender of the leased premises before the expiration date of the lease without any prior agreement on the part of defendants did not obligate defendants to refund any portion of the rent which had been paid in advance in accordance with plaintiffs' covenant in the lease. 52 C.J.S., Landlord and Tenant, § 545 b., pp. 355, 356. By such acceptance defendants at most may have possibly waived their right to damages for breach of the lease but not their right to retain any sum they had received as rent thereunder.
However, Czech testified that when the keys were delivered to defendants in December they said a check would be mailed the next day for $500, the amount of advance rent that plaintiffs claimed was unearned. Zuromski denied that he made such a statement. We do not think plaintiffs made this a condition of their surrender of the premises. Their own evidence shows that, regardless of the three months' rent which they had kept paid in advance in the sum of $750 and which defendants had not offered to return when served with plaintiffs' notice of intention to quit, they intended to surrender the premises at the end of December and not merely to move out. But even if defendants, upon receiving the keys at that time, expressed an intention to refund $500 it would not be binding on them unless plaintiffs could show that such was the condition previously agreed to upon which the keys were surrendered. We find no evidence to that effect in the record. In our opinion the breach of the relationship of lessors and lessees was voluntarily initiated and consummated solely by the plaintiffs.
The defendants' exception is sustained, the decision is reversed, and the plaintiffs may appear before this court on May 18, 1955 to show cause, if any they have, why the case should not be remitted to the superior court with direction to enter judgment for the defendants.
FLYNN, C. J., not participating.
Supplemental Opinion.
PER CURIAM.
Pursuant to our order previously entered, this case was restored to the calendar of October 24, 1955 for further argument solely on the question whether the proviso in General Laws 1938, chapter 454, § 7, should be construed to exclude nonpayment of rent as a default within the meaning of that term as used in such proviso. On that date such question was fully argued and briefs were submitted by both parties.
The plaintiffs contended that, assuming their breach of the covenant in the lease to keep the rent paid three months in advance, they nevertheless were entitled to the benefit of § 7 if their tenancy was determined "in any manner mentioned in the preceding section" of the statute. Section 6, they point out, includes a determination of the tenancy "for nonpayment of rent * * *." But the proviso in ,§ 7 reads: "Provided, however, that such determination has not occurred by reason of any default of the person claiming to recover such rent." The plaintiffs have argued for a construction that would disregard such proviso.
After carefully considering the oral arguments and briefs, we are of the opinion that the plaintiffs' proposed construction of the proviso is not sound. Since they have *436 failed to show cause why judgment should not be entered for the defendants, the case is remitted to the superior court for entry of judgment in accordance with the opinion.
CAPOTOSTO and BAKER, JJ", not participating. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1531342/ | 269 S.W.2d 201 (1954)
OLAN MILLS, Inc.
v.
CITY OF ELIZABETHTOWN et al.
Court of Appeals of Kentucky.
June 25, 1954.
Redwine & Redwine, Winchester, J. E. Wise, Elizabethtown, Joe Van Derveer, Chattanooga, Tenn., for appellant.
Floyd K. Hollan, Elizabethtown, for appellees.
STEWART, Justice.
The only question presented on this appeal is whether an ordinance, enacted by the city council of Elizabethtown, imposes an undue and discriminatory burden upon interstate commerce in violation of Article I, § 8, Clause 3 of the Constitution of the United States, commonly known as the "commerce clause," and is therefore unenforceable as to appellant, a nonresident corporation doing business in Kentucky. When we employ the term "nonresident" in this opinion, we refer in each instance to a person having his or its situs out of the state.
The ordinance imposes a license fee of $20 per year upon anyone who solicits in the above city "from house to house for photographs and for magazine subscriptions." It applies equally to residents and nonresidents. The ordinance also requires each applicant for such license to "register his or her name, address, name of employer and furnish such personal data as may be reasonably required by the Police Department before license is issued." The record before us furnishes only the license provision of the ordinance and we are left in the dark as to whether a penalty is imposed *202 for noncompliance with its terms. Usually, criminal sanction is prescribed for the violation of an ordinance of this type.
Appellant filed its petition in equity, alleging that the enforcement of the ordinance against it would contravene the commerce clause of the Federal Constitution. Appellee's demurrer to the petition was sustained, and, upon appellant's failure to plead further, the petition was dismissed. This appeal challenges the ruling of the lower court.
The averments in the petition which appellee's demurrer admits to be true are as follows:
"Olan Mills' agents and employees come into Elizabethtown and solicit orders for photographs. Upon taking the order, the solicitor gives the customer a coupon which amounts to acceptance of the order and collects from him fifty cents, which is one-half of the price of the picture. The orders are transmitted by mail to Olan Mills' studios at Chattanooga, Tennessee. At a later date a second agent of Olan Mills, the cameraman, takes the picture to Elizabethtown and collects the remaining fifty cents of the purchase price. Negatives are developed at Chattanooga, and the proofs therefrom are returned to the customer by a third agent of the studio, the proof passer. The customer then selects the picture or pictures desired, and after final processing, the one photograph originally ordered, plus such additional ones as are ordered, are sent to the customer by mail from Chattanooga. Any balance due by the customer is paid cash on delivery. No part of the processing, developing, or finishing is carried on in Elizabethtown."
This appeal involves transactions identical with those found in the recent case of Cordell v. Commonwealth, Ky., 254 S.W.2d 484, and in that opinion we held such activities are interstate commerce. Appellee attempts to distinguish the Cordell case from the present one by pointing out that in the foregoing opinion we held the ordinance was discriminatory, since it was aimed exclusively at nonresidents. However, a careful reading of the Cordell decision indicates that the ordinance there failed for two reasons: (1) It placed an undue burden upon interstate commerce; and (2) it was also discriminatory.
It is contended the license under scrutiny is not burdensome because it is reasonable in amount and it is not discriminatory because it applies to all solicitors, whether they are soliciting for local or for interstate business. The ordinance imposing the license is not to be judged on its face, but it is the operation of the tax, actual and potential, that is determinative of its true nature.
The incidence of the tax is not the same for residents and nonresidents. It applies equally to the casual out-of-state operator making a single sale of the article subject to the license ordinance as well as to the established merchant engaging continuously in selling the same commodity throughout the year. Thus, the small, occasional, nonresident solicitor who takes orders for a single specialized product will find the tax not only burdensome but prohibitive, with the result that commercial activity upon his part is stopped before it is begun. On the other hand, one maintaining a local place of business where he deals in a variety of goods and wares is practically unaffected by the imposition of the tax. Unquestionably, the tax affects more heavily the out-of-state seller than the local one. We therefore conclude the license imposes actual discriminatory effects in its practical application, although on its face it purports to treat all persons equally.
The potential excluding result of the tax becomes apparent when it is realized that the license is a municipal tax and not one imposed by the Legislature for uniform application throughout the state. The cumulative effect of flat municipal taxes laid in succession upon a nonresident salesman as he passes from town to town is obviously greater than that of any tax of *203 state-wide application likely to be laid by the Legislature itself. The out-of-state itinerant whose business requires him to move from place to place, exhausting his market at each periodic visit, would find that Elizabethtown type of tax, if it existed in each city, eating away all possible return from his sales. It is evident that such a cumulative burden would constitute an absolute interstate trade barrier. In City of Winchester v. Lohrey Packing Co. Ky., 237 S.W.2d 868, we condemned a tax of this character because of the possibility that it could be multiplied many fold throughout the state.
For the foregoing reasons, the tax involved is a regulation of, and a burden upon, interstate commerce prohibited by the commerce clause of the Federal Constitution. See Nippert v. Richmond, 327 U.S. 416, 66 S. Ct. 586, 90 L. Ed. 760, 162 A.L.R. 844.
Wherefore, the judgment is reversed with directions that it be set aside and a new one entered declaring the ordinance void to the extent that it applies to persons engaged in interstate commerce.
CAMMACK, J., dissenting. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1531345/ | 269 S.W.2d 835 (1954)
TEXAS EMPLOYERS INS. ASS'N
v.
NOEL et al.
No. 15526.
Court of Civil Appeals of Texas, Fort Worth.
June 18, 1954.
Rehearing Denied July 9, 1954.
*837 Leachman, Matthews & Gardere and Henry D. Akin, Dallas, for appellant.
Peery, Wilson & Spell and Kearby Peery, Wichita Falls, for appellees.
MASSEY, Chief Justice.
From a judgment for death benefits under the Texas Workmen's Compensation Act, Vernon's Ann.Civ.St. art. 8306 et seq. The insurer appealed.
Judgment affirmed.
Ellis Noel was an employee of the Jim Fish Drilling Company for approximately fifteen years upon the occasions material to this case. Upon such occasions the Texas Employers Insurance Association had in force on such Company's employees a policy of Workmen's Compensation Insurance. Noel was married and had one minor child.
On or about date of February 3, 1953, Noel was employed as a "pumper" for his employer, a job in the oil industry which requires such an employee to make regular visitations to sites where oil wells are producing oil. Those of such wells which require pumps are connected to machinery which operates pumps on one or more wells, each pump bringing the oil from under the surface and thence directed into pipe lines or other containers. The pumps are ordinarily connected with the machinery which provides the operational power of the pumps by steel cables and rods.
On February 3, 1953, Noel left his home at about 7:45 o'clock in the morning to go to a location known as the "Ramming Lease" where there was at least one producing oil well which had been placed on the pump. The pumping mechanism of a well had broken loose from the power mechanism by reason of a steel cable or rod having become broken or disconnected. As result of this the pump was not in operation and no oil was being brought to the surface of the earth. When such a situation is existent it is necessary to the production of oil from the well that the broken or disconnected cable be repaired or reconnected. The distance from the Ramming Lease to the Noel home is not disclosed from the record, but it could not have been very far since shortly after 9:00 o'clock the same morning Noel arrived back home in his pickup truck. Upon his return he was observed to be "holding his chest", to have a "palloryellow complexion", to have been in such condition that he "couldn't hardly speak for short breath", and to be "walking with difficulty". Noel's wife testified that he appeared to be in pain at the time. She asked him, "`What in the world is the matter?'" In response to the question so asked, Noel stated that he had a terrible pain in his chest. He made the further statement to the effect that he had hurt himself. In addition to that which Noel may truly be considered to have said in response to the question asked him (which was an inquiry of what was the matter with him), he made a statement to the effect that he was "`picking up the well with my come-along-boomer and a pain hit me in the chest'".
A physician was promptly called to the house to attend Mr. Noel. After spending three days at home, Noel was removed to a hospital at Wichita Falls. During the period he was at home he continued to suffer pain, experienced choking symptoms, and failed to improve so that he could safely get out of bed. He remained in the Wichita Falls hospital for a ten day period, and improved somewhat so that it was decided that he could be safely moved back to his home. He returned home on February 17, 1953, and on the third day *838 following, or February 20th, he started to get up from a bed or chair, again experienced severe chest pain, and began to choke. He was rushed immediately back to the hospital by ambulance. He died approximately twenty minutes after his arrival at the hospital.
Joe Noel, the deceased's seventeen year old son, went out to the lease in question and to the well where his father had been on the morning on which he experienced his pain. His trip was made either the same day or the day following. He found that the rods which had broken apart, resulting in an interruption of the power from the power machinery to the pump on the well, were still apart and not reconnected. He found that his father's "come-along-boomer" was connected to the severed rods as would be the case upon an initial connection prior to application of pressure to this type of machine or tool to bring the rods together for permanent connection. The "come-along-boomer" was described as a manual wincha winch with a handle on it. As descriptive of his testimony, photographs of the machine or tool in operation were introduced, and from the photographs and the testimony it is clear that a "come-along-boomer" is an oversized wire stretcher or fence tightener. It may be used to pull taut a steel cable to which is connected a steel rod, which then may be connected to another rod by use of a cotter key and cotter pin, or by the use of other similar connection parts. Once so connected the "come-along-boomer" may be disengaged and removed. Operation of a "come-along-boomer" is the reverse of that of an automobile jack, and by lever operation physical objects are drawn together rather than pushed apart as in the case of the jack. The pressure for the operation is exerted horizontally and by pushing or pulling rather than by lifting or pressing down. The normal operation involves a pulling upon the lever, throwing the weight of the body away from the lever handle, plus any bracing that the operation permits in order to increase the force exerted, at least at the point of time when the objects being drawn together are offering pressure resistance, such as would be true once a cable is drawn taut.
Since the testimony about the condition in which the "come-along-boomer" was found to be did not demonstrate in itself that the lever had been worked in such a fashion that there was any tension on the objects it was connected to for the purpose of drawing such objects together, but contrarily only that such tool or mechanism had been hooked on to both of such objects in the manner that they are connected prior to the time the winch-operation would be begun, it is our opinion that but for the statements the deceased made upon his arrival home in the pain and distress heretofore mentioned, proof of the injury alleged as arising out of physical exertion in pulling on the "boomer" lever would be wanting.
The appellant objected to the introduction of the testimony from the wife and mother-in-law of the deceased about the deceased's statements as being hearsay. Clearly they were hearsay and such testimony should not have been received unless it was res gestae. Res gestae declarations are exceptions to the general rule which exclude hearsay statements. When such evidence is admitted it must be necessary that it be admitted in the establishment of some material fact, or in contradiction of a material fact, thus warranting its admission as a necessity. It is admissible further upon the additional supposition that the circumstances under which the declarations or statements were made afford sufficient probability of their truth warranting their being received and considered by the jury for what the jury may deem them to be worth. The existence of such a necessity and of such circumstantial guaranty of trustworthiness form the basis for determining the admissibility of hearsay evidence in any particular case. 17 Tex.Jur., p. 531, sec. 215.
In the case of City of Houston v. Quinones, 1944, 142 Tex. 282, 177 S.W.2d 259, 262, is found the following statement: "* * * The general rule relating to *839 this question is that res gestae evidence is not the witness speaking but the transaction voicing itself. * * * In determining whether evidence is admissible, each case must be tested by its own facts; and if upon a fair analysis a statement after the event does not appear to be a continuation of such event, it cannot be res gestae, even though made near the time of the occurrence. Statements must be either a part of the transaction or made under such circumstances as to raise a reasonable presumption that they are spontaneous utterances of facts arising out of the transaction itself, and so soon thereafter as to exclude the presumption that they are the result of premeditation or design. * * * (Citing authorities.)"
We perceive no distinction between the rule as to such evidence in civil or criminal cases. As to the requisite of spontaneity, it has been stated that spontaneity may be deduced from such facts as show that there has been no change in the mental condition of the party making the statement from the time of the principal act until the statement was made. 18 Tex.Jur., p. 297, sec. 182. If the declarations sprang out of the principal transaction, tend to explain it, and were voluntary and spontaneous, and made at a time so near it as to preclude the idea of deliberate design, they may be regarded as contemporaneous in point of time, and are admissible. 18 Tex.Jur., p. 299, sec. 183. It has been held that res gestae include not only the statements made by the injured party almost contemporaneously with the occurrence of the injury, but also those relating to the consequences, made while the latter subsisted and were in progress. Johnson v. State, 1891, 30 White & W. 419, 17 S.W. 1070, 28 Am. St. Rep. 930. It is significant that this decision cited the case of Commonwealth v. McPike, 3 Cush., Mass., 181, which was one of the authorities cited (along with others) by Judge Gaines in the case of International & G. N. R. Co. v. Anderson, 1891, 82 Tex. 516, 17 S.W. 1039, 27 Am. St. Rep. 902, followed immediately by Judge Stayton in the case of Texas & P. Ry. Co. v. Robertson, 1891, 82 Tex. 657, 17 S.W. 1041, 27 Am. St. Rep. 929. All of these decisions were handed down in the month of December, 1891, and the case of International & G. N. R. Co. v. Anderson is recognized as the case establishing the more liberal rule as to such character of evidence as the law of this state.
It is observed from the cases that extreme doubt exists when the statements sought to be introduced as res gestae evidence were made in response to questions asked. While the deceased's statements as to the fact of his injured condition and as to the pain he was experiencing therefrom were truly responsive to the question asked, his statement relative to the manner in which he experienced his injury was not. In view thereof, our problem is not complicated as would have been the case had his statement been made upon a direct request that he describe the manner in which his injuries were received. We believe it follows therefore that the trial court was vested with discretion to rule upon the question of whether or not the evidence should be admitted as res gestae testimony, since the circumstances demonstrated with reasonable certainty that the deceased's declarations were not the result of premeditation or design, and since they fairly appeared to be a continuation of the event constituting the transaction because the pain resultant from the deceased's injuries was still subsisting and in progress at the time the statements were made. Under such circumstances there is a reasonable presumption that his utterances are spontaneous utterances of fact arising out of the transaction itself.
It is believed that the following authorities support our holding in this regard. Atkinson v. United States Fidelity & Guaranty Co., Tex.Civ.App.San Antonio 1950, 235 S.W.2d 509, error refused, n. r. e.; Texas Employers' Ins. Ass'n v. Wade, Tex.Civ.App.Galveston, 1946, 197 S.W.2d 203, error refused, n. r. e.; Texas Employers Ins. Ass'n v. Shifflette, Tex.Civ. App.Dallas, 1936, 91 S.W.2d 787, error dismissed. *840 The student is directed to dissenting opinion of Judge Bond in the case of Texas Employers Ins. Ass'n v. Shifflette for an excellent analysis of other analogous cases touching upon the question here presented
Appellant predicates a point of error upon the photographs introduced during the course of testimony by the deceased's son. These photographs were of a "come-along-boomer" in operation. They showed the manner of connection of the machine or tool to objects sought to be brought together through its manipulation, and also some unidentified person pulling upon the lever in its operation. To our view such photographs are most useful when properly illustrative of the manner of use of some instrument, machine or tool, not clearly understandable from a witness' testimony. When a proper predicate is laid, it is within the trial court's discretion whether such photographs are admissible. The objection to their introduction was premised upon a contention that no proper predicate was laid. Since we have held that the statements made by the deceased upon his arrival home following his injury were properly received by the jury, and since the deceased's son established by his testimony that the way and manner of the use of the "come-along-boomer" made by the individual in the photographs was usual and customary, and also was similar to the way and manner in which the deceased ordinarily operated the same type of machine or tool, a proper predicate was laid.
Appellant has predicated another point of error upon a somewhat similar premise. In the hypothetical question directed by appellees to a physician called by them as a witness upon the probable cause of death, their attorney assumed as truth the res gestae statements made upon the return of the deceased to his home on the morning of February 3rd. Appellant contends that no proper predicate was laid in that the question assumed as fact in evidence the res gestae testimony as to injury. Since we have held the testimony admissible, the point of error is overruled.
Other points of error urged by appellant by which it complains of the judgment entered are premised upon its contention that there was no competent evidence to warrant submission of the case to a jury, or to support the verdict returned, or that the verdict was contrary to the great weight and preponderance of the evidence, etc. These points are overruled in view of our having held the same testimony admissible as res gestae. It is noted that the appellant offered no evidence whatever and the only evidence in the record came from witnesses offered by appellees.
Appellant contends error through the refusal of the trial court to grant a new trial to appellant, since one of the jurors empaneled to try the case failed to reveal to appellant during the course of its voir dire examination of the panel that he had once had a claim for benefits under the Workmen's Compensation Act of Texas for injuries received by him.
The following proceedings occurred during the course of appellant's examination of the jury panel, following the examination of the panel by the appellees through their attorney. It may be remembered that one of the panel members, a Mr. Leath, had stated that he had had some character of claim for compensation at a prior time during his lifetime during the course of the examination of the panel by appellees' attorney.
"Mr. Gardere: (Appellant's attorney). * * *
"Other than Mr. Leath, who made the only answer that I heard, has any of you, or immediate family, ever had a compensation claim?
"(Juror unidentified)
"Q. What was the nature of your claim? A. (Answer inaudible.)
"Q. I see, that was not a compensation claim.
*841 "Q. Mr. Terrell, was that settled without a law suit? A. (Answer inaudible.)
"Q. Was it settled to where it left no bad taste in your mouth one way or the other? A. (Answer inaudible.)
"Q. Of course, we lawyers ask an awful lot of questions and still at times we find we didn't go even as far as we might have gone and a lot of times something does come up in your deliberations which may recall something about which you were not questioned. If you are accepted as a juror and something does come up about that back, could you totally disregard that and let your answers in this case be based solely on the evidence that you hear from this witness stand and the law given to you by Judge Haley, that, and nothing else? A. (Answer inaudible.)
"Mr. Gardere: Now, gentlemen, that same question, can each of you use that as a guide and will use it as a guide if you are selected as jurors? Now, other than Mr. Leath and Mr. Terrell
"Mr. Ross: I had my glasses broke.
"Mr. Gardere: Well nothing about that could possibly affect your verdict?
"Mr. Ross: Oh, no.
"Mr. Gardere: Now, other than compensation claims have any of you had claims having to do with personal injuries of any kindinjuries suffered in an automohile accident, fall in a store or None of you have, by your silence."
In its amended motion for new trial the appellant set forth the fact that it asked of the panel the question first set forth, to which only panel member J. C. Terrell responded. The appellant claimed that by their silence all the other members of the panel indicated that they had not had any compensation claim. That appellant thereafter inquired: "`Now, other than Mr. Leath and Mr. Terrell'", to which the juror James S. Ross replied, "`I had my glasses broke.'" Appellant contends that in fact Mr. Ross had sustained an injury to the upper lid and cornea of his right eye, for which he received compensation benefits. Appellant further contends that it had no knowledge of said injury or compensation claim until after the trial of the case, that had it known such at the time it would not have accepted said juror but would have peremptorily challenged him.
Upon the hearing on the motion for new trial, Mr. Ross was placed on the stand and interrogated by the attorney for the appellant. He stated that he did not remember being asked whether he had ever had a claim for compensation. The particular question asked was read to him and he stated that he did not remember that it was asked, then added: "* * * He (appellant's attorney) asked something and I don't remember now what it was, and I started to tell him about a claim that I had and I gotoh, I just got startedI told him about breaking my glasses * * * and he cut me off, and he said, `Oh, well, you got that fixed up all right, didn't you?' and I said, `Yes, sir'. Well, we did, all right. That was true, we did. And that was all that was said and he turned around and was talking to somebody else, or talking to somethingI don't know what. I never paid any attentionI don't remember now, and that was all I ever said."
Upon the appellant's attorney then reading from the record made by the court reporter just what the words stated by him were immediately following the statement by Mr. Ross about his glasses having been broken, Ross agreed that that was the way it had occurred. Then the following occurred:
"Q. What was it that you didn't tell him about? A. Well, I was going to tell him I broke my glasses out thereit was out here at Sheppard Field, four or five years agoI don't know when. I don't even remember who I was working for. You see, we worked for the contractor and I don't even remember the contractor now. I slippedI was standing on the ground we had sawed out part of the floor and I was standing on the ground in a rather tight place, a very awkward position then, *842 and I was pushing on a wrench * * * the wrench slipped and I tumbled over and struck the concrete wall or something I don't remember what it was, and broke my glasses and it hurt my eye a little bit. It didn't leave any permanent injury or anything, but for a little whileI was off about a week, I think, and I was going to tell him about that and he cut me off. I didn't figure it made any difference anyway.
"Q. Did you draw any compensation benefits for that? A. $25.00, I think. That is my recollection of it; I am sure it wasn't over that."
Mr. Ross testified further that he went to an eye doctor for treatment of his eye, and that the insurance company paid for the medical treatment.
Appellant contends that under the authority of the case of Texas Employers' Ins. Ass'n. v. Wade, supra, where a judgment for an employee for workmen's compensation benefits was reversed because a juror selected had remained silent upon similar questions being asked the jury panel, when in fact he had had several compensation claims. In the Wade case it was stipulated that such juror had had the claims, so there was no issue on that score under consideration. In this case it is a matter in dispute, or in any event is not admitted. We perceive a difference in having a claim, in having the right to assert a claim, or to make a claim, and having asserted or made a claim for compensation.
Appellant never showed through use of a release or compromise settlement agreement, or other form of evidence whatever, that the juror had made a claim, or that he was paid any compensation because of any claim. Appellant did not lay the proper predicate on his voir dire examination for the evidence introduced to display any disqualification of the juror, or he did not introduce sufficient evidence to disqualify him in view of what the voir dire examination consisted.
Furthermore, we believe that since the witness testified that he was cut off when he was trying to tell appellant's attorney about the incident in question when his glasses were broken, and since the record does not affirmatively demonstrate the contrary, it was in the discretion of the trial court to make the decision that the juror was not disqualified, which he did. His discretion will not be disturbed in the absence of abuse. There was no abuse. The point of error is overruled.
Appellant predicates another point of error upon the following statement made by the appellees' attorney when he first addressed the jury panel on voir dire examination, viz.:
"This is a workmen's compensation suit, growing out of the Texas Workmen's compensation law, brought by the Texas Employers Insurance, against Mrs. Wynema Noel, in which Mrs. Noel has filed a cross-action seeking benefits from the Texas Compensation Act against Texas Employers Insurance Association. Now, throughout the case, you will probably hear this thing in reverse. In other words, the lawyers are used to designating the Texas Employers as defendant. They filed this suit and we cross-acted so actually for all practical purposes Mrs. Noel is plaintiff in this law suit."
Appellant excepted at the time and on this appeal contends that this language disclosed to the jury panel, and also those of the panel finally selected, that it was a suit brought by the appellant to set aside an award made in behalf of appellees by the Industrial Accident Board, hence influencing the jury, because they were apprised of the Board's action and making them more inclined to find for appellees.
Appellant cites as his authorities the cases of Federal Underwriters Exchange v. Bickham, 1941, 138 Tex. 128, 157 S.W.2d 356, Commercial Standard Ins. Co. v. McGee, Tex.Civ.App.Dallas 1931, 40 S.W.2d 1105, and Texas Employers' Ins. Ass'n v. Downing, Tex.Civ.App.Amarillo 1919, 218 S.W. 112, error refused.
Without elaboration upon the authorities cited, we believe that this matter *843 is settled by the case of Aultman v. Dallas Railway & Terminal Co., Tex.Sup.1953, 260 S.W.2d 596. Texas Rules of Civil Procedure, rule 434 is applicable. In order for the error in making any improper statement before the jury to amount to reversible error, it must appear that it was reasonably calculated to cause and probably did cause the rendition of an improper judgment in the case. We do not mean to infer that there was anything wrong with the statement made. It is recognized that the average man understands that the plaintiff in any case is the person suing and the defendant is the person he sues, that the suer is the person whose name is in front of the word "versus" and the sued is the person whose name is behind. What we do mean to say is that even assuming that there exists a question as to whether the jury or some member thereof was erroneously informed by appellant that the Board had made an award which was in favor of the appellees, from which appellant was appealing, the appellant had the burden of showing that said attorney's act was reasonably calculated to cause and probably did cause the rendition of an erroneous verdict. Several of the jurors were interrogated upon the hearing of the motion for new trial. No question relating to this was ever asked of any of them. Assuming that the statement was erroneous, it was not shown that it conveyed the inhibited information to the jury, or that they so understood or so considered it, or that it had had any effect upon the verdict returned by it. Therefore, the point of error is overruled.
The appellees resorted to the Rules of Civil Procedure providing for requests for admissions of fact to be served upon the opposite party, once the suit was pending in the trial court. As part of the same, they asked certain questions, being numbered "5" and "6", to which the appellant filed answers, all as follows:
Question 5. "`That cross-Plaintiff's employer had actual notice of said accidental injury within thirty days from the above stated date.'"
Answer: "`To request No. 5, your plaintiff answers that the only knowledge it had of any injury suffered was a verbal report made by Ellis H. Noel within the thirty-day period.'"
Question 6. "`That if the cross-plaintiff's employer did not have actual notice of said accidental injury then that said employer was notified within thirty days of the date above stated that said cross-plaintiff had sustained or was claiming to have sustained an accidental injury while in the course of his employment with said employer.'"
Answer: "`To request No. 6, your plaintiff answers that it was notified by Mr. Noel as to his claim of having sustained an accidental injury in the course of his employment within thirty days of the date involved.'"
Appellant contends that since by their failure to deny under oath the pleadings of the appellees that notice of injury was given within thirty days of the date of injury, they had admitted the requisite jurisdictional facts and therefore it was prejudicial for appellees to read the above questions and answers before the jury because it constituted incompetent proof of accidental injury erroneously admitted under the guise of proving up a jurisdictional matter. Under the circumstances, appellant urges that hearsay statements made by the deceased which were wholly self-serving were inserted into the evidence of such prejudicial nature that reversal of the judgment is required.
Without citing authorities referred to by appellants, we recognize that the instruments filed with the Industrial Accident Board, including the form by which Notice of Injury is there placed of record in exhibit form, may not be introduced into evidence upon the trial of a workmen's compensation case as proof of the matters therein stated.
It is noted from the Statement of Facts that prior to the introduction of the foregoing requests for admission and the answers *844 given thereto, the appellees had introduced their res gestae evidence of the fact of injury to the deceased and the circumstances under which the injuries were received. If a proper predicate could be laid for the introduction of the questions and answers, such was done. The questions and answers demonstrate that the deceased did notify either his employer that he sustained the injuries within a thirty day period from the day they were sustained, or that the appellant itself was so notified by the deceased. The answers could be fairly construed either way or both ways. The worst construction of the answers would be that they were admissions on the part of appellant itself that it rather than the deceased's employer was on notice. However, all the parties brief the question as though the notice was to the employer rather than the insurer.
Appellees proceed on the premise that proof of a fact of injury is something distinct from proof of a fact that an injury was claimed to have occurred. They demonstrate the fact that had the deceased lived longer than he did without having ever notified his employer or any other person that he was injured or without having ever claimed in any conversation with his employer or other person that he had sustained any injury, this would have been a circumstance provable against him or his beneficiaries throwing doubt upon the validity of any claim presented. Certainly this would be possible and the weight of any such character of testimony would be for the jury. If this is so, why is it not likewise permissible to show that notice was given to the deceased's employer, who was not only a proper party to receive such notice but the natural person to whom such notice was given? It is true that the giving of notice of an injury is jurisdictional, but under certain circumstances the fact of its having been given may subserve other objectives.
We believe that the questions and answers are admissible in proof of the fact that the deceased reported his injury, as the law requires that he do, to his employer or insurer, and the fact that such a report was made is admissible in evidence as a circumstance in aid of the proof of the fact of injury. It is a natural and usual thing for an injured employee to notify his employer of the fact of injury. The giving of notice lends more credence to the fact of injury. The converse would be true had appellant been in position to prove that the deceased made no report when it would have been natural and usual for him to do so. The weight of such evidence would be a matter for the jury, the fact being admissible. 17 Tex.Jur., p. 536-537, sec. 219, and cases there cited; Broomfield v. Texas General Indemnity Co., 5 Cir., 1953, 201 F.2d 746; Texas Employers' Ins. Ass'n v. Thames, Tex.Civ.App.Fort Worth, 1951, 236 S.W.2d 203, error refused.
The judgment is affirmed. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1531369/ | 383 Pa. 116 (1955)
Higbee
v.
Koziol, Appellant.
Supreme Court of Pennsylvania.
Submitted September 27, 1955.
November 14, 1955.
Before STERN, C.J., STEARNE, JONES, MUSMANNO and ARNOLD, JJ.
A.J. Kuzdenyi, for appellant.
D.W. Henderson and Henderson, Parshall & Crow, for appellees.
*117 OPINION BY MR. JUSTICE ALLEN M. STEARNE, November 14, 1955:
This is an appeal from a decree of the Orphans' Court of Fayette County dismissing a motion for a new trial on the ground of after-discovered evidence following a verdict of a jury that decedent had possessed $10,000 in currency and gold coin, which he had secreted in the basement of his home, and which had come, after decedent's death, into the possession of the executor of decedent's estate and for which he had not accounted. The litigation was commenced by the residuary legatees filing exceptions to the inventory and appraisement which the judge treated as a petition for a supplemental inventory and appraisement. He decreed, after a hearing, that a substantial dispute of fact existed and that an issue should be granted to be submitted to a jury in the Orphans' Court. The result was as indicated.
The facts succinctly stated by the hearing judge are: ". . . The controversy arose in the estate of Joseph Koziol, deceased, who died on March 31, 1949, having first made his last will and testament dated July 18, 1940, and duly probated in the Register's Office of Fayette County on March 10, 1950, in which he appointed his two sons, Edward and Alexander, executors. Letters testamentary were granted to Alexander on March 10, 1950, Edward having died on March 4, 1950. Testator left to survive him a widow, Josephine Koziol, the two sons, Edward and Alexander, and two daughters, Sara B. Higbee and Kathryn Richnafsky. Joseph Koziol bequeathed and devised all of his property to his wife, Josephine, but she died on January 20, 1950, at which time his will had not been probated. Josephine also left a will dated the same day as that of her husband, in which she bequeathed and devised all of her property to her husband in the event he survived *118 her, but if he did not survive her then she devised the home property to her two sons, gave each of her two daughters $10.00 and directed that the remainder of her estate be equally divided among her four children. This proceeding concerns the estate of Joseph Koziol only."
There has been a patent error in procedure. Disputed title to property in connection with the settlement of a decedent's estate should never be determined upon exceptions to an inventory and appraisement, or upon a petition for a supplemental inventory. In Rogers Estate, 379 Pa. 494, 108 A.2d 924, we said (p. 495): "In the settlement of a decedent's estate disputed title to property should not be determined upon exceptions to an inventory and appraisement which happens not to include the property claimed on behalf of the estate. The function and object of an inventory and appraisement in a decedent's estate is to fix presumptively the existence of property in the possession of the fiduciary and the value thereof. This is only prima facie evidence of ownership and value. Such listing does not affect the true ownership and value: Stewart's Estate, 137 Pa. 175, 20 A. 554; Moore's Estate (No. 1), 211 Pa. 338, 60 A. 987; Hermann's Estate, 226 Pa. 543, 75 A. 731; Fleming's Estate, 10 Dist. 259 (PENROSE, J.). The question of ownership is of interest to creditors, federal and state taxing authorities, and others. Such title, therefore, should not be finally determined until after an audit, with due statutory notice, and the determination by the orphans' court whether or not a substantial issue of fact exists." But since a jury has determined that the property in dispute belongs to the estate of decedent, this procedural error has resulted in no harm. Had the verdict been in favor of the appellant and against the estate, a new trial would have been necessary since decedent's *119 creditors, federal and state taxing authorities, and perhaps others, had no opportunity to appear and be heard. No useful purpose would be served in the circumstances of this case by a reversal and a new trial under correct procedure. We have, therefore, concluded not to disturb the verdict on the ground of erroneous procedure.
A portion of the averred after-discovered evidence consists of testimony which tends to discredit the testimony of appellees. The law is clear that after-discovered evidence which merely impeaches the credibility of a witness does not constitute grounds for a new trial: Peterman v. Enggasser, 280 Pa. 528, 124 A. 681; Meholiff v. River Transit Company, 342 Pa. 394, 20 A.2d 762; Rice v. Bauer, 359 Pa. 544, 59 A.2d 885.
The remaining portion of the averred after-discovered evidence consists of an affidavit by the scrivener of the will, that decedent told the scrivener he did not possess cash, money, etc. Appellant, however, does not convincingly show that he was unable to obtain such testimony for the trial by use of reasonable diligence. It necessarily follows that this evidence does not warrant the grant of a new trial: Limper v. Philadelphia Electric Co., 297 Pa. 204, 146 A. 574; Hysong v. Kenny Transfer Co., 304 Pa. 102, 154 A. 922; Hornick v. Bethlehem Mines Corporation, 310 Pa. 225, 165 A. 36; Weissbach v. Price, 328 Pa. 46, 195 A. 21; Brannagan v. Great Atlantic & Pacific Tea Company, 352 Pa. 18, 41 A.2d 869.
The grant or refusal of a new trial, because of alleged after-discovered evidence, is discretionary with the trial court, and its decision will not be reversed except for an abuse of discretion which is not here shown to exist: Hamill's Appeal, 88 Pa. 363; Brannagan v. Great Atlantic & Pacific Tea Company, supra.
*120 The decree of the court below is affirmed, at cost of appellant. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1531422/ | 37 N.J. Super. 197 (1955)
117 A.2d 168
THE STATE OF NEW JERSEY, PLAINTIFF-RESPONDENT,
v.
SAMUEL ROSENBERG, DEFENDANT-APPELLANT, AND MARGARET BRANNICK, DEFENDANT.
Superior Court of New Jersey, Appellate Division.
Argued September 12, 1955.
Decided October 6, 1955.
*199 Before Judges CLAPP. JAYNE and FRANCIS.
Mr. Ralph L. Fusco, Deputy Attorney-General, Acting Passaic County Prosecutor, argued for the respondent.
Mr. J. Mortimer Rubenstein argued the cause for the appellant (Messrs. Saltzman, Rubenstein & Kosoff, attorneys).
The opinion of the court was delivered by FRANCIS, J.A.D.
The defendant Samuel Rosenberg was indicted for procuring for purposes of prostitution contrary to N.J.S. 2A:133-2. On the same day, the defendant Margaret *200 Brannick was indicted separately for offering and agreeing to receive certain named persons for the purposes of "prostitution, lewdness and assignation" in violation of the same statute. Both indictments arose out of the same set of circumstances and by consent they were tried together.
The jury found both defendants guilty. Rosenberg alone appeals, alleging error (1) in the denial of his motion for a severance, (2) in the charge of the court, and (3) in the denial of his motion for a judgment of acquittal on the ground of entrapment.
When the case was called for trial, a colloquy ensued between the court, the prosecutor and counsel for both defendants, Rosenberg and Brannick, in which it was stipulated that the indictments be tried at the same time. As far as the record shows, there was no inquiry by either defense counsel as to whether any statement or confession had been made by the other defendant inculpating his client.
In the course of the prosecutor's opening to the jury, it became perfectly plain that the State had a confession from the defendant Brannick which made inculpatory references to Rosenberg. Further, during this opening when the prosecutor mentioned some oral statements of Rosenberg, counsel for Brannick objected to them as not being binding on his client as they were not made in her presence. And the court at once advised the jury that such statements could not in any way be binding on her. Thus it may be said that at the very outset of the trial and before any proof was offered, all counsel were aware of this well settled rule and the way in which it would undoubtedly be applied.
In presenting its case, the State produced a voluntary confession of Margaret Brannick, which had been given in question and answer form in the presence of Rosenberg, who signed it as a witness. The prosecutor proved that not only did Rosenberg refuse to make a statement himself, but also that at the conclusion of the taking of the Brannick confession, when asked if what she had said was true, he denied it. The confession was admitted in evidence after both the court and the prosecutor had recognized the validity of the *201 objection that it was in no way binding on Rosenberg. The court said that "the statement can only be binding upon the person who signed it" and he instructed the jury "to disregard any statement or any mention in the statement about Mr. Rosenberg, and it may not be used to infer any guilt as far as this charge is concerned." Whereupon the prosecutor said: "I agree, sir," and Rosenberg's attorney said: "That is the law."
The confession was then read to the jury and at the conclusion of the reading, the prosecutor added to what he had already said:
"Mr. Diamond: Your Honor please, before I proceed may I again emphasize the fact that I heartily agree with your Honor's ruling that this applies to the defendant Brannick, and while the entire statement is admissible, there are statements in here referring to the defendant Rosenberg, and in fairness to all concerned, the jury, I would like to emphasize that this goes as to the defendant Brannick only."
The Court: I so instructed the jury."
The confession contained some allusions to the fact that Rosenberg and Brannick had been engaging in sexual relations with each other for a number of years. This portion could have been deleted on motion. State v. Schmieder, 5 N.J. 40, 47 (1950). Apparently, however, counsel was satisfied with the court's instructions limiting the probative force of the entire Brannick statement to her alone.
Later in the course of the charge the jury was again instructed that as to Rosenberg the Brannick confession must be entirely disregarded.
On other occasions during the trial, and particularly during the testimony of the investigators for the Division of Alcoholic Beverage Control, who brought about the prosecution, evidence was offered of statements or conversations with each of the defendants out of the presence of the other. Whenever objection was made, the court again specifically limited the effect thereof to the proper defendant. In fact, on at least seven occasions the court advised the jury on this subject.
*202 At the close of the case, after all of the proof for the State and both of the defendants had been introduced, Rosenberg moved for a severance because he claimed that the Brannick statement was so prejudicial to him that he could not get a fair trial from the jury. The motion was denied on the ground that it came too late and because of the possibility of a contention by Rosenberg at a subsequent retrial that under the recent case of State v. Locklear, 16 N.J. 232 (1954), a defense of double jeopardy might be interposed.
The Locklear case is not pertinent because there a mistrial was ordered on the application of the State over the objection and without the consent of the defendant after he had testified and his defense had been fully disclosed. Here the severance or mistrial would have been brought about on Rosenberg's motion and of course with his consent.
The granting of a motion for a severance is discretionary with the trial court. R.R. 3:5-7. The rule is declaratory of the long settled practice in this State. State v. Rios, 17 N.J. 572, 584 (1955). Denial of such a motion would not be reversed in the absence of a clear showing of mistaken exercise of discretion. No error of that character is discernible in this record.
Rosenberg's counsel consented to the joint trial. Inquiry of the prosecutor or of the co-defendant's counsel prior to the making of the stipulation undoubtedly would have revealed the existence of the confession. Rosenberg himself having witnessed the document, knew of it. It is unlikely that he would have withheld the information if his attorney had asked about it.
In any event, as soon as the trial opened it became evident that the State had the confession and no one could possibly believe that Rosenberg was not mentioned in it. However, no severance was sought. When it was introduced in evidence and the jury advised that it could not be considered at all on the subject of Rosenberg's guilt, counsel seemed satisfied, although at this time all of the sordid details of the affair, including some other conversations with the defendant Brannick *203 out of Rosenberg's presence, had been proven. In any event, no motion for severance was made then.
Finally, after the case had closed and counsel for Rosenberg had tried to have the confession excluded from the jury room, severance was applied for.
At that time, under the circumstances presented, we agree with the trial court that the motion came too late. A defendant cannot speculate on the course of a trial, sit back while all of the proof is introduced, gauging its damaging force as to him, and then just before summation seek to avoid the consequences of his acquiescence by moving for a severance.
The fact that one defendant's confession inculpates his co-defendant provides no legal basis for a mandatory severance where the trial court has properly limited the area of its use during the course of the trial and in his charge to the jury. State v. Rios, supra, 17 N.J., at page 585; State v. Dolbow, 117 N.J.L. 560, 563 (E. & A. 1937), appeal dismissed per curiam 301 U.S. 669, 57 S.Ct. 943, 81 L.Ed. 1334 (1937).
Rosenberg urges further that on the facts his defense of entrapment should have prevailed.
The proof discloses that some time prior to the date in the indictments, a complaint had been received by the State Division of Alcoholic Beverage Control about the tavern known as "Three O'Clock Club" at 176 Paterson Street, Paterson. In describing the complaint, one of the investigators assigned to look into the matter said that it concerned the actions of female patrons and was more serious than the solicitation of drinks.
Two investigators visited the premises on a number of evenings between April 21 and May 14, 1954, when the offense charged in the indictments took place. Rosenberg was a regular patron of the place and a part-time bartender there. They became friendly with him and drank with him on some of the evenings.
Without detailing all of the circumstances, evidence was adduced from which the jury could justifiably find that *204 Rosenberg introduced the subject of sexual relations, offered to produce two women for the purpose, and did in fact produce the defendant Brannick on May 14 for that purpose. Financial arrangements were made with her and she was given identifiable currency. On leaving the tavern for the place of assignation, they were intercepted by other Alcoholic Beverage Control agents and a detective of the Paterson Police Department.
The trial court declared that entrapment was a jury question and he charged on the subject. No objection was made to his definition of the nature and essentials of the defense. We agree that it was proper to deny the motion for judgment of acquittal and that the issue was one for determination by the fact finders.
Only a few cases in New Jersey have dealt with entrapment and they contain no specific definition of the defense. State v. Dougherty, 86 N.J.L. 525 (Sup. Ct. 1915), reversed 88 N.J.L. 209 (E. & A. 1915); State v. Contarino, 91 N.J.L. 103 (Sup. Ct. 1918), affirmed 92 N.J.L. 381 (E. & A. 1918).
Generally, it may be said that where a police officer "envisages a crime, plans it, and activates its commission by one not theretofore intending its perpetration" for the purpose of providing a victim for prosecution, the defense is available. Sorrells v. United States, 287 U.S. 435, 53 S.Ct. 210, 77 L.Ed. 413 (1932); Butts v. United States, 273 F. 35 (8th Cir., 1921). However, a distinction must be recognized between the situation where the criminal intent or design originates in the mind of the officer for the purpose of luring or entrapping the accused into commission of the offense which otherwise he would not have committed, and where such intent has its inception in the mind of the accused and the officer acting in good faith in the pursuit of his duties merely furnishes opportunities or facilities for, or aids or encourages the accused in the commission of the offense. State v. Marquardt, 139 Conn. 1, 89 A.2d 219 (Sup. Ct. Err. 1952); 22 C.J.S., Criminal Law, § 45 (1940); Annotation, 86 A.L.R. 264 (1933); 1 Wharton, *205 Criminal Law (12th ed. 1932), § 390, n. 3; Annotation, 18 A.L.R. 146 (1922). In the latter instance there is no entrapment.
In this case, the evidence obviously supported a finding by the jury that the investigators acting on a reasonable belief that the law was being violated at this tavern simply provided encouragement and opportunity for Rosenberg to put into effect his existing criminal intent.
A portion of the charge to the jury is criticized. However, it requires no discussion. The challenged language is factually accurate. Moreover, it is taken out of context. Considered in its full perspective, no error appears. And in any event no objection thereto was noted. State v. Picciotti, 12 N.J. 205 (1953); R.R. 1:5-1(a).
The judgment is affirmed. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1531428/ | 72 B.R. 200 (1986)
In re GALAXY BOAT MANUFACTURING CO. INC., Debtor.
Bankruptcy No. 86-00605.
United States Bankruptcy Court, D. South Carolina.
October 15, 1986.
*201 Julio E. Mendoza, Jr., Robinson, Mendoza & Barton, P.A., Columbia, S.C., for debtor.
Roy D. Bates, Columbia, S.C., for Norling.
Clifford O. Koon, Jr., Rogers & Koon, P.A., Columbia, S.C., for Triton.
Charles N. Mayfield, Columbia, S.C., for Fores.
J. BRATTON DAVIS, Bankruptcy Judge.
This matter is before the court upon the involuntary petition filed February 26, 1986, by Norling Studios, Inc. (Norling), Triton Enterprises, Inc. (Triton), and Fores Manufacturing Corporation (Fores) seeking an order for relief under Chapter 11 of the Bankruptcy Code (11 U.S.C. § 101 et seq.[1]) against Galaxy Boat Manufacturing Company, Inc. (debtor).
The debtor filed an answer in response to the involuntary petition which included counterclaims for attorney's fees, costs and damages.
Section 303(h)(1) provides that an order for relief may be entered only if "the debtor is generally not paying such debtor's debts as such debts become due unless such debts . . . are the subject of a bona fide dispute. . . ."
The debtor asserts that both the Norling claim, which is on appeal, and the Triton claim, which is in post trial motions, are subject to bona fide disputes. Each of these claimants asserts that its claim is not subject to dispute Norling has already obtained a default judgment; Triton disputes the amount of its claim, not the debtor's obligation to pay it.
FACTS
The debtor is a South Carolina corporation which manufactures and sells boats.
On October 11, 1985, Norling entered a judgment against the debtor in the office of the clerk of court for Richland County, South Carolina, for $55,536.35. This judgment was obtained through a North Carolina default judgment. On October 9, 1985, Norling obtained an order in the Richland County Court of Common Pleas granting full faith and credit to the North Carolina judgment.
The debtor appealed from the judgment, taking exception to the effectiveness of the service of process in the North Carolina action. This appeal is pending.
Triton is an advertising and public relations consultant which contracted with Galaxy to produce an advertising campaign for the debtor. In a law suit arising out of that contract, Triton received a jury verdict in the amount of $55,000. Neither party has appealed the verdict although both parties have filed motions to alter or amend the judgment. The remaining issue in the Triton case is the amount of the judgment.
On December 23, 1985, Fores entered a judgment against the debtor in the office of the clerk of court for Richland County, South Carolina, in the amount of $8,919., which is not subject to a bona fide dispute. This judgment arose from a contract for goods and services.
On October 11, 1985, The Fairmount Companies (Fairmount) and Aaronson Investment Corporation (Aaronson) purchased 50% of the outstanding shares of debtor's stock owned by Alvin Roof, Sr., the consideration for the sale being the sum of $30,000. plus Fairmount's agreement to make loans to Galaxy up to $470,000. which was to be used for debtor's operating capital.[2]
*202 As of May 31, 1986, the debtor's overdue business accounts, not including the judgments of Norling and Triton, totaled approximately $1,673,000.
The debtor has been unable to make payments when due on secured obligations to South Carolina National Bank and Citizens and Southern National Bank. Extensions on past due balances and forbearances on defaults have been granted to the debtor by some of its secured creditors.
The debtor had a net operating loss of more than $121,000. during the fiscal year beginning September 1, 1985. The debtor's May 1986 balance sheet shows: a negative cash balance of $539,960.59; $1,295,190.13 in trade accounts receivable, with approximately 50% considered collectible; trade accounts payable of $1,669,261.53, excluding the Norling and Triton judgments; and the allowance for doubtful accounts of $15,546.96.
The petitioners have requested the appointment of a Chapter 11 trustee pursuant to § 1104.
ISSUES
1. Whether the claims of Norling and Triton are subject to bona fide disputes.
2. Whether the claim of Norling is contingent as to liability.
3. Whether the debtor is generally paying its debts as they become due.
4. Whether the involuntary petition for relief was filed in bad faith.
DISCUSSION
I
Are the claims of Norling and Triton subject to bona fide disputes?
A
As stated earlier, Norling obtained a default judgment against the debtor in North Carolina which judgment was entered in Richland County, South Carolina, and granted full faith and credit by the Richland County Court of Common Pleas.
Although the debtor has appealed the Richland County order and the appeal is pending, the claim of Norling is not the subject of a bona fide dispute as contemplated by § 303(h)(1).
[A] claim based upon an unstayed judgment as to which an appeal has been taken by the debtor is not the subject of a bona fide dispute. Once entered, an unstayed final judgment may be enforced in accordance with its terms and with applicable law or rules, even though an appeal is pending. [citations omitted]. The filing of an involuntary petition is but one of many means by which a judgment creditor may seek to attempt collection of something upon its judgment.
It would be contrary to the basic principles respecting, and would effect a radical alteration of, the long standing enforceability of unstayed final judgments to hold that the pendency of the debtor's appeal created a `bona fide dispute' within the meaning of Code § 303.
In re Drexler, 56 B.R. 960, 967 (Bankr.S.D. N.Y.1986).
B
The parties have stipulated that the dispute over Triton's claim relates to the amount of the judgment entered on the verdict of the state court jury.
In Matter of Covey, 650 F.2d 877 (7th Cir.1981), the court set out a three part test for determining whether a disputed debt should be excluded from the "generally paying debt" determination. There the court stated that the debt is excludable only:
[U]nder the following circumstances: 1) the dispute is whether any claim exists, not merely regarding the amount of a claim; 2) the dispute can be examined without substantial litigation of legal or factual questions; and 3) the interests of the debtor in defeating an order of involuntary bankruptcy outweigh creditors' interest in achieving a somewhat more rapid determination of the involuntary bankruptcy question.
Covey at 883-84. (Emphasis added).
In applying this test,
[B]ankruptcy courts must initially examine the nature of the dispute claimed. If *203 the debtor merely has a colorable dispute as to the amount of a claim, there is no reason why the debt should be excluded in the determination of the `generally paying debts' standard. As we have discussed, the goals of the new Code, in such cases, are to resolve the question of whether the debts are paid first, and to examined the disputes and defenses later.
Covey at 883.
Because the debtor stipulated that the only issue in Triton's claim was the amount of the judgment, not whether a claim exists, it has failed the first prong of the Covey test.
Inasmuch as the debt in question has not met the first prong of the Covey test, it is not necessary for the court to consider the other requirements.
II
Is the Norling claim contingent as to liability?
A claim is contingent as to liability within the meaning of § 303 if ". . . the debt is one which the debtor will be called upon to pay only upon the occurrence or happening of an extrinsic event which will trigger the liability of the debtor to the alleged creditor and if such triggering event or occurrence was one reasonably contemplated by the debtor and creditor at the time the event giving rise to the claim occurred." In re All Media Properties, Inc., 5 B.R. 126, 133 (Bankr.S.D.Tex.1980).
Here, Norling has received a summary judgment against the debtor on an obligation that arose from their prior transaction. The debtor now asserts that this debt is owed by a third party.
In re All Media Properties, Inc., 5 B.R. 126, 133 (Bankr.S.D.Tex.1980) states that ". . . if a legal obligation to pay arose at the time of the original relationship, but that obligation is subject to being avoided by some future event or occurrence, the claim is not contingent as to liability, although it may be disputed as to liability for various reasons."
"The fact that the alleged debtor disputes about half of the claim and asserts a counterclaim does not make the claim `contingent'. If it did, any debtor could defeat any involuntary petition merely by refusing to concede the claim." In re Duty Free Shops Corp., 6 B.R. 38, 39 (Bankr.S.D.Fla. 1980).
Accordingly, the court holds that the Norling claim is not contingent as to liability.
III
Is the debtor generally not paying its debts as they become due?
It appears that the debtor generally is not paying its debts as they have become due.
"Under § 303(h), an order for relief can be granted on a contested involuntary petition only if the petitioning creditors establish that the Debtor is not paying his debts as they become due. (citations omitted). In order to carry its burden, the creditors must show more than just the existence of a few unpaid debts." (citation omitted). In the Matter of Cinnamon Lake Corporation, 48 B.R. 70, 72 (Bankr.M.D.Fla. 1985).
"The `generally not paying' test is to be applied as of the date of filing of the involuntary petition. . . ." In the Matter of Bishop, Baldwin, Rewald, Dillingham, 779 F.2d 471, 475 (9th Cir.1985).
In determining whether a debtor is paying its debts,
A starting point in the inquiry is to employ what is termed the mechanical test which is comprised of five factors: the timeliness of payments on past due obligations; the amount of debts long overdue; the length of time during which the debtor has been unable to meet large debts; any reduction in the debtor's assets; and the debtor's deficit financial situation. . . . . Although offering guidance, the mechanical test must be employed with regard to any unique circumstances attendant to a particular proceeding.
*204 In re Dakota Lay'd Eggs, 57 B.R. 648, 657 (Bankr.D.N.D.1986). (Citations omitted).
A
As to the timeliness of the alleged debtor's payments on the past due amounts, the court takes notice that the debtor has stipulated that it has been "unable to make payments when due on secured obligations" to certain creditors.
B
In regard to the amount of debts long overdue, there is evidence that the overdue accounts have been reduced from approximately $900,000. to approximately $200,000.; the reduction of some $700,000. has been effectuated by the debtor's borrowing from Fairmount and Alvin Roof, Sr.
This apparent substitution of debt does not satisfy the debt; it merely postpones it.
C
As to the length of time that the debtor has been unable to meet its large debts, the debtor has stipulated that it has been unable to make payments when due on secured obligations. On October 11, 1985, Norling entered a judgment against the debtor in Richland County, South Carolina, in the amount of $55,536.35. This judgment was obtained in North Carolina upon a complaint for goods and services furnished, and the debtor's appeal, which is based upon ineffective service of process, is pending in the South Carolina Circuit Court. On December 23, 1985, Fores entered a judgment against the debtor in Richland County, South Carolina. The Fores judgment arose from a contract for goods and services and amounted to $8,919. Although the debtor has appealed the Norling judgment, nearly one year has passed since the judgment was entered in South Carolina. Over nine months have passed since the Fores judgment was entered. These two instances indicate that the debtor is unable to meet large debts even after the lapse of a considerable time period.
D
In considering the reduction of the debtor's assets, the court is mindful that while the debtor has reduced its overdue obligations to its creditors (many of which were unsecured) it has given security interests in its assets to Fairmount and to Alvin Roof, Sr. thereby reducing the assets available to the debtor's general, unsecured creditors in the event of a liquidation.
E
In evaluating the financial situation of the debtor, the court notes that the influx of capital from Fairmount may, or may not, bring about a financial rehabilitation of the debtor; but, as of the filing of the involuntary petition, it is clear that the financial situation of the debtor was bleak the debtor having posted a loss for the first part of its current fiscal year.
IV
Was the petition filed in good faith?
Yes. There is no evidence that persuades the court that the petition was filed in bad faith.
"It is well established that good faith is presumed on the part of the party or parties filing an involuntary petition and that the burden of proving bad faith rests on the objecting party." In re CLE Corp., 59 B.R. 579, 583 (Bankr.N.D.Ga.1986).
FINDINGS OF FACT AND CONCLUSIONS OF LAW
1. The claims of the petitioning creditors are not subject to bona fide disputes.
2. Norling's claim is not contingent as to liability.
3. The debtor is generally not paying its debts as they become due within the meaning of § 303(h)(1)
4. The petition was not filed in bad faith.
Therefore, the order for relief sought by petitioners should be granted.
An appropriate order shall be issued, and a hearing on the petitioners' request for *205 the appointment of a Chapter 11 trustee shall be scheduled.
NOTES
[1] Further references to the Bankruptcy Code are by section number only.
[2] In their joint stipulation, the parties have stipulated as follows: "On October 11, 1985, the Fairmount Companies (Fairmount) and Aaronson Investment Corporation (Aaronson) purchased 50% of the 128 shares of stock in Galaxy, which was all of the shares of stock outstanding, owned by Alvin Roof, Sr. for the sum of $30,000.00 and an agreement to make loans to Galaxy up to $470,000.00 for operating capital to be repaid dollar for dollar with an obligation of $470,000.00 to Alvin Roof, Sr., which is not reflected on the balance sheets of Galaxy as a liability, both obligations being subordinate to a pre-existing obligation to Alvin Roof, Sr. of $100,000.00." | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1531423/ | 72 B.R. 25 (1987)
In re Eugene Laurence JONES and Emma Gertrude Jones, Debtors.
Bankruptcy No. SB 85-04296 JW.
United States Bankruptcy Court, C.D. California.
January 27, 1987.
*26 Daniel D. Zahner, Simon and Simon, San Bernardino, Cal., for debtors.
MEMORANDUM OF DECISION
JOHN J. WILSON, Bankruptcy Judge.
Debtors, Eugene Laurence Jones and Emma Gertrude Jones ("Jones"), object to the allowance of the claim of Albert Fisher ("Fisher") filed in the amount of $1,000.
Although the debtors cite no basis for their objection, it appears to be predicated upon 11 U.S.C. § 502(b)(1). Section 502(b)(1) states:
[I]f . . . objection to a claim is made, the court, after notice and a hearing, shall determine the amount of such claim in lawful currency of the United States as of the date of the filing of the petition, and shall allow such claim in such amount, except to the extent that
(1) such claim is unenforceable against the debtor and property of the debtor, under any agreement or applicable law for a reason other than because such claim is contingent or unmatured. . . .
11 U.S.C. § 502(b)(1). State substantive law is applied to determine the existence and validity of a claim, unless the Bankruptcy Code provides otherwise. In re Sparkman, 703 F.2d 1097, 1099 (9th Cir. 1983); In re Fantastik, Inc., 49 B.R. 510, 512-513 (Bankr.D.Nev.1985). However, "the allowance or disallowance of a claim is strictly a matter of federal law and is left to the bankruptcy court's just exercise of its equitable powers." In re Fantastik, Inc., 49 B.R. at 513. See Vanston Bondholders Protective Committee v. Green, 329 U.S. 156, 163, 67 S. Ct. 237, 240, 91 L. Ed. 162 (1946), reh'g denied, 329 U.S. 833, 67 S. Ct. 497, 91 L. Ed. 706 (1947); 3 Collier on Bankruptcy § 502.01 (15th ed. 1986).
FACTS
In 1984, Jones saw an advertisement in the newspaper placed by John Wright ("Wright") dba Wright Developers looking for investors in a mobile home park development. Jones answered the advertisement and met with Wright to discuss the project. Jones accompanied Wright to inspect a mobile home park that Wright claimed to have developed, but made no other investigation of Wright's background. Later Jones discovered that Wright was merely a laborer on the project.
On June 29, 1984, Jones and Wright entered into a written agreement opening an escrow for the purchase of a 25% interest in Desert Hot Springs property owned by Wright. Jones made a $20,000 deposit toward a total purchase price of $150,000. Wright planned to develop this property into a rental mobile home park.
The agreement was poorly drafted and discussed the purchase in terms of both an interest in property and an interest in a venture development. According to the agreement, Wright Developers was responsible for all construction, with significant changes from the approved plans to be agreed upon with Jones. Jones was to assist in the actual operation of the venture when available. Both parties had approval rights of any potential future investor.
In April, 1984, Jones left for a lengthy trip with Wright remaining in charge. Apparently Jones traveled as far as Yuma when he discovered that Wright was selling the lots without the necessary permits or subdivision maps. Jones returned to the property and encountered several angry buyers. When questioned, Wright stated that he sold the lots after consulting with an attorney, but planned to return all deposits.
*27 Subsequently, Jones discovered that Wright's name was actually Eugene Monte Naccoroto. In addition, Wright had falsified the appraisal which valued the property in excess of $600,000. The property was worth approximately one-half that amount.
To prevent foreclosure of the property, Jones prepaid the First and Second Trust Deed holder one year in advance. Jones then attempted to sell the property to a Chicago investor, but several factors, including Wright's irrational threats, prevented the sale. During the sale negotiations Jones wrote two letters to the claimants, including Fisher, assuring them that their deposits and expenses would be fully repaid with interest before he recovered anything on his investment. However, Jones told the buyers that to successfully effectuate the sale they should not press their claims in court. Fisher was one of the buyers who cooperated with Jones.
After the sale fell through, Jones and Wright filed separate Chapter 13 proceedings. Jones convinced Wright to quitclaim the entire property to him because he believed the property could not be sold as long as Wright was involved. Jones later sold the property as part of his bankruptcy reorganization to satisfy the First and Second Trust Deeds. He took back eleven lots, valued in the sale agreement at $10,000 each, as payment for his equity. However, the evidence established that the property remains undeveloped and it is doubtful that the lots are worth $10,000 each.
Wright was charged with and convicted of grand theft in the Municipal Court of the Desert Judicial District, County of Riverside, State of California.
DISCUSSION
Jones objects to Fisher's claim arguing that he is not indebted to Fisher because the debt, if any, was incurred by John Wright dba Wright Developers, not him. Jones maintains that he never intended to enter into a partnership or joint venture with Wright.
Fisher contends that Jones and Wright were engaged in a joint venture and that Jones is liable for any debts incurred by the venture. Therefore, Fisher argues that his claim for the amount of his deposit on the lot should be allowed in Jones's Chapter 13 reorganization plan.
A joint venture is frequently defined as an association of two or more persons who carry out a single business enterprise for profit. Holtz v. United Plumbing & Heating Co., 49 Cal. 2d 501, 506, 319 P.2d 617 (1957). Although a joint venture is usually formed for a specific transaction or single series of transactions and a partnership ordinarily involves a continuing business, "the incidents of both relationships are the same in all essential respects." Bank of California v. Connolly, 36 Cal. App. 3d 350, 364, 111 Cal. Rptr. 468 (1973). To create a joint venture, the parties must have an agreement "under which they have a community of interest, that is, a joint interest, in a common business undertaking, an understanding as to the sharing of profits and losses, and a right of joint control." Holtz, 49 Cal.2d at 506-507, 319 P.2d 617.
The agreement need not be formal or definite in every detail, but may be implied as a reasonable deduction from the acts and declarations of the parties. Holtz, 49 Cal.2d at 507, 319 P.2d 617; Weinstock v. L.A. Carpet, Inc., 234 Cal. App. 2d 809, 813, 44 Cal. Rptr. 852 (1965). Accordingly, the existence of a joint venture is primarily a factual question determined by the trier of fact from the evidence and inferences which may be drawn from it. Nelson v. Abraham, 29 Cal. 2d 745, 749-750, 177 P.2d 931 (1947); Connolly, 36 Cal.App.3d at 364, 111 Cal. Rptr. 468.
Jones argues that his participation in the development of the mobile home park was limited to that of passive investor, not joint venturer. The evidence refutes this assertion. The existence of a joint venture depends on the parties' intent. Rosen v. E.C. Losch Co., 234 Cal. App. 2d 324, 331, 44 Cal. Rptr. 377 (1965). Elements common to a joint venture which afford objective evidence of the parties' intent are: (1) a single enterprise; (2) a community of interest; (3) a sharing of both profits and *28 losses; and (4) the right of joint participation in the management and control of the business. Id. at 332, 44 Cal. Rptr. 377. All four elements are present in this case.
First, the development of the mobile home park was a single enterprise. The evidence does not establish that Wright and Jones were involved in other enterprises. Jones testified that he was involved with Wright only in the development of the Yellow Rose Country Club.
Second, a community of interest is reflected by the written agreement between Jones and Wright. The agreement purports to be a contract and receipt for the deposit of $20,000 into escrow for the purchase by Jones of a 25% interest in approximately 30 acres in Desert Hot Springs at a total price of $150,000. According to the agreement, Jones provided the initial capital. Wright was responsible for all construction, financing, and development supervision. This agreement reflected the parties' common goal of developing and completing the mobile home park.
Third, the written agreement stated that the parties would share the profits from the venture in proportion to their percentage of interest. These percentages also applied to profits from any sales, including sales of mobile homes and modular homes. Although the agreement does not specifically provide for the sharing of losses as well as profits, the law implies an obligation of the parties to bear losses in the same proportion as the agreement provides for the division of profits. 6 Witkin, Summary of Cal. Law, Partnership, § 17, p. 4269 (8th ed. 1974).
Fourth, the parties jointly participated in the management and control of the development of the mobile home park. The written agreement stated that Jones was to agree to any significant changes in the approved plans and he had approval rights for all financing. Furthermore, Jones was to assume responsibility for any construction loans in direct proportion to the percentage of his investment and to have the right to approve potential future investors.
In addition, the agreement maintains that if no other investors became "co-owners/partners" in the venture, then Jones's percentage increased to 35%. The phrase "co-owners/partners" evidences some uncertainty regarding whether the parties intended that Jones would be a co-owner of the property or a partner in the development of the mobile home park. However, this uncertainty is dispelled by other language in the agreement, which states that when available Jones will assist in the actual operation of the venture, including legal matters, formulating park rules, establishing park procedures, and hiring employees.
Finally, Jones and Fisher testified that Jones parked his camper at the development site. Fisher talked with Jones in his camper before and after Fisher purchased his lot. On one such occasion Fisher saw Jones watering a newly landscaped area. Jones also testified that when he returned from Arizona he questioned Wright about the illegal sales of the lots and talked with many of the irate purchasers.
Thus, although Jones testified that he was merely a passive investor, this testimony is not persuasive. The evidence firmly establishes joint participation in the management and control of the development by both Jones and Wright. Accordingly, the Court finds that Jones and Wright intended to and did engage in a joint venture to develop the Yellow Rose Country Club.
Jones also argues that he should not be liable for Fisher's claim because he lost significantly more money in the venture than Fisher. Jones contends that he was an innocent victim as well.
This argument is not persuasive. The rights and liabilities of joint venturers are governed by the principles applicable to partnerships. Stodd v. Goldberger, 73 Cal. App. 3d 827, 836, 141 Cal. Rptr. 67 (1977). "In contracts with third persons the law imposes liability upon one who either represents himself or consents to another representing him as a partner in an actual or apparent partnership." Deicher v. Corkery, 205 Cal. App. 2d 654, 662, 23 Cal. Rptr. 270 (1962). Compare this situation with *29 the analogous situation upon the dissolution of a partnership wherein even a limited partner's return of capital contributions is subordinated to claims of creditors of the partnership. See Cal.Corp.Code §§ 15523, 15684.
In Lindner v. Friednash, 160 Cal. App. 2d 511, 325 P.2d 612 (1958), two parties entered into a joint venture to purchase and sell wine. One joint venturer contributed capital to the venture with the understanding that his coadventurer would also invest money. Although the coadventurer never invested any money, he secured delivery of the wine on credit, and proceeded to misappropriate the invested capital and some of the wine. The innocent coadventurer claimed that he should not be liable for the price of the wine. The court held that one joint venturer may not escape liability for the price of goods sold to the venture although a portion of the money he contributed to the venture to pay for the goods was converted by the wrongful act of the coadventurer to the latter's own use, as was a portion of the goods. Id. at 518, 325 P.2d 612.
Similarly, Jones may not escape liability for Fisher's claim even though he lost his investment in the venture. At the time Wright sold the lots, Jones was embarking on an extended trip. Jones left Wright in charge of the mobile home park, and as established by their written agreement, vested broad authority in Wright to make decisions and direct the operations of the development. Thus, Jones consented to Wright representing him in the joint venture and is responsible for debts flowing from that consent.
Furthermore, "[w]here one of two innocent persons must suffer by the act of a third, he, by whose negligence it happened, must be the sufferer." Cal.Civ.Code § 3543. Jones testified that he graduated from Michigan State University with an undergraduate degree in general psychology and a graduate degree in industrial psychology, and worked for the Rand Corporation for several years. Additionally, after his retirement Jones engaged in a joint venture to develop a mobile home park in San Diego. Yet, Jones testified that he decided to invest $150,000 of his retirement funds in the development of a second mobile home park based upon a newspaper advertisement without even the most cursory investigation into Wright's veracity. Between Jones and Fisher, Jones was in the better position to investigate Wright's background and prevent the subsequent losses. Thus, the loss must be borne by Jones whose misplaced confidence enabled the injury to occur.
Jones's argument that his liability was terminated by Wright's criminal acts is inapposite. It is well established that under California law, "a partnership, not being a legal entity, cannot . . . commit a crime, and that where criminal acts are committed through a partnership, the culpable members of the partnership are held criminally responsible, rather than the partnership itself." United States v. Brookman Co., 229 F. Supp. 862, 864 (N.D.Cal. 1964). However, the issue before the Court is the liability of Jones for a claim arising out of the actions of the joint venture, not from any alleged criminal activity.
Alternatively, Fisher argues that his claim should be allowed based upon a separate contract with Jones as evidenced by conversations and letters from Jones during the attempted sale of the property to the Chicago investor. Because the Court holds that Jones and Wright were engaged in a joint venture and that Jones is liable for debts incurred by the venture, the Court finds it unnecessary to address this argument.
CONCLUSION
Jones's objection to Fisher's claim is overruled. The court finds that Jones and Wright engaged in a joint venture to develop the Yellow Rose Country Club. Fisher's claim for the amount of his deposit is allowed against the Chapter 13 plan of Jones, one of the joint venturers. This memorandum *30 of decision incorporates the Court's findings of fact and conclusions of law. Fisher shall lodge and serve a judgment consistent with this memorandum of decision. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1532016/ | 278 A.2d 836 (1971)
Richard Keith DUMIRE, Defendant Below, Appellant,
v.
STATE of Delaware, Plaintiff Below, Appellee.
Supreme Court of Delaware.
May 24, 1971.
Petition for Reargument Denied June 8, 1971.
Julian D. Winslow, Wilmington, for defendant below, appellant.
Mason E. Turner, Jr., Deputy Atty. Gen., Wilmington, for plaintiff below, appellee.
WOLCOTT, Chief Justice, and CAREY and HERRMANN, JJ., sitting.
*837 HERRMANN, Justice:
This is an appeal from a judgment of conviction for operating a motor vehicle while under the influence of intoxicating liquor. The State has filed a motion to affirm the judgment below under the new Rule 8(2) of this Court, Del.C.Ann.[1]
We have carefully considered the appellant's opening brief. The sole issue presented on the appeal is the propriety of the action of the Trial Judge in discharging one of the jurors and substituting an alternate juror.
It appears that the Trial Judge, sua sponte, excused one of the jurors and substituted an alternate juror duly selected under Superior Court Criminal Rule 24(c).[2] The reason for the replacement was that the regular juror had stated to the bailiff that he had "had a very bad experience" with drunkenness after the use of tranquilizers and intoxicating liquor upon the death of his son. The bailiff notified the Trial Judge of the remark, whereupon the Judge called the juror and counsel into chambers. The juror restated his remark to the bailiff about his "bad experience" *838 and added: "* * * and I thought it might influence the jury and I didn't want any chance, you know, to bringing personal opinion or anything like that to the jury."
The juror stated he "believed" he could decide the case on the evidence "without any reference whatever" to his own experience. In response to the Trial Judge's query whether the juror had "made any mention of this to the other jurors, any of them," the juror replied: "No Sir. I spoke in front of the bailiff and I think one juror was in there with me, but she didn't hear that much of it." Neither counsel had any objection to the juror's continuing to sit; nevertheless, the Trial Judge excused the juror and substituted the alternate, stating:
"This juror says that he is afraid a woman juror overheard what he said to the bailiff. Now that could create a problem and that is the reason I have excused him. * * *. It is what damage might be done because maybe one other juror overheard what he said, or part of what he said, and may have repeated it to some of the other jurors, and we just can't afford to stir this up with the jurors."
We conclude that the action of the Trial Judge was clearly within the realm of the exercise of a sound judicial discretion. The appellant's reliance upon People v. Freistadt, 23 Misc. 2d 534, 196 N.Y.S.2d 147 (1960) and People v. Sears, 74 Cal. Rptr. 872, 450 P.2d 248 (Cal.1969) is misplaced because of the obvious differences in factual situations.
Accordingly, we hold that, within the meaning of Rule 8(2), "it is manifest on the face of the appellant's brief that the appeal is unquestionably without merit because * * * the issue on appeal is one of judicial discretion, and clearly there was no abuse of discretion below."
An Order of Affirmance will be entered forthwith.
NOTES
[1] Rule 8(2), promulgated May 1, 1971, for the purpose of accelerating appellate practice, provides as follows:
"(2) * * * within five days after receipt of the appellant's opening brief, in lieu of a brief the appellee may file and serve a motion to affirm the order or judgment below. The sole ground for such motion shall be that it is manifest on the face of the appellant's brief that the appeal is unquestionably without merit because (1) the issue on appeal is clearly controlled by settled Delaware law; (2) the issue on appeal is factual, and clearly there is sufficient evidence to support the jury verdict or the findings of fact below; or (3) the issue on appeal is one of judicial discretion, and clearly there was no abuse of discretion below. There shall be no briefing or argument on the motion, or response thereto, unless requested by the Court. If the motion to affirm shall be granted, an order will be entered and a mandate will issue thereon, without further briefing and without oral argument. If the motion shall be denied, the appellee's brief will be due within twenty days after receipt of notice of such denial; and the appeal will proceed through briefing, oral argument, and disposition as provided by these Rules."
[2] Superior Court Criminal Rule 24(c) provides in pertinent part:
"(c) Alternate Jurors. The court may direct that not more than 4 jurors in addition to the regular jury be called and impanelled to sit as alternate jurors. Alternate jurors in the order in which they are called shall replace jurors who, prior to the time the jury retires to consider its verdict, become or are found to be unable or disqualified to perform their duties. Alternate jurors shall be drawn in the same manner, shall have the same qualifications, shall be subject to the same examination and challenges, shall take the same oath and shall have the same functions, powers, facilities and privileges as the regular jurors. An alternate juror who does not replace a regular juror shall be discharged after the jury retires to consider its verdict. * * *." | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1532019/ | 278 A.2d 712 (1971)
STATE of Vermont
v.
John EMRICK.
No. 78-70.
Supreme Court of Vermont, Washington.
June 1, 1971.
Kimberly B. Cheney, State's Atty., and Robert W. Gagnon, Deputy State's Atty., for the State.
Edwin W. Free, Jr., Barre, for defendant.
Before HOLDEN, C. J., and SHANGRAW, BARNEY, SMITH and KEYSER, JJ.
KEYSER, Justice.
The respondent was charged with three counts of breaking and entering into separate residences in the daytime with intent to commit larceny therein. Upon trial the jury returned verdicts of guilty on Counts 1 and 2, and not guilty on Count 3. Respondent's appeal is from the judgment entered on the guilty verdicts.
The respondent contends that the court erroneously charged the jury as follows:
"In this case, the Respondent, John Emrick, did not take the stand. The Law makes him a competent witness at his own request and not otherwise. It is his constitutional right and the fact he has availed himself of his right and has not testified is not to be held against him and not to be considered as evidence against him. The fact he exercised his right not to take the witness stand is not to be used against him."
The respondent did not testify or offer any evidence in his defense. The instruction to the jury was given by the court sua sponte.
The question here sought to be raised has already been presented, and passed *713 upon, in our state and federal jurisdiction. United States v. Woodmansee (1965, CA2, Vt.), 354 F.2d 235; State v. Grant, 127 Vt. 168, 243 A.2d 767; State v. Goyet, 120 Vt. 12, 132 A.2d 623.
In the Woodmansee case, the Circuit Court of Appeals held that "The judge's volunteering of a correct instruction as to a defendant's failure to take the stand is not reversible error, although it is better practice not to give it unless requested by a defendant."
In the Grant case the respondent did not testify. The trial court, without request, elected to charge the jury that "The respondent has not taken the witness stand in this case. The statute makes him a competent witness at his own request, but not otherwise."
The statute referred to and in effect at the time of that trial is 13 V.S.A. § 6601 which reads as follows:
"In the trial of complaints, informations, indictments and other proceedings against persons charged with crimes or offenses, the person so charged shall, at his own request and not otherwise, be deemed a competent witness. The credit to be given to his testimony shall be left solely to the jury, under the instructions of the court but the failure of such person to testify shall not be a matter of comment to the jury by either the court or the prosecutor and shall not be considered by the jury as evidence against him."
We said in the Grant case that once the court undertook to point up the fact that the respondent had not taken the stand, it was duty bound to instruct that such failure to testify should not be considered by the jury as evidence against him. In that case, the court failed to give this instruction and we held this was prejudicial error. We further said "According to the spirit of the statute, the trial court could have abstained from any comment concerning the competency as a witness and his choice not to testify, unless requested by the accused to explain his right of silence." The indicated effect of our holding in the Grant case is that the charge when correctly given is not prejudicial error but that the jury should not be instructed in this aspect of a case unless requested to do so by the respondent.
In State v. Goyet, supra, the respondent did not take the witness stand. The trial court instructed the jury (p. 66) in somewhat of the same language as in the instant case. At the time of that trial 13 V. S.A. § 6601 was in its present form by the enactment of No. 98 of the Act of 1955. The respondent claimed the charge was in violation of this statute. After a review of the history of the statute and the several cases wherein the charge under the statute was questioned, we held that "(I)t was proper for the court to direct and admonish the jury in the language of the statute as was done" and further that "(T)he instruction as given was proper." (120 Vt. p. 72, 132 A.2d p. 660).
The respondent in support of his claim cites the case of Griffin v. California (1965) 380 U.S. 609, 85 S. Ct. 1229, 14 L. Ed. 2d 106. The court held that "The Fifth Amendment, in its direct application to the Federal Government and in its bearing on the States by reason of the Fourteenth Amendment, forbids either comment by the prosecution on the accused's silence or instructions by the court that such silence is evidence of guilt." It is crystal clear that the Griffin case did not go beyond the point of condemning an instruction by the court or comment by the prosecution which serves to give the silence of an accused any coloration of evidence against him. The situation in the case at bar is readily distinguishable with the Griffin case. Here the instruction carefully pointed out that the silence of the respondent "is not to be held against him and not to be considered as evidence against him" and "is *714 not to be used against him." This cautious instruction was a clear statement of the law and not in derogation of the rule laid down in the Griffin case.
In State v. Wallace (1967), Iowa, 152 N.W.2d 266, the defendant contended that unless a defendant requests such an instruction (as here involved) it is error. He also argued that such an instruction highlights and emphasizes the fact that the accused did not take the stand and therefore it was an improper comment which tended to create an adverse presumption against him. The court said, however, at page 270: "The authority is all the other way. (Authorities cited)." See also United States v. Garguilo (2d Cir. 1962), 310 F.2d 249, 252.
The issue involved in the instant case was before the Arizona Supreme Court in State v. McAlvain, 104 Ariz. 445, 454 P.2d 987. There the court took the same position as that expressed in United States v. Woodmansee, supra. At page 990 of 454 P.2d, it said: "It is our position that it is better practice for the trial judge to give the instruction only if it is requested by the defendant, but it is not reversible error if the instruction is given without request."
We are of the firm opinion that the better procedure is for the trial court to ascertain the position of a respondent who has not testified to determine whether he desires that the instruction be given and then give the instruction only when it is requested by him. This places the burden of choice on the respondent rather than the court to decide whether the jury shall be instructed as to the respondent's rights under the statute. This decision is where it should rest in fairness to the respondent. He may feel that under the facts appearing in his case such an instruction would be prejudicial or, on the other hand, that it might be helpful or favorable to him if given. It should be for him to elect whether or not the instruction shall be given to the jury.
Judgment affirmed. Let execution of sentence be done. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1532058/ | 262 Md. 192 (1971)
278 A.2d 12
ST. PAUL AT CHASE CORPORATION ET AL.
v.
THE MANUFACTURERS LIFE INSURANCE COMPANY ET AL.
[No. 400, September Term, 1970.]
Court of Appeals of Maryland.
Decided May 17, 1971.
Motion for modification and rehearing filed May 26, 1971.
Denied June 1, 1971.
Supplemental motion for modification and for rehearing filed June 14, 1971.
Motions for rehearing June 15 and 16, 1971
Motions denied June 24, 1971.
Certiorari denied October 12, 1971.
*194 The cause was argued before HAMMOND, C.J., and BARNES, McWILLIAMS, FINAN, SINGLEY, SMITH and DIGGES, JJ.
David Freishtat, with whom were Charles W. Williams and Cornelius V. Roe on the brief, for appellants and cross-appellees.
Richard W. Case, with whom were Joseph M. Roulhac, Michael A. Pretl and Smith, Somerville & Case on the brief, for appellees and cross-appellants The Manufacturers Life Insurance Company and Weaver Bros., Inc.
George W. Baker, Jr., with whom were Allen, Burch & Baker on the brief, for cross-appellees The Mullan Contracting Company and Real Estate Management Co., Inc.
Motions for rehearing filed by Manufacturers Life Insurance Co. and Weaver Bros., Inc. of Maryland on June 15 and 16, 1971
Certiorari denied, Supreme Court of the United States, October 12, 1971.
SMITH, J., delivered the opinion of the Court.
The trial judge in this case (Proctor, J.) prefaced his findings of fact (the delivery of which consumed a full court day and which took up over 50 pages of the record extract) with the comment:
"In the past, I have looked upon St. Paul as a great Christian apostle. However, from here on I'm very much afraid that to me it will mean a high-rise apartment building at the corner of St. Paul at Chase."
The apartment house was the dream of appellant Charles W. Williams. As his literature put it, he conceived of it as a "prestige address" intended for "Gracious In-town Living". Appellant St. Paul at Chase Corporation was formed for the purpose of erecting and operating the building. This litigation was produced when *195 Manufacturers Life Insurance Co. of Toronto, Canada, cancelled a commitment it had made for permanent financing of the apartment building.
The situation here can perhaps best be understood by reference to the cast of characters:
St. Paul at Chase Corporation (St. Paul) plaintiff below, and appellant and cross-appellee here; received judgment of $1,935,955.60 at trial below; this is the company which was developing the apartment project in question. Charles W. Williams (Williams) president and principal stockholder of St. Paul. W. Hamilton Whiteford (Whiteford) and Edward A. Johnston (Johnston) attorneys for St. Paul.
The Manufacturers Life Insurance Company (Manufacturers) defendant below, and appellee and cross-appellant here; Canadian insurance company which was to provide a $4,800,000 permanent mortgage to St. Paul. Thomas R. Lamon (Lamon) mortgage superintendent for Manufacturers. Donald W. Lambert (Lambert) assistant mortgage superintendent for the United States for Manufacturers.
Weaver Bros., Inc. (Weaver Bros. or Weaver) defendant below and appellee and cross-appellant here; retained by St. Paul to procure financing for the project. Sidney H. Tinley, Jr. (Tinley) senior vice-president of Weaver Bros. E. Catherine Byrne Doehler (Miss Byrne) another vice-president.
The Mullan Contracting Company (Mullan Contracting) general contractor for the project. Charles A. Mullan (Mullan) president of Mullan Contracting.
*196 Chemical Bank New York Trust Company (Chemical) New York bank which eventually made $4,800,000 construction loan (not the permanent mortgage) for the project; not a party to this suit, but party to federal suit now pending and awaiting outcome of this suit.
Merchants Mortgage Company (Merchants) another mortgage broker, which eventually procured the construction loan from Chemical. Ralph Lubow (Lubow) loan officer of Merchants.
Daniel A. Neumayer (Neumayer) architect for the project.
Corbin C. Cogswell (Cogswell) of The Cogswell Construction Company inspector for Weaver Bros. and Manufacturers.
Merritt & Harris inspector for Chemical.
Williams and St. Paul sued Manufacturers and Weaver Bros. As Williams put it in his brief:
"Upon Defendants' Motion to Dismiss, Williams' individual claims against Manufacturers and Weaver were dismissed. However, as Williams is personally liable to Chemical for Chemical's Deficiency Decree, until this entire matter is resolved, Williams is an interested party and as such is a Party Plaintiff, see Newark Trust Co. v. Talbot Bank, 217 Md. 141 (1958)."
The exact breakdown of the judgments against Weaver Bros. and Manufacturers will be set forth later. St. Paul believes these judgments to be inadequate while Weaver Bros. and Manufacturers are convinced they had no liability. Therefore, they have all appealed. We shall affirm as to liability, eliminate punitive damages, and remand the case for entry of judgments which increase somewhat but not to the extent desired by St. Paul the compensatory damages.
Mullan Contracting and Real Estate Management Co., *197 Inc., are use plaintiffs in the litigation and appear here as cross-appellees, being owed in excess of $300,000 by St. Paul.
The six counts in the declaration were summarized by the trial judge as follows:
"COUNT 1 OF THE DECLARATION
"Although it is long and verbose, the gravamen of this count is that Weaver breached its contract of December 6, 1963, with the Plaintiff. * * * [(Probably the gist of this count is contained in paragraphs 40 and 41 of the declaration which stated:
"40. The Plaintiffs allege that having accepted the above modifications of Weaver's offer, they then waited for more than a reasonable time for Defendant Weaver to provide them with a construction loan, as Defendant Weaver had promised to do. The Plaintiffs allege that it was only after Defendant Weaver had attempted to secure their property for another client and only after Tinley, as Executive Vice-President of Defendant Weaver, had advised Plaintiffs' counsel, that Defendant Weaver had spent entirely too much time, that the Plaintiffs with their entire project then in jeopardy, advised Defendant Weaver on December 6, 1963, that the Plaintiffs were placing their construction loan elsewhere. The Plaintiffs allege that with their entire project then in jeopardy, under the time limitation set by Defendant Manufacturers in their Letter of Commitment of June 7, 1963, the Plaintiffs were required to do all in their power and regardless of the expense involved to obtain a construction loan from another source in an attempt to avoid the heavy losses and damages with which they were faced.
*198 "41. The Plaintiffs allege that in spite of the modifications to Defendant Weaver's original offer and contract agreed to by Plaintiffs in an effort to assist Defendant Weaver, Defendant Weaver did not secure a construction loan for the Plaintiffs by September 1, 1963, as they had promised and bargained to do, did not secure a construction loan for the Plaintiffs within a reasonable time thereafter, and in fact never did secure a construction loan for the Plaintiffs. The Plaintiffs allege that the failure of Defendant Weaver to secure a construction loan for the Plaintiffs as they had promised and bargained to do delayed the start and hence the completion of the Plaintiffs project by many months. The Plaintiffs allege that this failure on the part of Weaver to furnish the Plaintiffs a construction loan by September 1, 1963, and thereafter within a reasonable time, contributed to and set in motion those causes which caused the Plaintiffs their heavy losses and damage including the loss of their entire project."
It thus will be seen that the declaration itself did not refer to the December 6 agreement. This agreement supplanted the earlier agreement.)]
* * *
"COUNT 2 OF THE DECLARATION
"This count sounds in tort and is based upon two alleged tortious actions by Weaver.
"First, Plaintiff contends that Weaver failed to process the Plans and Specifications promptly, and thus committed a tort. I have already found for Defendant Weaver on this point.
"Second, Plaintiff alleges negligent and deceitful conduct on the part of Weaver in failing to button up Manufacturers' offer of a construction *199 mortgage loan, including Tinley's advice to Williams, when he accepted such offer, that it had been withdrawn. * * *
* * *
"COUNT 3 OF THE DECLARATION
"In this count Plaintiff contends that Manufacturers is responsible to it for breach of contract Manufacturers' offer of June 7, 1963, and Plaintiff's acceptance of June 21, 1963. * * *
* * *
"COUNT 4 OF THE DECLARATION
"This is an action against Manufacturers in tort. It is based upon three contentions: (1) Alleged failure of Manufacturers to exercise good faith and alleged negligence in the processing and approval of plans and specifications. I have already rendered a verdict in favor of Manufacturers on this count. (2) Its alleged failure to exercise good faith in breaching the contract. (3) Alleged constructive fraud on its part in breaching the contract.
* * *
"COUNT 5 OF THE DECLARATION
"This is a contract action against Weaver to recover the $48,000 paid by Plaintiff to Weaver on May 11, 1964, as a finder's fee for obtaining the permanent mortgage loan commitment from Manufacturers. * * *
"COUNT 6 OF THE DECLARATION
"This is a tort action against Weaver and Manufacturers. It merely combines the allegations of Counts 2 and 4, and alleges that Defendants were joint tortfeasors. * * *"
St. Paul and Williams have summarized the request for damages and the actual award by the court as follows:
"St. Paul requested the following in damages:
*200
A. Direct Damages - loss of property $7,920,000
B. Special Damages - loss of business
Value of Business $7,265,000
Less Amount of Mortgage 4,800,000 2,465,000
C. Consequential Damages -
1. Chemical Bank - Deficiency
Decree - 2/27/67 1,297,952
2. Extension fee paid
Manufacturers 9/7/65 24,000
3. Fee paid Weaver 9/18/63 on their
loan of $480,000 9,600
4. Interest on Weaver's loan of
$480,000 from 9/18/63 to 1/1/65;
paid 5/1/64 18,160
5. Merchants Mortgage Co. fees and
legal expenses 85,500
6. Dr. G. C. Merrill contract
covering moving, interruption and
dislocation of business, due over a
4 year period commencing with 4/1/66 50,000 1,485,212
11,870,212
D. Interest from 5/15/66 to 2/15/70 2,716,300
Total Compensatory Damages $14,586,512
"Under Count V, St. Paul claimed the return of the fee it paid to Weaver.
"THE COURT AWARDED:
Compensatory Punitive
COUNT I (Plaintiffs v.
Weaver - Contract) $5.00 $50,000
COUNT II (Plaintiffs v.
Weaver - Tort) 185,167.40 100,000
COUNT III (Plaintiffs v.
Mfgrs. - Contract) 1,552,783.20 0
COUNT IV (Plaintiffs v.
Mfgrs. - Tort) 0 0
COUNT V (Plaintiffs v.
Weaver - Contract) 48,000.00 0
COUNT VI (Plaintiffs v.
Mfgrs. & Weaver jointly) 0 0
$1,785,955.60 $150,000
"No prejudgment interest was awarded except on the Chemical Deficiency Decree. The $1,552,783.20 above was awarded to cover the deficiency decree and included interest at 6%."
On appeal Williams and St. Paul raise four issues. The first three all deal with their dissatisfaction with the damages awarded. The fourth alleges error on the part of the trial court in denying a motion to amend by interlineation the damage clause of the declaration so as to materially increase the claim for compensatory damages *201 to approximately $14,000,000.00. We shall not be obliged to pass upon that point since the damages awarded are less than those claimed in the original declaration. They do not appeal the issue of the refusal of the trial court to enter judgment against Manufacturers under the fourth count of the declaration which was in tort, nor do they claim error on the part of the trial judge in not allowing punitive damages against Manufacturers.
Weaver Bros. alleged error in finding it liable at all, in entering judgment for punitive damages against it and in the amount of the judgment for compensatory damages. Manufacturers contests the judgment as to liability and the amount of damages awarded.
We shall summarize as briefly as possible the essential facts, adding some additional summation of facts under the points discussed.
Weaver Bros. is a mortgage broker. In Hill v. Benevicz, 224 Md. 79, 167 A.2d 104 (1961), Chief Judge Brune discussed the practice of mortgage brokers and mortgage correspondents, stating:
"Rouse's usual practice appears to be to submit applications to the F.H.A. for mortgage insurance in its own name, but to place the mortgage, when a commitment for insurance has been obtained, with one or another of the lending institutions for which it acts as mortgage correspondent, and which are themselves F.H.A. approved mortgagees. Rouse then takes the mortgage in its own name, assigns it to the lending institution and services the mortgage under a contract between Rouse and the lender, pursuant to which Rouse receives compensation. Rouse thus performs several functions in the transaction. It acts partly in its own interest, partly as agent for the lending institution and partly for the benefit of the prospective mortgagor and partly also for the benefit of the would-be seller, for without the mortgage financing *202 the sale probably would not produce the cash consideration which he is seeking. All of these functions are well known in the business, and there is no question of an agent secretly serving his own interest or the interest of one principal to the detriment of another." Id. at 84.
A chronology of major events is as follows:
August, 1962: Williams contracted the first of nine purchase options on land on the northeast corner of St. Paul and Chase Streets in Baltimore; total purchase price was to be $725,000; the options were to be exercised by June 15, 1963, with payment apparently to be made by September 1, 1963.
December, 1962: St. Paul was incorporated by Whiteford, with Williams as the sole stockholder.
March, 1963: Tinley heard that Williams was contemplating erection of a high-rise apartment and directed one of his subordinates to contact Williams, which was done.
March 25, 1963: Williams contacted Tinley about a possible $5,200,000 $5,400,000 mortgage for the project.
April 10, 1963: Whiteford told Tinley that Williams needed 100% financing because he had no working capital.
May 14, 1963: Tinley advised Williams and Whiteford that Manufacturers was interested in a $4,800,000 permanent mortgage for 25-26 years at 6 1/4%. Weaver Bros. was to receive $48,000 for securing the permanent mortgage and another $48,000 for securing a $4,800,000 construction loan. St. Paul was also to pay Manufacturers a refundable "standby fee" of $48,000. Tinley said that Weaver Bros. would give a $200,000 second mortgage if Manufacturers' $4,800,000 mortgage *203 was not enough. Williams wanted to act as his own general contractor on the project (without bond), with bonded sub-contractors.
May 29, 1963: Weaver Bros. made a written submission concerning the project to Manufacturers. The application was accompanied by Weaver's valuation of the property in the amount of $7,920,000 for land and building and $7,265,000 on the basis of capitalization at 7 1/2% of the estimated net income of $544,865 per year. These figures, as will later be seen, contribute materially to this controversy.
June 5, 1963: Financing and plans for the project were approved by Manufacturers.
June 7, 1963: Commitment letter written by Manufacturers it was for breach of this contract that the company was held liable at the trial below. In addition to interest on the loan, Manufacturers was to receive 13.31% of all gross rental income in excess of $721,044 (80% of the forecasted gross income). The offer was to be accepted by June 24, 1963.
June 14, 1963: Manufacturers' letter of commitment was discussed at a meeting, at which Tinley gave assurances that he would be able to secure the necessary construction loan by September 1, 1963. He also stated that the requirement of "satisfactory completion" of the building did not mean that the building had to be completed in every detail. Tinley made an offer of a $200,000 second mortgage for working capital purposes; the land options on the nine lots were exercised.
June 21, 1963: St. Paul accepted Manufacturers' offer and paid the $48,000 standby fee.
Late July or early August, 1963: Tinley telephoned Whiteford and told him Williams' *204 poor credit standing (because of business losses in Virginia) and his insistence upon acting as his own general contractor without bond were making it difficult to obtain a construction loan.
Early August, 1963: Tinley asked Lamon of Manufacturers if that company would be interested in financing the construction loan.
August 10, 1963: Williams met with Merchants, which offered a $4,800,000 construction loan of 6% if they could have 2-3 weeks for approval of the plans. Williams "tabled" this offer because he needed the money prior to September 1, 1963, and did not think that he could afford this time.
August 12, 1963: On or about this date, Lamon telephoned Tinley. He said that Manufacturers would make a construction loan commitment as follows: interest at 6%; a separate $24,000 fee; approval by Manufacturers of the final plans and specifications; and a bonded general contractor. Tinley passed this information on to Williams, who indicated he was upset because it ruled him out as his own general contractor, since he could not get a bond.
Late August, 1963: Tinley called Whiteford in Ocean City and told him that Weaver Bros. would procure a land mortgage loan for St. Paul in the amount of $480,000 so that the company could preserve its land options while ironing out the construction loan problems.
August 30, 1963: Letter from Weaver Bros. to St. Paul was delivered stating that Weaver Bros. was loaning $480,000 to St. Paul on land mortgage, that a $4,800,000 construction loan had been arranged, and that a $4,800,000 permanent mortgage had been arranged. *205 (There was some indication that this letter was written solely for the benefit of the holders of the nine lots in order to get them to grant an extension on the date of payment.)
Johnston (Whiteford's partner) took this letter around, and obtained extensions from the landowners until September 18, 1963.
Williams delivered a set of plans for the project to Weaver Bros. Weaver Bros. apparently considered them to be only preliminary plans; Mullan testified that they were permanent plans and that they had been used to secure the necessary building permits from Baltimore City.
September 5, 1963: Williams had previously asked Mullan Contracting to become the general contractor. At a meeting on this date, there was some discussion relative to Mullan Contracting's obtaining the construction loan from Maryland National Bank. Tinley again said that Weaver Bros. would advance $200,000 on a second mortgage basis for working capital.
At another meeting on this same date (or maybe at the same meeting mentioned above), Tinley allegedly said that Weaver Bros. would take a $500,000 second mortgage to assure completion of the building, if necessary.
September 18, 1963: Weaver Bros. made the $480,000 land loan to St. Paul.
October 10, 1963: Mullan said that his application at Maryland National for $4,800,000 had been approved, subject to a $500,000 second mortgage from Weaver Bros. to be used for land fees and costs. Tinley denied that he had made an offer of a second mortgage, and an argument ensued. Williams said he would accept *206 Manufacturers' offer for a construction loan and asked Tinley to place it. Tinley said Manufacturers' offer for the construction loan had been withdrawn. The trial court found that the offer had never been withdrawn and was still good as of this date, and that Williams' statement to Tinley acted as an acceptance of Manufacturers' offer.
Shortly thereafter a meeting took place at which Tinley suggested that Williams sell his interest in St. Paul to make it easier to get the construction loan; Williams refused.
November 25, 1963: Meeting where Tinley suggested sale to Messrs. Gottschalk and Grant. Williams left in a huff.
November 26, 1963: Tinley said he could still place the construction loan and asked for two more weeks; Williams gave him until December 6, 1963. On the same date, Williams called Lubow of Merchants and resubmitted his original proposal.
December 6, 1963: The original agreement between St. Paul and Weaver Bros. was "finally terminated". They entered into a new contract. As the trial judge put it:
"Tinley described Weaver's obligations under this new Agreement as being, first, to make sure that the Buy-Sell Agreement between the construction and permanent mortgage lenders was signed by all of the parties at the construction mortgage loan settlement; and, second, if any problems arose, to assist in ironing them out. Under this new contract Plaintiff was obligated to pay Weaver $96,000 for its services $48,000 in cash and $48,000 at a later date. Weaver agreed that it would not assert any claim against the fee of Merchants * * * for placing the construction mortgage loan."
*207 The trial judge found as a fact that Manufacturers' offer to make a construction loan was still open at this time.
December 6, 1963: St. Paul and Merchants entered into a contract under which the latter was to be paid $72,000 for obtaining a construction mortgage loan commitment for the project. A fee of $10,000 was to be paid to certain persons who had introduced Williams to Merchants.
December 27, 1963: Commitment issued by Chemical.
March 9, 1964: Plans and specifications for the project were finally approved by Weaver Bros. on behalf of Manufacturers.
April 8, 1964: Plans and specifications were finally approved by Manufacturers.
April 27, 1964: St. Paul executed a contract with Mullan Contracting, the use plaintiff, for construction of the building.
May 1, 1964: Closing of Chemical's construction mortgage loan was held in New York, at which all of the necessary documents were executed, including a promissory note in the amount of $4,800,000 and the "Buy-Sell" agreement between Manufacturers and Chemical.
August 19, 1965: The expiry date under Manufacturers' permanent mortgage loan commitment was extended from September 7, 1965, to March 7, 1966, by letter from Manufacturers to Weaver Bros. Plaintiff paid Manufacturers $24,000 for such extension.
March 4, 1966: At a meeting of its executive committee Manufacturers decided not to extend the commitment any further. Lamon was instructed to advise Chemical.
March 8, 1966: Manufacturers wrote Weaver Bros. cancelling the commitment.
*208 April 13, 1966: Chemical filed foreclosure action.
June 1, 1966: Foreclosure sale. There was only one bidder at the sale, and the property was knocked down to a representative of Chemical.
February 23, 1967: Decree in personam was entered in the foreclosure proceedings against St. Paul in the amount of $1,297,952.39.
The commitment of Manufacturers provided in pertinent part:
"It is understood that our funds will not be required until we receive a report from your inspector certifying that construction of the building has been satisfactorily completed, and the certificate of an architect, approved by our Company, certifying that construction has been completed in accordance with the plans and specifications which are to be submitted to us for approval. Engineering and architectural approval of the project is also required."
A "Buy-Sell" agreement was entered into between Chemical and Manufacturers. This appears to be the conventional practice in financing of this type. One paragraph of that agreement, which was in the form of a letter from Chemical to Manufacturers, stated:
"1. At any time on or before September 7, 1965 (or the last day to which the commitment may be extended, if any extension thereof has been made as provided herein), if the conditions of the Commitment have been fulfilled, you agree to purchase and we agree to sell the Note for $4,800,000."
Manufacturers accepted the agreement, Weaver assented to it, and St. Paul appended its consent to the agreement and agreed that it would "(i) take or cause to be taken *209 any action required of the Borrower in order to comply with the terms, covenants and conditions of this Agreement and the Commitment, (ii) accept a loan from [Chemical] under the Commitment and (iii) not accept from any other person or persons a loan secured by a deed of trust creating a first lien so long as the Commitment ha[d] not expired."
The trial judge said in his findings of fact relative to the June 14 meeting to discuss the Manufacturers' commitment:
"Williams' testimony as to this meeting was that Tinley said that satisfactory completion meant the work had to be done in a workmanlike manner, and in accordance with the plans and specifications. Williams further testified that the degree of completion was discussed, and that Tinley said that an inspector would check the work monthly. Williams further testified that Whiteford had said that a construction loan had to be part of the package, and Tinley said we could rely on Weaver having a construction mortgage by September 1, 1963; that Whiteford said that the money had to be available by September 1, 1963. * * * The reason for the finding is that it is clear from the testimony of all the parties that at that point, Tinley was enthused about the project and its prospects, had obtained a permanent loan commitment from Manufacturers, and sincerely believed that with the permanent loan commitment on hand, he would have no difficulty in obtaining a construction mortgage loan commitment. Williams further testified that he asked if the word completed meant that everything had to be finished and Tinley replied that the building didn't have to be completed in every detail. I find that was the substance of what Tinley said, primarily because that's the substance *210 of the testimony Tinley gave here in Court. Tinley stated that Manufacturers' proposal had to be accepted and the standby fee paid by June 24, otherwise the offer was void. Finally, Whiteford asked Tinley if there was any question about the items discussed at the meeting, saying that this was a serious step, and Tinley said no. Again, I am confident that that's the gist of what took place, and so find.
* * *
"In his version of what transpired at this meeting, Tinley said that everyone was delighted with the information that the permanent loan commitment had been obtained, that Williams was interested to know whether there would be an architect coming from Canada, and that he advised Williams, from his own experience, that the answer was no; that, however, inspection by an architect would be necessary, unless an inspector was appointed to make monthly inspections. Tinley said that Williams inquired what the term satisfactory completion meant, and he replied that the building had to be finished, that every apartment had to be ready for occupancy; that Williams further inquired about the term satisfactory completion and he said it was not absolutely necessary that the building be 100 per cent completed; that if some completely minor items remained to be done, roll over would take place. Tinley further testified there was a discussion about the last paragraph of the commitment letter, and that he said it meant what it said. He further testified that Williams inquired whether everyone always met the date set forth in the commitment letter, and he said it had been his experience, that if an owner-builder got to the point where an additional thirty days was necessary for completion, he would ask for an extension and *211 normally get it. Tinley further testified that there was a discussion about whose responsibility it was to get the certificates referred to in the third paragraph of the commitment letter, and that he told Williams that the burden would be upon him. I find that that statement was made. It would be a logical statement for Mr. Tinley to make in response to that inquiry.
"Asked about the engineering and architectural approval referred to in the third paragraph of the commitment letter, Tinley testified that he said it would have to be received before roll over; that whoever gave such approval was to send it to Manufacturers, who had the right of final approval.
"Tinley admitted that, at that meeting, he made an offer of a $200,000 second mortgage for working capital purposes; that this is what Williams wanted. Tinley, on cross examination, testified that he did not remember Whiteford saying St. Paul couldn't make an application for a permanent loan without assurance of a construction loan; that, however, Whiteford impressed on everyone it was very important to get a construction loan to pick up the land and go ahead with the project. Tinley stated that he told those in attendance that he would undertake to get a construction loan on a best efforts basis; that Whiteford gave Weaver authority to go ahead with the permanent loan application, without Weaver's assurance of a construction mortgage. However, as I have already stated, I find that there was assurance of a construction loan commitment."
The two top floors of the building, 22nd and 23rd, were damaged in 1966. On this subject the trial judge said in his finding of fact:
"Next comes the question of the storm and *212 the alleged resulting damage. The weather reports, in my judgment, are inconclusive. I have examined them. There was a bad blizzard. There was a time after the blizzard, a week or ten days later, where the daytime temperature did rise to a point where there would have been a thaw. The difficulty with proof of this phase of the case as far as Plaintiffs is concerned is that the time when the leak developed is not pinpointed. No witness testified that the leak was discovered on February 13 or 14, the day when quite a bit of thaw took place. Neumayer testified, however, that the terraces had been tested for leaks. That tends to negate the idea of the damage being attributable to the storm. So that I find that Plaintiff has not met for whatever significance it has in the case its burden of proving that the damage to the 22nd and 23rd floor suites was due to `an act of God'."
This damage was a factor in the question of whether the building had been completed at the time of the March 7 deadline.
At one point there was sincere belief on the part of Williams that Mullan would not be able at the pace at which he was going to complete the building by March 7.
On the question of completion of the building the trial judge said:
"Finally, I find as a fact that the high-rise apartment building at the northeast corner of St. Paul and Chase, as of March 7, 1966 was substantially complete. The reasons for that finding are manifold. Mullan says it was substantially complete; Cogswell said it was substantially complete and Cogswell was Manufacturers' and Weaver's representative; Neumayer says it was substantially complete; the photographs taken by Tadder are only of the top two *213 floors. You can bet your bottom dollar if there was substantial evidence of incompletion of the project on the remaining floors other than the first floor, there would have been photographs of that state of incompleteness. He had been asked by Weaver, according to his own testimony, to take photographs showing what had not been completed.
"Just as significant, in my judgment, is the inspection by Lambert. This was made under circumstances where Lambert knew that Manufacturers was cancelling the commitment letter. He read the handwriting on the wall. He knew that he had been asked to prepare an inspection report which, if called for, would justify (if possible) the position taken by Manufacturers. I have reviewed his report carefully, and it is, to say the least, not objective. In the first place, in making the examination, he shows some lack of familiarity with the plans and specifications. Of 238 apartments in the building, as I compute it, he found 67 okay; there was nothing that he could find wrong, not even a scratch on the walls. In other words, there were at least 67 apartments which tenants could have occupied on March 7. There were three that he said he couldn't inspect. There were approximately 100 apartments in which the items which Lambert said needed correction, were obviously of the most minor nature which could have been corrected in twenty-four hours what I consider to be a punch list item. There were fifteen more apartments where his comment was `Clean out hatch not plastered.' As Charles Mullan pointed out, the purpose of the clean out hatch would be completely nullified if you plastered over it. Obvious nitpicking.
"When I say minor items, I'm talking about *214 this sort of thing: `Room 311, bath, vanity fixture hung below outlet, wire shows,' only one item in that room. So when I say minor, I mean petty. Where Lambert's report showed more than one item to be corrected in a room or suite, I have not considered that as minor. But even in the rooms which had several items which allegedly required correction, they were items that could have been corrected before a tenant would want to move in. For example, in Room 1102, `Dining room electric light fixture not properly installed. Bath, ceiling plaster finished splotchy.' I don't consider that minor, but obviously on the face of it, it is something that could be taken care of in one morning at most probably fifteen minutes for the light fixture and an hour for the plaster job. The only part of the building that was not in this minor or comparatively minor category was some of the exterior work and some of the suites on the 22nd and 23rd floors. Here we're dealing with an apartment house that has 238 apartments, ten of them on the top two floors. Ten out of 238, and even in those, the work was finished, according to the testimony before me, within a week after March 7, 1966.
"So that my finding, so far as the state of completion is concerned, is that the building was substantially completed. Again, the determination of the legal effect of this finding must await tomorrow's edition."
There were suggestions from time to time through the record that Tinley and Weaver Bros. did not want Manufacturers to know that the loan here was intended to cover the entire construction cost. There is some intimation that this was the reason that Tinley did not proceed with the closing of a construction loan with Manufacturers.
*215 LIABILITY
At the conclusion of trial on the issue of liability and before presentation of evidence of damages the trial judge rendered an oral opinion which we adopt:
"CONCLUSIONS OF LAW
"We now come to the point in the case where I am required to make certain conclusions on the question of liability. As is true in most cases, these conclusions are in some instances exclusively legal, in others, they are combinations of fact and law.
"There are several preliminary questions which must be considered before I get to the ultimate decisions which must be made.
"I. Weaver Agent for St. Paul and Manufacturers.
"The question of agency has arisen in this case. I have found as a fact that Weaver acted as agent for both St. Paul and Manufacturers. In Hogan v. Q.T. Corporation, 230 Md. 69, 75, the Court of Appeals said that `the existence of a principal-agent relationship is ordinarily a question of fact. * * * And since such relationship may be implied from the words and conduct of the parties and the surrounding circumstances, the question was properly submitted to the jury, and its verdict should not have been set aside.' So that such agency has been determined by me, sitting as a jury, as a matter of fact.
"II. Weaver's Responsibilities as Agent.
"Next, is the question of the responsibilities of Weaver as broker-agent. In Hardy v. Davis, 223 Md. 229, 232, the Court of Appeals had this to say on the subject of a real estate broker acting as agent for both parties: `During the term of the agency, a real estate broker can not act *216 for both vendor and vendee in respect of the same transaction because of possible conflict between his interest and his duty in such case, and he must disclose to his principal all facts or information which may be relevant or material in influencing the judgment or action of the principal in the matter. Coppage v. Howard, 127 Md. 512, 523; Restatement (Second), Agency Sec. 381.' Of course, Weaver did act as agent for both, and, in my judgment that dual agency was known both by Manufacturers and by St. Paul. St. Paul had hired Weaver as its agent and broker, and yet it knew through the multitude of letters and phone and face to face negotiations that Weaver was also acting as agent for Manufacturers. Many of the communications were directed by Manufacturers to Weaver. As I recall it, none in writing were directed to St. Paul. So that the fact that Weaver was acting as agent for both parties did not, in and of itself, constitute a breach in violation of the holding in Hardy v. Davis (supra). Nevertheless, when one acts in such a dual capacity, one has an even greater responsibility to be sure that he walks a straight line and acts in a fair manner towards both principals, than if he were acting for only one party.
"On the degree of care which an agent must exercise, 12 Am.Jur.2d, 847, Sec. 96, says that
`As a general rule, a broker who is not a mere middleman, but is employed by a principal to act as his agent in a transaction, is bound to exercise reasonable care and skill, or the care and skill ordinarily possessed and used by other persons employed in a similar undertaking. He must exert himself with reasonable diligence in his principal's behalf, and is bound to obtain for the latter the most *217 advantageous bargain possible under the circumstances of the particular situation. * * *
`* * * A broker is not liable for a mere mistake in judgment which does not result from a failure to know or do that which a person of ordinary prudence under similar circumstances would know or do. * * *.'
`In the absence of special circumstances giving the principal a right to rely on the agent's skill and care, the principal has been held to be barred from recovering for the agent's negligence by his own contributory negligence.'
"In Nagel v. Todd, 185 Md. 512, at page 516-517, the Court of Appeals had this to say on this subject: `In DeCrette v. Mohler, 147 Md. 108, 115, this Court, speaking through Judge Walsh, said: "The principal duty of an agent is loyalty to the interest of his principal. The very nature of the relationship of principal and agent demands that the latter give to the former the fullest measure of service in all matters pertaining to the agency, and that he devote all his skill and ability to securing the greatest legitimate benefit and advantage for his principal. Experience has taught us that no man can serve two masters, and for this reason it has long been an established rule of law that an agent cannot recover from his principal in any transaction in which the agent's interest was antagonistic to that of the principal, unless such interest was fully and fairly disclosed to the principal" citing Mechem on Agency, 2nd Ed., Sec. 1588 et seq.'
"The responsibilities and duties of an agent are discussed in some other Maryland cases. In Maryland Credit Finance Corp. v. Hagerty, 216 Md. 83, 90, 92, the Court of Appeals, after quoting, *218 as I have just done, from DeCrette, said: `Where the breach of duty by the employee was wilful and material, as we find it to have been in the case before us, the Courts have held consistently that the employee has forfeited at least compensation which has not already been earned. The rule was recognized, although found inapplicable on the facts, in Shipley v. Meadowbrook Club, 211 Md. 142, 148. It was there said that: "We accept the general principle that an agent who is guilty of fraud upon his principal, particularly where there is a conflicting interest, concealment, or a wilful and deliberate breach of his contract, may be denied compensation for his services."' There are a number of authorities cited at that point.
"In Buffington v. Wentz, 228 Md. 33, 38, the Court of Appeals said this: `* * * that the broker was under a duty to make full disclosure to his clients of all of the relevant facts which might influence the judgment or action of his principals.' citing several Maryland cases, and Restatement, Agency, Second edition, Secs. 381, 389, 390; also 8 Am. Jur., (Brokers), Secs. 89, 91.
"Again on this subject, Coppage v. Howard, 127 Md. 512, 523, the Court said: `* * * A broker employed to sell real estate occupies a quasi fiduciary relation to his employer, and in his dealings with him is bound to act in good faith and to make disclosures of matters that are material and might affect the action of his employer in the premises. This principal is fully recognized in this State.' citing three earlier Maryland cases.
"Finally on this subject, Virginia Dare Stores, Inc. v. Schuman, 175 Md. 287, 291-92, the Court said: `It appears from the declaration heretofore *219 referred to that this action is founded upon negligence in misrepresentation. No Maryland case has been found directly upon the subject, but the weight of authority in other jurisdictions seems to be that such action is not necessarily confined to injuries arising from contractual relations; that the action lies for negligent words, recovery being permitted where one relies on statements of another, negligently volunteering an erroneous opinion, intending that it be acted upon, and knowing that loss or injury are likely to follow if it is acted upon.' citing a number of authorities.
"Referring to the argument of day before yesterday, Mr. Freishtat contended that Weaver had held itself out as having special skill in the subject of obtaining mortgage financing, such as is involved in this case, and that St. Paul and Williams had relied thereon to their loss. In response, Mr. Case contended that there was a failure of proof of special skill and reliance thereon, and also that there was a lack of expert testimony as to the standard of care required in such a case. In my judgment, this is not a case which requires the production of expert testimony. However, it appears that in this case, and in other cases like it, it's not so much a question of some higher degree of care, but of the degree of care one would expect of the particular person involved, whether he is a doctor, or a lawyer, or a real estate broker or specialist.
"The case which Mr. Case referred to in argument is L.B. Laboratories, Inc. v. Mitchell, 235 Pac. (2d) 253, 257, had this to say: `The courts have uniformly based recovery upon principles of negligence where there is failure to employ the knowledge, skill and judgment *220 which is engaged to be rendered in professional employment, or other employment of a highly specialized nature. A member of the learned professions, and for that matter any one who undertakes employment because of his possession of exceptional skill, impliedly represents that he possesses and will employ the degree of learning and skill usually possessed by those in good standing practicing their specialities in the same locality. He impliedly agrees to use his best judgment but does not guarantee results. Roberts v. Parker, 121 Cal. App. 264; 8 Pac. (2d) 908. "In all those employments where peculiar skill is requisite, if one offers his services, he is understood as holding himself out to the public as possessing the degree of skill commonly possessed by others in the same employment, and if his pretentions are unfounded, he commits a species of fraud upon every man who employs him in reliance on his public profession. But no man, whether skilled or unskilled, undertakes that the task he assumes shall be performed successfully, and without fault or error; he undertakes for good faith and integrity, but not for infallibility, and he is liable to his employer for negligence, bad faith, or dishonesty, but not for losses consequent upon mere errors of judgment." (Cooley on Torts, (4th Ed.), Vol. 3, p. 335).'
"III. Commitment Letter Time of Essence?
"Next, one other preliminary question is whether time was of the essence in this contract, the commitment letter of June 7, 1963. It is my judgment, and I so hold, that time was not of the essence of this contract. My reasons for that holding are several. First, the language itself negates the idea of time being of the essence. The last paragraph says: `The commitment *221 may be canceled,' not, as does the paragraph immediately preceding, that `This commitment shall become void if by June 24, 1963 we have not received written acceptance of the same, * * *.' Clearly that paragraph was time was of the essence. If the refundable standby fee had not been paid and the offer contained in the letter had not been accepted by that date, that would have been the end of the complete end of the matter. So that you have that very definite difference in language. Now the only thing in the last paragraph that would make time of the essence is that a date is mentioned. However, when you compare the language of the two paragraphs it becomes obvious that, so far as the last paragraph is concerned, time was not considered of the essence.
"Another reason is that the law is clear that one who draws a contract can expect to have that contract construed against him. `* * * this Court cannot disregard the rule of construction of contracts often restated by it, that where an ambiguity exists, a contract will be most strongly construed against the one who prepared it.' Kelley Construction Co., Inc. v. Washington Suburban Sanitary Com., 247 Md. 241, 250; Hughes v. Pioneer, 230 Md. 36, 38; Ebert v. Millers Fire Ins. Co., 220 Md. 602, 611; Cadem v. Nanna, 243 Md. 536, 544. This rule is particularly applicable to insurance contracts. Although this is not an insurance contract, it is a contract drawn by an insurance company; and there is a reasonable inference that they were familiar with that rule of law.
"Another reason for my holding on this point is that Manufacturers knew that, if this commitment were accepted and if it were followed by a construction mortgage loan so that the *222 project would go forward, St. Paul would expend large sums of money in reliance upon commitment, and also knew of the possibility, at least, that exactly what did occur, might occur.
"Finally, the construction placed upon this contract by the actions of the parties. When September 7, 1965, arrived, what did Manufacturers do? Did it say, stop, you have not met the date specified in the last paragraph? No, it not only did not say stop, it gave a six months extension six months additional life to the agreement. So that it is clear not only that time was not of the essence, but that the parties did not consider it to be.
"There are two Maryland cases which I have found that deal generally with this subject, and which throw some light upon it. The first of these is Scarlett v. Stein, 40 Md. 512, 525-526. There, the Court said: `Parties may, no doubt, make time an essential part of a contract, and in such cases, the failure by one of the parties to perform his part of the obligation within the time prescribed, discharges the other from all liability under the contract. Whether time is to be considered as of the essence of the contract, must, of course, depend upon the intention of the parties. When this intention is expressed in clear and unambiguous terms, the contract must speak for itself, and the liability of the parties must be determined by the plain and obvious meaning of the language used. If, however, this intention is not expressed in clear and direct terms, courts may look to the acts and conduct of the parties, in order to find out the meaning which they themselves have put upon the contract.' And that is why I have emphasized the factual phase of this problem, because from such facts one can ascertain that the intention *223 of the parties was that time was not of the essence. Also bearing on this subject is Kasten Constr. Co., Inc. v. Maple Ridge Constr. Co., Inc., 245 Md. 373, 377. There, the Court said: `In a case involving specific performance, where the intention of the parties is always the controlling factor, the general rule is that time is not of the essence of the contract of sale and purchase of land unless a contrary purpose is discovered by its terms or is indicated by the circumstances and object of its execution and the conduct of the parties. * * * Ordinarily, however, time is held to be of the essence only when it is clear that the parties have expressly so stipulated or their intention is inferable from the circumstances of the transaction, the conduct of the parties or the purpose for which the sale was made.', citing a long list of Maryland cases.
"Now, as I said once before, we come to the nitty gritty. I have tried to sift from my recollection of the declaration, from all of the facts and from argument of counsel, what I consider to be the questions which I have to consider and decide. They are as follows, without comment, in the first instance:
"First, the contention that Weaver and/or (I hate that expression but it applies here) Manufacturers alleged delay in approving the plans and specifications constituted negligence so far as Weaver and/or Manufacturers is concerned. Subsidiary to that question, even if one or both were negligent, was such negligence the proximate cause of any loss or damage sustained by St. Paul?
"Second, the contention that Weaver was negligent in its failure to procure a commitment for a construction mortgage loan.
*224 "Third, the contention that Weaver's failure to button up Manufacturers' offer of a construction mortgage loan commitment constituted either a breach of contract or negligence on the part of Weaver.
"Fourth, whether by virtue of some act, or failure to act, Weaver has forfeited its right to retain the $48,000 fee paid it for obtaining the permanent mortgage loan commitment.
"Fifth, whether Manufacturers' cancellation of the permanent mortgage loan commitment constituted a breach of contract on its part.
"First. A great deal of the testimony before me and many of the exhibits are related to the question of delay, vel non, in the approval of the plans and specifications. * * * [E]ven if there were negligence it was not the proximate cause of any damage which has been sustained by St. Paul.
"Second. It is contended that Weaver was negligent in its efforts to procure a commitment for a construction mortgage loan. At this point, I'm not going to consider the question of Manufacturers' offer. * * * I cannot find from the evidence that St. Paul has met the burden of showing that Weaver was negligent in its failure to procure a commitment for a construction mortgage loan. And once again, I'm not referring to Manufacturers' offer.
"Third. We come to the allegation that Weaver was negligent in its failure to button up Manufacturers' offer of a construction mortgage loan commitment. If we bear in mind the authorities which I cited at the beginning of this opinion concerning the responsibility of an agent, particularly his responsibility to make full disclosure to the principal, what Weaver did in this case becomes of major significance. *225 This is not a case of mere failure to disclose. Weaver knowingly made a misstatement of fact. On October 10, 1963, Williams told Tinley that he accepted Manufacturers' offer of a construction mortgage loan commitment and that Tinley should close it immediately. Tinley's response was that the offer was no longer open, that it had not been accepted promptly enough. And yet the evidence is clear beyond a doubt that the offer was still open on that date (and remained open, as a matter of fact, down to the very day that the Chemical construction mortgage loan was buttoned up) and that Weaver knew this. This was a clear breach of a duty which Weaver owed St. Paul, and I so hold.
"Fourth. Is Weaver liable for return of the $48,000 fee which it was paid for obtaining the permanent mortgage loan commitment? You will recall that in one or two of the authorities to which I referred in the beginning of the opinion, it was stated that for breach of duty an agent could lose a fee otherwise coming to him unless it had been earned. This poses a problem in this case because St. Paul agreed to pay Weaver $48,000 for obtaining a permanent mortgage loan commitment, and another $48,000 for obtaining a construction mortgage loan commitment. Weaver did obtain the former; so that, from that point of view, it had earned $48,000. However, when you look at all the evidence, particularly what transpired at the end, you have here a concern which, under the facts as I have found them, was acting as agent for St. Paul on the one hand and for Manufacturers on the other, and owed a great responsibility to each because of that dual relationship. Yet at the very end, it's all for Manufacturers, nothing for St. Paul. Tinley goes to the building *226 and inspects it not once but on several occasions without Williams being there. The only reasonable inference that can be drawn from that is that such inspections were to be reported to Lamon.
"Weaver hires a photographer to take pictures. Of what? If Weaver was, in good faith acting as agent for both, photographs would have been taken of what had been completed properly as well as everything that had not been completed. However, according to Defendants' own witness, he was instructed to take photographs of portions of the building which had not been completed.
"Lambert's inspection on March 8th and the 9th starts out at Weaver's office, moves from there to the building.
"The circumstance under which the letters of March 29 and March 30 were obtained from Cogswell and Neumayer Cogswell, Tinley and two representatives of Manufacturers, were at Weaver's not Williams or any representative of Williams. The following day the same thing happened. A letter was obtained from Neumayer. Williams was not present. Two representatives of Manufacturers were also Tinley. You have the Gottschalk and Grant incident, where Tinley was hopeful of peddling the whole deal to them, being fearful that Williams could not go through with it. So that you have a series of acts which show that, while they were transpiring, Weaver did not act as it should have towards one of its two principals. If Weaver had spoken up, as agent for Williams and St. Paul, and said to Lamon, here, this building is for all practical purposes complete, in a week or ten days or two weeks we can have tenants moving in and the income *227 stream will start to flow who knows but that Lamon and Manufacturers might have taken a different view of canceling the contract. However, Manufacturers did cancel the contract. So that the service which Weaver had rendered, and which under other circumstances would have earned it its fee, was lost, lost completely so far as St. Paul was concerned. It is my judgment that the conduct of Weaver, which I have just described in some detail, requires a finding against it on that count of the declaration which seeks the return of the $48,000 fee, and I so hold.
"Fifth. Finally we come to Manufacturers canceling the permanent mortgage loan commitment. Mr. Case said yesterday, and I agree with him, that the words, `It is understood' are synonymous with `It is agreed'. I read the case to which he referred, the Phoenix Iron and Steel Co. v. Wilkoff Co., 253 F. 165, 167-172. It is highly persuasive. It is my judgment that `It is understood' is just the same as `It is agreed', and that is the agreement which is set forth in the third paragraph of Plaintiff's Exhibit No. 4. Now what is that agreement? The meat of it is, `It is understood that our funds will not be required until we receive a report from your inspector certifying that construction of the building has been satisfactorily completed', and then goes on to the part concerning the certificates required. What does satisfactory mean? I have just purchased what the New York Times Book Review Section says is the best dictionary ever published, edited by The American Heritage. The second definition there of the word satisfactory is adequate. Webster's New International, Second Edition, defines satisfactory as follows: (None of the first definition *228 applies here) `giving or producing satisfaction; yielding content; as: adequate for the purpose; offering adequate treatment or fullness of detail; of a kind to meet all requirements or expectations; explaining fully; serving to allay the demands of a questioner or challenger; relieving the mind from doubt or uncertainty; as a satisfactory pension, report, marriage, provision, excuse.' The synonym is stated as adequate, satisfying, expiatory. The antonym is unsatisfactory or inadequate. So that satisfactory does not mean perfect. It does not mean absolute. It does not mean to the last nut and bolt. And that is borne out by the construction placed upon the word by Lamon. He was perfectly candid in his testimony before me. He said that roll over would not have been stopped by the fact that the commercial space on the first floor was not complete; that roll over would not have been stopped by the fact that a punch list had to be completed; that roll over would not have been stopped by a combination of those two factors. It's obvious to me from his testimony that he did not interpret satisfactory as complete one hundred percent, down to the last nut and bolt. It necessarily follows, that, if it's not absolute, final, complete without anything of any kind no matter how minute remaining to be done, it is a question of degree. And degree brings us inevitably to the question of substantial compliance.
"Substantial [Performance], in 17 Am. Jur. (2d) (Contracts), page 818, section 375, is described as follows: `Although there is some early authority in support of the rule that a party must strictly or literally perform the stipulations on his part before the other party is obligated to perform, unless the promises are *229 independent, the modern authorities support a more liberal rule. Thus, it is said that the law looks to the spirit of a contract and not the letter of it, and that the question therefore is not whether a party has literally complied with it, but whether he has substantially done so. This has long been the rule in equity. Accordingly, the courts now state that substantial, and not exact, performance accompanied by good faith is all the law requires in the case of any contract to entitle a party to recover on it.' And then skipping to the next page, `While the doctrine of substantial performance is applied most frequently in building and construction contracts, it is not so limited and may be applied in the case of any kind of contractual obligation to perform.' Now in the first quotation it is stated that `performance accompanied by good faith is all the law requires', and I don't think that anyone can say that St. Paul and Williams did not operate in good faith. They did everything possible to push for the completion of this project by the 7th of March, 1966.
"There is also a note in 76 A.L.R.(2d) 815 et seq., which admittedly is related only to construction contracts, but where cases are cited from almost every state in the Union. All the leading authorities follow this rule of substantial compliance Illinois, Massachusetts, Michigan, New Jersey, New York, Pennsylvania.
"In Maryland, it has been applied. At the time of the decision on the Motion for Summary Judgment, I referred to the case of First National Realty Corp. v. Warren-Ehret Co., Inc., 247 Md. 652, 656. There are several portions of that opinion to which I wish to refer. It's just as good law today as it was when we had the Motion for Summary Judgment. In that *230 case there was a requirement that the work be approved by the architect, like we have here. The Court had this to say: `If we were concerned with only the question of substantial performance, this case could be put to rest with the decisions of this Court * * *' citing several cases including Evergreen Amusement Corp. v. Milstead, 206 Md. 610, 621, opinion by Judge Hammond, which is to the same effect. Then it goes on to say, `However, this case presents the further question of the effect to be given the express wording of the contract set forth in paragraph numbered "Twenty-fifth" which specifically provides that the "opinion" of the contractor will control in deciding whether the subcontractor (Warren-Ehret) prosecuted the work with promptness and diligence or failed in the performance of any of the agreements contained in the contract.
"`There are a number of Maryland cases which have dealt with the question of the performance of a contract to the satisfaction of one of the parties, * * *'. That, in substance, is what we have here. The Court then proceeded to cite a number of authorities in and out of the State, including textbooks, and went on to say, in quoting from 13 Am. Jur. (2d) (Building & Construction Contracts), section 30, page 32, where the architect or the owner or somebody has the final say, `Nevertheless, even under the latter view, the owner's claim of dissatisfaction must be made in good faith, and this is ordinarily a question of fact for the jury.' The Court went on to say (page 660), `* * * whether the objective criteria (i.e. reasonable-man rule) or subjective criteria (i.e. the individual personal satisfaction of the owner) must be met, the Courts, with very few *231 exceptions, have asked the question whether the action on the part of the owner was capricious or arbitrary, and if such action was present it vitiated the quality of the reasonableness of the owner's action in the objective criteria cases and his good faith in the subjective criteria cases.'
"Referring (page 661) to a Pennsylvania decision, Hood v. Meininger, 377 Pa. 342, 347, the Court said, `* * * where the Court in rejecting the "reasonable man" test and adopting the subjective criteria test, found in favor of the owner and against the contractor stating: "* * * (1) that the dissatisfaction must be genuine and not prompted by caprice or bad faith, and (2) that if the work is not sufficiently completed for a reasonable determination whether it was or would be satisfactory, then the rejection is premature."'
"Interestingly enough, what brought the problem in First National v. Warren-Ehret to a head was a torrential downpour of four to five inches which innundated parts of the building and, as the trial judge said, snapped the patience of the contractor and triggered the dismissal of the roofer, and triggered the termination of the contract. I have no doubt that, in the present case, if there had not been the damage to the 22nd and 23rd floors from leakage, Manufacturers would not have had the gall or the nerve to cancel the contract as it did.
"Now looking at contracts in general, the law applicable to contracts and what happened in this case, was Manufacturers justified in canceling its commitment? It had agreed with Chemical Bank and New York Trust Company that `At any time on or before September 7, 1965 (or the last day to which the commitment *232 may be extended, if any extension thereof has been made as provided herein), if the conditions of the Commitment have been fulfilled, you agree to purchase and we agree to sell the Note for $4,800,000.' St. Paul was the beneficiary of that contract. Now, what are the facts and circumstances surrounding the cancellation? In the first place, I am persuaded from all of the evidence that the only stated reason for the cancellation, before the fact, was that the building was not complete. I am persuaded, as Lamon described Williams' reference to the cause of the leaks, viz., a snowstorm, that it was an afterthought to say that the certificates had not been furnished. Although it is not necessary to hold this, there is some law that if one states a reason for cancellation of a contract, they're stuck with it. They can't later on try to drag in some other reason or excuse. That's the case that Mr. Freishtat referred to in his argument yesterday, Brush-Swan Electric Light Co. of New England v. Brush Electric Co., 41 Fed. 163, at pages 168-169. In determining the answer to this question, it is necessary that the Court bear in mind that basically, the law frowns on forfeitures of any kind. That's what the effect of this cancellation was all that had been expended on that building at the date of cancellation was lost, so far as St. Paul was concerned. The evidence discloses, based upon my findings of fact, that although Weaver had not told Manufacturers about Williams poor credit experience in Virginia, had not told Manufacturers that Williams had no money of his own to invest in this project, had merely told Manufacturers that the project had to be one hundred percent financed, I have found that Weaver was Manufacturers' agent, and as such all that information was chargeable to *233 Manufacturers. We then have the February 28, 1966, visit to Baltimore by Lamon, when he learned that Williams might be on thin ice, that he was unhappy with his contractor, that he was considering suit against the contractor, that he was threatening not to pay interest if there were a roll over, until he ironed out his problems with Mullan. These were all matters which I can understand worried Lamon tremendously, but matters which he had no legal right to consider, none at all. He had no right to speculate, even though it was a reasonably good speculation, as to what would happen in the event there was a roll over. Many things might have happened which could have bailed out Williams after a roll over, which would have enabled him to preserve the status quo. But, in any event, whether they would or would not have happened, Lamon had no legal right to anticipate that they would. He had an obligation to live up to his contract, if the other party had lived up to its. I am persuaded beyond any doubt that the reason for the cancellation of this contract was, first, a calculated risk taken by Manufacturers that if it didn't accept the roll over, and if the construction mortgage were foreclosed, and if Manufacturers were sued, that it could weather the storm, either by avoiding liability completely, or if subjected to liability, by minimizing damages. They took that calculated risk, and they're stuck with the result. It is my judgment, and I so hold, that first, this building was substantially completed, and that was all that was required so far as the contract was concerned; second, that Manufacturers had more than adequate protection by an escrow of funds sufficient to complete the building, at which point the necessary certificates would have been forthcoming. So that, so far as the *234 roll over was concerned, Manufacturers had every legal and practical protection it needed, or could have arranged for such legal and practical protection and was obligated to accept the roll over; that in not accepting the roll over, it breached its obligations under the loan commitment and under the Buy-Sell Agreement of which St. Paul was the beneficiary.
"Now, thus endeth this lesson. We now have to recess for as much time as counsel want to prepare for trial of the question of damages."
PREJUDGMENT INTEREST
The trial judge allowed prejudgment interest on the deficiency decree from the date of entry of that decree down to the date of his judgment. After quoting extensively from the opinion of Judge Sobeloff (a former Chief Judge of this Court) in Robert C. Herd and Company, Inc. v. Krawill Machinery Corp., 256 F.2d 946 (4th Cir.1958), he said:
"It is my judgment that the exercise of judicial discretion requires the award of interest on the amount of the deficiency decree from the date of the entry of that decree down to the date of this judgment. I have considered whether or not interest should be awarded on any other phases of this case, and have determined that to allow interest on the other judgments nisi would constitute an abuse of judicial discretion."
St. Paul and Williams take issue with this, quoting further from Herd, asking the Court to take judicial cognizance of the fact that "delay is the best defense", stating that St. Paul "was left impoverished and destitute and faced with huge obligations, on all of which interest was and is accruing, while the Defendants were using the monies wrongfully withheld from St. Paul to their advantage, during a period of spiraling interest rates", and *235 suggesting that the trial judge abused his discretionary powers.
In Atlantic States v. Drummond & Co., 251 Md. 77, 246 A.2d 251 (1968), Judge McWilliams said for the Court:
"Ordinarily the matter of interest is left to the discretion of the jury or the court sitting without a jury. In Affiliated Distillers Brands Corp. v. R.W.L. Wine & Liquor Co., 213 Md. 509, 516, 132 A.2d 582 (1957), we said:
"However, this general rule is subject to certain exceptions that are as well established as the rule itself. Among the exceptions are cases on bonds, or on contracts, to pay money on a day certain, and cases where the money has been used. If the contractual obligation be unilateral and is to pay a liquidated sum of money at a certain time, interest is almost universally allowed from the time when its payment was due. [citing cases.]'
To the same effect see Mullan Contracting Co. v. International Business Machs. Corp., 220 Md. 248, 151 A.2d 906 (1959)." Id. at 85.
In City Pass. Ry. v. Sewell, 37 Md. 443 (1873), our predecessors said:
"It must be conceded that interest is not an inseparable and invariable incident of claims for money, or unliquidated accounts. `It is recoverable as of right, upon contracts in writing to pay money upon a day certain; as upon bills of exchange and promissory notes, or on contracts for the payment of interest, or where the money claimed has been actually used, and upon bonds, etc., but in other cases, it is a question entirely for the jury to be decided according to the equities of the transaction.' Newson v. Douglass, 7 H. & J. 417; Karthaus v. Owings, *236 2 G. & J. 430." Id. at 452 (emphasis in original).
See also A. & A. Masonry v. Polinger, 259 Md. 199, 203-204, 269 A.2d 566 (1970), which quoted both of the above cases. As Brantly on Contracts (2d ed. rev. 1922) puts it:
"Interest is recoverable as of right upon all contracts to pay money upon a day certain, as upon bills of exchange, or where goods sold and delivered are to be paid for at a given time. In other cases the allowance of interest is within the discretion of the jury." Id. at 460.
A contract to loan money can not be equated with a contract to pay money on a day certain. The trial judge was the trier of fact. His statement relative to judicial discretion was entirely in accord with the Maryland authorities.
PUNITIVE DAMAGES
The trial judge allowed punitive damages on both the first and second counts of the declaration. As previously indicated, the first count was a pure contract claim, while the second count alleged negligence by Weaver Bros. in the performance of its contract with St. Paul.[1] Judge Proctor in his award recognized the general rule that in a contract action punitive or exemplary damages are not recoverable, citing 22 Am.Jur.2d Damages § 245 (1965) and 5 Corbin on Contracts § 1077 (1964). A comment to the same effect is to be found in Restatement of Contracts § 342 (1932). The award on the first count was made on the strength of Brown v. Coates, 102 App. D.C. 300, 253 F.2d 36, 67 A.L.R. 2d 943 (1958). No Maryland authority was cited to support the allowance of punitive damages in this type of case.
The Maryland rule relative to punitive damages was most recently summarized for the Court by Chief Judge *237 Hammond in Damazo v. Wahby, 259 Md. 627, 270 A.2d 814 (1970), where he said:
"The Maryland rule is that malice in the sense of deliberate and improper violation of a known right, that is, absence of legal justification, will support an action and permit recovery of compensatory damages for deprivation of known contractual rights but that actual malice must be shown to support punitive damages. Knickerbocker Co. v. Gardiner Co., 107 Md. 556; Stannard v. McCool, 198 Md. 609; Heinze v. Murphy, 180 Md. 423. There is no evidence here to show more than that Damazo wanted to benefit himself by receiving the gross purchase price without diminution for commissions and the various purchasers wanted to pay a lesser purchase price that the avoidance of the earned commissions would permit." Id. at 638-39.
In Damazo a broker claimed commissions on the sale of apartment properties and damages for tortious interference with and conspiracy by the sellers and buyers to deprive him of contract rights. The trial court found the broker was the procuring cause of the sale, that the two parties tried to bypass the broker, and awarded the commissions earned, nominal compensatory damages, and punitive damages. This Court affirmed on liability but reversed relative to punitive damages.
The classic case in Maryland on punitive damages involving tortious interference with a contract is Knickerbocker Co. v. Gardiner Co., 107 Md. 556, 69 A. 405 (1908). There a dairy company had a contract with an ice company by which the ice company was to supply the dairy company with ice during a certain season at a designated price. The ice company procured large quantities of ice from Knickerbocker, a company manufacturing ice. Knickerbocker, knowing of the existence of the contract between the dairy company and the other ice company and intending to obtain a benefit for itself, notified *238 the other ice company that if it sold ice to the dairy company Knickerbocker would refuse to supply any ice to it. Consequently, the ice company broke its contract with the dairy company and that company was compelled to purchase ice from Knickerbocker at a price higher than that stipulated for in its contract with its original supplier. Punitive damages were claimed. Chief Judge Boyd said for our predecessors:
"But the difficulty is that there is no evidence of malice in this case, unless it be such as some of the cases speak of that the intention to benefit the defendant, or to injure the plaintiff, is to be treated as evidence of malice. But we have found no case in which exemplary damages were allowed for malice implied from such facts. The facts stated in the first prayer are in our judgment sufficient to entitle the plaintiff to recover, but we do not think they authorize recovery of exemplary damages, and there was not sufficient evidence outside of those facts to authorize the submission of this prayer. We do not mean to say there may not be such damages in cases of this character, for if, for example, there was evidence tending to show that the defendant had caused the contract to be broken for the sole purpose, and with the deliberate intention of wrongfully injuring the plaintiff, exemplary damages might be recovered, but when the object was merely to benefit itself, although the plaintiff would be thereby injured, there would be no more reason for allowing such damages than there would be in a suit by one party to a contract against the other for breach of it." Id. at 569-70.
Cf. Rinaldi v. Tana, 252 Md. 544, 250 A.2d 533 (1969), as commented upon in Damazo, 259 Md. at 639.
It is true, as St. Paul urges, that there has been discussion in the Maryland cases of wanton conduct as permitting *239 the recovery of punitive damages. These cases include Moore v. Schultz, 31 Md. 418 (1869); Sloan v. Edwards, 61 Md. 89 (1883); Philadelphia, W. & B.R.R. v. Hoeflich, 62 Md. 300 (1884); Baltimore Transit Co. v. Faulkner, 179 Md. 598, 20 A.2d 485 (1941); Heinze v. Murphy, 180 Md. 423, 24 A.2d 917 (1942); Dennis v. Baltimore Transit Co., 189 Md. 610, 56 A.2d 813 (1948); and Vancherie v. Siperly, 243 Md. 366, 221 A.2d 356 (1966). Comfort is derived from such comments as that of Judge Delaplaine for the Court in Baltimore Transit Co. v. Faulkner, where at page 602 "wanton" was defined as: "Characterized by extreme recklessness and utter disregard for the rights of others." None of these cases arose from contract actions. We interpret the language of those cases which speak of wanton conduct or wantonness as being a basis for awarding punitive damages as referring to such conduct as would carry an implication of malice or as conduct from which one would draw a necessary inference of malice, conduct from which one might determine the existence of actual malice. There is no evidence of malice in this case. The sum total of the conduct of Weaver Bros. in this case is but little different from the conduct in Knickerbocker where Chief Judge Boyd said, "[W]hen the object was merely to benefit itself, although the plaintiff would be thereby injured, there would be no more reason for allowing such damages than there would be in a suit by one party to a contract against the other for breach of it." Accordingly, upon the basis of the prior Maryland holdings, we conclude that the conduct of Weaver Bros. was not such as to warrant punitive damages.
DAMAGES MANUFACTURERS LOSS OF BUILDING
St. Paul upon the strength of its conception of Hadley v. Baxendale, 9 Exch. 341, 5 Eng. Rul. Cas. 502 (1854), contends most strongly that it is entitled to recover $7,920,000 for its loss of the property and $2,465,000 for its loss of the business, the latter figure being the difference *240 between its valuation of $7,265,000 for the business and the mortgage of $4,800,000. It says that at the time of the contracting Manufacturers had valued the building and land at $7,920,000 and valued the use of the building on an income basis of $7,265,000. It is correct in those statements.
The Hadley v. Baxendale rule is succinctly summarized in Brantly on Contracts (2d ed rev. 1922) in the following language:
"The damages which a plaintiff is entitled to recover for a breach of contract `should be such as may fairly and reasonably be considered as either arising naturally, i.e., according to the usual course of things, from such breach of contract itself, or such as may reasonably be supposed to have been in the contemplation of both parties at the time they made the contract as the probable result of a breach of it.'" Id. at 457.
* * *
"When a contract has been made under special circumstances and these were communicated to the defendant then, in case of a breach, the plaintiff is entitled to recover as damages the amount of the injury which would ordinarily follow from a breach. But whether such special damages may reasonably be supposed to have been in the contemplation of both parties depends upon how much of the real situation was so disclosed.
"The special circumstances which may render a breach more than ordinarily injurious to the one party must be known by the other party whom it is sought to charge with the loss, at the time the contract was made and not afterwards." Id. at 459.
This was a contract to lend money. Restatement of Contracts § 343 (1932) states upon this subject:
*241 "Damages for breach of a contract to lend money are measured by the cost of obtaining the use of money during the agreed period of credit, less interest at the rate provided in the contract, plus compensation for other unavoidable harm that the defendant had reason to foresee when the contract was made."
5 Corbin on Contracts § 1078 (1964) states the rule:
"The better rule and the one generally followed is that for breach of a contract to lend money the borrower can get judgment for damages measured by his resulting injury so far as the defendant had reason to foresee such injury when the contract was made. This is the rule applicable to contracts in general, and a lender of money should be subject to it like other contractors. Doubtless, there are many cases in which he has no reason to foresee that the borrower will be unable to secure money elsewhere or that there will be special injuries; but if he has such reason he must make good the loss. There are many well considered cases that have applied this rule." Id. at 447-448.
11 Williston on Contracts § 1411 (3d ed. Jaeger 1968) states:
"It will frequently happen that the borrower is unable to get money elsewhere, and, if the defendant had notice of the purpose for which the money was desired, he will be liable for damages caused by the plaintiff's inability to carry out his purpose, if the performance of the promise would have enabled him to do so." Id. at 614.
In F.B. Collins Inv. Co. v. Sallas, 260 S.W. 261 (Tex. Civ. App. 1924), the loss to which a landowner was entitled in a situation such as this was summarized:
"It is the landowner's interest in the land, represented *242 by the value of his equity, that he would be entitled to as compensation. For legally the value of the equity is his only `actual loss.' The value of the equity is not measured, as a matter of law, by the amount of the purchase price paid in cash for the land in the first instance. The value of this equity must appear and be established at the time the title is lost. For the value of the equity at the time the title is lost may or may not be the same as at the time of the original purchase by the landowner. The market value of land rises and decreases, according to conditions and circumstances. If the market value of land goes below the original purchase price paid, the value of the equity would consequently be less and, on the other hand, the value of the equity would be greater if the market value of the land should be greater than the original purchase price paid. In either event the landowner could recover the value of his equity, and no more." Id. at 265.
See also Avalon Const. Corporation v. Kirch Holding Co., 256 N.Y. 137, 175 N.E. 651 (1931).
It does not appear from this record that St. Paul was able to go into the marketplace and obtain a loan elsewhere in the time available to it. The foreclosure sale by Chemical took place on June 1. Fruitless efforts were made by St. Paul to obtain funds elsewhere. As Judge Proctor put it:
"[T]he next to the last paragraph [of the permanent mortgage loan commitment] clearly contemplated an antecedent construction mortgage loan and the extension of a Buy-Sell Agreement. This is standard procedure in a transaction such as this. In the first instance the funds are obtained from the construction mortgage lender. The permanent mortgage lender agrees to buy the promissory note, secured by the assignment *243 of a Deed of Trust, from the construction mortgage lender upon the completion of the project. It is contemplated that the borrower will use the funds to build the proposed project to pay direct and indirect construction costs. In such a transaction the parties, of course, anticipate that everything will proceed according to hoyle that there will be no breach by either party. On the other hand, the would be permanent mortgage lender must contemplate that if, at the last minute, it cancels its commitment such action would be disastrous to the borrower; that in such event obtaining a new permanent mortgage loan would be well-nigh impossible, for the reason that whatever brought about the cancellation would in all likelihood prevent another lender from entering the fray; that one doesn't find someone willing and able to lend $4,800,000 at a moment's notice; that, under such circumstances, foreclosure under the construction mortgage would not only be a probability, it would be almost inevitable."
Accordingly, St. Paul under the circumstances here was entitled to more than nominal damages.
The trial judge here determined that at the time of the loss St. Paul had no equity in the property. In other words he determined the value of the complete building to be not greater than the mortgage. There was ample evidence to sustain this conclusion upon his part. Under Maryland Rule 886, this finding would not be disturbed by us if this were one of the issues specifically argued on appeal. The position of St. Paul is that because a tentative value of the building was assigned by Manufacturers in making its loan that this becomes the criteria for determining damages.
St. Paul misunderstands the application of the rule. It would have been the loss of the building which the parties would have foreseen at the time of entering into *244 the contract. It does not follow that the value of the building and, therefore, the amount of the loss is established by the parties at that time. Judge Proctor was entirely correct in determining that the loss was the equity, if any, in the building. There was no equity. Therefore, he was correct in allowing nothing for loss of the building.
St. Paul would also place a valuation on the business and claim the loss of that. On the issue of lost profits, which was but another way of claiming the loss of the value of the business, the trial judge said:
"(1) Alleged Loss of Profits.
"In Lawson v. Price, 45 Md. 123, 139, appellee brought an action against appellant for obstructing the mill race leading to his distillery. It was held that lost profits could be recovered as an element of damage because they could be ascertained with reasonable certainty. In doing so the Court cited, with approval, Sedgewick on Damages, 89, as follows:
`It may now be assumed to be the general rule that in actions of tort, where the amount of profits of which the injured party is deprived, as a legitimate result of the trespass, can be shown with reasonable certainty, such profits constitute to that extent a safe measure of damages. In these cases, the rule adopted with reference to certain breaches of contract which makes the offending party liable for the loss of profits, so far only as he foresaw, or should have foreseen that particular consequence of his act, does not apply. He who commits a trespass must be held to contemplate all the damages which may legitimately follow from his illegal act, whether he might have foreseen it or not; and so far as it is plainly traceable, he should make compensation for it. To this extent, the recovery of a *245 sum equal to the profits lost, while fairly within the principle of compensation, is also within the limits which exclude remote consequences, from the scale in which the wrong is weighed.'
"In Winslow Elevator Co. v. Hoffman, 107 Md. 621, 640-1, the owner of a building (recently constructed) had brought suit against the elevator contractor for, among other things, loss of rents from the building allegedly attributable to the defective elevator. The Court held as follows:
`* * * In Wolcott v. Mount, 36 N.J.L. 269, the Court said: "It must not be supposed that, under the principle of Hadley v. Baxendale, mere speculative profits, such as might be conjectured to have been the probable results of an adventure which was defeated by the breach of the contract sued on, the gains from which are entirely conjectural, with respect to which no means exist of ascertaining, even approximately, the probable results, can, under any circumstances, be brought within the range of damages recoverable. The cardinal principle in relation to the damages to be compensated for on the breach of a contract, that the plaintiff must establish the quantum of his loss by evidence from which the jury will be able to estimate the extent of his injury, will exclude all such elements of injury as incapable of being ascertained by the usual rules of evidence to a reasonable certainty."
`When the claim of the plaintiffs for the recovery of lost rent is considered in the light of these rules it certainly must be denied. What rent they might have received from the building was not only dependent upon collateral engagements with persons who might rent the rooms, but upon many other considerations, *246 such as location, desirability of rooms, the amount of rent asked, light and air, competition of other buildings, the number of tenants, the ability of the owners to keep the rooms occupied, and the general character of the management of the building. There are so many elements of uncertainty which enter into and affect the question that any estimate of loss could be little short of a guess. The special damages sued for in this case are so uncertain and incapable of reasonable ascertainment that they cannot be recovered.'
"In Evergreen Amusement Corp. v. Milstead, 206 Md. 610, 618, the operator of a new drive-in movie theatre, in a suit by a contractor, counterclaimed for alleged loss of profits attributable to the delay in the work. The Court of Appeals held that because the venture was new profits were too uncertain to form a basis for recovery, saying:
`* * * on the other hand, loss of profits from a business which has not gone into operation may not be recovered because they are merely speculative and incapable of being ascertained with the requisite degree of certainty. Restatement, Contracts, Sec. 331, states the law to be that damages are recoverable for profits prevented by breach of contract "only to the extent that the evidence affords a sufficient basis for estimating their amount in money with reasonable certainty" * * *.'
See also: M & R. Builders v. Michael, 215 Md. 340, 352, where the Court of Appeals cited a number of cases in which plaintiffs were not allowed to recover `collateral, estimated and probable profits claimed to have been lost.'; Abbott *247 v. Gatch, 13 Md. 314, 332-4; Lanahan v. Heaver, 79 Md. 413, 418-23.
"Reference to the hypothetical question put to the witness Hoffman by Plaintiff's attorney (objection to which, incidentally, should have been sustained by the Court) is sufficient to demonstrate that the alleged loss of profits from this venture were completely speculative. Realization of profits from a new untried venture such as this depends on so many uncertainties that they cannot form a proper element of damages in a contract action, and I so hold."
We adopt that opinion.
COMPUTATION OF DAMAGES
In computing damages we start with the comment of this Court in Casualty Ins. Co. v. Messenger, 181 Md. 295, 29 A.2d 653 (1943), involving application of the Hadley v. Baxendale rule. There a liability insurance policy was issued covering operations of a tractor and trailer within a radius of 500 miles of Salisbury. An accident occurred in South Carolina which the company held not to be within a radius of 500 miles of Salisbury. Judgment was obtained against the insured and his tractor and trailer were levied upon and sold by the sheriff at auction in South Carolina. The insured brought suit in Maryland for the loss of his tractor and trailer. He established the point of accident to have been within a radius of 500 miles of Salisbury. In sustaining the action of the trial court and jury in awarding a verdict to the insured for the loss of his vehicles, Judge Delaplaine said for the Court:
"The court should endeavor to place the injured person, as far as possible by monetary award, in the position in which he would have been, if the contract had been properly performed. Chamberlain v. Baltimore & Ohio R. Co., 66 Md. 518, 529, [8] A. 267; United States v. Behan, *248 110 U.S. 338, 4 S. Ct. 81, 28 L. Ed. 168." Id. at 301-02.
(i) First Count
The trial judge allowed $5.00 compensatory damages and $50,000 punitive damages. We have already indicated that he erred in allowing the punitive damages. Under Rule 886 "the judgment of the lower court will not be set aside on the evidence unless clearly erroneous and due regard will be given to the opportunity of the lower court to judge the credibility of the witnesses." Accordingly, the $5.00 compensatory damages on that count must stand.
(ii) Second Count
The trial judge allowed $100,000 punitive damages and $185,167.40 in compensatory damages, the latter figure being made up of the $175,167.40 which St. Paul was entitled to draw from Chemical but which had not been paid to St. Paul and a total of $10,000 paid to Monen and another in connection with a loan from Merchants.
There is a strong contention on the part of Weaver Bros. that the item of $175,167.40 should not stand. It said:
"[I]t represents no true loss on the part of St. Paul. The Court's award completely overlooks the fact that the funds in question were part of a loan from Chemical, that would ultimately have to be repaid. The final advance would satisfy a debt owing [Mullan] Contracting, and create a debt larger pro tanto with the construction lender. The `damage' being fully offset by a `credit' in another column of the hypothetical ledger, St. Paul has lost nothing. The Court's award is founded on an illusion and clearly should not stand." (emphasis theirs)
The "building loan" agreement between St. Paul and Chemical provided:
"16. Trust Fund. Borrower covenants that *249 Borrower will receive the advances to be made hereunder and to be secured by the Mortgage, and will hold the right to receive such advances as a trust fund to be applied first for the purpose of paying the cost of improvement and will apply the same first to the payment of the cost of the Improvement before using any part of the total of the same for any other purpose, except for payments specifically authorized in Schedule B."
The statement by Weaver Bros. relative to bookkeeping is correct, as far as it goes. One must look to the end of the line, however. Under the contract with Chemical the $175,167.40 item would have been payable to Mullan Contracting. As this case stands, Mullan Contracting as a use plaintiff is to be paid substantially in excess of that amount from any judgments recovered in this proceeding. Therefore, the indebtedness of St. Paul at the conclusion of this litigation will be $175,167.40 greater if this amount is not allowed as an item of damage against Weaver Bros. than if it is so allowed.
The trial judge's basis for charging this item to Weaver Bros. was summed up in his comment:
"From my findings set forth immediately above, it is my conclusion that had Manufacturers been the construction mortgage lender as well as the permanent mortgage lender, the building would have been `completed', and that such completion would have been certified by Cogswell and Neumayer, and that, therefore, there would have been no retainer. In any event, I find that Weaver's tortious conduct deprived Plaintiff of an opportunity to complete the building to the satisfaction of Manufacturers, who would otherwise have been the construction lender, and to draw down the full amount of the construction mortgage loan."
The trial judge correctly concluded that the items totaling *250 $10,000 paid by St. Paul as finders' fees to procure the Merchants loan was a proper item of damage allowable against Weaver Bros.
Since there was error in allowing punitive damages, the damages allowable under this count are $185,167.40 compensatory damages.
(iii) Third Count
Under this count the trial judge allowed as consequential damages $1,552,783.20, which is the amount of the deficiency decree obtained by Chemical in the amount of $1,297,952 plus accrued interest. On that subject he said:
"B. Alleged Consequential Damages.
"(a) Chemical's deficiency decree. The deficiency decree held by Chemical is part and parcel of the foreclosure proceedings which would not have been instituted had Manufacturers fulfilled its obligation under its letter of commitment and under the Buy-Sell Agreement Plaintiff would not be saddled with this debt which, since February 23, 1967, has been bearing interest at 6% per annum. As was said in Pennsylvania, etc., Casualty Insurance Co. v. Messenger (supra), `The Court should endeavor to place the injured person, so far as possible, by monetary award, in the position he would have been if the contract had been properly performed.' See also: Wartenbe v. Car-Anth. Mfg. Co., 362 S.W. (2) (Mo.) 54, 56. To do that in this case it is necessary that I require Manufacturers to pay to Plaintiff such a sum as will enable it to liquidate its obligation under the deficiency decree."
We adopt that opinion.
On the remaining items the trial judge said:
"(b) Finder's Fee paid Manufacturers for extension, Manufacturers was paid a finder's fee of $24,000 for extending the expiry date *251 from September 7, 1965, to March 7, 1966. There is no causal relationship of any kind between Manufacturers' breach and the payment of this fee. It was not in any way a consequence of that breach, and for that reason this claim is disallowed.
"(c) Weaver's Finder's Fee of $9,600. In order that Plaintiff might fulfill its obligations to the landowners under the land options, so that the land would not be lost, Weaver agreed to lend and Plaintiff agreed to borrow the sum of $480,000. This transaction took place on September 18, 1963. For placing the mortgage Weaver charged a finder's fee of $9,600. There is no causal relationship whatsoever between Manufacturers' breach and his expense, and it is, therefore, disallowed as an element of damage under this contract.
"(d) Interest on the $480,000 mortgage. When the Chemical construction mortgage loan was closed in New York on May 1, 1964, the mortgage in the amount of $480,000 was paid off, as was accrued interest in the amount of $18,160. This is disallowed as an element of damage, for the reasons just stated.
"(e) Merchants' Finder's Fee. As I have already stated, the $72,000 fee paid Merchants for the construction mortgage loan was exactly what Plaintiff would have had to pay Weaver and Manufacturers had the latter's offer been accepted. There is no evidence to support a claim for $2,500 attorneys' fee. The $10,000 paid Monen and another has already been allowed as an element of damage in the claim against Weaver. None of these expenses bear any causal relationship whatsoever to Manufacturers' breach, and for that reason these claims are disallowed.
"(f) Dr. Merrill's $50,000. When the land for the building site was purchased, Plaintiff agreed *252 to pay Dr. Merrill the sum of $50,000 as `moving costs' over and above the purchase price of his land. Once again, there is no causal relationship whatsoever between this claim and Manufacturers' breach, and, therefore, this claim is disallowed."
Except as to Dr. Merrill, we disagree.
The attorney's fee mentioned actually was $3,500. This was an oral opinion and the record is complex. Therefore, it is not surprising that there might be an error of $1,000 in the quotation of figures. The attorney's fee is fully set forth on the settlement sheet filed as an exhibit in this proceeding.
We note that Weaver Bros. said in submitting the original proposal to Manufacturers:
"CONSTRUCTION COSTS
"The attached Marshall and Stevens appraisal gives us a reproduction cost new of the subject building of $7,245,000. This appraisal service has proven extremely reliable in estimating construction costs on garden-type apartments as it takes into account all the myriad costs incidental to construction which become a part of final price. Some of these costs are as follows:
1. Contract extras can add up to 10% of base contract. 2. Architect's fees usually approximately 3% of base contract on a building of this size. 3. Engineering fees. 4. Financing charges. 5. Interest on construction loan. 6. Settlement charges. 7. Off-site utility charges. 8. Building permits. 9. Leasing and advertising expenses."
It has been determined that St. Paul had no equity in the building and that, therefore, the value of the building *253 could not be recovered. In that case it then follows that if St. Paul is to be placed "so far as possible, by monetary award, in the position [it] would have been if the contract had been properly performed", it must be permitted to recover those items which it has been obliged to pay out or for which it is liable that are connected with the erection of the building and which would in the normal course of circumstances have been paid from the loan from Manufacturers. The Manufacturers' loan was to be approximately $1,300,000 more than the contractor's construction cost. Had there been no breach, St. Paul not only would have had this fund from which to make payment, but it anticipated having a business in being to generate revenue for repayment of the loan which would have paid these items. Thus, portions of the construction costs paid by St. Paul or for which it still remains liable are part and parcel of St. Paul's loss directly chargeable to the breach by Manufacturers.
The trial judge correctly excluded the claim for the moving costs to be paid Dr. Merrill since that was not a part of construction. However, within the contemplation of the parties under the Hadley v. Baxendale rule would be the $24,000 extension fee paid Manufacturers, the $9,600 fee paid Weaver Bros. on its loan of $480,000, the $3,500 attorney fee previously mentioned, the balance due the architect said to be $108,000, the interest paid on the $480,000 mortgage, and the balance due Mullan Contracting and Real Estate Management Co., Inc., under the construction contract, said to have amounted to $270,627.41. Apparently, from the record this item is drawing interest from April 2, 1968. It would appear proper to allow interest from that date. In making computations allowance must be made for the item of $175,167.40 discussed under the second count which should be credited on the Mullan claim.
The original charge of Weaver Bros. was to be $48,000.00 for obtaining the permanent mortgage loan and $48,000.00 for obtaining the construction mortgage loan, a total of $96,000.00. When the contract with Weaver *254 Bros. was rewritten in December of 1963 to eliminate the exclusive agreement with Weaver Bros. for obtention of the construction loan so as to permit St. Paul to obtain the construction loan through Merchants, Weaver Bros. required that its compensation remain at $96,000.00, $48,000.00 which had already been paid and $48,000.00 to be paid later. St. Paul then agreed to pay, and did pay, Merchants $48,000.00 for the construction loan and was also obliged to pay Chemical a $24,000.00 fee, the same amount which Lamon of Manufacturers advised Tinley of Weaver in August, 1963, it would require as a fee for making a construction loan. It is the sum of these items to which Judge Proctor referred as "the $72,000 fee paid Merchants for the construction mortgage loan". This $72,000 also is a part of the damage sustained by St. Paul which should be allowed against Manufacturers.
The complexity of this case leads us to believe the wisest course of action would be to remand this case for entry of judgment on these items rather than attempting to compute them ourselves.
(iv) Fourth Count
There was no appeal relative to this count which was an action against Manufacturers in tort.
(v) Fifth Count
On this item the trial judge said:
"This is a contract action against Weaver to recover the $48,000 paid by Plaintiff to Weaver on May 11, 1964, as a finder's fee for obtaining the permanent mortgage loan commitment from Manufacturers. I have already found against Weaver under this count. Accordingly, I will enter judgment under this count against Weaver Bros., Inc., in the amount of $48,000."
We adopt that opinion.
(vi) Sixth Count
This was the tort action against Weaver and Manufacturers. *255 As the trial judge said, nothing new was added by this count and, therefore, he entered judgment under that count in favor of the defendants. There was no appeal on this item.
Judgment as to punitive damages reversed; judgments affirmed as to liability and case remanded for entry of judgments in accordance with this opinion, appellees Weaver Bros. Inc. of Maryland and The Manufacturers Life Insurance Company to pay the costs.
NOTES
[1] The precise "short" title of this Act, as provided in § 212, is the "Uniform Absence as Evidence of Death and Absentees' Property Act," which is reproduced with minor variations in 9 Uniform Laws Annotated, 5-12, §§ 1-16 (1957). This law was first approved by the National Conference of Commissioners on Uniform State Laws and the American Bar Association in 1939, but it has only been adopted in Maryland, Tennessee and Wisconsin. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1531479/ | 269 S.W.2d 343 (1954)
PATRIZI
v.
McANINCH.
No. A-4305.
Supreme Court of Texas.
June 16, 1954.
Rehearing Denied July 21, 1954.
*344 Vinson, Elkins, Weems & Searls and Ben H. Rice, III, Houston, Graves, Dougherty & Greenhill and Joe R. Greenhill, Austin, for petitioner.
Hart, Brown & Sparks, Powell, Wirtz, Rauhut & McGinnis and William A. Brown, Austin, for respondent.
*345 CALVERT, Justice.
Respondent filed suit in a district court of Travis County against petitioner to recover certain royalty payments due under a written contract theretofore entered into whereby the respondent sold to petitioner a certain patented machine for making frozen custard. Petitioner answered, and defended upon the ground, among others, that the contract between the parties was illegal and void because it was in violation of the antitrust statutes of Texas. Art. 7426 et seq., Vernon's Annotated Civil Statutes of Texas. Trial was to the court without a jury, and at the conclusion of the trial, judgment was entered by the court in favor of respondent and against the petitioner. On appeal the Court of Civil Appeals entered judgment affirming the trial court's judgment. 258 S.W.2d 949.
Petitioner assigns error to the holding of the Court of Civil Appeals that petitioner must pay the royalties sued for, on the ground that a substantial portion of the contract is in violation of the antitrust laws; and that the contract is not divisible so as to permit separation of the legal from the illegal provisions. The contract is set out in its entirety, less the signature paragraph, in the opinion of the Court of Civil Appeals. McAninch is designated therein as First Party and Patrizi as Second Party.
The paragraphs pertinent to a decision of this cause are copied below. The contract is on a printed form with blank spaces underlined by dotted lines. These blank spaces are filled in by typewriting and the typewritten words and figures appear over the dotted lines exactly as copied.
"1. That First Party hereby sells and assigns to Second Party Zest-O-Mat machine bearing serial number.......1003........
"2. That First Party agrees for a period of ten (8) years from date, not to sell or lease to any person, firm or corporation other than Second Party, or cause to be used in any other manner whatsoever, any like Zest-O-Mat machine in the above described territory.
"3. That First Party agrees that during the term of this agreement, Second Party shall use the name `Zesto' in the advertising and sale of products manufactured in the above mentioned machine, and that Second Party will use only uniformly high quality ingredients, according to the formula approved by the Taylor Freezer Corporation. Second Party further agrees to use the name `Zesto' in the advertising and sale of such products during the term of this agreement.
"4. That in consideration of such sale, Second Party agrees to pay to First Party the sum of ......$3,000.00.....Said sum to be paid as follows:.....cash with order.....with order, and.....upon delivery; in addition thereto, Second Party agrees to pay to First Party a royalty of $20c per gallon of mix used in said Zest-O-Mat machine during the 8 year period from ......1st July, 1948.......to......1st July, 1956......* * * Second Party further agrees that in no event shall the royalty paid be less than $500.00 per year, per machine, for each year following its purchase, for the ten year period and agrees that if the monthly royalty payments for any such year do not total $500.00 or more on each machine, Second Party will, on or before the tenth day of the month immediately following any such year, pay to First Party whatever sum might be necessary to constitute the $500.00 annual minimum royalty for each machine.
"5. That Second Party agrees for a period of ten (8) years from date not to sell, lend, lease or assign said Zest-O-Mat machine bearing serial number.......1003.......to anyone without the written permission or consent of the Taylor Freezer Corporation. Second Party further agrees for a period of ten (8) years from date not *346 to use, operate or cause to be operated in any manner whatsoever said Zest-O-Mat machine bearing serial number......1003....., at any location other than .....870-South 11th Street in the city of Beaumont, Texas........without the written consent of the Taylor Freezer Corporation.
"12. Both parties hereby expressly agree and contract that it is the intention of neither party to violate public policy, statutory or common laws of the State of Texas, including the Texas Anti-Trust Statute. That if any sentence, paragraph, clause or combination of the same is in violation of the Anti-Trust law or any other Texas, or Federal law, such paragraphs, clauses or sentences, or combination of the same shall be inoperative and the remainder of this contract shall remain binding upon the parties hereto; that in any event, these paragraphs concerning the cash consideration and royalty shall be binding upon the parties, and Second Party shall not be relieved of the obligation to pay for the machine and subsequent royalties as herein provided. It is the intention of all parties hereto to make this contract binding only to the extent that it may be lawfully done under the existing laws of the State of Texas and the United States.
"14. This agreement shall be binding upon and inure to the benefit of the successors and assigns of the First Parry and the heirs, administrators, executors and assigns of the Second Party."
The territory in which First Party agreed not to sell or lease any like Zest-O-Mat machine to any other person, firm or corporation, and outside of which Second Party agreed not to use or operate the machine, was described in the preamble of the contract as "That area within the present City Limits of Beaumont, Texas that is within a one-mile radius of the location known as 870-South 11th, St." The Zest-O-Mat is a patented machine the use of which the patentee could control by lease and for the use of which he could exact royalties, but the parties are agreed that the contract here was a contract of sale and not of lease and that by the sale the patentee's monopoly was exhausted and he no longer had a right to restrict the resale thereof in violation of our antitrust laws.
We hold the machine to be an article of merchandise and that the restrictive provisions of paragraphs 2 and 5 are violative of our antitrust laws which prohibit agreements which "may tend to create, or carry out restrictions in trade or commerce" and "preclude a free and unrestricted competition among themselves or others in the sale or transportation of any such article or commodity". Article 7426, Vernon's Annotated Civil Statutes; National Automatic Machine Co. v. Smith, Tex.Civ. App., 32 S.W.2d 678, no writ history; Burpee Can Sealer Co. v. Henry McDonnell Co., Tex.Civ.App., 75 S.W.2d 458, writ refused; Rogers v. Westinghouse Electric Supply Co., Tex.Civ.App., 116 S.W.2d 886, writ refused; Fuqua v. Pabst Brewing Co., 90 Tex. 298, 38 S.W. 29, 750, 35 L.R.A. 241; 6 Tex.Law Rev. 210. We do not interpret Coca-Cola Co. v. State, Tex.Civ.App., 225 S.W. 791, as holding to the contrary.
Respondent relies upon the provisions of paragraph 12 of the contract, quoted above, to authorize recovery of the royalties in spite of the illegal provisions. The substance of paragraph 12 is that even if illegal provisions are found in the contract and are stricken therefrom, the royalties provided for in the contract shall yet be payable just as though the illegal provisions had never been in it. In support of their position that the illegal provisions of the contract may be stricken and the remaining provisions thereof preserved, respondent cites Nevels v. Harris, 129 Tex. 190, 102 S.W.2d 1046, 109 A.L.R. 1464, and Ford Motor Co. v. State, 142 Tex. 5, 175 S.W.2d 230.
In Nevels v. Harris, suit on a note and to foreclose a deed of trust given to secure payment thereof was defended on the ground that the note provided for usurious *347 interest. Under one contingency the note, considered alone, could have been construed as usurious, but the court said [129 Tex. 190, 102 S.W.2d 1048] that it "must treat the application [for the loan], principal note, interest notes, and deed of trust as constituting one contract", and finding in the deed of trust the stipulation "`That the intention of the parties being to conform strictly to the Usury Laws now in force, any of said contracts for interest shall be held to be subject to reduction to the amount allowed under said Usury Laws as now or hereafter construed by the courts having jurisdiction'", held that the contract of the parties, considered as a whole, was not usurious. The court then proceeded in language we regard as particularly applicable to the facts of this case, and said: "Of course we do not mean to hold that a person may exact from a borrower a contract that is usurious under its terms, and then relieve himself of the pains and penalties visited by law upon such an act by merely writing into the contract a disclaimer of any intention to do that which under his contract he has plainly done."
Ford Motor Co. v. State was a suit by the State of Texas to recover statutory penalties and to enjoin violations of the state's antitrust laws. The question before this court was whether the state's petition stated a cause of action. The court held that while none of the provisions of Ford's contract with its dealers violated the antitrust laws, the petition did charge a course of conduct sufficient to raise a jury question of a violation of such laws. One of the provisions of the contract was an agreement by the dealer not to sell Ford's products at less than the retail prices established by Ford "`in so far as it is lawful for the dealer to so agree * * *'". [142 Tex. 5, 175 S.W.2d 233.] It was held that this did not constitute an agreement to sell at fixed prices in violation of the antitrust laws.
It will be noted that in each of the cited cases it was held that the language of the contract did not permit any illegality to enter the contract. Not so here. On the very face of the instant contract the illegal provisions of paragraph 2 and 5 were a vital part thereof. It is true that paragraph 12 sought to make them inoperative if they were held to be illegal, but even then the same paragraph sought to retain any benefits that might accrue to first party if it were held that the royalties were, in part, consideration for the illegal provisions, a matter to which we will next devote our attention. If a party may thus eliminate parts of an agreement which may well have been the vital and inducing cause for its execution by the other party, the while retaining the right to enforce the consideration for the eliminated parts, the antitrust laws will become a hollow symbol of a dead era.
But respondent argues that the royalties are properly severable from the illegal provisions of the contract because they are only a part of the purchase price of the machine. The plain language of the contract contradicts him.
By paragraph 1 respondent sold the machine to petitioner, and the opening sentence of paragraph 4 states in language plain and clear "That in consideration of such sale, Second Party agrees to pay to First Party the sum of $3000.00." There the sentence ends; it is ended with a period. That is all of the consideration for the sale of the machine. It does not say that in consideration of such sale second party agrees to pay $3000 and certain royalties; it just says that second party agrees to pay $3000 for the machine. The printed form is prepared so that the parties may then fill in their agreement as to how "said sum" (the consideration for the sale of the machine) is to be paid, whether all in cash with the order, or partly in cash with the order and partly upon delivery. Here, the contract was filled in to show that all of the consideration for the machine was paid in cash with the order. There then follows the provision that "in addition" Second Party agrees to pay First Party a 20¢ per gallon "royalty" for a period of eight years, with a minimum payment of $500.00 for each of the years. "In addition" to what? The contract says the royalty payment is "in addition" to the "consideration of such *348 sale" which is recited to be "$3000.00 cash with order." From the very language of these two sentences it would seem clear that the parties expressed the intention that the $3000 cash payment should be the entire consideration for the sale of the machine. That such was their intention is clearly expressed again in the very plain language of paragraph 12 wherein they provided "that in any event, these paragraphs concerning the cash consideration and royalty shall be binding upon the parties, and Second Party shall not be relieved of the obligation to pay for the machine and subsequent royalties as herein provided."
In our view there is no need for the use of rules of construction to arrive at the intention of the parties, but if we were to adopt the view of respondent that the royalties were apart of the consideration for the sale of the machine it would lead to the rather unusual result that the same machine would be sold to one party, selling but little of the product and therefore requiring the use of but little mix, for the minimum price of $7000, whereas to one selling a large amount of the product and therefore requiring the use of, let us say, 5000 gallons of mix per year, the sale price of the machine would be $11,000.
If the machine itself was not the consideration of the agreement to pay royalties, then the only consideration for such agreement was the right to use the trade-name "Zesto" given in paragraph 3 of the contract and the agreement of respondent not to sell or lease a like machine in the restricted territory. These are the only undertakings of the respondent found in the contract. Respondent suggests, therefore, that the function of paragraph 12 is to allocate the royalty payments as consideration for the right to use the trade-name, a legal provision of the contract, rather than as consideration for a restricted territory, an illegal provision. Respondent concedes in his brief that "if any illegal provision is part of the contract and part of the consideration for petitioner's promise to pay `royalties', then the illegality of part of the consideration rendered the entire contract illegal."
It is our opinion that under the only reasonable construction of all the provisions of the contract, the royalty payments and the illegal restrictions contained in paragraphs 2 and 5 are so interdependent and indivisible that they cannot be separated and must fall together.
The record shows that there was no secret formula for making "Zesto,"; that it was but a trade-name applied to a powdered mix used in the making of a frozen custard, available to anyone who cared to buy it. On the other hand, by obtaining a restricted territory in which no like machine could be sold or leased, petitioner freed himself of all competition. We are not prepared to say that petitioner would have agreed to pay the royalties for use of the trade-name if the illegal provisions for a restricted territory had been eliminated. Kissel Motor Car Co. v. Walker, 5 Cir., 270 F. 492, 24 A.L.R. 782. It is worth nothing that the agreement of respondent not to sell or lease a like machine in the restricted territory was to continue for eight years, the agreement of petitioner not to sell, lend, lease or assign the particular machine or to operate it outside of the restricted territory was to continue for eight years, and the agreement to pay royalties was to continue for eight years.
Having reached the conclusion that the provision for royalty payments and the illegal provisions are indivisible and inseparable, we are confronted with the oftrepeated rule: "That a promise made upon several considerations, one of which is unlawful, no matter whether the illegality be at common law or by statute, is void." Edwards County v. Jennings, 89 Tex. 618, 35 S.W. 1053, 1054; W. T. Raleigh Co. v. Land, 115 Tex. 319, 279 S.W. 810. We may say here as was said by the court in Wegner Bros. v. Biering & Co., 65 Tex. 506, 509, 510, 512:
"It is obvious that there is ample valid consideration to support the promise sued on; yet, if, to the abundance of valid consideration, there has been added a leaven of what is illegal, the whole contract is tainted.
*349 "* * * The whole cannot be enforced, because the law will not compel what it prohibits, and the parts can not be separated. Illegality thus vitiates the entire instrument.
"* * * The purpose of the law is to discountenance and discourage improper contracts; not to enforce them is adopted as the best means to this end, and is adopted in total disregard of the effect upon the parties to the prohibited transaction".
The judgments of both courts below are reversed and judgment is here rendered that plaintiff take nothing.
GARWOOD and GRIFFIN, JJ., dissenting.
SMEDLEY, J., not sitting.
WILSON, Justice (concurring).
The majority opinion is based in part upon Ford Motor Co. v. State, 142 Tex. 5, 175 S.W.2d 230. Art. 7437, V.A.C.S., is not ambiguous and needs no construction. Our duty is to apply the statute.
The holding here is that a contract containing some clauses violating the antitrust laws and also containing a "saving clause" that the parties do not intend to violate the antitrust laws is not "absolutely void" and therefore "not enforcible, either in law or equity", but on the contrary the portions violating the antitrust laws may be stricken and the remainder of the contract enforced if severable. In my opinion, this holding is contrary to Art. 7437, V.A.C.S., which is:
"Any contract or agreement in violation of any provision of this subdivision shall be absolutely void and not enforcible either in law or equity."
Through Art. 7437, the Legislature clearly attempted to impose as a civil sanction for the purpose of aiding in the enforcement of the antitrust laws the penalty of contractual illegality or contractual unenforceability. The parties may sidestep neatly Art. 7437 in making a contract violating the antitrust laws by the statement that it is the "intention of neither party to violate * * * the Texas Antitrust Statute." Of course this self-serving statement about intent is not a correct statement of fact. The parties knew the specific wording of the contract and intended to use the very words they did use. If a particular combination of words constitutes an antitrust violation, they intended to violate the antitrust law. In law a person intends to do the very act he does do although he may not fully understand or desire the specific legal consequences which follow his acts. So in the case of W. T. Raleigh Co. v. Land, 115 Tex. 319, 279 S.W. 810, 812, the court said:
"* * * The proviso, of course, is without meaning, except as a selfserving declaration of intent whose prima facie evidential value, if any, is * * * wholly destroyed (or rather turned against the parties) if in fact a bad purpose appears in the execution of the agreement. * * *"
I would give no effect at all to the statement that the parties had no intent to violate the law if what they did does in fact violate the law.
The Ford case was not a suit to declare the contract void and unenforceable under Art. 7437 and no one attempted to invoke civil sanctions voiding the Ford contract. Perhaps that is the reason the Court in that case did not either mention or discuss Art. 7437.
It may be that consistency prohibits that the same contract should be held subject to civil penalties but not to criminal penalties. Since the Court in the Ford case did not directly construe or apply Art. 7437 as we must in the case at bar, we should disregard paragraph 12 of the contract because it directly conflicts with a statute and reserve a reconsideration of the Ford case until the point is again squarely presented in a penalty suit.
*350 GRIFFIN, Justice (dissenting).
I find myself unable to agree with the majority opinion wherein it holds (1) the provisions of the sale contract which violate the antitrust statutes are not severable and divisible from the legal provisions so as to leave a legal and valid obligation to pay the royalties sued for, and (2) the royalties provided are not a part of the purchase price to be paid for the machine.
The provision of Paragraph 4 for the payment of $3,000 cash "and in addition thereto" the royalties provided for, does not prevent the royalties being a part of the purchase price. It is no more than a deed to a tract of land which says the consideration for the sale is $3,000 cash, and in addition thereto certain vendor's lien notes. The words "said sum to be paid as follows in no manner limit the consideration to be paid to the amount of cash. "Said sum" clearly means only the amount of cash to be paid, not the total consideration. The fact that a period follows the words "the sum of $3,000.00" could have no more effect in determining the consideration than if it had been a comma, semi-colon or other punctuation mark. 10 Tex.Jur. 300, Contracts, Sec. 174. When the whole of the paragraph is considered it is very apparent to met that it states consideration to be paid for the machine. Assuming, without deciding the same, that other provisions of the contract violate the antitrust statutes, the question then arises as to whether the legal provisions of the contract are divisible or severable from the illegal provisions so that a valid, binding and legal contract was made by the parties which can be enforced without resort to the other provisions of the contract. 10 Tex.Jur. 246, et seq., Contracts, Sec. 141; Id., 316, Sec. 182; 27 Tex. Law Rev. 254; Corbin, On Contracts, Sec. 1520.
It is elementary and requires no citation of authorities for the proposition that the contract must be construed in its entirety, and effect given to all its provisions. Paragraph 12 provides that neither party intends to violate public policy, statutory or common laws or the Texas Anti-Trust Statutes. Then there is a provision that if any part of the contract or any combination of parts is in violation of Federal law, or Texas law, including the Anti-Trust Act, such parts, or combination of parts, shall be inoperative, and the remainder of the contract shall continue to be binding upon the parties, and states that second party must pay for the machine, both cash consideration and royalties as is provided in the contract. (Paragraph 4). Does Paragraph 12 mean what it says, or is such provision unlawful and of no force and effect?
In the case of Wicks v. Comves, 110 Tex. 532, 221 S.W. 938, Comves sued Wicks et al. for specific performance of a lease contract, or for damages for breach of such contract. The contract provided that Wicks leased space to Comves for a fruit stand on the sidewalk in the City of Houston at a specified monthly rental. The contract further provided that if the City complained of such fruit stand on the sidewalk, or if there was a city ordinance "now or hereafter in force" making a fruit stand on the sidewalk illegal, then Wicks agreed to furnish Comves the same amount of space inside Wicks' building, which was at the same location, for his fruit stand. Wicks et al. defended the suit upon the ground that the contract was illegal and void because of leasing space on the sidewalk, and that the provision for the inside lease was inseverable from the sidewalk lease provision. There was a city ordinance prohibiting the occupation of any city sidewalk for mercantile purposes at the time of the execution of the contract. On certified question, Judge Greenwood, speaking for this Court, held the inside lease was severable from the sidewalk lease, and stated: "* * * we think the parties have made their purpose entirely plain that the failure of the grant, if any, of the use of the stands and fixtures on the sidewalk was not to affect the grant, for the agreed rental, of the inside space. [Only one rental charge was provided in the contract, and it was stated in connection with the sidewalk lease.] How can parties more plainly direct a severance of obligations than by stipulating *351 that one shall be performed, for a separate consideration, upon the failure of another?" 2nd col., 221 S.W. at page 939. The Court discusses the law applicable to severable valid provisions contained with illegal provisions in the same contract, and holds that part of the lease contract for the inside space valid, binding and enforceable. In the contract under consideration in this cause, the parties have made a specific provision as to payment for the machine, in event any part of the contract should be held illegal and void.
In the case of Nevels v. Harris, 129 Tex. 190, 102 S.W.2d 1046, 109 A.L.R. 1464, Harris sued Nevels et al. to recover on a note and to foreclose a deed of trust on real estate given as security for the note. The defense was usury, in that a part of the interest on the main debt was represented by interest coupon notes with definite due dates, and also these notes and deed of trust contained a provision to the effect that if default were made in the payment of the obligation, all notes immediately became due at the option of the holder. Also, a sum of money was deducted from the original amount of the loan and paid to a broker agent of Harris, so that the borrower, Nevels, did not receive the amount of money set out in the face of the principal note. Under certain conditions, this permitted Harris to collect more than 10% interest per annum on the amount of money actually paid over to Nevels as proceeds from the loan. The case of Shropshire v. Commerce Farm Credit Co., 120 Tex. 400, 30 S.W.2d 282, 39 S.W.2d 11, 84 A.L.R. 1269, had held contracts of this nature in violation of the Texas statutes defining usury. However, the deed of trust in the Nevels case contained this further provision: "`That the intention of the parties being to conform strictly to the Usury Laws now in force, any of said contracts for interest shall be held to be subject to reduction to the amount allowed under said Usury Laws as now or hereafter construed by the courts having jurisdiction'." Bottom 2nd col., 102 S.W.2d at page 1049. In affirming the judgments of the courts below, and discussing the clause last above quoted this Court said:
"It is the rule that all parts of a contract must be given effect if it is reasonably possible to do so. It is also the rule that men are presumed to have intended to obey the law unless the contrary appears. In the contract at bar the lender very carefully provided for the cancellation of unearned interest notes should the default maturity provisions of the contract be exercised. The parties were not even content to rest the matter of usury there. They added the provision last above quoted. If this provision only has effect to cancel unearned interest coupons from the date the default maturity provisions of the contract are exercised by the noteholder, it is a vain and an idle stipulation, for the reason that that matter had already been carefully guarded by the other provisions of this contract which we have quoted and discussed. If this last provision can be given effect, and, as already said, it must be given some effect if it is reasonably possible to do so, it must be held to operate to deny the noteholder the right, in any event, to collect usury. In other words, it denies the noteholder the right to collect more than the principal debt and 10 per cent. interest per annum from the time the borrower had the use of the money until he should repay it. This is plain because this clause of the contract expressly states that it is the intention of the parties to conform strictly to the usury laws now in force, and that `any of said contracts for interest shall be held to be subject to reduction to the amount allowed under said usury laws,' etc."
I can see no distinction in principle between the so-called "saving clause" in the usury case and in the case at bar, except the clause in the case at bar specifically reiterates the liability of petitioner for the cash consideration and royalties to be paid for the Zest-O-Mat machine, in the event any part of the purchase contract should violate the Anti-Trust or other laws.
In the case of Ford Motor Co. v. State, 142 Tex. 5, 175 S.W.2d 230, 231, the State *352 sued Ford for violation of the Anti-Trust laws of Texas on allegations that the contract which Ford had with its dealers in Texas was illegal and void. The trial court sustained Ford's exceptions to the State's petition, and the cause was dismissed. On appeal, the Court of Civil Appeals reversed and remanded for a trial upon the merits. 169 S.W.2d 504. In affirming the judgment of the Court of Civil Appeals, this Court said [142 Tex. 5, 175 S.W.2d 233]:
"A contract which merely agrees to do a certain thing `in so far as it is lawful for the dealer to so agree * * *' on its face constitutes no agreement to do the thing mentioned, if it is unlawful to do so. Nevels v. Harris, 129 Tex. 190, 102 S.W.2d 1046, 109 A.L.R. 1464."
As pertinent to this cause the Court further says:
"The State contends that Section 9(b) of this alleged contract on its face violates our anti-trust laws, because it obligates Ford Dealers not to sell Ford products at less than retail prices established by Ford for the dealer's city or town from time to time. This section of the contract reads as follows: `(b) Insofar as it is lawful for Dealer so to agree, not to resell Company products bearing Company's trademark or trade name at less than retail prices established for Dealer's city or town from time to time by Company, except in cases where such goods have been damaged, or have become obsolete, or are about to become obsolete because of change in models, or in the case of sales to Company or its nominees or to other authorized Ford Dealers, or Associate Ford Dealers, and except when a discount is warranted by quantity purchases unless such a discount is in violation of law. Dealer agrees, if requested by Company, to display prominently in Dealer's showroom a chart showing current minimum retail prices as established by Company for Dealer's city or town.'
"Under the rule of law already announced in this opinion, this contract provision, on its face, does not violate our anti-trust laws. It only obligates the dealer if it is lawful for him to be obligated. If it is unlawful, no obligation is assumed. If no obligation is assumed, no violation of law is contracted for."
The Court also discusses and upholds contract provisions for supervision of the place of business, accounting methods and conduct of the dealer's business, somewhat comparable to provisions in the contract under discussion.
Respondent contends that under the provisions of Art. 7437, Vernon's Annotated Civil Statutes, "Any contract or agreement in violation of any provision of this subdivision shall be absolutely void and not enforcible either in law or equity." This statute was the same when all three of the cases above cited were decided. Also, the wording of the Usury Statute, Art. 5071, Vernon's Annotated Civil Statutes, which was in effect when the Nevels case, supra, was decided by this Court, is, in part: "* * * and all written contracts whatsoever, which may in any way, directly or indirectly, provide for a greater rate of interest [than legal rate of 10%] shall be void and of no effect for the amount or value of the interest only * * *." In the face of this statute this Court, in the Nevels case, approved the collection of all interest not above the legal rate. In the case at bar, we have a valid and legal provision as to the payment of the purchase price for the Zest-O-Mat machine contained in a separate paragraph to those violating the Anti-Trust Act, and so being severable, may be enforced.
In view of the above authorities, I believe that Paragraph 12 is a valid, binding and severable part of the contract for the purchase of the machine between the parties hereto.
Petitioner cites no case holding that a payment of a royalty as a part of the purchase price for the machine is illegal or unlawful, nor does he make any such contention. *353 I do not believe that it is a violation of law to agree to purchase any machine by making a cash down payment, and to pay out the balance at an agreed figure per unit produced or manufactured in such machine for a definite time. This is the effect of the consideration agreed to be paid in Paragraph 4, with the addition of a guaranteed minimum payment of $500 per year for a definite 8-year period. Petitioner contends that the royalty provisions violate the antitrust statute in that they are an attempt to exercise control over the machine after it has been bought and paid for, thus constituting a servitude and restraint upon the use and alienation of the machine. I do not so construe the contract. As I have said above, the provision for "royalty" payment is a part of the purchase price to be paid for the machine, and constitutes a personal obligation of the second party. No lien on the machine is reserved, nor attempted to be reserved by first party. First party admits that the title to the machine passed to the second party purchaser.
It follows that I would affirm the judgments of both courts below.
GARWOOD, J., joins in this opinion. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1531499/ | 269 S.W.2d 798 (1954)
LEWIS
v.
KRUEGER, HUTCHINSON AND OVERTON CLINIC.
No. A-4533.
Supreme Court of Texas.
June 30, 1954.
Boling & Smith, Lubbock, for petitioner.
Klett, Bean & Evans and Crenshaw, Dupree & Milam, Lubbock, for respondents.
CULVER, Justice.
Petitioner, Lewis, a young physician, entered the employ of respondents in January 1950 under a written agreement. It provided in part that if the employment of petitioner ceased he would not thereafter practice his profession in Lubbock County.
Three years later petitioner resigned and entered private practice for himself in Lubbock. Respondents filed suit praying for injunction, and thereafter moved for summary judgment based upon affidavits and deposition of the parties. The trial court sustained exception addressed to the petition on the ground that the covenant, though reasonably limited as to space, was void and unenforceable because unlimited as to time. On appeal the cause was reversed and remanded, with directions that respondents' motion for summary judgment *799 be sustained but reducing the injunctive relief to a period of three years. 266 S.W.2d 885.
We are of the opinion that this decision is correct.
In one authority the rule is thus stated:
"Generally, an agreement imposing a restraint reasonably limited in space is not against public policy, although unlimited in time of operation, regardless of the nature of the business or occupation restrained." 17 C.J.S., Contracts, § 244.
The case of Randolph v. Graham, Tex. Civ.App., 254 S.W. 402, is in point, though it deals with the sale of one physician's practice to another. Under somewhat similar facts as here presented, it was held in Foster v. White, 248 A.D. 451, 290 N.Y.S. 394, 395, that though the covenant be unlimited as to time this fact will not preclude the granting of an injunction where the area of restraint is limited and reasonable. In an earlier Supreme Court of Rhode Island case, Tillinghast v. Boothby, 20 R.I. 59, 37 A. 344, the holding is to the same effect.
As the rule makes no distinction between a profession and any other occupation, such cases as Patterson v. Crabb, Tex.Civ.App., 51 S.W. 870; Langever v. United Advertising Corporation, Tex.Civ.App., 258 S.W. 856, and Moore v. Duggan Abstract Co., Tex.Civ.App., 154 S.W.2d 519, come into application.
In view of the full discussion by the Court of Civil Appeals and the many other authorities referred to in its opinion, we need pursue the point no further.
Many cases are cited by petitioner but none seem to support his contention. For instance, in the recent case of Parker v. Slayter, Tex.Civ.App., 238 S.W.2d 814, the court held that the area, namely, that of Harris County, was too inclusive and therefore harsh and unreasonable. The parties had operated a chiropractic clinic in Baytown, a suburb of Houston. Their patrons came from only a small portion of the county, whereas the patients of respondents were drawn from all over Lubbock County and the contiguous area.
In Miller v. Chicago Portrait Co., Tex. Civ.App., 195 S.W. 619, the contract of employment provided the employee would not engage in a rival business in a certain territory stipulating that in the event of a violation, liquidated damages were fixed at the sum of $1,000. The court held that an injunction would not issue to enjoin the employee from engaging in such business within the state, there being no evidence of trade secrets connected with the business or a showing that damages were inadequate.
In Union Transfer & Storage Co. v. Greve, Tex.Civ.App., 131 S.W.2d 796, the case turned on a question of fact. There was no proof of injury, no diversion of patronage.
The Court of Civil Appeals, after holding that the unlimited time element, coupled with the limitation as to territory, was not unreasonable and did not render the contract void, reduced the limitation to three years. The clinic in its appeal had prayed that if the period of restriction was thought to be unreasonable, the duration of the injunction should be limited to three or five years. The court treating the proposition as an offer on the part of respondents to accept a reduction of time and as a waiver of their legal right to insist on injunctive relief for an unlimited time, reduced the period accordingly. Of this petitioner could not complain as it inured to his benefit. His point to the effect that the court was reforming the contract and trying the case on a different theory is without merit.
We agree with the result reached by the Court of Civil Appeals but upon somewhat of a different theory. Merely because a limit has not been fixed for the duration of the restraint, the agreement will not be struck down but will be enforceable for such period of time as would appear to be reasonable under the circumstances. Corbin on Contracts, § 1391. This rule is properly applicable to the facts of our case. *800 The restraint for three years will amply protect the practice of respondents and to extend the time further would serve no useful purpose.
We overrule petitioners' contention that the court is making a new and different contract for the parties. The phrase "will not thereafter practice his profession in Lubbock County" lends itself to the construction that the parties intended the restriction to prevail for a reasonable length of time only. Even though it might be interpreted as promising never to practice in Lubbock County, it would hardly be doing violence to the established principles to hold that the restriction is merely void or unenforceable with respect to that portion of the time beyond what the court considers reasonable.
The Court of Civil Appeals did not err in directing summary judgment to be entered. There was no dispute as to the facts. Sufficient consideration was shown moving to the petitioner. According to his own deposition he admitted making $500 more per month the first year he was employed by the clinic than he did the year before, and this income had increased to $20,000 the third year. Injury and damage to respondents were not disputed. The petitioner admitted that all of the patients that he had were those who had come to the clinic for treatment and had been referred to him.
The judgment of the Court of Civil Appeals must be affirmed.
CALVERT, Justice (concurring).
I agree to the judgment affirming the judgment of the Court of Civil Appeals, but I do not concur in the reasons given in the opinion by Associate Justice CULVER for that result.
The contract provided, in substance, that in consideration of petitioner's employment and his later disassociation therefrom, he would "not thereafter practice his profession in Lubbock County." The contract, as written, was either legal or illegal. The language of the contract is too clear to lend itself to a construction that the parties intended the prohibition to exist for only three years, or five years, or some other period of time which this court deems to be a reasonable time. When the parties contracted that respondent would "not thereafter" practice in Lubbock County they clearly meant that he would never practice in Lubbock County. What this court is saying by Justice CULVER'S opinion is that when a party agrees by contract that he will "not thereafter" engage in a particular business we will test the legality of the contract by looking further to see if he said "and by the language `not thereafter' I mean `never'." Of course the two expressions mean exactly the same thing.
In my opinion the Court of Civil Appeals decided this case correctly and upon the correct theory: that is, that under all the authorities on the subject this was a perfectly valid and enforceable contract, reasonable both as to time and space, prohibiting respondent from ever practicing his profession in Lubbock County, with the right in respondents to waive their right of enforcement beyond a three year period.
What Justice CULVER'S opinion does is to say that even though the contract may be illegal and unenforceable as written, one of the parties may make it legal and enforceable by offering to take out of it the offending provision that makes it illegal. This is exactly contrary to what we have held within less than two weeks of this writing in Patrizi v. McAninch, Tex.Sup., 269 S.W.2d 343, where the parties sought by the very terms of the contract itself to eliminate all illegality leaving the remaining provisions as valid and enforceable.
I pose these questions: If we may rewrite the time provision of the contract, may we, having before us a contract illegal because of an unreasonable restriction as to space, rewrite it with the consent of the party seeking to enforce it so as to reduce the space, on the theory that the parties intended only to make a reasonable contract, and thereby make the contract legal? Could we rewrite both time and space provisions? *801 In other words, if the contract here had provided that petitioner would "not thereafter" practice his profession in Texas, could we say that three years was a reasonable time limitation and Lubbock County a reasonable space limitation and then, with the consent of respondent, enforce the illegal contract as thus modified to a legal contract? I think not; and yet we have taken the first step in that direction, and I can think of no logical reason why, having done the one, we may not do the other.
BREWSTER, J., joins in this opinion. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1531510/ | 269 S.W.2d 478 (1954)
HOLLAND
v.
LANSDOWNE-MOODY CO., Inc.
No. 3179.
Court of Civil Appeals of Texas, Waco.
June 3, 1954.
*479 Wm. M. Nathan, Herbert Finkelstein, Houston, for appellant.
Fulbright, Crooker, Freeman, Bates & Jaworski, L. Keith Simmer, Houston, for appellee.
McDONALD, Chief Justice.
This appeal is from a summary judgment granted under Rule 166-A, T.R.C.P. Parties will be referred to as in the trial court. Defendant, who is in the tractor business, sold one Hawkins a tractor in January 1952. The sale was evidenced by a combination note-mortgage called a "Purchase Agreement," which recited a cash payment; a deferred balance to be paid in 18 monthly installments of $206 each; and which secured the balance by mortgage on the equipment. The mortgage provided for repossession with or without process of law by the seller or assignee in the event of default in payment. Hawkins transferred his interest to plaintiff, and defendant sold the "Purchase Agreement", with recourse, to Dearborn Credit Corporation.
Plaintiff failed to pay the October, November and December 1952 installments. On 1 November 1952 plaintiff left the equipment with defendant for repairs. The cost of repairs was $336 which plaintiff tendered on 13 December 1952. Defendant refused to deliver the equipment unless the delinquent installments on the note were also paid. Thereafter plaintiff sued for conversion. Defendant pleaded as an affirmative defense that it was acting as agent for Dearborn Credit Corporation, *480 owner of the note and mortgage, and that Dearborn Credit Corporation had instructed it to withhold possession of the equipment until all installments in arrears had been paid. Defendant filed motion for summary judgment, attaching copy of the "Purchase Agreement" and two affidavits. The first affidavit, of E. E. Earp, General Manager of defendant company, was to the effect that Mr. John Thompson, Branch Manager of Dearborn Credit Corporation, instructed him orally to withhold the equipment until arrearage on the note be paid; that no further payments were ever made on the note and that on 17 February 1953 defendant re-purchased the note and mortgage from Dearborn Credit Corporation. The second affidavit, of L. J. Meury, an employee of defendant, was to the effect that Meury advised plaintiff that he refused to deliver to plaintiff the equipment and told him the payments in arrears would have to be made before he would turn over the equipment to plaintiff. No controverting affidavits were filed by plaintiff. The trial court sustained the defendant's motion for summary judgment and entered judgment that plaintiff take nothing by his suit, and plaintiff appeals.
It is settled law that a lienholder, acting itself or through an agent, can retake or withhold possession of a chattel, after default in installment payments, if the provisions of the mortgage so provide.
In the case at bar it is undisputed that installment payments were in default; that the mortgage provided for repossession; and that the defendant withheld possession of the tractor.
The sole question for determination, therefore, is whether the defendant, under the pleadings, admissions and affidavits on file, was as a matter of law agent of the Dearborn Credit Corporation with authority to re-possess or withhold the tractor from plaintiff.
Plaintiff (appellant) earnestly contends that defendant could not be Dearborn's agent as a matter of law under the pleadings, admissions and affidavits, because: 1) The "Purchase Agreement" provides that if payments be made on the note to the seller (defendant herein) that seller shall be deemed the agent of the purchaser, and for such reason seller cannot thereafter become the agent of the Dearborn Corporation; 2) that the authority of the Branch Manager of Dearborn Corporation to appoint defendant as its agent to repossess the tractor must be determined by evidence; and 3) that the affidavits which give evidence of the "agency" designation of defendant company do no more than raise an issue of fact.
Plaintiff's first contention is that the "Purchase Agreement" prohibits defendant from being the agent of Dearborn Credit Corporation, because it provides that if the purchaser makes any payment on installments due to Dearborn, to the seller, that the seller shall be deemed the agent of the purchaser.
We have carefully examined the "Purchase Agreement" in its entirety, and conclude that the above provision constitutes the seller (defendant herein) as agent of the purchaser (plaintiff herein) for the limited purpose of receiving and transmitting payments on the installment note to the Dearborn Corporation; and that this provision is in no way inconsistent with and can in no way preclude or prohibit the seller, defendant, from thereafter becoming the agent of the Dearborn Corporation for the purpose of effectuating a repossession of security when the note becomes in default.
Plaintiff further contends that the relation of principal and agent between the Dearborn Corporation and defendant is precluded by the assignment of the "Purchase Agreement" to Dearborn Corporation, which provides: "We shall have no authority, without assignee's prior written consent to accept collections and/or repossess". This provision in the assignment was a contract between the defendant and the Dearborn Corporation. This provision was *481 waived by Dearborn Corporation when its branch manager told Earp to withhold the tractor. A party to a contract can orally waive a provision thereof providing that amendments be written to be effective. Groce v. P. B. Yates Mach. Co., Tex.Com. App., 288 S.W. 161.
Appellant's second point contends that the authority of a branch manager must be determined by the evidence, and in the absence of any evidence as to what that authority is, the trial court erred in holding that the branch manager of Dearborn Credit Corporation had authority to appoint defendant as agent for Dearborn.
A branch manager has authority to bind a corporation in matters in the usual and customary course of, or incident to the particular business of which he is branch manager. Pittsburg Pipe & Supply Co. v. Federal Machine & Supply Co., Tex.Civ.App., 107 S.W.2d 637. We believe that for a finance or credit corporation, acting through its branch manager, to take steps to protect its security would be in the usual and customary course of business.
Plaintiff's third point complains that the uncontradicted testimony of a party, where the other party does not have equal access to the facts, does no more than raise an issue of fact for the jury. In this connection plaintiff contends that the affidavits of Meury and Earp were both from "interested witnesses" and that they covered subject matter about which they alone had knowledge and to which plaintiff had no access. Plaintiff contends further that he should have the right to cross-examine these witnesses and to have the trier of facts pass on their credibility.
We cannot agree with plaintiff's position. Plaintiff did not file any controverting affidavits, as required by Rule 166-A, nor did plaintiff attempt to avail of subdivision (f) of Rule 166-A, which provides that when controverting affidavits are unavailable that delay may be secured in order to attempt to secure affidavits or take depositions. In this connection it might be noted that a taking of the deposition of the affiants Meury and Earp would have permitted plaintiff to cross-examine them and otherwise to test their credibility. It is the law that where a plaintiff, at a hearing on defendant's motion for summary judgment under Rule 166-A, files no counter affidavits, and makes no showing other than as stated in their pleadings, and makes no showing that affidavits are unavailable, he in effect admits the facts alleged in defendant's sworn affidavits supporting the motion, and for which reason cannot complain of the court's granting the motion for summary judgment. Rolfe v. Swearingen, Tex.Civ.App., 241 S.W.2d 236, W/E Ref. N.R.E.; Fowler v. Texas Employers Ins. Ass'n. Tex.Civ.App., 237 S.W.2d 373, W/E Ref. The foregoing cases present excellent and thorough discussions of Rule 166-A generally, and particularly of the precise point here involved.
We believe that the defendant, under the pleadings, admissions, and affidavits, was as a matter of law the agent of the Dearborn Corporation, authorized in its behalf to withhold the tractor from plaintiff. This being true, defendant could not be guilty of conversion, and for which reason the trial court properly granted defendant's motion for summary judgment. All of plaintiff's points are overruled and the judgment of the trial court is affirmed. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1531498/ | 480 F. Supp. 1063 (1979)
DATA CASH SYSTEMS, INC., a Florida Corporation, Plaintiff,
v.
JS&A GROUP, INC., an Illinois Corporation, Joseph Sugarman, Mary Stanke, Novag Industries, Ltd., Peter W. Auge, and Mitco Industries, Ltd., Defendants.
No. 79 C 591.
United States District Court, N. D. Illinois, E. D.
September 26, 1979.
*1064 *1065 Geraldine Soat Brown, Michael L. Shakman, Devoe, Shadur & Krupp, Chicago, Ill., for plaintiff.
George H. Gerstman, Pigott & Gerstman, Chicago, Ill., for defendants.
MEMORANDUM OPINION
FLAUM, District Judge:
This action for copyright infringement and unfair competition is brought by the creator of a computer program[1] against the corporations and the officers of these corporations which are allegedly reproducing, importing, distributing, selling, marketing and advertising copies of plaintiff's computer program. Plaintiff has filed a motion for a preliminary injunction and defendants JS&A Group, Inc. ("JS&A"), Joseph Sugarman ("Sugarman"), and Mary Stanke ("Stanke") have filed a motion for summary judgment. For the reasons set forth below, the motion of defendants JS&A, Sugarman and Stanke for summary judgment is granted on Count I of the First Amended Complaint for Infringement of Copyright and for Unfair Competition (the "First Amended Complaint") and is denied on Count II of the First Amended Complaint and the motion of plaintiff for a preliminary injunction is denied.
Before discussing the facts in this case, it is necessary to set forth what exactly a computer program is. A computer program has been defined generally as a set of precise instructions that tells the computer how to solve a problem. C. J. Sippl & C. P. Sippl, Computer Dictionary 333 (2d ed. 1974); Synercom Technology, Inc. v. University Computing Co., 462 F. Supp. 1003, 1005 (N.D.Tex.1978). Normally, a computer program consists of several phases which may be summarized as follows. The first phase is the development of a flow chart which is a schematic representation of the program's logic. It sets forth the logical steps involved in solving a given problem. The second phase is the development of a "source program" which is a translation of the flow chart into computer programming language, such as FORTRAN or COBOL. Source programs may be punched on decks of cards or imprinted on discs, tapes or drums. The third phase is the development of an "assembly program" which is a translation of the programming language into machine language, i.e., mechanically readable computer language. Unlike source programs, which are readable by trained programmers, assembly programs are virtually unintelligible except by the computer itself. Finally, the fourth phase is the development of an "object program" which is a conversion of the machine language into a device commanding a series of electrical impulses. Object programs, which enter into the mechanical process itself, cannot be read without the aid of special equipment and cannot be understood by even the most highly trained programmers. J. Brown & R. Workman, How a Computer System Works 149-175 (1976); Keplinger, Computer Intellectual Property Claims: Computer Software & Data Base Protection, 1977 Wash.L.Q. 461, 464; M. Pope & P. Pope, Protection of Proprietary Interests in Computer Software, 30 Ala.L.Rev. 527, 530-31 (1979).
Thus, at some point in its development, a computer program is embodied in material form and becomes a mechanical device which is engaged in the computer to be an essential part of the mechanical process. At different times, then, a given program is both "source" and "object". The "source program" is a writing while the "object program" is a mechanical tool or machine part.
In this case plaintiff retained an independent consultant, D. B. Goodrich and Associates, to design and develop a computer program for a computerized chess game, CompuChess, which was to be manufactured and sold by plaintiff. From September *1066 1976 to April 1977 D. B. Goodrich and Associates designed and developed the basic instructions which told the computer how to play chess at six different levels of difficulty. This process involved the four phases in the development of a computer program discussed above. The instructions were translated into programming language, the source program, which then was translated into machine language, the assembly program. This assembly program was then used to create the object program, the Read Only Memory (the "ROM"). This ROM was then installed in the computer as part of its circuitry.
Thus, CompuChess is a hand-held computer which uses keyboard and data display devices to input and output information. The human player enters his move on the keyboard device by pressing certain keys and the computer relays its move on the data display device by displaying certain letters and numbers.
In late 1977 plaintiff began to market the CompuChess. No copyright notice appeared anywhere on the ROM, the CompuChess itself, its packaging, or its accompanying literature. The copyright notice did appear, however, on the source program and all copies thereof.[2] In November of 1978 the source program was filed with the Register of Copyrights and on November 28, 1978 a Certificate of Copyright Registration was issued to plaintiff.
In late 1978 defendants JS&A, Sugarman and Stanke began marketing the JS&A Chess Computer. The ROM in the JS&A Chess Computer is identical to the ROM in plaintiff's CompuChess.[3] In early 1979 plaintiff filed this action for copyright infringement and unfair competition.
Where, as here, the pleadings, depositions, answers to interrogatories and affidavits show that there is no genuine issue as to any material fact, then summary judgment should go to the party entitled to judgment as a matter of law. However, motions for summary judgment in copyright infringement and unfair competition cases have been generally frowned upon. 6 Moore's Federal Practice ¶¶ 56.17[14] and 56.17[71] (2d ed. 1976). Nevertheless, such motions may be granted for the defendant in a copyright infringement action if, after assuming copying, the court finds that any similarity between the works is insubstantial or that undisputed facts raise a complete defense as a matter of law. 3 Nimmer on Copyright § 12.10 (1979); Musto v. Meyer, 434 F. Supp. 32, 36 (S.D.N.Y.1977).
Since the ROM in the JS&A Chess Computer is identical to the ROM in plaintiff's CompuChess, the court can assume that there was direct copying of plaintiff's ROM. However, the undisputed facts show that defendants JS&A, Sugarman and Stanke have a complete defense as a matter of law with respect to plaintiff's claim of copyright infringement.
Count I of the First Amended Complaint, the count alleging copyright infringement by defendants JS&A, Sugarman and Stanke, is brought under the Copyright Act of 1976, 17 U.S.C. § 101 et seq. (App. 1976) (the "1976 Act"). Although this action should be brought under the 1976 Act, the 1976 Act itself does not apply.[4] Section 117 of the 1976 Act states:
*1067 "this title [title 17] does not afford to the owner of copyright in a work any greater or lesser rights with respect to the use of the work in conjunction with automatic systems capable of storing, processing, retrieving, or transferring information, or in conjunction with any similar device, machine or process, than those afforded to works under the law, whether title 17 or the common law or statutes of a State, in effect on December 31, 1977, as held applicable and construed by a court in an action brought under this title."
The legislative history for section 117 explains that this section was enacted because the problems in the area of computer uses of copyrighted works are not sufficiently developed for a definitive legislative solution.[5] Thus, the purpose of section 117 is to preserve the status quo. It is not intended to cut off any rights that existed on December 31, 1977 or to create new rights that might be denied under the predecessor to the 1976 Act, the Copyright Act of 1909, 17 U.S.C. § 1 (1976) (the "1909 Act"), or under common law principles applicable on December 31, 1977. H.R.Rep.No.94-1476, 94th Cong., 2d Sess. 116, reprinted in [1976] U.S. Code Cong. & Admin.News, pp. 5659, 5731.
Therefore, a court, in deciding the scope of exclusive rights in the computer area, first must determine the applicable law, whether state statutory or common law or the 1909 Act. After determining which law is applicable, the court's decision must depend upon its interpretation of what that law was on December 31, 1977. H.R.Rep.No.94-1476, 94th Cong., 2d Sess. 116, reprinted in [1976] U.S.Code Cong. & Admin.News, p. 5731. If, as of the date of the alleged act of infringement, the computer program allegedly infringed had been neither published nor registered in the copyright office, then the common law copyright rule should be applied. Otherwise, the law under the 1909 Act should be applied. 1 Nimmer on Copyright § 2.08[D], at 2-106 (1979).
Prior to the complete revision of the 1909 Act, the American law of copyright had been the subject of a dichotomy between federal and state law. Unpublished works were automatically protected by *1068 state law, referred to somewhat inaccurately as common law copyright.[6] Such protection began at the moment of creation and terminated upon publication when common law copyright was lost. Thereafter, protection was available, if at all, only through federal, or as it is generally known, statutory copyright. 1 Nimmer on Copyright § 2.02, at 2-16 (1979).
The parties have assumed that the ROM is a "copy" of the computer program created by plaintiff within the meaning of both the common law and the 1909 Act.[7] The court does not agree. Both at common law and under the 1909 Act, a "copy" must be in a form which others can see and read.
At common law the author's property in his unpublished work included the right to publish, or to refrain from publishing, at his option, and the right of restraining others from publishing without his consent. The original manuscript and the incorporeal right of first publication were the private and exclusive property of the author. He had the sole right of first printing and publishing it for sale. Thus, the unauthorized publication of an author's work was a violation of the author's common law right to the "copy". H. Ball, The Law of Copyright and Literary Property § 4 (1944).
At common law the noun "copy" signified a tangible object that was a reproduction of the original work. Although any mode of reproduction, whether by printing, writing, photography, or by some other method not yet invented, constituted a copying, to be a "copy" there must have been an appeal to the eye. Thus, the term "copy" has been defined as that which comes so near to the original as to give to every person seeing it the idea created by the original. 18 Am. Jur. Copyright & Literary Property § 94 (1965) (quoting Boosey v. Whight, [1900] 1 Ch. 122).
That the ROM at common law does not constitute a copy of plaintiff's computer program is supported by the cases which hold that a completed building is not a copy of the architectural plans upon which the building is based. E.g., Nucor Corp. v. Tennessee Forging Steel Service, Inc., 476 F.2d 386, 391 n. 8 (8th Cir. 1973); Smith v. Paul, 174 Cal. App. 2d 744, 345 P.2d 546, 553 (1959). An architectural plan is a technical writing which is capable of being copied only by similar technical writings, i.e., by other plans. A building is the result of plans not a "copy" of them. Nucor Corp. v. Tennessee Forging Steel Service, Inc., 476 F.2d at 391 n. 8 (quoting Katz, Copyright Protection of Architectural Plans, Drawings & Designs, 19 Lans. Ch. & Contemp.Prob. 224, 236 (1954)). It follows that at common law a copy of a computer program is another computer program in its flow chart or source phase because these are comparable technical writings. While the ROM is the mechanical embodiment of the source program, it is not a "copy" of it.
This same conclusion is reached under the 1909 Act. The 1909 Act and its predecessors gave authors the exclusive right, inter alia, to copy the copyrighted work. 17 U.S.C. § 1(a) (1976). In White-Smith Music Publishing Co. v. Apollo Co., 209 U.S. 1, 28 S. Ct. 319, 52 L. Ed. 655 (1908), the Supreme Court held that a piano roll[8] was not a "copy" of the musical composition recorded thereon and therefore, that the defendant, in making an unauthorized piano roll of plaintiff's musical composition, had not infringed plaintiff's "right to copy". After quoting the definition of copy set forth in Boosey v. Whight, the Supreme Court defined a copy of a musical composition as "a written or printed record of it in intelligible notation". 209 U.S. at 17, 28 S.Ct. at *1069 323. In reaching this result the Court stated:
"It may be true that in a broad sense a mechanical instrument which reproduces a tune copies it; but this is a strained and artificial meaning. When the combination of musical sounds is reproduced to the ear it is the original tune as conceived by the author which is heard. These musical tones are not a copy which appeals to the eye. In no sense can musical sounds which reach us through the sense of hearing be said to be copies as that term is generally understood, and as we believe it was intended to be understood in the statutes under consideration." 209 U.S. at 17, 28 S.Ct. at 323.
Noting that the perforated rolls were parts of a machine which, when duly applied and properly operated in connection with the mechanism to which they were adopted, produced musical tones in harmonious combination, the Supreme Court concluded that they were not "copies" within the meaning of the copyright act then in existence.
Congress in the 1909 Act implicitly adopted the White-Smith definition of "copy". 1 Nimmer on Copyright § 2.03[B], at 2-29 (1979). Thus, since the ROM is not in a form which one can "see and read" with the naked eye, it is not a "copy" within the meaning of the 1909 Act. In its object phase, the ROM, the computer program is a mechanical tool or a machine part but it is not a "copy" of the source program.[9]
Dicta in Synercom Technology, Inc. v. University Computing Co., 462 F. Supp. 1003 (N.D.Tex.1978), supports this conclusion. There suit was brought for copyright infringement of instruction manuals and input formats used with a computer program designed to solve engineering problems incident to the analysis of building structures.[10] The plaintiff argued that the sequencing and ordering of data was the expression of an idea, not the idea. After rejecting this argument, the court observed that
the formulation of the problem [to be solved] in sufficient detail and with sufficient precision to enable it to be converted into an unambiguous set of computer instructions requires substantial imagination, creativity, independent thought, and exercise of discretion, and the resulting program can in no way be said to be merely a copy or version of the problem statement. The program and the statement are so different, both in physical characteristics and in intended purpose, that they are really two different expressions of the same idea, rather than two different versions of the same expression. 462 F.Supp. at 1013 n.5.
Even assuming that the ROM in plaintiff's CompuChess was copied by defendants JS&A, Sugarman and Stanke, the ROM is not a "copy" of plaintiff's computer program and therefore the copying is not actionable. Since a complete defense as a matter of law with respect to plaintiff's claim of copyright infringement exists, the motion of defendants JS&A, Sugarman and Stanke for summary judgment is granted on Count I of the First Amended Complaint.[11]
In Count II of the First Amended Complaint, it is alleged that defendants JS&A, Sugarman and Stanke have engaged in unfair trade practices and unfair competition against plaintiff by importing, distributing, selling, marketing and advertising *1070 as its own copies of plaintiff's ROM.[12] Although the facts are undisputed, defendants JS&A, Sugarman and Stanke have not shown that they are entitled to judgment as a matter of law.
While the rule may once have been otherwise, unfair competition is not confined to the passing off of the goods of one for those of another and the "palming off" theory is no longer the sole and exclusive criterion in determining the right to relief against unfair competition. There may be unfair competition by misappropriation as well as by misrepresentation, that is, the doctrine of unfair competition has been extended to permit the granting of relief in cases where there was no fraud on the public but where one, for commercial advantage, has misappropriated the benefit or property right of another and has exploited a competitor's business values. 87 C.J.S. Trade-Marks, Trade-Names and Unfair Competition § 13 (1954); R. Callmann, The Law of Unfair Competition, Trademarks & Monopolies § 60.3 (3d ed. 1968); International News Service v. Associated Press, 248 U.S. 215, 39 S. Ct. 68, 63 L. Ed. 211 (1918).
Defendants JS&A, Sugarman and Stanke attempt to rebut plaintiff's argument that they misappropriated plaintiff's ROM by relying on two Supreme Court decisions, Compco Corp. v. Day-Brite Lighting, Inc., 376 U.S. 234, 84 S. Ct. 779, 11 L. Ed. 2d 669 (1964), and Sears, Roebuck & Co. v. Stiffel Co., 376 U.S. 225, 84 S. Ct. 784, 11 L. Ed. 2d 661 (1964). The following statement in Compco capsulizes the two decisions:
"Today we have held in Sears . . . that when an article is unprotected by a patent or a copyright, state law may not forbid others to copy that article. To forbid copying would interfere with the federal policy, found in Art. I, § 8, cl. 8, of the Constitution and in the implementing federal statutes, of allowing free access to copy whatever the federal patent and copyright laws leave in the public domain."
376 U.S. at 237, 84 S.Ct. at 782. Thus, defendants JS&A, Sugarman and Stanke in essence are arguing that International News Service has been overruled sub silentio by Sears and Compco.
However, Goldstein v. California, 412 U.S. 546, 93 S. Ct. 2303, 37 L. Ed. 2d 163 (1973), indicates that Sears and Compco did not overrule International News Service and the misappropriation doctrine. R. Callmann, The Law of Unfair Competition, Trademarks & Monopolies § 61.1 (3d ed. Supp.1978). In Goldstein a California statute making it a criminal offense to pirate recordings produced by others was challenged and the Supreme Court held inter alia that the California statute did not violate the Supremacy Clause of the Constitution. In so holding, the Supreme Court distinguished Sears and Compco from Goldstein on the grounds that in Sears and Compco the state was giving protection *1071 which conflicted with the objectives of the federal patent laws while in Goldstein the state was giving protection which did not conflict with any federal law. Since Congress had left the area of sound recordings unprotected, the state was free to act. Thus, states may prohibit the misappropriation of a property right or a commercial advantage of another. R. Callmann, The Law of Unfair Competition, Trademarks & Monopolies § 60.4(c) (3d ed. 1968).
Since unfair competition is a tort, it is governed by the law of the state which has the most significant relationship to the occurrence and to the parties. Restatement (Second) of Conflict of Laws § 145 (1971); Ingersoll v. Klein, 46 Ill. 2d 42, 262 N.E.2d 593, 595 (1970). In unfair competition cases the principal location of the defendant's conduct is the contact that usually is given the greatest weight in determining the state which has the most significant relationship. Restatement (Second) of Conflict of Laws § 145, comment f (1971). Thus, with respect to defendants JS&A, Sugarman and Stanke the law of Illinois controls.[13]
Cases in Illinois indicate that the doctrine of unfair competition has been extended in Illinois to permit relief where one for commercial advantage has misappropriated the property of another. E.g., Capitol Records, Inc. v. Spies, 130 Ill.App.2d 429, 264 N.E.2d 874 (1st Dist. 1970). Since the court does not know exactly how the ROM in the JS&A Chess Computer was created,[14] it cannot determine at this time whether defendants' actions constituted unfair competition. Since the undisputed facts presently before the court do not establish that defendants JS&A, Sugarman and Stanke are entitled to judgment as a matter of law, their motion for summary judgment is denied on Count II of the First Amended Complaint.
In order to obtain a preliminary injunction to restrain the unfair competition of defendants JS&A, Sugarman and Stanke, plaintiff must establish a reasonable probability of success on the merits, irreparable injury, the lack of serious adverse effects on others, and sufficient public interest. Ekanem v. Health & Hospital Corp. of Marion County, 589 F.2d 316, 319 (7th Cir. 1978). Here plaintiff has failed to establish any of these four factors.
Firstly, plaintiff has not established that there is a reasonable probability of success on its claim of unfair competition because it can only speculate as to how the ROM in the CompuChess was duplicated.[15] Thus, at this point in time, the court is unable to determine that there is a substantial likelihood that plaintiff will prevail on the merits.
Secondly, plaintiff has failed to show that it will be irreparably harmed if the injunction does not issue. Plaintiff contends that if a preliminary injunction does not issue, it will suffer lost profits, other damages and injury to its good will and business reputation. However, plaintiff has an adequate remedy at law if it has suffered lost profits and other money damages as a result of the actions of defendants JS&A, Sugarman and *1072 Stanke. Plaintiff's conclusory statements that its reputation and good will have been damaged do not establish that plaintiff has been irreparably harmed.[16]
Thirdly, the threatened injury to plaintiff may not outweigh the threatened harm to defendants JS&A, Sugarman and Stanke if they are enjoined from reproducing, importing, distributing, selling, marketing and advertising the JS&A Chess Computer. The injury to plaintiff if the preliminary injunction does not issue is a decrease in sales while the injury to defendants JS&A, Sugarman and Stanke if the preliminary injunction does issue is an elimination of sales altogether.
Finally, plaintiff has not convinced the court that the public interest will be served if a preliminary injunction issues. Generally, the public interest is served by freedom of trade and business competition. Absent a showing as to exactly how the ROM in the CompuChess was duplicated, this court does not believe it is in the public interest to enjoin defendants JS&A, Sugarman and Stanke from reproducing, importing, distributing, selling, marketing and advertising the JS&A Chess Computer. Therefore, plaintiff's motion for a preliminary injunction to restrain the unfair competition of defendants JS&A, Sugarman and Stanke is denied.
Accordingly, the motion of plaintiff for a preliminary injunction is denied and the motion of defendants JS&A, Sugarman and Stanke for summary judgment is granted on Count I of the First Amended Complaint and is denied on Count II of the First Amended Complaint.
It is so ordered.
NOTES
[1] In the industry computer programs are collectively known as computer software, as distinguished from computer hardware, i.e., the physical equipment itself. 21 Cath.L.Rev. 181 n.2 (1971); Synercom Technology, Inc. v. University Computing Co., 462 F. Supp. 1003, 1005 (N.D.Tex.1978).
[2] Each and every copy of the source program had printed on it the words "Copyrighted by D. B. Goodrich & Associates" and the date when it was printed out. On November 2, 1978, D. B. Goodrich & Associates, Inc. assigned its copyright to plaintiff.
[3] Although defendants JS&A, Sugarman and Stanke do not know how the ROM was manufactured by defendant Novag Industries, Inc., defendants JS&A, Sugarman and Stanke and plaintiff have stipulated that the chess computer program of the JS&A Chess Computer is identical to the chess computer program of plaintiff's CompuChess.
[4] Even if the 1976 Act did apply, copying of the ROM would not be actionable. Under the 1976 Act "copies" are defined as
"material objects, other than phonorecords, in which a work is fixed by any method now known or later developed, and from which the work can be perceived, reproduced, or otherwise communicated, either directly or with the aid of a machine or device. The term "copies" includes the material object, other than a phonorecord, in which the work is first fixed." 17 U.S.C. § 101 (App.1976).
While the new definition of copy encompasses works which may be perceived "with the aid of a machine or device," the court believes that the 1976 Act applies to computer programs in their flow chart, source and assembly phases but not in their object phase, i.e., the ROM, for the following reasons:
(1) Proposed Regulation § 201.20, which sets forth the suggested methods of affixing and positioning the copyright notice on various types of works in order to satisfy the requirement in section 401(c) of the 1976 Act, 17 U.S.C. § 401(c) (App.1976), that the copyright notice "be affixed to the copies in such manner and location as to give reasonable notice of the claim of copyright," states:
"(g) Works Reproduced in Machine-Readable Copies. For works reproduced in machine-readable copies (such as magnetic tapes or disks, punched cards, or the like) from which the work cannot ordinarily be visually perceived except with the aid of a machine or device, the following constitute examples of acceptable methods of affixation and position of the notice:
(1) A notice embodied in the copies in machine-readable form in such a manner that on visually perceptible printouts it appears either with or near the title, or at the end of the work;
(2) A notice that is displayed at the user's terminal at sign on;
(3) A notice that is continuously on terminal display;
(4) A permanently legible notice reproduced on a gummed or other label securely affixed to the copies or to a box, reel, cartridge, cassette, or other container used as a permanent receptacle for the copies."
Copyright L.Rep. (CCH) ¶ 14,001 (footnote omitted).
(2) In its object phase, the computer program is a mechanical device which is engaged in the computer to become an essential part of the mechanical process. Keplinger, Computer Intellectual Property Claims: Computer Software & Data Base Protection, 1977 Wash.L.Q. 461, 464. Mechanical devices which cannot qualify as pictorial, graphic or sculptural works are not writings and may not obtain copyright protection. 1 Nimmer on Copyright § 2.18[F] (1979).
[5] The National Commission on New Technological Uses of Copyrighted Works was established to recommend, inter alia, definitive copyright provisions to deal with these problems. Act of Dec. 31, 1974, Pub.L.No.93-573 §§ 201-208, 88 Stat. 1873-1875.
[6] Although the term "common-law copyright" is not technically and strictly accurate, it is useful and suggestive. More accurate is the term "common-law right of first publication." 18 Am.Jur. Copyright & Literary Property § 2 (1965).
[7] Since the parties have assumed that the ROM is a "copy" of plaintiff's computer program, they have perceived the issue here to be whether the sale of the CompuChess, which contains the ROM, was a publication of the computer program. Since the court concludes that the ROM is not a "copy" of the computer program, it need not reach this issue.
[8] A piano roll is a perforated roll of music used in connection with player pianos.
[9] A structure is not a copy of the architectural plans upon which the structure is based under the 1909 Act, as at common law. E.g., DeSilva Construction Corp. v. Herrald, 213 F. Supp. 184, 196 (M.D.Fla.1962). Thus, the conclusion that the ROM is not a "copy" of the source program under the 1909 Act could be supported on that ground also.
[10] In using a computer program, it is necessary to have a format for input so that the input of data and the instruction to the computer are compatible with its program. Synercom Technology, Inc. v. University Computing Co., 462 F.Supp. at 1005.
[11] Since defendants JS&A, Sugarman and Stanke have a complete defense as a matter of law with respect to plaintiff's claim of copyright infringement, plaintiff's motion for a preliminary injunction to restrain these defendants from infringing plaintiff's copyright is denied.
[12] The First Amended Complaint alleges that the court has jurisdiction pursuant to 28 U.S.C. § 1338 (1976) which states that district courts have jurisdiction of claims of unfair competition when they are joined with substantial and related claims under the copyright law. However, where there is no jurisdiction of the asserted federal claim, the state claim should be dismissed unless there are other grounds of jurisdiction to support it. 1 Moore's Federal Practice ¶ 0.62[6], at 699 (2d ed. 1979). Although the jurisdictional statement does not contain other grounds of jurisdiction, the court can look at the entire complaint to determine the existence of jurisdiction. Wright & Miller, Federal Practice & Procedure: Civil § 1206 (1969). Since the First Amended Complaint alleges that plaintiff is a corporation organized and existing under the laws of Florida with its principal place of business in Pinellas County, Florida, that the corporate defendants are organized and exist under the laws of states other than Florida and have their principal places of business in states other than Florida, and that the individual defendants are citizens of states other than Florida, there is diversity of citizenship. Although the First Amended Complaint does not allege the existence of the requisite amount in controversy, information in affidavits in support of plaintiff's motion for a preliminary injunction demonstrates that the amount in controversy exceeds, exclusive of interest and costs, the sum of ten thousand dollars. The court can also look at information outside the complaint to determine the existence of jurisdiction. Wright & Miller, Federal Practice & Procedure: Civil § 1206 (1969). Thus, the court has diversity jurisdiction of the unfair competition claim.
[13] JS&A is an Illinois corporation and Sugarman and Stanke are citizens of Illinois.
[14] Plaintiff and defendants JS&A, Sugarman and Stanke have stipulated that General Instruments Corporation produces and manufactures the ROM contained in the JS&A Chess Computer, that JS&A obtains the ROM from defendant Novag Industries, Ltd., a foreign corporation with its principal place of business in Hong Kong, and that in May of 1978 General Instruments Corporation manufactured the ROM from a punched paper tape received from ASTEC, a Hong Kong company. Plaintiff and defendants JS&A, Sugarman and Stanke speculate that the ROM in plaintiff's CompuChess was unloaded (i.e., plaintiff's ROM was removed from the CompuChess and installed in a computer interface which decoded the ROM). Once the computer had the complete decoding of the ROM, they speculate that either a computer printout could have been furnished to someone who could have made a ROM identical to plaintiff's ROM or that the information from the computer could have been dumped onto a programmable read only memory ("PROM") which could have been furnished to a ROM manufacturer who could have made a ROM containing plaintiff's computer program.
[15] See footnote 14 supra.
[16] The only damages that plaintiff specifically alleges are the decrease in plaintiff's sales since defendants JS&A, Sugarman and Stanke began marketing the JS&A Chess Computer and the refusal of plaintiff's distributors to renew their orders due to competition from defendant JS&A. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1531518/ | 269 S.W.2d 46 (1954)
STATE
v.
SANCHEZ.
No. 43821.
Supreme Court of Missouri, Division No. 1.
June 14, 1954.
Milton B. Kirby, Springfield, for appellant in error.
John M. Dalton, Atty. Gen., Paul McGhee, Asst. Atty. Gen., for respondent.
LOZIER, Commissioner.
Defendant-appellant (herein called defendant) was convicted of receiving stolen property knowing it had been stolen, Section 560.270 RSMo 1949, V.A.M.S., and sentenced to five years' imprisonment in the penitentiary. He appealed.
In this court, defendant's only allegation of error is the trial court's failure "to discharge the jury because of the inflammatory remarks made by the prosecuting attorney in his closing argument."
The state's case (defendant offered no evidence) was: Defendant and his wife Edna lived at a hotel in Springfield. Willie Birdsong, of Bolivar, had met them when he stayed at the hotel. Edna worked at the R. C. Cocktail Lounge as a "tattoo artist." Willie, a patron of the lounge, had visited with Edna there several times. Willie spent the afternoon of February 6, 1953, drinking beer in the lounge. Verla Louise Bridges (whom Willie had never seen before) came into the lounge and joined Willie. According to Willie, about 5:30 or 6 p. m., Verla persuaded Willie to go with her next door and have their picture taken; as they came out of the studio, Verla rushed him into a cab and took him to the Lone Star Cabins where she had him give her a ten dollar bill to pay for the taxi and the cabin; they went into the cabin; Verla gave Willie a "Mickey Finn"; Willie "passed out" almost immediately; when *47 Willie revived at dawn, both Verla and his money were gone. Verla's version was not materially different from Willie's. (According to her: Willie had wanted the picture taken, he proposed the trip to the cabin, she had not given him a "Mickey Finn," they drank three highballs made from whiskey Willie had bought before they left the lounge, and his loss of consciousness was simply a drunken stupor.) She admitted taking the money out of Willie's billfold, leaving the cabin and turning the money over to defendant.
We can perhaps best point up the sole issue in this appeal (the alleged impropriety of the prosecuting attorney's argument and the trial court's actions thereon) by summarizing the rest of Verla's testimony, given without objection. Verla was 28 years old, lived in Miami, Florida, and came to Springfield in January, 1953, to visit her husband, a prisoner in the Federal Medical Center there. She stayed at the hotel where defendant and his wife were living. Shortly after defendant became acquainted with her, he asked her "about some prostitution here, and I told him I wasn't interested," and that she was going back to Miami. She left for Miami and telephoned defendant from Birmingham, Alabama; defendant told her that if she would send him some money, he would join her, and she refused. She returned to Springfield and defendant asked her for money. Defendant and his wife told her about Willie, that he "had money on him," that as Willie didn't know Verla, she (Verla) could get it; and defendant "told me that I'd better get the money." At the lounge the next day (February 6, 1953), defendant and Edna pointed Willie out to her.
After Verla left the cabin, she met defendant at the lounge. He and she went to the hotel, she handed him her purse, he took out the money, counted it ("some $340 odd dollars") and kept it. Defendant then had Verla change clothes and he and she drove out of Springfielddefendant wanted to get her out of town. He took her to a cabin, they had several drinks, she "passed out" and defendant left her there. After she "came to," she returned to town and saw defendant and Edna. They took her to the hotel where Verla asked defendant about $40 she had given him to keep for her "before I ever rolled this fellow by the name of Birdsong," but defendant "wouldn't give her the money." There was no talk "exactly of splitting the money (Willie's) up. I had just give Sam (defendant) the money. The proposition was that I was going to get the money and they (defendant and Edna) was going to pay off a car note, and we was going to Kansas City to involve in prostitution. Q. He was going to take you up there to be a prostitute, is that correct? A. That is right." She "had engaged in prostitution here in Springfield on two occasions at Sanchez's instance" and had given defendant the money.
Verla said that she had never been arrested for prostitution, but had "served time""once for assault, and attempt to murder, when I was eighteen years old, and three or four other times for vagrancy." She admitted that she then stood charged with larceny (of Willie's money, apparently) in Greene County, had served 18 months for violation of "the White Slave Traffic Act," 18 U.S.C.A. § 2421 et seq. and at one time had been a drug addict.
In his new trial motion, defendant first complained of this argument by the prosecuting attorney: "What other witnesses would the state have? What other witnesses would associate with some bloodsucker, some pimp who makes his money by sending out women to rob other citizens? Who else would know him? Who else would associate with him? Who else would be here to testify?" However, we need not rule the propriety of that argument as no objection thereto was made at the time. (The same applies to other argument of which defendant now complains but which he did not assign as error in his new trial motion.) State v. Revard, 341 Mo. 170, 106 S.W.2d 906, 911[17].
Referring to a statement in the argument of Mr. Kirby, defendant's counsel (that *48 defendant "values his liberty"), the prosecuting attorney said: "He (defendant) should have thought about that somewhere back in his career in which he enticed girls into this sort of life." Defendant's counsel objected saying, "There is no evidence of that. The Court: The jury will disregard that statement. Mr. Kirby: And ask that the jury be discharged on the basis of that statement. The Court: The motion is overruled."
Later, the prosecuting attorney argued: "These people (such as defendant) are the lice of our society. We must take care of them. It is your duty as well as my duty to impose upon people of this type, the lowest form of humanity there is, the maximum punishment." Mr. Kirby objected "to those remarks as being inflammatory, and ask that the prosecutor be reprimanded, and ask that the jury be discharged. The Court: Well, those remarks are probably inflammatory. And the jury is instructed to disregard them, and pay no attention to them. Mr. Greene (the prosecuting attorney), refrain from using any further inflammatory remarks. And the motion to discharge the jury is overruled. Proceed." Mr. Greene then immediately concluded for the state thus: "I ask you, ladies and gentlemen of the jury, in all sincerity, to impose the maximum punishment that the State of Missouri provides in this case, and that is five years in the State Penitentiary. I am sure that you will discharge your duties in imposing a sentence in the same diligent and careful manner that you have reviewed the testimony in this case. I think you."
Defendant and the state cite many cases wherein this court has reversed or refused to reverse a conviction because of prejudicial argument by the prosecuting attorney. We have examined all of those cases, but need not compare them with the instant case or even cite them. "Whether or not a particular improper argument is so prejudicial under the facts in the particular case, as to necessitate a reprimand of counsel or a discharge of the jury, is largely within the discretion of the trial court. An appellate court will not interfere unless the record shows that the trial court abused its discretion to the prejudice of the appellant." State v. Tiedt, 360 Mo. 594, 229 S.W.2d 582, 588[8-11].
We shall assume without deciding that the prosecuting attorney's statement as to defendant enticing girls "into this sort of life" was not justified by the evidence, and that his references to people of defendant's type as "lice" and "the lowest form of humanity," were improper. In both instances, defendant's objection was sustained, the jury was instructed to disregard the statement (and, in the latter instance, the prosecuting attorney was admonished to "refrain from using any further inflammatory remarks"), and the prosecuting attorney thereafter made no similar statement. In ruling defendant's new trial motion, the trial court considered the nature of the statements and determined that, under all the circumstances, they had not been so prejudicial to defendant as to justify the grant of a new trial. We believe that the trial court's action was sufficient in each instance and that the trial judge did not abuse his discretion in refusing to declare a mistrial.
We affirm the judgment and direct that defendant's sentence be executed. 42 V.A. M.S.Supreme Court Rule 28.14.
VAN OSDOL and COIL, CC., concur.
PER CURIAM.
The foregoing opinion by LOZIER, C., is adopted as the opinion of the Court.
All concur. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1531516/ | 269 S.W.2d 203 (1954)
CLICK
v.
COMMONWEALTH.
Court of Appeals of Kentucky.
June 23, 1954.
Robert S. Wellman, Prestonsburg, for appellant.
J. D. Buckman, Jr., Atty. Gen., Zeb A. Stewart, Asst. Atty. Gen., for appellee.
*204 CULLEN, Commissioner.
Upon trial under an indictment for murder, Ray Click was found guilty of voluntary manslaughter and sentenced to 10 years in the penitentiary. He appeals, maintaining that the evidence was not sufficient to sustain a conviction and that the court erred in the admission of certain evidence.
The victim was Otis Blankenship. He, together with Ray Click, Lloyd Click and Everett Stone, began a drinking, singing and dancing party in a small two-room house owned by Ray Click, in Floyd County, around 7:00 p. m. on August 29, 1953. Around 10:00 p. m. the light in the front room went out, and a rifle shot was heard. A bullet passed through the abdomen of Lloyd Click and entered the head of Otis, who later died without regaining consciousness. After the shot was fired, Lloyd Click and Everett Stone immediately departed from the premises by the front door. Otis Blankenship's wife, who had been at a nearby house, ran to the Ray Click house with a flashlight, and found Otis lying on the floor of the front room. Ray Click was standing in the room, with the light still out. Mrs. Blankenship exclaimed that Otis had been killed, whereupon Ray said, in effect, that it was not Otis, but Lloyd, who had been shot. The light was then turned on, and other neighbors arrived. One of these neighbors found Ray Click's .22 rifle lying across the bed in the back room, with several shells beside it. Ray left the place and went to the home of his mother where he fell asleep and was later that night awakened and arrested by some deputies of the sheriff. The deputies said that when they arrested him he was drunk and talked incoherently. He said at first that the men who were shot had been wrestling over the gun, but immediately changed his story and said that he was asleep at the time and didn't know what had happened.
It appeared from the testimony of Lloyd Click and Everett Stone that immediately before the light went out and the shot was fired, Everett Stone was sitting on a chair in one front corner of the room, and Otis Blankenship was seated in the other front corner. Ray Click was standing behind a table in the back of the room, directly in front of and perhaps partly in the doorway to the back room, and Lloyd Click was standing in front of the table, in a line between Ray and Otis. No one could say whether the light went out accidentally or was turned off by someone in the room, although one of the men said that Ray had turned the light off one time earlier in the evening. It is not questioned that the bullet which wounded Lloyd and killed Otis came from Ray Click's rifle.
Upon the trial, Lloyd Click and Everett Stone had no recollection of seeing the rifle in the room at any time, and refused to say either that the rifle was or must have been fired by Ray Click. We will have more to say about their testimony at a later point in this opinion.
Ray Click testified that during the evening the rifle had been standing in a back corner of the room, with its butt resting upon a small shelf behind a stove, and with its barrel leaning against a nail in the wall above the shelf. He said that after the shot was heard he discovered the gun lying across the top of the stove, and he stated his belief that the gun fell from its resting place across the stove and was accidentally discharged. He further said that when he went into the back room to get some towels to wipe the blood from Otis' head he picked up the rifle and tossed it onto the bed, all this taking place before the light was turned back on.
It is our opinion that the evidence was sufficient to establish that a criminal act had been committed and that Ray Click was the person who committed it. Although the evidence was wholly circumstantial, the inferences lead unerringly to the conclusion that Ray Click turned out the light and fired the shot. It is true that no witness said the gun was in Ray's hands, but the situation before the shooting, and the course of the bullet, establish beyond any doubt that if the gun was fired deliberately Ray was the one who did it. The conduct of Ray after the shooting, the conflicting stories told by him to the arresting officers, *205 the fact that the other men did not see the rifle resting in the corner earlier in the evening, and the fact that shells were found beside the gun on the bed in the back room, all tend to disprove Ray's theory that the gun fell accidentally from its resting place. Also, there was evidence that the shelf on which Ray said the butt of the gun was resting was below the level of the top of the stove, so that the gun could not have fallen across the top of the stove.
Although we believe that the evidence was sufficient to sustain the conviction, it is our opinion that prejudicial error was committed in the admission of certain evidence supposedly offered for the purpose of impeaching the witness Lloyd Click.
Before offering Lloyd Click as a witness, the Commonwealth's attorney stated to the court:
"* * * it is imperative that we introduce the witness Lloyd James Click, who is a nephew of the defendant, Ray Click, and we assume he will be a hostile witness, and desire permission of the Court to cross-examine him, and also to impeach his testimony by showing he made statements contrary to his present testimony."
The request of the Commonwealth's attorney was granted, over objection of the defendant. Upon being questioned as to the events at the time of the shooting, Lloyd Click would not say that Ray shot him, and he claimed to have no idea who fired the shot. He also said that he had made no effort to find out who shot him. The Commonwealth's attorney then asked him whether he had not stated, in the presence of various named persons, that Ray shot him. Lloyd denied having made the statements. The Commonwealth's attorney subsequently introduced seven witnesses who testified that Lloyd had said in their presence that Ray had shot him. The court admonished the jury, as to each of these witnesses, that their testimony was to be considered only for the purpose of impeaching Lloyd Click.
We think it is perfectly obvious that the real objective of the Commonwealth's attorney, and the real purpose of the seven "impeaching" witnesses, was not to impeach Lloyd Click, but to prove by indirection that Ray Click had fired the fatal shot. The purpose was to put into Lloyd's mouth words Lloyd was unwilling to use on the trial, which would have the effect of establishing Ray's guilt.
In Maddox v. Commonwealth, 311 Ky. 685, 225 S.W.2d 107, 108, after receiving a number of "`I don't know'" answers from an evasive witness, the Commonwealth's attorney questioned her about some positive statements she allegedly had made to him before the trial, and he later took the stand himself and testified that she had made such positive statements. In holding this to be prejudicial error, the Court said:
"If the testimony is merely negative or the witness fails to make the statements which the party introducing him apparently expected, he will not be permitted to get before the jury the anticipated evidence by this secondhand method."
The rule is stated generally to be that a party may impeach his own witness, by proof of contradictory statements, only where the witness testifies positively to the existence of a fact prejudicial to the party, and not where the witness merely fails or refuses to testify as to the existence of a fact that would be favorable to the party. Harvey v. Commonwealth, 287 Ky. 92, 152 S.W.2d 282; Couch v. Commonwealth, 202 Ky. 677, 261 S.W. 7; Johnson v. Commonwealth, 227 Ky. 153, 12 S.W.2d 308; Champ v. Commonwealth, 2 Metc. 17, 59 Ky. 17, 74 Am.Dec. 388.
We have no doubt as to the prejudicial effect of the seven witnesses repeating and emphasizing the fact that Lloyd had said that Ray fired the shot. We think the admission of this evidence deprived Ray of a fair trial.
Some complaint is made of the conduct of the Commonwealth's attorney in questioning Everett Stone concerning contradictory statements made by him in his *206 testimony before the grand jury. While a considerable amount of this questioning was with regard to unessential details, and therefore not prejudicial, some of it related to positive statements alleged to have been made by Everett before the trial concerning facts as to which he professed a lack of knowledge on the trial. This was improper for the same reason that the attempted impeachment of Lloyd Click was improper, and upon another trial the court will not permit such line of questioning.
The judgment is reversed, with directions to grant a new trial. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1531522/ | 115 N.J. Super. 133 (1971)
278 A.2d 500
SHERRY ANN QUAGLIATO, ROCCO QUAGLIATO AND CHARLOTTE QUAGLIATO, PLAINTIFFS-APPELLANTS,
v.
NATHAN BODNER, DEFENDANT-RESPONDENT. SHERRY ANN QUAGLIATO, ROCCO QUAGLIATO AND CHARLOTTE QUAGLIATO, PLAINTIFFS-APPELLANTS,
v.
HAROLD ZEMANY, DEFENDANT-RESPONDENT.
Superior Court of New Jersey, Appellate Division.
Submitted June 2, 1971.
Decided June 10, 1971.
*134 Before Judges KILKENNY, HALPERN and LANE.
Mr. Herman J. Ziegler, attorney for appellants.
Messrs. Conant, Halberstadter & McGuire, attorneys for respondent Nathan Bodner (Mr. Edward J. McCreedy, of counsel).
*135 Messrs. Oppenheim & Oppenheim, Attorneys for respondent, Harold Zemany, submitted Statement In Lieu of Brief.
The opinion of the court was delivered by LANE, J.A.D.
Plaintiffs appeal upon leave granted from an order dated August 14, 1970 that "the above captioned matters be severed and tried separately as to all issues for the purpose of trial in the Superior Court, Law Division, Union County," and from an order dated October 19, 1970 denying a rehearing.
On July 7, 1967, Sherry Ann Quagliato, under 21 years of age at the time of the accidents, was operating an automobile which was struck in the rear by an automobile owned and operated by Harold Zemany. On September 12, 1967, Sherry Ann Quagliato was the operator of an automobile which was struck at an intersection by an automobile owned and operated by Nathan Bodner. In March 1969 separate suits were instituted against each defendant to recover damages for her injuries sustained in each accident. By motion filed July 29, 1969, plaintiffs moved to consolidate the two actions "as to damages only upon the grounds that they involve common injuries to plaintiff which may prove difficult to apportion or allocate to each particular defendant." Although notice of the hearing date of the motion was given to the attorney for each defendant, no appearance was made in opposition to the motion. An order dated August 19, 1969, was signed by Judge Milton A. Feller providing "that the within causes of action be and they are hereby consolidated for trial on the question of damages only. The question of liability in each case will be tried separately after which trials, and in the event plaintiff is successful in both cases, the question of damages will be tried jointly."
On June 24, 1970, Bodner filed a notice of motion that he would apply to the court on July 3, 1970, "for an order vacating the order of the court of August 19, 1969, consolidating the above matters, and make application for them to be severed and tried separately as to all issues." The *136 motion was heard by a different judge, and the relief sought was granted by the August 14, 1970 order. After the entry of this order, application was made by plaintiffs to the Law Division for a rehearing of the motion and, alternatively, for "a stay on the trial of the issues of damages in each of the within causes pending the resolution of all issues of the liability in the trial of the two cases." The judge who signed the August 14, 1970 order filed a letter-opinion denying the application. An order dated October 19, 1970, was entered providing that "the applications for the consolidation of the within causes of action and the application for a stay of the trial of the issues on the question of damages be and they are hereby denied."
In interrogatories answered by Sherry Ann Quagliato in the Zemany action she set forth that her injuries in part were "cervical sprain, whiplash type injury; acute sprain and strain of cervical spine; acute lumbar sprain." Allegedly she was confined to a hospital from July 8 to July 24, 1967, and from September 13 to September 16, 1967.
In interrogatories answered by her in the Bodner action she set forth that her injuries in part were "cervical sprain, whiplash type injury;" "aggravation of lower back and upper back conditions from accident of July 7, 1967." She alleged that she was confined to a hospital from September 13 to September 16, 1967.
In her deposition plaintiff stated that the injuries she sustained in both accidents were to the same areas of her body and that her complaints following each accident were similar. The physician who had treated her since July 8, 1967, testified on deposition that the injuries and complaints arising from each accident were to the same area of plaintiff's body. He said that he could not separate the injuries sustained in the second accident from those injuries sustained in the first accident but that there was an aggravation to the injuries sustained in the first accident as a result of the second accident. He testified, "I cannot at all divide any portion of *137 her pain today and make it attributable to the first injury or the second injury."
We note that Judge Feller's order of August 19, 1969, consolidating the damage issue, was not specifically vacated by the August 14, 1970 order. It seems clear to us, however, that the judge signing the August 14, 1970 order intended it to vacate Judge Feller's earlier order. We will so consider its effect.
We strongly disapprove of the procedure followed by Bodner and concurred in by Zemany. If they were dissatisfied with Judge Feller's order, the proper procedure would have been to apply for leave to appeal under R. 2:2-4 or to move before Judge Feller to vacate the order under R. 4:50-1. Bodner's motion directed to the August 19, 1969 order was filed June 24, 1970, and was to be heard July 3, 1970. Judge Feller was sitting in the same Division, in the same county, throughout July 1970. We should not have to say that under these circumstances a motion for relief pursuant to R. 4:50-1 should properly have been brought on for hearing before Judge Feller, the judge who signed the order sought to be vacated. We see no reason for a different judge consenting to hear defendant's motion. The fact that the motion was not actually moved for hearing until August 14, when Judge Feller was on vacation, does not alter our opinion. The hearing should have been adjourned until his return from vacation. The circumstances would have been different if Judge Feller had no longer been sitting in the Law Division in Union County or if an emergency existed. We pass this procedural deficiency and go to the merits.
Apparently the second judge based his decision upon either R. 4:50-1(a) or R. 4:50-1(f). R. 4:50-1(a) provides that the court may relieve a party from an order for "mistake, inadvertence, surprise, or excusable neglect." There was before the court an affidavit by the former attorney for Zemany. This affidavit states that that attorney was aware that plaintiffs' motion to consolidate was listed for argument. He alleges that he decided the night before the return day of *138 plaintiffs' motion that he would appear in court the following day to oppose the motion but that when he appeared the motion had already been heard. The attorney continues to say in his affidavit, "I then advised Mr. Ziegler, by letter, that I was not happy with the consolidation and felt that the matter was improperly consolidated and that the prior order should be rescinded." That letter was dated August 21, 1969. A motion for rehearing or an application for leave to appeal could have been promptly filed.
There was no mistake, inadvertence or surprise. The only possible justification under R. 4:50-1(a) would be excusable neglect on the part of the attorney. By no stretch of the imagination can the attorney's tardiness on the day the motion was listed be considered excusable neglect.
There was some indication during the argument on defendant's motion before the second judge that he felt Judge Feller's order was inadvertently entered and, therefore, should be vacated under R. 4:50-1(f) which provides that the court may relieve a party from an order for "any other reason justifying relief from the operation of the judgment or order." If the second judge granted the relief under that provision, he would have had to conclude that Judge Feller had entered the original order through an erroneous interpretation of the law. However, to obtain relief from an order under R. 4:50-1(f), one must show that the enforcement of the order would be unjust, oppressive or inequitable. Greenberg v. Owens, 31 N.J. 402, 411 (1960) (Jacobs, J., dissenting).
It appears from what is before us at this time that plaintiff sustained injuries to the same portion of her body as a result of two entirely separate automobile accidents. The facts are distinguishable from those in Hill v. Macomber, 103 N.J. Super. 127 (App. Div. 1968), only as to the interval of time between the two accidents. The reasoning of that opinion at pp. 136-137 is directly applicable. Consolidation of the issues of damages in this case flows logically from what we said there. A gross injustice could result to *139 plaintiffs or to defendants if plaintiffs were compelled to try separately against each defendant the issue of damages. Cf. Ristan v. Frantzen, 14 N.J. 455, 461-462 (1954).
In Treanor v. B.P.E. Leasing, Inc., 158 N.W.2d 4 (Sup. Ct. Iowa 1968), the court held that it was error to order the plaintiff to have separate trials against two alleged tortfeasors to recover damages for injuries sustained in two separate accidents less than two months apart where the plaintiff alleged that certain of the damages were "inseparable and indivisible." The court stated:
As indicated in Meek v. Long, supra [258 Iowa 1309, 142 N.W.2d 385, 387, 388], if after trial the evidence supports plaintiffs' contentions, three verdicts would probably result, one against one defendant for those injuries shown to be solely attributable to him, another for those injuries shown to be solely attributable to the other defendant, and a third against both defendants jointly and severally for the injuries shown which could not with reasonable certainty be attributable solely to either. * * * Under proper instructions we are convinced the fact-finder is the proper party to make these determinations and assess these damages. [158 N.W.2d at 7]
In that case the court permitted a consolidated trial not only as to damages but also as to liability. We are not to be understood to approve a consolidation as to liability as well as damages where there are two separate accidents separated by an appreciable period of time. We fully subscribe to the Iowa Supreme Court's holding as to the verdicts the jury should be instructed to return in the event both defendants are held liable in the separate trials on liability. The finding as to whether, or what portion of, the injuries are indivisible is properly left to the jury. The Michigan Supreme Court in Maddux v. Donaldson, 362 Mich. 425, 108 N.W.2d 33 (Sup. Ct. 1961), stated:
When the triers of the facts decide that they cannot make a division of injuries we have, by their own finding, nothing more or less than an indivisible injury, and the precedents as to indivisible injuries will control. [108 N.W.2d at 37]
*140 See also Sutterfield v. District Court, 165 Colo. 225, 438 P.2d 236 (Sup. Ct. 1968); Schwartz v. Swan, 63 Ill. App. 2d 148, 211 N.E.2d 122 (App. Ct. 1965) (cert. or appeal denied or dismissed); Watts v. Smith, 375 Mich. 220, 134 N.W.2d 194 (Sup. Ct. 1965); 4 Restatement, Torts, § 879, p. 446 (1939); 1 Harper and James, The Law of Torts, § 10.1, p. 692 (1956); Prosser on Torts, § 42, p. 247, 255 (3d ed. 1964); Id., § 44, p. 260; Annotation, "Apportionment of Damages Involving Successive Impact By Different Motor Vehicles," 100 A.L.R.2d 16 (1965).
Clearly, Judge Feller's order consolidating these actions for trial "on the question of damages only" was entirely correct. Assuming a proper application had been made for relief from that order under R. 4:50-1(f), it was erroneous to grant the motion.
The orders of the Law Division dated August 14, 1970, and October 19, 1970, are vacated. The matters will proceed to trial as expeditiously as possible under Judge Feller's order of August 19, 1969, and if both defendants are found to be liable, as supplemented herein.
Costs will be taxed on this appeal for the plaintiffs against both defendants. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1531524/ | 236 B.R. 701 (1999)
In the Matter of Ernest & Carol KRIKAVA, Kevin Krikava, Debtors.
Ernest Krikava and Kevin Krikava, Plaintiffs,
v.
Richard J. Butler, Trustee, and Mark A. Beck, Attorney for Trustee, Defendants.
Bankruptcy Nos. BK92-40351, BK92-40352. Adversary No. 98-4034.
United States Bankruptcy Court, D. Nebraska.
June 17, 1999.
*702 *703 Stephen H. Nelsen, Lincoln, NE, for defendant Mark A. Beck.
Ira Dennis Hawver, Ozawkie, Kansas, for plaintiffs.
Shirley Keeler, Kansas City, MO, for defendant Richard J. Butler, Chapter 7 Standing Trustee.
MEMORANDUM
JOHN C. MINAHAN, Jr., Bankruptcy Judge.
This matter is before the Court upon Defendant Mark A. Beck's Rule 12(b) Motion to Dismiss Complaint (Fil. # 17), Plaintiffs' Resistance to Motion to Dismiss (Fil. # 20), Defendant/Trustee's Motion to Dismiss (Fil. #23) and Plaintiffs' Resistance to Trustee's Motion to Dismiss (Fil. # 29). The Motions to Dismiss are granted.
FACTS
Ernest and Carol Krikava filed for Chapter 12 relief on March 4, 1992 (BK92-40351). On this same date, the debtors' son, Kevin Krikava, also filed under Chapter 12 (BK92-40352). The bankruptcy cases were consolidated on March 26, 1992 (Fil. # 20). On August 14, 1992, the consolidated cases were converted to Chapter 7 cases under 11 U.S.C. § 1208(d) because the debtors had committed fraud in connection with the bankruptcy cases (Fils. # 106, # 107). Richard J. Butler was appointed as the Chapter 7 Standing Trustee and Mr. Mark A. Beck served as attorney for the trustee (Fil. # 125).
On October 19, 1992, Mr. Beck, on behalf of the Chapter 7 trustee, filed a Motion for Injunction and Restraining Order to restrain the debtors from interfering with the administration of the bankruptcy estate (Fil. # 146). Debtors did not resist this Court's entry of an Injunction and Restraining Order and the trustee's motion was sustained (Fil. # 158). Debtors were represented by counsel at the hearing on trustee's Motion For Injunction and Restraining Order, and no appeal was taken from this ruling.
On November 16, 1992, Mr. Beck, on behalf of the trustee, filed a Motion For Contempt alleging that the debtors had interfered with the liquidation of estate assets (Fil. # 164). The motion was heard on November 18, 1992. The debtors were again represented by counsel at the hearing. The debtors were not held to be in contempt. However, I sustained the trustee's oral request for a Writ of Assistance, in part, due to debtors interference with the trustee's administration of the estate. The Writ of Assistance directed the U.S. Marshal to assist the Chapter 7 trustee in execution of his duties. No appeal was taken from the Writ of Assistance entered by this Court (Fil. # 174).
On December 11, 1992 (Fil. # 209), and December 22, 1992 (Fil. # 223), the trustee filed a Notice, and Revised Notice, to Creditors of a Public Sale of certain real estate which constituted property of the bankruptcy estate. The United States Department *704 of Agriculture, Farm Home Administration ("United States") had a security interest in the real estate which was to be sold. Notice of sale was sent to the United States on December 11, 1992 and December 22, 1992. The United States did not object to the sale, stated that it approved of the proposed public auction and further stated that it would have a representative present on the date of the auction to place a protective bid of $96,310.00.
On March 6, 1996, Ernest Krikava filed a Motion requesting that the trustee be ordered to abandon potential claims against the Community National Bank of Seneca, Kansas ("Bank") (Fil. # 391). Krikava's counsel suggested to the Court that if the claims were abandoned, Ernest Krikava could then sue the Bank, personally. Krikava then filed a Withdrawal of Motion for Abandonment requesting, in part, that the trustee be ordered to sue the Bank (Fil. # 396). The trustee declined and filed a motion to abandon potential claims against the Bank. The trustee alleged that debtors' counsel was not willing to pursue claims against the Bank, debtor had not found outside counsel to file the claims, and that the claims were of inconsequential value and should be abandoned (Fil. # 397).
After a hearing, I entered an interim Order allowing for additional time for the presentation of evidence (Fil. # 403). As part of this Order, I stated that "the Chapter 7 trustee has proceeded appropriately with respect to the administration of the alleged lender liability action. Counsel for debtor acknowledged on record today, that debtor, in fact, desires to withdraw its motion to abandon and that debtor does not have the ability to prosecute the claim himself at this time."[1] (Fil. # 403).
Following a final hearing regarding abandonment, I sustained the trustee's and debtors' Motions to Abandon (Fils. # 397, # 391), concluded the debtor's Withdrawal of Motion for Abandonment (# 396) and trustee's Resistance to Withdrawal of Motion for Abandonment (Fil. # 401) were moot, and denied resistances filed by the Bank (Fils. # 392, # 400, and # 407). (See Fil. # 408). Debtors were represented by counsel at this hearing, and the decision was not appealed. The consolidated cases were closed on June 16, 1997 (Fil. # 434).
On February 3, 1997, Ernest and Kevin Krikava filed suit in the United States District Court for the District of Kansas against multiple defendants, including Richard J. Butler and Mark A. Beck. Mr. Butler filed a motion with this Court requesting that the bankruptcy cases be reopened (Fil. # 435), and the motion was sustained.
On February 12, 1998, I ordered the debtors to dismiss Mr. Butler and Mr. Beck as parties to the Kansas litigation, and I allowed the debtors 60 days in which to file a contested matter or adversary proceeding in this Court (Fil. # 460), against Mr. Butler and/or Mr. Beck. The Kansas litigation was dismissed. See U.S. ex rel. Krikava v. Community National Bank of Seneca, 220 B.R. 699 (D.Kan. 1998).
The debtors filed a timely Complaint with this Court, naming as defendants, Richard J. Butler in his capacity as trustee in the Krikavas' Chapter 7 bankruptcies, and Mark A. Beck in his capacity as attorney for the trustee (A98-4034, Fil. # 1).
*705 On June 8, 1998, plaintiffs filed two certificates attesting to service upon Mr. Gerald Goodell (Fil. # 5), and Mr. James Borthwick (Fil. # 6), attorneys for defendants, Mark Beck and Richard Butler, respectively.
On December 10, 1998, I overruled Plaintiffs' Motion for Default Judgment (Fil. # 13) and sustained the Resistance by defendants Beck (Fil. # 11), and Butler (Fil. # 12). As part of that Order, I allowed plaintiffs an additional 30 days in order to obtain personal service on the defendants (Fil. # 13). On January 8, 1999, plaintiffs filed certificates attesting that they had served defendants Butler (Fil. # 15) and Beck (Fil. # 16) on January 7, 1999.
This adversary proceeding is currently before the Court upon defendants' Motions to Dismiss (Fils. # 17, # 23). In support of their Motions to Dismiss, the defendants have requested that the Court take judicial notice of the record in the related bankruptcy cases. In addition, defendant Butler offers numerous documents, including deposition testimony in support of his motion to dismiss. In opposition to defendants' motions, plaintiffs have offered three affidavits.
LAW
Defendants' Motions to Dismiss (Fils. # 17, # 23) are made pursuant to FED. R.CIV.P. 12(b). Both defendants request that the Court take judicial notice of court files in the related bankruptcy cases. In addition, defendant Butler offers numerous additional documents, including deposition testimony, in support of his motion to dismiss. In opposition to defendants' motions, plaintiffs offered three (3) affidavits from harvesters which allegedly have knowledge of facts pertaining to debtors' complaint, as well as a letter received by debtors' counsel from the United States. Since the Court will consider "matters outside the pleading[s]," Rule 12(b) requires that the motion be treated as one for summary judgment. (See FED.R.CIV.P. (12)(b)).
Summary judgment is to be granted if there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. FED. R.BANKR.P. 7056(c). Under FED. R.BANKR.P. 7056(e), the non-moving party may not rest upon the mere allegations or denials in the pleading, but must set forth specific facts showing there is a genuine issue for trial.
Thus, the moving party's burden on summary judgment "may be discharged by a showing that there is an absence of evidence to support the nonmoving party's case." Celotex Corp. v. Catrett, 477 U.S. 317, 325, 106 S. Ct. 2548, 91 L. Ed. 2d 265 (1986). The burden then shifts to the nonmoving party to make "a showing sufficient to establish the existence of an element essential to [its] cause, and on which it will bear the burden of proof [at trial]." Id.
DISCUSSION
Plaintiffs allege four separate causes of action.[2] Plaintiffs first and second causes of action allege that defendant Butler is liable for: (1) failure to prosecute or timely abandon claims which the Krikavas allegedly had against the Bank, and (2) violation of the False Claims Act (31 U.S.C. §§ 3729 et seq.).
Plaintiffs' third and fourth causes of action allege that defendant Beck is liable based upon allegedly false and misleading statements made in Motions filed with this Court. (See Fils. # 146, # 164).
A. Service of Process:
As a threshold issue, defendant Beck asserts that plaintiffs' complaint should be dismissed as: (1) plaintiffs did not serve defendant Beck within 10 days following issuance of the initial summons pursuant to FED.R.BANKR.P. 7004(e), (2) plaintiffs *706 failed to personally serve defendant Beck with the original summons and complaint pursuant to FED.R.BANKR.P. 7005 and FED. R.CIV.P. 5(a), and, (3) plaintiffs failed to serve defendant Beck with process within 120 days of filing their complaint pursuant to FED.R.BANKR.P. 7004 and FED.R.CIV.P. 4(m).[3]
Federal Rule of Bankruptcy Procedure 7004(e) states, in pertinent part: "If a summons is not timely delivered or mailed, another summons shall be issued and served." It is irrelevant that the initial Summons and Complaint were not timely served. The plaintiffs were granted additional time to perfect service (Fil. # 13), obtained additional Summons' pursuant to Rule 7004(e), and duly perfected service upon the named defendants (Fils. # 15, # 16). Thus, defendants' first two assertions are without merit.
Further, under FED.R.BANKR.P. 4(m), if service is not obtained within 120 days after filing, the court may, upon a showing of good cause, extend the time for service for an appropriate period. On December 10, 1998, the Court allowed plaintiffs an additional 30 days in which to perfect service on the individually named defendants (Fil. # 13). Plaintiffs perfected service on January 7, 1999 (Fils. # 15, # 16). As this date is within the thirty (30) day service period granted by the Court, Beck's final assertion is also without merit.
B. Collateral Estoppel:
In the prior proceedings before this Court, plaintiffs had a full and fair opportunity to litigate the issues which form the basis of the allegations contained in their first, third and fourth causes of action. Plaintiffs were represented by counsel at each of the hearings, and this Court's decisions were not appealed. The plaintiffs are collaterally estopped from asserting the first, third and fourth causes of action stated in their Complaint.
Plaintiffs' first cause of action alleges that the trustee negligently or willfully failed to prosecute, or timely abandon, potential claims against the Bank. On April 25, 1996, this Court held a final hearing on Ernest Krikava's Motion to Abandon claims against the Bank (Fil. # 391), Resistance by the Bank (Fil. # 392), debtor's Withdrawal of Motion to Abandon and request that the trustee be required to pursue potential claims against the Bank (Fil. # 396), trustee's Resistance to debtor's withdrawal of motion to abandon (Fil. # 401), trustee' Motion to Abandon potential claims against the Bank (Fil. # 397), and Resistances filed by the Bank (Fils. # 392, # 400, and # 407). In support of his Motion to Abandon, the trustee stated that debtor's counsel was not willing to file claims against the Bank, debtor had not found outside counsel to file the claims, and that the claims were inconsequential in value or burdensome to the estate (Fil. # 397). I granted debtor's and trustee's motions to Abandon, held that the debtor's withdrawal of his motion to abandon and trustee's Resistance were moot, and denied the Bank's resistances. Debtor was represented by counsel at the hearings and did not appeal this Court's decision.
Issues concerning the trustee's abandonment of property of the estate were fully litigated before this Court and the Krikavas are simply precluded from raising the issues again. In first instance, it was the Krikavas who filed a Motion to Abandon, there was no resistance to their motion and that motion would have been sustained had they not withdrawn it. The fact is that the Krikavas' were not able to file a claim against the Bank, so they attempted at the very last minute, only a few days before they thought the statute of limitations would run, to leave the claim in the bankruptcy estate and to assert that *707 the trustee should prosecute the claim. At the time the Krikavas withdrew their Motion to Abandon it was very apparent to the Court that they were attempting to place the trustee in a difficult position on the eve of the running of the statute of limitations. I therefore articulate my conclusion and holding that it was reasonable for the trustee to abandon the claim against the Bank.
Plaintiffs' third cause of action alleges Mr. Beck, in his capacity as trustee's counsel, filed a Motion for Injunction and Restraining Order (Fil. # 146), wherein he made false and unfounded statements for the purpose of misleading and prejudicing the Court against the debtors. The trustee's Motion for Injunction and Restraining Order was sustained by this Court on October 29, 1992 (Fil. # 158). Debtors were represented by counsel at the hearing on trustee's motion, but chose not to resist the request for Injunction and Restraining order. Debtors did not appeal this Court's order.
The Krikavas had the opportunity to litigate issues concerning the issuance of the Injunction and Restraining Order and they chose not to do so. They also had the opportunity to dispute any and all statements which attorney Beck had made to the Court. At the hearing on the injunction, there was a dispute as to whether and to what extent, if any, the Krikavas were hindering the trustee's harvesting of crops and liquidation of assets. I was convinced that' a potentially dangerous situation existed and that the Court needed to take immediate action to head off and to defuse the situation. I issued an injunction to prevent the Krikavas from interfering with the trustee's administration of the bankruptcy estate and, at a later date (see infra.) I issued a writ of assistance directing the United States Marshal to go to the Krikavas' farm to assist the trustee in carrying out his duties. The Krikavas did not resist issuance of the Injunction and Restraining Order. The Krikavas also did not appeal my ruling. Therefore, the Krikavas are precluded from asserting the third cause of action stated in the Complaint.
Plaintiffs' fourth cause of action alleges that Mr. Beck, acting in his capacity as trustee's counsel, attempted to mislead the Court by filing a Motion for Contempt (Fil. # 164) wherein he made allegedly false and libelous statements against the debtors. On November 19, 1992, I sustained Mr. Beck's oral request for a Writ of Assistance, in part, due to debtors' interference with the trustee's administration of the estate. Debtors were represented by counsel at this hearing and did not appeal this Court's Order for a Writ of Assistance and are precluded from raising the issue again. The Krikavas were not held in contempt.
Let me note for the record, that I have not received into evidence the affidavits offered by the plaintiff. These affidavits provide statements of persons who harvested the plaintiffs' crops with alleged contemporaneous knowledge of facts related to the allegations made by Mr. Beck (See Fil. # 20, atts. 1-3). This evidence was not offered at either the hearing on the trustee's Motion for Injunction and Restraining Order or the trustee's Motion for Contempt. The plaintiffs had notice and opportunity to resist the trustee's Motion for Injunction and Restraining Order and did not do so. This evidence was available to the plaintiff at the time of the hearings and it does not constitute newly discovered evidence.
In reading debtors' Complaint in its entirety, it can be construed to allege that defendants Beck and Butler are liable for defamatory statements made in the course of judicial proceedings. However, even if the Court were to conclude that the defendants made defamatory statements, there is no liability for defamatory statements made in the course of judicial proceedings. Scott Fetzer Co. v. Williamson, 101 F.3d 549 (8th Cir.1996); Sinnett v. *708 Albert, 188 Neb. 176, 195 N.W.2d 506 (1972).
C. Claim under 31 U.S.C. § 3729(a)(7):
Plaintiffs' second cause of action asserts that the trustee violated 31 U.S.C. § 3729(a)(7) of the False Claims Act (31 U.S.C. §§ 3729, et seq.) (the "Act") when he did not inform the United States that Kevin Krikava had arranged financing to make up past due payments on estate property financed by the United States. (See Fils. # 1, # 29).
The Act, as amended in 1986, allows the United States, or private citizens ("qui tam plaintiffs") acting on behalf of the United States, to recover damages from individuals who knowingly make false claims for money or property upon the United States or who submit false information in support of such claims. United States ex rel. Barth v. Ridgedale Elec., Inc., 44 F.3d 699 (8th Cir.1995).
Section 3729(a)(7) of the Act has been referred to as the "reverse false claims provision." Rabushka ex rel. United States v. Crane Co., 122 F.3d 559, 565 (8th Cir.1997). A claim under § 3729(a)(7) requires proof:
(1) that the defendant made, used, or caused to be used a record or statement to conceal, avoid, or decrease an obligation to the United States; (2) that the statement or record was false; (3) that the defendant knew that the statement was false; and (4) that the United States suffered damages as a result.
Pickens v. Kanawha River Towing, 916 F. Supp. 702, 708 (S.D.Ohio 1996).
Plaintiffs assert that the trustee's liability under § 3729(a)(7) results from the fact that he "made a false record when he did not inform the [United States] that the Krikavas had arranged financing to make up past due payments and arranged to sell the property for a loss of over $51,000.00 after deduction of expenses and trustees and lawyer's fees . . ." (See Fil. # 29, p. 2).
A party is liable under § 3729(a)(7) only where they "make, use, or cause to be made or used, a false record or statement." Id. Thus, "[a] failure to report does not count as a statement or record," Pickens, 916 F.Supp. at 708, and will not result in liability under § 3729(a)(7).
Even if taken as true, plaintiffs allege nothing more than trustee's failure to inform the United States of alternative financing allegedly obtained by Kevin Krikava, and this does not state a claim under 31 U.S.C. § 3729(a)(7).
Further, as qui tam plaintiffs, the Krikavas' claim is brought "on behalf of the government as agents of the government, which is always the real party in interest." United States ex rel. Rodgers v. State of Arkansas, 154 F.3d 865 (8th Cir.1998). Thus, a qui tam plaintiffs standing to bring suit is derived from the government, and the actions and inactions of the United States may preclude the plaintiffs from being able to bring suit.
Plaintiffs assert that the trustee violated § 3729(a)(7) of the Act because he failed to inform the United States of financing allegedly obtained by Kevin Krikava. However, the record clearly reflects that the United States had knowledge of the alleged financing prior to the trustee's sale. The United States did not object to the proposed sale. The United States chose to proceed with the public sale and took advantage of the protections afforded by § 363 by opting to place a minimum bid on the property (Fil. # 23, Att. 16).
In other words, the United States made an informed election of how it wanted to proceed with respect to the collateral by electing to rely upon the public sale under supervision of the Chapter 7 trustee. Accordingly, the United States is barred from asserting a claim against the Chapter 7 trustee in connection with the alleged failure of the Chapter 7 trustee to inform *709 the United States that Kevin Krikava had obtained a loan commitment.
Further, counsel for the Krikavas has advanced no legal authority for the proposition that the Chapter 7 trustee had an obligation to inform the United States that Kevin Krikava had obtained a loan commitment. The Chapter 7 trustee acts as a fiduciary for the benefit of all creditors, and in that connection, is charged with the responsibility of liquidating estate assets. Whether or not the Krikavas could obtain a loan is simply not relevant to the administration of the bankruptcy estate. I conclude that the trustee acted appropriately for at least two (2) reasons. First, the trustee had no duty to inform the United States that the Krikavas had a loan commitment. Furthermore, whether or not the trustee had such a duty is irrelevant because prior to the public sale of the real estate, the United States was aware that Mr. Krikava claimed that a loan commitment had been obtained.
Based upon the foregoing, I conclude that the United States, and in turn the Krikavas, are barred from asserting that the United States suffered harm due to the alleged failure of the trustee to inform the United States of the alleged financing obtained by Kevin Krikava.
IT IS THEREFORE ORDERED, that defendants are entitled to summary judgment, therefore, the Motions to Dismiss (Fils. # 17, # 23) are granted. A separate order will be entered dismissing this adversary proceeding and the reopened bankruptcy case will be closed in due course.
IT IS SO ORDERED.
NOTES
[1] At the hearing on these motions, the Court was informed that Ernest Krikava had prior discussions with Kansas counsel regarding suing the Bank. There was also concern that the statute of limitations on the claim against the Bank was about to run. When the Krikavas learned that Kansas counsel was not willing to represent them personally and promptly file the action against the Bank, the Krikavas reversed their position. They sought to withdraw the Motion to Abandon, to thereby leave the claim in the hands of the trustee, and argue that the trustee should pursue the claim. I concluded that it was reasonable and appropriate for the trustee to abandon the claim.
[2] Plaintiff's fifth cause of action was withdrawn on March 23, 1999 (See Fil. # 29).
[3] Defendant Butler attempts to join in the insufficiency of process argument through oral request to amend his Motion to Dismiss. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1531527/ | 269 S.W.2d 579 (1954)
HOUSTON CREDIT SALES CO. et al.
v.
CITY OF TRINITY et al.
No. 3178.
Court of Civil Appeals of Texas, Waco.
June 3, 1954.
Rehearing Denied June 24, 1954.
Harold Kahn, Houston, for appellants.
Hutson & Cauthan, Trinity, for appellees.
HALE, Justice.
This is a suit for a declaratory judgment and injunctive relief. Appellants, Houston Credit Sales Co., a partnership, and C. H. Lindsey, brought the action against appellees, the City of Trinity and its Mayor and City Marshal, joining the Attorney General of Texas as a party pro forma under the provisions of the Uniform Declaratory Judgments Act. Appellants alleged that a certain ordinance passed by the City on *580 November 11, 1952, purporting to define and regulate itinerant merchants, vendors and peddlers was unconstitutional and void because it was violative of art. VIII, § 1 of the Vernon's Ann.St. Constitution of Texas and of the Fourteenth Amendment to the Constitution of the United States. They prayed that the ordinance be held unconstitutional and that its enforcement be permanently enjoined. Appellees answered with a general denial and the Attorney General answered that the State of Texas had no interest in the subject matter of the litigation.
The case was tried before the court below without a jury and resulted in judgment declaring the ordinance to be a valid enactment and denying the relief sought by appellants.
The caption to the ordinance in controversy, being descriptive of its comprehensive provisions, reads as follows: "an ordinance defining and regulating itinerant merchants, itinerant vendors, peddlers, and persons selling or taking orders for goods, wares, merchandise, produce or photographs; providing for a license and a license fee; requiring a bond; exempting those engaged in interstate commerce from license fee and bond, but requiring such persons to register with the City Secretary; and providing penalties for violation of this ordinance, including a fine not less than $2.00 nor more than $200.00."
The ordinance provides, among other things, that it shall be unlawful for any person to pursue the occupation of itinerant merchant, itinerant peddler, transient merchant or transient peddler of goods, wares and merchandise in the City of Trinity, or for any person to go from house to house, or from place to place in the City of Trinity, soliciting, selling or taking orders for any goods, wares or merchandise without having first applied for and obtained a license so to do from the City Secretary. The ordinance defines an itinerant merchant or an itinerant vendor as being any person engaged in any of the activities above mentioned, but it does not define or purport to define "peddler" or "peddling." It further provides for the payment of a license fee of $100 per month or $10 per day as a condition precedent to the issuance of a license to an itinerant merchant or itinerant vendor.
The evidence showed and the trial court found that Houston Credit Sales Co. was engaged in selling dry goods, household goods, dishes and kitchen utensils in Trinity on November 11, 1952 through its agent, Lindsey, who went from house to house in the City in connection with the sale of such merchandise on credit, thereafter collecting for it in weekly installments. Lindsey spent only one-half day each week in Trinity. The Credit Sales Company had been engaged in carrying on its business in Trinity for a number of years. The evidence further showed that from October of 1952 to February of 1953, Lindsey's collections in Trinity amounted to an average of $22 per week. As compensation for his services, Lindsey received a commission of 35% on all collections. After the payment of the agent's commission of 35%, the Sales Company realized a net profit of approximately 10% on weekly collections made by Lindsey. The evidence further showed that Trinity has a population of less than 2,500 people.
Appellants say the charge exacted of them as a condition precedent to the lawful pursuit of their occupation or business in the City of Trinity, although denominated a license fee, is so large as to show conclusively that the purpose of the ordinance was to impose an occupation tax upon them, in violation of the Constitution of Texas, and that the effect of such charge, whether it be regarded as a tax or a license fee, was such as virtually to prohibit them from the pursuit of their occupation and business, in violation of the Federal Constitution. On the other hand, appellees say the charge was not imposed as a tax but was a license fee which was not intended as a revenue measure but as a means of enabling the City to partially defray the expense of enforcing the provisions of the licensing ordinance. Appellees further say that even though the amount of the charge exacted of appellants was so large as to prohibit them from the *581 pursuit of their occupation or business, the trial court was correct in holding that the City was authorized to pass the ordinance in question regulating peddlers and peddling, because the City had the power to prohibit such activity entirely, and, therefore, had the power to do anything less than that in the way of regulation.
We do not deem it necessary to determine whether the charge exacted of appellants as a condition precedent to the further pursuit of their occupation or business in the City of Trinity should be regarded as a tax or as a license fee, because in either event it is readily apparent to us that the charge of $10 per day, $100 per month or $1,200 per year is so large and excessive as to render the ordinance invalid in so far as its enforcement against appellants is concerned, for the reason that such oppressive exaction by a town of less than 2,500 population is manifestly prohibitive and confiscatory in its application to the business of appellants. Ex parte Mihlfread, 128 Tex. Crim. 556, 83 S.W.2d 347; Ex parte Dreibelbis, 133 Tex. Crim. 83, 109 S.W.2d 476; Ex parte Patterson, 134 Tex. Crim. 551, 116 S.W.2d 745.
In support of their contention that the City of Trinity had the power to prohibit peddlers and peddling within its corporate limits, appellees rely primarily upon the provisions of art. 1015, § 37 of Vernon's Tex.Civ.Stats., and the holding of the Texas Court of Criminal Appeals in Ex parte Lewis, 141 Tex. Crim. 83, 147 S.W.2d 478. The cited statute provides that the governing body of any city, town or village, as therein referred to, shall have power "to license, tax and regulate or suppress and prevent hawkers, peddlers, * * *." We know of no definition of hawkers or peddlers in the statutory law of Texas. While appellants clearly were engaged within the City of Trinity, in the occupation or business of itinerant merchants or itinerant vendors as defined in the ordinance before us, we doubt whether it can be said that they were hawkers or peddlers as such terms are generally understood in ordinary parlance or as such words are defined in current dictionaries. Furthermore, we cannot ascertain from the opinion in Ex parte Lewis, supra, what type of merchandise relator was charged with peddling, the manner in which he was peddling the same or whether his activity in that regard was or was not of such inherent nature as to amount to a nuisance per se.
But, be that as it may, the Texas Court of Criminal Appeals has held unequivocally in two cases decided since the opinion was handed down in Ex parte Lewis that a city has no authority to prohibit rather than to regulate the practice of going in and upon private residences within a city by all solicitors, peddlers, hawkers, itinerant merchants, transient merchants or transient vendors of merchandise, notwithstanding the provisions of art. 1015, § 37 of Vernon's Tex.Civ.Stats. See Ex parte Faulkner, 143 Tex. Crim. 272, 158 S.W.2d 525 and Ex parte Luehr, Tex.Cr.App., 266 S.W.2d 375. Certainly, the orderly sale of dry goods, household goods, dishes and kitchen utensels, whether such sale be made by itinerant merchants, solicitors or peddlers, is not an occupation or business of such inherent nature as to constitute a nuisance.
From what has been said, it follows that in our opinion the trial court erred in declaring the ordinance in controversy to be a valid enactment in so far as appellants are concerned and in denying appellants injunctive relief against the enforcement thereof. Accordingly, the judgment appealed from is reversed and judgment is here rendered declaring the ordinance in controversy to be unconstitutional and void in its application to the occupation or business of appellants, and directing the issuance of such writs, if any, as may be proper and necessary to protect appellants against the further enforcement thereof.
Reversed and rendered. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1531526/ | 160 Conn. 280 (1971)
ALFRED J. MARCOLINI, JR., ET AL.
v.
ALLSTATE INSURANCE COMPANY
Supreme Court of Connecticut.
Argued December 1, 1970.
Decided January 13, 1971.
ALCORN, C. J., HOUSE, THIM, RYAN and SHAPIRO, JS.
Lewis C. Maruzo, with whom was Marvin M. Horwitz, for the appellants (plaintiffs).
*281 William W. Sprague, with whom were James T. Haviland II and, on the brief, John R. Fitzgerald, for the appellee (defendant).
SHAPIRO, J.
The plaintiffs, Alfred J. Marcolini, Sr., and Alfred J. Marcolini, Jr., father and minor son, sought a declaratory judgment determining whether a motorcycle is an automobile as the term "automobile" is used in an insurance policy issued by the defendant to the father. The plaintiffs and the defendant filed separate motions, each accompanied by supporting affidavits and each seeking a summary judgment. Thereafter, the court denied the plaintiffs' motion but granted the defendant's motion and declared that a motorcycle is not an automobile within the meaning of the policy. From the judgment rendered thereon, the plaintiffs have appealed.
The facts are not in dispute. The named plaintiff was injured while riding as a passenger on a motorcycle, owned by Anselma Berthod and being operated by her son, Gerald, when it collided with another vehicle. An insurance policy covering the motorcycle contained a passenger hazard exclusion clause which precluded liability coverage in favor of the plaintiffs. The father's insurance policy, under which recovery was sought in the court below, contained a provision for coverage against bodily injury caused by uninsured automobiles.[1]
*282 The plaintiffs' position is that although the defendant denies inclusion of a "motorcycle" in its uninsured motorist provision, it used ambiguous language more calculated to conceal its intention than to express it, and that this ambiguity should be resolved against it. They seek, therefore, to have us apply the favorable construction rule. See A. M. Larson Co. v. Lawlor Ins. Agency, Inc., 153 Conn. 618, 622, 220 A.2d 32; Scranton v. Hartford Fire Ins. Co., 141 Conn. 313, 315, 105 A.2d 780. They *283 assert also that the policy should be construed to include the Berthod motorcycle for the reason that under the doctrine of expressio unius est exclusio alterius, all automotive vehicles not specifically excluded in the policy were meant to be included in its coverage. They make no claim that, in a literal sense, a motorcycle is the same as an automobile.
The portion of the policy recited in the footnote makes it clear that the defendant will pay to the insured all sums which he is legally entitled to recover as damages resulting from the operation of "an uninsured automobile" and arising out of that automobile's ownership, maintenance or use. The definition of "uninsured automobile" is stated unequivocally to mean "an automobile." What is not included under "an uninsured automobile" is specifically defined and enumerated. Because "motorcycles" are not recited as a distinct exception, the plaintiffs claim they are included in the coverage. None of the items described in the exclusionary clause can be confused with motorcycles and the plaintiffs make no such claim.
The determinative question is the intent of the parties, that is, what coverage the plaintiff-father expected to receive and what the defendant was to provide, as disclosed by the provisions of the policy. See Downs v. National Casualty Co., 146 Conn. 490, 494, 152 A.2d 316. "Where ... the terms of an insurance policy are unambiguous, it is to be interpreted by the general rules governing the interpretation of any written contract, and enforced in accord with the real intent of the parties as so determined. If the terms of the policy are clear, their meaning cannot be forced or strained by an unwarranted construction to give them a meaning which the parties obviously never intended. Lyon v. Aetna Casualty *284 & Surety Co., 140 Conn. 304, 307, 99 A.2d 141; London & Lancashire Indemnity Co. v. Duryea, 143 Conn. 53, 58, 119 A.2d 325." Ibid. A court will not torture words to import ambiguity where the ordinary meaning leaves no room for ambiguity, and words do not become ambiguous simply because lawyers or laymen contend for different meanings. A. M. Larson Co. v. Lawlor Ins. Agency, Inc., supra; Downs v. National Casualty Co., supra. The terms of the instant policy are not ambiguous. Given their natural and ordinary meaning, they express the intent of the parties. Plunkett v. Nationwide Mutual Ins. Co., 150 Conn. 203, 207, 187 A.2d 754.
The language in the exclusionary clause on which the plaintiffs rely simply limits the coverage by providing that "an uninsured automobile" shall not include a motor vehicle or trailer operated on rails or crawler treads, or one located for residence use but not as a vehicle; or a farm-type tractor or equipment designed principally for use off public roads, except while actually upon public roads. The exclusion here is in the nature of a limitation on certain types of equipment and the use to which each is put. The exclusionary clause in this policy does not attempt to limit the meaning of the term "automobile" and by no means can it be construed to include a "motorcycle" under the policy coverage. The favorable construction rule, therefore, is inapplicable. Nor can it be said that the maxim expressio unius est exclusio alterius has application here. It is generally an aid to statutory construction and should not be used to create an ambiguity or to contradict a clear expression of intent. See 17A C.J.S., Contracts, § 312.
We make a brief reference to one other matter. The policy was issued on April 25, 1967, for the *285 period of one year. The plaintiff, in his brief, cites General Statutes § 38-175a and also §§ 38-175a-1 to 38-175a-8 of the regulations adopted by the insurance commissioner pursuant to that statute with respect to minimum provisions to be included in automobile liability insurance policies covering private passenger automobiles. The statute became effective October 1, 1967; Public Acts 1967, No. 510; and the regulations were adopted on December 19, 1967. We have no reason to discuss the relationship of the statute and the regulations to the policy considered here since they do not impose new restrictions on the enforcement of a past contract. See O'Connor v. Hartford Accident & Indemnity Co., 97 Conn. 8, 15, 115 A. 484.
The trial court's conclusion that the Berthod motorcycle is not an automobile as the term "automobile" is used in the policy and its granting the defendant's motion for summary judgment and entering judgment thereon was correct.
There is no error.
In this opinion the other judges concurred.
NOTES
[1] The pertinent portion of the policy reads as follows:
"SECTION IIPROTECTION AGAINST BODILY INJURY BY UNINSURED
AUTOMOBILES
Coverage SBodily Injury Benefit Insurance
Bodily injury protection against uninsured motorists who are legally liable
Allstate will pay all sums which the insured shall be legally entitled to recover as damages from the owner or operator of an uninsured automobile because of bodily injury, sustained by the insured, caused by accident and arising out of the ownership, maintenance or use of such automobile.
The following persons are insured under this Section
1. The named insured and his relatives while residents of his household; and
2. Any other person while in or upon, entering into or alighting from the owned automobile provided the actual use thereof is by or with the permission of the named insured.
Definitions of words used under this Section
The definitions of `named insured', `owned automobile' and `bodily injury' under Part 1 of Section 1 also apply under this Section and an additional definition under this Section is: `uninsured automobile' means an automobile:
1. with respect to the ownership, maintenance or use of which there is no bodily injury liability insurance applicable at the time of accident; or
2. used without the permission of the owner thereof if there is no bodily injury liability insurance applicable at the time of the accident with respect to the operator thereof;
provided, however, an uninsured automobile shall not include:
1. an automobile owned by the named insured or any resident of his household, or self insured within the meaning of the safety responsibility law of the State or Province in which it is registered, or which is owned either by the United States, Canada, any political subdivision thereof or any agency of any of them;
2. a land motor vehicle or trailer operated on rails or crawler treads;
3. a farm-type tractor or equipment designed for use principally off public roads except while actually upon public roads; or
4. a land motor vehicle or trailer while located for use as a residence or premises and not as a vehicle." | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1531523/ | 269 S.W.2d 591 (1954)
HAMMERSTEIN
v.
HAMMERSTEIN.
No. 15508.
Court of Civil Appeals of Texas, Fort Worth.
June 11, 1954.
*592 W. Scott Clark, Fort Worth, for appellant.
Robert Allen, Fort Worth, for appellee.
BOYD, Justice.
On April 23, 1954, we entered judgment affirming the judgment of the trial court. After further study of the case on motion for rehearing, we have reached the conclusion that we were in error in so doing. The former opinion is hereby withdrawn and the following substituted therefor.
In her original brief appellant states that she filed a plea in abatement to appellee's cause of action on the ground that appellee had not been a bona fide inhabitant of the State of Texas for twelve months and had not resided in Tarrant County for six months next preceding the filing of the suit, and that said plea was duly presented to the court and was overruled. Such statements in appellant's brief are not challenged by appellee and this Court need not look to the record but will accept appellant's statements as being correct. Rule 419, T.R.C.P.; Looney v. Traders & General Ins. Co., Tex.Civ.App., 231 S.W.2d 735; Donnelly v. Donnelly, Tex.Civ.App., 220 S.W.2d 278; Stewart v. Basey, Tex. Civ.App., 241 S.W.2d 353; Gonzales v. Gonzales, Tex.Civ.App., 224 S.W.2d 520; Morales v. Roddy, Tex.Civ.App., 250 S.W.2d 225; Young v. Howze, Tex.Civ.App., 216 S.W.2d 988; Leavell v. Lincoln County Mut. Fire Ins. Co., Tex.Civ.App., 243 S.W.2d 223; Allen v. Herrera, Tex.Civ.App., 257 S.W.2d 753.
Appellant's point for reversal is that the court erred in overruling the plea in abatement because the evidence shows conclusively that appellee does not have residential qualifications to maintain the suit, in that he has not been an actual inhabitant of the State for twelve months, nor a resident of Tarrant County for six months, next preceding the filing of the suit.
Appellee is a soldier and is stationed at Carswell Air Field, in Tarrant County, Texas. He arrived there on August 5, 1952. He enlisted in the Army in Harrisburg, Pennsylvania, in 1931. In 1934 he was discharged from the Army and returned to Harrisburg, living there until February 25, 1935, when he reenlisted. He was discharged on May 2, 1940, and returned to Harrisburg, where he lived until September, 1943, when he reenlisted. He was again discharged in February, 1946, and returned to Harrisburg, where he lived until he reenlisted on April 5, 1947. He has been in the Army continuously since then, and was stationed in various camps until being sent to the Philippines in September, 1950. From the Philippines he was transferred to Carswell Air Field. The last time he voted was in 1951 in Pennsylvania. Appellee testified that he intended to live in Fort Worth and make it his home after leaving the Army. The court asked him what his military records showed his home to be at the time of the trial, and he answered, "Harrisburg." The court asked further whether he had "any other factor" to show intent to live in Fort Worth, other than his own testimony. He answered, "No, sir." There was no other testimony on the point.
In Commercial Credit Corporation v. Smith, 143 Tex. 612, 187 S.W.2d 363, it was held that domicile is not changed by one's being stationed at a place in the line of duty while in the Army, unless the contrary *593 is shown by clear proof. To the same effect is the holding in Pippin v. Pippin, Tex.Civ.App., 193 S.W.2d 236, 238.
"`A soldier or sailor does not acquire a new domicile merely from being stationed at a particular place in the line of duty. His domicile remains the same as that which he had when he entered the service, unless he shows a change by proof of clear and unequivocal intention.' * * *" 15 Tex.Jur., p. 716, sec. 6.
In Gallagher v. Gallagher, Tex.Civ.App., 214 S.W. 516, 518, the plaintiff was ordered to San Antonio by the Army in 1915, and lived there a year before serving in Mexico. He was ordered back to San Antonio in July, 1917, and there filed suit for divorce September 23, 1918. He testified he would retire in 1919 and intended to settle in San Antonio. The court said: "* * * He was in Bexar county, not of his own volition, but under the inexorable commands of military authority. * * * It would be a dangerous precedent to establish, and would open the floodgates for divorce seekers from all parts of the Union, if mere intention, unexpressed and uncorroborated by any evidence, can fix a domicile in the purview of our divorce statutes. * * *"
In Wilson v. Wilson, Tex.Civ.App., 189 S.W.2d 212, 213, the plaintiff was stationed at Sheppard Field in Wichita County for three years. He talked to a Mr. Norwood of Wichita Falls about going into business there after the war and talked to others about going into business in Texas. He and his wife lived in an apartment in Wichita Falls. He was planning to marry a Wichita Falls girl after the divorce, suit for which was filed in Wichita County. The plea in abatement was sustained, the court saying: "* * * The testimony of the party as to an intention to establish the new domicile is not enough, when not accompanied by any act or declaration showing such intent. * * *"
In Perry v. Perry, Tex.Civ.App., 181 S.W.2d 133, 136, the plaintiff was from Georgia and entered the service there and was ordered to Sheppard Field, and then to Amarillo, in Potter County, Texas. He and his wife were living in Amarillo when they separated. He filed suit for divorce in Amarillo on November 16, 1943. He had been in Texas since June, 1942. Some of his friends corroborated his testimony that he intended to live in Amarillo after he got out of the Army. One bank official testified that the plaintiff had inquired about a job with the bank after his discharge. The court said, "We believe the trial court properly found that appellant did not meet the requirements of the law as to residence and that there was not a concurrence of an overt act with intention to fix residence in Texas and that the divorce was properly denied. * * *"
In Klingler v. Klingler, Tex.Civ.App., 254 S.W.2d 817, the plaintiff married in New York in 1942, and lived there with his wife until he reenlisted in the Army in March, 1949. He was sent to Texas in February, 1950, and since that time he had been stationed either at the Army Air Base in Lubbock County or the Army Air Base in Howard County. He filed suit for divorce in Howard County on May 5, 1952. His wife had remained in New York. The plaintiff testified that he had contracted for the construction of a home in Big Spring, and had already paid thereon the sum of $750, and had bought additional material for its construction. The trial court sustained the defendant's plea in abatement, and on appeal the judgment was affirmed.
In Wells v. Wells, Tex.Civ.App. 177 S.W.2d 348, the plaintiff entered the Army while living in Childress, Texas, and had been stationed in San Angelo, in Tom Green County, about nine months when his divorce suit was tried. He testified that he intended to live in San Angelo after the war and marry a San Angelo girl. A divorce was granted by the trial court, and upon an appeal the judgment was reversed and the cause dismissed, the court holding that the plaintiff failed to establish "`upon full and satisfactory evidence'" that he had resided in Tom Green County six months next preceding the filing of the suit.
*594 We are compelled to hold that the evidence in this case established appellee's lack of residential qualifications to maintain a divorce suit, and that the court erred in overruling the plea in abatement.
The judgment of the trial court is reversed and judgment here rendered that appellant's plea in abatement be sustained. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1531556/ | 443 Pa. 171 (1971)
Commonwealth
v.
Mozzillo, Appellant.
Supreme Court of Pennsylvania.
Argued November 18, 1970.
June 28, 1971.
*172 Before BELL, C.J., JONES, COHEN, EAGEN, O'BRIEN and POMEROY, JJ.
Irving W. Backman, for appellant.
Milton M. Stein, Assistant District Attorney, with him Steven H. Goldblatt, Assistant District Attorney, James D. Crawford, Deputy District Attorney, Richard A. Sprague, First Assistant District Attorney, and Arlen Specter, District Attorney, for Commonwealth, appellee.
OPINION BY MR. JUSTICE O'BRIEN, June 28, 1971:
The appellant, Samuel Mozzillo, was indicted as of November Term, 1962, on charges of murder and arson. The charges concerned the death of Philip Fromenko, an eight-month old infant who died in a fire on October 20, 1962, at an apartment house in Philadelphia, *173 where both he and the appellant lived. During the police investigation of the incident, appellant gave certain self-incriminating statements which were later suppressed as inadmissible at trial.
In December, 1962, a lunacy commission examined the appellant and found him to be sane. In March, 1963, appellant's attorney petitioned for the court appointment of a psychiatrist to help in the preparation for trial. At that time the appellant's attorney believed that appellant, who was an epileptic and had been hospitalized for a seizure shortly before the fire, might have had a seizure at the time of the fire. The psychiatric examination confirmed that appellant suffered from epilepsy. Moreover, the appellant was found to have an IQ of 59. However, the psychiatric examination of the appellant did not reveal any evidence of "mental disease."
Nevertheless, because of the convulsive disorder and the low IQ, the psychiatrists recommended that the appellant be committed to the state institution at Dallas as incompetent to stand trial since he was "not competent to confer with counsel in the preparation of his trial or to testify in his own defense." The assistant district attorney agreed with the recommendation of the psychiatrists and appellant's attorney prepared the commitment forms under Section 1225 of the Mental Health Act. On July 30, 1963, the court signed an order committing appellant to the Dallas Institution for Mental Defectives.
On October 28, 1966, following a petition for a writ of habeas corpus, appellant was ordered transferred to the Philadelphia State Hospital (Byberry) pending a psychiatric examination for the purpose of determining whether appellant was competent to stand trial. Appellant was instead transferred to Holmesburg prison on October 28, 1966. On December 5, 1966, appellant *174 was examined by Dr. Kenneth Kool, who was at that time the Medical Director of the Psychiatric Division of the Probation Department. Dr. Kool found that the appellant was competent to stand trial and to cooperate with counsel. In due course appellant was brought to trial.
On May 4, 1967, a jury returned a verdict of guilty of murder in the first degree, and after further deliberation fixed the penalty at life imprisonment. This case comes to us on direct appeal from that sentence.
The evidence which the Commonwealth presented to the jury clearly established that the victim died in the fire at the apartment house, that the fire originated from the hallway outside of the appellant's apartment while appellant was in the building, and that the fire was incendiary in origin. The Commonwealth then offered the testimony of Stanley A. Gabriel, a guard at the State Correctional Institution at Dallas, who had supervised the cell block where the appellant was incarcerated during 1965 and most of 1966. Gabriel testified that on at least twelve different occasions appellant had bragged to him and appellant's fellow inmates that he was at Dallas for murder and arson, that he had burned down an apartment building using a container full of gasoline and wooden matches to set it afire, and that there was somebody in the building at the time that it was burned.
The appellant's admissions were somewhat corroborated by the testimony of a police detective to the effect that there was a box of wooden matches in one of appellant's pockets when he was arrested.
Appellant first contends that the evidence was not sufficient in law to meet the requirements for submission to a jury. We do not agree.
As we said in Commonwealth v. Leslie, 424 Pa. 331, 227 A.2d 900 (1967), quoting Commonwealth v. Nasuti, *175 385 Pa. 436, 123 A.2d 435 (1956): "For a conviction in an arson case, three facts must be established: (1) that there was a fire; (2) that it was of incendiary origin; (3) that the defendant was the guilty party."
We went on to explain in Leslie that the Commonwealth was not required to establish independently all elements of the charge. It was enough for the Commonwealth to show independently that a fire occurred and that the burning was of incendiary origin. Then admissions or confessions of the accused could be received as proof of the identity of the guilty party. Leslie, supra, at page 335.
Here, there was competent independent proof of the baby's death in the fire and the fire's incendiary origin before proof of the appellant's admissions at Dallas was offered into evidence. Those admissions clearly established that the appellant set the fire. If those admissions were properly received into evidence, then the verdict against the appellant can be supported.
Appellant contends that the testimony concerning his admissions should not have been received into evidence. Appellant emphasizes that these admissions were made after appellant had been declared incompetent to stand trial in 1963 but before he was found competent in 1966.
In his testimony, Gabriel, the guard who testified as to appellant's admissions, made it quite clear that he did not elicit the admissions from the appellant. Gabriel not only did not question appellant, Gabriel did not even know that the appellant had not yet been tried. Rather, in the case of each admission the appellant had voluntarily and spontaneously bragged of his accomplishments. Thus, we are not faced with a confession and the attendant question of whether the appellant was competent to waive his constitutional rights against self-incrimination without the advice of *176 counsel. Instead, appellant's competency to make these admissions is governed by rules of testimonial capacity which in turn are principally concerned with trustworthiness. As we explained in Commonwealth v. Kosh, 305 Pa. 146, 157 A. 479 (1931), at page 156: ". . . [I]ncompetency does not necessarily follow from insanity. The general rule is that a lunatic or a person affected with insanity is admissible as a witness if he has sufficient understanding to apprehend the obligation of an oath, and to be capable of giving a correct account of the matters which he has seen or heard in reference to the questions as issue." Citing Commonwealth v. Loomis, 270 Pa. 254, 113 A. 428 (1921).
Here, there is no insanity since appellant was at no time found insane and was, in fact, found sane by a lunacy commission on December 21, 1962. Moreover, there is no question of his understanding of an oath since his admissions were not taken under oath but were considered competent and admissible as exceptions to the hearsay rule because they were admissions against interest. Thus, the only questions which must be considered in analyzing appellant's mental health at the time of his admissions were whether his memory, his thinking processes or his orientation to reality made it likely that his admissions were untrue.
The court below relied on the testimony of Dr. Kool, who performed a psychological examination on appellant on December 5, 1966, to the effect that appellant's memory was not impaired, his thinking processes were good, and he was functioning normally, in full contact with reality.
We do not think that Dr. Kool's testimony can be relied upon to prove appellant's competency at the time of his admissions. Dr. Kool's examination took place more than two months after appellant made the last of his statements, and Dr. Kool admitted that he *177 could only speculate as to appellant's mental condition at earlier times.
The Commonwealth argues that the burden was on appellant to show that he was incompetent at the time of his earlier admissions, citing Commonwealth v. Kosh, supra. We believe that appellant has met this burden by showing that he was institutionalized as incompetent to stand trial at the time the admissions were made, and that the Commonwealth must now come forth with sufficient evidence to the contrary if it wishes to use the statements he made while in Dallas.
The only witnesses to the behavior of one detained for being incompetent to stand trial during the period of his detention are either employees of the Commonwealth or other inmates, most of whom are also incompetent. Under such circumstances, it would be cruel to place the burden on the inmate to prove his incompetence, especially when neither he nor his attorney knows it will be an issue until later, when the Commonwealth brings him to trial. Instead, since the Commonwealth is in control of his detention and the use it wishes to make of any admissions he makes, the burden should be placed on it to show that he was competent at the time his admissions were made. It has not met that burden in this case.
Judgment of sentence reversed, and case remanded for new trial.
Mr. Justice EAGEN concurs in the result.
Mr. Chief Justice BELL dissents.
Mr. Justice COHEN took no part in the decision of this case.
Mr. Justice ROBERTS took no part in the consideration or decision of this case. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1531558/ | 269 S.W.2d 163 (1954)
GORDON
v.
CHEVROLET-SHELL DIVISION OF GENERAL MOTORS CORP.
No. 28876.
St. Louis Court of Appeals. Missouri.
May 18, 1954.
Motion for Rehearing or to Transfer to Denied and Opinion Modified. July 7, 1954.
*164 Harlan & Harlan, John L. Harlan, Sr., Clayton, for appellant.
Milton R. Fox, Julius H. Berg, St. Louis, for respondent.
Motion for Rehearing or to Transfer to Supreme Court Denied and Opinion Modified. July 7, 1954.
ANDERSON, Presiding Judge.
This is a proceeding under the Workmen's Compensation Law, Sections 287.010-287.800 RSMo 1949, V.A.M.S. The appeal is by the employer, Chevrolet-Shell Division of General Motors Corporation, from the judgment of the Circuit Court of the City of St. Louis affirming an award in favor of the employee, Bennie W. Gordon.
The claim for compensation alleged injuries to claimant's back, left leg, and ankle, sustained December 20, 1951, as a result of a fall. The employer, a self-insurer, in its answer, denied each and every allegation in said claim.
*165 There was a hearing before a referee of said commission which resulted in an award in favor of the employee for permanent partial disability in the sum of $30 per week for eighty weeks, said payments to begin as of December 21, 1951. The award was based upon a finding that the employee had suffered a twenty per cent. permanent partial disability. Upon application for review, the Industrial Commission affirmed the award of the referee, and entered a final award in favor of claimant. The final award, as heretofore stated, was affirmed by the Circuit Court.
It was admitted at the hearing before the referee that Bennie W. Gordon was, on December 20, 1951, an employee of Chevrolet-Shell Division of General Motors; that both parties were subject to the provisions of the Missouri Workmen's Compensation Law; that the employer had notice of the employee's injury; that the claim was filed within the time prescribed by law; and that the average weekly wage of the employee was in excess of $42.50. The disputed fact issues were: (1) whether the employee sustained a compensable injury on December 20, 1951; and (2) if such injury was sustained, the nature and extent of disability resulting therefrom.
Claimant at the time of the hearing was twenty-nine years old, and was at the time of the alleged accident and injury employed as a "nicker" operator in appellant's plant. The duties of such an operator were to make cuts or nicks in bars of steel by the use of an electric torch. The bars of steel, four inches wide, are moved on a conveyor, past the nicking machine. The operator of said machine stands on a platform located at the side of the conveyor and, in making the operation, moves a lever which causes the steel bar to stop and a torch to burn a cut into the steel. The lever is then moved, a button pressed, and the steel bar again moved forward until a point is reached where another cut is desired. The steel bars come into the shop on a cross-conveyor and are delivered to the conveyor which carries them past the nicking machine. During the operation a steel bar will occasionally get stuck or caught, making it necessary for someone to straighten it so that the bars will move forward on the conveyor. This is usually done by a material handler.
On Thursday, December 20, 1951, at about 9:30 a. m., while claimant was engaged in operating his machine, several of the steel bars became stuck. There was no material handler present at the time, whereupon claimant himself attempted to remedy the situation. He testified that he jumped off the platform on which he was standing, took a crowbar, got up on the main conveyor and attempted to pry the bars apart. He stated that as he was doing this he lost his balance and fell to the floor, a distance of approximately six feet, striking his back and left leg against a part of the machinery as he fell. Mr. Huber, the general foreman, immediately came up to claimant and inquired if he was hurt. According to claimant, Mr. Huber, just prior to the fall, was standing in front of claimant's machine talking to him and calling his attention to the bars that were stuck. By the time Huber arrived claimant had arisen from the floor and, in reply to Huber's inquiry, stated that he did not think he was hurt. Claimant did not tell Huber he had fallen, but had assumed that Huber had seen him fall.
Claimant further testified that, thereafter, he continued working, but after a few moments felt pain in the lower part of his back, a little below the belt line, and pain in his left leg. He told Huber about this and the latter sent someone to relieve him. Claimant then reported at the dispensary.
Huber testified that he was standing at the time about six feet northeast of the machine claimant was operating, and that the actual distance from the floor to the top of the main conveyor was forty-four and one-half inches. With steel on the conveyor, the distance from the floor was forty-eight inches.
Huber is six feet tall, and from where he was standing he was able to see the floor on the opposite side. He stated that claimant *166 stood on the steel on top of the conveyor and straightened the steel bar with a pinch bar. After doing so, claimant stepped down to his working position and, as he did so, slipped and started to fall, but caught himself. He stated that claimant did not fall to the floor.
On cross-examination, Huber testified that he could not see through claimant, and therefore could not know whether he struck anything in back of him, but was certain claimant did not strike the floor. He further testified that he immediately went up to claimant and told him he had better go to the dispensary, which he did. He stated that claimant worked the rest of the day, and full time the following day, Friday, according to the employer's records.
Claimant testified that after receiving treatment at the dispensary he returned to his job and worked the rest of the day. That evening claimant consulted Dr. Rusan. Dr. Rusan treated claimant's leg and bandaged his back. Claimant remained home the following day, but reported for work the following Monday. During the next two or three weeks claimant was given lighter work, but at the end of that period returned to his regular job. Two men were assigned to help him, one to keep the bars of steel moving freely, and the other to work with him on the bars so that he would not have to bend his back. This arrangement lasted about a week and a half. During that time the machine on which claimant worked was being changed so that an automatic device moved and lowered the steel. After that, the extra man was taken off and claimant continued to operate the machine in the same manner he had prior to the accident. After returning to his regular job, claimant worked continuously, putting in overtime of approximately eight hours per week during the period from December 30, 1951, to June 15, 1952.
Huber testified that two men worked at the machine both before and after the accident. He stated that claimant did the same kind of work after the accident that he did before being injured. He further testified that claimant worked the day following the accident, and that the "absence" report prepared by claimant himself did not mention December 21, but did show that, because of illness, claimant was off work from December 22nd (Saturday) to 7:00 a. m. December 24th. Whether Sunday was a working day for claimant does not appear from the record. The record of the dispensary shows that claimant was treated there on the 22nd and 23rd of December.
On claimant's first visit to the dispensary his back was taped, and he was given heat treatment. The records of the dispensary show that claimant visited the dispensary on sixteen different days, through January 16, 1952. After that date his next visit was June 7, 1952. At the dispensary he was given heat treatments, aspirin, anesthesin and caffeine pills, also a vitamin B-1 preparation.
Dr. Thomas Rusan testified that he first examined claimant on the evening of December 20, 1951. At that time claimant was able to rise without assistance, but with difficulty, and seated himself in the consultation chair slowly, but with difficulty. Claimant undressed himself with difficulty. There was partial flexion of the hip. There was swelling and tenderness over the lumbar and sacral regions, but no radiation of pain, and no muscular atrophy. Protective movements on bending were noted. The flexion with bending on the trunk was possibly 70 degrees, with associated pain and limitation. The pain was increased on hyper-extension. Rotation was painful, and there was restriction of movement. He stated that the leg raising test was negative. There was some Romberg on the right leg, and the left leg was positive and painful bilaterally.
The doctor further testified that on lying down there was a spasm of the sacrum, lumbar and sacroiliac muscles, and that pain increased on flexion above 90 degrees. There was pain on external rotation or abduction and straight leg-raising 80 degrees. The doctor's diagnosis at the time was that claimant suffered a lumbar sacral sprain, and laceration of left leg. The indicated *167 treatment was sodium salicylate iodine, colchiciene hypodermically, and heat to be given as necessary.
Claimant's next visit to Dr. Rusan was on December 22nd, at which time he told the doctor that his pain had diminished somewhat. He was given the same treatment as was administered on the first visit. Subsequent visits were made on the 24th, 27th and 29th of December, also on January 3rd, 5th, 11th, 15th, and 19th. On the latter visit the diathermy treatment was increased from fifteen minutes to thirty minutes. On each visit claimant received intravenously sodium salicylate iodine, and colchiciene. The next visit was on January 22, 1952, at which time claimant stated he was doing better, but complained of pain on stooping, and inability to lift. A physical examination at that time revealed that movements were less limited. The same treatment theretofore administered was given him on that date. Claimant was given the same treatment on January 25th and 30th. On the latter visit claimant stated he was feeling better. He again visited the doctor on February 3rd, at which time he complained of pain on turning in bed. He was treated on February 6th and February 9th, at which times the doctor noted that muscle spasms were still present. On February 15th he was again treated, and said he was doing better and was able to do more work. At the time, however, there was still present pain on bending, and restriction of movement. The same treatment as theretofore rendered was given him on this occasion. On February 22nd he was again treated, and received his last diathermy treatment. The doctor stated that claimant had received altogether seventeen diathermy treatments. On February 29th claimant returned to the doctor's office and said his back felt much better, and that he noticed tenderness chiefly on bending and lifting. Claimant was next treated on March 10th, and received sodium salicylate by mouth. The same treatment was administered on April 19th, at which time claimant stated that his back felt about the same. An examination on this occasion revealed some limitation and muscle spasm. The doctor noted in his record at that time that there was possibly a twenty-five per cent. permanent disability. Claimant was again treated May 12th and 29th, and stated he was feeling better. The last treatment by Dr. Rusan was on June 14th, at which time claimant stated he was "doing fine". Dr. Rusan stated that he noted then "he had flexion approximately 85 degrees, extension 160 degrees, hyperextension of 140, right and left side bending 110 degrees." The doctor further testified:
"Q. Do you believe that Mr. Gordon now, based on your last examination, has any permanent partial disability? A. Yes. * * * I made a note he has 25%.
"Q. You think he has 25% permanent partial disability of what? A. Back. Lumbar sacral region.
"Q. What do you base your opinion on, doctor * * *? A. On the amount of flexion, amount of bending and muscle rigidity and muscle pain in the back.
"Q. Did you find an amount of muscle spasm present on every examination? A. I did. I also based it on the fact it has been approximately seven months since the accident and with heat treatment and the amount of sodium salicylate I think he has progressed as far as he is going to progress."
The doctor further testified that he did not believe further treatment or time would reduce the amount of disability, and that he believed the injury was permanent.
Dr. Henry Hampton testified that he first examined claimant on January 8, 1952. At that time claimant complained of pain in the lower back. The doctor further testified: "I felt in the lower back of both sacroiliac articulations. There was some muscle spasm present on all occasions. I examined and treated him five times and during that time I found this tenderness and to a lessening degree, so when I last saw him there was very little tenderness.
*168 * * * I examined him on the 17th and 19th of May, and he had very little tenderness then." X-rays which he made of claimant were negative for injury to the bone, and all vertebrae were normal. He testified that all movements found in the normal spine and pelvis were present at all examinations. He further stated: "There was moderate restriction of rotation of the pelvis, both to the right and left on active movement. When the trunk was rotated to the left the disability and pain apparently increased in the right sacroiliac joint. Forward flexion and extension could be accomplished but these latter movements were slow and calculated, and apparently uncomfortable with extensive pain. Palpation and compression of the spinous processes of the spinal cord and lumbar vertebrae showed no evidence of injury except for a moderate amount of pain over the muscles of the spine, being the vertebrae muscles * * *. He was able to raise his leg and keep his pelvis on the table, up to 90% normal * * *. He was able to bend forward to fasten and unfasten his shoes and slip trousers on and off without discomfort * * * those bring to play all muscles of the pelvis and thigh. * * * I know he had pain in the lower back and was uncomfortable whenever the weather was cold, cloudy or rainy. * * * Whenever a muscle is fractured or injured when the weather changes there is stiffness. * * * Following my several examinations of this man I made this notation. * * * I said, `this man suffered a low back trauma apparently of moderate severity at place of employment.' The injury was confined to the soft tissue in the lower back, that is muscles and fascia. He probably experienced some difficulty immediately after the accident with moderate restriction of movement in the affected area. * * * On the basis of repeated examinations, laboratory information and X-ray examinations, I believe that whatever injury Mr. Bennie Gordon might have suffered in the fall of 1951, when he slipped and fell, was confined to the sacroiliac joint and to the soft tissue overlying same. I believe that a reasonable estimate of his disability should be rated at 15% loss at the level of the sacral and lumbar vertebrae * * *. To me, 15% represented to me a generous maximum, be somewhere close to that. I am giving him full advantage above his complaints of pain, limited motion and inability to pick up things, although he did demonstrate on occasions he did pick up things very well."
Dr. Marlin C. Spoeneman, director of the medical department of the employer and in charge of its first aid dispensary, also testified for the employer. In addition to finding a superficial abrasion of the left leg, he noted a contusion of the lumbar region, but no abrasions or discoloration of the skin, and no swelling in that area. There was tenderness in that region, and his treatment consisted of aspirin tablets and infra-red heat treatments. The doctor made no tests to determine disability, and made no notation with respect to muscle spasm. He stated, however, that his records indicated simply a localized tenderness in the lumbar region. He did not see claimant between January 16th and June 7th, during which time claimant was under treatment by Dr. Hampton. On June 7th claimant did not have any muscle spasm.
On his first visit to the dispensary claimant's leg was dressed and his back taped. The injury to the leg consisted of a gash three or four inches below the kneecap. The wound was a superficial one and any claim for compensation by reason thereof was abandoned by claimant. Thereafter, claimant was given a series of treatments at the dispensary, which included heat treatments, pills, and "shots". Claimant was uncertain as to how many visits he made to the dispensary, but stated that it was more than a half dozen times. He further stated that when he did go to the dispensary it would sometimes be as often as two or three times a day. The records of the dispensary showed that there were only two occasions on which claimant reported to the dispensary twice in one day, namely, December 20th and December 24th. The records further showed that claimant visited the dispensary *169 on sixteen different days through January 16, 1952, and thereafter not until June 7, 1952. In the meantime, Dr. Spoeneman, who was in charge of the dispensary, had sent him to see Dr. Henry Hampton. Claimant was also being treated by Dr. Rusan. In general, he was given heat treatments at the dispensary, and pain pills consisting of aspirin, anesthesin and caffeine. He was also given a Vitamin B-1 preparation. Claimant does not wear any mechanical device on his back for the reason that the use of such was discouraged by Dr. Spoeneman and Dr. Rusan. Claimant testified that he still took pills whenever he felt pain. He also stated that he still had pain in his back, but that his condition had improved. He further testified that he could do everything that he had done before the accident, but there were some things which caused pain when he did them. When asked to specify what those things were, he replied that if a steel bar gets stuck while the extra man is at lunch and he himself straightens it, he experiences pain.
Huber testified that claimant worked very steadily at his job and was a good worker, in fact, was one of his best employees. He stated that claimant had never complained to him of inability to do his job, and that he had never noticed anything which would indicate that claimant was unable to perform his work.
Claimant's earnings' record showed that he worked steadily since the date of the accident, and that his earnings in most weeks were in excess of $90 per week. In the first two weeks of February claimant earned $105 per week, working fifty-three hours each week. During the last two weeks shown by the record, the weeks of June 8th and June 16th, 1952, claimant earned $95.16 per week for a forty-eight hour week. Only during five weeks of the twenty-six week period did claimant earn less than $70. During these weeks claimant worked a shorter number of hours due to holidays or absences for one reason or another.
Claimant testified that he had previously been in the military service, during which time he developed flat feet. Thereafter, he received a disability rating of ten per cent from the government, and was receiving compensation on that basis.
The appellant assigns as error the action of the trial court in affirming the award of the commission. In support of this assignment it is urged that the finding of the commission that claimant sustained a 20% permanent partial disability was unreasonable and contrary to the overwhelming weight of the evidence. It is argued that this conclusion necessarily follows from consideration of the following facts developed by the evidence, towit: (1) that claimant suffered no broken bones, but received an injury merely to the muscles and soft tissues of the lower back; (2) that there was no abrasion or discoloration at the site of the injury; (3) that claimant was steadily employed after the accident in the performance of the same work he did prior thereto; (4) that claimant suffered no loss of wage as a result of the accident; (5) that claimant has since the accident been able to perform all of the duties of his job in a satisfactory manner; and (5) that claimant's condition had steadily improved in that the pain and tenderness in his back has continued to diminish.
It is true that the foregoing facts, considered alone, tend to prove that Gordon's injuries were not as serious as claimed. But the commission was not limited to the evidence which established the foregoing facts. Its duty was to consider all the evidence, including the testimony of the physicians who treated claimant and who were in a position to give expert testimony as to the nature and extent of claimant's injuries.
The testimony of Dr. Rusan shows that when he first treated claimant he found swelling and tenderness over the lumbar and sacral regions of claimant's back. There was pain and limitation of movement present at the time. The doctor's diagnosis was that claimant had suffered a lumbar sacral sprain. Claimant thereafter received numerous treatments which extended over a period of approximately six months, during which time the symptoms *170 first noted by the doctor persisted, though there was some improvement. Dr. Rusan further testified that upon his last examination, which was in June, 1952, there was still present limitation of movement, muscle spasm, and pain. The doctor gave it as his opinion that claimant had suffered a 25% permanent partial disability to his back.
Dr. Hampton found the same symptoms present at the times he examined claimant, and testified that "a reasonable estimate of his disability should be rated at 15% loss at the level of the sacral and lumbar vertebrae."
It is possible to suffer a permanent partial disability to the body as a whole as the result of back injury, even though no bones are fractured. Worley v. Swift & Co., Mo.App., 231 S.W.2d 828. Recovery may also be had under Section 287.190 RSMo 1940, V.A.M.S., for permanent partial disability, notwithstanding the fact that the person injured suffers no loss of time from work and no immediate loss of earning power. Betz v. Columbia Tel. Co., 224 Mo.App. 1004, 24 S.W.2d 224; Worley v. Swift & Co., Mo.App., 231 S.W.2d 828; Carr v. John W. Rowan Plastering Co., 227 Mo.App. 562, 55 S.W.2d 727; Sleets v. St. Louis Material & Supply Co., Mo.App., 39 S.W.2d 821; Graf v. National Steel Products Co., 225 Mo.App. 702, 38 S.W.2d 518; Lynch v. Gleaner Combine Harvester Corp., 223 Mo.App. 196, 17 S.W.2d 554.
Of course, the fact that the employee resumed his work may be considered for its evidentiary value in determining the ultimate fact issue, and in fixing the percentage of disability, if any; but the mere fact that such work is resumed, and at the same wage, does not disentitle the employee to compensation if, in fact, it appears from a consideration of the whole record that there is an injury which is the cause of a partial loss of bodily function which impairs the efficiency of the person in the ordinary pursuits of life. Betz v. Columbia Tel. Co., 224 Mo.App. 1004, 24 S.W.2d 224.
In our opinion, there was ample evidence in the record from which the commission could reasonably have found that claimant suffered a 20% disability to his body as a whole as a result of the accident of December 20, 1951.
It is urged that since the commission in its finding of fact found that claimant sustained an injury to the left leg as well as to the back, the award was based upon an injury for which no claim was made and for that reason the award should not be permitted to stand.
The evidence was conclusive that the claimant sustained a superficial abrasion to his leg, and that he abandoned any claim for compensation by reason of said injury. There was no suggestion in the evidence that said injury contributed in any degree to the disability, and to infer that the commission based its award in part on this slight leg injury would be clearly unreasonable and contrary to the rule that all reasonable intendments should be indulged in favor of the award of the commission. The case was tried before the commission on the theory that it was the back injury which caused the disability, and that the leg injury was of no consequence. Under the circumstances, we hold that the award was responsive to the evidence and the theory on which the case was tried.
It is further urged by appellant that the commission should have deducted from the 20% disability found to exist, the 10% rating for flat feet previously allowed claimant by the Veterans' Administration. Appellant, in support of this contention, cites Section 287.220 RSMo 1949, V.A. M.S., and Goebel v. Missouri Candy Co., 227 Mo.App. 112, 50 S.W.2d 741. This defense was not set up in appellant's answer, nor does it appear that the matter was specifically urged below, and no reference to such defense was made in the motion for new trial filed in the trial court. But assuming, without deciding, that the question is before us, we are of the opinion that there is no merit to the contention made. The record does not disclose the basis of *171 the award of the Veterans' Administration. Whether it was for disability for industrial purposes or otherwise does not appear. Furthermore, it is not shown that the present impairment of claimant's body as a whole was contributed to in any degree by his flat feet. If the award of the Veterans' Administration could be said to be based upon a finding that claimant suffered a 10% disability to his body as a whole by reason of flat feet, the Industrial Commission, in the case at bar, was in no sense bound by such action. The finding of the Veterans' Administration would, at most, be merely evidence in support of a defense, if one were asserted by the employer and insurer, that the employee was in fact subject to a disability of ten per cent prior to the time of the accident out of which this proceeding has arisen. The refusal of the commission, in the case at bar, to be bound by the action of the Veterans' Administration does not, in view of the other evidence adduced, render the award erroneous as not being supported by competent evidence upon the whole record.
Finally, it is urged that the commission erred in failing to give credit to the employer for wages paid the employee after his injury. Appellant relies upon Section 287.160(3) RSMo 1949, V.A.M.S., which provides that: "The employer shall be entitled to credit for wages paid the employee after the injury, and for any sum paid to or for the employee or his dependents on account of the injury except for liability under section 287.140." The latter section deals with medical, surgical and hospital treatments.
Section 287.190 RSMo 1949, V.A.M.S. deals with injuries which leave an employee permanently maimed and which are likely to permanently impair his ability to carry on the ordinary pursuits of life, and which reduce his future occupational opportunities. Said section does not require a showing of loss of earning power as a prerequisite to the recovery of compensation payments. To hold the employer entitled to credit for wages earned would be inconsistent with the apparent purpose of the Act.
In our opinion, it was not error for the Commission to refuse to credit the employer with payment of wages made to the employee for services performed subsequent to the date of injury. These payments were not made on account of the injury and were not intended as gratuities, but represented money earned by the employee.
Finding no error in the record, it follows that the judgment of the circuit court affirming the award of the commission should in turn be affirmed by this court, and it is so ordered.
BENNICK, J., and ADAMS, Special Judge, concur. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1531583/ | 480 F. Supp. 562 (1979)
Vincent A. REFINO, Sr., Plaintiff,
v.
FEUER TRANSPORTATION, INC., and Local 445, International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America, Defendants.
No. 78 Civ. 1447.
United States District Court, S. D. New York.
October 26, 1979.
*563 *564 Conrad P. Sheehan, New York City, for plaintiff.
Arthur Liberstein, New York City, for defendant Feuer Transportation.
Leaf, Deull & Drogin, P. C., New York City (David Kramer, New York City, of counsel), for defendant Local 445.
ROBERT J. WARD, District Judge.
Plaintiff Refino brought this action against his former employer, Feuer Transportation ("Feuer"), and his union, Local 445 of the International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America ("Local 445"). He alleged that in breach of the parties' collective bargaining agreement defendants wrongfully terminated his employment at Feuer and that Local 445 did not fulfill the duty of fair representation it owed him as his collective bargaining representative. Refino claims that the union wrongfully refused to assist him in his attempt to secure reemployment and reinstated seniority at Feuer. Jurisdiction is based on 29 U.S.C. § 185.
After appearing before the Court at a pre-trial conference on July 14, 1978, the parties agreed to submit their disputes to an arbitrator for resolution. The matter was submitted to arbitration under the aegis of the American Arbitration Association. An award issued on June 16, 1979.
Refino now moves to have the award confirmed under 9 U.S.C. § 9. Plaintiff asks, in addition, that the Court assess compensatory and punitive damages against defendants and award to plaintiff attorney's fees to cover his litigation costs in this action. Both defendants oppose plaintiff's motion, and Local 445 cross-moves for an order vacating the award under 9 U.S.C. § 10(d). For the reasons set forth below, plaintiff's motion is granted in part and Local 445's cross-motion is denied. The question of what further compensatory relief, if any, plaintiff may be entitled to is remanded to the arbitrator.
The parties agreed to submit the following two issues to arbitration:
*565 (1) Did Feuer and Local 445, jointly or severally, improperly deny Refino reemployment with Feuer as of October 31, 1977? If so, what shall be the remedy, if any?
(2) Did Local 445 breach its duty of fair representation in connection with Refino's efforts to be reinstated to his position with Feuer? If so, what shall be the remedy, if any?[1]
The arbitrator resolved both of these issues in plaintiff's favor and ruled that Refino's seniority at Feuer be deemed unbroken and cumulative from the date plaintiff first was hired in June 1954. The arbitrator severed from his award Refino's claims for punitive damages and counsel fees and referred these claims to the Court for resolution.[2] The award did not address Refino's request for additional compensatory relief in the form of (1) back pay, (2) the cash equivalent of contributions Feuer would have made on Refino's behalf to its employees' Welfare Fund during the period in which Refino was wrongfully denied reemployment, and (3) contributions on plaintiff's behalf to the employee Pension Fund for that same period.
Maintaining that the arbitration award should be vacated, Local 445 argues that the award is arbitrary, capricious, unsupported by fact, and incomprehensible. Local 445 further contends that the arbitrator exceeded his authority by overturning an earlier award of the Joint Local Committee ("JLC"), an arbitration panel established to resolve disputes arising out of the National Master Freight Agreement, the parties' collective bargaining agreement. In addition, the union argues that the award is not final and definite because it does not resolve the issue of what further compensatory remedy, if any, Refino is due. At the same timepresumably in the alternativeLocal 445 contends that the arbitrator did resolve this issue and found plaintiff entitled to no additional compensatory relief beyond restoration of unbroken, cumulative seniority. Conversely, Refino maintains that the arbitrator decided plaintiff was to receive the additional compensatory relief he sought and merely left to the Court the task of computing the amount of these additional damages. Defendants oppose plaintiff's request for punitive damages and attorney's fees.
The arbitration award is ambiguous on the question of what further relief plaintiff is entitled to receive. The arbitrator gave no indication that he intended either to award or to deny Refino the additional compensation plaintiff sought. The matter therefore must be remanded to the arbitrator for resolution of this issue. The Court cannot enforce any part of an award that is so ambiguous it lends itself to no definite interpretation. Bell Aerospace Co. v. Local 516, UAW, 500 F.2d 921, 923 (2d Cir. 1974).
The Court, however, will confirm the remainder of the arbitration award and enforce the arbitrator's finding that defendants breached the collective bargaining agreement in refusing to reemploy plaintiff as well as the arbitrator's determination that Local 445 failed to fulfill its duty of fair representation. Local 445's contention that the entire award should be vacated because it is arbitrary, capricious, unsupported by fact and incomprehensible is without merit. An award can be vacated only under one of the grounds specified in section 10 of the Arbitration Act, 9 U.S.C. § 10. Office of Supply, Government of Republic of Korea v. New York Navigation Co., 469 F.2d 377, 379 (2d Cir. 1972). These grounds do not include mistakes of fact, errors of law, inadequate reasoning or even arbitrary determinations.[3]
*566 Local 445 argues that the arbitrator exceeded his authority by overruling an earlier JLC arbitration decision. In that May 12, 1976 decision[4] the JLC found that Feuer had wrongfully refused to reinstate plaintiff as a Feuer employee on the company's seniority list when Refino requested reinstatement in January 1976. Plaintiff entered the employment of Feuer in 1954. He left the company and was employed by the union from March 1966 through the end of 1975. The JLC determined that under the collective bargaining agreement the company was required to reemploy plaintiff when his employment with the union terminated.[5] This much of the JLC decision is not now the subject of dispute, as it was not affected by the arbitrator's ruling here.
What the union disputes is the further determination of the JLC that Refino was to provide Feuer with a medical certificate within thirty days of its decision and submit to a physical examination within seven days thereafter.[6] Plaintiff neither submitted this certificate nor underwent the physical. In fact, Refino did not contact Feuer until more than a year after the JLC decision and did not submit the medical certificate until approximately sixteen months after it was due. However, finding plaintiff was not bound by the conditions imposed by the JLC ruling, the arbitrator concluded that Feuer was not authorized under the collective bargaining agreement to deny Refino reemployment when plaintiff first was physically able to work in October 1977.[7] Local 445 contends that the arbitrator was *567 without authority to issue an award in conflict with the JLC decision. The Court cannot agree.
The pleadings here expressly put the validity of the JLC decision in issue, and the argument that this decision erected a res judicata bar to plaintiff's claim was fully considered by the arbitrator. Indeed, there appears to this Court to be no way the arbitrator could have addressed the matter submitted to himi. e., the propriety of defendants' denying plaintiff reemploymentwithout considering what effect the JLC determination was to have. But even if the arbitrator erroneously applied the doctrine of res judicata to the JLC decision, there would still be no basis for vacating the award. "It is a truism that an arbitration award will not be vacated for a mistaken interpretation of law." Sobel v. Hertz, Warner & Co., 469 F.2d 1211, 1214 (2d Cir. 1972).[8]
Although in most instances an arbitration award will be confirmed only if it can stand in its entirely, an award may be confirmed in part when the valid portion of the award is "separable" from, and not dependent upon, the remainder of the award. Puerto Rico Maritime Shipping Authority v. Star Lines Ltd., 454 F. Supp. 368, 372 (S.D.N.Y.1978). See also Moyer v. Van-Dye-Way Corp., 126 F.2d 339, 341 (3d Cir. 1942) (applying New York law). The arbitrator decided the issues of liability submitted to him in connection with Feuer's refusal to restore plaintiff's employment status with the company and Local 445's duty of fair representation and determined that plaintiff was entitled to restored seniority. The issues of liability properly could be decided independently of Refino's additional claims for compensatory relief, punitive damages and attorney's fees. Indeed, these claims could only be addressed after the consideration of liability. Thus, the unresolved claims are analytically separable from the issues decided by the arbitrator.
The parties agreed to have the two issues of liability decided by the arbitrator and agreed that the arbitrator was to fashion an appropriate remedy if he found plaintiff entitled to relief. This duty to fashion relief clearly required the arbitrator to determine fully the compensatory relief Refino is due. While the Court will confirm that part of the award determining defendants' liability to plaintiff and requiring restored seniority, it must, accordingly, remand to the arbitrator the question whether further compensatory relief is warranted.
Plaintiff's requests for punitive damages and counsel fees need not be remanded. It is unclear whether the parties intended that these requests be submitted to arbitration. Although the parties stipulated that the arbitrator was to determine the appropriate "remedy" for each issue submitted, this stipulation could reasonably be construed as not extending to the consideration of such extraordinary relief as punitive damages and counsel fees. The arbitrator determined that these requests should be decided by the Court, and none of the parties here has objected to this determination. Having retained jurisdiction throughout, the Court therefore can rule on the question of plaintiff's entitlement to the further extraordinary relief he seeks.[9]
The Court finds that neither punitive damages nor an award of attorney's fees is warranted in this case. The Supreme Court recently ruled that an employee *568 cannot recover punitive damages against a union for the union's breach of its duty of fair representation. International Brotherhood of Electrical Workers v. Foust, 442 U.S. 42, 99 S. Ct. 2121, 60 L. Ed. 2d 698 (1979).[10] For Refino to recover punitive damages against Feuer for breach of the collective bargaining agreement plaintiff would have to demonstrate "a willful abuse of a duty imposed as a result of [Feuer's] position of authority or trust, as well as a breach of contract." Holodnak v. Avco Corp., 514 F.2d 285, 292 (2d Cir.), cert. denied, 423 U.S. 892, 96 S. Ct. 188, 46 L. Ed. 2d 123 (1975). Nothing appears in the arbitrator's findings that would indicate Feuer willfully abused its contractual duty, nor does plaintiff allege such a willful abuse by Feuer.[11]
In general, a federal court may not award counsel fees in the absence of a statute authorizing such an award. Alyeska Pipeline Co. v. Wilderness Society, 421 U.S. 240, 95 S. Ct. 1612, 44 L. Ed. 2d 141 (1975). Although exceptions to this rule have been recognized, see id. at 258-259, 95 S.Ct. at 1622, none of these exceptions is applicable here. Plaintiff's suit has not benefited a class of which he is a member but was brought solely to resolve his personal employment dispute with defendants. Cf. Hall v. Cole, 412 U.S. 1, 93 S. Ct. 1943, 36 L. Ed. 2d 702 (1973) (attorney's fees properly awarded in action under Labor-Management Reporting and Disclosure Act § 102 to vindicate statutory right of free speech since action benefited union and union members as well as individual). Nor do the facts as recounted by the arbitrator demonstrate that defendant Feuer "acted in bad faith, vexatiously, wantonly, or for oppressive reasons." F.D. Rich Co. v. Industrial Lumber Co., 417 U.S. 116, 129, 94 S. Ct. 2157, 2165, 40 L. Ed. 2d 703 (1974). Feuer could reasonably have determined, as it appears the company did, that as a result of Refino's failure to comply with the JLC decision he was entitled to no seniority. There is nothing to indicate the employer's action here was in bad faith.[12]
As for the union, an award of attorney's fees against Local 445 would contravene the policy articulated by the Supreme Court in International Brotherhood of Electrical Workers v. Foust, supra. There is some authority for awarding attorney's fees against a union for an aggravated breach of its duty of fair representation, see Richardson v. Communications Workers of America, 530 F.2d 126, 132 (8th Cir.), cert. denied, 429 U.S. 824, 97 S. Ct. 77, 50 L. Ed. 2d 86 (1976), but this authority pre-dates the decision in Foust. Refino does not claim bad faith or vexatious conduct by the union during the course of this litigation. Rather, any acts of bad faith by Local 445 on which plaintiff could base a claim for counsel fees occurred prior to this *569 action and were the same acts that gave rise to plaintiff's cause of action against the union in the first place.[13] To award attorney's fees here essentially would be to award exemplary damages against the union for breaching its duty of fair representation. The Court in Foust, however, ruled that such damages cannot be assessed. Thus, an award of attorney's fees in this instance is not permitted.[14]See Straub v. Vaisman & Co., 540 F.2d 591, 598-599 (3d Cir. 1976).
Accordingly, plaintiff's request for attorney's fees and punitive damages is denied. Plaintiff's motion to confirm the arbitration award is granted with respect to the award to Refino of unbroken, cumulative seniority. The question of what further relief, if any, is to be awarded to plaintiff is remanded to the arbitrator. The arbitrator is directed to submit his response to this question within thirty days of the date this Court enters its order in connection with these motions. Local 445's cross-motion is in all respects denied.
Settle order on notice.
NOTES
[1] Arbitration Award, p. 3 (June 16, 1979). The award is attached as exhibit A to the affidavit of David Kramer submitted in opposition to plaintiff's motion for confirmation of the arbitrator's award.
[2] Arbitration Award, p. 18.
[3] "[T]he law is clear that an arbitration award based upon a misinterpretation of law or an insufficiency of supporting facts will not be overturned." Orion Shipping & Trading Co. v. Eastern States Petroleum Corp. of Panama, S.A., 312 F.2d 299, 300 (2d Cir. 1963). Moreover, ambiguity in reasoning in an arbitrator's opinion, as opposed to ambiguity in the award itself, provides no basis for refusing to enforce an award. "Arbitrators have no obligation to the court to give their reasons for an award." United Steelworkers of America v. Enterprise Wheel & Car Corp., 363 U.S. 593, 598, 80 S. Ct. 1358, 1361, 4 L. Ed. 2d 1424 (1960).
Local 445 has not cited, nor has the Court found, a Second Circuit decision authorizing vacatur of an arbitration award on the grounds that the arbitrator's determination was arbitrary and capricious. However, the Third Circuit held in Swift Industries, Inc. v. Botany Industries, Inc., 466 F.2d 1125, 1131 (3d Cir. 1972), that an arbitrator's "award may not stand if it does not meet the test of fundamental rationality." And the New York Court of Appealsto which the courts in this circuit may turn for helpful teachings in arbitration matters, see El Hoss Eng'r & Transp. Co. v. American Independent Oil Co., 289 F.2d 346, 350 (2d Cir.), cert. denied, 368 U.S. 837, 82 S. Ct. 51, 7 L. Ed. 2d 38 (1961)has held that an award may be set aside when an arbitrator behaves so capriciously as to exceed his power, see N.Y. CPLR § 7511(b)(1)(iii) and compare 9 U.S.C. § 10(d), but only when the determination is "completely irrational." Rochester City School District v. Rochester Teachers Ass'n, 41 N.Y.2d 578, 582, 394 N.Y.S.2d 179, 182 (1977). Arguably, then, this Court could apply an "irrationality" test and vacate this arbitration award under 9 U.S.C. § 10(d). But even if the Court were to employ such a test the arbitrator's determination here would not fall. The arbitrator could rationally find that the union acted in bad faith by inadequately assisting Refino in presenting his grievance against Feuer. See Arbitration Award, pp. 15-17. And it was not a completely irrational construction of the collective bargaining agreement for the arbitrator to conclude that the agreement did not give the JLC authority to set the conditions it did on Refino's reemployment. See text and notes at nn. 5-7 infra and Arbitration Award, pp. 11-12.
[4] The May 12, 1976, JLC decision is attached as exhibit A to plaintiff's complaint.
[5] The pertinent part of the collective bargaining agreement, cited by the JLC, provides:
Any employee who is designated by the Union to work on a full time basis shall be granted a leave of absence with no loss of seniority for the duration of his full time employment provided he reports back to the Company for employment within ninety (90) days after his employment with the Union is terminated.
[6] The JLC decision states:
The Joint Local Committee further advises that Mr. Refino must submit a certificate from his doctor to the Company that he is able to return to work within thirty (30) days of the date of this decision and must thereafter within seven (7) days submit to a physical examination as required by law for all drivers engaged in driving in Interstate Commerce.
[7] Apparently plaintiff was recuperating from injuries suffered in an automobile accident and was unable to report for work within the time period required by the JLC decision. The arbitrator made reference in his award to articles 43 and 44 of the collective bargaining agreement. These provisions preserve the seniority rights of an employee unable to work because of sickness or injury. Arbitration Award, p. 9.
[8] Moreover, as the arbitrator noted, the finality of an arbitration decision need not be upheld where (as the arbitrator found here) the union has breached its duty of fair representation. Hines v. Anchor Motor Freight, Inc., 424 U.S. 554, 571, 96 S. Ct. 1048, 47 L. Ed. 2d 231 (1976).
[9] Arbitration is a matter of contract, and parties cannot be required to submit to arbitration any dispute they have not agreed to submit. Rochdale Village, Inc. v. Public Service Employees Union, Local No. 80, I.B.T., 605 F.2d 1290, 1294 (2d Cir. 1979). The Court, not the arbitrator, is to decide whether a particular issue is to be submitted to arbitration. Id. at 1294-1295. Thus, in an instance such as this, where the parties do not dispute that their agreement to arbitrate should not extend to certain issues, the court must itself decide these issues.
[10] Though Foust was decided under the Railway Labor Act, the Court unquestionably intended the Foust rule to extend to like actions brought under the National Labor Relations Act, 29 U.S.C. § 151 et seq., as well. 99 S.Ct. at 2125 n. 8.
[11] Moreover, the arbitrator's findings of Refino's own failure to take expeditious action to attempt to resolve his dispute, either directly with Feuer or through grievance procedures, or to seek other employment further undercuts his position with respect to a claim for punitive damages. The arbitrator found
that Refino did not contact Feuer for more than a year after the May 12, 1976 decision; that he never furnished the Union proof of his injury in the auto accident; that he never initiated a grievance concerning Feuer's alleged contract violation in denying him seniority and reemployment on October 31, 1977; that he made no attempt to find work with any other employer; and that he spent much of his time "politicking" and running for Union office between October 31, 1977 and December 31, 1978 when he accepted full-time employment with the Union from Raymond Ebert who had just defeated him for the position of Secretary-Treasurer and principal officer of the Union.
Arbitration Award, p. 18.
[12] See Arbitration Award, p. 4. Cf. Vaughan v. Atkinson, 369 U.S. 527, 82 S. Ct. 997, 8 L. Ed. 2d 88 (1962) (shipowner's refusal either to admit or to denyor even to investigatevalidity of seaman's claim resulting from disease contracted while in ship's service forced seaman to institute litigation; callousness and recalcitrance of shipowner warranted award of attorney's fees).
[13] To state a claim against a union for breach of duty of fair representation an employee must, in the Second Circuit at least, allege that the union acted in bad faith. Simberlund v. Long Is. R. Co., 421 F.2d 1219, 1224 n. 8 (2d Cir. 1970). See also Abrams v. Carrier Corp., 434 F.2d 1234, 1251 (2d Cir. 1970), cert. denied, 401 U.S. 1009, 91 S. Ct. 1253, 28 L. Ed. 2d 545 (1971), and Williams v. American Tel. & Tel. Co., 460 F. Supp. 755, 760 (E.D.N.Y.1978).
[14] The Supreme Court's citation in Foust, 99 S.Ct. at 2127, of Hall v. Cole, supra, 412 U.S. at 9 n. 13, 93 S.Ct. at 1948 n.13, could be taken as a suggestion that the Court would find counsel fees distinguishable from punitive damages and allow a prevailing union member to recover such fees in an action for breach of the duty of fair representation. If the Supreme Court were to do so, however, it is likely to require the union's conduct to have been "outrageous" and its breach "egregious" before approving such an award. See International Brotherhood of Electrical Workers v. Foust, supra, 99 S.Ct. at 2132 (Blackmun, J., concurring). This Court sees neither an egregious breach nor outrageous conduct by Local 445 here. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1531634/ | 236 B.R. 448 (1999)
In re Jerry Lee GILLEY, Debtor.
Bankruptcy No. 96-16913-8G2.
United States Bankruptcy Court, M.D. Florida, Tampa Division.
January 8, 1999.
*449 Bernard J. Morse, Morse, Berman & Gomez, P.A., Tampa, FL, for Debtor.
Terry E. Smith, Bradenton, FL, trustee.
Lori A. Heim, Mason & Associates, P.A., Clearwater, FL, for United States of America.
ORDER ON MOTION TO DETERMINE SECURED STATUS PURSUANT TO SECTION 506 OF THE BANKRUPTCY CODE
PAUL M. GLENN, Bankruptcy Judge.
THIS CASE came before the Court for hearing to consider the Motion to Determine Secured Status Pursuant to Section 506 of the Bankruptcy Code filed by the Debtor, Jerry Lee Gilley. In the Motion, the Debtor asserts that the United States of America (Farmers Home Administration) filed a secured proof of claim in the amount of $413,924.01, and that "the value of the property which secures such claim has a market value significantly less than the amount of the Proof of Claim Filed." Consequently, the Debtor requests that this Court value the collateral of the United States of America (Farmers Home Administration) and determine which portion of the claim is secured and which portion of the claim is unsecured.
The United States of America, acting through Farm Service Agency f/k/a Farmers Home Administration, United States Department of Agriculture (FSA), filed a written response to the Motion and asserted that its claim is fully secured. The amended proof of claim filed by the FSA is in the amount of $413,924.01, and states that it is based on a "Real Estate Mortgage/Note." The debt is secured by a mortgage on certain real property, including real property in Pasco County, Florida. The parties indicate that when the mortgage was entered, the value of the property *450 supported the amount of the debt. In the 1980's, the mortgagor applied the chemical fungicide Benlate to the property. The fungicide damaged the property, and the parties agree that the value of the real property is now less than the amount of the debt. The mortgagor sued the manufacturer of the fungicide for the damage to the property, and entered a settlement pursuant to which the manufacturer of the fungicide paid a substantial amount to the mortgagor. The parties also indicate that the value of the real property plus the proceeds of the settlement exceed the amount of the mortgage debt.
The primary issue at this point in the proceeding is whether the proceeds of the settlement with the manufacturer of the fungicide constitute security for the obligations owed by the Debtor and Doris Gilley to the FSA under the loan documents.
The FSA filed a Memorandum regarding the extent, validity, and value of its secured claim. In the Memorandum, the FSA states that the parties have stipulated to the following facts:
1. Doris Gilley, the Debtor's mother, executed sixteen promissory notes in favor of the FSA between July 1, 1981, and June 25, 1991.
2. The Debtor executed ten promissory notes in favor of the FSA between February 19, 1988, and June 25, 1991.
3. The Debtor and Doris Gilley executed two mortgages and three mortgage extension agreements in favor of the FSA, which were recorded in the public records of Pasco County, Florida, and Collier County, Florida.
4. The Debtor and Doris Gilley "were plaintiffs in a lawsuit against E.I. DuPont de Nemours Co. ("DuPont"), arising from the use of Benlate on the parcels of real property owned by the Gilleys in Pasco County, and described in FSA's mortgages." (FSA's Memorandum, ¶ 7).
5. "The Gilleys obtained a sum from DuPont in settlement of the lawsuit." (FSA's Memorandum, ¶ 8).
In the Memorandum, the FSA also states that the total amount received by the Gilleys pursuant to the settlement agreement with DuPont was $1,085,000. Of the total settlement amount, ninety percent, or the sum of $976,500, was payable upon the execution of a settlement release by the Gilleys. The remaining ten percent, or $108,500, is payable upon the second anniversary of the settlement. The Memorandum further recited that attorney's fees and costs to be deducted from the total settlement amount were estimated at $435,976, so that the Debtor and Doris Gilley received a net amount from the settlement in the approximate sum of $649,024. The Debtor has conceded that the figures contained in FSA's Memorandum are generally correct.
The Real Estate Mortgage provides that the property granted by the Debtor and Doris Gilley to secure payment of the obligations owed to the Government consisted of the real property located in Pasco and Collier Counties, as legally described in the Mortgage:
together with all rights, interests, easements, hereditaments and appurtenances thereunto belonging, the rents, issues, and profits thereof and revenues and income therefrom, all improvements and personal property now or later attached thereto or reasonably necessary to the use thereof, including, but not limited to, ranges, refrigerators, clothes washers, clothes dryers, or carpeting purchased or financed in whole or in part with loan funds, all water, water rights, and water stock pertaining thereto, and all payments at any time owing to Borrower by virtue of any sale, lease, transfer, conveyance, or condemnation of any part thereof or interest therein all of which are herein called "the property".
(Emphasis supplied). The mortgage also contains a provision by which the Debtor *451 agrees to keep the property insured (paragraph 8), and a separate provision by which the Debtor agrees "not to . . . cause or permit waste, lessening or impairment of the security covered hereby" (paragraph 9).
The Debtor contends that his cause of action against DuPont, together with the proceeds of the cause of action, constitute personal property owned by the Debtor and Doris Gilley. The Debtor further contends that the Mortgage executed by the Gilleys grants a lien only on real property and interests in real property, and does not extend to personal property of the Gilleys. Consequently, the Debtor asserts that "the mortgage of Farm Service Agency does not create a lien on the personal property which consists of the cause of action and the proceeds of the settlement with DuPont." (Debtor's Memorandum, p. 2). In support of this position, the Debtor cites In re Schrewe, 108 B.R. 116 (E.D.La. 1989). The Debtor also contends that the Mortgage provides that the lien extends to payments to the Debtor on account of a sale, lease, transfer, or conveyance of the real property, but that the Debtor's claim against DuPont does not amount to such a sale or transfer of the mortgaged property, and therefore does not fall within the terms of the parties' contract.
In response, the FSA contends that the proceeds of the settlement with DuPont represent an "interest" in the property within the meaning of the Real Estate Mortgage, and therefore are included in the FSA's collateral. Additionally, the FSA asserts that the proceeds are analogous to a condemnation award, which constitutes compensation for any reduction in the value of a landowner's property by a governmental unit or public agency. The FSA cites Investors Syndicate of America, Inc. v. Dade County, 98 So. 2d 889 (Fla. 3d DCA 1958) regarding such condemnation awards. The FSA also asserts that the proceeds are analogous to the proceeds of a hazard insurance policy, which may be viewed as an interest in the real property which serves as collateral. The FSA cites In re Spano, 161 B.R. 880 (Bankr.D.Conn. 1993) to support its contention in this regard. In either case, the FSA asserts that its lien attaches to the proceeds of the settlement with DuPont.
Discussion
The Debtor is a farmer who previously grew strawberries and other fruits and vegetables on his property in Pasco County. In the 1980's, the Debtor sprayed Benlate, a chemical fungicide, on his property. Benlate was manufactured by DuPont. The property was contaminated as a result of the use of Benlate, and is no longer suitable for growing either strawberries or the other crops previously raised on the property. The Debtor and his mother, as well as other farmers, filed an action against DuPont seeking compensation for the damage to their property caused by the application of Benlate. A settlement ultimately was reached with DuPont, and the funds at issue in this case represent the proceeds of that settlement.
A. The rationale of Schrewe does not apply to the circumstances of this case.
The Debtor asserts that his claim against DuPont is properly characterized as "personal property," and that the mortgage of the FSA does not extend to such personal property. The Debtor cites In re Schrewe, 108 B.R. 116 (E.D.La.1989) in support of his position that a cause of action for damage to real property is a personal property right, and not subject to a mortgage on real property. In Schrewe, American Savings and Loan (American) had loaned money to the debtor to construct an office building on the debtor's real property, and the debtor had granted American a mortgage on the property to secure the loan. After entering the mortgage, the office building was constructed. The debtor subsequently filed suit against the architect and engineer, alleging that the office building was defectively designed and constructed, to recover the costs of repair. In re Schrewe, 108 B.R. at 117.
*452 During the pendency of the debtor's bankruptcy case, American filed a Motion for Recognition of Creditor's Interest in Certain Proceeds of Lawsuit Owned by Debtor. The motion was filed on the basis that the cause of action for damages to the debtor's property was "physically related" to the underlying real property and therefore subject to American's mortgage. An unsecured creditor in the debtor's bankruptcy case opposed the motion and argued that the cause of action was a personal right of the debtor that was separate from the mortgaged property. Id. at 117.
The District Court in Schrewe applied Louisiana law, and quoted a comment to the Louisiana Civil Code as follows:
Louisiana courts have held that . . . damages due to the owner of a thing for its partial destruction or for an interference with the owner's rights, belong to the person who was owner at the time of the expropriation, destruction, or interference. These are personal rights that are not transferred to a successor by particular title without a stipulation to that effect.
The comment follows Article 1764 of the Louisiana Civil Code, which is entitled "Effects of real obligation," and which pertains to the transfer of obligations which attach to a "thing." The District Court concluded from the comment that, under Louisiana law, a cause of action for damage to property is a personal right, not a real right, and that American's mortgage did not create a security interest in the proceeds of the cause of action. Id. at 117-18.
Florida law is not necessarily inconsistent with the holding of Schrewe. In Department of Transportation v. Burnette, 384 So. 2d 916 (Fla. 1st DCA 1980), Florida's First District Court of Appeal considered the entitlement to compensation for a "taking" by the Department of Transportation. The Court stated:
[A] right to compensation vests in the person owning the property at the time of such interference. This right has the status of property, is personal to the owner, and does not run with the land if he should subsequently transfer it without an assignment of such right. The theory is that where the government interferes with a person's property to such a substantial extent, the owner has lost a part of his interest in the real property. Substituted for the property loss is the right to compensation. When the original owner conveys what remains of the realty, he does not transfer the right to compensation for the portion he has lost without a separate assignment of such right. If the rule were otherwise, the original owner of damaged property would suffer a loss and the purchaser would receive a windfall. Presumably, the purchaser will pay the seller only for the real property interest that the seller possesses at the time of the sale and can transfer.
Department of Transportation v. Burnette, 384 So.2d at 920, quoting Brooks Inv. Co. v. City of Bloomington, 305 Minn. 305, 232 N.W.2d 911, 918 (1975) (Emphasis supplied). The rationale for the rule is evident, since any subsequent transferee would acquire the property in its already-damaged condition, and therefore would not have suffered any loss as a result of the occurrence of the damage.
These cases, however, stand only for the proposition that a cause of action for damage to real property is a personal right to the extent that it belongs to the owner of the property at the time that the damage occurred, and not to any successor owner of the property. Consequently, the rationale of Schrewe does not necessarily apply to the circumstances of this case, and the Court will not find on the basis of Schrewe that the cause of action is not covered by the FSA's mortgage.
B. The FSA's lien attaches to the proceeds of the Debtor's settlement with DuPont in accordance with the terms of the mortgage contract.
The Court determines that the FSA's lien attaches to the proceeds of the Debtor's *453 settlement with DuPont on the basis of the express terms of the mortgage contract. Specifically, the contract provides that the property subject to the mortgage consists of the real property described in the mortgage, "together with all rights, interests, easements, hereditaments and appurtenances thereunto belonging." For the reasons set forth below, the Court concludes that the claim against DuPont, and the proceeds of that claim, constitute a right or interest belonging to the real property within the meaning of the mortgage.
In Florida, a mortgagee has a right to recover from a third party for damage to the security for the mortgage. This right is not an unrestricted right to recover for any damage to the property, but exists only in the context of the mortgage transaction. The Fifth Circuit Court of Appeals considered this question in All-state Finance Corporation, et al. v. Zimmerman, 272 F.2d 323 (5th Cir.1959).[1] Under the facts of that case, because the mortgage previously had been foreclosed and the mortgage debt had been satisfied, the court concluded that the mortgagee did not have a cause of action for damage to the property which occurred prior to the foreclosure. Regarding Florida mortgage law in general, however, the Court stated:
If plaintiff before the foreclosure sale, or afterwards if the debt had not been satisfied thereby, had brought a suit alleging that its security was diminished and it had sought recovery of the damage, not to the property but to its security, in Florida and generally elsewhere, it would certainly have stated a claim. . . .
If, before satisfaction of the mortgage by purchase at the foreclosure sale, plaintiff had alleged a cause of action arising to it as mortgagee at the time of the trespasses as a result of the diminution of its security, as it could have done, . . . the action would not have been, as it was in this suit, for the diminution in value of the property. It would have been for, and its damages would have been limited to, damages measured by the impairment of its ability to collect its debt. . . .
In 59 C.J.S. Mortgages note 4 supra, there is to be found a full and careful statement, supported by a wealth of authorities, of the general principles controlling here. Perhaps the best statement of the law controlling the precise situation this case presents in [sic] that in Sloss-Sheffield Steel & Iron Co. v. Wilkes, 231 Ala. at page 515, 165 So. at page 767, 109 A.L.R. at page 389, as follows:
"When damage occurs before foreclosure, the right of action by the mortgagee whatever it may be, or the nature of the action, is only for the recovery of an amount not exceeding the mortgage debt. The right of action is collateral to the debt, and as security for it. The mortgagee may pursue any course he pleases to collect the debt, whether it be a suit for a personal judgment against the debtor, or for damages against one who has wrongfully converted the mortgaged property, or otherwise destroyed his rights in it, or for a foreclosure.
"And he may do them all at the same time. But when he once collects his debt, by any one of those proceedings, or by a voluntary payment of it, he cannot pursue any other remedy. They are all but means to accomplish one purpose, and when that is accomplished, all the remedies, not used in so doing, are terminated. . . . "
Allstate Finance Corporation, et al. v. Zimmerman, 272 F.2d at 325-26. Pursuant to Florida law, therefore, a mortgagee may sue a third party for damage to the mortgaged property, to the extent of the mortgagee's rights in the mortgaged property.
*454 In this case, the mortgage provides that the mortgagor "covenants and agrees" not to cause or permit the lessening or impairment of the property, and the mortgagee therefore has a cause of action against the mortgagor if such impairment occurs. As indicated above, under Florida law the mortgagee also has a cause of action against a third party for damage to or diminution of the property to the extent that the damage or diminution impairs the mortgagee's security. The mortgagee does not have a cause of action against a third party for damage to the property independent of the mortgage transaction. To the extent that the damage impairs the security for a mortgage, however, the mortgagee has a cause of action for, and therefore an interest in, an award based upon such damage.
In this case, the proceeds of the Debtor's settlement with DuPont represent the value of the damage to the property. It appears that the FSA as mortgagee could have brought an action for the damage to the property, or joined in the Debtor's action, to the extent that the damage impaired its security. Consequently, the Court concludes that the cause of action against DuPont, together with the proceeds of that cause of action, constitute an interest belonging to the property within the meaning of the mortgage contract, and further concludes that the FSA's lien therefore attaches to the proceeds in accordance with the specific terms of the contract.
C. The FSA is entitled to an equitable lien on the proceeds of the Debtor's settlement with DuPont.
The Court also concludes that the FSA is entitled to an equitable lien on the proceeds of the Debtor's settlement with DuPont. The mortgage provides that the Debtor agrees "not to . . . cause or permit waste, lessening or impairment of the security" covered by the mortgage. It appears that under Florida law an equitable lien may be predicated on such covenant of a mortgagor if the property is damaged.
The Florida Supreme Court has described the rights of a mortgagor and a mortgagee to an insurance payment where the mortgage requires the mortgagor to maintain insurance on the property and there is damage to the property:
It is settled by many decisions that where a mortgagor binds himself by a covenant in the mortgage, or otherwise, to insure the mortgaged premises for the better security of a mortgagee and his assigns, the latter will have a lien on any money that may become due on the policy taken out by the mortgagor, to the extent of the mortgagee's (or his assignee's) interest in the insured property destroyed. . . .
. . .
To decide whether or not the bank ever acquired an equitable lien on the proceeds of the policy, it must first be determined whether there was an agreement to insure contained in the [mortgagors'] original mortgage.
. . .
If the mortgagors are bound by covenant to insure for the better security of the mortgagee, the latter will have a lien on the money due on the policy, to the extent of the mortgagee's interest. . . .
Where there was a covenant in the mortgage to insure improvements for the benefit of the mortgagee and such insurance was effected, the improvements were destroyed by fire while insurance was in force, the mortgagee was held to have acquired an equitable lien upon the proceeds of the policy for the amount of the mortgage debt. . . .
Atwell, et al. v. Western Fire Ins. Co. of Fort Scott, Kan., et al., 120 Fla. 694, 702-706, 163 So. 27, 30-32 (1935). (Emphasis supplied.) Consequently, pursuant to the Florida Supreme Court's decision in Atwell, if a mortgagor agrees to keep the *455 property insured, as in this case, the mortgagee is entitled to an equitable lien on any proceeds of the insurance policy if the property is damaged or destroyed.
Similarly, in the mortgage at issue in this case the Debtor specifically agrees not to "cause or permit waste, lessening or impairment of the security" covered by the mortgage. The Debtor applied the chemical fungicide to the property, and that action diminished the value of the property and resulted in an impairment of the security. The Debtor entered the settlement with the manufacturer of the fungicide which resulted in a payment to the Debtor as compensation for the damage to the property. The treatment of the proceeds of the settlement in compensation for the damage to the property which impaired the security where there was the covenant not to cause or permit impairment of the security should be similar to the treatment of the proceeds of the insurance policy in Atwell where there was a covenant to maintain insurance. Accordingly, the Court concludes that the FSA is entitled to an equitable lien on the proceeds of the Debtor's settlement with DuPont, to the extent of the amount of the mortgage debt.
The Court also notes that where a mortgagee is entitled to condemnation proceeds and part of the mortgaged property is condemned, the mortgagee is entitled to so much of the condemnation award as is necessary to compensate him for his interest in the part taken. Investors Syndicate of America v. Dade County, et al., 98 So. 2d 889 (Fla.3d DCA 1957).
Finally, the Court notes that the Debtor has claimed the settlement proceeds as exempt pursuant to Florida's Constitutional exemption for homestead real property. In conjunction with a challenge to that claim of exemption, the Debtor testified that the proceeds are segregated and will be reinvested in the property to rehabilitate the property. Contemporaneously with this order, the Court has overruled the Chapter 13 trustee's objection to that claim of exemption and has allowed the proceeds to be exempt from the assets of the estate and from the claims of unsecured creditors. Consistently, in this order the Court concludes that the settlement proceeds are subject to the lien of the homestead mortgagee to the extent of the mortgage debt.
Conclusion
In conclusion, the Court determines that the proceeds of the Debtor's settlement with DuPont constitute security for the obligations owed by the Debtor to the FSA. First, the Court finds that the proceeds are subject to the mortgage lien in accordance with the specific terms of the contract. The contract provides that the mortgage covers the real property described in the mortgage, together with all rights and interests belonging to the property. Since the FSA could have commenced an action, or joined in the Debtor's action, to recover for damage to the property pursuant to Florida law, the Court determines that the cause of action and its proceeds constitute a right or interest belonging to the property. Consequently, the proceeds are subject to the FSA's lien in accordance with the mortgage contract.
Additionally, the Court finds that the FSA is entitled to an equitable lien on the proceeds. Given the specific agreement in the mortgage not to impair the security, and since the settlement proceeds represent compensation for damage to the property which impaired the security, the Court concludes that the FSA acquired an equitable lien on the proceeds, consistent with the holding of the Supreme Court of Florida in Atwell.
Accordingly:
IT IS ORDERED that:
1. The Motion to Determine Secured Status Pursuant to Section 506 of the Bankruptcy Code filed by the Debtor, Jerry Lee Gilley, is granted as set forth in this Order.
2. The claim of the United States of America, acting through Farm Service *456 Agency f/k/a Farmers Home Administration is secured by the real property described in the Real Estate Mortgage, and also by the proceeds of the Debtor's cause of action against E.I. DuPont de Nemours Co. arising from the use of Benlate on the parcels of real property described in the Real Estate Mortgage, to the extent of the amount of the mortgage debt.
NOTES
[1] Decisions of the Fifth Circuit Court of Appeals prior to October 1, 1981, are binding precedent in the Eleventh Circuit. Bonner v. City of Prichard, Alabama, 661 F.2d 1206 (11th Cir. 1981). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1531639/ | 236 B.R. 119 (1999)
In re Wayne COUSINS, (d/b/a Cousins Gardens) and Mary Cousins, Debtors.
Wayne Cousins, (d/b/a/ Cousins Gardens) and Mary Cousins, Plaintiffs,
v.
Internal Revenue Service, Defendant.
Bankruptcy No. 90-12162-MWV. Adversary No. 97-01115-MWV.
United States Bankruptcy Court, D. New Hampshire.
February 2, 1999.
*120 Geraldine Karonis, Assistant United States Attorney, Manchester, NH, for United States Trustee.
Nancy Michels, Michels & Michels, Londonderry, NH, for Plaintiffs.
David Broderick, U.S. Attorney's Office, Concord, NH, William Kostak, U.S. Dept. of Justice, Alex Sadler, Trial Attorney, Tax Division U.S. Dept. of Justice, Washington, DC, Mae Lew, Boston MA, for Defendant.
Lawrence Sumski, Amherst, NH, Chapter 13 Trustee.
*121 MEMORANDUM OPINION
MARK W. VAUGHN, Chief Judge.
The Court has before it the motion for summary judgment filed by the Plaintiffs, Wayne Cousins (d/b/a Cousins Gardens) and Mary Cousins ("Debtors"), and the cross-motion for summary judgment filed by the Defendant, the United States of America ("IRS"). The parties jointly filed an agreed stipulation of facts and subsequently filed memoranda of law in support of their respective positions. For the reasons discussed below, the Court denies the IRS's motion for summary judgment and grants the Debtors' motion for summary judgment.
This Court has jurisdiction of the subject matter and the parties pursuant to 28 U.S.C. § 1334 and 157(a) and the "Standing Order of Referral of Title 11 Proceedings to the United States Bankruptcy Court for the District of New Hampshire," dated January 18, 1994 (DiClerico, C.J.). This is a core proceeding in accordance with 28 U.S.C. § 157(b).
Under Rule 56(c) of the Federal Rules of Civil Procedure, made applicable to this proceeding by Federal Rule of Bankruptcy Procedure 7056, a summary judgment motion should be granted only when "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." "Genuine," in the context of Rule 56(c), "means that the evidence is such that a reasonable jury could resolve the point in favor of the nonmoving party." Rodriguez-Pinto v. Tirado-Delgado, 982 F.2d 34, 38 (1st Cir. 1993) (quoting United States v. One Parcel of Real Property, 960 F.2d 200, 204 (1st Cir.1992)). "Material," in the context of Rule 56(c), means that the fact has "the potential to affect the outcome of the suit under applicable law." Nereida-Gonzalez v. Tirado-Delgado, 990 F.2d 701, 703 (1st Cir.1993). Courts faced with a motion for summary judgment should read the record "in the light most flattering to the nonmovant and indulg[e] all reasonable inferences in that party's favor." Maldonado-Denis v. Castillo-Rodriguez, 23 F.3d 576, 581 (1st Cir.1994).
FACTS
The Debtors filed a petition for relief under Chapter 12 of the Bankruptcy Code on November 14, 1990. On March 14, 1991, the IRS filed a proof of claim for $43,194.42 in assessed federal tax liabilities, including federal income taxes for tax years 1987, 1988 and 1989. On November 25, 1991, the Court confirmed a Chapter 12 plan, which was subsequently modified. On May 20, 1991, the Court entered an Order Confirming First Modified Chapter 12 Plan.
The original and modified Chapter 12 plans treated the IRS's claim as an unsecured priority claim.[1] Both plans instructed the Trustee to make "full payment in deferred cash payment of all claims entitled to priority under U.S.C. § 507 including ... the debt to the IRS in the amount of $43,194.42." The plans did not provide for the payment of postpetition interest. The IRS did not object to the original or modified Chapter 12 plans.
By January 24, 1997, the Trustee paid $43,195.00 to the IRS in full satisfaction of the Debtors' prepetition tax liabilities. On January 31, 1997, the Debtors received a Chapter 12 discharge. On June 27, 1997, *122 the IRS assessed the Debtors statutory interest in the amount of $15,560.00, which it claims accrued on the Debtors' federal income tax liabilities for tax years 1987, 1988, and 1989. When the Debtors failed to pay this amount, the IRS issued a Notice of Intent to Levy. On September 10, 1997, the Debtors initiated this proceeding by filing a complaint arguing that they are not liable for the postpetition interest charges. Both parties moved for summary judgment.
DISCUSSION
The Debtors move for summary judgment on two grounds: 1) confirmation and completion of the Chapter 12 plan bind the Debtors and the IRS, and are res judicata as to the terms of the plan, and 2) the Bankruptcy Code does not give the IRS any right to postpetition interests in Chapter 12 cases. The IRS cross-moves for summary judgment on the ground that, under sections 1222(a)(2) and 1228(a)(2) of the Bankruptcy Code, postpetition interest is excepted from discharge even after confirmation and full completion of the Chapter 12 plan.
As a threshold matter, the Court finds that the Debtors' res judicata claim is without merit. It is true that, in general, a bankruptcy proceeding has res judicata effect. See In re Martin, 130 B.R. 951, 956 (Bankr.N.D.Iowa 1991) (noting that a confirmed Chapter 12 or Chapter 13 plan provides binding, res judicata effect unless and until it is modified); In re Amigoni, 109 B.R. 341, 343 (Bankr.N.D.Ill.1989) (holding that a confirmed plan generally binds any creditor regardless of whether the creditor's claim is impaired by the plan). See also 11 U.S.C.A. § 1227 (West 1993 & Supp.1998) (effect of confirmation).
However, the plan in this case was silent as to how to treat the postpetition interests; therefore, it cannot bind the IRS with respect to its claim of postpetition interests. See Bossert v. United States (In re Bossert), 201 B.R. 553, 555 (Bankr.E.D.Wash.1996) (when the plan does not specifically state whether postpetition interest would have to be paid, the terms of the plan do not preclude postpetition interest on debtor's prepetition priority tax obligation under doctrine of res judicata), appeal docketed, In re Bossert, 230 B.R. 172 (E.D.Wash.1999) (Shea, J., transferred). The Court therefore concludes that the doctrine of res judicata does not apply to the IRS's postpetition interest claim.
Having found that the doctrine of res judicata does not apply to the instant case, the Court now addresses the issue of whether the IRS is entitled to postpetition interest when the Debtors fully paid the tax obligation in accordance with the confirmed plan. The Bankruptcy Code provides in pertinent part as follows:
(a) The plan shall
. . .
(2) provide for the full payment, in deferred cash payments, of all claims entitled to priority under section 507 of this title, unless the holder of a particular claim agrees to a different treatment of such claim; ....
11 U.S.C.A. § 1222(a)(2) (West 1993 & Supp.1998). The Court notes that this section does not contain any requirement that a plan contain language regarding the "present value" of payments.[2] With respect *123 to this section, courts have held that only the allowed amount of the claim need be paid and not the present value of the claim. See In re Wakehill Farms, 123 B.R. 774, 776 (Bankr.N.D.Ohio 1990) (holding that the IRS is not entitled to postpetition interest under 1222(a)(2)); In re Herr, 80 B.R. 135, 136-37 (Bankr.S.D.Iowa 1987) (Chapter 12 plan may provide for deferred payment of priority tax claim without interest) (emphasis added). Therefore the Court concludes that, under section 1222(a)(2), the Debtors are not required to pay postpetition interest to the IRS.
However, the IRS also asserts that the real issue of this case is a discharge issue; therefore the controlling Bankruptcy Code section is 11 U.S.C. § 1228(a)(2). This section provides that:
(a) As soon as practicable after completion by the debtor of all payments under the plan, other than payments to holders of allowed claims provided for under section 1222(b)(5) or 1222(b)(10) of this title, unless the court approves a written waiver of discharge executed by the debtor after the order for relief under this chapter, the court shall grant the debtor a discharge of all debts provided for by the plan allowed under section 503 of this title or disallowed under section 502 of this title, except any debt
. . .
(2) of the kind specified in section 523(a) of this title.
11 U.S.C.A. § 1228(a)(2) (West 1993 & Supp.1998). The IRS argues that the tax liability is excepted from discharge under § 1228(a)(2); therefore, the interest accrued on this tax liability is also excepted from discharge. The IRS raised the same argument in two recent cases in Bossert v. United States (In re Bossert), 201 B.R. 553 (Bankr.E.D.Wash.1996), appeal docketed, In re Bossert, 230 B.R. 172 (E.D.Wash. 1999) (Shea, J., transferred), and Mitchell v. United States (In re Mitchell), 210 B.R. 978 (Bankr.N.D.Tex.1997), aff'd, United States v. Mitchell, No. 597-CV0275-C, slip op. (N.D.Tex.1997), appeal dismissed per stipulation, United States v. Mitchell, No. 98-10141, slip op. (5th Cir.1998).
The Court notes that the facts in these two cases were virtually identical to the facts in this case. In both cases, the debtor filed a Chapter 12 bankruptcy and the court confirmed the plan. The debtor made all required plan payments and received a discharge. After the discharge, the IRS attempted to collect the postpetition interest and the debtor brought an adversary proceeding against the IRS whereupon the IRS raised the same line of argument, i.e., the discharge provision should control. Needless to say, the courts flatly rejected this argument and held that the IRS is not entitled to postpetition interest. The Bossert court noted that the IRS's interpretation of the Bankruptcy Code provisions is contrary to the intent of Congress, and unnecessarily complicated. In re Bossert, 201 B.R. at 559. The Mitchell court noted that section 1228(a)(2) was inapplicable because the debt was paid as required. In re Mitchell, 210 B.R. at 983.
The Court agrees with the Bossert and Mitchell decisions and holds that the Debtors are not liable for the postpetition *124 interest and the IRS is not entitled to postpetition interest as a matter of law. Therefore, the Debtors' motion for summary judgment is granted, and the IRS's motion for summary judgment is denied.
This opinion constitutes the Court's findings and conclusions of law in accordance with Federal Rule of Bankruptcy Procedure 7052. The Court will issue a separate final judgment consistent with this opinion.
NOTES
[1] The Court notes that some portion of the IRS's original claim was secured by tax lien. However, the IRS did not object to the plan's treatment of its claim as an unsecured priority claim. While it is true that "discharge only extinguishes only in personam claims; it generally has no effect on in rem claims against property," In re Echevarria, 212 B.R. 185, 187 (1st Cir. BAP 1997), aff'd, 141 F.3d 1149 (1st Cir.1998), but the IRS cannot have in rem claim for interest because: 1) whatever rights the IRS had as a secured creditor to interest were waived by remaining silent until the plan was confirmed and completed; and 2) the confirmed plan binds the IRS to its terms. Id. at 188.
[2] 11 U.S.C. § 1129(a)(9)(C) provides:
. . . .
(C) with respect to a claim of a kind specified in section 507(a)(8) of this title, the holder of such claim will receive on account of such claim deferred cash payments, over a period not exceeding six years after the date of assessment of such claim, of a value, as of the effective date of the plan, equal to the allowed amount of such claim.
. . . .
11 U.S.C.A. § 1129(a)(9)(C) (West 1993 & Supp.1998) (emphasis added). It is clear that this section requires that the debtor pay the present value of the debt, which would require the addition of interest or payment of interest after the original debt is discharged. United States v. Neal Pharmacal Co., 789 F.2d 1283, 1285 (8th Cir.1986). The IRS argues that the Court should apply the Chapter 11 requirement of present value payment to this Chapter 12 case. The Court is not persuaded because: 1) Chapter 12 is modeled after Chapter 13, not after Chapter 11, see In re Herr, 80 B.R. 135, 137 (Bankr.S.D.Iowa 1987) (noting that the legislative history of Chapter 12 reveals that Chapter 12 was patterned to a large extent after Chapter 13); and 2) the absence of the present value language has led the courts to interpret the Chapter 12 and 13 provisions as not requiring payment of present value of the tax debt. See In re Herr, 80 B.R. at 137 (concluding that Congress did not intend deferred cash payments made under section 1222(a)(2) to include interest in every case); LAWRENCE P. KING, 8 COLLIER ON BANKRUPTCY ¶ 1222(a)(2), at 1222-4 (15th ed.1998) (noting that this is a considerable advantage to a farmer-debtor under Chapter 12 over a farmer-debtor in Chapter 11). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1531658/ | 115 N.J. Super. 140 (1971)
278 A.2d 504
STATE OF NEW JERSEY, PLAINTIFF-RESPONDENT,
v.
BRUCE KING, DEFENDANT-APPELLANT.
Superior Court of New Jersey, Appellate Division.
Argued June 1, 1971.
Decided June 10, 1971.
*141 Before Judges CONFORD, KOLOVSKY and CARTON.
Mrs. Rita L. Bender, designated counsel, argued the cause for appellant (Mr. Stanley C. Van Ness, Public Defender, attorney).
*142 Mr. Wilbur H. Mathesius, First Assistant Prosecutor, argued the cause for respondent (Mr. Bruce M. Schragger, Mercer County Prosecutor, attorney).
The opinion of the court was delivered by CONFORD, P.J.A.D.
After a trial of defendant-appellant King and co-defendants Allen and Clark, the latter were acquitted and King convicted of the murder of Adam Mueller and Joseph Beismann in Trenton on the late evening of March 13, 1969. The jury recommended life imprisonment on each conviction, and King was sentenced to terms of life imprisonment on each, to be served consecutively.
* * * * * * * *
[Here the court discusses the testimony of various witnesses to the case]
The most important State witness was Beverly Peters, a/k/a Vevlyn Jackson. Between 11 P.M. and midnight on the night of the murders, Miss Peters was standing on the corner outside Sid's Bar. After about 20 minutes, she saw two white men emerge from Skopa's Bar across the street. As the men were crossing the street to the corner diagonally opposite the corner on which Miss Peters stood, she saw Glover [a companion of the defendants] and defendants King, Clark and Allen emerge from Skopa's Bar. The four ran up to the two white men, and King stuck his gun up at the older man's (Beismann's) head. The younger man (Mueller), upon seeing this, fled down Brunswick Avenue towards Sanford Street. King thereupon took his gun from Beismann's head, and ran after Mueller; he shot at the fleeing Mueller, apparently twice, and Miss Peters saw Mueller fall down in the street. At this, Clark, Allen, and Glover ran into Sid's Bar, while King took Beismann down Old Rose Street. Miss Peters did not see what King did with Beismann, because she also went into Sid's Bar at that point. Miss Peters' boyfriend, Curtis Jackson, the father of her son, was in Sid's Bar at the time. *143 Miss Peters told Jackson about what she had seen, and Jackson suggested that they leave because Jackson had been in trouble with the law, as had Miss Peters, and he was afraid that she would be called as a witness in this matter. Jackson and Miss Peters left Sid's Bar and went home together.
* * * * * * * *
[Here the court discusses additional testimony of witnesses in the case.]
The principal ground of appeal is the contention that the court erred in allowing the State at the conclusion of its case, over strenuous defense objection, to adduce in evidence Miss Peters' testimony given before the Grand Jury on April 29, 1969 and a statement she gave the police March 14, 1969 which in substance were to the same effect as her testimony to the trial. (The case was tried from November 5 through November 13, 1969). In so doing, the trial judge accepted the State's contention that it was entitled to bolster Miss Peters' credibility because her cross-examination was designed to suggest to the jury that her testimony was a recent fabrication. See Evidence Rule 20 which states: "* * * No evidence to support the credibility of a witness shall be admitted except to meet a charge of recent fabrication of testimony."
Prior to the promulgation of the evidence rules in 1967 this State allowed somewhat broader latitude in supporting by prior consistent statements the credibility of a witness assailed on cross-examination.
"It is well established that previous statements of a witness are ordinarily not admissible to strengthen and corroborate his testimony, but the general rule is that when a witness has been impeached by an attack upon his credibility, tending to show that his testimony is a fabrication of recent date or is colored, distorted, and falsified through the influence of some strong personal motive, his statements made on occasions so near to the event involved, and so long anterior to the litigation that the effect of his speech could not have been foreseen, are admissible."
State v. Neiman, 123 N.J.L. 341, 344 (Sup. Ct. 1939), aff'd o.b. 124 N.J.L. 562 (E. & A. 1940).
*144 See also State v. Kane, 9 N.J. Super. 254, 262-264 (App. Div. 1950).
The version of Rule 20 first adopted by the Supreme Court (September 14, 1964) but which never became effective, read, in pertinent part:
"* * * No evidence to support the credibility of a witness shall be admitted except to meet a charge of willful falsification of testimony."
The change to the now-existing version was accomplished at a conference of the Legislative Commission serving pursuant to SCR 28 (1966) and SCR 1 (1967) with the Supreme Court. See Report of the Rules of Evidence Study Commission (1967) p. 7.
The express limitation in Evidence Rule 20 to charges of "recent fabrication" should, in the light of the prior history of the rule and the evolution of Rule 20 as it now stands, ordinarily call for adherence to that formulation as the only criterion for admissibility of prior consistent statements of the witness assailed to support credibility. However, we find that the cross-examination of the witness Peters by the several defense counsel here was such as to permit the trial court properly to determine that it met the criterion of charge of recent fabrication.
In ruling in favor of admission of the evidence the trial court relied largely upon the following portions of the cross-examinations of Miss Peters:
"Q. Isn't it true you made up this story to help protect [your boyfriend] Curtis?
A. Protect him from what?
Q. Wasn't he one of the people there?
A. No.
* * * * * * * *
Q. Do you recall talking to Mr. DeFusco on October 28th [eight days before the trial] in front of Detective Vorhees, Detective Fitzgerald down in the County Jail?
*145 A. Who?
Q. You were talking to Thomas DeFusco, don't you remember, down in the County Jail on October 28th?
A. Yes.
Q. Of this year?
A. Yes.
Q. Do you recall telling him that Curtis told you to give the police a statement to keep him out of trouble or he would get in trouble?
A. Yes.
Q. He is the one that told you to make this story up, didn't he?
A. I told him that because my probation officer gave me .
Q. Did you make that statement?
A. I told him that because my probation officer gave me three months in jail and I said I wasn't going to witness.
Q. Did you tell him that story that Curtis told me to get him out?
A. When I got in Court I was going to change my statement to say that Curtis did it.
Q. Is that what you told him?
A. I told the man that.
* * * * * * * *
THE COURT: In response to any of those questions that you wish to explain, go ahead, try to explain to him now.
A. That I told Mr. Fitzgerald that I wasn't going to witness in this case because I was mad at him for getting me three months. I wouldn't have got three months for violation of probation. He said I was being spiteful and ignorant. I said I didn't care, if they had to go to jail it wouldn't be for me and I won't witness for that.
* * * * * * * *
Q. Did you tell him that, Thomas DeFusco, that Curtis told you to give the police a statement, a story?
A. I didn't tell him that, I said I was going to say that in Court and they said why would you change your statement. I said because I am doing three months, because if I have to do three months, let me do it on my own.
* * * * * * * *
Q. Who decided you should make the trigger man King, you or Curtis?
[objection sustained]
* * * * * * * *
Q. Now, when you were interviewed in the County Jail by Detective DeFusco and Officer Fitzgerald and Voorhees, is it correct that you told them that you weren't going to be a witness?
A. Yes.
Q. Is it correct that you told them that Curtis had told you to make this statement?
A. I said that I was going to tell a lie when I came over here and he said I would be ruining my life for purjury [sic]. I would get a lot of time for that and I said, well, I am going to tell a lie anyway.
*146 Q. Didn't you tell them that Curtis had told you to tell this story?
A. I would say Curtis told me to say it.
* * * * * * * *
Q. Now, Miss Peters, on certain circumstances, would you tell a lie?
A. Yes.
Q. Is that true?
A. You would too.
Q. Under certain circumstances would you lie under oath?
A. No, I am not lying now.
Q. Did you just testify in answer to Mr. Turner's questions that you were going to come here and lie and you were going to do it anyway?
A. That is what I told them.
Q. Would you lie to protect someone that is close to you?
Mr. Phelan: Objection.
THE COURT: Sustained.
Mr. Schroth: She testified she said she was going to come here and lie.
* * * * * * * *
Q. In fact, you are lying now, aren't you?
A. No. I had already made my statement. I said I was going to lie in Court and change my statement." (Emphasis by court.)
A "charge" of recent fabrication can be effected through implication by the cross-examiner as well as by direct accusation of the witness. In fact that is the usual way in which the charge is made. See State v. Kane, supra (9 N.J. Super., at 263-265). Defendant argues that the cross-examination did not bring out any recent fabrication by Miss Peters but only suggested that her testimonial version of the affair was a lie from the time of the very first statement of the witness to the police and that it was contrived by her to protect Jackson. We think the trend of the cross-examinations, especially toward their conclusion, went considerably beyond that. The allusion to the threat by the witness to the detectives a week before trial that she intended to lie at the trial, coupled closely with the outright assertion of the examiner that she was in fact lying in implicating King, could fairly have been held by the trial judge to have conveyed the impression to the jury that the witness had recently decided to lie to involve King. For present purposes, it is the *147 impression the cross-examiner makes upon the jury in the heat of the trial rather than what an appellate court would discern from a coldly analytical study of the testimony which must control review of the somewhat discretionary exercise of judgment made by the trial judge in the matter. We find no error.
Beyond the foregoing, a finding of prejudice would be dubious even were the admission of the evidence technically erroneous. The cross-examination was fairly rife with implications that Miss Peters had given statements to the police inculpating King.
Moreover, the other unexceptionable evidence adduced by the State, direct and circumstantial, of King's guilt was overwhelming.
* * *
[The court here considers and rejects other grounds of appeal.]
Judgment affirmed. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1531651/ | 269 S.W.2d 587 (1954)
PHILLIPS PETROLEUM CO. et al.
v.
RAILROAD COMMISSION et al.
No. 10224.
Court of Civil Appeals of Texas, Austin.
June 2, 1954.
Rehearing Denied June 23, 1954.
*588 Rayburn L. Foster, Harry D. Turner, Bartlesville, Okl., Carl W. Jones, Midland, Dan Moody, Austin, Paxton Howard, Richard L. Hughston, Midland, for appellant.
John Ben Shepperd, Atty. Gen., Burnell Waldrep, Mert Starnes, Asst. Attys. Gen., for Railroad Commission of Texas.
Elmer Patman, Hollers, O'Quinn & Crenshaw by Charles E. Crenshaw, Austin, J. Percival Rice, Dallas, for Selwyn S. Smith, appellee.
GRAY, Justice.
This a Rule 37 case. Appellants have appealed from a judgment sustaining a permit granted to appellee, Selwyn S. Smith, authorizing production of a well in the Yates Oil Field in Pecos County. The well is located on a .64 acre tract of land, 20.7 feet wide, north and south, and 1320 feet long, east and west. The well was drilled under a permit considered and held invalid by this Court in Shell Oil Co. v. Railroad Commission, 247 S.W.2d 448, error ref. In that case we held the .64 acre tract to be a voluntary subdivision within the meaning of the applicable spacing rules and cancelled the permit.
Prior to our above holding the well was
drilled and produced but after our judgment became final the well was shut down.
*589 Thereafter Selwyn S. Smith applied to the Commission for a permit to produce the well on the ground that it was necessary to prevent waste. The permit was granted "under the waste prevention powers of the Commission."
In the prior suit appellants and Ohio Oil Company, who is not a party here, were parties. That cause was tried on a stipulation of the parties made in the trial court which is fully set out in our former opinion and to which we here refer, however we deem it advisable to here quote portions thereof:
"It is stipulated by and between all of the parties to this cause for the purpose of the trial of this cause only that no issue of whether the permit is justified as a permit to prevent waste is involved in this case; that the permit was not applied for or granted upon the theory that the well is needed to prevent waste and that this cause shall be tried as though the order of the commission recited only that the permit is granted to prevent confiscation of property, * * *"
The stipulation further provided that the only question to be decided was whether the .64 acre strip of land constituted a voluntary subdivision; that if it was decided it did constitute a voluntary subdivision then the judgment should be for the plaintiffs and that if it be decided it does not then the judgment should be for the defendants.
We will herein refer to the well in question as the Smith well, to the permit considered in our above opinion as the first permit, and to the permit under consideration here as the second permit.
On examination of the above mentioned stipulation and the opinion holding the first permit invalid shows that the opinion was limited to the issues of voluntary subdivision and confiscation and that the issue of waste was not considered and was not determined. The judgment rendered was in keeping with the stipulation that if the .64 acre strip was adjudged to be a voluntary subdivision the judgment should be for the plaintiffs. Here the permit is grounded on the issue of waste which was not involved in, but was expressly excluded from, the former opinion and judgment for which reason that judgment is not res adjudicata of the different issue of waste here presented. Buckley v. Atlantic Refining Co., Tex.Civ.App., 146 S.W.2d 1082, error dism. judgm. cor.
The stipulation, supra, the judgment and the opinion cancelling the first permit rendered and decided on the basis of the stipulation does not show an abandonment by appellee Smith of his right to apply for and sustain the second permit since there is nothing to show an intention on his part to abandon such right. Humble Oil & Refining Co. v. Cook, Tex.Civ.App., 215 S.W.2d 383, error ref., n.r.e.
When appellants' claim of waiver of the issue of waste by appellee Smith is considered in the light of what was stipulated, what was decided and the judgment rendered in the former opinion it cannot be said that Smith waived his right thereto. Appellants were parties to that proceeding and the stipulation. If appellants desired to make an issue of waiver then they assumed the burden of proving it. The record does not sustain such burden. The Praetorians v. Strickland, Tex.Com.App., 66 S.W.2d 686.
Rule 37 authorizes the Commission to issue well permits to prevent confiscation or to prevent waste. These terms are separate and distinct and have no reference to each other. 31A, Tex.Jur., Sec. 407, p. 689. And the fact that
"* * * a tract of land is a subdivision within the meaning of the rule last mentioned is no impediment to the granting of a well permit thereon as an exception under Rule 37 to prevent waste. In other words, the rule pertaining to subdivisions has no application to well permits granted to prevent waste."
*590 Gulf Land Co. v. Atlantic Refining Co., 134 Tex. 59, 131 S.W.2d 73, 83.
The prior judgment adjudging the first permit invalid because the .64 acre tract constituted a voluntary subdivision and not entitled to a well to prevent confiscation is not contradictory to a judgment sustaining the second permit granted to prevent waste. Appellees are not judicially estopped to now assert that a well on the.64 acre tract is necessary to prevent waste. 26 Tex.Jur., Sec. 449, p. 206.
The evidence shows that prior to the time the Smith well was drilled there had been drilled four wells on tracts of land adjoining and immediately surrounding the .64 acre tract which wells are located from 200 to 460 feet from the Smith well.
Two expert witnesses were called to testify, one by appellants and one by appellees. These witnesses differed in their opinions as to whether substantially all of the oil to be produced by the Smith well would be produced by the four surrounding wells and by other wells in the field. Appellants' witness was of the opinion that the oil would be recovered by the four surrounding wells and appellees' witness was of the opinion that it would not. They seemed to agree that prior to the drilling and completion of the Smith well there was nothing unusual about the particular area of the field in which the .64 acre tract is located; that no one had any knowledge of what the formation would be when the well was drilled, what to expect, or whether it would be more or less permeable, and that the drilling and production history of the four existing wells surrounding the Smith well revealed nothing unusual about the area prior to the drilling of the Smith well.
Appellees' witness considered the facts revealed by the drilling and the production of the Smith well in connection with other matters and testified that the reservoir from which the Smith well was producing is not in effective communication with the reservoirs of the other four wells and based his opinion on various reasons: (1) that the Yates Field is regarded by the Commission to be, and factually is "the most regularly irregular" field in its jurisdiction. See Standard Oil Co. v. Railroad Commission, Tex.Civ.App., 215 S.W.2d 633, error ref., n.r.e.; (2) that he had had much experience working in the field and had a knowledge of Section 24 of which the .64 acre tract is a part; (3) that the potentials of wells in the field vary from 10 or 15 barrels of oil per day to 200,000 barrels per day; (4) that the official production records and potential tests of the Smith well and the wells on the adjoining tracts show a wide variance; (5) that in 1951 the Smith well had a potential of 4991 barrels of oil in 12 hours while the four surrounding wells then had very low potentials and had the ability of producing much smaller quantities of oil than the Smith well; (6) that these facts show the variation in permeability and porosity of the structures under the tracts; (7) that water or free gas, or both, was present in each of the four surrounding wells and that the Smith well did not make water or free gas. He expressed the positive opinion that the reservoir from which the Smith well was producing was not in effective communication with the reservoir or reservoirs from which the other wells were producing, that the oil to be recovered by the Smith well could not be recovered by either of the four surrounding wells and that such oil is in a substantial amount.
In Gulf Land Company v. Atlantic Refining Co., supra, the Court defined "waste" as follows:
"The term `waste,' as used in oil and gas Rule 37, undoubtedly means the ultimate loss of oil. If a substantial amount of oil will be saved by the drilling of a well that otherwise would ultimately be lost, the permit to drill such well may be justified under one of the exceptions provided in Rule 37 to prevent waste."
This definition is quoted with approval in Hawkins v. Texas Co., 146 Tex. 511, 209 S.W.2d 338.
Appellants say that the uncontradicted evidence shows that the characteristics of *591 the formation underlying the .64 acre tract are not unusual or peculiar but are typical of other parts of the field and of the field as a whole, and further say that the Commission and the trial court should not have heard and should not have considered evidence based on the facts revealed by the drilling and production of the Smith well since it was drilled under the first permit. They say that because the first permit was held invalid and cancelled such evidence is rendered inadmissible in this proceeding.
The filing of the suit to cancel the first permit did not suspend drilling operations under it nor the production of oil from the well when drilled. Humble Oil & Refining Co. v. L. & G. Oil Co., Tex.Civ.App., 259 S.W.2d 933, error ref., n.r.e. For this reason the jurisdiction of the Commission to enforce and apply its rules as to such drilling and production was not suspended. The evidence procured from the drilling and production of the well was not illegally procured. Moreover we think that the admissibility of the evidence does not depend on the circumstances of its procurement but upon its materiality and relevancy to the issues. McCormick & Ray, Texas Law of Evidence, p. 308, Sec. 220, et seq.
We think the evidence was not illegally obtained but even if it was, as is contended by appellants, we know of no statute of this State, and none has been called to our attention, declaring it to be inadmissible in this cause. We are mindful of Art. 727a, Vernon's Ann.C.C.P., which provides that no evidence procured by an officer or other person in violation of the Constitution or laws of the United States or of this State "shall be admitted in evidence against the accused on the trial of any criminal case." However this is not a criminal case and that article has no application.
When the facts revealed by the drilling and the production of the Smith well, as testified to by appellees' witness, are considered, it cannot be said that the uncontradicted evidence shows that the characteristics of the formation underlying the .64 acre tract and the surrounding area are not unusual or peculiar but are typical of other parts of the field and of the field as a whole. However it may be here observed that the uncontradicted evidence does show the "regular irregularity" of the entire field.
We have considered all points presented by appellants and it is our opinion that error is not presented.
The judgment of the trial court is affirmed.
Affirmed. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1531683/ | 269 S.W.2d 389 (1954)
McFARLANE
v.
STATE.
No. 26769.
Court of Criminal Appeals of Texas.
March 24, 1954.
Rehearing Denied June 2, 1954.
Davenport & Anderson, by Henry J. Anderson, Wichita Falls, for appellant.
Wesley Dice, State's Atty., Austin, for the State.
DAVIDSON, Commissioner.
This is a conviction for aggravated assault; the punishment, a fine of $500 and one month in jail.
The information alleges that the assault was committed upon Gay Bryan. The ground of aggravation was the use of a deadly weapon, to wit, a pistol.
*390 At the outset we are confronted with the contention that appellant has been arbitrarily deprived of his bills of exception.
Within the proper time, appellant presented to the trial court twenty-nine formal bills of exception numbered from 2 to 30, inclusive. The trial court refused twenty-five of the bills of exception by marking them "Refused." The trial court also noted upon each of the refused bills that the appellant excepted to his refusal thereof. The date the bills of exception were refused was November 5, 1952, or one day before the expiration of the 90-day period authorized within which bills of exception might be filed.
We are constrained to consider the bills of exception, notwithstanding their refusal by the trial court. Cotton v. State, 113 Tex. Crim. 188, 19 S.W.2d 319; Hunt v. State, Tex.Cr.App., 269 S.W.2d 385.
The case of McFarlane (W. N.) v. State, Tex.Cr.App., 254 S.W.2d 136, and 266 S.W.2d 133, while not a companion case, grew out of the same general transaction.
Gay Bryan, the alleged injured party here, and his wife, Doris Bryan, were engaged in the cleaning and pressing business and in the operation of a parking lot. Appellant operated an adjoining tourist court and parking lot. His brother, W. N. McFarlane, worked for him. What is referred to as "an old city bus" was used and occupied as an office for the McFarlane parking lot.
Ill feeling existed between the Bryans and the McFarlanes over a dividing fence. The controversy had reached the point where an injunction had been sought by McFarlane.
This being the background, Mrs. Bryan saw appellant standing in front of their (Bryans') parking lot about nine o'clock the night of April 15, 1952. She testified that W. N. McFarlane "grabbed" her and dragged her "over to his office," and there started "stomping" her severely and beating her with his fists; and that while W. N. McFarlane was beating and "stomping" her, the appellant, A. D. McFarlane, came into the office and "held me while the other one hit me." Looking out the office window, appellant saw Gay Bryan approaching and was heard to say, "The son of a bitch is coming." He then grabbed a pistol, ran out of the office, and attacked the husband by beating him over the head with the pistol. The witness further testified as to the extent of the injuries she received as a result of the attack of W. N. McFarlane, including a broken nose and a miscarriage.
The foregoing facts are taken from the testimony of the witness Mrs. Gay Bryan.
Gay Bryan, the injured party named in the information, testified that on the night of the assault he had been at a next door cleaning establishment loading clothes and then drove his truck into his parking lot about the time the assault upon his wife began. When he endeavored to ascertain the whereabouts of his wife, he was attacked by the appellant and struck three times over the head with a pistol, as a result of which he was severely injured.
It is for this assault by the appellant that he stands here convicted.
By the testimony of the witness Chisum, Mrs. Bryan is shown to have been the aggressor in the entire matter, in that "She drove up in front of the office on the McFarlane property and she said to me `Where is that God damn son of bitching man at? * * * I am talking about that son of bitching McFarlane.'" The witness further testified that, about that time, Mrs. Bryan saw W. N. McFarlane in his office and started "cussing him." Thereupon he telephoned the sheriff's department to report that "there was a woman out in the driveway cussing him out"; that after the telephone call, Mrs. Bryan attacked McFarlane and began the difficulty that resulted in her injuries.
Appellant, as a witness in his own behalf, testified that he was lying in bed in his apartment situated near the parking lot when he heard a lot of noise; that upon looking out the window he saw Mrs. Bryan *391 seated in a car near the door to the office and heard her "cussing." He saw his brother, W. N. McFarlane, talking over the telephone, which was on the same line with the telephone in his room. He listened in and heard his brother talking to the sheriff's office and asking that some deputies be sent out there. He saw Mrs. Bryan leave the car and go into the office and saw the fighting begin. He then went to the office. Upon his arrival, the fight had stopped, according to his testimony. His brother asked him to call the sheriff's office again. On the way back to his apartment to place the call there, he passed Mrs. Bryan's car and removed the ignition keys from the switch in order that she might not drive it away. He then went to his apartment and placed the call. After completing it he picked up his pistol, returned to the office, and saw, for the first time, the husband, Gay Bryan, drive up and park his car and start toward the office. As he did so, appellant said to him, "Gay, don't come in here." To Bryan's question, "Where is Doris?," he was told, "She is in the office, the officers has been called and stay out of here until they get here." It was because of Bryan's attempt to get into the office, notwithstanding appellant's warning, that appellant struck him the first blow with the pistol. According to appellant, the second blow was struck only after Bryan had again endeavored to enter the office following his threat: "I am going to kill that son of a bitch if it is the last thing I ever do."
Appellant insisted that his attack on Gay Bryan was to prevent what he thought would be a killing of one or the other if he (Bryan) ever got into the office and that it was an endeavor on his part to prevent the difficulty from resulting in more serious trouble and was in defense of his brother.
Appellant denied that he participated in any manner in the difficulty between Mrs. Bryan and his brother.
It is apparent from the verdict that the jury rejected appellant's defense.
Bills of exception complain of the receipt in evidence of the testimony showing the assault upon Mrs. Bryan by W. N. McFarlane, especially the details not only of the assault but of the injuries received by Mrs. Bryan. Appellant insists that such testimony was not relevant here, and highly inflammatory to him. It is also insisted that if the testimony be held admissible by reason of the fact that he was alleged to have participated therein, then it was proof of another and extraneous offense not coming within any exception allowing such character of testimony.
It becomes unnecessary to determine appellant's contention, for we find that appellant, by introducing in evidence the testimony of Mrs. Gay Bryan given upon the trial of the case, placed before the jury the same facts to which he was here objecting. One cannot complain of testimony when he introduces testimony to the same effect. Soble v. State, Tex.Cr.App. 218 S.W.2d 195.
It is apparent that, under the testimony of Mrs. Bryan, the state was justified in treating the testimony showing the assault upon her and that upon her husband as one general transaction; that the two assaults were so related as to be inseparable; and that for such reason the state introduced the testimony showing the assault upon Mrs. Bryan, in the first instance, as a part of the assault upon her husband.
As shown by various bills of exception, and especially in argument of state's counsel, appellant was taken to task for not calling as a witness in his behalf his brother, W. N. McFarlane.
Appellant's position is that his brother was under indictment for the same offense, or for an offense growing out of the same transaction as that for which appellant was on trial, and, therefore, that he could not have testified in his behalf.
There is no question but that if appellant is correct in his contention, reversible error is here reflected.
Art. 82 of the Penal Code and art. 711 of the Code of Criminal Procedure are almost identical and provide that persons *392 charged as principals, accomplices, or accessories cannot be introduced as witnesses for one another.
Art. 651, C.C.P., known as the severance statute, provides the method whereby two defendants prosecuted for an offense growing out of the same transaction may obtain, by severance, the testimony of the other.
It will be noted that neither art. 82, Vernon's Ann.P.C., nor art 711, Vernon's Ann.C.C.P., refer to charges "growing out of the same transaction". Such language is found only in the severance statute, art. 651, C.C.P.
Here, W. N. McFarlane was under accusation for the offense of aggravated assault upon Mrs. Gay Bryan, growing out of the same transaction. The two offensesthat is, the assault upon Mrs. Bryan and that upon her husbandwere not the same, but they did grow out of the same transaction, according to the state's theory.
Under such circumstances, could appellant have called W. N. McFarlane as a witness in his behalf?
We are of the opinion that the case of Cotton v. State, 92 Tex. Crim. 594, 244 S.W. 1027, 1029, where the distinction between "same offense" and "same transaction" within the meaning of the above statutes is pointed out, is here controlling.
It was there said:
"It is the charge lodged against them by the state, and not the acting together which works the disqualification."
In connection therewith, it was also pointed out that:
"If A. and B. act together in committing a crime, and A. only is charged therewith, B.'s evidence is available to him".
It is apparent, therefore, that W. N. McFarlane, not being charged with the offense for which appellant was upon trial, could have been called as a witness by the appellant. Such being true, it was within the province of the state to refer in argument to the jury to the fact that appellant had failed to call the witness.
We are constrained to conclude that the picture of the injured party, taken after the assault, was admissible upon the issue as to whether the pistol, as used in inflicting the injuries, was a deadly weapon.
Pictures of the injured party are admissible when they tend to establish some issue in the case. Ray v. State, Tex. Cr.App., 266 S.W.2d 124.
The other questions presented by appellant in his brief are overruled without discussion.
No reversible error appearing, the judgment is affirmed.
Opinion approved by the court.
On Motion for Rehearing.
BELCHER, Commissioner.
Appellant, in his motion for rehearing, complains of the refusal of the court to permit him to interrogate Mrs. Bryan on cross-examination about her previous trouble with the McFarlanes over property boundary lines and an injunction suit pertaining thereto in order to show the motive and prejudice of the witness.
The record reveals that the defense offered the following testimony of Mrs. Bryan: "We had been having trouble about the title to our property, about the fences around it and about the signs for a long time. We didn't owe him (McFarlane) money, he bought a note, a delinquent note. He bought the note hoping to foreclose, he wouldn't accept the money."
She further said that she had testified at a hearing about the fence on this property, but had not been cited for violating an injunction concerning it. Her testimony further shows that she had appeared at other previous trials in which the Bryans and the McFarlanes were involved.
*393 The above evidence reveals the previous relationship between the parties as to the matters herein complained of, thus no error is here shown.
We have considered the other contentions of appellant and are of the opinion that they do not show error.
Appellant's motion for rehearing is overruled.
Opinion approved by the Court. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1531680/ | 12 Md. App. 419 (1971)
278 A.2d 652
JAMES F. SCHWARTZ ET UX.
v.
FRANCES HUDGINS.
No. 647, September Term, 1970.
Court of Special Appeals of Maryland.
Decided June 28, 1971.
The cause was argued before ORTH, THOMPSON and CARTER, JJ.
Norman F. Summers, with whom was Julian S. Brewer, Jr., on the brief, for appellants.
No brief filed on behalf of appellee.
ORTH, J., delivered the opinion of the Court.
By its decree of 16 November 1970 the Circuit Court for Baltimore County in Equity denied the adoption of Angela Marie Houser by James F. Schwartz and Patricia Ann Schwartz, his wife. It awarded the guardianship and custody of the child to Mr. and Mrs. Schwartz with a right of visitation in the natural mother, Frances Hudgins, formerly Frances Houser, all subject to its further order. Mr. and Mrs. Schwartz appealed.[1]
Angela's natural father, Frank Houser, consented to the adoption. Her natural mother refused to give her consent. In reaching his conclusion the chancellor made factual findings which we accept. Maryland Rule 1086; Sullivan v. Auslaender, 12 Md. App. 1 (1971). He set them out in a memorandum opinion. "The natural mother of the child proposed for adoption had three children: BERNARD ANTHONY HOUSER, born November 21, 1955; MARY TERESA HOUSER, born July 26, 1957, *421 and ANGELA MARIE HOUSER, born December 30, 1964. In February, 1965, when Angela was two months old, the mother left the home where the children and her husband resided and moved to an address on Calvert Street in Baltimore City. She made no effort to contact the children, husband, or any public authority for about two months. She explained her actions as caused by a sense of hopelessness and desperation arising from her husband's indolence and intoxication. These events triggered a Juvenile Court hearing, attended by the mother, at which the three children were found to be neglected and dependent and were committed to the Baltimore County Welfare Board for foster placement on April 30, 1965. JAMES F. SCHWARTZ and PATRICIA ANN SCHWARTZ, his wife, were chosen as foster parents of all three children shortly thereafter, when Angela was but a few months of age. At that time the Schwartzes were childless. Three children subsequently were born to the couple, namely: JAMES JOHN SCHWARTZ, age 4; AMY LOUISE SCHWARTZ, age 2, and GINA ROSE SCHWARTZ, age 7 months, who reside in the home with Angela. Mr. Schwartz is an Officer of the Baltimore County Police Bureau. Mrs. Schwartz is not employed, except as housewife and mother. Both bear the highest reputation. Their present home is a four bedroom, detached dwelling on a lot 75 feet by 105 feet. It was manifest that both have the same deep affection for Angela as for their own children. The interrelationship of these children was described as extremely close. Angela was described as a happy, well adjusted child. The Schwartzes have resided in their present home for about one year. In the first year, visitations by the natural mother to her children occurred monthly with reasonable regularity. The visits decreased thereafter and by August, 1968 had become very infrequent. At that time her son, Bernard, left the Schwartz household to live with his mother and her present husband, FREDERICK ALLAN HUDGINS. There were no visitations by the natural mother thereafter. She never thereafter sent Angela a *422 letter or greeting card on holidays or birthdays. Sometime prior to the time that Bernard returned to the home of his mother, the other daughter, MARY TERESA HOUSER, had been taken from the Schwartz home and placed in other foster care. The reason for that course is in dispute Mrs. Hudgins suggests that the child was unhappy because of unfair treatment by the Schwartz family; the Schwartzes contend that the admitted difficulty with Mary Teresa within the household was caused by a feeling by the child that she had been rejected by her mother. Mary Teresa now resides with her mother. She did not testify. The evidence is strong and fully believed by the Court, that the natural mother never, by word or deed, expressed or evidenced love and affection for Angela. Once, in the course of a long delayed visitation, Angela, in the presence of her natural mother, inquired `who is this lady?' The mother did not even respond. At or about the time when the mother's visitations had ceased altogether, when Angela was about three years old, the child was told by Mrs. Schwartz that she was not the real mother. This apparently caused the child to become quite emotionally upset, for which medical attention was required. Thereafter, no comment about Angela's true parentage ever was made by the Schwartzes. She was known within the family and the community as `Angela Schwartz'. When Mrs. Hudgins learned [apparently from her son, Bernard] that Angela was being called a `Schwartz' she protested to a representative of the Welfare Department. Discussions took place between the Schwartzes and the Welfare Department on the subject. It was agreed that meaningful visitations by the mother to the child were necessary and desirable if the child were to achieve an appropriate parent-child relationship. The visitations never took place. The relationship between the natural mother and Angela appears to have been different than with her son, Bernard. On her infrequent visitations her interest and affection seem to have been directed exclusively to the son the daughter was ignored. The evidence compels the conclusion that *423 the child Angela regards herself and is regarded by the Schwartz family and the community generally as a child of that household. This is directly and exclusively the product of the natural mother's failure ever to indicate affection for the child; the gross infrequency of her visitations in the early years; the seeming disinterest in the child during these infrequent visitations, and the complete absence of any contact either in person or by card or letter within the past two years.
"The evidence shows abundant opportunity for the mother to maintain frequent and meaningful visitations with the child, particularly after Mrs. Hudgins' marriage to her present husband on January 29, 1967. She is employed as a nurses aide at the Mercy Hospital at a net bi-monthly wage of $164.00. Her husband was said to have a take-home wage of $125.00 weekly, with gross wages of $9,500.00 in 1969. She works five days a week, with regular work hours of 7:30 A.M. to 4:00 P.M. Her non-work days are variable, but occur chiefly in midweek. Her husband's hours of employment generally extend from 7:00 A.M. to 3:00 or 4:00 P.M., with most Saturdays and Sundays off. She has two weeks vacation annually; her husband five weeks. It is true that the former residence of the Schwartzes was somewhat removed from public transportation about five or six blocks away in hilly terrain but the present home is only one block from such transportation. It is simply beyond belief that the natural mother was barred, either by financial restraints or by travel difficulties from visitations with her child. Still, the natural mother has stated an ultimate desire to have Angela with her at some indeterminate future time. Mrs. Willin, of the Probation Department of Baltimore County, testified that during her interview Mrs. Hudgins presented no plan for her daughter to return to the home that she just didn't know, she couldn't tell when such return would occur. Mrs. Willin also testified that the natural mother showed no evidence of love for the child in the course of her interviews. The natural mother testified that she believed *424 that Angela would adjust toward her because the child knew that Mary and Bernard were her sister and brother. She stated that it was her purpose from the very beginning to have all of her children return and that this purpose has been achieved as to Mary and Bernard. She hoped that Angela will return after her husband `has more time to adjust.' The natural mother's explanation of her admitted failure to maintain any contact with Angela in the past two years, or to explain the infrequent contacts prior thereto is most unsatisfactory. Her explanation that cards were not sent because of fear that they may not be delivered by the Schwartzes is equally unimpressive. The testimony in this case persuades the Court that the removal of this child from the household of the Schwartzes at this time would cause at least temporary harm to the child. This is solely a circumstance caused by the mother's failures as a parent. She has not evidenced love and affection for the child."
The primary consideration of transcendent importance in child adoption cases, as in child custody cases, is firmly established that action should be taken which subserves the best interests of the child. Lippy v. Breidenstein, 249 Md. 415, 420. Although in reviewing such cases we accept the factual findings of the chancellor if not clearly wrong, we exercise our best judgment in determining whether the conclusion the chancellor reached on those facts was the best one for the welfare, benefit and interests of the child. Sullivan v. Auslaender, supra. In so doing in adoption cases, however, we recognize that they are to be distinguished from custody cases. The distinction was pointed out in Walker v. Gardner, 221 Md. 280, 284, quoted with approval in Lippy at 420, in Beltran v. Heim, 248 Md. 397, 401 and in Goodyear v. Cecil County Department of Social Services, 11 Md. App. 280, 284:
"Unlike awards of custody, (* * *), adoption decrees cut the child off from the natural parent, who is made a legal stranger to his offspring. *425 The consequences of this drastic and permanent severing of the strongest and basic natural ties and relationships has led the Legislature and this Court to make sure, as far as possible, that adoption shall not be granted over parental objection unless that course clearly is justified. The welfare and best interests of the child must be weighed with great care against every just claim of an objecting parent."
The Court of Appeals has indicated that it will not permit trial courts to decree adoption over the expressed objection of the natural parent save "in very strong cases."[2] The Legislature has provided for consent to be obtained in certain circumstances to any proposed adoption. Applicable here is the requirement that such consent shall be obtained from one natural parent, if the other has lost his parental rights through voluntary relinquishment. Code, Art. 16, § 74 (c). But since the amendment of the statute by chapter 622 of the Laws of 1955 there is an express exception regarding the requirements of consent: "However, the court may grant a petition for adoption without any of the consents hereinafter specified,[3] if, after a hearing the court finds that such consent or consents are withheld contrary to the best interests of the child."[4] See Rule D 73 based on the statute as amended. Even before this provision was added by amendment the Court of Appeals did not read into the statute "an absolute, arbitrary veto on the part of the parent." Lagumis v. Ex Parte Lagumis, 186 Md. 97, 106. And see Alston v. Thomas, 161 Md. 617. The test as to what is to the best interests of the child necessarily depends on the facts and circumstances in each case. In Shetler v. Fink, 231 Md. 302 the Court reviewed cases decided by it before and after the amendment regarding consent. It said, at 308:
*426 "While all the facts and circumstances in a case must be considered, the cases, which reached this Court on the merits of the question whether or not adoption should be granted, seem to indicate that willful abandonment, failure to contribute to support, neglect to see or visit, and unfitness of a natural parent, are some of the important factors to be considered in determining whether consent has been injustifiably withheld; and the station in life and financial and religious considerations are of secondary importance. On the other hand, the natural rights of a natural parent that have not been lost or forfeited by his or her acts of conduct must be carefully weighed and considered in deciding the question."
In the case before us the chancellor never decided whether the natural mother withheld her consent to the adoption contrary to the best interests of the child. He said: "There is some doubt whether her refusal to consent to adoption in this case is caused by a real interest in the welfare of her daughter, or whether it is withheld simply because she considers that such a course would be a brand of infamy upon her." He then denied the adoption because the evidence fell short of establishing that the mother had abandoned the child "under the stringent rules laid down in Lippy v. Breidenstein, 249 Md. 415 and Logan v. Coup, 238 Md. 253." Of course, had the chancellor found that the mother had abandoned the child, her consent would not be required under the terms of the statute because she would have lost her parental rights through the abandonment. We do not share the chancellor's view of Lippy and Logan. In Lippy the Court of Appeals, exercising its independent judgment on the facts, found, contrary to the finding of the lower court, that the consent of the natural father was not withheld contrary to the best interests of the child. In so concluding the Court of Appeals noted that there was *427 a report from the county welfare board to the effect that the natural parents appeared to have achieved some stability; that they seemed to be sincere in their desire to have the child with them; that the board rather than make a recommendation would leave the decision to the court. A circuit court probation officer testified it was his opinion that the best interests of the child would be served by granting the adoption. A caseworker for the welfare agency thought the removal of the child from the foster parents might permanently injure him and recommended he be allowed to remain. Another caseworker, however, testified the child would be able to make the adjustment to the home of the natural parents and should be returned to them.[5] In Logan the lower court granted the petition for adoption and the Court of Appeals reversed because "clear and sufficient legal reasons" were not shown that the adoption was needed for the interests and welfare of the child. In so deciding the Court first found that the natural father, who withdrew his consent to the adoption,[6] had not lost his parental rights in the child by voluntary relinquishment or abandonment thereof. It then determined that the best interest and welfare of the child did not require the adoption, a determination which it had no difficulty in reaching because the facts and circumstances fell "far short" of so showing. It pointed out that the chancellor stated, "all these people impress me favorably," they "[impress] me as being very fine people." "I can't find anything against any of them" and "I cannot find that the natural father is unfit." The record fully supported those observations and findings. In fact the only advantage that the record disclosed for the adoption was that the family of the foster parents would be a "closer-knit" one, and it found *428 no case where that reason, standing by itself, had been considered sufficient, 238 Md. at 260-261.
We think it patent that it does not necessarily follow that because a natural parent has not abandoned a child, it must be found that he is not withholding consent contrary to the child's best interests. Thus accepting the view of the chancellor here that Mrs. Hudgins' actions were not sufficient to establish that she voluntarily relinquished or abandoned Angela within the meaning of those terms as discussed in Logan at 257-259, does not preclude a determination that she withheld consent to the adoption contrary to Angela's best interests. On the contrary, on the facts found by the chancellor, we can only conclude that Mrs. Hudgins did withhold consent to Angela's adoption by Mr. and Mrs. Schwartz contrary to the best interests of the child. We are not able to find here any of the considerations which led the Court in Lippy and Logan to feel that the adoption was premature. The chancellor found that Mrs. Hudgins never, by word or deed, expressed or evidenced any love and affection for Angela. She ceased visiting the child despite discussions with the welfare department at which it was agreed that "meaningful visitations" were necessary and desirable if the child were to achieve an appropriate parent-child relationship. There was over the past two years a complete absence of any contact either in person or by card or letter between Mrs. Hudgins and Angela, although the chancellor found "abundant opportunity" for the natural mother to maintain frequent and meaningful visitations. He found her reasons for lack of contact most unsatisfactory and unimpressive. Although Mrs. Hudgins stated an ultimate desire to have Angela with her it was to be at some indeterminate future time. She presented no plan or real desire for Angela to return to her, showing no evidence of love for her whatsoever. She told the welfare department that it would be impossible for her and her husband to take Angela as they do not have the room or the money. She was willing for the Schwartzes to keep her until she was ready for her but she did *429 not know when this would be. Nor did it seem that she could adequately look after the young child; the two children with her look after themselves while she works. On the other hand it is apparent from the chancellor's comments in the memorandum opinion that he felt that the foster parents were eminently fit persons to care for Angela in happy and pleasant surroundings. He found manifest that they had the same deep affection for her as for their own children and the interrelationship of the children was extremely close. Angela was happy and well adjusted. She regarded herself and was regarded by the Schwartz family and the community generally as a child of that household.
We believe that this is a very strong case in which adoption should be permitted over the expressed objection of the one natural parent who refused to give consent. Although the case before us is resolved on its own facts and circumstances, on the factual findings of the chancellor we find it stronger than Walker v. Gardner, supra, Alston v. Thomas, supra, and King v. Shandrowski, 218 Md. 38, in which there was "more than a hint that the best interests of the child might be found by the trial court on remand to lie in adoption by the custodians of the child, despite the objections of both natural parents." Walker at 284-285. Compare Goodyear v. Cecil County Department of Social Services, supra, in which, unlike the instant case, we did not have a situation where the child to be adopted had been in the custody of individuals seeking the adoption or exposed to them in a manner which would engender feelings of love, affection and emotional attachment toward them. Nor did we know, in Goodyear, as we here know, the type of parents, environment or surroundings which would be provided in the adoptive home. 11 Md. App. at 286.
Applying the facts found by the chancellor to the important factors to be considered, it is our best judgment that the adoption sought should be decreed as best for the welfare, benefit and interests of the child. We remand *430 the case for the passage of a decree in accordance therewith.[7]
Decree reversed; case remanded for passage of a decree as prayed in petition of appellants; costs to be paid by appellee.
NOTES
[1] There is no brief or appearance for Frances Hudgins, the appellee.
[2] Strahorn, Adoption in Maryland, 7 Md.L.Rev. 275, 295.
[3] They are specified in Art. 16, § 74, subsections (a) to (h) both inclusive.
[4] The original adoptive statute required notice to a parent or guardian but not their consent to the adoption.
[5] In applying for the adoption the foster parents violated a written agreement made with the welfare agency that they would take no action for adoption of any child placed with them by the agency without its consent in writing.
[6] Consent obtained under Art. 16, § 74 may, by its provisions, be revoked and cancelled at any time before the final decree with certain exceptions designated.
[7] We note that we do not remand without affirming or reversing as was done in King v. Shandrowski, supra, because we do not feel that further proceedings are required below. Unlike King the facts found by the chancellor here, as supported by the evidence, were ample for us, in the exercise of our best judgment, to conclude with no difficulty that the adoption should be decreed as best for the welfare, benefit and interests of the child. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1531697/ | 12 Md. App. 384 (1971)
278 A.2d 658
IN RE DAVID ARNOLD AND BRIAN NICHOLUS ARNOLD.
No. 618, September Term, 1970.
Court of Special Appeals of Maryland.
Decided June 25, 1971.
The cause was argued before THOMPSON, MOYLAN, POWERS, CARTER and GILBERT, JJ.
Joseph P. McCurdy, with whom were Philip H. Goodman and Goodman, Meagher & Enoch on the brief, for appellants.
George A. Eichhorn, III, Assistant Attorney General, with whom were Francis B. Burch, Attorney General, and J. Thomas Clark, State's Attorney for Queen Anne's County, on the brief, for appellee.
*386 GILBERT, J., delivered the opinion of the Court.
The Appellants, brothers, were both charged with being delinquents in Queen Anne's County Juvenile Court petitions. The petitions alleged that they "did assault and beat Barbara Lee Currens, age 12, with a stick." They entered a general denial and both boys on November 4, 1970 were adjudged to be delinquent and were committed to the Maryland Training School.
The boys' parents had been served on October 24, 1970 with a petition charging that each of the children was a delinquent.[1] Both boys executed, in court, a "Waiver of Consent and Election Not to Contest".[2] Their father, Richard Arnold, consented, in writing, to his children's waiver.
On appeal, a twofold attack is made: (1) the Appellants were denied the right to counsel because a waiver had been signed by the father who alleged he had been told "that the proceedings would not result in the commitment of the Appellants," and (2) that the commitment was contrary to the express purposes of Article 26, Section 70, of the Maryland Code.
The testimony established that on October 5, 1970, David Arnold (David), age 13, and Brian Nicholus Arnold (Nicky), age 11, were playing at the Bay City Community Beach in Queen Anne's County. Barbara Lee Currens, age 12, in company with other children, was also at the beach. Barbara testified, "See, we were over on the Community Beach playing, and then we saw this rope on the tree hanging down and we were swinging on it. It was my turn so there was a boy in front and there was a boy on the side. The boy in front of me said a couple of bad words, and get off the rope. I said, `no.' *387 The boy on the side of me hit me so I jumped down. * * * I jumped down and grabbed his hand and told him to drop the stick. So, he did, and his brother came and hit me on the back. While the other was walking I got hold of the other who hit me on the back."
She then related that she had been struck "around five times"; that the Appellants had taken turns hitting her. Miss Currens stated she struck the boys with her fist. She identified both boys as her assailants. She said she lost no time from school as a result of the assault. Her total medical expenses were $6.00 and consisted of treatment by a physician for a cut on the back and a tetanus shot. Her clothing was not damaged.
Jane Austin, a witness, told substantially the same version of the incident, except for the fact that, "David said it was their swing and we better get off or else they were going to hit her over the back with a stick. So, he picked up the stick and hit Barbara with it, so, she got down and grabbed his hand so he stopped." Jane then stated that while Barbara was fighting with David that Nicky picked up the stick and hit Barbara. The witness informed the court that she told everybody [the other children present] "Let's help." She looked for a stick but by the time she located one David and Nicky were running home. Jane and Barbara proceeded to locate Barbara's mother, and with her drove to the Arnold home. In response to the knock the boys opened the door. Mrs. Currens asked to talk to Mrs. Arnold, but was informed she was not at home. When Mrs. Currens invited the brothers to come outside of the house and to look at her daughter's back in order that she might show them what they had done, Nicky said, "Why don't you shut your damn mouth." He then shut the door. Mrs. Currens, Barbara and Jane went to the police station and lodged their complaint against the Arnold boys. Neither Mr. nor Mrs. Arnold ever contacted Mrs. Currens relative to the assault, and there is no evidence that they knew about the incident until they were notified by the probation department.
*388 Mr. Arnold denied any knowledge of the incident and explained that his wife was not at home on October 5, 1970, the day of the offense, because she was at a doctor's office. Neither boy testified.[3] The court asked for the report of the probation officer, which was apparently received into evidence, and the probation officer informed the court that Mr. John Walker, the principal of the Stevensville Middle School, wanted to say something. Mr. Walker testified as to the Appellants' absences from school; that David "was doing well for his ability and was cooperative in class" but that "Nicky is not doing as well academically as we feel he could do"; that he was concerned with the fact that Nicky had caused disruptive behavior in class, was ejected from an assembly for similar behavior and that he had had a number of fights with students. Nicky had only been in that school since September, 1970. Mr. Walker stated that Nicky had used other students to do things for him such as going off the campus grounds for cokes and that he had spoken to Nicky about the matter. The following took place:
"THE COURT: Nicky is supposed to be one of the worst discipline problems in the school."[4]
"THE WITNESS: Nicky is a problem. I have never "
"THE COURT: That's the way he is classified in this report."[5]
"THE WITNESS: Is that my report, sir? I haven't rated him as to who is worst, but Nicky has been a discipline problem *389 and taken a great deal of my time."
"THE COURT: All the Court wants to say at this point to you, Mr. Walker, is that the first time such conduct as appears to have been present in this case manifests itself to you in your capacity get in touch with Mr. Horwath. They only have to misbehave once as far as the Court is concerned. We're not going to put up with it; we will back you up."
Then Mr. Walker continued his testimony and told the court that Nicky sometimes wore a hat to class which he removed when told and later put it back on; that he had trouble getting Nicky to keep his shirt-tail in and that if Nicky's behavior did not improve he would have to suspend him. He said that the parents had not attended P.T.A. meetings, or the school "open house". Mr. Arnold, in a combination of testimony and cross-examination again denied he knew of the incident, or any disruptive behavior caused by the boys in the school. In fact, Mr. Arnold said, "Like I said, I never knew anything about it until now."
The Appellants, in support of their first contention, inform us that the father, Mr. Richard Arnold, alleges that he had been told by the probation officer that "the proceedings would probably not result in commitment." Then they argue that if the waiver executed by the brothers, and consented to by their father, was in any way procured in reliance upon this alleged misstatement, such a waiver would not be intelligently made, and, consequently, invalid.
At the time of the commencement of the hearing, the juvenile judge asked Mr. Arnold whether or not he wished an attorney. His answer was "no." The probation *390 officer stated that he had been assured that they [the Arnolds] would want counsel if the matter went to court. Mr. Arnold said, "We did at the time." The court asked that the waivers be signed, saying, "Have Mr. Arnold execute the waivers. Go over it with him and have him execute those waivers."
We have carefully reviewed the record in this proceeding and fail to find any testimony, argument or inference to support the Appellants' position, and, in fact, the Appellants fail to direct our attention to anything in their own support except an inference which they believe may be drawn from the fact that the father asked at the conclusion of the hearing if there was "a chance of appeal on their part until I can get an attorney. I didn't realize it was going to be this serious." The belated realization of the seriousness, and the desire to employ counsel, does not lead us to conclude that the Appellants' father was in any way misled by the probation department. There is nothing in the record to indicate that the waiver was not voluntarily and knowingly signed.
We shall now consider the second argument presented by the Appellants; that is, that the trial court committed the Appellants contrary to the express purpose of Article 26, Section 70, of the Annotated Code of Maryland.
In Re Hamill, 10 Md. App. 586, 590 (1970), contains a comprehensive discussion of the Maryland juvenile law. Chief Judge Murphy in that case said:
"The law of this State governing juvenile causes and delinquent children was substantially revised by Chapter 432 of the Acts of 1969. The purposes of the Acts were plainly outlined in part as follows:
`(1) To provide for the care, protection and wholesome mental and physical development of children coming within the provisions of this subtitle;
(2) To remove from children committing *391 delinquent acts the taint of criminality and the consequences of criminal behavior, and to substitute therefor a program of treatment, training, and rehabilitation consistent with the protection of the public interest;
(3) To place a child in a wholesome family environment whenever possible;
(4) To separate a child from his parents only when necessary for his welfare or in the interest of public safety.'
"By so providing, it is clear that the Legislature intended no departure in philosophy from that underlying previous juvenile court enactments in Maryland, as interpreted by the Court of Appeals, viz., that juvenile proceedings are of a special nature designed to meet the problems peculiar to the adolescent (In Re Fletcher, 251 Md. 520); that the proceedings of a juvenile court are not criminal in nature and its dispositions are not punishment for crime (In the Matter of Cromwell, 232 Md. 409); that the juvenile law has as its underlying concept the protection of the juvenile, so that judges, in making dispositions in juvenile cases, think not in terms of guilt, but of the child's need for protection or rehabilitation (In Re Johnson, 254 Md. 517); that the juvenile act does not contemplate the punishment of children where they are found to be delinquent, but rather an attempt to correct and rehabilitate them in `a wholesome family environment whenever possible,' although rehabilitation may have to be sought in some instances in an institution (Moquin v. State, 216 Md. 524).
"Under Section 70-1 (y) of the present juvenile law, the disposition hearing held following an adjudication of delinquency is `to determine (1) whether the child is in need of supervision, *392 treatment, or rehabilitation; and if so (2) the nature of the supervision, treatment, or rehabilitation.' Under Section 70-19, the juvenile judge is enjoined to `make disposition as most suited to the physical, mental, and moral welfare of the child.' These principles must be applied in light of the purposes of the juvenile law, as set forth in Section 70 (heretofore outlined), viz., that the juvenile court is to make disposition so as to provide for the care, protection, and wholesome mental and physical development of the child; by a program of treatment, training and rehabilitation `consistent with the protection of the public interest.'
"Against such a legislative and judicial background, it is altogether clear that the mere fact of delinquency, without more, ordinarily does not justify the taking of the child from his parents and his commitment to a State training school. Because the Legislature has indicated its preference that a delinquent child be placed in the care, custody, and control of individuals rather than an institution whenever consistent with the purposes underlying the juvenile law, a commitment to a training school in a case where the parents would seem able and willing to undertake the rehabilitation of the delinquent child would be improper. See Cantu v. State, 207 S.W.2d 901 (Tex.); In re Walter, 172 N.W.2d 603 (N.D.); Berry v. Superior Court, 245 P. 409 (Wash.); 47 Am.Jur.2d Juveniles and Delinquent and Dependent Children, Section 30; Annotations, 45 A.L.R. 1533 and 85 A.L.R. 1099. Of course, where the evidence at the disposition hearing shows that the parents, no matter how well motivated or intentioned, are incapable, unwilling, or unable to control or rehabilitate their delinquent child, a commitment to the training school may be necessary for the `welfare *393 [of the delinquent] or in the interest of public safety.' (Section 70 (4))."
Appellants point to Hamill and Maryland Rule 913. They argue that the juvenile judge did not comply with Rule 913, nor is there a showing that he considered "welfare of the children" or "public safety."
At the conclusion of the testimony in this case the court said:
"All right, stand up boys. Now, the Court is not at all pleased with what has been presented here this morning as to your conduct. Nor are we satisfied with the apparent indifference of the parents to their conduct. The fact that you say you don't know anything about what they have been doing is certainly an indication that you haven't been paying attention to what these children have been doing. The fact that your wife is not here this morning, although she may have a job, the Court thinks she should be here.
"Now, we're not going to put up with such conduct as this in any community in this county. Certainly we're not going to permit these children, although they're young, to behave as they have been, from what Mr. Walker said and what these reports show. And, certainly the fact that you don't know anything about this certainly shows indifference on your part.
"Now, boys you're both going to be sent to the Maryland Training School for an indefinite period. I hate to do it with boys your size and age because it's rough over there, but you deserve it when you go around beating people the way you have, and misbehaving the way you have in school." (Emphasis supplied).
"MR. CLARK: Have you made a finding?" (Emphasis supplied).
"THE COURT: The finding is delinquent in *394 both cases. You will also pay the costs of this proceeding, whatever that might be. You will also pay the lady for the medical bill. * * *." (Emphasis supplied).
The Rules for Juvenile Causes, (Chapter 900) Maryland Rules of Procedure, provide that there shall be an adjudicatory hearing and at the conclusion thereof "the court shall announce and dictate to the stenographer or reporter or prepare and file with the clerk a brief statement of the grounds upon which it bases its determination." Rule 912 d 1.
After the "adjudicatory hearing" there shall be a "disposition hearing." Rule 913; In Re Hamill, supra.
The proceedings in this case do not comply with the Maryland Rules of Procedure, and as Mr. Justice Fortas, In the Matter of Gault, 387 U.S. 1, said, quoting Foster, Social Work, the Law, and Social Action, in Social Casework, (July, 1964), page 286, "Procedure is to law what scientific method' is to science."
In the recent case of Isen v. Phoenix Assurance Co., 259 Md. 564, 570 (1970), the Court of Appeals, speaking through Judge McWilliams, said of the Maryland Rules:
"* * * they are not guides to the practice of law but precise rubrics `established to promote the orderly and efficient administration of justice and [that they] are to be read and followed.' Brown v. Fraley, 222 Md. 480, 483 (1960)."
Here the adjudicatory hearing (Rule 912) and disposition hearing (Rule 913) are interwoven. The Appellants were actually ordered committed to the Maryland Training School before they were adjudged "delinquent". The hearing before the juvenile judge was violative of the Rules.
*395 The probation report submitted to the juvenile court stated in part:
"In summation, I feel after reviewing school reports, considering the present incident where two brothers beat a girl their own age with sticks because she refused to vacate a swing for them, the extensive records of fights and antisocial behavior in the school and community, the lack of motivation on the part of the parents to accept help when offered and the continued protection by the parents even when the problem is obvious, that Brien, regarding his age and development, cannot be entirely responsible for his delinquency. I feel it is an outgrowth of continued parent protection, lack of supervision and blame of others for his action.
"RECOMMENDATION
It is respectfully recommended to the court that if Brien (Nicky) is found delinquent, he be placed on probation, under the supervision of the Department of Juvenile Services. I would also respectfully recommend that the court make the parents abundantly aware that custody can and quite possibly will be changed in any future appearance by the family in Juvenile Court. If the parents refuse the counseling by the school and the Department of Juvenile Services, I feel foster placement with full support ordered by the family the only alternative to probation."
The summation and report as to David is identical except for the proper noun of "David" in place of "Brian" (Nicky) where the same may appear. The trial judge ignored the recommendation and in doing so, we think failed to give proper effect to Sections 70 and 70-1 of Article 26.
By the enactment of Chapter 432, Acts of 1969, the General Assembly created a wholly new category entitled *396 "Child in Need of Supervision."[6] This new classification contains most of the acts defined as "delinquency" under former Section 52 of Article 26.[7]
On the bare record before us there is no showing that the legislative design was weighed or considered by the juvenile judge, nor does the record disclose to us how the children's "welfare" or "the interests of public safety" (Article 26, Section 70 (4)) would be best served by commitment to the Maryland Training School.
Incarceration of these youthful Appellants in an institution is fraught with grave consequences for they will be uprooted from their family, friends and classmates, and exposed to association with delinquents who have committed serious felonies including rape, manslaughter and armed robbery, inter alia, and is not in keeping with the legislative intent.
We are not unmindful that, "disposition in a juvenile case is committed to the sound discretion of the juvenile judge, to be disturbed on appeal only upon a finding that *397 such discretion has been abused." Hamill, supra. We find an abuse of discretion by the juvenile judge in failing to consider "a program of treatment, training and rehabilitation consistent with the protection of public interest" (Article 26, Section 70, supra) and we remand the case without either affirming or reversing for further consideration by the juvenile court.
As we said in Hamill, supra, "In the course of such reconsideration, it may be proper for the judge to review the minor Appellants' conduct since the original hearing and to consider the legislative purposes as stated in Article 26, Section 70."
Case remanded without affirming or reversing for further proceedings in accordance with this opinion.
Costs to be paid by the County Commissioners of Queen Anne's County.
Mandate to issue forthwith.
NOTES
[1] The 1970 Cumulative Supplement to Vol. 9B, Annotated Code of Maryland, pages 325 and 326, sets forth Form 31 as the suggested Petition and contains more information than the one used in this case. Form 31 was added Feb. 2, 1970.
[2] We note that the form "Waiver of Consent and Election Not to Contest" was adopted prior to the enactment of Chapter 432, Acts of 1969, (Art. 26, Sec. 70).
[3] Rule 917. "A child may remain silent as of right during an adjudicatory hearing on an allegation of delinquency and shall be so advised."
[4] This is an apparent reference to the Probation Department report which attributes this comment to the school guidance counselor.
[5] Although not argued here, Rule 912 (c) requires: "The rules of evidence applicable to criminal cases shall apply to delinquency hearings." The probation report was received into evidence before a finding of delinquency.
[6] Article 26, Sec. 70-1, defines a "delinquent child" to mean "a child who commits a delinquent act, and who requires supervision, treatment or rehabilitation." "Delinquent act" is defined in the same section and Article (g) as "an act which is in violation of Article 661/2 of this Code, any other traffic violation, or an act that would be a crime if done by a person who is not a child.
"(i) Child in need of supervision means a child: (1) Subject to compulsory school attendance who is habitually and without justification truant from school; (2) Without substantial fault on the part of his parents, guardian, or other custodian, who is habitually disobedient, ungovernable and beyond their control; (3) Who so deports himself as to injure or endanger himself or others; or (4) Who has committed an offense applicable only to children; and (5) Requires guidance, treatment, or rehabilitation."
[7] Article 26, Sec. 52, which was repealed by Chapter 432 of the Acts of 1969, supra, and had defined a delinquent child as "a child (1) who violates any law or ordinance; or who commits any act, which, if committed by an adult, would be a crime not punishable by death or life imprisonment; (2) who is incorrigible or ungovernable or disobedient or who is beyond the control of his parents, guardian, custodian or other lawful authority; (3) who is habitually a truant; (4) who without just cause or without the consent of his parents, guardian or other custodian, repeatedly deserts his home or place of abode; (5) who is engaged in any occupation which is in violation of law; or association with immoral or vicious persons; (6) who so deports himself so as to injure or endanger himself or others." | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1531720/ | 269 S.W.2d 62 (1954)
BRASKER et ux.
v.
CIRESE.
No. 43473.
Supreme Court of Missouri, En Banc.
June 14, 1954.
*63 Anthony J. Miceli, Lawrence W. Saeger, Kansas City, for appellants.
J. K. Owens, I. I. Ozar, Kansas City, for respondent.
COIL, Commissioner.
Plaintiffs-appellants, husband and wife, sought to cancel a sheriff's deed issued to defendant-respondent as a result of proceedings under the Land Tax Collection Law, §§ 141.210-141.810 (all section references are RSMo 1949, V.A.M.S.). The trial chancellor found plaintiffs not entitled *64 to relief and entered judgment dismissing their petition.
Plaintiffs had been the record owners of the instantly involved house and lot in Kansas City since 1939. The county taxes were delinquent for the years 1944 to 1948, inclusive. An in rem action was instituted under the Land Tax Collection Law, supra, resulting in a foreclosure judgment on November 4, 1949. On June 30, 1950, at a duly advertised and regularly conducted sale, defendant purchased the property for $143.11, more than sufficient to pay the taxes and costs due. A hearing to confirm the sheriff's sale (§ 141.580) was set for September 22 and continued to October 6, 1950. Thereafter the following order and judgment was entered:
"Now on this 20th day of October, 1950, comes on for final determination the Sheriff's report of sale as to the above described parcels of land included in Land Tax Suit No. 21, which report has heretofore been filed on the 26th day of July, 1950, and which report was, upon motion filed on the 3d day of August, 1950, by Alvin D. Hatten, Collector of Revenue of Jackson County, Missouri, set for hearing commencing on the 22d day of September, 1950, and continued from time to time until the 6th day of October, 1950, at which time the court examined said report, heard the testimony of competent and qualified witnesses as to the value of each of said parcels of land, examined the exhibits and documentary evidence, and being fully advised in the premises, took the same under advisement.
"The court now finds:
"That the Sheriff of Jackson County, Missouri, duly advertised said sale and sold at public auction each of said parcels of land in Jackson County, Missouri, in accordance with the judgment of this court heretofore entered on the 4th day of November, 1949; that each of said parcels of land was sold to an individual purchaser at a regular Sheriff's sale; that the price paid for each of said parcels of land was an adequate consideration therefor.
"Wherefore, it is ordered, adjudged and decreed by the court that the Sheriff's sale as to each of said parcels of land be and the same is hereby, in all respects, confirmed as to each of said parcels of land;
"That the lien of the general tax bills shall take priority as determined by the judgment entry of the 4th day of November, 1949; that the Sheriff shall, if no appeal is taken within twenty days, execute his deed to the purchaser of each of said parcels of land, place the purchaser in immediate possession thereof and distribute to the holders of the general tax liens affecting each of said parcels of land the amount necessary to satisfy said liens in the priority as determined herein; that upon satisfaction of said liens this cause shall stand dismissed as to such persons and taxing authorities, owning, holding or claiming any right, title or interest in any such general tax bill or bills so paid, and the case shall be continued as to any party claiming any right, title or interest in or lien upon each of said parcels of land affected by such general tax bill or bills as to their respective claims to any such surplus fund then remaining in the hands of the Sheriff from the sale of each of said parcels of land.
"That the Circuit Clerk of Jackson County, Missouri, is directed to issue a writ of possession to place said purchaser in immediate possession of each of said parcels of land, if said writ is necessary."
No appeal was taken from that judgment. A writ of possession was issued by the circuit clerk of Jackson County on December 18, 1950, and defendant took possession on January 15, 1951, after plaintiffs had been forcibly dispossessed.
Plaintiffs' evidence was: that the property had been appraised at $1750 by the county collector's delinquent land tax division after the land had been sold at the foreclosure sale (the date of such appraisal was not shown); that in October 1950 (day not shown), two appraisers for the Housing Authority of Kansas City had appraised the property at $3975. The Housing Authority by trial time had condemned the property, had paid $4,000 into court, and defendant, in October, 1951, had agreed to *65 accept that amount as his damages. The evidence was conflicting as to whether plaintiff-husband had received by mail notices of the impending foreclosure sale and of the subsequent hearing on confirmation (although he admitted having received by mail a notice that the sale of the property to defendant had been confirmed); there was evidence that plaintiff-wife had received no notices by mail.
Plaintiffs contend that their suit to set aside the sheriff's deed is a direct attack not only upon the deed but upon the judgment of confirmation as well; that the consideration paid by defendant was so grossly inadequate as to shock the conscience of the court and to entitle them to the equitable relief sought; that the judgment, confirming the sheriff's sale and ordering the deed to defendant, was so gross an abuse of the discretion placed in the trial court as to constitute a noncompliance with the provisions of Section 141.580
We shall assume without deciding that plaintiffs' present suit to set aside the sheriff's deed does amount to a direct, rather than a collateral, attack upon the order and judgment confirming the sheriff's sale as well as upon the sheriff's deed. Thus we treat the action as a suit in equity to set aside a final judgment of a circuit court and to cancel a sheriff's deed ordered by that judgment to be executed and delivered to defendant. (There is no contention made that plaintiffs' petition may be treated as a petition for review of a default judgment rendered on constructive service. §§ 511.170-511.240. Plaintiffs' claim is clearly for equitable relief and not for relief under those statutes.)
It is well established that upon timely application equity will intervene to set aside a final judgment procured by fraud or to prevent injustice where a final judgment was the result of unavoidable accident or excusable mistake. Krashin v. Grizzard, 326 Mo. 606, 615, 31 S.W.2d 984, 987[1]; Overton v. Overton, 327 Mo. 530, 540, 541, 37 S.W.2d 565, 567[1], [2, 3]; Chouteau v. City of St. Louis, Mo.App., 131 S.W.2d 902, 903[1], 904[4,5]. But "the fact that injustice results from the judgment is by no means sufficient to invoke equitable interposition." Jones v. Arnold, 359 Mo. 161, 168, 221 S.W.2d 187, 192. Here, however, as we shall indicate hereinafter, there was no evidence of fraud in the procurement of the judgment or any showing that the judgment resulted from accident or mistake.
Plaintiffs make no contention that the proceedings by which this property was foreclosed and sold were not in every respect regular and in strict accordance with the applicable law; they do not contend that they were not served by publication, nor do they question the legal sufficiency of such service. Nor do plaintiffs contend that the trial court was without jurisdiction in this action. Spitcaufsky v. Hatten, 353 Mo. 94, 110-114, 182 S.W.2d 86, 95-98.
The difficulty with plaintiffs' position is that they adduced no evidence tending to prove what in fact occurred at the confirmation hearing on September 22 and October 6, 1950. Plaintiffs' proof showed only that an appraisal of the property at $1750 was made sometime after it was sold at foreclosure and that in October, 1950 (the month of the judgment) the property was appraised at $3975. Whether either appraisal was before the trial court at the confirmation hearing is not shown. It may be that it is a reasonable inference from the evidence that the $1750 appraisal made by the collector's agent was available at the time of the confirmation hearing. But whether this appraisal was before the court and, if so, what other appraisals, if any, were considered, does not appear. Nor was there any evidence as to what the "testimony of competent and qualified witnesses" heard by the court at the hearing to confirm the sheriff's sale was. The judgment discloses, among other things, that the court "heard the testimony of competent and qualified witnesses as to the value of each of said parcels of land" (including the land here in question), and "The court now finds: * * * that the price paid *66 for each of said parcels of land was an adequate consideration therefor."
Section 141.580 makes it the duty of the court to "hear evidence of the value of the property offered on behalf of any interested party to the suit, and shall forthwith determine whether an adequate consideration has been paid for each such parcel." The section further provides that the court may summon any city or county official, or other person, to testify as to the reasonable value of the property and that, if he finds that the consideration paid is adequate, "he shall confirm said sale and order the sheriff to issue a deed to the purchaser. If the court finds that the consideration paid is inadequate, the purchaser may increase his bid to such amount as the court may deem to be adequate, whereupon the court may confirm the sale." But if the purchaser declines to make the additional payment, "then the sale shall be disapproved, * * *." The provisions of Section 141.580 make adequacy of consideration a fact issue to be litigated at the hearing on confirmation. So far as the record in this case shows, that fact issue was litigated at the confirmation hearing, and the court found and adjudged that the consideration paid at the foreclosure sale was adequate. Section 141.590 provides for an appeal from such a judgment. As noted, no appeal was taken by anyone and the judgment became final. Whether the trial court erred in finding and adjudging that $143.11 was adequate consideration for property apparently worth at the time from $1750 to $3975 is not now open for consideration in the absence of some showing that the confirmation judgment was procured through fraud, accident, or mistake. Otherwise, the trial court's finding was, at most, a judicial error correctible on appeal. A court of equity does not determine whether other tribunals committed errors of law or fact while exercising their jurisdiction. Overton v. Overton, supra, 37 S.W.2d at page 567[2, 3]. In so far as the application of the principles of res judicata are concerned, an erroneous judgment has the same effect as a correct one. McIntosh v. Wiggins, 356 Mo. 926, 931, 204 S.W.2d 770, 772 [6,7].
In Spitcaufsky v. Hatten, supra, the validity of most of the sections of the Land Tax Collection Law were in question. One of the contentions made was that what are now sections 141.480, 141.560, 141.570, and 141.580 "countenance the sale of delinquent lands on bids so shockingly inadequate as to amount to constructive or legal fraud, in defiance of Bussen Realty Co. v. Benson, 349 Mo. 58, 159 S.W.2d 813, decided by this court en banc in 1942." 182 S.W.2d at page 102[34]. And the respondents in that case, in support of that contention, demonstrated that the statutory charges added to the delinquent taxes would permit land to be sold for less than 15% of its value. The court, in answering this contention, said: "The section [141.580] requires the court to hear evidence on the adequacy of the successful bids; and to reject such of them as are found inadequate and order a resale, if the purchasers will not increase their bids to a figure deemed by the court to be reasonable. This procedure applies to sales to the Land Trust as well as other purchasers. Thus the question of adequacy is made a direct issue in every case, and the court's decision on confirmation should stand res judicata as on other issues of fact. We see no constitutional or legal objection to that course, and overrule respondents' contention." 182 S.W.2d at pages 102[35], 103. Thus, this court, en banc, held that the Land Tax Collection Law provides for the determination of the adequacy of the consideration paid at the sheriff's sale before execution and delivery of a deed to a purchaser is ordered. In other words, the Law provides the machinery and procedure to prevent the sale of property for a consideration so grossly inadequate as to shock the conscience and to amount to confiscation of property. If, in this instance, for some cause unknown to us, the machinery and procedure failed to prevent the very thing it was designed to prevent, plaintiffs' adequate remedy was by appeal from the judgment confirming the sheriff's sale. Plaintiffs had their day *67 in court on the fact issue of adequacy of consideration. That they did not appear and offer evidence on this issue was not because the opportunity to so do was not provided by the Law, and that they did not appeal, but permitted the judgment to become final, was also not because of any defect in the Law. The issue of adequacy of consideration was finally determined, albeit probably erroneously determined as it now appears. In the absence of fraud in procurement, accident, or mistake, that final judgment is res judicata on the fact issue of adequacy of consideration.
It is true that "`adequate consideration' as the term is used in the Act was intended by the legislature to mean such an amount as the court is satisfied is substantial, and fairly and reasonably commensurate with the value of the land in the circumstances of a forced-tax sale in a proceeding wherein, the sale having been confirmed, the purchaser procures a marketable title. Such a consideration would be adequate, it would seem, although it be less than the `full value' of the propertysufficiently less to yet induce bidders, and facilitate the sales and the collection of the long-delinquent taxes." Hatten v. Parcels of Land, etc., 358 Mo. 853, 858[2], 217 S.W.2d 511, 514[3]. But clearly, any determination of whether an adequate consideration has been paid, as the term "adequate consideration" is used in the Law as above noted, would necessarily include and embrace a consideration of the question of whether the consideration paid was so grossly inadequate as to shock the conscience and to amount to confiscation of the property.
It is also true that plaintiffs claim they had no actual notice by mail of the filing of the foreclosure suit as contemplated by Sections 141.440 and 141.450, and no actual notice otherwise of either the foreclosure suit or the hearing to confirm the sheriff's sale. And if such is true, the hearing to confirm the sheriff's sale, at which the trial court determined the question of the adequacy of consideration (at which plaintiffs did not appear and of which they claim they had no actual notice), was not an adversary proceeding in the sense we usually think of a proceeding wherein parties are adverse. But Section 141.440, providing for notice by mail to the last known persons in whose names the tax bills were last charged on the collector's records, also provides that "failure of the collector to mail the notice * * * shall not affect the validity of any proceeding brought pursuant to sections 141.210 to 141.810." And in Spitcaufsky v. Hatten, supra, the court en banc, in determining whether the Law's provisions as to service afforded due process, recognized that the foreclosure "suit must stand or fall on the validity of the published notice except as to parties who enter appearance." 182 S.W.2d at page 95. And it was there held that service by publication as provided in the Law was sufficient. 182 S.W.2d at page 96[10, 11]. And, in determining whether fraud in the procurement of a judgment has been shown, no distinction is made between cases in which service has been by publication and those in which there has been personal service, except that defendants "who have been personally served have less excuse to cry fraud than those who have had no actual notice." Fadler v. Gabbert, 333 Mo. 851, 871, 63 S.W.2d 121, 131[13]; Johnson Timber & Realty Co. v. Belt, 329 Mo. 515, 523, 46 S.W.2d 153, 156.
Plaintiffs rely on Modern Home Inv. Co. v. Boyle, 358 Mo. 1149, 219 S.W.2d 346, a suit to set aside a sheriff's deed executed pursuant to foreclosure under the Land Tax Collection Law. The appraiser, who had been appointed by the court to view the property and report to it at the confirmation hearing, had mistakenly viewed two vacant lots (believing them to be the property involved) and had valued them at $50 each. Later, and more than two months after the court had confirmed the sale for $151, on the erroneous testimony before it that the lots were worth $100, the appraiser had filed a supplemental report in which he valued the property actually involved at $1550. It was held that plaintiff's proof showed noncompliance with Section 141.580 in that the property had not been in fact *68 appraised before the sale was confirmed, and further, that the $151 sale price was so grossly inadequate that the court would not have approved the sale if it had had before it a true appraisal of the property at the time of the hearing to confirm the sale. (While Section 141.580 does not require an appraisal, the section does require the determination by the court of the adequacy of the consideration paid, and does require the court to hear evidence of the value of the property.) As we read the Modern Home case, the basis for its conclusion is that the plaintiff proved that the judgment confirming the sale had been entered as a result of an excusable mistake brought about by the fact that the court had determined the issue of adequacy of consideration upon evidence relating to property other than that involved and thus in fact failed to determine that issue. And it was held that equity could and would relieve against the injustice of the judgment resulting from that mistake or constructive fraud. In the instant case, however, the record does not show that the judgment resulted from actual or constructive fraud or from mistake. So far as appears, the trial court found that the consideration paid was adequate based upon evidence before it of the value of the very property in question.
The instant case has caused us considerable concern. We are aware that the ultimate fact remains that a professional buyer of tax titles has received property worth probably $4,000 for an expenditure of $143.11; and that under a long line of decisions, both prior and subsequent to Bussen Realty Co. v. Benson, supra, the consideration paid, even on a minimum value of $1750, is so grossly inadequate as to shock the conscience and establish fraud. We are also aware of the fact that if the instant deed had been obtained as a result of a tax sale where there had been no prior judicial determination of whether the consideration paid was or was not adequate, it would most surely be set aside on the ground alone that the consideration was so grossly inadequate as to shock the conscience and establish fraud; and that we would not permit this property to be so sacrificed as to amount to confiscation. And we are also aware of the fact that had an appeal been taken by these plaintiffs from the judgment confirming the sheriff's sale, we doubtless would have reversed that judgment (assuming, of course, that there had been evidence in that record demonstrating the unconscionably gross inadequacy of the consideration paid). It may seem, therefore, extremely harsh and inequitable to refuse relief to these plaintiffs who have offered to reimburse defendant sufficiently to make him whole, and to permit this property, in which plaintiffs had lived continuously from 1939 until they were forcibly dispossessed in January, 1951, to pass to one who has paid only $143.11 for it. But to do otherwise under the facts here, would be to thwart the purpose of the legislature expressed in the Land Tax Collection Law, to emasculate the clear provisions of that Law, and to depart from settled principles of res judicata.
The judgment is affirmed.
VAN OSDOL and LOZIER, CC., concur.
PER CURIAM.
The foregoing opinion by COIL, C., is adopted as the opinion of the Court.
All concur.
Adopted as opinion of the court en Banc.
HYDE, J., concurs in result.
CONKLING, C. J., and HOLLINGSWORTH, DALTON and LEEDY, JJ., and BENNICK and CAVE, Special Judges, concur. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1531723/ | 12 Md. App. 286 (1971)
278 A.2d 637
HOUSTON A. HUNT
v.
STATE OF MARYLAND.
No. 513, September Term, 1970.
Court of Special Appeals of Maryland.
Decided June 23, 1971.
The cause was argued before MURPHY, C.J., and ORTH and GILBERT, JJ.
Robert Allen Sapero for appellant.
James L. Bundy, Assistant Attorney General, with whom were Francis B. Burch, Attorney General, Julian B. Stevens, Jr., State's Attorney for Anne Arundel County, Samuel A. Green, Jr., State's Attorney for Baltimore County, and Gary Huddles and Stuart E. Hirsch, Assistant State's Attorneys for Baltimore County, on the brief, for appellee.
ORTH, J., delivered the opinion of the Court.
Barbara Jean Stec, 21 years of age, said that she had been kidnapped by members of a motorcycle club called The Heathens. Although various members of the club participated in the crimes by being present in a position *290 to aid and abet, at the least,[1] Houston A. (Foggy) Hunt was her principal tormentor. She and Janet Couch, with whom she shared an apartment, and Janet's boy friend had gone to the Club DeVille about 11:00 P.M. on 18 April 1969. Hunt had forced her to leave the Club DeVille with him. For the next several days she was in the company of The Heathens against her will. She was forcibly taken to various places in Maryland, including Hunt's residence and The Heathen's clubhouse, driven to Delaware, returned to Maryland, plied with dope, beaten and raped. She escaped in the early afternoon of 22 April and called her former boss at the County Bar, Tony Panatti, from a telephone booth on Holabird Avenue. He called the police.
As a result of her allegations the Grand Jury for Baltimore County returned a true bill against Hunt and eight others Gilmer P. (Jeeter or Mother Cheater) Crane, Chester (Animal) Gabriszeski, Hurley L. (Dum Dum) Fickus, Paul Leonard (Tramp) Sprinkle, George (Jungle) Janowiak, Patrick (Baby Huey) Hill, Mark Allan (Crazy) Fox and Walter Joseph (Tiny) Kennedy. Upon suggestion the indictment was removed to Anne Arundel County and tried before a jury in the Circuit Court in that jurisdiction. Only Hunt was convicted. The jury found him guilty of kidnapping Barbara, forcibly carrying her within Maryland (1st count), and out of Maryland (2nd count), assaulting her (5th count), and falsely imprisoning her (6th count).[2] He was sentenced to a total of 46 years 20 years under the 1st count and two terms to run consecutively thereto of 20 years, 1 year and 5 years respectively under the other counts. He appealed His sixteen claims of prejudicial error run the gamut of the trial from the selection of the jury to the sentences imposed and include along the way, the *291 conduct of the trial judge, the admission of evidence, closing arguments of the prosecutors, sufficiency of the evidence and merger of offenses.
The defense was that the criminal aspects of Barbara's story were a complete fabrication. The defendants adduced evidence from some eighteen witnesses that Barbara willingly went with Hunt and other members of The Heathens, declining an invitation of one Nicholas Thomas (Piggy) Charney, not a member of The Heathens, and with whom she had danced, to leave the Club DeVille with him.[3] Contrary to her claim of being raped, she willingly went to a second floor bedroom with Hunt and when she came back to the first floor living room told another girl, Joyce Peay, that "Foggy couldn't satisfy her." Later when they returned from Delaware[4] and were all in the clubhouse of The Heathens, she sat on a sofa with Hunt "trying to arouse" him again. She was successful and they copulated right then and there in the presence and within the view of the gathering.[5] Nor was she compelled at any time to remain with Hunt or other members of the club or to go anywhere with them, doing both freely and voluntarily. She agreed to wear and did in fact wear Hunt's "colors", his jacket *292 with "Property of Foggy" emblazoned on the back.[6] On the evening of 21 April the group ended up at Hunt's house. While listening to records the lights were turned out and everybody "sort of dozed off." The next morning Barbara was gone. They "were sort of laughing at [Hunt] because Barbara left and didn't tell him anything." It was denied that during Barbara's sojourn with the Heathens she took dope.
THE SUFFICIENCY OF THE EVIDENCE
We resolve first the question of the sufficiency of the evidence to sustain the convictions. It is before us on the denial of a motion for judgment of acquittal made at the close of all the evidence. The test is whether the evidence either showed directly or supported a rational inference of the facts to be proved from which the trier of fact could be convinced, beyond a reasonable doubt, of the defendant's guilt of the offense charged. Williams v. State, 5 Md. App. 450, 459. The basis of Hunt's contention, and properly so on the posture of the evidence, is that the State's case stands or falls on the testimony of the victim.[7] He claims that it must fall since her testimony had no probative value because of the inconsistencies in it, relying on Kucharczyk v. State, 235 Md. 334. We do not find the holding of Kucharczyk to be applicable. Barbara's testimony was not so contradictory within itself as to preclude the consideration of it. See Poff v. State, 3 Md. App. 289. Such inconsistencies as were in it only went to its weight and to her credibility. These matters, as well as contradictions to her testimony presented by the testimony of other witnesses and other evidence, were properly to be resolved by the jury. See *293 Bailey v. State, 6 Md. App. 496; Eley v. State, 4 Md. App. 230. Thus the lower court did not err in submitting it to them, for if the jury believed Barbara, her testimony provided evidence meeting the test. Therefore, we find the evidence sufficient in law to sustain the convictions and hold that the lower court did not err in denying the motion for judgment of acquittal.
THE JURY
The Voir Dire Examination
The court, as it may, elected to conduct the examination of prospective jurors itself and itself submitted additional questions suggested by Hunt's counsel as it deemed proper. Maryland Rule 745. Hunt now contends that the court erred "in preventing defense counsel from asking additional voir dire questions for cause." According to the transcript of the proceedings what occurred was that after the examination of the prospective jurors on their voir dire had been concluded, Hunt's counsel said, "I would like to ask an occasional question for voir dire purposes of specific individuals, information, that is, to their background which is not indicated in the sheet which gives their names and for whom they work. I would first like to ask an occasional question." The court said it would ask a prospective juror whether he was married and his occupation. "That's all I'll do." We see no error in the refusal of the court to grant counsel's vague request for blanket permission to ask "an occasional question" of specific but undesignated individuals concerning "their background." See Carder v. State, 5 Md. App. 531; Curtis v. State, 4 Md. App. 499; Day v. State, 2 Md. App. 334.
The Striking of Juror No. 11
After twelve jurors and two alternate jurors had been selected, Juror No. 11 informed the court that he knew the man sitting in the courtroom with Barbara Jean *294 Stec.[8] "I don't know the girl, I know him." The court asked, "Alright, would that affect you in rendering a fair and just verdict in this case?" Juror No. 11 replied, "I'm afraid so, I know him real well, he's from Curtis Bay." Although the transcript does not expressly so state, from later developments it appears that this colloquy between the court and Juror No. 11 took place at the bench out of the presence of the defendants and their counsel. The court announced:
"Mr. Batngate, who is Juror Number 11, says that he does know the person who is sitting alongside of Barbara Jean Stec in the balcony, and that such knowledge would prevent him from rendering a fair and just verdict in this case. In this case, the Court has no alternative but to strike him on its own motion. You are excused, sir. Alternate Juror Number 1, you will move in to Number 11. Alternate Juror Number 2 will now become Alternate Juror Number 1. Gentlemen, there is the necessity for selecting an additional alternate Juror."
Hunt's counsel, receiving permission to approach the bench, moved for a mistrial "because of the commentary regarding Juror Number 11." The court asked him if the mistrial was moved on the grounds "that Mr. Bathgate's reason for asking to be disqualified as Juror Number 11 was stated in open court" and counsel answered "Yes." Asked why that would prejudice his client, counsel said:
"I think that it was probably inappropriate to speak to the Juror out of the presence of counsel and also that the following commentary that he knew the person sitting next to the girl and then was taken out indicates the knowledge of *295 someone with the girl and in the presence of other prospective Jurors, I believe it would be prejudicial. That sums it up."
The motion for mistrial was denied. We think the denial proper. We can conceive of no prejudice to Hunt by reason of the striking of Juror No. 11 in open court and the announcement by the court of the reason therefor. We observe that counsel neither below nor in the brief on appeal stated with specificity the prejudice he believed accrued by the court's action. Nor do we feel in the circumstances that the colloquy between the court and Juror No. 11 denied Hunt either his right to be present at all stages of the trial or his right to representation by counsel. We do not think that this communication between the court and the Juror was a stage of the trial. See Young v. State, 5 Md. App. 383, construing Midgett v. State, 216 Md. 26. In any event, the court immediately made known to Hunt and his counsel what the Juror had communicated to him and action was taken on the communication in the presence of both of them. We find it clear from the record that the communication was not prejudicial and had no tendency to influence the verdict of the jury. Saul v. State, 6 Md. App. 540; affirmed on certiorari, State v. Saul, 258 Md. 100, is not factually apposite.
The Challenge to the Array
As Alternate Juror No. 1 replaced Juror No. 11 and Alternate Juror No. 2 became Alternate Juror No. 1, a second alternate juror was selected. There were no further preemptory challenges or challenges for cause made by the prosecution or defense. The prospective jury and the two alternates were asked if there was any reason they may have that would prevent in any way the rendering of a fair and just verdict; they had no reason. The transcript reads: "Clerk swears in jury." The court gave the jury comprehensive admonitions concerning discussion of the case, and receiving information *296 about it from outside sources. It explained the routine expected to be followed in the trial and the function of the alternate jurors. The transcript then reads, "(Jury is sworn and indictments read.)"[9] After luncheon recess court resumed out of the presence of the jury to entertain motions. Hunt's counsel challenged the array.[10] He based the challenge on two grounds: 1) the exclusion from juries of persons under the age of 25 years, and 2) the excusing of persons from jury service by the Jury Commissioner for the Circuit Court for Anne Arundel County.
(1)
At the time of the trial Code, Art. 51, § 1 provided: "No person shall be selected and placed upon a panel as a juror who shall not have arrived at the age of twenty-five years."[11] Also at the time of trial § 5-500 of the Anne Arundel County Code (Michie 1967) provided for the preparation and the filing by the clerk to the county council with the clerk of the Circuit Court of a list of all taxable residents of the county whose names appear on the tax books "and who are not known to the clerk or *297 to the council to be under the age of twenty-five years." A jury panel was picked from this list and other sources, including the poll books of the several councilmanic districts. Hunt claims that the elimination of those under 25 years of age deprived him of equal protection of the law. We do not agree. Assuming that those under 25 years of age were eliminated from the jury in Hunt's trial we see no constitutional infirmity. There is nothing unreasonable in requiring a juror to be at least 25 years old. There must be some cut-off point and Hunt does not explain, nor do we see, why equal protection is denied at a 25 years of age cut-off but afforded, as he seems to suggest, at a 21 years of age cut-off. See Britton v. Bullen, 275 F. Supp. 756 (4th cir.). Nor do we find any merit in the argument that to be a jury of his peers the jurors must be the approximate age of the defendant before them. In any event we do not find evidence sufficient to establish that those under 25 years of age were excluded from the jury here due to a systematic policy rooted in prejudice. See Borman v. State, 1 Md. App. 276. We note that the provisions of Art. 51, § 1 are directory, rather than mandatory, Hollars v. State, 125 Md. 367, and there is no evidence that some prospective jurors were excluded as under 25 years of age at the mere whim or caprice of the selecting authorities. And we do not feel that the rationale of cases holding unconstitutional systematic exclusion because of race or religion is applicable to the issue here. See Brooks v. State, 3 Md. App. 485; Grayson v. State, 1 Md. App. 548.
(2)
The Jury Commissioner for Anne Arundel County, called by Hunt, testified as to the procedure followed in drawing a jury panel. She said that some persons were excused by reason of financial and physical hardship. For example, women who have no transportation, mothers unable to obtain baby sitters for their young children, and those impaired by ill health may be excused. Hunt concludes from her testimony that she alone determined *298 whether or not a prospective juror should be excused from serving. He claims that it is a judicial function to assure that the jury panel consists of 300 names of citizens of the County, fairly and impartially selected, with special reference to the intelligence, sobriety and integrity of such persons, Anne Arundel County Code, § 5-501, and that the Jury Commissioner usurped the authority of the judge. We do not think that the testimony of the Jury Commissioner established that she had the final determination as to who was to serve and who was to be excused. Although she talked in terms of "we" and sometimes "I" we believe it implicit from what she said that any final action taken was under the direction of the jury judge. But in any event the evidence did not establish a constitutional infirmity in the selection of the persons which comprised Hunt's jury. Even if the statutory requirements were not strictly followed it is evident from all her testimony that the objective in the selection procedure was to get persons of intelligence, integrity, and sobriety. See Loker v. State, 2 Md. App. 1, 15. The lower court characterized the procedure as followed "to ensure a Jury that is able to comprehend what is going on before it and ably physically to understand what the court takes to be the rigors of the jury trial itself." We cannot say from the record here that Hunt was foreclosed from obtaining a fair trial by an impartial jury of his peers. We agree with the lower court that his contentions were without merit. We hold that it did not err in denying the challenge to the array.
PRESENCE AT TRIAL OF THE VICTIM'S PARENTS
When the trial was about to begin all witnesses were excluded from the courtroom at the request of the State. Rule 753. At a bench conference Hunt's counsel requested that the parents of Barbara Jean Stec be excluded from the courtroom although they were not to be called as witnesses for either the prosecution or the defense. The reason given was "so there cannot be a communication as to what is going on in this court * * * I *299 don't want the communication between the parents and their daughter about this ." The court in denying the request said that it would admonish all persons in the courtroom not to communicate with any of the witnesses or prospective witnesses. It did so in plain words, expressly including relatives of witnesses. The court did not err in the refusal of the request on the ground advanced, which in any event Hunt appears to have abandoned on appeal. Now Hunt presents a different ground. He claims prejudice because Juror No. 11 told the judge he knew the man seated next to the victim and that man and the woman next to him were the victim's parents. "That juror was excused but the fact of the parent's presence in the courtroom thereafter and the fact that a reputable juror knew the parent of the alleged victim was implanted in the remaining juror's minds. Further, during the trial, the parents sat apart from the rest of the gallery in such a manner that attention would be drawn to them. Due to the above factors it was impossible for the defendant to receive a fair trial by an impartial jury." This point was not tried and decided below and is not before us. Rule 1085. The record does not disclose that at the trial objection was made to the place in which the parents sat in the courtroom. We find the allegation of prejudice to be unsupported and without substance.
THE ADMISSION OF EVIDENCE
The Affidavit for the Issuance of a Search Warrant
During the cross-examination of Barbara by counsel for Sprinkle, he asked if she appeared before Judge Maguire, an Associate Judge of the Circuit Court for Baltimore County, on 23 April. She said that she had. It was then elicited through questions asked of her that she made an affidavit. She was shown a document and asked to identify it. She identified it as a photo-copy of the affidavit she had signed. She was asked if what was stated in the affidavit was all true and she said it was. Numerous *300 questions about specific statements in the affidavit were directed to her, including whether what was set out in the affidavit accurately represented what she had said. She was then asked to explain alleged discrepancies between her testimony at trial and the statements in the affidavit. At one point when defense counsel purported to repeat what was said in the affidavit the State objected on the ground that the affidavit did not so say. The court was shown the affidavit and sustained the objection, permitting counsel to rephrase his question. Counsel then read from the affidavit and asked the witness if that was her statement. He then pressed her on the issue whether the statement in the affidavit was correct or incorrect. In short, Barbara was examined by the defense at great length and fine detail on the representations made by her in the affidavit. The affidavit was in support of a search and seizure warrant of Hunt's residence. Although it was not formally introduced in evidence by the defense it was, by the reference to it under the circumstances, before the jury as fully as if it had been so introduced. And even though the cross-examination was conducted by Sprinkle's counsel, Hunt's counsel interposed no objection whatsoever. When the cross-examination of Barbara by all counsel was completed, the State moved the admission of the affidavit. It does not appear from the record before us that Hunt's counsel objected but even if he did we see no prejudicial error in its formal admission. In the light of the extent to which its contents were placed before the jury by the defense, the jury were entitled to consider the affidavit itself.
The Extra-judicial Statement of Paul Fischer
On cross-examination by counsel for Grabriszeski, Paul Fischer, a witness called by the State, was asked: "Mr. Fischer, as a result of what you observed and have testified to this morning, regarding the incidents of April the 19th, you were taken to Baltimore County Detective Bureau to reduce that to writing, were you not?" He answered in the affirmative. It was then elicited that he had *301 been interviewed by a Detective Neuner on 24 April and gave a statement which was reduced to writing and signed by him. He was shown a photostatic copy of that statement and identified it as a copy of the document he had signed. Then with the suggestion that his memory was "a lot fresher" on 24 April than at the time of trial, he was asked to explain differences between specific assertions in the statement and his testimony and attempted to do so. For example, he was referred to his testimony relating to a ride in an automobile with members of The Heathens. "You were asked whether the girls in the car did the girls in the car say or do anything in your presence? Well, they talked but I don't know what they were talking about. Well, in your answer on the 24th you said, `No, they just sat quiet * * *', now did they or did they not say anything to you?" Fischer replied, "Not to me they didn't say anything, no. They were * * * they seemed real quiet. The person that was talking was mostly Foggy." The State took over the witness on redirect. It asked if the statement defense counsel had shown him was the one he made to the police. Hunt's counsel objected and there was a bench conference. The jury was sent to the jury room. The State offered in evidence the statement made by Fischer to the police on 24 April. Over continuing objection Fischer was referred to the second question on page 5 and requested to read it to the court. It was "Did the girls in the car say or do anything in your presence?" The answer to the question was read, "No, they just sat quiet the one girl with the brown hair and glasses acted like she was moving real slow as if she was under some type of influence. I did see two of the males drinking wine." The State offered the original of the statement. Hunt's counsel argued that the statement was inadmissible as an attempt by the State to impeach its own witness and as placing something in evidence on redirect examination which could not have been introduced on direct examination. Counsel for other defendants also objected and argued. The court ruled:
*302 "All right, the Court has considered the statement and had an opportunity to peruse its contents and the Court's ruling is that it will permit the State to ask the witness to read the balance of the statement that he gave with response to the girls in car to which reference was made by Mr. Friedman during cross-examination. However, it rules that the entire statement shall not be submitted to the Jury and that it is not competent evidence in its entirety."
In the presence of the jury the question in the statement with respect to the girls in the car talking was read to Fischer and he was asked if he remembered that question being asked of him. He said he did. The Assistant State's Attorney then said, "And this was your answer [reading it] is that correct?" Fischer replied, "Yes, sir, I'd say that was correct."
Without citation of authority, Hunt now contends that this "procedure was grossly leading, was a variation of impeachment by the State of its own witness and was totally improper." We do not agree. Counsel for Gabriszeski, on cross-examination and with no objection from counsel for Hunt, read part of the answer given in the statement in the presence of the jury. We see no reversible error in the State following this up by introducing the balance of the answer. "The offer in testimony of a part of a statement or conversation, upon a well established rule of evidence, always gives the opposite party the right to have the whole." Walters v. State, 156 Md. 240, 243. The jury then had the answer given to the question by Fischer in his testimony at trial and the entire answer to the question as given the police, a part of which was brought out by the defense. The State was entitled to adduce the complete answer and the jury were entitled to consider it in determining what occurred and assessing the credibility of the witnesses.
The Photograph of Hunt
Dennis Goldberg testified on behalf of the State that *303 he had seen Barbara and some of the defendants at The Heathens' clubhouse. He had difficulty in making judicial identifications of the defendants as those he had seen because they were clean-shaven at trial "Their hair is pretty short. They're cleaned up" and when he saw them before "they were dirty, long hair and everything." He was shown nine photographs and selected four as photographs of men he had seen with Barbara. Of the four he made a judicial identification of Chester (Animal) Gabriszeski. Barbara was shown one of the photographs selected by Goldberg. She identified it as that of Hunt. She said it represented "an accurate description" of Hunt at the time of the offenses. The State offered the photograph. The procedure followed in showing the photographs to Goldberg in open court was clearly not impermissibly suggestive. Hunt's claim on appeal that it had no probative value has no merit; it went to his criminal agency. Further proof tending to establish Hunt's connection with Barbara was not inadmissible because a prior witness had identified him as being present with her at the clubhouse. The photograph may have been "gruesome" as stated in Hunt's brief but that did not render it inadmissible; it was an accurate depiction of his appearance at the time the crimes were committed. A procedure comparable to that here was followed in Holmes v. State, 10 Md. App. 253 to establish criminal agency and was not found by us to be improper. We hold that the admission of the photograph of Hunt was proper. It follows that the court did not err in denying Hunt's motion for a mistrial predicated on the recall of Barbara to identify the photograph as that of Hunt.
The Testimony of Lenadell Large
Nicholas Thomas (Piggy) Charney testified for the defense. During his examination he said he had met the members of the motorcycle club, "not personally but from ridin', you know, seein 'em every once in awhile." He had never joined the club. They were friends of his friend Robert Ingram. On 18 April 1969 at the Club DeVille where the incidents involving Barbara Stec and *304 Hunt began, Ingram asked him if he wanted to go to a party. "I said `I don't care', you know, `It's Friday night and I'm game, nothing doesn't matter to me', so like he came over and showed me some of the guys and said, `How are you doing?' you know. They introduced me to some of the guys and they said this is so-and-so and this is so-and-so * * * whatever their nicknames are." He judicially identified Hunt, Kennedy, Crane, Fickus and Janowiak as being there but his identifications were far from positive. He thought that about six of The Heathens and two of their girls were there.
After the defense had rested the prosecution called Lenadell Large. She said she knew Tramp, Animal, Baby Huey, Foggy and Jungle. She could not remember the names of the other defendants but had seen them before. From that point on her testimony was subject to continual objection to which the stock reply of the prosecution was "It's rebuttal." She said she had last seen the defendants about six months ago[12] and had met them through Hunt with whom she was then living. She lived with him about a month, the relationship terminating 27 March. She knew Piggy (she thought his last name was Charles) and had last seen him several months before shooting pool in Troy's Bar in Essex. She identified a photograph of Nicholas Charney as that of the man she knew as Piggy. She was asked if she had ever seen Hunt and "these people" in conversation. She said, "Yes, it was about it was in March. It was right after a killing ." There was objection and the court told the jury to disregard the last statement. It was then elicited from her that the conversation took place in Hunt's house. Baby Huey, Dum Dum and Jungle were present. She was asked what the conversation was about. There was objection as being improper rebuttal. The court said it would let the answer in subject to exception. She said, "Baby Huey was reading the paper, newspaper, about a *305 killing in New York and it was one of The Pagans or Heathens or something ." Hunt's counsel objected on the ground of relevancy and the objection was overruled. She continued " and Baby Huey had said that he'd like to get * * * in touch with Piggy and that was all I heard." At a bench conference a defense counsel moved to strike the testimony of Large and requested that the jury be instructed to disregard it. The State answered the objection by again characterizing the testimony as in rebuttal. The court said, "I don't know the full import of all this. As a matter of fact, I'm greatly mystified by the last witness." The State offered an explanation. "You [defense counsel] brought out through Charney that he did not know any of The Pagans, they didn't know him. * * * The witness brought out `that they that Baby Huey, at least knew who Piggy was.' * * * There's no connection between The Heathens and The Pagans and Piggy * * * and yet before this incident even occurred, Baby Huey, at least, knew who Piggy was." One defense counsel said he thought it clear that the purpose "was to get out about the killing in The Pagans." The Assistant State's Attorney denied this. The court said, "Well, I'm going to leave it in for whatever it's worth. I refuse any request to strike it out." Hunt now claims the court erred.
Piggy Charney was an important witness for the defense. His testimony tended to show that Barbara had willingly left the Club DeVille with Hunt and the other Heathens. The probative value of his testimony was greater when viewed with his assertion that he was not a member of the motorcycle club and had not met the members personally although he had seen them "every once in awhile." He was introduced to them by Ingram at the Club DeVille on 18 April. The testimony of Lenadell Large, on the other hand, tended to contradict his claim that he had no close association with members of The Heathens; Baby Huey Hill wanted to get in touch with Piggy when he read about a matter concerning The Heathens or The Pagans and so said in the presence of *306 other members of The Heathens.[13] We hold that the challenged testimony of Lenadell Large was relevant and that there was no prejudicial error in admitting it as rebuttal.
The Testimony of John Charney and Eston Scott
Hunt contends that the testimony of John Charney and Eston Scott, offered by the State in rebuttal, was "a calculated presentation by the State of irrelevant, leading and misleading inflammatory testimony and absolutely prejudicial."
Charney said he was the brother of Piggy. He was shown a photograph of Robert Ingram. He said the man in the photograph looked familiar but was not the man who came to his place. He did not know Robert Ingram.
Detective Eston Scott was recalled by the State in rebuttal. He simply identified a photograph shown him as that of Robert Ingram, a witness in the case.
This testimony of John Charney and Scott may have been irrelevant but we cannot say that its admission, even if erroneous, compels reversal for we see no prejudice to Hunt.
THE CLOSING ARGUMENT OF THE PROSECUTION
Counsel presented arguments to the jury. No objection was made during argument by the State nor immediately thereafter. Then the court charged the jury. Rule 756 e. At the conclusion of the charge after discussion by counsel and court regarding the instructions, Hunt's counsel said in response to the court's inquiry whether there was anything else from counsel: "Only to say, your Honor, that I do I've had no opportunity before, but I would take severe objection to comments made by the Prosecutor in his closing, for the record." Asked by the court what specific comments he had in mind, counsel *307 said: "Comments relating to the fact that the State's Attorney's office, and he, himself, were the ones that stand behind this prosecution as such, and also I believe he is, in fact, as a result of this injected himself into the prosecution of this case." The court thought it a fair comment under the circumstances and denied a motion for a mistrial. The record does not disclose further objection before the jury retired to deliberate its verdict. Hunt alleges in his brief that "the court and counsel had discussed the ground rules for the closing arguments in chambers, and it was thoroughly understood by counsel for the appellant that there were not to be any interruptions during closing arguments. Objections were to be made upon the completion of the instructions by the court." The record is silent as to an understanding for this rather unusual procedure but even if this was the agreement there was objection directed only to "comments relating to the fact" that the State's Attorney's office and the prosecutor stood behind the prosecution. Only this objection, so expressed in vague terms and without specificity despite the court's request to counsel to state the specific comments he had in mind, was in any event timely made to the prosecutor's concluding argument covering about 20 pages when transcribed. See Chandler v. State, 7 Md. App. 646, 656. It is the only objection properly before us. Rule 1085. The primary defense of each defendant was that Barbara's story was a lie in its criminal aspects because she participated freely in the events of the several days with The Heathens. In so arguing to the jury defense counsel referred to the prosecutors. At one point defense counsel said the prosecutors were "attempting to dazzle the jury with footwork." One of defense counsel said he was explaining why certain things were not as the Assistant State's Attorney "tried to make you believe." At another point he remarked, "I think that one of the things [the prosecutor] said was true was that there really isn't too much difference between the story that was told by Barbara Stec and the story that was told by the defendants." (emphasis *308 supplied) The implication was that the prosecutor had said things that were not true. In his argument the prosecutor answered by stating that he did not elicit perjury, did not suborn perjury and did not hide evidence. The defense had strongly questioned the State's failure to call Tony Panatti, whom Barbara had telephoned upon her escape. The prosecutor took full responsibility for not calling that witness, stating that it was his opinion the testimony would have been simply cumulative. He concluded his argument by remarking that the preceding Saturday the Governor of Maryland had spoken at a testimonial dinner for the State's Attorney for Baltimore County and during the course of his speech had remarked that the Baltimore County State's Attorney's Office "is well known for its pursuit of justice within the realm of justice. It's well known that the Baltimore County and these are the Governor's words that the Baltimore County State's Attorney's Office are prosecutors and not persecutors." The prosecutor then concluded his argument in these words: "I don't care what these men look like. I don't care how these men dressed. I don't care what these men do. I don't care what their jobs are. I don't care what their families are like. I don't care what their personal feelings are on any topic. I don't care whether they agree or disagree with me on anything. But when they have the audacity and the gall to take someone forcibly and against her will where she doesn't want to go, then it's time for action, and that's what we proceeded to do in this case." Assuming that the comments of the prosecutor set out above are those to which defense counsel had reference in his objection we see no abuse of discretion in the lower court's denial of a mistrial, the only action requested to be taken. See Matthews v. State, 3 Md. App. 555. Without approving the reference to the Governor's speech, we cannot say that it appears that the jury were actually misled or were likely to have been misled or influenced to the prejudice of Hunt by the remarks of the prosecutor. Compare Holbrook v. State, 6 Md. App. 265, 270. *309 Thus reversal of the judgment is not justified. Other objections to the State's arguments as set out in the brief are not considered as not properly before us.
THE CONVICTIONS
Hunt claims that he was illegally convicted "of kidnapping out of the State of Maryland." His point is that Maryland would not have jurisdiction to prosecute a kidnapping out of the State. Code, Art. 27, § 337 provides, inter alia, a person "who shall be convicted of forcibly or fraudulently carrying or causing to be carried out of or within this State, any person * * * with intent to have such person carried out of or within this State * * * shall be guilty of a felony." The provisions of the statute become clear by reference to the common law crimes of kidnapping and false imprisonment. False imprisonment was the unlawful confinement of a person, the two essentials being (1) the detention of the person, and (2) the unlawfulness of such detention. Kidnapping was a false imprisonment aggravated by conveying the victim out of the country. Thus kidnapping was the forcible abduction or stealing of a man, woman or child from his own country and sending him into another. Perkins on Criminal Law (1957); pp. 129-137; Hochheimer, Criminal Law, (1st Ed.) § 624, p. 363 and § 686, p. 406; IV Blackstone Commentaries, ch. xv, p. 219. It is therefore apparent that the legislative intent in enacting Art. 27, § 337 was to broaden the common law crime of kidnapping to include the forcible or fraudulent carrying or intent to carry a person within the State as well as without. But false imprisonment is still a common law offense in this State and is distinguished from kidnapping; a "carrying away" is not an element of false imprisonment. Midgett v. State, 216 Md. 26, 38-39. The statute obviously does not apply to a kidnapping committed in another State and is not "an unlawful extension of State's (sic) criminal jurisdictional powers contrary to the Due Process Clause of the Fourteenth Amendment *310 of the United States Constitution." Hunt's claim that it is unconstitutional is without merit.
MERGER
Hunt claims error in the failure of the lower court to merge the convictions of assault (5th count) and false imprisonment (6th count) into the convictions of kidnapping (1st and 2nd counts). It is correct, as the court instructed the jury, that "assault is a necessary ingredient in the crime of kidnapping" and so assault must be found before there can be a conviction of kidnapping. But here there was evidence from which the jury could have found that Hunt assaulted Barbara independent of any assault incident to the kidnapping itself. Barbara testified that while in Hunt's apartment he was importuning her to have sexual relations with him. "I told him to leave me alone, to get away from me and I was pushing him and he was pushing me and he struck me." He grabbed her arm and pulled her in the bedroom and threw her down on the bed. These acts of assault and battery were not an element of the kidnapping but a separate and distinct offense. We hold that there was no merger of the 5th count into the convictions under the 1st and 2nd counts. See Tender v. State, 2 Md. App. 692. Compare Massey v. State, 7 Md. App. 615.
On the other hand we think that the false imprisonment here merged into the conviction of kidnapping. We have seen that kidnapping at common law was false imprisonment aggravated by carrying the victim out of the country. At common law and under the Maryland statute, false imprisonment is a necessary element to kidnapping. In proving the statutory kidnapping, false imprisonment is also proved, for the victim is unlawfully detained whether he is carried or intended to be carried within or without the State. We hold under the modern doctrine of merger that the 6th count merged into the convictions under the 1st and 2nd counts.
The next inquiry is whether it was proper that Hunt *311 be convicted both of forcibly carrying Barbara out of and within Maryland. We do not believe it was. We think that the legislative intent, as above suggested, was to make kidnapping include both a carrying within and a carrying out of the State, so distinguishing it from the common law. The crime of false imprisonment remains punishable at common law, committed by an unlawful detention absent a carrying. We do not feel that the legislature intended each act of carrying within Maryland stemming from the same abduction to be a separate and distinct offense. By the same token we do not feel that the legislature intended that a carrying out of the State after a carrying within the State, each aggravating an initial unlawful detention, were to be twice punished as separate and distinct offenses. Thus when a false imprisonment is aggravated by a carrying within the State, followed by a carrying out of the State, only one crime of kidnapping is committed and a conviction of carrying within the State and a conviction of carrying out of the State would be duplicitous. We set aside the judgment under the 2nd count.
Our holding disposes of the contention that the total of 40 years resulting from consecutive sentences on the convictions under the 1st and 2nd counts exceeded the maximum sentence of 30 years authorized by the Statute proscribing kidnapping.
A FAIR TRIAL
Hunt contends that he did not receive a fair trial. He complains that the State did not produce medical evidence establishing that the victim was abused, or a physician's report relating to her alleged rape, or physical evidence such as torn clothing, spectacles broken when he allegedly struck her, narcotics, weapons and other items, or the testimony of Tony Panatti to whom the victim first complained, or the testimony of Piggy Charney who was last with her before the kidnapping. Much of this evidence would have been available to Hunt upon proper *312 procedures and could have been produced by him had he thought it helpful. Piggy Charney was called by him and testified on his behalf. We do not find a denial of a fair trial by the failure of the State to make these matters a part of its case. There is no allegation that the State concealed any evidence. Other matters of which Hunt now complains were not preserved for review or, in our consideration of his other contentions, have been found not to have been improper or prejudicial or cannot be said to derogate a fair trial. We hold that Hunt was not denied a fair trial.
We note that the practical effect of our holdings in disposing of the questions presented, some of which have been considered under one heading, is that Hunt is subject to a total term of 21 years rather than the 46 years imposed.
Judgments under the first and fifth counts affirmed; judgment under the second count reversed as duplicitous with that under the first count; judgment under the sixth count vacated, the conviction thereunder merging into the conviction under the first count.
NOTES
[1] See Agresti v. State, 2 Md. App. 278, 280.
[2] The other counts charged kidnapping with intent to conceal the victim within the State (3rd count) and with intent to conceal her without the State (4th count).
[3] Piggy testified: "I says `Barbara, I'm going to go to Brooklyn [Anne Arundel County]', I says `You want to go down with us, you know, come on', she says `No, I'll go with them', I says alright and I left." Asked if she was forced to go with them, he said, "No, Sir, because they walked out the door just before we did, and uh I mean like I'm a pretty big boy and if I'd of seen, you know, anybody forcin' her or anything I'd come to helped her in some sort ."
[4] The trip to Delaware was to attend a meeting in contemplation of The Heathens merging with another club, The Pagans.
[5] Even according to the version of the events offered by the defense Barbara's sexual activities were confined to Hunt. She was not in the "train", although she said that she was threatened with being put through the "train" if she did not submit to Hunt. It seems that a girl is in the "train" when a number of men in succession have sexual relations with her. There was testimony that one girl in the group, Patricia Meachum, was in the train while Barbara was with the group and Patricia admitted when she testified for the defense that she had willingly been involved in the train. It would seem that coitus in the presence of other members is practiced as within the mores of the group.
[6] It appears that it is the custom in the social stratum represented by The Heathens for a girl to so advertise that she belongs at the moment to one of the group.
[7] He states in his brief: "The State presented its case in chief through one material witness, the purported victim as well as nine other relatively unimportant witnesses."
[8] During the voir dire examination Barbara Jean Stec was introduced to the prospective jurors and they were asked if they "personally knew her or any member of her family."
[9] We do not know whether the jury were in fact twice sworn. In any event it is immaterial if they were. And if they were not it is immaterial whether they were sworn before or after the court's remarks to them.
[10] The court said:
"I might mention that counsel did bring this up as an issue this morning when twelve prospective Jurors filled the box, although they had not been sworn as yet, this was raised in chambers and I advised counsel at that time that I would permit him to raise this issue after the Jury and the alternates had been selected and sworn."
We point out that Maryland Rule 744 b provides, "A challenge to the array shall be made and determined before any individual juror from that array is examined." That the court permitted Hunt to make the challenge untimely cannot be said to prejudice him. See Hicks v. State, 9 Md. App. 25.
[11] The section and other sections regarding qualification and selection of juries were repealed by chapter 408, Acts 1969. Under the terms of the Act a plan for random jury selection was submitted by the Circuit Court for Anne Arundel County on 27 August 1969 and approved to be effective 1 January 1970 by order of the Court of Appeals of 6 October 1969. It seems that under the plan the 25 year age limitation is eliminated and those old enough to vote may serve.
[12] As she testified on 1 October 1969 and as the date of the offenses was 22 April 1969, she had last seen them about 3 weeks before the offenses were committed.
[13] It seemed clear that the "Piggy" Hill mentioned was Nicholas Thomas Charney. Lenadell Large identified a photograph of Charney as the man she knew as Piggy and as the only one she knew "in The Heathens" who was known as Piggy. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/249909/ | 274 F.2d 96
60-1 USTC P 9190
Matilda M. BROOKS, Petitioner,v.COMMISSIONER OF INTERNAL REVENUE, Respondent.
No. 16355.
United States Court of Appeals Ninth Circuit.
Dec. 21, 1959.
Stark & Champlin, Herbert P. Moore, Jr., Oakland, Cal., for petitioner.
Charles K. Rice, Asst. Atty. Gen., Helen A. Buckley, Lee A. Jackson, Robert N. Anderson, Kenneth E. Levin, Attys. Dept. of Justice, Washington, D.C., for respondent.
Before BARNES, JERTBERG and MERRILL, Circuit Judges.
BARNES, Circuit Judge.
1
The Tax Court reviewed a deficiency assessed against petitioner Matilda M. Brooks and found against her. The deficiency asserted involved a deduction claimed by petitioner for expenses of travel and living while petitioner was doing research in Europe during 1952 and 1953. The Tax Court had jurisdiction under 26 U.S.C. 6213, 6214, 7442. The appeal is timely, and this Court has jurisdiction to review the decision of the Tax Court under 26 U.S.C. 7481-7483.
2
Petitioner is an accomplished research scientist. She received her Ph.D. from Radcliffe College in 1920. Since 1927 she has been a member of the faculty of the University of California. Her fields of research are biology, zoology and physiology. Most of her work has been fundamental research. She discovered the use of methylene blue as an antidote for carbon monoxide and cyanide poisoning. She has had over one hundred papers published in various scientific periodicals and co-authored one book with her husband. She has been honored by election to various learned societies, among them Phi Beta Kappa and Sigma Xi. Her field of special interest involves single cells which apparently have many varieties, each variety growing in only one locality which has necessitated much travel on her part to study each in its native habitat.
3
For six years after receiving her Ph.D. in 1920, she worked for the United States Public Health Service, receiving about $3,000 per year, plus travel expenses to various parts of the world. In 1927, her husband, also a scientist, came to the University of California. Petitioner came to Berkeley with her husband, but because of the University's anti-nepotism rule, accepted a nonpaying research appointment. From 1927 until 1952 she worked for the University, receiving no pay except for short periods when her husband was on leave of absence and she took over his lecturing and research programs. During the years she received many grants in aid from various sources to help defray her research expenses. These were mostly in the nature of $500 each, though one was for $6,000.
4
In 1952 petitioner went to Europe to do further research. Her expenses for such travel and her living while traveling were $2,988 in 1952 and $3,685.20 in 1953. These are conceded by the government to be accurate expenses. The Commissioner also agrees that the travel was necessary to the furtherance of her research projects. While the Commissioner believes these are ordinary and necessary expenses, he contended that there was not a sufficient profit motive to indicate that they had been incurred in a trade or business nor that these expenses were necessary to keep petitioner from losing the small stipend she had been receiving from the University.
5
In 1952 the University heard that petitioner was involved in some tax disputes with the government concerning the years 1948 and 1949. Since her husband had died in 1949 and she was supporting herself, this created a serious problem. A lump sum payment of $1,000 was made to her, calculated on an estimate of the tax deficiency involved. (The Tax Court found this payment to be a gift.) She was then given a nominal stipend of $500 per year, payable in monthly installments. Since her husband's death, petitioner's only source of income, aside from the small amount from the University, has been interest, dividends and income from real estate amounting to about $4,000 or $5,000 a year. During this period she has been forced to 'dip into capital' in order to take care of her living and research expense.
6
Petitioner testified that she had a profit motive in making the trip to Europe for her research. She testified that she had to maintain her professional standing in order to be able to be eligible for prospective research appointments, and, more particularly, to be eligible for some of the large grant in aid awards now being given by large foundations which pay 'salaries' in the neighborhood of $5,000 to $7,000 per year. She had in recent years made no efforts to obtain any such appointments. In 1927 she had turned down an offer to take a position as head of the Physiology Department at Hunter College at $9,000 per year. After her husband's death, she turned down a tentative offer of a research position at the University of Pennsylvania, Inferentially a paying position.
7
In the same years of 1952 and 1953 petitioner further claimed small expenses for dues to professional societies and laboratory fees for broken glass. The Tax Court allowed these expenses as directly connected with her status as a salaried research associate at the University of California. But the Tax Court further found that the travel expenses were not incurred with a profit motive, nor were they required by or connected with the University of California position, and sustained the Commissioner's determination of a deficiency.
8
Petitioner argues that the correct test for determining whether the taxpayer is conducting a trade or business within the statutory definition is the intent of the taxpayer upon entering the activity. Petitioner testified that profit was her intent after the death of her husband made additional sources of income necessary. The cases indicate that presence of a net profit in the short term is not essential to the requisite intent. The racing stable cases are good examples of this. E.g., George D. Widener, 1927, 8 B.T.A. 651. The requirement seems to be that the activity engaged in at the time in question be a part of the projected profit making scheme. Petitioner's own testimony indicates that any potential profit from her research activities in Europe would be as a result of being able to acquire funds from some fundation in the future as salary. There is no prospective income from publication of the results, as apparently scientific writings of this nature are not compensated for, except in resulting prestige. Petitioner is engaged in the business of free lance scientific research and while her claimed profit motive is recently acquired upon the death of her husband, the present state of affairs indicates that there are good prospects for remuneration by means of salaries from foundations.
9
An examination of the cases does not indicate any clear cut rule. In James M. Osborn, 1944, 3 T.C. 603, a non-salaried college professor claimed deduction for expenses involved in preparing several scholarly books, two of which were admittedly not potentially profitable, and the third which stood only a slight chance of showing a profit. The alleged profit incentive was that his stature would be increased by these books and that this would make it possible for him to gain future employment as perhaps a university president or in some equally high academic position. Deduction was disallowed on the basis that by his writing he was not actually engaging in the potentially profitable activity, but that it merely prepared him for that activity. In Manuel Cardozo, 1951, 17 T.C. 3, a college professor spect a summer studying and doing research in Europe. It was held that since he was only impliedly required to do additional research, and the research was not the activity in which he was primarily engaged, which was teaching, that the deduction should be disallowed. It might be noted that both these cases are distinguishable from the instant case in that here the present activity is the potentially profitable one-- it is not merely a stepping stone into another type of work.
10
Petitioner finds support for her position in Cornelius Vanderbilt, Jr., 1957, 16 T.C.M. (CCH) 1081. Vanderbilt was the son of Cornelius Vanderbilt and at the time in question was receiving $40,000 annually from a trust fund. He had had a long background in journalistic and lecturing endeavors, and claimed deductions for expenses of a trip to Europe where he made motion pictures to show at his lectures. His 'lecturing' business showed substantial losses in every year, but the Tax Court found that he was engaged in a trade or business and that the requisite profit motive was present, since potential profit was present. The factors weighed by the court in arriving at this conclusion were:
11
1. The length of the period over which the losses had occurred. Apparently at some previous time he had supported his family from analogous activities, but for six or seven years had shown large losses.
12
2. The length of time during which he had been engaged in alleged trade or business. He had been in similar activities since he started working some thirty years previously.
13
3. The lecturing-writing business had once provided the support for Vanderbilt and his family.
14
4. The Tax Court judge found that the potential for profit was good.
15
A further similarity between the cases is to be found in the fact that Vanderbilt did not derive his income from one steady source, but operated in a free lance fashion.
16
The Commissioner urges that the expenditures by Dr. Brooks resemble a capital investment-- that what she was in fact doing was equivalent to getting further education in order to increase her future profit potential rather than presently engaging in a profitable enterprise. Since leaving the Public Health Service she had gained no profit from her researches-- all money she had received, until the University commenced her $500 stipend, was merely to cover her expenses.
17
But research, and attendant expenses, was required of petitioner in order that she might retain her position with and the stipend from the University. Her contract with the University so provided. The moment her researches stopped, her compensation stopped. It is true that in a position such as hers, the degree of control usually present in the employeremployee situation is not present. The Tax Court found that her laboratory fees and professional societies' dues were sufficiently connected with her employment to allow deduction. The Commissioner conceded that the expenses were necessary to the continuance of her research, but it did not concede that they were necessary to the continuation of her employment. It is difficult in view of mankind's almost universal drive for monetary award alone to recognize that petitioner was required to spend many thousands of dollars to retain the position paying her but $500 per annum.
18
The Cardozo case indicates that the courts are strict in finding the necessity of expenses. But that case may be distinguished on the ground that there the main profession was teaching. Here Dr. Brooks has no teaching aspirations-- the only line of endeavor which she pursues is research and writing. Admittedly the principal research on which she had spent her life had to be performed in various parts of the world. She has previously traveled to the far corners of the world to continue this same research.
19
Under a factual situation of this kind, we recognize there are limitations on the scope of review of this Court. In Morton v. Commissioner, 2 Cir., 1949, 174 F.2d 302, at page 303, it was said:
20
'Whether the activities of a taxpayer constitute carrying on a trade or business is a question of fact the determination of which by the Tax Court, if adequately supported by the record, is ordinarily conclusive on appeal.'
21
In view of (1) the stipulated facts in this case; (2) the admission by the government 'that in order to adequately perform her research duties, it was necessary for her to travel to Europe for the greater part of 1952 and 1953'; (3) that in order to maintain her position with the University of California during the years in question she was required by her contract to engage in continuous research; (4) the profit she had derived in previous years from her research, and her undisputed testimony that she expected to derive profit in the future; (5) the fact that these expenses were incurred in her sole present activity, research, and not for the purpose of gaining any other or better job; (6) the many years spent by petitioner in similar research throughout the world (having been sent to Miami and Bermuda by the government to do precisely the same type of scientific research), we conclude the Tax Court erred in concluding that the petitioner was not engaged in a 'trade or business.' We hold all her admittedly accurate travel expenses were 'ordinary and necessary travel expenses' incurred in connection with her business of research.
22
We are convinced the facts of this case bring it more closely in line with Cornelius Vanderbilt, Jr., 1957, 16 T.C.M. (CCH) 1081; Margaret E. Amory, 1931, 22 B.T.A. 1398; and George D. Widener, 1927, 8 B.T.A. 651, affirmed, 3 Cir., 1929, 33 F.2d 833, than the cases of Henry P. White, 1954, 23 T.C. 90, affirmed, 6 Cir., 1955, 227 F.2d 779; Morton v. Commissioner, 2 Cir., 1949, 174 F.2d 302; and Coffey v. Commissioner, 5 Cir., 1944, 141 F.2d 204.
23
The opinion below recognizes the good faith of petitioner, and mentions 'her desire to benefit mankind,' and her commendable 'innate drive as a pure scientist.' The Tax Court judge then rules that he testimony of prospective monetary award from her research was 'hope' and not based on fact. In Doggett v. Burnet, 1933, 62 App.D.C. 103, 65 F.2d 191, at page 194, there appears the following language which we believe is applicable here:
24
'The proper test is not the reasonableness of the taxpayer's belief that a profit will be realized, but whether it is entered into and carried on in good faith for the purpose of making a profit, or in the belief that a profit can be realized thereon, and that it is not conducted merely for pleasure, exhibition or social diversion.'
25
The judgment of the Tax Court is reversed. | 01-03-2023 | 08-23-2011 |
https://www.courtlistener.com/api/rest/v3/opinions/1531726/ | 12 Md. App. 264 (1971)
278 A.2d 307
PERRY LEROY McDUFFIE
v.
STATE OF MARYLAND.
No. 609, September Term, 1970.
Court of Special Appeals of Maryland.
Decided June 11, 1971.
The cause was argued before ORTH, THOMPSON and MOYLAN, JJ.
Jerold H. Fishman for appellant.
*266 James L. Bundy, Assistant Attorney General, with whom were Francis B. Burch, Attorney General, Arthur A. Marshall, Jr., State's Attorney for Prince George's County, and Robert H. Mason, Assistant State's Attorney for Prince George's County, on the brief, for appellee.
MOYLAN, J., delivered the opinion of the Court.
The appellant, Perry Leroy McDuffie, was indicted by the Grand Jury for Prince George's County under an eight-count indictment. Those counts charged, respectively: 1) robbery with a dangerous and deadly weapon, 2) attempted robbery with a dangerous and deadly weapon, 3) assault with intent to rob, 4) robbery, 5) attempted robbery, 6) assault, 7) openly carrying a dangerous weapon with the intent of injuring a person, and 8) shooting with intent to maim. The case went to trial before a jury, presided over by Judge William H. McCullough. At the end of the State's case, a defense motion for a judgment of acquittal was granted as to the eighth count. At the conclusion of the entire case, the remaining seven counts were submitted to the jury. The jury returned a verdict of guilty as to each count. Appellant's counsel, in a bench conference, asked for a mistrial on the ground that the convictions of attempted robbery with a deadly weapon under the second count and of attempted robbery under the fifth count were inconsistent with the rest of the verdict. The judge discharged the jury and directed the clerk to enter findings of not guilty on all counts but the first count. The court expressed the feeling that counts two through seven were lesser-included counts that merged into the conviction under the first count.
In Boone v. State, 2 Md. App. 80, 114-115, this Court took the position that a necessary element in the crime of attempt is the failure to consummate the greater crime which was being aimed at. See also Tender v. State, 2 Md. App. 692, 698-699; Price v. State, 3 Md. *267 App. 155, 159-160. Under the holding of those cases, a conviction for attempt would be inconsistent with a conviction for the consummated crime. The jury verdict with respect to the second and fifth counts was, therefore, inconsistent with the rest of its verdict.
It is unquestionably true, as was stated by the Court of Appeals in Heinze v. State, 184 Md. 613, that "it is the safer practice to send the jury back to their room with instructions as to the corrections that ought to be made, so that they can amend the verdict as they think proper unhindered by the presence and possible influence of others." It is clear that in the case now before us, the better procedure would have been for the trial judge to have asked the jury to return to the jury room and, if they were indeed intent upon returning a verdict of guilty under the first count charging robbery with a dangerous and deadly weapon, then to return verdicts of not guilty on the other counts because of merger with respect to counts 3, 4, 6, and 7 and because of inconsistency with respect to counts 2 and 5. A commonsense review of what transpired, however, permits of no other conclusion than that the jury found the appellant guilty under the most major count robbery with a dangerous and deadly weapon and then; subsidiarily but erroneously concluded that all of the other counts were lesser-included constituent parts of the major count and that a finding of guilt thereon was logically compelled. In determining the effect of this mistake, we are guided by the philosophy expressed in Heinze v. State, supra, at 619:
"However, if the defendant is not prejudiced, the verdict may be amended in substance in open court under the direction of the judge, provided that the jury assent to the verdict as amended. State v. Burrell, 120 N.J.L. 277, 199 A. 18; Burton v. Commonwealth, 109 Va. 800, 63 S.E. 464; Pehlman v. State, 115 Ind. 131, *268 17 N.E. 270; Clark, Criminal Procedure, 2d Ed., 565. If no harm has been suffered by the defendant, the Court of Appeals will go far in sustaining the action of the trial court in correcting a defective verdict in the presence of the jury. Williams v. Commonwealth, 153 Va. 987, 151 S.E. 151. Chief Justice Paxson said in a Pennsylvania case: `There was a time in the history of the English criminal law when great crimes were left unpunished because of harmless, technical errors. This greater strictness was perhaps due to the fact that at that period the Criminal Code was especially bloody. Capital punishment was inflicted for very trifling offenses; and, it may be, the judges sought to ameliorate its rigor by holding the crown to the observance of the nicest technicalities. * * * With the advancement of judicial science, and a more enlightened administration of the law, mere technicalities are less regarded, where they work no harm to a defendant.' Appeal of Nicely, 130 Pa. 261, 18 A. 737, 739."
To forestall any danger of multiple convictions and multiple sentencing on either the lesser-included or the inconsistent counts, the trial judge promptly directed the clerk to enter verdicts of not guilty on counts 2 through 7. The appellant was sentenced only upon the first count, of which the jury obviously found him to be guilty. We feel that he, thereby, suffered no prejudice.
In Bell v. State, 220 Md. 75, inconsistent convictions for larceny and receiving stolen goods were handed down by the trial judge, sitting without a jury. The Court of Appeals found that the verdict was defective. It, however, affirmed the decision of the lower court on two grounds. It held first that "since the question was not raised below in any manner, it may be that the defendant waived the inconsistency." That holding of possible *269 waiver would afford little comfort to the State in the case at bar, since there clearly was no waiver. In Bell, however, the Court went on to state, at 81:
"In any event, the court passed but one sentence of a year's duration and then provided that it should run concurrently with the previous sentence of three years for the receiving and unauthorized use of the automobile referred to in the first indictment. Since it does not appear that the defendant has been prejudiced [Heinze v. State, supra] by the rendition of inconsistent verdicts under the second indictment, we see no reason to make such inconsistency the basis for a remand of the case for further proceedings or a new trial. Novak v. State, 139 Md. 538, 115 A. 853 (1921)."
The court there explicitly noted that if the trial court "had passed sentence on both of the inconsistent counts, a different question would be raised."
In the case at bar, not only was the appellant convicted and sentenced upon the single count of robbery with a dangerous and deadly weapon, but he could have received the same sentence for attempt, as well, had the conviction been upon either of the attempt counts.
In Hardesty v. State, 223 Md. 559, the trial court, again without a jury, handed down an inconsistent verdict, finding guilt of both larceny and of receiving stolen goods. The Court of Appeals pointed out very explicitly what proper procedure should have been:
"There can be little doubt that the proper practice calls for a specific verdict upon each count of an indictment that contains inconsistent counts, unless a general verdict of `not guilty' be rendered. In fact, the State rightly concedes that a general verdict of `guilty' upon such an indictment is defective, and the defendant may *270 require the trier of facts in this case, the trial judge to specify on which counts the defendant has been found guilty." p. 562.
In nevertheless affirming the decision, the Court relied, in part, on waiver. It also went on to point out, however:
"In the instant case, the trial judge imposed but one sentence, which is below the maximum permitted by any one of the four counts now under consideration; hence no prejudice resulted to the defendant by reason of the general verdict. Novak v. State; Bell v. State, both supra." p. 562.
The same situation applies in the case at bar. The same sentence could have been imposed for either the consummated offense or for the attempt.
In Boone v. State, supra, this Court was dealing with inconsistent jury verdicts finding guilt of both the consummated crime of armed robbery and the attempt to perpetrate that crime. In refusing to overturn the convictions, we relied primarily on the waiver of any objection but pointed out, as well, that there was no prejudice to the appellant. We said, at 117:
"Although we feel the better practice, under the holdings in Heinze v. State, 184 Md. 613, 617-19, 42 A.2d 128 (1945), would have been for the trial judge to direct the jury to return to the jury room to correct what was patently an inconsistency in the verdict announced by them, in the absence of a Motion in Arrest of Judgment or a request for a correction of the record, this contention is not properly before us. Here, as in Bell, only one sentence was imposed which was within the penalty prescribed by Art. 27, Sec. 488, supra, for either of the offenses; there was no prejudice to the Appellant."
*271 In both Tender v. State, supra, and Price v. State, supra, inconsistent verdicts were handed down by trial judges, sitting without juries. In each case, there was a verdict finding guilt for the consummated crime of armed robbery and also for the attempt to commit that crime. In neither case did we permit ourselves to be boxed into the logical absurdity of holding that the factfinder had somehow concluded, beyond a reasonable doubt, both that the defendant had completed the crime and also that he had failed to complete the crime. In each case, recognizing the error for what it was, we simply reversed the judgment of guilt as to the count charging the attempt.
Although, in the case at bar, it would unquestionably have been the better practice for the trial judge to have resubmitted the inconsistent verdicts to the jury in order to have permitted them to resolve any apparent conflict while they were still available to do so, we cannot say that the trial judge committed prejudicial error in taking those very corrective measures which we should have felt compelled to take, had he not already taken them for us.
The appellant also contends that his inculpatory statement was erroneously admitted into evidence against him. He admits that he received his full Miranda warnings, including the right to have a lawyer appointed for him. The testimony of Detective Crump of the Prince George's County Police Department was very explicit that the appellant did receive all such Miranda warnings, did understand them and did intelligently waive them. Without making a very explicit contention as to any one factor, the appellant relies upon a combination of factors such as his tender age, the pain that he was in from a wound to his buttock and the fact that he had been in a hospital for six days prior to the day on which he gave his statement. The appellant was 17 years of age. That fact would not vitiate an otherwise voluntary statement. Miller v. State, 251 Md. 362, 379; Harris v. State, 1 Md. *272 App. 318. Nor would the fact that the appellant had been in the hospital and may have still been in some pain vitiate an otherwise voluntary statement. Spell v. State, 7 Md. App. 121.
In ruling on the admissibility of the statement, the trial judge found:
"The Court finds that the defendant had all of his mental faculties at the time he gave a partial oral statement and a partial written statement to Officer Crump. But the Court also finds from the testimony as a whole that the handling of the case by Officer Crump from the beginning indicated a sense of fair play on his part in the manner in which he handled the identification of the photographs by the various witnesses by excluding each of them from the room, bringing them in separately; by the manner in which the line-up was set up with the attorneys there and again excluding witnesses, keeping them segregated from one another; bringing them in one at a time; from his testimony that he did not make any promises or threats to this defendant for the purpose of making a statement or an admission or a confession.
The Court has to conclude and does conclude that this confession or admission made by this defendant was not induced or coerced by any threats of reward or punishment by Officer Crump and that it is admissible."
We cannot say that he was wrong in so finding.
Judgment affirmed. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1531725/ | 269 S.W.2d 624 (1954)
STATE
v.
PROCTOR.
No. 43765.
Supreme Court of Missouri, Division No. 1.
June 14, 1954.
Motion for Rehearing or to Transfer to Denied July 12, 1954.
*625 Lawrence J. McKin and Samuel J. Kevrick, St. Louis, for appellant.
John M. Dalton, Atty. Gen., Julian L. O'Malley, Asst. Atty. Gen., for respondent.
Motion for Rehearing or to Transfer to Court en Banc Denied July 12, 1954.
COIL, Commissioner.
Defendant, who shot and killed Blanchie Warren, was convicted of second degree murder and sentenced to 35 years in the penitentiary. He contends that the trial court erred in refusing to admit in evidence an alleged dying declaration.
On October 5, 1952, six persons were in Louise Wallace's apartment; some of them had been there since 9 a. m. and others had arrived at various times thereafter. They, other than deceased, had been drinking whiskey and gin, but the evidence tends to show that no one was intoxicated. About one o'clock deceased, Blanchie Warren, who had been there before for a brief time returned and joined in an argument which was in progress between defendant and *626 Louise Wallace. Those present described the events immediately preceding the shooting in various ways. Suffice, for our purposes, to state that Louise Wallace went to a closet from which she took a pistol and, either a scuffle ensued among her, defendant, and deceased, or defendant simply jerked the pistol from Louise's hand. In any event, all of the state's witnesses who testified on the subject stated that at the time the fatal shot was fired, defendant was standing at least 3½ or 4' from deceased and that the scuffle, if any, had terminated well before the shot was fired. Deceased fell to the floor immediately. One of the witnesses spoke to her between the time she fell and the time the police arrived a few minutes later. This witness said, "I asked herwe all call her Ducky I said, `Ducky, you dead?' And she said, `Mmhmm.'" A police officer testified that when he arrived, shortly after the shooting, deceased was lying on the floor and bleeding from a wound in her neck; that she told him that she "was suffering from a pain in her neck" and that she was not able to move "the lower extremities of her body or her arms"; but that deceased said nothing as to whether she expected to live or die. Deceased was placed in the ambulance section of a cruising patrol car and conveyed to a hospital. On the way, she said to a police officer in the car that "she was called to her aunt's home at that address, and when we arrived there the aunt, who was Louise Wallace, and her common-law husband Proctor were involved in an argument. She inquired what the nature of the argument was and her aunt told her they were arguing about Proctor's legal wife coming there, and during the argument the aunt, Louise Wallace, got the pistol from the closet in the living room and she and Proctor tried to get the gun away from her and during the scuffle the gun was accidentally discharged." Deceased said nothing at that time to indicate her mental state as to her consciousness of impending death.
Upon arrival at the hospital, deceased was first seen by Dr. Adams, apparently in the emergency receiving room. He said, "there was a gunshot wound of the neck * * * I thought there was some involvement of the trachea, I had her rushed right up to female surgery so she could go to the operating room as soon as possible." Dr. Davis, who was one of the doctors who attended deceased from the time she entered the hospital until she died on October 13, said the bullet had entered the neck and exited in the region of the upper quarter of the right scapula; that there was damage to her spinal cord and there was blood in the pleural cavities; that she was unable to talk during the entire time she lingered; that a traecheotomy was performed so she could breathe; that she was in a serious condition from the time she entered the hospital; that she was paralyzed from the neck down; that such paralysis could have occurred immediately when the bullet struck the spinal cord. Dr. Davis testified, without objection, that "I didn't hear anyone or didn't advise her as to how serious she was, although I do believe that she was aware of her condition. Q. You do believe she was aware of the seriousness of her condition? A. I do. Q. And that she could die at any time as a result of it? A. Yes."
The trial court excluded in whole and in part the statement made to the police officer above quoted on the ground that it was not shown that the statement was made by the declarant under a consciousness of impending death and after hope of recovery had been abandoned, and on the further ground that the statement that the gun was accidentally discharged was a conclusion which the witness, if alive and on the witness stand, would not be permitted to state.
A statement to be admissible as a dying declaration must have been made by the declarant in extremis and in the belief of impending death after hope of recovery has been abandoned. State v. Strawther, 342 Mo. 618, 624, 116 S.W.2d 133, 136[2, 3]. The declaration may be in narrative or question and answer form; and it is the impression of almost immediate death and not the rapid succession of death in fact which renders a declaration admissible. *627 State v. Kelleher, 201 Mo. 614, 637, 638, 100 S.W. 470, 477. An explanatory statement by the declarant as to the presence of a sense of impending death need not be made in express language. It is sufficient if the sense of impending death and the abandonment of hope of recovery appears by any means. The despair of recovery may be inferred from the circumstances if the facts in evidence support the inference. "The surrounding circumstances may, and frequently do, speak as loudly as the oral word. It is enough if, from all the circumstances, it satisfactorily appears that such was the condition of the declarant's mind at the time of the declarations. The declarant's belief in imminent death may be inferred from the nature of his condition, his evident danger, the character of his injury, the administration of the last rites of the church, the conduct of the declarant, and other circumstances which indicate his apprehension of imminent death." 26 Am.Jur., Homicide, § 420, p. 447; State v. Evans, 124 Mo. 397, 409, 28 S.W. 8, 11; State v. Anderson, Mo.Sup., 34 S.W.2d 25, 26[2-5]; State v. Kelleher, supra.
Whether a statement has been made when declarant was conscious of impending death and after he had abandoned hope of recovery is a question to be determined by the trial court at a preliminary hearing. State v. Custer, 336 Mo. 514, 517[1], 80 S.W.2d 176, 177[1,2]. However, after the trial court has determined on preliminary hearing "the character of the statements as dying declarations * * * for the purpose of determining their admissibility," the ruling of the trial court that the statement is admissible does not have "the effect of precluding consideration by the jury of the question of declarant's belief when he made the statements * * *." State v. Custer, supra, 80 S.W.2d 180. The Custer case established the rule in this state that whether a certain statement is in fact a dying declaration is a question for the jury under proper instructions from the court, even though the trial court has so determined on preliminary hearing. The Custer case overruled prior Missouri decisions holding that a trial court's preliminary determination that a certain statement was a dying declaration was conclusive.
Dying declarations are admissible in favor of the defendant as well as against him. State v. Livingston, Mo.Sup., 204 S.W. 262, 263[2]. Usually, however, the question in an appellate court is whether the trial court erred in admitting an alleged dying declaration offered by the state. And it may often be that this hearsay testimony is the only evidence connecting a defendant with the crime charged. Thus, because it is hearsay and its admission may be the determinative factor in depriving one of his life or liberty, trial courts, and appellate courts on review, must be "exceedingly careful that there should be a rigid adherence to the principles upon which, and the preservation of the constituent elements from which," statements are admitted as dying declarations. State v. Johnson, 118 Mo. 491, 501, 24 S.W. 229, 231. It is important then, that a jury not even hear the contents of a purported dying declaration unless the party offering it has shown on preliminary hearing by substantial evidence of clear probative value that the alleged statement was made under a consciousness of impending death and after hope of recovery had been abandoned.
Before deciding whether there was sufficient evidence adduced in the instant case to have required the trial court to have submitted to the jury whether deceased's statement to the police officer was in fact a dying declaration, we should first determine whether the opinion of Dr. Davis (that deceased was aware of the seriousness of her condition and aware of the fact that that condition could result in her death at any time) has any probative value as evidence. We find no Missouri case on the question except State v. Anderson, supra. There, the court discussed the testimony of a doctor who had related what had been said to him by deceased. In holding that the statement was admissible as a dying declaration, against the objection that it was not shown that declarant expected immediate dissolution, the court said at 34 *628 S.W.2d 26: "Dr. McRaven, of course, could not give his opinion as to what he thought she believed about it, but his story indicates that she knew she was going to die." That statement was obviously dictum in that case. Dr. McRaven had not given his opinion as to the state of mind of declarant and the question was thus not before the court for decision.
There is a division of authority in the various jurisdictions on this proposition. In 40 C.J.S., Homicide, § 295, p. 1266, this statement is made: "Testimony that deceased realized he was mortally wounded, or that deceased knew he was going to die, the witness not being cross-examined as to the basis for this statement, or the opinion of a witness who has had full opportunity for reaching a correct conclusion that deceased was aware of impending dissolution, has been held sufficient. However, it has been held, on the other hand, that the declarant's belief that death was impending could not be shown by the bare conclusion of the witness that declarant knew he was going to die in a short time, * * *."
In Pennington v. State, 136 Tenn. 533, 539, 190 S.W. 546, 547[4], the court said: "It is further insisted that the court erred in permitting Miss Sharp to testify that deceased realized he was going to die. This assignment of error is not well taken. There is abundant authority to the effect that a witness who remains with the deceased a considerable time before his death, hears him talk, witnesses his demeanor, and has full opportunity for reaching a correct conclusion, may testify to the opinion, or conclusion formed from such circumstances, that the deceased was aware of impending dissolution.
"The Supreme Court of California says that such an expression of such a witness is not a mere opinion of the witness in the objectionable sense. `It approaches to knowledge, and is knowledge, so far as the imperfection of human nature will permit knowledge of these things to be acquired; and the result thus acquired should be communicated to the jury, because they have not had the opportunities of personal observation, and because in no other way can they effectually have the benefit of the knowledge gained by the observations of others.' People v. Sanford, 43 Cal. 29." To the same effect, see: Plummer v. State, 200 Ga. 641, 38 S.E.2d 411, 413; State v. Mooney, 185 Wash. 681, 56 P.2d 722, 723[2].
Among the cases holding that a physician's opinion as to whether deceased knew he was dying is not competent, see: People v. Smith, 245 A.D. 69, 71, 281 N.Y.S. 294, 298[1-7]; People v. Hall, 260 A.D. 421, 424, 22 N.Y.S.2d 973, 976 [1-3]; and State v. Layton, 204 N.C. 704, 706, 169 S.E. 650, 651.
It would have been desirable for counsel to have inquired into the reasons for Dr. Davis' opinion and to have established when, in point of time with relation to the time of the alleged dying declaration, it was the doctor's opinion that deceased realized she could die at any time as a result of her injury. Nevertheless, we think that the opinion of a doctor who had been in a position to have acquired knowledge upon which to base such an opinion is of some benefit to a jury, along with all the other facts and circumstances in evidence, in determining whether a statement was in fact a dying declaration. As we have noted, there was no objection to Dr. Davis' testimony. But inasmuch as the case will be remanded for retrial, we may observe that unless further examination of the doctor discloses that he possessed insufficient knowledge upon which to base such an opinion or that his opinion of deceased's realization of impending death did not apply to the time of deceased's statement, his opinion would be admissible.
Was there evidence sufficiently cogent to have required the trial court to submit to the jury the ultimate fact of whether the deceased's statement to the police officer was a dying declaration? From the recitation of the pertinent evidence heretofore made, it appears that, a very short time before making the statement, deceased had suffered a gunshot wound through the *629 neck; that she was prone on the floor and was suffering from the bleeding wound; that she was paralyzed, probably from her neck down; that she was asked whether she was dead, to which she replied "Mmhmm"; that a very short time thereafter she made the statement in question; that she was in a serious condition when she entered the hospital and remained in that condition until her death, with the paralysis which probably occurred when the bullet struck the spinal cord remaining in effect.
Deceased's answer "Mmhmm" should be interpreted in the light of all the circumstances and in the light of deceased's condition at the time the answer was made. The trial court took the view that "Mmhmm" was equivalent to "Yes" and that, therefore, the only effect of the answer was to conclusively demonstrate that such answer was not true. However, while it may be that the answer was subject to more than one interpretation, nevertheless, when it is considered in the light of all the circumstances and in the light of deceased's obvious physical condition when the answer was made, we cannot escape the conclusion that the thought deceased expressed when she said in effect "Yes, I am dead" was that she realized or believed that she was then in the process of dying. And we find nothing in the evidence which would warrant the conclusion that deceased's state of mind and physical condition were not the same a few minutes later when she made the statement to the police officer.
In State v. Elkins, 101 Mo. 344, 350, 14 S.W. 116, 117, it was said: "The inquiry made by deceased of Coughran, namely, `if I thought he would get well,' taken by itself, would lead to the conclusion that he had not then given up all hope; but he stated repeatedly that he was killed, and told those present `not to take on.' To Mr. Coughran he said, `For God's sake, don't take it up!' The deceased was mortally wounded; and, taking his statements as a whole, it is clear that he was conscious of that fact. It is impossible to escape the conclusion that he expected to die from the wound, and that he had abandoned all hope; and, this being so, it follows that his statements were admissible on the ground of dying declarations."
In State v. Custer, supra, this court said at 80 S.W.2d 178[3]: "In the instant case the state's evidence was that deceased fell when he was shot and had to be carried to his home. When the doctor arrived, he was suffering severely and was in a very bad condition. The doctor's ministrations failed to relieve his suffering, as witness the statement to Tuttle that he was then still suffering greatly. His expression: `He got me; I am all in,' must be interpreted in the light of the circumstances and his condition at the time the words were spoken. While the evidence offered in this case as foundation for the admission of the dying declaration does not seem to us quite as strong as in the cases above cited [State v. Kelleher, supra, and State v. Dipley, 242 Mo. 461, 147 S.W. 111, 114] and others which we have examined, we are inclined to think it was sufficient to justify admission of the declaration in evidence." (Bracketed insertion the present writer's.)
In State v. Livingston, supra, deceased was shot through the skull on September 21 and lived until October 9. A deputy sheriff testified that while deceased was in the hospital he had this conversation with him: "`I am the prosecuting attorney, and this is the deputy sheriff, Mr. Bridges. We came out here to learn what we could about this shooting. Do you realize that you are going to die?' and that Livingston answered, `Yes, I guess I will;' and that Livingston then said to them, `I shot myself;' and that on being asked why he had shot himself he answered, "I was disgusted.' That evidence was offered as a dying statement, and was excluded." 204 S.W. at page 263. The court pointed out that there was no evidence that a physician or any other person had told deceased that there was no hope for him, and then stated, 204 S.W. at page 263: "It must be conceded that the word `guess' is not very definite or emphatic. In State v. Dipley, 242 Mo. 461, *630 147 S.W. 111, the injured person was not told that he would die. He said that he could tell from his breathing that he was shot through the lung, and repeatedly stated, `I guess they have got me.' It was held that a declaration made by him under such circumstances was admissible as a dying declaration. That declaration was admissible not so much because the injured person said, `I guess they have got me,' but because he was shot through the lungs and knew it.
"The thing that almost staggers belief in this case is that, though Livingston was shot through the brain, he not only lived for more than two weeks, but was conscious for some days after being shot. Being conscious, he must have known that the physicians were treating him for a bullet wound in the brain.
"* * * We insist that no stronger case than this is likely to arise for the enforcement of the rule announced by the Supreme Court of the United States in the Mattox Case, supra, [Mattox v. United States, 146 U.S. 140, 13 S. Ct. 50, 36 L. Ed. 917] where it was said that the sense of impending death may be made to appear from what the injured person said, `or from the nature and extent of the wounds inflicted, being obviously such that he must have felt or known that he could no[t] survive.'"
Tested by the decisions in the foregoing cases, realizing that since State v. Custer, supra, the jury decides again the fact issue as to whether a statement was or was not made under a sense of impending death and after hope of recovery had been abandoned, and resolving any doubt in favor of the defendant, we are of the opinion that a sufficient foundation was laid to require the trial court to submit the statement to the jury for its determination as to whether it was in fact a dying declaration and, if so, to give to it whatever weight the jury thought proper. This, unless the trial court correctly excluded the statement for another reason.
As noted, the trial court excluded the statement on the additional ground that it was a conclusion which deceased would not have been permitted to state had she lived and was being examined as a witness. Matters of opinion in dying declarations are inadmissible unless they would have been received in evidence if the declarant himself were a witness; but what constitutes a statement of opinion or a statement of fact depends not alone upon the statement itself but upon the surrounding circumstances as well. State v. Strawther, supra, 116 S.W.2d 137, 138. No part of the instant statement was a conclusion with the exception of deceased's characterization of the discharge of the gun as "accidental." In our view, this statement, standing alone and unexplained, would be objectionable as a conclusion and inadmissible. However, when taken in its context we are inclined to the view that the part of deceased's statement that the gun was "accidentally discharged" was a statement of her opinion drawn from facts immediately under her observation and was not objectionable as a conclusion. State v. Wilks, 278 Mo. 481, 490, 213 S.W. 118, 121. The declarant characterized the discharge of the gun as "accidental" to express her purported knowledge that it was discharged as a result of the scuffle which ensued in attempting to get the gun away from Louise Wallace. However, inasmuch as the case is to be remanded for a new trial the word "accidentally" may be eliminated from the statement, obviating any question as to whether the statement was deceased's unwarranted conclusion. Furthermore, that part of the statement which purports to relate what the aunt told deceased should also not be admitted because it would not be admissible were the deceased herself a witness.
Defendant also contends that the court erred in giving instruction 2 on the subject of presumptions of intent and malice. This point was not preserved in defendant's motion for new trial and is therefore not before us for review. However, inasmuch as we are remanding the case, we call attention to the language of *631 the court en banc in State v. Martin, Mo. Sup., 260 S.W.2d 536, 546: "Our conclusion is that, at least in those cases where the facts are fully developed by eyewitnesses, instructions on presumptions of intent and malice, should not be given."
Reversed and remanded for a new trial.
VAN OSDOL and LOZIER, CC., concur.
PER CURIAM.
The foregoing opinion by COIL, C., is adopted as the opinion of the court.
All concur. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1531736/ | 12 Md. App. 168 (1971)
278 A.2d 82
CHARLES R. HOLTMAN
v.
STATE OF MARYLAND.
No. 524, September Term, 1970.
Court of Special Appeals of Maryland.
Decided June 4, 1971.
The cause was argued before MURPHY, C.J., and ANDERSON and POWERS, JJ.
Marshall H. Feldman for appellant.
*169 John P. Stafford, Assistant Attorney General, with whom were Francis B. Burch, Attorney General, Howard L. Cardin, State's Attorney for Baltimore City, Charles Hennick and Gary Melick, Assistant State's Attorneys for Baltimore City, on the brief, for appellee.
POWERS, J., delivered the opinion of the Court.
Church-going is considered by most people to yield beneficial results. Charles R. Holtman undoubtedly takes the opposite view. On October 17-18, 1968 he went to three churches in Baltimore, with the result that in a bench trial before Judge David Ross in the Criminal Court of Baltimore in April, 1970, he was convicted on one count each of three separate criminal indictments. From those convictions and the sentences imposed in each case he appealed.
Berkley Baptist Church
At about 1:30 P.M. on October 17, 1968 Helen Gibson, who was employed in the office of the Berkley Baptist Church was winding up her work preparatory to leaving when appellant appeared at the door, carrying a long stick, and said "I want your money." He told her he was an escaped murderer and if she behaved she would be all right. He ordered her to lie on the floor, and asked for her pocketbook. She told him where it was, and he took her money, approximately $3.00, from it and put it back. He went upstairs, and she escaped and notified the police.
On these facts indictment 5197 charged Holtman with robbery, assault with intent to rob, assault, larceny, and receiving stolen goods. He was convicted of robbery. He contends that the evidence did not justify the conviction because (a) the victim was not put in fear and (b) the money was not taken from her person. That the victim's compliance with appellant's order to lie down and his demand for her pocketbook resulted from fear of violence is too obvious to require discussion. In Williams v. State, 7 Md. App. 683, 256 A.2d 776, we said at page 685, quoting *170 from Clark and Marshall, Crimes, (6th ed.) § 12.09, that robbery is:
"the felonious taking and carrying away of the personal property of another, from his person or in his presence, by violence, or by putting him in fear."
The pocketbook was "in her presence", and the evidence was sufficient to sustain the conviction of robbery.
Hillsdale Methodist Church
Charles Tracey, custodian of the Hillsdale Methodist Church, testified that he left the church at about four o'clock on October 17, 1968. The doors were locked and the premises were secure. He returned about 6:30 and opened a door. Some children ran in and promptly returned, saying that there was a burglar upstairs. Tracey went up and saw a big hole in the door of the minister's study. Appellant appeared at the hole, then came through it, where Tracey confronted him. After some conversation, during which appellant said he was looking for money, Tracey told him not to go away, but while Tracey was making a telephone call, appellant disappeared. The police arrived shortly thereafter. The desk drawers in the study had been pulled out. Tracey testified that a basement window had been broken, and that appellant said he came in through it.
On these facts indictment 5199 charged appellant with daytime housebreaking, rogue and vagabond, storehouse breaking ($100 and upwards) and storehouse breaking (less than $100). At the close of the State's evidence the judge granted a motion for judgment of acquittal as to the two storehouse breaking counts. Appellant was convicted of daytime housebreaking.
We held in Sizemore v. State, 10 Md. App. 682, 272 A.2d 824, at page 689:
"One who breaks a church in the day or night with intent to commit murder or felony therein, or with intent to steal goods of the value of *171 $100 or more is guilty of the storehouse breaking proscribed by Code, Art. 27, § 32. * * * But a person who breaks a church is not guilty of the statutory burglary proscribed by Code, Art. 27, § 30 (a) or the crime proscribed by § 30 (b) because a necessary element of those offenses is that it be a dwelling house that be broken and a church is not a dwelling house."
In Sizemore, decided January 8, 1971, Judge Orth for this Court discussed the "quaint turn" by which Lord Coke referred to a church as the mansion-house of God, and pointed out that breaking into a church was burglary at common law, not on the ground that a church was the dwelling house of God, but as a separate kind of burglary not involving a dwelling house.
The motion for judgment of acquittal as to this indictment should have been granted.
St. William of York Roman Catholic Church
Officer Larry Sachs testified that at about 12:50 A.M. on October 18, 1968 he "received a call for prowler", and went to the rear of St. William of York Church. He found appellant "coming out of a window" of the church. Appellant was intoxicated and the officer had to help him out because "he was stuck in the window". A search disclosed nothing; they had no conversation.
On these facts indictment 5198 charged appellant in four counts: common law burglary, rogue and vagabond, storehouse breaking ($100 and upwards) and storehouse breaking (less than $100). At the beginning of the trial the State announced that it would "abandon the first count and press the second count". At the close of the State's case the judge granted a motion for judgment of acquittal as to the third and fourth counts. Appellant was convicted on the second count of being a rogue and vagabond.
The Maryland rogue and vagabond statute (Code, Art. 27, § 490) was discussed and interpreted in Crossland v. State, 252 Md. 70, 249 A.2d 153, in the light of the *172 "unusual circumstances" there presented. Crossland had been observed by a police officer walking out the front door of a house carrying a record player and a radio. After some inquiry at the house the officer pursued Crossland and arrested him. A four count indictment resulted. At his trial a verdict was directed as to three of the counts because of a technical failure of proof, and he was convicted of being a rogue and vagabond. The Court of Appeals said, at pages 73 and 74:
"The language of Section 490 indicates that it is an essential element of the statutory crime that the accused have the intent to commit a crime. * * * [The] language indicates that it is the contemplated commission of the specified crimes which is referred to in the statute. * * * We believe that the normal usage of this language implies the mental processes preliminary to the actual doing of or completion (emphasis added) of a particular act. * * * the beneficial and useful purpose of this important statutory provision * * * is to give the enforcement officers a tool to apprehend and suppress more aggravated criminal conduct prior to its actual commission.
"* * * The taking of the chattels by Crossland and their asportation were clearly established by the evidence. In other words, the substantive crime had in fact been committed by Crossland and under these unusual circumstances, the necessary intent `to enter' or `to steal' no longer existed; the substantive crime was a fait accompli."
Since the holding in Crossland we have been called upon in a number of cases to delineate the boundaries of its applicability. The cases were fully reviewed in Downes v. State, 11 Md. App. 443, 274 A.2d 663. In Downes the breaking was shown, and it was held proper to infer that the intent to steal, not consummated, still existed. The *173 situation in Knight v. State, 7 Md. App. 282, 254 A.2d 379, was similar.
It seems clear that when any part of the substantive crime remains incomplete, from the practical as well as the legal standpoint (Matthews v. State, 8 Md. App. 712, 715, 261 A.2d 804) the intent to complete it which may be inferred from the circumstances is sufficient to support a conviction under the rogue and vagabond statute.
The evidence showing that appellant was found on the premises of the church, and that the substantive crime was not completed, supports an inference that he still entertained an intent to steal goods and chattels in the church. His motion for judgment of acquittal on the rogue and vagabond count of indictment 5198 was properly denied.
Judgments affirmed as to indictments 5197 and 5198.
Judgment reversed as to indictment 5199. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1531755/ | 443 Pa. 183 (1971)
Commonwealth
v.
McKinnon, Appellant.
Supreme Court of Pennsylvania.
Argued April 30, 1971.
June 28, 1971.
*184 Before BELL, C.J., EAGEN, O'BRIEN, ROBERTS, POMEROY and BARBIERI, JJ.
John G. Veith, for appellant.
Louis A. Perez, Jr., Assistant District Attorney, with him Milton M. Stein, Assistant District Attorney, James D. Crawford, Deputy District Attorney, Richard A. Sprague, First Assistant District Attorney, and Arlen Specter, District Attorney, for Commonwealth, appellee.
OPINION BY MR. JUSTICE O'BRIEN, June 28, 1971:
On June 14, 1966, police Sergeant John Pembrook went to 2260 North Van Pelt Street, Philadelphia, in response to a police radio call ordering him to investigate a possible assault and battery by hammer, and to provide transportation to the hospital for the victim, *185 if required. He was met at the door by appellant, dressed only in a tee shirt, and covered from head to foot with blood. Sergeant Pembrook asked appellant "What happened?" and was told that "she came after him with a knife and he had to defend himself with a hammer." Thereupon, appellant led Sergeant Pembrook into the living room, where he discovered who "she" was and what had happened to her. "She" was Shirley Dash and she was lying in a pool of blood. She died shortly thereafter as the result of injuries to the brain and skull.
Sergeant Pembrook sat appellant on the steps and called for additional officers. Moments later, Officer Edward Furlong arrived and escorted appellant upstairs for the purpose of getting dressed. While appellant began getting dressed in the blood-splattered bedroom, he volunteered an account of the entire bloody event. He told his story without any questioning or prompting by the police.
After appellant was found guilty by a jury of voluntary manslaughter, in filing motions for arrest of judgment and a new trial, appellant challenged the admissibility of the statements he made to the two police officers. His post-trial motions were denied and he was sentenced to a term of six to twelve years.
Appellant confines his appeal to a challenge of the admissibility of the two statements. He contends that the Commonwealth had a duty to give appellant his Miranda warnings before any questions were asked.
In light of the facts of the case, that is an absurd contention. When appellant appeared at the door, covered with blood from head to toe, and only partially dressed, Sergeant Pembrook reasonably assumed that he was a victim, not a suspect, and accordingly asked him a simple "What happened?". Moreover, at this time, appellant was not in custody and really was not *186 under suspicion of the commission of any crime. Appellant's unexpected reply was completely voluntary. Similarly, appellant's account of the episode to Officer Furlong was volunteered. Although Officer Furlong had said nothing to him, except to tell him to get dressed, appellant apparently thought that the blood-splattered bedroom required some explanation.
We have frequently held that: "Volunteered statements made by an accused, without warnings, are not barred by the Fifth Amendment to the United States Constitution and the admissibility of volunteered statements is not affected by the Miranda warnings." (Emphasis in original.) Commonwealth v. Brown, 438 Pa. 52, 56, 265 A.2d 101 (1970).
Judgment affirmed.
Mr. Justice EAGEN concurs in the result.
Mr. Justice JONES took no part in the consideration or decision of this case. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1531750/ | 269 S.W.2d 393 (1954)
JOHNSON
v.
STATE.
No. 26957.
Court of Criminal Appeals of Texas.
May 12, 1954.
On Motion to Reinstate Appeal June 16, 1954.
Reynolds & Tucker, Shamrock, by W. M. Tucker, Sherman, for appellant.
Wesley Dice, State's Atty., of Austin, for the State.
DAVIDSON, Commissioner.
This is a conviction for the felony offense of drunk driving as denounced by Art. 802b, Vernon's P.C., with punishment assessed at one year in the penitentiary.
The record before us contains no judgment of the trial court.
A final judgment is necessary to confer jurisdiction of this court over an appeal. Berry v. State, 138 Tex. Crim. 563, 138 S.W.2d 105; Davis v. State, 145 Tex. Crim. 188, 167 S.W.2d 523.
Accordingly, the appeal is dismissed.
Opinion approved by the Court.
On Motion to Re-Instate Appeal
*394 WOODLEY, Judge.
The record having been perfected, the appeal is reinstated and will be considered on its merits.
The fact that a defendant has been previously convicted of the misdemeanor offense of driving a motor vehicle on a public highway while intoxicated is an essential part of the felony offense which must be alleged and proved, and without such proof the evidence is insufficient to sustain the conviction. A necessary part of this proof is the identification of the defendant as the person previously convicted. Cases arising under Arts. 61, 62 and 63, P.C. are deemed applicable. Franklin v. State, 154 Tex. Crim. 375, 227 S.W.2d 814; Phariss v. State, 149 Tex. Crim. 406, 194 S.W.2d 1007; Doyle v. State, 140 Tex. Crim. 417, 145 S.W.2d 876.
The conviction must be reversed because of the absence of any testimony identifying appellant as the person convicted of the prior offense alleged in the indictment.
In view of the insufficiency of the evidence in this regard, we pretermit a discussion of the sufficiency of the proof of venue other than to observe that we are unable to account for the failure of the state to request permission to reopen and make proof that the offense was committed in Wheeler County when the question was raised. Unless we can consider an uninitialed interlineation in the statement of facts, proof of venue must rest on judicial notice that the trial was held at Wheeler (the County Seat of Wheeler County), and that a point from one to four miles from Wheeler, on the highway leading toward Pampa, was in Wheeler County.
The courts should not be called upon to rely upon such evidence when the proof is available to establish that the place where the offense was committed was in Wheeler County, Texas.
The question of the sufficiency of the indictment is not raised, but we express doubt as to its sufficiency.
Art. 802b, Vernon's Ann.P.C., provides that "Any person who has been convicted of the misdemeanor offense of driving or operating an automobile * * * upon any public road * * * in this state * * * while intoxicated" and who shall thereafter so drive while intoxicated shall be guilty of a felony.
The indictment against appellant nowhere alleges that he had been convicted of the misdemeanor offense of driving while intoxicated. It does allege that in a certain numbered cause in the District Court he was convicted of a felony, said conviction being for the offense of operating a motor vehicle upon a public road while intoxicated, and that said conviction therein became final prior to the commission of the present offense.
It is true that this court has held that a misdemeanor conviction for driving while intoxicated may be used more than once for the purpose of charging a felony under Art. 802b, V.A.P.C. Hill v. State, Tex.Cr.App., 256 S.W.2d 93.
It is likewise true that the felony conviction for driving while intoxicated alleged against appellant of necessity charged a prior conviction for the misdemeanor offense. But an accused is entitled to know from the written accusation the nature of the charge against him. It would be better pratice, if it be not essential, that the indictment describe the misdemeanor offense of which he is alleged to have been previously convicted in charging a felony offense under Art. 802b, V.A.P.C.
Nor is it clear that the introduction of a judgment of conviction with sentence suspended could suffice to support an allegation that the judgment of conviction in the prior felony offense had become final.
In the event of further prosecution, it is suggested that a new indictment be presented.
The judgment is reversed and the cause is remanded. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1531775/ | 278 A.2d 848 (1971)
ROSE BLUME
v.
THE SHEPARD COMPANY.
No. 1188-Appeal.
Supreme Court of Rhode Island.
July 2, 1971.
*849 Bernard S. Goldberg, for plaintiff.
John G. Carroll, for defendant.
OPINION
POWERS, J.
This civil action for negligence was tried to a Superior Court justice and a jury which returned a verdict for the plaintiff. The case is before us on the defendant's claim of appeal from the judgment entered in accordance with the verdict.
The ultimate facts are not in dispute and are readily stated. They establish that defendant is the operator of a department store which includes shoes as merchandise offered for sale. For this purpose, an area of the store is set aside as a shoe department. On September 29, 1964, plaintiff, who was familiar with the layout from previous visits, entered the store and went to the shoe department with the intention of purchasing a pair of shoes. She walked down an aisle some three feet in width which aisle was created by a row of four chairs, the backs of which faced the back of a display case. The chairs are of common variety and used by customers when having shoes fitted. Shoes of particular interest to plaintiff were displayed on top of the case which was to her right, while the backs of the chairs were to plaintiff's left. As she proceeded through the aisle thus formed, to examine a pair of shoes on the display case, plaintiff struck the front of her left ankle against a stool which was protruding under the rear of the second chair in the row. The stool against which plaintiff struck her ankle is known as a fitting stool and there were a number of them customarily used in the department. These stools are made of metal but have an upholstered seat for the salesclerk. The stools are twenty-nine inches long and slope from a height of fourteen and one half inches above the floor at the end where the seat is placed to five and one half inches from the floor at the point where the customer's foot would rest. When not in use the stools are "pushed" lengthwise under the chairs. Further, there is evidence that the aisle or space traversed by plaintiff, although designed for use by defendant's employees, was permitted to be used by patrons in selecting shoes.
The plaintiff called, under the statute, an employee of defendant who, plaintiff had testified, sold her the shoes on the day in question. The plaintiff had testified that this employee was made aware of the injury at the time it occurred.
The employee, however, testified she did not recall the incident, but there is documentary evidence from which the jury could infer that this employee was the clerk who sold plaintiff the shoes. While not recalling plaintiff's experience, nor indeed anything similar with any other patron, this employee testified "But I've seen clerks, I've done it myself." In speaking of the fitting stools, said employee testified as follows:
"Well, they are for the sales people, but mothers come in with children and they proceed to use these as trains; sometimes it's like a home away from home for the elderly, they pull them out and use them to rest their legs on. I mean, this is what happens, they even take a nap, some of them. But I mean, this is, they're not really for other people to use, they're really for the clerks to use."
After both parties had rested, defendant moved for a directed verdict on two grounds, first that there was no evidence whatsoever as to how long the stool in question had been protruding into the aisle. Absent such evidence, defendant contended, there was nothing from which a jury could find that defendant had notice of the dangerous condition, and without such notice could not be charged with negligently failing to keep its premises in a reasonably safe condition. It premised the notice requirement, actual or constructive, on the *850 employee's testimony that customers, particularly children, moved such stools from their customary places. In support of its motion, defendant looked to the rule in McVeigh v. McCullough, 96 R.I. 412, 192 A.2d 437. There this court held that a storekeeper owed his patrons the duty to use reasonable care to keep his premises in a safe condition but that he was not an insurer. Continuing, we further held, that for a plaintiff who was injured on the premises to prevail she had the burden of establishing that the condition which caused the injury had remained long enough to give defendants reasonable notice, actual or constructive, of its existence and that defendants, having had such notice, negligently failed to remedy the danger or warn of its presence or existence.
The defendant's second ground on which it sought a directed verdict was that the aisle or space in which plaintiff was injured was for the use of its employees and was not an area of the premises covered by defendant's invitation. The trial justice denied defendant's motion, holding, in essence, that the facts of the case at bar distinguished it from those cases where the notice requirement was applicable. Here, he pointed out that the fitting stool was equipment regularly used in defendant's business; that when not in use, they were pushed under the chairs by defendant's employees, and, alternatively, it knew of the long-standing practice of patrons and their children moving the stools about. Concluding, he stated, that puts them on notice that they should keep their house in order.
As to defendant's second ground, namely that the injury occurred at a place where plaintiff was not entitled to be, the trial justice made clear that this question was also one for the jury.
Consistent with the view that he took of the case in denying the motion for a directed verdict, the trial justice refrained from instructing the jury as to the requirement of reasonable notice. In partial support of its appeal, defendant argues that such failure was prejudicial error. However, it neither requested such charge nor objected to the trial justice's failure to so instruct. Because of the view we take of the trial justice's denial of the motion for a directed verdict, defendant's contention with regard to the trial justice's failure is wholly lacking in merit and requires no further consideration. See 1 Kent, R.I. Civ. Prac. § 51.4.
The jury returned a verdict for plaintiff in the sum of $2,000 and judgment was accordingly entered. Within the ten days authorized by Super. R. Civ. P. 59(b), defendant moved for a new trial on the usual grounds that the verdict was against the law and against the weight of the evidence. This motion being denied, defendant seasonably appealed from the judgment previously entered.
This brings us to a consideration of the two assignments of error raised by defendant's appeal. These are that the trial justice erred in denying defendant's motion for a directed verdict, and also erred in denying its motion for a new trial.
I
The Denial of the Motion for a Directed Verdict
It is elementary that in passing on a motion for a directed verdict, the trial justice is required to view the evidence and any reasonable inference to be drawn therefrom in the light most favorable to the party against whom the motion was made, and, when so viewed, there is a question of fact for the jury the motion must be denied. The defendant acknowledges such to be the rule, but argues that however viewed, the evidence in the instant case could not support a verdict for plaintiff. This is so, it contends, because it is as reasonable to assume that defendant had neither actual nor constructive notice of the dangerous condition for a period of time long enough to enable it to correct the condition as it is to assume that defendant was aware of this danger to its patrons and neglected to correct it.
*851 In support of this contention, it relies on several cases in this jurisdiction, all of which, however, are readily distinguishable on their facts. However, defendant also relies on Oelschlaeger v. Hahne & Co., 2 N.J. 490, 66 A.2d 861, where plaintiff also stumbled over a fitting stool but was denied recovery on defendant's motion to dismiss. In Oelschlaeger, there was no evidence as to where the fitting stool was placed when not in use, nor of defendant's knowledge that such stools were moved about by patrons. Rather, the evidence is that there were shoe clerks and patrons alike moving about in the few minutes Mrs. Oelschlaeger stood at the counter, and turning fell over a stool. She asked the court to presume that it had been negligently left there by a servant of defendant, or, in the alternative, defendant was negligent in failing to remove it.
The New Jersey court pointed out that while negligence can be inferred from established facts, it will not be presumed from facts which are susceptible to two equally reasonable but contradictory inferences. Thus the court concluded that on the facts established by plaintiff, it was as reasonable to presume that patrons moving about the shoe department had left the stool where Mrs. Oelschlaeger fell over it as it was to presume that an employee of defendant had placed it there.
Continuing, the court pointed out that if the dangerous condition resulted from the conduct of a patron, Mrs. Oelschlaeger had the burden of establishing that such patron's conduct had come to defendant's attention in time to be remedied.
Here, it was the practice of defendant to keep its fitting stools under the chairs when not in use and the stool in question was so positioned, except that it had been pushed so far under the chair as to constitute a dangerous condition in the aisle traveled by plaintiff. Consequently, the evidence is open to the inferences that either the fitting stool had been placed where encountered by plaintiff by one of defendant's employees, or had been further pushed under the chair by a patron. In either event, it made for a dangerous condition of which defendant had long-standing knowledge and, from the evidence adduced, had never taken measures to prevent such conditions. Neither is there evidence that, in lieu of preventive measures, defendant warned its patrons. See Dawson v. Rhode Island Auditorium, Inc., 104 R.I. 116, 242 A.2d 407. On this state of the evidence the trial justice correctly denied defendant's motion.
Neither did he err in denying the motion on the grounds that the evidence established that plaintiff's invitation did not extend to the area in which the injury occurred. In Millken v. Weybosset Pure Food Market, 71 R.I. 312, 44 A.2d 723, this court recognized that there may be areas of a storekeeper's premises from which the public is excluded and, ordinarily, the storekeeper's duty to keep his premises in a reasonably safe condition does not extend to such areas. However, we also held that to escape liability for an injury incurred by a patron in such an area, the storekeeper must take such steps as will make it obvious to patrons that the area is not for their use and whether such steps were taken is a question of fact for the jury.
In the instant case, all the evidence is that although the aisle or space in which the plaintiff was injured was primarily intended for use by defendant's employees, patrons were not forbidden to use it and, in fact, customarily did so.
II
Denial of Defendant's Motion for a New Trial
Although defendant predicated this motion on its contentions that the jury's verdict was against the law as well as the credible evidence and weight thereof, it makes no real argument as to the verdict being against the law. Nor could it. In *852 reaching his decision on the new trial motion, the trial justice followed the law as he gave it to the jury. Since this is what he was bound to do, Barbato v. Epstein, 97 R.I. 191, 196 A.2d 836, it is only if the verdict is contrary to the law as given by the trial justice to the jury that a motion for a new trial can prevail on such ground. Such is not the case here.
Nevertheless, defendant argues vigorously that the evidence fairly preponderates against the jury's verdict, particularly on the issue of plaintiff's contributory negligence. In support of this argument, it points to that evidence which, in its opinion, should have been given more weight by the trial justice than he in fact chose to give it. However, it was for the trial justice, in passing on defendant's motion, to independently determine the weight of the credible evidence as he saw it. When in the exercise of his independent judgment, the trial justice finds the credible probative evidence so nearly balanced that reasonable minds could come to different conclusions, it is his duty not to disturb the jury's verdict. Turgeon v. Rocks, 96 R.I. 353, 191 A.2d 606; Votta v. Calcagni, 84 R.I. 289, 123 A.2d 402.
Furthermore, if the trial justice's decision on the new trial motion complies with the aforestated rule, that decision will not be disturbed by this court unless in reaching such decision the trial justice either misconceived or overlooked material evidence on a controlling issue, or was otherwise clearly wrong. Covinsky v. Costa, 108 R.I. 375, 275 A.2d 633. If, however, the trial justice's decision is to be set aside for any such reasons, it is appellant's burden to point out in what particular the decision must be faulted. Here, the defendant does not contend that the trial justice failed to exercise his independent judgment, nor does it point to any misconception or overlooking of material evidence. Consequently, there is no merit to the defendant's contention that the denial of its motion for a new trial constitutes error.
The defendant's appeal is denied and dismissed, the judgment appealed from is affirmed, and the case is remitted to the Superior Court. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1531811/ | 115 N.J. Super. 151 (1971)
278 A.2d 511
STATE OF NEW JERSEY, PLAINTIFF-RESPONDENT,
v.
WILLIE GEAR, DEFENDANT-APPELLANT.
Superior Court of New Jersey, Appellate Division.
Argued June 7, 1971.
Decided June 14, 1971.
*152 Before Judges GOLDMANN, LEONARD and FRITZ.
Mr. David L. Horuvitz argued the cause for appellant (Mr. Sheldon C. Schulman, on the brief).
Mr. Gerard J. DiNicola, Salem County Prosecutor, argued the cause for respondent.
PER CURIAM.
Defendant was indicted for possession of lottery slips (N.J.S.A. 2A:121-3), found guilty by a jury and sentenced to a State Prison term of 1-2 years and fined $1,000. The appeal was filed and bail continued immediately after sentence was pronounced.
The single argument advanced is that it was error to permit Detective McManus, who participated in defendant's apprehension *153 and arrest, to testify as to tests he had made with water-soluble paper before trial and to perform a demonstration with such paper in the presence of the jury. The basis of this argument is that the witness could not say whether the paper he used was similar to that allegedly used by defendant.
Detective Becker testified that when he approached the car defendant had been driving and in which he sat, the doors were locked. After Becker had identified himself defendant reached for a water-filled plastic container on the floor of the car and immersed some papers he had, on which figures were written, in the water. Becker testified that the figures he saw were consistent with numbers play. He took defendant into an adjacent house where, after briefly talking with Detective McManus, all three returned to the car.
McManus testified he picked up the container, removed the lid and saw papers that were disintegrating. However, they were still intact enough for him to identify them as representing numbers play. McManus said he attempted to remove the papers but found they became like paste to the touch. He then tried to pour the papers into his hand, but they continued to break up.
At this point in the trial the prosecution requested permission to conduct a test, using water-soluble paper with numbers written on it, the purpose being to show the ultimate result when the paper was placed in water. The defense objected and the jury was excused while the objection was argued. Essentially, defense counsel contended that the State would have to show that the paper being used was identical to the paper found in the container the same argument advanced here. The obvious reply on the prosecution was that since the paper was self-destructing, it was impossible to determine its manufacturer or particular quality, and so the State should be allowed to use a water-soluble paper that previous tests had shown would react in identical fashion to the paper originally placed in the container by defendant at the time of the arrest.
*154 McManus was then permitted to testify before the jury that he had seen water-soluble paper demonstrated before and had made tests in his office to determine just what happened with such paper. In every case the results were the same as when he tried to recover the paper from the container at the scene of the arrest: the paper would break up in his hand, flake, become sticky and pasty, and disintegrate completely when he attempted to remove it. After a brief cross-examination the judge ruled that he would allow the demonstration to proceed, whereupon McManus left the stand and placed water-soluble paper, on which numbers had been written, into a jar filled with water. The jury then filed past the jar to see what happened. Some 2 1/2 minutes after placing the paper in the jar McManus tried to remove the paper and it dissolved in his hand. The 2 1/2 minutes approximated the time Becker testified it took to bring McManus to the car.
McManus was not presented as an expert witness, nor did he attempt to give expert testimony. The only purpose of his testimony and demonstration was to show, as the prosecution stated, that "there exists a paper that will dissolve when placed in water." For this there was no need of testimony as to the exact ingredients and chemical composition of the paper defendant had tested or that used in the demonstration. The demonstration was obviously for the purpose of being helpful to a clear understanding of the detective's testimony. See Evidence Rule 56. McManus had said that defendant possessed lottery slips on water-soluble paper. By showing the jury the use of such paper he fulfilled the requirement that the demonstration must be substantially the same as that described in his testimony. 2 Wharton, Criminal Evidence (12 ed. 1955), § 684 at 645. See, generally, 2 Underhill, Criminal Evidence (5 ed. 1956), § 517; 29 Am. Jur.2d, Evidence, § 818 at 908; Annotation, 76 A.L.R.2d 354 (1961).
A demonstration of the type here under attack lies in judicial discretion and may be justified because it tends *155 to enlighten the jury on an important point. State v. Foulds, 127 N.J.L. 336, 343-344 (E. & A. 1941). As the court there said, "caution and prudence should govern in each instance, depending upon the circumstances and the character of the demonstration. It is impossible to lay down a formula that will govern in every case." Cf. State v. Harris, 1 N.J. Misc. 526, 528 (Sup. Ct. 1923), aff'd 100 N.J.L. 184 (E. & A. 1924). The testimony and demonstration in the present case were necessary and proper in order to corroborate what the detectives said had happened to the papers defendant placed in the container of water when he was apprehended.
Affirmed. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1531830/ | 370 S.W.2d 623 (1963)
Joseph A. SCHULTE, (Plaintiff) Appellant,
v.
Elmer G. FLORIAN, (Defendant) Respondent.
No. 31375.
St. Louis Court of Appeals, Missouri.
September 17, 1963.
*624 Sherwood R. Volkman, St. Louis, for appellant.
Robert L. Inman, Clayton, for respondent.
L. F. COTTEY, Special Commissioner.
This case originated in the Magistrate Court of St. Louis County on a petition containing the formal averments of the old common law action of trover, it being alleged that on a certain day plaintiff was the owner of, and entitled to the possession of, a plaster mixing machine of the value of $300 which the defendant then and there "wrongfully took," and that "defendant refused to return the same and unlawfully converted and disposed of said property for his own use." On appeal to the Circuit Court trial was begun before a jury, but at the conclusion of plaintiff's evidence the trial court sustained a motion for directed verdict in defendant's favor and judgment was entered accordingly. The propriety of that ruling is the sole question presented here.
Plaintiff was the only witness who testified. From his rather sketchy account of the affair these facts emerge: Plaintiff was a plastering contractor who owned the machine in question and used it in his work. It was worth its alleged value. During the month of May, 1960, he took the machine to the site of a job on which he expected to be engaged in the near future and left it there. One Schwerdtfeger was the building contractor on that job, and defendant was employed there as a bricklayer. While the machine remained there, unused, Schwerdtfeger called plaintiff's wife one day and stated that one of the bricklayers' machines (presumably defendant's) had broken down. He asked permission to use plaintiff's. Plaintiff's wife replied that plaintiff was absent at the moment but that upon his return she would have him reply to the request. Upon his return plaintiff did call Schwerdtfeger and learned from him that in the meantime the machine had been used without waiting for his permission, "and he said they had cleaned it out and that was all that was said about it."
A week or so thereafter plaintiff went out to the job site, found his machine gone *625 and, on inquiry, discovered that defendant was using it on another job some distance away. Plaintiff went to that place, picked up his machine without incident and apparently without even seeing defendant, and returned it to its original location. It had been left "in a dirty condition." A day or so later he encountered defendant, asked him "about cleaning the machine, and he told me to have one of my laborers clean it (and) he'd pay for his time." For undisclosed reasons plaintiff rejected that offer and, instead, on various subsequent occasions demanded that defendant clean up the machine which was unusable in its then condition; but, said plaintiff, "every time I talked to him about it he'd walk away or else give me some remark about it, but he never would clean it." This suit followed. Before it came to trial, however, defendant actually did clean up the machine and it was "a good cleaning job, sand-blasted." There was no evidence introduced, and no proof offered, that plaintiff sustained any actual damages on account of defendant's use of the machine or any loss of any kind on account of being deprived of its use. On that showing plaintiff rested and was cast on defendant's motion. Defendant has not favored us with a brief.
We would be warranted in refusing to consider the propriety of the trial court's ruling on the motion because the point has not been properly preserved for review. Plaintiff's motion for new trial recited five so-called "grounds," the first four of which were: "1. Because the verdict is against the law. 2. Because the verdict is against the evidence. 3. Because the verdict is against the law, the evidence, and the law under the evidence. 4. Because the verdict is against the weight of the evidence." (The fifth ground, equally vague, related to the alleged refusal of the trial court to admit certain evidence; but the record discloses no attempt to adduce any such evidence, and no offer of proof was made, and on this appeal the point has been voluntarily abandoned).
All four of the quoted "grounds" have been held to be wholly insufficient to preserve for appellate review the propriety of the trial court's action in sustaining the motion for directed verdict. Commenting on identical assignments in a motion for new trial under review in Marquand Development Corp. v. Maisak-Handler Shoe Co., Mo., 260 S.W.2d 242, l. c. 246, the Supreme Court said: "By the record in this case we are precluded from a consideration of the action of the court in sustaining defendant's motion to dismiss or in directing a verdict for defendants or from determining on this appeal whether appellant made out a submissible case and whether the court erred in refusing to submit such case to the jury. These matters were not preserved for review in plaintiff-appellant's motion for a new trial." For a further discussion of the question and a definitive analysis of the applicable Supreme Court Rules, see The C & O Distributing Co., Inc. v. Milner Hotels, Inc., Mo.App., 305 S.W.2d 737.
It is suggested to us by Rule 79.04, V.A. M.R., however, that we should examine the record for "plain errors affecting substantial rights" and rule on them, even though not properly preserved for review, if we deem that the ends of justice require it. We have made that examination, as our review of the facts discloses, and reluctantly, have concluded that the learned trial court committed a "plain error" in sustaining defendant's motion. Plaintiff's evidence made a submissible case on the question of conversion.
It is true there was no evidence of demand or refusal, but those matters "* * * are merely evidential, not creative, and they need not be shown to make out a case of conversion where some other independent act of conversion (some act in opposition to the rights of the owner) is in evidence." Sigmund v. Lowes, Mo. App., 236 S.W.2d 14, l. c. 19. It is true that there was no direct proof of an unlawful intent on defendant's part in "borrowing" the machine and using it temporarily *626 "* * * but the intention may be inferred from the facts and circumstances * * *." Pitcock v. Higgins, Mo.App., 239 S.W. 870, 871, and the modern view is that such "* * * question of good faith, and the additional questions or elements of motive, knowledge or ignorance, or care or negligence, are not involved in actions for conversion," 89 C.J.S. Trover and Conversion § 7, pp. 536-537. It is true, as the evidence affirmatively discloses, that defendant had not "disposed of said property for his own use" in the sense of having sold it or otherwise put it permanently beyond plaintiff's reach, but proof of such a permanent and irretrievable disposition of the property is not required to make out a technical case of conversion. And it is true that plaintiff had recovered the machine and had it in his possession at the time the suit was brought, but a return of the property by the wrongdoer operates only in mitigation of damages and not as a bar to the action. 89 C.J.S. Trover and Conversion § 86, supra; Lloyd v. Tracy, 53 Mo.App. 175.
The controlling fact shown by the record is that defendant took the machine and used it as if it were his own without plaintiff's permission. That was an "act in opposition to the rights of the owner." That was a conversion of it. "A wrongful assumption of property is not merely evidence of, but actual conversion." Proctor v. Home Trust Co., 221 Mo.App. 577, 284 S.W. 156, 159. Defendant was trespasser with respect to the machine and "* * * trover may be maintained whenever trespass will lie * * *." Pitcock v. Higgins, supra, 239 S.W. l. c. 871. So, both by his tortious taking and by his proprietary use of the machine defendant effected its conversion. Sigmund v. Lowes, supra, 236 S.W.2d 19. The fact that he made no claim of ownership of the property and did not sell or otherwise permanently dispose of it goes only to the degree of his offense, not to its commission. There was a violation of plaintiff's rights and it was "plain error" to deny him his remedy.
The question remains, however, as to whether such error affects any "substantial right" of plaintiff's. His property has been returned to him, it is in good condition, and he has neither proved nor offered to prove any actual damages resulting from defendant's temporary appropriation of it. But, "[a]lthough no actual loss is shown, if there has been a technical conversion the defendant is liable for at least nominal damages." 89 C.J.S. Trover and Conversion § 161, p. 642, supra. And "* * * in this jurisdiction a judgment for nominal damages is a substantial right since such a judgment decides the incidence of the costs." Curd v. Reaban, Mo., 232 S.W.2d 389, 392. The failure to award nominal damages in a proper case "* * * entitles the plaintiff to a reversal of the judgment * * *." State of Missouri, to Use of Goddard, Peck & Co. v. Rayburn et al., 22 Mo.App. 303, 306.
The Curd case makes it clear, however, that the failure to award nominal damages violates a plaintiff's substantial rights only when, and only because, the judgment carries with it the costs of the action. In that case the trial court, after hearing all the evidence offered by both sides, found the issue in plaintiff's favor but neglected to make an award of nominal damages although the costs were properly taxed against defendant. It was held on appeal that the omission of any award of nominal damages did not, by itself, require a reversal. The judgment was accordingly affirmed; and rightly so, both on the principle expressed by the maxim de minimis non curat lex and in furtherance of the public interest in discouraging the protracted litigation of inconsequential grievances. Those same considerations suggest a similarly practical solution for this case; as, for instance, a remand with instructions to the trial court simply to retax the costs against defendant. We may not resort to that expedient here, however, because to do so would be to deprive defendant of his right to have the jury pass on his possible defenses and, incidentally but importantly, *627 on plaintiff's credibility as a witness. It may well be that on a retrial the jury will find the issues in defendant's favor and thereby relieve him of liability for the costs. At any rate he is entitled to that chance. We reluctantly conclude, therefore, that the judgment must be reversed and the cause remanded for a new trial.
The Special Commissioner so recommends.
PER CURIAM.
The foregoing opinion by L. F. COTTEY, Special Commissioner, is adopted as the opinion of the Court.
The judgment is accordingly reversed and the cause remanded for a new trial.
RUDDY, P. J., and WOLFE and ANDERSON, JJ., concur. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1531831/ | 480 F. Supp. 1352 (1979)
Joseph LOUGHNEY and Robert J. Osborne, Jr., Plaintiffs,
v.
Eugene F. HICKEY, both Individually and in his capacity as Mayor of the City of Scranton; City of Scranton, Pennsylvania, c/o John Brazil, Esquire, Solicitor of the City of Scranton, Pennsylvania; and Gaynor Cawley, Individually and in his capacity as Director of Public Works of the City of Scranton, Defendants.
Civ. A. No. 78-302.
United States District Court, M. D. Pennsylvania.
December 12, 1979.
*1353 Brian J. Cali, James G. McDonough, Dunmore, Pa., for plaintiffs.
John J. Brazil, City Sol., Ralph J. Iori, Jr., Asst. City Sol., Dept. of Law, Scranton, Pa., for defendants.
MEMORANDUM
HERMAN, District Judge.
I. PROCEDURAL HISTORY
Plaintiffs initiated this action on March 30, 1978 by filing a complaint alleging that they were discharged from their employment as municipal officers for the city of Scranton for political reasons and seeking reinstatement and back pay. A trial was held before the court without a jury on June 5, 6, and 7, 1979. Trial briefs were filed by Defendants and Plaintiffs on July 20 and 26, 1979 respectively. On October 18, 1979 we ordered counsel for both sides to prepare more detailed findings of fact. Defendants filed their suggested findings of fact on October 26, 1979 and Plaintiffs filed theirs on October 29, 1979. Because we believe that the First Amendment freedom of association as described in Elrod v. Burns, 427 U.S. 347, 96 S. Ct. 2673, 49 L. Ed. 2d 547 (1976), does not extend to the Plaintiffs in this matter, we find for Defendants and will enter judgment accordingly.
II. FINDINGS OF FACT
1. Joseph Loughney was an employee of the City of Scranton from 1974 until termination on February 10, 1978.
2. Loughney worked as a foreman in the Department of Public Works from February 1974 to 1977 and as Superintendent of Bureau of Highways from 1977 until February 10, 1978.
3. Robert Osborne was an employee of the City of Scranton from September 1974 until termination on February 10, 1978.
*1354 4. Osborne began his employment as a CETA[1] employee, went through a training program in 1974, and in 1975 was hired as Superintendent of Refuse.
5. Both the Bureau of Highways and the Bureau of Refuse are Bureaus within the Department of Public Works.
6. There are six (6) Bureaus within the Department of Public Works.
7. During the years 1974 through 1978 three (3) different Directors of Public Works served the City of Scranton, specifically, James McNulty, Gregory Herbster and Gaynor Cawley.
8. The principle function of the Bureau of Highways is the maintenance and clearing of the city streets.
9. Mr. Loughney's 1978 salary was $13,700.00 and his 1979 salary would have been $14,800.00; he received benefits of approximately $200.00 per month.
10. The job of Superintendent of Refuse was to implement the standing orders of the Director of the Department of Public Works and provide information to the Directors and insure that the Directors' orders were carried out in the field.
11. The primary duty of the Superintendent of Refuse was to collect garbage within the city limits.
12. Osborne was paid $13,700.00 in 1978 and would have been paid $14,800.00 in 1979; he received benefits of approximately $200.00 per month.
13. The election for the Mayor of the City of Scranton in 1977 was hotly contested and there were three (3) candidates, James B. McNulty, Reverend Vernon Searfoss, and Eugene F. Hickey.
14. McNulty ran on a sticker ballot.
15. Loughney and Osborne publicly supported the candidacy of James McNulty by openly soliciting votes for him, erecting political signs, displaying political signs in their homes, and serving as election watchers on election day.
16. Both Osborne and Loughney worked at a televised event, at which 20,000 people were present, and received television credits for their appearance in that program.
17. Loughney and Osborne, on Election Day, November 7, 1977, challenged absentee ballots on behalf of McNulty at the polls, appeared at a public hearing at which Eugene Hickey was present, and testified on behalf of McNulty.
18. Loughney and Osborne watched over election machines impounded during the months of November and December of 1977 on behalf of Mr. McNulty. Present at such watch were members of the Hickey Election Committee.
19. Loughney and Osborne, on behalf of James McNulty, signed an election contest petition which contested the election of Eugene Hickey as Mayor.
20. It was general knowledge throughout the community, especially the political community, that Loughney and Osborne supported the candidacy of James McNulty.
21. Gaynor Cawley, Director of Public Works and the superior of both Plaintiffs, was aware of the fact that Osborne and Loughney supported the candidacy of James Barrett McNulty.
22. Eugene F. Hickey, the Mayor elect, was aware of the fact that both Loughney and Osborne supported the candidacy of James Barrett McNulty.
23. In the course of his door-to-door campaign, Hickey discovered that people were concerned about the methods and efficiency of garbage collection and street repair.
24. On February 5th, 6th and 7th of 1978 a very severe snowstorm hit the Scranton area.
25. On February 6th and 7th of 1978 Raymond Boynton, janitor for the Department of Public Works, remained in the department for 37½ hours, because he was unable to get out as a result of the severity of the snowstorm.
*1355 26. On February 6, 1978, Loughney did not end his working day until 1:00 a. m. on February 7, 1978.
27. On the morning of February 7, 1978, Mr. Loughney was preparing to go to work at his normal hour, but was snowed in at his residence and was unable to get to work.
28. Loughney resided approximately a mile and one-half from his work site in the City of Scranton and the general nature of the roads between his home and his work site at the Public Works garage is level.
29. On the morning of February 7, 1978, Loughney attempted to walk to work but was unable to do so because of the accumulation of snow.
30. On February 7, 1978, Loughney did not have possession of any four-wheel drive vehicle.
31. At 6:15 a. m. February 7, 1978, Loughney called into work informing his office that because of the snow he was unable to get in and he requested a four-wheel vehicle to pick him up. Later in the morning Loughney again called requesting to be picked up by a four-wheel drive vehicle.
32. Mr. Joseph Loughney as Superintendent of the Bureau of Highways had the duty to set an example to the men concerning work attendance and to motivate the men for work attendance in an emergency.
33. On February 7, 1978, Osborne woke up at 5:00 a. m. preparing to go to work, but was unable to get to work. Osborne lives in the East Mountain Section of the City of Scranton.
34. On February 7, 1978, approximately 60 employees worked for the Department of Refuse; only five reported to work on February 7, 1978.
35. Osborne called his office at the Bureau requesting that a snow plow pick him up and take him into work.
36. On February 7, 1978 all other Bureau heads within the City of Scranton, the Director of the Department of Public Works and some foremen attended work.
37. At or about 1:00 p. m., on February 7, 1978, an emergency four-wheel drive M-A-S-H ambulance vehicle driven by Mr. Fred Schemelfenig arrived at the Loughney residence. Mr. Schemelfenig handed Mr. Loughney a letter signed by Gaynor Cawley, Director of the Department of Public Works, terminating Mr. Loughney from his position as of February 10, 1978. No reason appeared on said letter for his dismissal.
38. At approximately 1:30 p. m., February 7, 1978, a four-wheel drive M-A-S-H ambulance vehicle driven by Mr. Schemelfenig arrived at the home of Mr. Osborne. Mr. Schemelfenig delivered a dismissal letter similar to that received by Mr. Loughney to Mr. Osborne, dismissing him as of February 10, 1978.
39. At no time during their employment were either Loughney or Osborne reprimanded, disciplined, or told that they were not performing in a satisfactory manner.
40. At no time subsequent to their dismissal on February 7, 1978, were either Loughney or Osborne informed of the reason for their dismissal.
41. Loughney and Osborne were both considered to be satisfactory employees by Cawley and Herbster when the latter two were Directors of the Department of Public Works.
42. On the morning of February 7, 1978, Gaynor Cawley made no attempts to contact either Loughney or Osborne by telephone to determine why either man was not at work.
43. Loughney applied for and received unemployment compensation from the Commonwealth of Pennsylvania. The City of Scranton did not contest the claim or allege that he should not be allowed to receive benefits on the grounds that he was removed for cause.
44. In September of 1977 Loughney had been transferred to the Community Development Department where he worked until January of 1978.
45. When Loughney returned to his job as Superintendent of Highways in January *1356 of 1978 he discovered that his job power had been usurped by Eugene O'Hara.
46. Eugene O'Hara was present at the Bureau of Refuse during January of 1978 and issued directives to the men within the Bureau. He did so on a daily basis. At said period of time Eugene O'Hara was not Superintendent of Refuse.
47. A union grievance was filed against Eugene O'Hara in January of 1978 acting in the capacity of Superintendent of Refuse, when in fact, he was not appointed to this position at that time.
48. During the months of November and December of 1977 and prior to the ultimate conclusion of the Election of 1977 Eugene Hickey and Gaynor Cawley met on several occasions to discuss the replacement of individuals in the Department of Public Works and specific reference was made to the Superintendents of Refuse and Highways.
49. Between January 1, 1978 and February 7, 1978, Cawley and Hickey met on several occasions and discussed the replacement of Superintendents of Highways and Refuse.
50. Prior to January 1, 1978, Cawley recommended the names of Fred Schemelfenig and Eugene O'Hara for the positions of Superintendents of Refuse and Highways respectively.
51. Eugene O'Hara and Fred Schemelfenig were appointed to the positions of Superintendents of Highways and Refuse respectively by Eugene Hickey, effective February 10, 1978.
52. There were at least two suggestions made prior to February 7, 1978 that Loughney and Osborne would be dismissed in a short period of time.
53. Mr. Loughney was never told he was being terminated because of his political activity.
54. Director of the Department of Public Works Cawley believed that the positions of Superintendents of Highways and Refuse were filled on the basis of political affiliation.
55. After January 1, 1978, the only two positions in which replacements were made within the Department of Public Works were in the positions of Superintendents of Highways and Refuse.
56. The Home Rule Charter and Administrative Code of the City of Scranton specifically define the duties and obligations of the Director of the Department of Public Works.
57. No job descriptions for the jobs of Superintendent of Refuse or Highways were ever given to either Loughney or Osborne.
58. Mr. Loughney as the Superintendent of Highways reported for work at 6:30 every morning, at which time he would take roll call and report to the Office of the Director of Public Works the number of men present or absent for the day.
59. The Director of Public Works told Mr. Loughney the number of trucks he wanted out and in which areas he wanted work to be done. This procedure was followed on a regular basis.
60. Mr. Loughney as Superintendent of the Bureau of Highways had the power, duty, and authority to make recommendations concerning the priority of jobs to be done by his Bureau.
61. Mr. Loughney as Superintendent of the Bureau of Highways made job assignments to the foremen and the men in the Bureau of Highways by instructing the men where they should work.
62. In addition to getting instruction and orders from the Director, Mr. Loughney as Superintendent followed the same procedure of his predecessors. When a complaint came in to the Department of Public Works it would be written down by clerks and Mr. Loughney would then respond to the complaint.
63. The system of responding to complaints existed when Mr. Loughney assumed the job of Superintendent and he did not alter this system.
*1357 64. If the system of complaints were to be altered in any manner, only the Director could do it.
65. Mr. Loughney as Superintendent of the Bureau of Highways had substantial leeway in executing his responsibilities within the Bureau.
66. Mr. Joseph Loughney as Superintendent of the Bureau of Highways could make some decisions on his own concerning the operation of his department.
67. The Director of the Department of Public Works relied upon the recommendations and decisions of the Superintendent of Highways.
68. Loughney did not have the authority to hire or fire employees.
69. The contract between the International Association of Machinists and Aerospace Workers AFL-CIO and the City of Scranton mandates that grievances between union employees and the City are the responsibility of the Director of the Department.
70. It was the responsibility of the Superintendents of Refuse and Highways to inform the Director of the Department of Public Works if problems with an employee existed; the authority to discipline employees rested with the Director.
71. The Director of the Department of Public Works, not the Superintendents of the Bureaus, would determine the vacation time of the employees within the various bureaus.
72. Loughney met with union officials to resolve union grievances about the working conditions of the employees within his Bureau.
73. Loughney did not have the authority to purchase vehicles for his Bureau.
74. The Director of the Department of Public Works, and not the Superintendent of Refuse or Highways, accepted bids for the purchase of equipment.
75. Loughney, as Superintendent of the Bureau of Highways, initiated requisitions for material and equipment within his Bureau.
76. Loughney, as Superintendent of the Bureau of Highways, conferred with the Director of the Department of Public Works on a regular basis concerning the operation of his Bureau.
77. Loughney, in the usual course of business provided information relied upon by the Director of the Department of Public Works in the decision making process.
78. Loughney conferred with the Director of the Department of Public Works and provided information and assistance in the preparation of the budget for the Bureau of Highways and prepared a recommended budget.
79. The Director of the Department of Public Works relied on Loughney as the Superintendent of the Bureau of Highways for the information needed in the preparation of the budget.
80. Loughney, as Superintendent of the Bureau of Highways, identified problems within his Bureau, conferred with the Director of the Department of Public Works, and ultimately made decisions with the Director of the Department of Public Works on the priorities of the Bureau and ways to resolve a problem.
81. Loughney, as Superintendent of the Bureau of Highways, attended and participated in many conferences with the Business Administrator for the City of Scranton.
82. Loughney attended conferences and made recommendations concerning the size of the work force.
83. The schedule of picking up garbage existed before Mr. Osborne became Superintendent of Refuse and was a system which had been handed down from one administration to the next.
84. If the schedule of garbage collection were to be changed, it could only be done by the Director, not by the Superintendent of Refuse.
*1358 85. Osborne made changes in the garbage collection routes in the City of Scranton.
86. Osborne as Superintendent of the Bureau of Refuse made certain decisions about the Bureau without prior approval from the Director of the Department of Public Works.
87. Osborne as Superintendent of the Bureau of Refuse suggested and made recommendations concerning his ideas on implementing the garbage collection system.
88. The Director of the Department of Public Works depended on the recommendations and estimates of the Superintendent of Refuse, Mr. Osborne.
89. Osborne, as Superintendent of the Bureau of Refuse, had the power, duty, and authority to analyze problems and conduct meetings to determine the answers to problems within his Bureau.
90. Osborne had no authority to purchase equipment or supplies.
91. Osborne, as Superintendent of the Bureau of Refuse, would confer with and make recommendations to the Director of the Department of Public Works concerning the decision to rent additional refuse trucks.
92. The Director of the Department of Public Works relied on the recommendations of the Superintendent of Refuse, Mr. Robert Osborne, concerning the rental of Packmasters.
93. Osborne recommended the rental of additional Packmaster trucks based on his analysis of the costs of the rental of the vehicles compared to the overtime pay of the employees in his Bureau.
94. Osborne, as Superintendent of the Bureau of Refuse, analyzed refuse landfill sites by making cost studies and made recommendations based on his study and analysis to the Director of the Department of Public Works.
95. As Superintendent of Refuse, Osborne did not have the power to hire or fire employees.
96. The salaries and wages of employees within the Bureau of Refuse were set by the union contract.
97. Overtime pay for employees of the Bureau of Refuse was determined by the Director of the Department of Public Works, not by Osborne.
98. Disciplinary measures and procedures for all employees in the Department of Public Works are established in the union contract, which specifically states that discipline is the Director's responsibility.
99. Osborne had the authority to meet with union officials and resolve union grievances about the working conditions of the employees within his Bureau.
100. Osborne had the power to recommend docking pay from employees for tardiness.
101. The Superintendent of Refuse did not authorize vacations; vacations were the responsibility of the Director of the Department of Public Works.
102. The Superintendent of Refuse did not have the power to alter the schedule of employees or transfer employees from department to department.
103. Osborne, as Superintendent of the Bureau of Refuse, made general communications to the entire work force within his Bureau.
104. Osborne, as a Superintendent, had the ability to recommend certain persons for positions within the bureau, but it was entirely within the discretion of the Director of the Department of Public Works to accept or reject the recommendations of Osborne.
105. On two separate occasions Osborne recommended two individuals for certain positions within the Bureau of Refuse, but the Director, using his discretion, decided not to accept such recommendations.
106. Osborne would provide information and make recommendations to the Director of the Department of Public Works regarding the work schedule.
*1359 107. Osborne, as Superintendent of the Bureau of Refuse, had the power and the right to consult and confer with and make recommendations to the Mayor of the City of Scranton.
108. Osborne, as Superintendent of the Bureau of Refuse, made general press releases.
109. Osborne did not submit the budgets for his Bureau to the Mayor of the City of Scranton. He provided budgetary information to the Director on a form given to Mr. Osborne by the Director of the Department of Public Works.
110. Osborne, as Superintendent of the Bureau of Refuse, made recommendations concerning substantial budgetary expenses regarding the purchase of Packmasters for the City of Scranton.
111. The Superintendent of the Bureau of Refuse was responsible for providing a budget analysis for the Director of the Department of Public Works and conferring with the Director about the budget for his Bureau.
III. DISCUSSION
A. Facts
Joseph Loughney (hereafter referred to as "Loughney") and Robert T. Osborne (hereafter referred to as "Osborne") were municipal employees for the city of Scranton until they were discharged on February 10, 1978. Loughney had been employed by the city from 1974 to his date of termination and served as Superintendent of the Bureau of Highways for the last part of his tenure. Osborne had been employed from 1975 and had served as Superintendent of the Bureau of Refuse until the end of his employment. Both Bureaus are within the Department of Public Works, and the Director thereof was the immediate supervisor of both Plaintiffs.
The primary function of the Bureau of Refuse is the collection and disposition of the city residents' garbage. The Bureau of Highways' primary responsibility is the maintenance and cleaning of the streets of the city. Although neither Loughney nor Osborne had the power to hire or fire employees or to mete out any final disciplinary sanctions, they were permitted and encouraged to confer with the Director concerning those matters and to make recommendations. Under the union contract, only the Director had ultimate responsibility for those labor matters.
While Plaintiffs were employed as superintendents, the budget for the city of Scranton was prepared by the Mayor for submission to the City Council for final approval. Each Director was required to submit recommended budgets for his department to the Mayor. In the course of the preparation of the budget for the Department of Public Works, the Director sought recommended budgets and budgetary information from the superintendents for each bureau, including Plaintiffs. In reviewing the proposed budgets and information, the Director conferred with the superintendents and discussed the priorities of various budgetary items. The final decision about which budgetary priorities were to be presented to the Mayor rested with the Director.
Each of the Plaintiffs was a field representative of the Director. Each was responsible for carrying out the standing orders in his Bureau and performing the duties requested by the Director. Plaintiffs began each day by taking a roll call of their employees and supplied a list of absentees to the Director. The superintendents met regularly, often on a daily basis, with the Director to discuss all of the matters concerning their respective bureaus. Based on these discussions, the Director established general guidelines for operation of the bureaus. These guidelines were to be implemented and fleshed out by the superintendents.
In the summer and fall of 1977, a mayoral election was conducted in Scranton. One of the candidates was the present mayor, *1360 Defendant Eugene Hickey. Another candidate, James B. McNulty, was running on a sticker-type write-in campaign. It was common knowledge among the city's political community that Plaintiffs actively supported and worked for the McNulty campaign. When McNulty lost and Hickey won, the latter held discussions in late 1977 and early 1978 regarding potential replacements for the positions of Superintendents of Refuse and Highways. These discussions included the Director of the Department of Public Works, Gaynor Cawley, who eventually discharged the Plaintiffs. The testimony at trial clearly indicated that the Plaintiffs' continued employment was in jeopardy from the day that it appeared that Hickey had won the election.
In early February 1978 a heavy snowfall struck the East coast including the Scranton area. On February 6, 1978 a snow emergency was declared in the city. Loughney returned home on the morning of February 7 at 1:00 a. m. He had been at his work the entire preceding day from approximately 6:00 a. m. Osborne began work on February 6 at about the same time and returned home at 8:00 p. m. that evening. On the morning of February 7, 1978, both Plaintiffs awoke and prepared to go to work at the regular times. They were unable to get to City Hall because another snowstorm had struck Scranton during the night. Plaintiffs called their offices and requested that vehicles be sent to their homes to pick them up. Unable to get to work without proper vehicles, the men remained at home waiting to be picked up by city vehicles. Both Plaintiffs had further communications with their offices, renewing their requests for emergency transportation.
The snowstorm crippled the entire East coast and the Scranton area. Many offices and businesses were closed because of it. A very high number of the city of Scranton's employees could not report to work on February 7, 1978 because of the heavy accumulation of snow.
Between 12:00 noon and 2:00 p. m. on the afternoon of February 7, 1978 Fred Schemelfenig arrived at each of the Plaintiffs' homes in a M-A-S-H ambulance loaned to the city by the National Guard. Schemelfenig delivered to each Plaintiff a letter of dismissal effective February 10, 1978. The letter was signed by Cawley and contained no reasons for the dismissal. Cawley testified that he was unaware of the phone calls Plaintiffs made to their offices that morning. Cawley failed to attempt to contact Plaintiffs to find out why they were absent. No investigation was made, no reprimand issued, and no questions were asked of the Plaintiffs. At no time prior to February 7, 1978 had either Loughney or Osborne been reprimanded, disciplined, or otherwise warned about unsatisfactory job performance.
Cawley testified that the reason Loughney and Osborne were discharged was for failure to report to work during a snow emergency. No other employee of the city had been discharged for not reporting to work that day but all other Bureau chiefs did report. When Loughney applied for unemployment compensation, the city did not contest the approval of the application on the basis of discharge for cause.
We agree with Plaintiffs when they suggest to us that we must face two principal issues. First, we must decide whether Plaintiffs were discharged from their positions as municipal employees solely because of their political affiliations and beliefs or whether they were discharged for cause. Second, we must decide whether Loughney and Osborne are protected from political firing by the First Amendment as described by the United States Supreme Court in Elrod v. Burns, supra, 427 U.S. 347, 96 S. Ct. 2673, 49 L. Ed. 2d 547 (1976). Because we need not reach the Elrod issue if we find that Plaintiffs were discharged for cause, we will address that issue first.
B. Discharge for Cause or for Political Belief
The overwhelming impact of the testimony convinces us that Plaintiffs Loughney *1361 and Osborne were discharged from their superintendent positions because of their political affiliations and beliefs. The widespread notoriety caused by their activities for McNulty could not have escaped the Hickey staff. The comments exhibiting surprise that Plaintiffs had continued their employment with the city under the Hickey administration until February 1978 indicate the political atmosphere surrounding their final discharge. See T-105, 242, 243, 479, 480 and 491. We simply cannot look at the discussions held between Hickey and Cawley in late 1977 and January 1978 and believe anything other than that Plaintiffs' days were numbered.
It may very well be that the severe snowstorm of 1978 and Plaintiffs failure to get to work on February 7, 1978 hastened the ultimate date of discharge. It is apparent to us, however, that the storm merely led to an earlier time of discharge and did not lead to the discharge itself. The decision to replace Loughney and Osborne had been made, we are convinced, some time before February 7, 1978. Loughney's powers and authority had already been partially usurped, first by his transfer to the Department of Community Development and later, upon his return to Highways, by a union member who had taken over responsibility for the Bureau. We hold therefore that the decision to discharge Loughney and Osborne from their positions as municipal officials was made sometime prior to February 7, 1978 and was based on their political affiliations, activities, and beliefs.
C. Elrod's Protection Against Political Firing
In 1976, the year of the 200th anniversary of our country's political birth, the United States Supreme Court struck a blow at the roots of the political patronage system in the decision of Elrod v. Burns, supra, 427 U.S. 347, 96 S. Ct. 2673, 49 L. Ed. 2d 547 (1976). Although unable to agree on the precise rationale for the holding, five Justices agreed that patronage dismissals violate the First and Fourteenth Amendments. Dismissal of government employees because of their political affiliations and beliefs is unquestionably a violation of their First Amendment rights to freedom of association. 427 U.S. at 356-57, 96 S. Ct. 2673. The Court recognized, however, that an imposition on government employees' First Amendment rights might be permitted for appropriate reasons.
In short, if conditioning the retention of public employment on the employee's support of the in-party is to survive constitutional challenge, it must further some vital government end by a means that is least restrictive of freedom of belief and association in achieving that end, and the benefit gained must outweigh the loss of constitutionally protected rights.
427 U.S. at 363, 96 S.Ct. at 2685 (footnote omitted).
Although the Court found that patronage firing did further a vital government objective by a least restrictive means, the Court was divided in its holding. The plurality opinion of Justice Brennan[2] limited patronage dismissals to government employees in "policymaking positions". 427 U.S. at 367, 96 S. Ct. 2673. Justice Brennan regarded non-policymaking employees as having only limited responsibility without power to thwart the goals of the in-party.
When the Court issues a decision in which a majority of the Justices fail to agree on a single opinion, lower federal courts must interpret it on the basis of the narrowest ground of agreement of a majority of the Justices. Marks v. United States, 430 U.S. 188, 193, 97 S. Ct. 990, 51 L. Ed. 2d 260 (1977). Justice Stewart's concurring opinion in Elrod[3] regarded the issue as "whether a nonpolicymaking, nonconfidential *1362 government employee can be discharged or threatened with discharge from a job that he is satisfactorily performing upon the sole ground of his political beliefs." 427 U.S. at 375, 96 S.Ct. at 2690 (Stewart, J., concurring). Because the concurring opinion added the element of "non-confidential", most federal courts have regarded it as narrower than the plurality opinion and have followed it as the governing law. See, e. g., Stegmaier v. Trammell, 597 F.2d 1027, 1033-34 (5th Cir. 1979) (and cases cited therein); Alfaro de Quevado v. de Jesus Schuck, 556 F.2d 591, 592 n.2 (1st Cir. 1977); Ramey v. Harber, 431 F. Supp. 657 (W.D.Va.1977), aff'd in part, rev'd in part, 589 F.2d 753 (4th Cir. 1978).
The only government interest regarded as sufficiently vital by the Court to permit the denial of First Amendment rights is "the need for political loyalty of employees [so that] representative government [will] not be undercut by tactics obstructing the implementation of policies of the new administration, policies presumably sanctioned by the electorate." 427 U.S. at 367, 96 S. Ct. 2686. The interpretations of what is covered by that government interest have led to numerous court decisions construing "nonpolicymaking, nonconfidential government employee". The courts split over whether the test is conjunctive or disjunctive, i. e., whether an employee who is "confidential" or "policymaking" is beyond First Amendment protection, or whether the employee must be "confidential" and "policymaking".
Although neither party before us chose to refer us to the decision, the Third Circuit approached this question in Rosenthal v. Rizzo, 555 F.2d 390 (3d Cir. 1977). The court reviewed a grant of summary judgment in favor of the defendants in a political firing matter and reversed the district court. The court admonished the lower court for making findings of fact between conflicting evidence in a motion for summary judgment. Judge Aldisert dissented from this decision because he believed that the patronage system should be left as unfettered as possible. He argued strongly for the ability of governing individuals to dismiss nonpolicymaking, confidential employees because of their political affiliations. 555 F.2d at 396-97 (Aldisert, J., dissenting). The pleadings indicated, he believed, a clear record of the nature of the plaintiff's employment. Judge Aldisert believed that the plaintiff was unquestionably a confidential employee and was therefore vulnerable to political firing under the disjunctive approach to the Elrod test of Justice Stewart.
The majority opinion in Rosenthal disagreed with the disjunctive interpretation of the Stewart test and construed the test as requiring consideration of both conditions:
It is true that Mr. Justice Stewart's concurrence in Elrod refers to a "nonpolicy making [sic], nonconfidential government employee". 427 U.S. at 375, 96 S.Ct. at 2690. In our view the additional adjectivenonconfidentialdoes not change the basic thrust [of] the plurality opinion, which is directed at policy formulation and representative government. A "confidential government employee" in this sense would not necessarily be one . . . who has covert activities as part of his duties, but instead one who is privy to the discussions and information involved in the policymaking process.
555 F.2d at 393 n.5 (emphasis in original). It is clear that in the Third Circuit, "one who is privy to the discussions and information involved in the policymaking process" is outside the protection of the First Amendment as described by the Supreme Court in Elrod. This definition includes not only the policymaker himself, but extends also to those involved in the process of establishing policy.
This rule has been adopted by at least two other courts. In Finkel v. Branti, 457 F. Supp. 1284 (S.D.N.Y.1978), aff'd, 598 F.2d 609 (2d Cir. 1979) cert. granted, ___ U.S. ___, 99 S. Ct. 3095, 61 L. Ed. 2d 871 (1979), the court applied the conjunctive approach to the Stewart test and developed the following definition: *1363 An employee is a "confidential employee" if he or she stands in a confidential relationship to the policymaking process, e. g., as an advisor to a policymaker, or if he or she has access to confidential documents or other materials that embody policymaking deliberations and determinations, e. g. as a private secretary to a policymaker.
457 F.Supp. at 1291 (emphasis added). The Finkel decision's definition was adopted generally by the Fifth Circuit as part of the Stewart test, but the latter court went on to include persons in a confidential position with nonpolicymaking elected officials. Stegmaier v. Trammell, supra, 597 F.2d 1027, 1040 (5th Cir. 1979).
We do not need to decide whether the Aldisert and Stegmaier opinions are correct. It does not matter in our present situation whether confidential, nonpolicymaking employees are subject to political firing. Our only present concern is whether Plaintiffs were municipal employees who were advisers to a policymaker and who constantly participated in and were privy to the discussions and information involved in the policymaking process. That is the type of government employee who is not protected by Elrod and who is therefore subject to discharge solely because of his political affiliations and beliefs.
We have no trouble in ruling that Plaintiffs were advisers to the Director of the Department of Public Works. We also are convinced that Plaintiffs participated in and were privy to much confidential information and many discussions with the Director. The facts are admitted by Plaintiffs in their trial brief (pp. 15-17) and are enumerated in our Findings of Fact. It was the duty and responsibility of both Loughney and Osborne to report to the Director, to confer with the Director, to make recommendations to the Director, and to provide information to the Director.
The next question to be faced is whether the discussions, recommendations, and information were part of policymaking. This question has two principal parts. First, is the Director of the Department of Public Works a policymaker. Second, did the discussions, recommendations, and information concern the fundamental policy of municipal government.
Plaintiffs refer us to the Administrative Code of the city of Scranton in their trial brief. Section 311 of the Administrative Code defines the "broad duties and powers" of the Director of Public Works. We need not spell out these duties and powers because we fully agree with Plaintiffs' assessment: "Director's responsibilities by definition in the Code itself surely make him one in a policymaking position." Plaintiff's Trial Brief, p. 14. Thus the first step of the policymaking test is satisfied: Plaintiffs were involved in discussions, recommendations, and conferences with a policymaker. The question remains whether these discussions involved legitimate "policy" determinations for a city government.
The administration of a municipal entity concerns per force considerations of topics somewhat more mundane than those faced by the federal government. There is no defense policy, no space policy, and no foreign policy. A state government has a welfare policy, a criminal policy, and an education policy that are also generally beyond the jurisdiction of city government. City government is more concerned with the day-to-day existence and comfort of its populace. A city provides police and fire protection. A city often provides sewer and water services. A city also provides for the maintenance and clearing of its streets and for the collection and disposal of garbage. Potholes and garbage collection are often the bases of successful political campaigns for local government. Both garbage and potholes, the candidates exclaim, will be removed quickly, efficiently, and inexpensively.
The Supreme Court cited, as its basis for Elrod, the need of government officials to implement and effectuate policies of a new administration presumably sanctioned by the electorate. We had testimony that one of the issues of the 1977 campaign concerned the Bureaus of Highway and Refuse. People were dissatisfied with tardy collection *1364 of garbage and failure to repair the streets. The Director whose ultimate responsibility is to rectify such maladies is unquestionably making policy decisions crucial to the fulfillment of campaign issues and promises. Municipal employees who have the power, duty, and authority to report to the Director concerning implementation of the program, to recommend to the Director more efficient, less costly methods of implementation, and to provide budget information that would eventually be reflected in increased or decreased service are advisers to a policymaker and are an integral part of the policymaking process.
We hold therefore that Loughney and Osborne, as Superintendents of Highways and Refuse respectively, were advisers to the Director and privy to discussions in which policy of the utmost importance to the effective administration of a municipal government was established. This does not mean that every employee of a governmental body who has a suggestion or recommendation for implementing policy is subject to political discharge. Nor does it mean that any employee who has the authority to approach a Director or policymaker with suggestions and recommendations loses his or her Elrod protection. We deal only with managerial, supervisory personnel that have the actual duty to take part in day-to-day discussions concerning the establishment and implementation of policy. It is only these municipal employees who are part of the policymaking process and lose their Elrod protection under this decision.
On the basis of the preceding discussion, we believe that the discharge of Plaintiffs, motivated as it was on their political beliefs and affiliations, did not constitute an impermissible infringement of their constitutional rights. The city government officials had a valid and vital government interest that was furthered by removing the political dissidents from their positions of influence in the policymaking decisions of the city government.
IV. CONCLUSIONS OF LAW
1. Plaintiffs, Joseph Loughney and Robert T. Osborne, were discharged from their employment by a municipal government solely on the basis of their political beliefs, affiliations and activities.
2. City government officials have a vital interest in maintaining political loyalty of city employees so that representative government will not be undercut by tactics obstructing the implementation of policies of the new administration presumably sanctioned by the electorate.
3. A nonpolicymaking, nonconfidential government employee cannot be discharged or threatened with discharge from a job upon the sole ground of his or her political beliefs, affiliations, and activities.
4. A policymaking, confidential government employee is one who takes active part in policymaking and who is privy to the discussions and information involved in the policymaking process.
5. Plaintiffs, Joseph Loughney and Robert T. Osborne, were policymaking confidential government employees and were therefore subject to discharge solely on the basis of political beliefs, affiliation, and activities.
NOTES
[1] Comprehensive Employment and Training Act, 29 U.S.C. §§ 801 et seq.
[2] Justice Brennan was joined by Justices White and Marshall.
[3] Justice Blackmun joined this opinion. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1531832/ | 262 Md. 632 (1971)
278 A.2d 574
TURF VALLEY ASSOCIATES
v.
ZONING BOARD OF HOWARD COUNTY
[No. 89 (Adv.), September Term, 1971.]
Court of Appeals of Maryland.
Decided June 29, 1971.
Motion for rehearing filed July 19, 1971.
Denied September 13, 1971.
The cause was argued before HAMMOND, C.J., and McWILLIAMS, FINAN, SINGLEY and SMITH, JJ.
Bernard F. Goldberg for appellant.
Thomas E. Lloyd, County Solicitor, for appellee.
HAMMOND, C.J., delivered the opinion of the Court.
Turf Valley Associates, the appellant, owns some eleven hundred acres of land in Howard County which for years it has been attempting to have rezoned for combined intense residential and commercial uses. It was successful below but lost on appeal in Board v. Turf Valley, 247 Md. 556. On its second effort, Judge Macgill found in November 1970 that the zoning authorities of Howard County had acted arbitrarily and illegally in denying a change in the classification of its land to Planned Community zoning (at the argument we were told that a Planned Community District would be the equivalent of a mini-City of Columbia). We say "would be" because on March 9, 1971 the Zoning Board of Howard County deleted from the County's comprehensive zoning ordinance Sec. 17A, the section that provided for planned communities. The present appeal by Turf Valley *634 is from an order of Judge Childs sitting in the Circuit Court for Howard County, holding the deletion to have been legally and effectively accomplished. Meanwhile, Howard County had appealed from Judge Macgill's order in Turf Valley's second effort. We heard argument in the second case on May 5, 1971, and, being then told by counsel that the present appeal was on its way to us, and that if we affirmed Judge Childs the appeal from Judge Macgill would become moot (see Mandel v. Board of County Commissioners, 238 Md. 208), it was agreed that we would defer decision until the present appeal was decided. We have concluded that Judge Childs' decision must be affirmed, and we will dismiss the appeal from Judge Macgill as moot.
The agreed statement of facts shows the following. On July 9, 1968 the County Commissioners of Howard County added Sec. 17A Planned Community (P.C.) Districts to the County's comprehensive zoning ordinance. Turf Valley is the first and the only applicant for reclassification of land to the new district. In the general election of 1968 the voters of Howard County adopted the charter form of government. On January 22, 1969 the first County Executive and the first members of the County Council were elected, taking office six days later.
Before Howard County became chartered, the power of the County Commissioners to zone was derived not from the basic state zoning enabling act codified as Code (1970 Repl. Vol.), Art. 66B, but from the special delegation granted by Ch. 19 of the Laws of the Extraordinary Session of 1948. Section 1109 of the County Charter continued the existing comprehensive zoning ordinance of the County in full force and effect. The adoption of the Charter made the Express Powers Act, Code (1966 Repl. Vol.), Art. 25A, § 5 (X) the basis of the County's power to zone. That section reads:
"The following enumerated express powers are hereby granted to and conferred upon any *635 county * * * which shall hereafter form a charter under the provisions of said Article 11A of the Constitution * * * [t]o enact local laws, for the protection and promotion of public safety, health, morals, and welfare, relating to zoning and planning."
The Howard County Charter in Art. II establishes the County Council as the legislative branch of the County government. Section 202 says: "The legislative power of the County is vested in the County Council of Howard County which shall consist of five members who shall be elected from the County at large." Section 204 provides that: "In all of its functions and deliberations, the Council shall act as a body and shall have no power to create standing committees or to delegate any of its functions and duties to a smaller number of its members than the whole." The depth and extent of the law making power is spelled out in Sec. 207: "The Council is vested with the law making power of the County, including all such powers as heretofore have been exercised by the General Assembly of Maryland and transferred to the people of the County by the adoption of this Charter."
One of the first legislative acts of the Council was to pass Council Bill No. 3, 1969 (Bill 3). Bill 3 repealed certain existing zoning procedural provisions, and went on:
"to provide for a legislative agency of the County Council consisting of the members of the County Council to be the Zoning authority of Howard County, to provide for the designation, establishment, adoption, modification, supplementation, enforcement, and repeal of zoning districts, boundaries, and regulations, to provide for the procedure of designation, establishment, adoption, amendment, modification, supplementation and repeal thereof, and to provide further for appeals from decisions of the Zoning Board, and, further declaring this Act to be an emergency measure."
*636 Section 16.200 of Bill 3 provides that the Howard County Zoning Board which the Bill creates shall be the zoning authority of the County and names the act the "Zoning Enabling Act of Howard County." Section 16.201 states that the intention of the County Council is "to establish a legislative agency of the County Council" as the County's zoning authority, and makes the five members of the County Council the five members of the Zoning Board and the chairman and the vice-chairman and the secretary of the Council the chairman, the vice-chairman and the secretary, respectively, of the Board.
Section 16.202 of the Zoning Enabling Act provides: "For the purpose of promoting the health, safety, morals and general welfare of Howard County" the Zoning Board is empowered to regulate size and location and use of buildings, open spaces and density of population (the words are those generally used in § 4.01 (a) of Art. 66B of the Code (1970 Repl. Vol.) and in § 21 (a) of Art. 66B before it was superseded by Sec. 4.01 (a) in 1970). Section 16.203 authorizes the Zoning Board to divide the County into districts and make regulations uniform in each district and provides that such district boundaries and regulations shall be made "in accordance with a comprehensive plan and shall be designed to lessen congestion in the streets [etc.]." There follow other standard designs, the precise words being those generally used in zoning enabling acts, as for example in § 4.03 of Art. 66B of the Code (1970 Repl. Vol.) and in § 21 of Art. 66B of the Code (1957). Section 16.204 provides that: "Zoning regulations, districts, boundaries and restrictions may from time to time be amended, supplemented, changed, or repealed by the Zoning Board" after notice and hearing in manner specified and after receiving and considering the report of the Planning Board before final decision. Section 16.206 requires that: "All public hearings on zoning matters shall be conducted in accordance with the rules of procedure adopted by the Zoning Board insofar as they do not conflict *637 with the rules of administrative procedure promulgated by law." Section 16.207 provides for judicial review, granting any aggrieved person or officer, department, board or bureau of the County or State an appeal to the Circuit Court "in accordance with the Maryland Rules of Procedure providing for appeals from administrative agencies." The court, without a jury, may affirm, remand or reverse or modify the decision if the substantial rights of the appellant have been prejudiced because the Board's findings or decisions violate constitution or charter, or statute, were made upon unlawful procedure, were fraudulent, grossly erroneous to the point of bad faith, arbitrary or illegal or "unsupported by competent, material and substantial evidence in view of the entire record as submitted."[1]
During the political campaign of 1970 in Howard County most of the twelve candidates for the County Council promised to support an amendment to the County's comprehensive zoning ordinance that would delete the Planned Community District from the ordinance and the sole candidate favoring retention of the P.C. classification was not elected. Councilman Charles E. Miller, who was campaigning for reelection, petitioned the Zoning Board (pursuant to Sec. 16.205 of the Zoning Enabling Act which permits "any duly * * * elected * * * County * * * official [to] petition the Zoning Board for an amendment, supplement, addition, repeal, or a change to the zoning regulations * * *") to eliminate the Planned Community districts before the election but the Board refused to act. After Mr. Miller was reelected he insisted on action on his petition. Due notice was *638 given of a hearing that began on January 26, 1971, and was continued to February 10. The Zoning Board heard testimony and received other evidence, considered the report of the Planning Board (which recommended denial of the petition but suggested refinements and improvements in the regulations relating to Planned Communities) and on March 9 deleted from the comprehensive zoning ordinance Sec. 17A (P.C.), the Planned Community provisions.
Turf Valley appeared before the Zoning Board in opposition to Councilman Miller's petition. It objected first on the ground that the zoning regulations as they existed prior to the passage of Bill 3 permitted only the County Commissioners to amend regulations (and presumably that after the Charter took effect only the County Council could legislate as to zoning) and, second, to the participation in the proceedings of Councilmen Miller and Jones on the ground that they had demonstrated by their public and private statements that they would vote to delete Sec. 17A come what may. Both councilmen refused to withdraw and both voted.[2]
Turf Valley took an appeal to the Circuit Court. It alleged that the decision to delete Sec. 17A was illegal, unconstitutional and void for all of the reasons that the appeal section of the Zoning Enabling Act (Sec. 12.607) authorizes the Circuit Court to reverse or modify a decision of the Zoning Board. It alleged further that the action of the Zoning Board was tainted fatally by the participation therein of Councilman Miller and of other councilmen who in what amounted to a sham hearing recorded for the record the vote they had announced before the hearing began.
Turf Valley makes two contentions here. First, it says, the County Council did not legally and effectively delegate all zoning powers to the Zoning Board as it purported *639 to do. Essentially, this argument is that even if it be assumed that a right to so delegate could constitutionally and legally have been bestowed on the Council, the Howard County Charter did not bestow it, and, in any event, the Council by passing the Administrative Procedure Act made the Zoning Board an administrative agency, and legislative powers cannot be delegated to an administrative agency. Second, it argues that the bias and prejudice of Messrs. Miller and Jones against Turf Valley made void the action of the Zoning Board.
We think there is no fundamental barrier to conferring on the legislative branch of a chartered county the right to constitute itself a zoning body and that the Howard County Charter permitted the Council of that County to act as it did in this regard. There is no present need to go beyond this holding.
The governmental processes of zoning early were recognized as best exercised locally and the legislature permitted such exercise by adding Art. 66B to the Code by the passage of Ch. 705 of the Laws of 1927, the first basic zoning enabling act, which granted zoning powers to cities and incorporated towns of more than 10,000 inhabitants and Ch. 599 of the Laws of 1933, which generally provided the zoning power for counties and all incorporated areas. The validity of this delegation cannot now successfully be challenged if ever it could have been. Bradshaw v. Lankford, 73 Md. 428, 430; Rossberg v. State, 111 Md. 394, 412-415; Gordon v. Montgomery County, 164 Md. 210, 213; Carney v. City of Baltimore, 201 Md. 130, 135. Article XI-A of the Constitution, § 3 provides that upon adoption of a charter the County Council of a County has, subject to the Constitution and Public General Laws of the State, "full power to enact local laws of said * * * County including the power to repeal or amend local laws * * * upon all matters covered by the express powers granted [pursuant to § 2]." Section 2 directs the General Assembly to provide a grant of express powers for chartered counties. The General *640 Assembly complied by the passage of Art. 25A of the Code and § 5 (X) of Art. 25A gives the chartered county power to enact local laws "relating to zoning and planning."
Section 4 of Art. XI-A of the Constitution provides that after adoption of a charter "no public local laws shall be enacted by the General Assembly for said * * * County on any subject covered by the express powers granted as above provided." Thus there is presently an exclusive constitutional grant to Howard County to legislate locally in relation to all zoning matters in the County. It has all the powers in this regard in Howard County that the State had inherently and would continue to have except for Art. XI-A. Carney v. City of Baltimore, supra, and Givner v. Commissioner of Health, 207 Md. 184, 189. As we see it, Howard County without violation of constitutional or statutory bounds enacted for itself a local Art. 66B by passing Bill 3.
The cases in this Court sustain these views. In Givner v. Commissioner of Health, supra, we pointed out that the City of Baltimore had been given within its limits the rights to exercise the same full police power the State possesses, and that the only question was whether the ordinance had validly delegated part of that power to the Commissioner of Health. The delegation was to make regulations "for the better protection of the health of the City." In upholding the Commissioner's regulations, we said (p. 191):
"The fact that the promulgation of regulations involves the exercise of discretion and deliberation of a type that might be described as legislative in character, is not necessarily fatal, provided there are adequate standards set up to guide the Commissioner of Health in ascertaining the basic facts upon which his regulations are predicated."
The process of zoning is described in Hyson v. Montgomery *641 County, 242 Md. 55, 63-66, as in part legislative in character. In Pressman v. Barnes, 209 Md. 544, we upheld a delegation to the Director of Traffic of Baltimore to set speed limits on city streets. In Baltimore County v. Mo. Realty, 219 Md. 155, we dealt with the argument that the Board of Zoning Appeals could not validly rezone piecemeal because reclassification was the exercise of legislative powers that could not be delegated to an administrative agency. In rejecting the contention, we said (p. 161):
"It has long been established in Maryland that the mere fact that the power is legislative does not prevent its delegation. See M. & C.C. of Balto. v. Biermann, 187 Md. 514, 522, and Marino v. City of Baltimore, 215 Md. 206, 215. There are cases to the contrary in other states. See Note 58 A.L.R. 2d 1083. It is argued that where there is no legislative policy laid down in advance, as in the case of special exception or variances, the rule is otherwise. But we said in the Missouri Realty, Inc. v. Ramer case, supra, [216 Md. 442] (p. 447): `Zoning officials, when properly authorized, have the authority to alter zone lines from time to time when there are substantial changes in conditions and such alteration has a reasonable relation to the public welfare,' quoting Offutt v. Bd. of Zoning Appeals, 204 Md. 551, 557."
We went on to say (at p. 162):
"As Judge Markell, for the Court, said in Pressman v. D'Alesandro, 193 Md. 672, 678, the basic question `is not whether the City Council can delegate legislative power, but whether the Legislature has conferred, by the Baltimore charter or otherwise, power of whatever nature, legislative or executive or both to make the choice of alternatives. There can be no question *642 as to the power of the Legislature to make such grants of powers of local government, whether to an existing municipal corporation or agency, a specially constituted body, or an existing executive or administrative body such as county commissioners. The constitutional requirement of separation of powers is not applicable to local government. [Citing cases and add Wicomico County v. Todd, 256 Md. 459]. Just how much power is granted by a particular statute is a question of statutory construction, * * * not a constitutional question.' * * * In the instant case the power stems directly from the statute and Charter, and there was no redelegation by the County Council to the Board. We do not suggest that a different result would follow if there had been a redelegation authorized by basic law."
We added (p. 163):
"There is the further safeguard that, to the extent that the action taken may be arbitrary, capricious, discriminatory or illegal, or not fairly debatable, any action taken is subject to judicial review."
In the delegation under review there are clear and defined standards, for Bill 3 restates for the guidance and control of the Zoning Board the well established and recognizedly valid standards of the basic State zoning enabling law, and adds the protection of judicial review.
The provisions of the Howard County charter impose no substantial or significant barrier to the delegation made by Bill 3. The argument of Turf Valley is that zoning is law making and under the charter only the County Council can make law. The power given the Council, the legislature of the County under the charter, by the express powers act is to pass local laws "in relation *643 to planning and zoning." Bill 3 unquestionably is a local law relating to zoning. Section 207 of the charter says the law making power of the Council includes "all such powers as heretofore have been exercised by the General Assembly of Maryland and transferred to the people of the County by the adoption of this Charter." The General Assembly had, and exercised, the power to enact a zoning enabling act and that power was transferred to the Council by the Constitution and the express powers act when the Charter was adopted. The Council added to its legislative hat another piece of headgear when it made for itself a zoning board hat by the passage of Bill 3. The fact that the members and officers of the Zoning Board are identical with those of the Council gratifies the mandate of Sec. 204 of the Charter that the Council shall act as a body and not delegate any of its functions and duties to a smaller number of its members than a whole. That the Council required the Board to adjudicate facts and made it subject to Bill 7, the Administrative Procedure Act, as well as the fact that the appeal provisions in Bill 3 say the appeal to the Circuit Court is equated with appeals from administrative agencies, does not prevent the effective delegation to it of powers legislative in nature. Section 16.201 of Bill 3 states the intention of the Council to have been "to establish a legislative agency * * * which shall be the zoning authority of Howard County." The Council did not absolutely abrogate its powers in relation to zoning. It can abolish the Board at any time and itself zone and rezone. In the meantime it empowered the Board to amend, supplement, change or repeal "zoning regulations, districts, boundaries and restrictions." The pattern followed by the Council was that drawn by the legislature of Maryland in making the members of the County Council in the chartered counties of Montgomery and Prince George's the members of the District Councils in those counties with the power to zone and rezone, comprehensively and piecemeal, subject both to procedural standards and requirements usually associated with administrative *644 agencies and judicial review. Woodlawn Area Citizens Association, Inc. v. Board of County Commissioners of Prince George's County, 241 Md. 187, 190-193. The zoning processes include the quasi-judicial function and the function legislative in character. Hyson v. Montgomery County, supra.
We are not impressed with the contention that the openly expressed interest of Messrs. Miller and Jones in deleting, and intention to delete, planned communities from the Howard County scene were such that they were disqualified from voting as Board members and therefore the fact that they did vote nullified the deletion action. There is no showing that these gentlemen had any element of personal gain or pecuniary interest in the deletion, or any bias against Turf Valley other than it would bring a planned community into being if it could unless Section 17A was cut from the law. They simply had come to the conclusion that planned communities would not be good for Howard County and openly campaigned for office on the loudly and frequently proclaimed promise that if elected they would vote to eliminate the possibility of any such communities. The voters responded by electing them and they kept their promises.
Professor Davis well articulates the views we have on this phase of the matter. In his Administrative Law Treatise, he says in Sec. 12.01:
"Bias in the sense of crystallized point of view about issues of law or policy is almost universally deemed no ground for disqualification." (p. 131)
"All men who had thought about controversial issues necessarily have biases in this sense. A judge may have a bias on a question of law because he has decided the question in a previous judicial opinion; the judge who has the most biases in this sense may be the best judge." (pp. 130-131)
*645 See also Sec. 12.06 as follows:
"Prejudgment of adjudicative facts is not necessarily a ground for disqualification. The holdings are almost uniform that a judge who has announced his findings of fact is not disqualified to hear the case a second time after a remand, and these holdings are generally applied equally to the administrative adjudicator. Prejudgment of facts bearing on law or policy is no more a disqualification than prejudgment of philosophy about law or policy." (p. 169)
See also Kramer v. Bd. of Adjust., Sea Girt (N.J.), 212 A.2d 153, 159-161 ("[N]evertheless, the interest which disqualifies a member of the governing body in such a situation is a personal or private one, and not such an interest as he has in common with all other citizens or owners of property * * *. True, from his so called `realistic attitude toward the Stockton Hotel' a reasonable mind might be left with little doubt as to where the Mayor's sentiments lay; but it is equally true that the campaign literature, the statements to the press, and all other official statements represent no more than the views of public officials pertaining to a matter of deep moment to the community.").
Judge Childs held below that the deletion action was legislative in nature and that the philosophical bias and predisposition and political promises of Messrs. Miller and Jones did not disqualify them from sitting and voting, citing M. & C.C. of Balto. v. Biermann, 187 Md. 514, Benner v. Tribbitt, 190 Md. 6, and Blankenship v. City of Richmond (Va.), 49 S.E.2d 321. We agree. Certainly if the Council had done away with the Zoning Board and under its Council hat had deleted planned communities, Messrs. Miller and Jones could have voted. That they voted under the Board hat did not put the curse on their actions.
Finding that the Board's action was not in violation *646 of constitutional or charter provisions, beyond the statutory jurisdiction of the Board, made upon unlawful procedure, or fraudulent, Judge Childs held further that to establish the disqualification of Messrs. Miller and Jones and the invalidity of the Board's action Turf Valley would have to show him by the transcript of the Board hearing (which had not yet been typed) bad faith, complete lack of supporting evidence, arbitrariness or other error, or other lack of due process under the standards of judicial review set up by Bill 3. Turf Valley chose not to have the transcript prepared, bringing this appeal instead. Assuming that Turf Valley did not thereby waive its right to continue to press such disqualifying grounds, we have found nothing in the record, the briefs or the oral argument as to the motives or the conduct of Messrs. Miller and Jones that goes beyond sincere political and philosophical views that they were able to put into effect by reason of the electorate's agreement with those views.
Order affirmed, with costs.
NOTES
[1] The County Council adopted by Council Bill No. 7, 1970, an Administrative Procedure Act for the County which in terms is made applicable to the Zoning Board. Like the Zoning Enabling Act, the Administrative Procedure Act lays down careful rules to insure fairness and due process in zoning matters. Two methods of judicial review are provided. Section 22.202 (e) of the Administrative Procedure Act grants a broad right to petition for a declaratory judgment to review a rule or regulation of any agency of the County in addition to the right of appeal to the Circuit Court in zoning matters granted in Sec. 16.207.
[2] Mr. Miller, when the vote was 4 to 1 to delete, offered to withdraw but when Mr. Hanna, who had voted aye, said he would change his vote if Mr. Miller did so, thereby producing a deadlocked vote, Mr. Miller continued to vote aye. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1531816/ | 480 F. Supp. 1288 (1979)
Richard WOJTCZAK, Plaintiff,
v.
Julius T. CUYLER, Individually and in his official capacity as Superintendent at the State Correctional Institution at Graterford et al., Defendants.
Civ. A. No. 76-3087.
United States District Court, E. D. Pennsylvania.
December 6, 1979.
As Amended December 21, 1979.
*1289 *1290 Edmond A. Tiryak, Community Legal Services, Philadelphia, Pa., for plaintiff.
Jerry I. Drew, Asst. Atty. Gen., Pennsylvania Dept. of Justice, Philadelphia, Pa., for defendants.
OPINION AND ORDER
EDWARD R. BECKER, District Judge.
I. Preliminary Statement
This case raises the interesting question whether a long-term prison inmate segregated in a maximum-security housing unit at his own request for his own protection can nonetheless require prison authorities to afford him certain of the rights and privileges of inmates in the general prison population. For reasons which will in due course appear, we hold that, at least in some respects, he can.
Plaintiff is an inmate at the State Correctional Institution at Graterford, Pennsylvania (Graterford). In August, 1975, he was arrested on the aggravated morals charges described below and held in Montgomery County Jail in lieu of bail. The record indicates that at some point he spent a short time in Bucks County Prison. On February 26, 1976, following his conviction, he was transferred to Graterford. After expressing fears for his physical safety occasioned by the widespread publicity given his offenses, he was assigned to a housing unit known as the Behavioral Adjustment Unit (BAU).[1] The BAU is a maximum security unit used to segregate from the rest of the population those inmates who are violent, mentally ill, or need protection. Plaintiff is now and for a long time has been assigned to the BAU for his own protection.
Plaintiff does not seek to be transferred from the BAU. To the contrary, he requests that we order his continued assignment to the BAU. Rather, he challenges in this suit the following conditions and privileges afforded him as a BAU-assignee: (1) the fact that his cell has not been equipped with a chair, desk, or table, although cells in the general population are so equipped; (2) the fact that he has not been provided with any program for rehabilitation, while inmates in the general population have been *1291 provided with such programs; (3) his inability to leave his cell for more than one out of every twenty-four hours, although inmates in the general population are allowed more time out of their cells; (4) the fact that he has not been allowed to perform remunerative work, while inmates in the general population have been allowed such work; (5) the denial to him of the "idle pay" which is awarded to all inmates who are unable to work, except inmates like plaintiff who are confined in the BAU for their own protection; (6) the fact that he has been permitted to shower and shave only three times weekly, whereas inmates in the general population may shower and shave daily; (7) the denial of visitation rights equivalent to those afforded to prisoners in the general population; (8) the fact that he has not been permitted to attend weekly religious services of the Roman Catholic faith; and (9) the fact that he has not been permitted to do legal research in the prison law library.[2]
Plaintiff brought this action under 42 U.S.C. § 1983 for injunctive relief and damages[3] for alleged deprivation of his rights under the First, Eighth, and Fourteenth Amendments to the United States Constitution.[4] He has also claimed that defendants violated Administrative Directive 801 of the Pennsylvania Bureau of Correction. After discovery, plaintiff moved for a preliminary injunction. By stipulation of counsel, we have treated that motion in all respects as a motion for a permanent injunction, see Fed. R.Civ.P. 65(a)(2), and have held a final hearing. Plaintiff requests a permanent injunction ordering defendants to permit him to attend weekly religious services; to allow him to visit the law library, to attend educational programs, and to receive visitors at the same times and with the same frequency as prisoners in the general population; to assign him remunerative work on the same terms as inmates in the general population; to award him "idle pay" when work is unavailable; to permit him to shower and shave daily; to furnish his cell with a desk and a chair; and to maintain his security by continuing to assign him to the BAU.
In terms of legal theory, plaintiff argues that he has been denied his constitutional rights of the free exercise of his religion and of meaningful access to the courts because he has been deprived of personal access to communal religious services in the prison chapel and to the prison law library. He argues that he has been deprived of equal protection of the laws in that other inmates enjoy greater rights and privileges than he does. He claims, further, that the denial to him of rights and privileges which other inmates enjoy violates Administrative Directive 801 of the Pennsylvania Bureau. In addition, plaintiff makes the following argument bottomed on the Eighth Amendment proscription of "cruel and unusual punishment." He contends that since his fear for his safety has an objective basis, which defendants recognized by assigning him to the BAU, defendants have a constitutional duty, included within the Eighth Amendment, to exercise reasonable care to protect him from violence directed at him by other inmates, and that while they have discharged that duty by assigning him to the BAU, they have improperly conditioned *1292 his enjoyment of the opportunities, rights, and privileges available to inmates in the general population on renunciation of his Eighth Amendment right to protection. We refer to this as plaintiff's unconstitutional conditions claim.
Defendant Cuyler is the Superintendent of the State Correctional Institution at Graterford. The other twenty defendants are prison officials, members of the medical and psychological staff, and guards at Graterford. Defendants submit that plaintiff's fear for his safety is a mere subjective belief, without an objective basis. Moreover, they note that plaintiff is free to rejoin the general prison population at any time, and then will enjoy all the opportunities, rights, and privileges of the inmates in the general population. They argue that by requesting confinement in the BAU, plaintiff has waived those opportunities, rights, and privileges, and in any event, that the treatment afforded him during his confinement in the BAU meets all constitutional minima. Defendants also take issue with certain of plaintiff's factual allegations concerning the opportunities afforded him and the opportunities afforded prisoners in the general population.[5] They argue that the disparate treatment of plaintiff is necessary to the maintenance of prison security. And finally they disagree with plaintiff's application of constitutional theory.
We have found this to be a difficult and troubling case, in which the arguments of both the plaintiff and the defendants have considerable appeal. Upon analysis and reflection, and for reasons that will appear in Part III of this opinion, we have determined that plaintiff's Eighth Amendment argument is meritorious. While it has been a source of concern, we are satisfied that our decision accommodates fully the policy of broad deference to prison officials which was enunciated most recently in Bell v. Wolfish, 441 U.S. 520, 99 S. Ct. 1861, 60 L. Ed. 2d 447 (1979). In Wolfish, the Supreme Court held that courts must defer to the judgments of prison officials concerning prison security unless the officials have exaggerated their response to perceived security considerations. 441 U.S. at 548 & 551 & 555 & 561-62, 99 S.Ct. at 1878-79 & 1880 & 1882 & 1886. We are mindful of our obligation to defer to prison administrators, but we find that certain of the practices challenged in this action were the result of exaggerated responses to security considerations.
Our first task is to make findings of fact on the following matters: the nature of plaintiff's criminal convictions and attendant publicity; the general layout of the prison; the threats on plaintiff's life and his placement and retention in the BAU; the conditions of plaintiff's confinement in the BAU; and the security justifications for the challenged conditions. We will then turn to our discussion of the applicable law. This opinion constitutes our findings of fact and conclusions of law under Federal Rule of Civil Procedure 52(a).
II. Findings of Fact
A. The Nature of Plaintiff's Criminal Convictions and Attendant Publicity
In August, 1975, plaintiff was arrested on charges of burglary, felonious restraint, corruption *1293 of minors, and deviate sexual intercourse. These charges were the result of complaints filed on behalf of eight young girls ranging in age from nine to thirteen years. He was subsequently convicted of the rapes of three of those girls. The first conviction was in Montgomery County, the second conviction was in Philadelphia, and the most recent conviction, in November, 1978, occurred in Bucks County. As a result of these convictions, plaintiff is serving a total sentence of forty to eighty years.
The publicity accompanying plaintiff's arrest and convictions was extensive. All the major Philadelphia daily newspapers and TV channels covered his arrest.[6] Plaintiff testified that the publicity made it necessary for his wife to be provided with police protection and for his son to be withdrawn from school.
Prisoners in the general population at Graterford have access to television, radio, and newspapers. It is highly probable, and not disputed in the record, that at least some inmates at Graterford know of the nature of plaintiff's offenses.
B. The Prison Layout
Within the prison walls at Graterford there are three buildings: the main building, the powerhouse, and the BAU. The main building encompasses five cell blocks as well as the chapel, school, law library, and visitation room. The prison kitchen, auditorium, hospital, administrative offices, and industrial plant are also located in the main building. Inmates in the general population are housed in the five cell blocks. Cells remain unlocked between the hours of 6 A.M. and 4 P.M., and from 5 P.M. until 9 P.M., during which time the inmates are free to move about the cell block.
In the rear of one cell block is an area consisting of fifty cells separated from the rest of the block by cyclone fencing and a gate. This area is known as B-gallery. It houses those inmates who require closer security than is available in the general population. Inmates there are locked in their cells except for periods of recreation in the yard, meals in the dining room, medical treatment, and visits. B-gallery inmates have contact with each other during recreation and meals, and may also come in contact with the general population in moving back and forth from these places. B-gallery inmates are assigned work in B-gallery when available. Inmates who have committed themselves to B-gallery are permitted to go to the chapel and the law library, but are not escorted by guards if they choose to go there.
The BAU is located in a separate building and constitutes the most secure housing at Graterford. BAU inmates are locked in their cells approximately twenty-three hours per day. Meals are served to them in their cells, and the inmates are not in physical contact with one another during recreation periods in the yard. Prisoners in the BAU ordinarily leave the BAU building only to go to the visitation room in the main building to see attorneys or other visitors. In such instances, prisoners are taken from the BAU to the main building in a station wagon and are escorted by two guards.
The BAU houses three categories of inmates: (1) those assigned for disciplinary reasons; (2) those who are severely mentally disturbed; and (3) those who are there for their own protection. Plaintiff falls into this latter category. At the time of trial, three other inmates were housed in the BAU for their own protection. Super-intendent Cuyler testified that this was a "relatively high number" compared to the usual number of inmates lodged in the BAU for their own protection.
*1294 C. The Threats Upon Plaintiff's Life; His Placement and Retention in the BAU
Plaintiff's first incarceration was in Montgomery County Prison when he was awaiting trial. Plaintiff testified that while he was lodged there, other prisoners threw firebombs, burning newspapers, and cigarettes into his cell, and that many verbal threats were directed at him. He described these threats:
Well, these were prisoners, inmates. We'll get you. We can get you. They used the terms baby raper, child molester.
As a result, he was segregated from the other prisoners at Montgomery County Jail. At Bucks County Prison, prior to transfer to Graterford, the word reached him through another inmate that there were inmates "waiting for him" at Graterford.
These occurrences formed the basis for plaintiff's request for protection upon arrival at Graterford. At a hearing before defendants Mauger, Schildt, and Spaid, he told them that numerous attempts had been made on his life because of the nature of the crimes for which he had been sentenced, and that he was concerned about his physical safety at Graterford. He was then assigned to the BAU.
Plaintiff contends that initially he did not specifically request placement in the BAU. Defendants claim that he did request such placement. There is no dispute, however, that plaintiff does not now wish to be transferred out of the BAU, but wishes to remain there. Defendants point out and plaintiff concedes that he is free to go to the general population or to B-gallery at any time. Defendants note that most self-protection cases are housed in B-gallery. However, plaintiff fears that he cannot be adequately protected in these areas where contact among inmates is less restricted, and therefore chooses to remain in the BAU. Indeed, in May 1977 plaintiff was removed from the BAU and placed in B-gallery.[7] After approximately two hours on B-gallery, plaintiff requested the guards to return him to the BAU, and he was returned there. Plaintiff testified that during those two hours, he was threatened by two prisoners in the main portion of "B" cell block, who called him by name and said that they could "get" to him. During that scant two hours, either those prisoners or two others called plaintiff a "baby-raper" and "child molester."
Plaintiff also testified that he has been threatened even while in the BAU. He testified that he has heard prisoners in the yard call his name and threaten him with death. We credit that testimony. Plaintiff was thus subjectively in fear. We also find that there was an objective basis for that fear. If plaintiff were transferred out of the BAU, other prisoners would indeed be able to "get" to him. Moreover, plaintiff's contention that he has reason to fear for his safety was supported by the testimony of an expert witness.
Dr. Edward V. Guy, the Director of Psychiatric Services for the Philadelphia prison system, testified that the lowest status among prison inmates is generally reserved for persons convicted of sex crimes against children. He testified that he had found "a very active type of a threatening attitude" toward such inmates among other inmates, and that in the Philadelphia prison system, a person convicted of a sex crime against a child would "automatically" be housed differently from the general population. While other inmates there are housed in dormitories, sex offenders against children are housed initially in individual cells with some access to other inmates. Dr. Guy testified that "almost invariably within a day or two . . . once the threats begin," such offenders request transfer to a maximum security cell.[8] We find Dr. Guy's *1295 testimony as to conditions and practices in the Philadelphia prison system, and the plaintiff's own testimony as to his own experiences in other prisons in Eastern Pennsylvania, to be probative of the reasonableness of plaintiff's apprehension of danger to his physical security at Graterford. See Withers v. Levine, 449 F. Supp. 473, 476 (D.Md.1978). Indeed, that apprehension was acknowledged by the defendants, who assigned plaintiff to the BAU in response to his expressed fears of physical assault by other inmates, and who have never attempted to transfer him from the BAU, with the possible exception of the two hours he spent on B-gallery.
D. The Conditions of Plaintiff's Confinement in the BAU
The basis of plaintiff's complaint is the disparity between the opportunities and programs available to prisoners in the general population at Graterford, and the restricted opportunities available to him in the BAU. He presented evidence at the hearing of disparities in access to religious services, access to the prison law library, the availability of educational programs, employment and idle pay, cell furniture, time out of lock-up, personal hygiene, and access to visitors. We consider each of these topics in turn.
1. Access to Religious Services
Inmates in the general population and in B-gallery are permitted to attend weekly religious services in the prison chapel, located in the main prison building. Plaintiff is a Roman Catholic who regularly attended Mass before his incarceration. During his confinement in the BAU, plaintiff has not been permitted to attend communal religious services.
Plaintiff has requested that defendants permit him to receive communion in the BAU once a week. He testified that a priest had visited him in the BAU only sporadically and had given him communion at times varying from approximately once a month to once every four months. Defendants state that although plaintiff is not permitted to attend services with other prisoners for security reasons, he may receive daily chaplain visits and be given communion in his cell. Plaintiff testified at the hearing that he was willing to accept chaplain visits in the BAU in lieu of being escorted to the prison chapel. We accept the parties' word on these points.
2. Access to the Prison Law Library
Prisoners in the general population are permitted to go to the prison law library, which is located in the prison school building, to do research. The library is open from about 8:30 or 9:00 a. m. to 11:00 a. m., from 1:00 p. m. to 3:30 p. m., and from 6:00 to 8:00 or 8:30 p. m. The library hours are the same as the hours of the prison school, of which it is a part. Staff members and guards are not on duty in the library or the school building during the hours when it is not open, and the entire building is generally locked during those hours.
Plaintiff has not been permitted to go to the prison law library. A few months before trial, defendants began to provide plaintiff with photocopies of judicial opinions which he requests. These copies are often blurred, and plaintiff frequently has been told that the library does not have the cases which he requested. Plaintiff has not been permitted to meet with or obtain assistance *1296 from the paraprofessional law clinic at Graterford. Plaintiff has, however, stated through counsel that he is willing to accept the opportunity of doing legal research in the BAU in lieu of being transported to the law library.
3. Availability of Educational Programs
The prison has a wide variety of educational programs available to inmates from kindergarten to college level. According to Superintendent Cuyler, these programs exist to assist in the rehabilitation of inmates. An inmate's participation in educational programs is a factor in the determination whether he will be recommended for parole.
Plaintiff has not been permitted to participate in educational programs with other prisoners outside the BAU. Moreover, he has never been offered the opportunity to receive education by means of correspondence courses and tutors in his cell, and has been unaware that such an opportunity existed. Defendants state, however, that while he is in the BAU, plaintiff may receive educational programs in the form of correspondence courses and tutors in his cell. A prison official testified that tutors had been permitted into the BAU in the past, and would not cause a security problem. We accept that representation. The plaintiff testified that he would be satisfied with having tutors and educational materials in the BAU in lieu of being escorted to educational programs with other inmates.
4. Employment and Idle Pay
Inmates in the general population at Graterford are permitted to perform remunerative work. Work is available to inmates to make them productive, to reduce idleness, and to facilitate rehabilitation. One factor in the prison's determination whether to recommend a prisoner for parole is his participation in, and success or failure at work programs. Inmates in the general population who are unable to work receive "idle pay." Furthermore, inmates in the BAU who are confined for disciplinary reasons or because they are mentally ill receive idle pay. Only inmates in the BAU who are confined there for their own protection receive no idle pay.
During most of the time of his confinement in the BAU, plaintiff has not been permitted to engage in remunerative work, and has not received idle pay. Approximately two weeks before the first day of hearing in this case, plaintiff was given a job stripping down a section of the BAU which was being renovated. He worked along with two other inmates who were confined in the BAU for their own protection. They were issued sledge hammers, crow bars, hammers, and chisels. That job was for 8 hours a day, six days per week. Between the first and second hearings in this case, plaintiff was terminated from that job and assigned another job which required him to work only one day out of every three. Defendants have made no assurances to plaintiff that he will continue to receive remunerative work or idle pay.
5. Cell Furniture
Cells in the general population at Graterford are equipped with a chair. Cells in one block out of the total of five are also equipped with a desk. Cells in the BAU, including plaintiff's, are furnished with neither a chair nor a desk.
6. Other Disparities
Inmates in the general population are permitted to leave their cells for at least ten hours per day. While confined in the BAU, plaintiff has been permitted to leave his cell for but one hour per day, except when he is working. During this hour, he is permitted to exercise alone outdoors.
Inmates in the general population are permitted to shower and shave daily. Except while he was working six days per week, plaintiff has been permitted to shower and shave only three times per week. While he was employed six days a week, plaintiff was permitted to shower and shave six times per week. Plaintiff's cell is equipped with a sink that he may use for washing.
*1297 All inmates are limited to one visit per week. Inmates in the general population are permitted to see visitors on holidays, evenings, and weekends. Inmates in the BAU, including plaintiff, are permitted to see visitors only on Saturday mornings. These limitations do not apply to prisoners' consultations with their attorneys.
E. Security Justifications for the Challenged Conditions
Defendants have asserted that the restricted opportunities afforded plaintiff are justified by security considerations. We are obligated by the recent decision in Bell v. Wolfish, 441 U.S. 520, 99 S. Ct. 1861, 60 L. Ed. 2d 447 (1979), to defer to the decisions of prison officials on matters of security unless substantial evidence shows that they have exaggerated their responses to the perceived security problem. See discussion infra.
Plaintiff has testified that to insure his safety he needs an escort of two guards to accompany him to religious services and other programs where he would come into contact with other prisoners. Indeed, he has indicated that even if we order defendants to permit him to attend religious services and educational classes and to go to the law library, he would not do so unless accompanied by a two-guard escort, because of fears for his safety. Defendants do not contest plaintiff's evaluation of the necessity of a two-guard escort, except for their blanket assertion that all plaintiff's fears for his safety are insubstantial, a contention which we have rejected. Accordingly, we accept plaintiff's testimony that he cannot safely be transported to programs where he would come into contact with other prisoners unless he is accompanied by two guards.
Defendants argue that giving plaintiff the required escort would compromise the security of the institution as a whole by reducing the number of guards in the remainder of the institution. At no time are there more than 40 guards working within the institution.[9] Assigning a two-guard escort to plaintiff would reduce that complement by 5%, and might lead to an increased likelihood of escape, violence, pilferage, and vandalism in the institution. We find that defendants' response to this proposal has not been exaggerated, and we must defer to their judgment on the "escort" aspect of plaintiff's proposed relief.
Defendants argue further that the security of the BAU itself would be weakened if they had to open the doors frequently to transport plaintiff to programs which are conducted outside the BAU building. The chapel, prison law library, and prison school, to which plaintiff seeks personal access, are all located in a separate building from the BAU building. Superintendent Cuyler testified that some of the most dangerous inmates in the entire state prison system are housed in the BAU, and that he is concerned about the possibility of escapes.[10] We cannot and do not find that the defendants' concern for the risk to BAU building security that would be created by frequently transporting plaintiff from the BAU to the main prison building is exaggerated.
These problemsthe weakening of BAU security and the weakening of total institution security caused by diversion of guards from other areas of the institutionwould arise whenever plaintiff is transported from the BAU to a program in the main prison building where he would come into contact with other inmates. Since we have not found that the prison administrators' response to these problems is exaggerated, we must defer to their judgment. These security problems thus control our disposition of plaintiff's claims for personal access to communal *1298 religious services, personal access to the law library, personal attendance at educational classes, and work outside the BAU.
Defendants contend also that a security risk would be created by opening the doors of plaintiff's own cell. Their concern for that risk is plainly exaggerated. None of the relief sought by plaintiff would require defendants to open any other prisoner's cell in the BAU. Defendants have never claimed that plaintiff himself presents a security risk. To the contrary, they emphasize that he is free to rejoin the general population whenever he wishes.
Defendants argue further that giving plaintiff privileges not enjoyed by other inmates in the BAU would increase resentment against him felt by the other inmates. Although Superintendent Cuyler testified in general terms that "we have an unwritten rule . . . that we try not to do for one inmate or any group of inmates something that we can't do for our entire population," another defense witness testified that defendants have regularly granted some prisoners in the BAU more benefits, including jobs and television and radio receivers, than other prisoners in the BAU, and that no breakdown in BAU security has resulted. We note also that plaintiff seeks no privileges or opportunities which are not already enjoyed by prisoners in the general population. We find that defendants' argument concerning prisoner resentment is speculative, and that to the extent that disparate treatment of plaintiff is based on the anticipation of prisoner resentment it is an exaggerated response to any security problems that may exist.
Finally, defendants argue that their refusal to furnish the plaintiff's cell with a chair is justified by the security consideration that he might dismantle the chair and use it as a weapon. While this reasoning would be persuasive as applied to inmates who are confined in the BAU because they present security risks themselves, it is inapplicable to plaintiff. As we have noted above, defendants have never asserted that plaintiff is a security risk himself. Indeed, they have provided him with a sledge hammer and other heavy tools for use in his former job in the BAU. Consequently, we find that the denial to plaintiff of a chair in his cell is an exaggerated response to any perceived security problem.
III. Discussion
Our analysis begins, as it must, with the recent opinion of the United States Supreme Court in Bell v. Wolfish, 441 U.S. 520, 99 S. Ct. 1861, 60 L. Ed. 2d 447 (1979). In Wolfish, the Court considered a challenge to the conditions of confinement of pretrial detainees at the Metropolitan Correctional Center (MCC), a federal facility in New York City. Much of the Court's reasoning is expressly made applicable to convicted inmates as well as to pretrial detainees. 441 U.S. at 546 n.28 & 547 n.29, 99 S.Ct. at 1878 n.28 & n.29. The Supreme Court indicated that courts should accord great deference to correctional officials' decisions about the security needs of their institutions, and enunciated a standard for judicial review of such decisions:
Prison administrators therefore should be accorded wide-ranging deference in the adoption and execution of policies and practices that in their judgment are needed to preserve internal order and discipline and to maintain institutional security. "Such considerations are peculiarly within the province and professional expertise of corrections officials, and, in the absence of substantial evidence in the record to indicate that the officials have exaggerated their response to these considerations, courts should ordinarily defer to their expert judgment in such matters."
441 U.S. at 547-48, 99 S.Ct. at 1878-79 (emphasis added) (citations and footnotes omitted). In evaluating challenged conditions at MCC against a background of security considerations, the Court determined that the record would not support an inference that MCC officials had exaggerated their responses to security problems. 441 U.S. at 551 & 555, 99 S.Ct. at 1880 & 1882. The Court concluded that respondents in Wolfish "simply have not met their heavy *1299 burden of showing that these officials have exaggerated their response to the genuine security considerations that actuated these restrictions and practices." 441 U.S. at 561-62, 99 S.Ct. at 1886. In our findings of fact, we concluded that plaintiff had met this burden with respect to several of the practices which he challenges here.[11]
However, such a conclusion does not resolve the matter, for in order to be entitled to relief in this action brought under 42 U.S.C. § 1983, plaintiff must establish that he has been deprived of rights secured to him by the Constitution and laws of the United States. See, e. g., Basista v. Weir, 340 F.2d 74 (3d Cir. 1965). Plaintiff in fact maintains that he has been deprived of constitutional rights under the First, Eighth, and Fourteenth Amendments to the United States Constitution. He claims that denial of his personal access to religious services and to the law library violates his rights under the First and Fourteenth Amendments. He maintains that the denial to him of employment, idle pay, participation in educational programs, and other benefits enjoyed by inmates in the general population, solely because he is confined in the BAU for his own protection, is an unconstitutional burden on his Eighth Amendment right to be protected reasonably from violence directed at him by other inmates.[12] And he advances a claim under Administrative Directive 801 of the Pennsylvania Bureau of Correction, over which we exercise pendent jurisdiction.
Our task is made somewhat easier by the apparent agreement of the parties on the issues relating to plaintiff's access to religious services, use of the law library, and availability of educational programs. The defendants state that under existing prison policy, plaintiff may receive daily visits from the prison chaplain and may be given communion in his cell; that he will be provided with photocopies of materials from the prison law library for use in his cell; and that he may participate in educational programs by means of tutors and correspondence courses in his cell. Plaintiff denies that these arrangements have been made available to him in the past, but has indicated that he is willing to accept them in lieu of being transported under guard to the prison chapel, library, and school. We address these arrangements here only to explain why the constitution requires no more of defendants but permits no less.
A. Denial of Personal Access to Religious Services
Prisoners must be afforded reasonable opportunities to exercise the religious freedom guaranteed by the First and Fourteenth Amendments. Cruz v. Beto, 405 U.S. 319, 92 S. Ct. 1079, 92 S. Ct. 1079, 31 L. Ed. 2d 263 (1972); Cooper v. Pate, 378 U.S. 546, 84 S. Ct. 1733, 12 L. Ed. 2d 1030 (1964). In the Third Circuit, a restriction on the free exercise by prisoners of their religion is deemed reasonable only if it is the least restrictive alternative that is consistent with the maintenance of prison discipline. O'Malley v. Brierley, 477 F.2d 785 (3d Cir. 1973); X v. Brierley, 457 F. Supp. 350 (E.D.Pa.1978) (Luongo, J.). However, *1300 in determining what the least restrictive alternative is, we must defer to prison officials' evaluation of security risks unless their response is exaggerated. In Wolfish, supra, the Supreme Court indicated that such deference was due prison administrators "even when an institutional restriction infringes a specific constitutional guarantee, such as the First Amendment." 99 S.Ct. at 1878. In particular, we must defer to defendants' assessment of the security risks associated with opening the BAU and diverting guards to escort plaintiff to the main prison building, as we have explained in Part II-E, supra. Because of these security considerations, plaintiff is not entitled to attend religious services in the prison chapel.[13]
On the other hand, no substantial security considerations preclude plaintiff from receiving regular visits from a prison chaplain and receiving communion or mass in his cell. Prisoners in segregated confinement are entitled at least to individual religious ministration in their cells. E. g., Sweet v. South Carolina Department of Corrections, 529 F.2d 854 (4th Cir. 1975) (en banc); Diamond v. Thompson, 364 F. Supp. 659 (M.D.Ala.1973), aff'd, 523 F.2d 1201 (5th Cir. 1975). Since defendants have asserted no security justification for limiting the frequency of plaintiff's religious exercise, they must permit him to see a chaplain of the Roman Catholic faith at least as frequently as prisoners in the general population are permitted to attend religious services.
B. Denial of Personal Access to the Law Library
In Bounds v. Smith, 430 U.S. 871, 97 S. Ct. 1491, 52 L. Ed. 2d 72 (1977), the Supreme Court held that "the fundamental constitutional right of access to the courts requires prison authorities to assist inmates in the preparation and filing of meaningful legal papers by providing prisoners with adequate law libraries or adequate assistance from persons trained in the law." 430 U.S. at 828, 97 S.Ct. at 1498. See also Bryan v. Werner, 516 F.2d 233 (3d Cir. 1975); Wade v. Kane, 448 F. Supp. 678 (E.D. Pa.1978) (Lord, C. J.), aff'd, 591 F.2d 1338 (3d Cir. 1979). The Supreme Court emphasized, however, that its decision "does not foreclose alternative means" of assuring meaningful access to the courts. 430 U.S. at 830, 97 S. Ct. 1491. The Court observed, for instance, that the constitutional requirement might be met through a program of legal assistance provided by inmates who *1301 were trained as paralegal assistants working under a lawyer's supervision. Id. at 831, 97 S. Ct. 1491.
While the Supreme Court has "consistently required States to shoulder affirmative obligations to assure all prisoners meaningful access to the courts," id. at 824, 97 S.Ct. at 1496, and this right was not before the Court in Wolfish, supra, in the wake of that decision we must extend some deference to the judgments of prison officials as to the security concerns that would be implicated if plaintiff were permitted to go the law library under escort. See also Procunier v. Martinez, 416 U.S. 396, 420, 94 S. Ct. 1800, 1814, 40 L. Ed. 2d 224 (1974). The security risks involved here are the same that preclude plaintiff's personal attendance at the prison chapel. Accordingly, we follow our earlier reasoning and hold that plaintiff need not be afforded personal access to the library. In such circumstances, other courts have held that the constitutional right or meaningful access to the courts is satisfied by providing legal materials to prisoners in their cells. Arsberry v. Sielaff, 586 F.2d 37, 44 (7th Cir. 1978); Frazier v. Ward, 426 F. Supp. 1354, 1371 (S.D.N.Y.1977). We agree.
In Bryan v. Werner, supra, the Third Circuit held that a regulation prohibiting an inmate-run clinic from assisting inmates in filing certain suits violated their right of access to the courts, in the absence of reasonable alternatives for obtaining access. The court stated, "If there is no alternative and readily available means of obtaining assistance of at least equal caliber, the restriction must be invalidated." 516 F.2d at 237. While the defendants may provide legal materials to plaintiff in his cell, the opportunity to do legal research which is thereby afforded him must be at least the equivalent of the opportunity that is available to an inmate who is permitted to go personally to the prison law library. We therefore hold that the legal materials provided to plaintiff in his cell must be legible, that they must be supplied to him within 48 hours of his request, and that he may request legal materials at least as frequently as he would be permitted to visit the law library if he were in the general population.[14]
C. Denial of Employment and Idle Pay
As we have found, plaintiff has been denied the opportunity to engage in remunerative employment or, when work is not available, to receive idle pay. Defendants provided plaintiff with a job immediately before the trial of this action began, but have made no representations to him or to us that they will continue to employ him or to grant him idle pay. Defendants pay idle pay to inmates who are in the BAU for reasons other than their own protection; they deny idle pay only to inmates who are housed in the BAU because they need protection from other prisoners.
Administrative Directive 801 of the Pennsylvania Bureau of Correction includes provisions governing the treatment of prisoners who are assigned to restricted housing units such as the BAU. The Directive provides:
The inmates [in the BAU] shall have all the rights and privileges accorded to the general population except for freedom to move about the institution, freedom to engage in programs with the general population, the use of civilian clothing and the use of items specifically found by the Program Review Committee to be a security hazard.
Administrative Directive 801, Part VI.A.2 (effective October 1, 1978). The denial to plaintiff of the opportunity to work or to receive idle pay, when those benefits are afforded to prisoners in the general population, is contrary to the plain language and *1302 the facially apparent meaning of this provision.[15]
Although we deal here with a state law claim, we must nevertheless apply to this situation the overriding principles of Bell v. Wolfish, supra. The policy of judicial deference to prison administrators stated in Wolfish is based on a recognition of the limitations on judicial competence "to deal with the increasingly urgent problems of prison administration and reform." 441 U.S. at 548 n.30, 99 S.Ct. at 1879 n.30, quoting Procunier v. Martinez, 416 U.S. 396, 404-05, 94 S. Ct. 1800, 40 L. Ed. 2d 224 (1974). Since that policy arises from these broad prudential considerations, it should be applied by federal courts whenever they are called upon to scrutinize the decisions of prison administrators, no matter whether their scrutiny is founded on federal or state law. Accordingly, we must defer to the judgments of the Graterford authorities concerning any applicable security problems unless we find that their response is exaggerated.
We note initially that no security justification has been advanced for denying plaintiff idle pay when he is not working. The only reason defendants have advanced for denying him idle pay is to deter prisoners in the general population from fraudulently seeking protective confinement in the BAU in order to avoid work. This reasoning is not sufficient to justify a clear violation of Administrative Directive 801. We are confident that the defendants have the power to determine whether individual applications for confinement in the BAU are spurious, and need not rely on a blanket exclusion which unnecessarily penalizes inmates who are validly confined in the BAU for their own protection. When individual determinations are readily available, the use of a broad generalization which disadvantages a constitutionally cognizable group is unnecessary. Orr v. Orr, 440 U.S. 268, 99 S. Ct. 1102, 1113, 59 L. Ed. 2d 306 (1979) (use of gender as a proxy for financial need held unconstitutional because individual determinations of need were available). See n.16, infra.
The assignment of plaintiff to work outside the BAU would implicate the security considerations related to taxing the guard force and weakening the building security which we have already held preclude plaintiff's personal access to the law library and to religious services. We note, too, that Administrative Directive 801 permits limitations on plaintiff's "freedom to move about the institution," and thus does not require that he be assigned to work outside the BAU. For these reasons, we do not order defendants to assign plaintiff to work outside the BAU, but only to provide him work within the BAU building when such employment is available. The record has not been developed with respect to security risks involved in assigning plaintiff work inside the BAU, or the availability of work there. It is clear, however, that no security considerations preclude plaintiff from ever being assigned remunerative work, since he was given work shortly before the first hearing in this action. Because we are uncertain what risks to security may exist, we hold only that plaintiff must be provided with remunerative employment when suitable employment is available, consistent with security precautions, and that plaintiff must be given idle pay when he is not working.
D. Denial of Other Benefits (The Unconstitutional Conditions Claim)
In addition to the denial of personal access to communal religious services and to the law library, and the denial of employment and idle pay, plaintiff complains as well of a number of other disparities between the opportunities, rights, and privileges afforded him during his confinement in the BAU, and those afforded prisoners in *1303 the general population at Graterford. In particular, he complains of disparities in the availability of educational programs, in cell furnishings, in time out of the cell, in the frequency of opportunities to shower and shave, and in the hours of visitation. We have already made factual findings with respect to these disparities.
We emphasize that plaintiff does not argue, and we do not hold, that the limited rights and privileges afforded him in themselves constitute cruel and unusual punishment. Such an argument or holding would be contrary to the clear weight of precedent. See, e. g., Newman v. Alabama, 559 F.2d 283, 291 (5th Cir. 1977), cert. denied, 438 U.S. 915, 98 S. Ct. 3144, 57 L. Ed. 2d 1160 (1978); Padgett v. Stein, 406 F. Supp. 287, 296 (M.D.Pa.1975). See also Nadeau v. Helgemoe, 561 F.2d 411 (1st Cir. 1977). However, for reasons which will appear, we believe that the denial to plaintiff of benefits which other prisoners enjoy, solely because he is in need of protection from other inmates, violates the Eighth Amendment unless the disparity is justified by considerations of institutional security. Put differently, we conclude that, absent valid security considerations, plaintiff may not be required to renounce his right to reasonable protection from other inmates as a condition of receiving the opportunities afforded to prisoners in the general population.[16]
1. The Eighth Amendment Right to Protection from Other Inmates
Our analysis proceeds from the proposition that correctional authorities have an obligation to protect inmates from violence and assaults directed at them by other inmates. Judge Van Dusen has explained that "the right of a prisoner to be reasonably free from an atmosphere conducive of sexual assault is a constitutional right; it falls within the Eighth Amendment right against cruel and unusual punishment." United States ex rel. Ricketts v. Lightcap, 567 F.2d 1226, 1235 (3d Cir. 1977) (concurring opinion). Moreover, in Woodhous v. Virginia, 487 F.2d 889, 890 (4th Cir. 1973), the Fourth Circuit held:
A prisoner has a right, secured by the eighth and fourteenth amendments, to be reasonably protected from constant threat of violence and sexual assault by his fellow inmates, and he need not wait until he is actually assaulted to obtain relief.
Accord, Rudolph v. Locke, 594 F.2d 1076 (5th Cir. 1979); Little v. Walker, 552 F.2d 193 (7th Cir. 1977), cert. denied, 435 U.S. 932, 98 S. Ct. 1507, 55 L. Ed. 2d 530 (1978); Sweet v. South Carolina Department of Corrections, 529 F.2d 854, 858 n.3 (4th Cir. 1975) (en banc); Finney v. Arkansas Board of Corrections, 505 F.2d 194, 201 (8th Cir. 1974); Stevens v. County of Dutchess, 445 F. Supp. 89 (S.D.N.Y.1977). The danger of assault may be proved by evidence of events at other penal institutions in the area, as well as at the institution at which the prisoner is serving his sentence. Withers v. Levine, 449 F. Supp. 473, 476 (D.Md. 1978).
2. The Eighth Amendment and the Doctrine of Unconstitutional Conditions
The defendants have accommodated Wojtczak's well-founded apprehension of harm by housing him in the BAU. His assignment to the BAU was made after a hearing at which he expressed his well-grounded fear of assault. We cannot say that by assigning Wojtczak to the BAU, defendants have failed to satisfy their duty of reasonable care to protect him from violence. However, as a condition of receiving this protection, the defendants have deprived Wojtczak of some rights and privileges which would have been available to him if he had remained in the general population. Defendants argue that by requesting voluntary confinement in the BAU, the plaintiff has waived the rights and privileges granted to prisoners in the general population. Although plaintiff does request continued confinement in the BAU for his own *1304 protection, we believe that, under the facts of this case, defendants' waiver argument is unsound. Defendants would condition plaintiff's enjoyment of the opportunities available to prisoners in the general population on his willingness to be reassigned to the general population. Thus defendants would require plaintiff to choose between those opportunities and his constitutional right to be protected reasonably from harm from other inmates.
The short of it is that defendants would deny plaintiff the opportunity to participate in educational programs, to have a chair in his cell, and otherwise to receive treatment equivalent to that afforded prisoners in the general population, because he has exercised his Eighth Amendment rights. This is impermissible. In Perry v. Sindermann, 408 U.S. 593, 92 S. Ct. 2694, 33 L. Ed. 2d 570 (1972), the Supreme Court analyzed a similar denial of benefits as follows:
For at least a quarter-century, this Court has made clear that even though a person has no "right" to a valuable governmental benefit and even though the government may deny him the benefit for any number of reasons, there are some reasons upon which the government may not rely. It may not deny a benefit to a person on a basis that infringes his constitutionally protected interestsespecially, his interest in freedom of speech. For if the government could deny a benefit to a person because of his constitutionally protected speech or associations, his exercise of those freedoms would in effect be penalized and inhibited. This would allow the government to "produce a result which [it] could not command directly." Speiser v. Randall, 357 U.S. 513, 526, 78 S. Ct. 1332, 1342, 2 L. Ed. 2d 1460. Such interference with constitutional rights is impermissible.
408 U.S. at 597, 92 S.Ct. at 2697. Accord, Elrod v. Burns, 427 U.S. 347, 358-61, 96 S. Ct. 2673, 49 L. Ed. 2d 547 (1976) (plurality opinion); Frissell v. Rizzo, 597 F.2d 840, 845 (3d Cir.), cert. denied, ___ U.S. ___, 100 S. Ct. 82, 62 L. Ed. 2d 52 (1979).
In fact, the antecedents of the doctrine of unconstitutional conditions are far older than the quarter-century claimed by the Perry Court. In Insurance Company v. Morse, 87 U.S. (20 Wall.) 445, 22 L. Ed. 365 (1874), the Court invalidated a Wisconsin statute which permitted foreign corporations to do business in Wisconsin only on the condition that they waive their right to remove suits filed against them in the state courts to federal court. The Court held that although the state could absolutely prohibit a foreign corporation from doing business in Wisconsin, it could not impose conditions "which are repugnant to the Constitution and laws of the United States." Id. at 456-57. The Wisconsin law was unconstitutional because it obstructed the petitioner in the exercise of his rights under Article III of the Constitution and the Judiciary Act of 1789. In Frost v. Railroad Commission, 271 U.S. 583, 46 S. Ct. 605, 70 L. Ed. 1101 (1926), the Court traced the development of the doctrine during the preceding half-century, concluding:
If the state may compel the surrender of one constitutional right as a condition of its favor, it may, in like manner, compel a surrender of all. It is inconceivable that guaranties embedded in the Constitution of the United States may thus be manipulated out of existence.
271 U.S. at 594, 46 S.Ct. at 607. See generally L. Tribe, American Constitutional Law 510 (1978); Van Alstyne, The Demise of the RightPrivilege Distinction in Constitutional Law, 81 Harv.L.Rev. 1439, 1445-49 (1968); O'Neil, Unconstitutional Conditions: Welfare Benefits with Strings Attached, 54 Cal.L.Rev. 443 (1966); Note, Unconstitutional Conditions, 73 Harv.L.Rev. 1595 (1960); Hale, Unconstitutional Conditions and Constitutional Rights, 35 Colum.L.Rev. 321 (1935); Merrill, Unconstitutional Conditions, 77 U.Pa.L.Rev. 879 (1929).
The doctrine of unconstitutional conditions has been applied most frequently in recent years to protect First Amendment *1305 rights.[17] For example, in Perry v. Sindermann, supra, an untenured college professor challenged the nonrenewal of his employment contract with a state college. He alleged that the decision not to rehire him was based on his public criticism of college policies. The Supreme Court held that his continued employment could not be conditioned on the surrender of the right to freedom of speech. Perry is but one in a long line of cases in which the Court has protected public employees from discharge for reasons that infringe their rights to freedom of speech. E. g., Givhan v. Western Line Consolidated School District, 439 U.S. 410, 99 S. Ct. 693, 58 L. Ed. 2d 619 (1979); Mt. Healthy City School District Board of Education v. Doyle, 429 U.S. 274, 97 S. Ct. 568, 50 L. Ed. 2d 471 (1977); Pickering v. Board of Education, 391 U.S. 563, 88 S. Ct. 1731, 20 L. Ed. 2d 811 (1968). In Elrod v. Burns, supra, the Court followed Perry, supra, to hold that a system of political patronage dismissals of public employees unconstitutionally conditioned their employment on the nonassertion of their rights to freedom of association and belief. 427 U.S. at 358-61, 96 S. Ct. 2673 (plurality opinion); id. at 375, 96 S.Ct. at 2690 (concurring opinion).
The Supreme Court has also applied the doctrine of unconstitutional conditions to protect First Amendment interests in the free exercise of religion. In Sherbert v. Verner, 374 U.S. 398, 83 S. Ct. 1790, 10 L. Ed. 2d 965 (1963), the Court held that South Carolina could not constitutionally deny unemployment benefits to a claimant who refused to work on Saturday because of her religious beliefs. The Court commented, "It is too late in the day to doubt that the liberties of religion and expression may be infringed by the denial of or placing of conditions upon a benefit or privilege." 374 U.S. at 404, 83 S.Ct. at 1794. And in McDaniel v. Paty, 435 U.S. 618, 98 S. Ct. 1322, 55 L. Ed. 2d 593 (1978), the Court invalidated a Tennessee statute which disqualified members of the clergy from running for election as delegates to the state's constitutional convention. The Court held that the clergy disqualification provision unconstitutionally conditioned access to the ballot on the minister-candidate's willingness to surrender his religiously-impelled ministry. 435 U.S. at 626, 98 S. Ct. 1322 (plurality opinion); id. at 633, 98 S.Ct. at 1329 (concurring opinion).
However, the doctrine has never been restricted to cases where First Amendment interests were implicated. Its origins lie elsewhere, see, e. g., Frost, supra, and the doctrine has consistently been employed to protect other constitutional interests. For example, in Dixon v. Alabama State Board of Education, 294 F.2d 150 (5th Cir.), cert. denied, 368 U.S. 930, 82 S. Ct. 368, 7 L. Ed. 2d 193 (1961), the court held that due process requires notice and some opportunity for a hearing before students at a tax-supported college are expelled for misconduct. Rejecting appellants' argument that the students had waived notice and a hearing by accepting the privilege of state college enrollment, the court of appeals commented that "the State cannot condition the granting of even a privilege upon the renunciation of the constitutional right to procedural due process." 294 F.2d at 156. In Parrish v. Civil Service Commission, 66 Cal. 2d 260, 57 Cal. Rptr. 623, 425 P.2d 223 (1967), the California Supreme Court adopted unconstitutional conditions analysis to protect the Fourth Amendment right of welfare recipients to be free from unreasonable warrantless searches of their homes. In that case, the plaintiff was a social worker who had been fired for refusing to participate in warrantless searches of recipients' homes on the grounds that the searches were unconstitutional. The searchers would not force their way into a home if the recipient refused to consent to their entry, but refusal to consent was treated by the welfare agency as grounds for the termination of benefits. The Court held that even if the recipients gave their voluntary consent to the searches, the program of *1306 warrantless searches was unconstitutional because the agency could not condition continued receipt of welfare benefits upon a waiver of Fourth Amendment rights. 57 Cal.Rptr. at 630-31, 425 P.2d at 230-31.
While the doctrine of unconstitutional conditions has not previously been applied to protect the Eighth Amendment interests of a convicted prisoner, we can discern no reason of logic or of policy for declining to do so. In Lamb v. Hutto, 467 F. Supp. 562, 565 (E.D.Va.1979), the principle was invoked to safeguard the First Amendment rights of a prison inmate. Most importantly, the logical foundation of the unconstitutional conditions doctrine applies with equal force in any case in which the enjoyment of a government-sponsored benefit is conditioned upon a person's nonassertion of any constitutional right. See Van Alstyne, supra, 81 Harv.L.Rev. at 1446.
We do note one difference between application of the doctrine here and application in other contexts. The pertinence of the unconstitutional conditions doctrine here depends upon our prior factual finding that the plaintiff is objectively in danger of violent assault. This logical dependency is a consequence of the special nature of the Eighth Amendment right to protection from other inmates. The constitutional rights of freedom of speech, free exercise of religion, and freedom from unreasonable warrantless searches are guaranteed to all person at all times, although of course the contours of the rights may vary from situation to situation. Governmental authorities are always under an obligation to refrain from any activity that would infringe these rights. In contrast, the Eighth Amendment right to protection from other inmates does not place any obligation upon prison authorities except when the objective possibility of assault exists. Therefore, the right is not implicated when the government denies benefits to a prisoner unless the prisoner is actually in danger. In a legal action brought by a prisoner, the burden of showing that he is objectively in danger is of course on the plaintiff.
In this respect, the Eighth Amendment right is like the procedural due process right in Dixon, supra, since procedural due process does not place any obligation on governmental authorities unless a person is deprived of a cognizable liberty or property interest. See, e. g., Bishop v. Wood, 426 U.S. 341, 96 S. Ct. 2074, 48 L. Ed. 2d 684 (1976). Like procedural due process, the right to protection from other inmates only comes into play in a specific factual context. In the case of procedural due process, the requisite fact is the pending deprivation of a liberty or a property interest; in the case of the right to protection, the requisite fact is that an inmate is objectively in danger of violent assault. We have previously found that the present plaintiff is objectively in danger of violence directed at him by other inmates, thus triggering the unconstitutional conditions doctrine.
With the foregoing caveat, we hold that prison authorities may not condition the rights, privileges, or opportunities of a prisoner who is objectively in danger of violent assault upon his renunciation of his Eighth Amendment right to be protected reasonably from violence directed at him by other inmates, except to the extent the Wolfish grounded security considerations allow. Here the defendants have confined plaintiff to the BAU for his own protection, and as a condition of this protection, to which plaintiff is constitutionally entitled, have required him to forego education and other benefits. For the reasons and subject to the limitations stated in the preceding discussion, defendants may not deny plaintiff those benefits on a basis that infringes his Eighth Amendment right to protection. We turn then to the questions of security considerations.
3. Security Considerations
Given the overriding character of Bell v. Wolfish, we must defer to the judgments of prison authorities concerning security considerations unless their response is exaggerated. Since the defendants have advanced different security justifications for each of the various disparities between plaintiff's *1307 privileges and those of prisoners in the general population, we examine the offered justifications separately and in turn.
a. Educational Programs
The security considerations that are relevant to restrictions on plaintiff's access to educational programs in the main prison building are the burden on the guard force which would be created by supplying plaintiff the necessary two-guard escort, and the diminution in BAU building security arising from the frequent transport of plaintiff to the prison school. See pp. 1297-1298, supra. For these reasons, we hold that plaintiff is not entitled to attend classes in the main prison building, but must be permitted instruction by tutors and the use of educational materials in his cell.
b. Cell Furniture
The denial to plaintiff of a chair in his cell is plainly an exaggerated response to security considerations which are relevant only to prisoners who are housed in the BAU for reasons other than self-protection. As has already been noted, the only justification asserted by the defendants is that a chair might be dismantled and used as a weapon. However, they have not tried to show that plaintiff himself presents a security risk, and in fact they provided him with a sledgehammer and other heavy tools for use in his former employment within BAU.
c. Visitation, Personal Hygiene, and Time Out the Cell
With respect to visitation, we find that the disparity between plaintiff's privileges and those of prisoners in the general population is insubstantial. Plaintiff is allowed the same number of visits as other prisoners, but is allowed fewer hours during which visits may be scheduled. The scheduling of visits is within prison officials' discretion. Pell v. Procunier, 417 U.S. 817, 92 S. Ct. 2800, 41 L. Ed. 2d 495 (1974). Furthermore, defendants have shown that extending the hours for visitation would tax the guard force, and thus have shown a security justification for the limited hours of visitation.
Conflicting evidence was presented on the question of how many guards are required to take plaintiff to the shower. No evidence was presented on the question of possible burdens on the guard force that would result from permitting plaintiff to remain out of his cell for more than one hour per day. With respect to neither of these matters can we conclude that plaintiff has met his burden of proof by showing that the response of prison officials to security concerns was exaggerated. Accordingly, plaintiff's claims for relief related to these issues are denied.
An appropriate order follows.[18]
NOTES
[1] We were informed at the hearing on December 27, 1978 that the name of this unit was changed to "Restricted Housing Unit" at some time prior to hearing. However, the witnesses continued, for the most part, to refer to the "BAU" in their testimony. For the sake of clarity, we will use the term "BAU" when referring to the housing unit to which plaintiff is assigned.
[2] Although plaintiff's claim relating to access to the Graterford law library was not alleged in his Amended Complaint, extensive evidence on that issue was adduced at the hearing, without objection, and both parties have addressed the issue in their memoranda of law. Consequently we treat the pleadings as amended to conform to the evidence. Fed.R.Civ.P. Rule 15(b).
In his Amended Complaint, plaintiff also alleged disparities in lighting, provision of hot water and cleaning and hygiene materials, permission to keep matches in his cell, use of silverware at meals, permission to smoke a pipe, and permission to tape materials onto cell walls. He also alleged that medical treatment was inadequate, that his mail was censored, and that the BAU was inadequately ventilated and infested by rodents. Since none of these allegations was supported at the hearing or addressed in plaintiff's proposed permanent injunction, we deem them abandoned.
[3] This opinion and the accompanying order address only plaintiff's claim for injunctive relief. His claim for damages is not presently before us.
[4] Concomitantly, jurisdiction is founded on 28 U.S.C. § 1343.
[5] Defendants also argue that plaintiff's claims for remunerative employment when available, and for idle pay when employment is not available, are moot. Defendants provided plaintiff with a job shortly before the trial began. However, they have made no representations to the court or to the plaintiff that they will continue to employ him. Nor have defendants represented that they will give plaintiff idle pay when he is not employed. In fact, during the interval between the first and second days of trial, which were separated by several weeks, defendants downgraded plaintiff's employment from full-time to part-time. At the time of the second and final day of trial, plaintiff had not received any idle pay based on the downgrading of his employment. While the defendants provided plaintiff with temporary employment, they have not ceased their allegedly illegal activity, for they have evinced no intention to give plaintiff either a job or idle pay on a permanent basis. Even if they had indicated such an intention, plaintiff's claims would not be moot because the voluntary cessation of allegedly illegal practices does not moot claims for injunctive relief. United States v. Concentrated Phosphate Export Association, 393 U.S. 199, 89 S. Ct. 361, 21 L. Ed. 2d 344 (1968); Zurak v. Regan, 550 F.2d 86, 95 n. 17 (2d Cir.), cert. denied, 433 U.S. 914, 97 S. Ct. 2988, 53 L. Ed. 2d 1101 (1977).
[6] The crimes themselves and the police search for the perpetrator had been widely publicized. Indeed, just prior to our hearing, we read a newspaper article in the Philadelphia Inquirer reporting that plaintiff had been sentenced in Bucks County. We informed counsel of the contents of this article at a prehearing conference. We also noted at hearing that one of our law clerks had seen a television report of the sentencing on television channel 10. The publicity surrounding these events was highlighted by plaintiff's status as a well-known former high school football star in Northeast Philadelphia.
[7] The reasons for this move were not revealed at trial.
[8] The syndrome was described in Short Eyes, a play by Miguel Pinero, an ex-convict, which won the New York Drama Critics Circle Award as Best American Play of 1973-74. The play concerns the murder of an accused child molester by other inmates in a House of Detention. The appended glossary of prison slang defines "short eyes" to mean "Child molester; according to prisoners, the lowest, most despicable kind of criminal." M. Pinero, Short Eyes, 126 (Mermaid ed. 1975). Early in the play, a sympathetic inmate tells the victim, "If I was you I'd ask transfer to protection . . . cause . . . if you remain on this floor you're asking to die . . .. You'll be committing involuntary suicide." Id. at 30.
Independently of this action, we have been assigned another case which suggests that plaintiff's fears are at least within the bounds of reason. Mastrota v. Robinson, Civil Action No. 79-1914 (E.D.Pa. filed May 29, 1979). The plaintiff in that case alleges that upon his transfer to Graterford, he requested placement in maximum security for protection because of his notoriety, but instead was placed in the general population overnight. During that brief time in the general population, he alleges, he was stabbed by another inmate while under escort by two prison guards. The character of Mastrota's offenses is not apparent from the pleadings.
[9] This figure excludes guards assigned to the perimeter patrol, the vehicle lot, the pedestrian gate, and other locations outside the prison buildings.
[10] By way of contrast, Superintendent Cuyler also testified that the doors of the BAU are opened "on a routine basis" to transport prisoners to the visiting room, and another defense witness testified that the doors are opened "all the time." We cannot, however, find that the defendants' concern for the additional risk that would be created by transporting the plaintiff from the BAU to the main building is exaggerated.
[11] We note also that the Supreme Court was strongly influenced in Wolfish by the fact that a large majority of the MCC detainees were incarcerated there for less than 60 days. 441 U.S. at 543 & 552 & 555 n.35 & 562, 99 S.Ct. at 1876 & 1881 & 1882 n.35 & 1886. Here, in contrast, the plaintiff has been sentenced to a minimum term of forty years.
[12] Plaintiff also argues that he has been deprived of equal protection of the laws. With respect to the denial of access to religious services and to the law library, he argues that he is deprived of fundamental rights in the absence of a compelling state interest. With respect to all other disparities between his opportunities and those afforded to prisoners in the general population, he argues that those disparities are not rationally related to furthering a legitimate state interest. We do not reach either of these arguments. Even if plaintiff prevailed on both arguments, he would be entitled to no greater relief than we award upon our consideration of his other arguments. His fundamental rights are afforded as great protection by our examination of their constitutional sources as they would be afforded under Fourteenth Amendment equal protection analysis. His rational-relation claim is at best duplicative of his Eighth Amendment argument which we treat extensively.
[13] In St. Claire v. Cuyler, 481 F. Supp. 732 at 739-741 (E.D.Pa.1979), Chief Judge Lord has held that the Graterford rule prohibiting chapel attendance by all prisoners housed in segregated units is invalid. He ordered the prison authorities to permit the plaintiff Frank "X" St. Claire to attend religious services "unless it is determined after full hearing, followed by appropriate findings of fact, that the plaintiff's attendance at religious services constitutes a threat to prison discipline or the prison population." Id. Order ¶ 4. He instructed the prison authorities to undertake a two-tier analysis before restricting chapel attendance of a prisoner housed in a segregated unit:
[F]irst, assess whether a particular inmate is unruly or likely to cause security problems by his presence at chapel; then, if necessary, structure a staggered or rotating attendance schedule that would incorporate both the religious requirements of the inmates and the deployment-of-personnel concerns of the administration.
Id. at 741. Chief Judge Lord noted that the record was insufficient to show that St. Claire's attendance at chapel would raise bona fide security considerations. Id. at 740. He cited with approval a line of cases holding that it is constitutionally valid to restrict the chapel attendance of segregated inmates whose attendance would create security problems. Id. at 740-741.
In the case at bar, defendants have shown that Wojtczak's attendance at chapel implicates genuine considerations of security. Because he is in objective danger of assault, Wojtczak cannot safely attend religious services with any other prisoners unless accompanied by a two-guard escort. As we have found, providing this escort would diminish the security of the institution, and opening the BAU to transport plaintiff to the main building would diminish BAU building security. Moreover, a staggered or rotating attendance schedule would be of no avail to Wojtczak because he is in danger whenever he is accessible to other inmates. Thus our decision is consistent with St. Claire. However, nothing in this opinion should be construed to permit defendants to exempt Wojtczak from any administrative review procedure which they institute as a result of St. Claire.
[14] In Wade v. Kane, supra, Chief Judge Lord found the Graterford law library constitutionally deficient because it lacked essential law books. If this situation has not been rectified, plaintiff's access to legal materials may not satisfy the constitutional minimum. In that case, he may apply for modification of our order to permit him to meet with members of the paraprofessional inmate-run law clinic in his cell.
[15] We exercise our pendent jurisdiction over this state claim which arises from the same facts as plaintiff's § 1983 claim. See Hagans v. Levine, 415 U.S. 528, 94 S. Ct. 1372, 39 L. Ed. 2d 577 (1974). Since counsel for the defendants has never opposed the implication of a private right of action from Administrative Directive 801, we deem any objection on that basis to have been waived.
[16] Our reasoning in this section is also applicable to plaintiff's claims for remunerative employment and idle pay and constitutes an alternate holding with respect to them, although we have disposed of those claims on the basis of state law.
[17] "[I]t seems to be settled, at least in the First Amendment area, that `the government "may not deny a benefit to a person on a basis that infringes his constitutionally protected interests . . . ."'" Frissell v. Rizzo, supra, 597 F.2d at 845.
[18] Our order is directed at Superintendent Cuyler alone because he possesses the authority to implement it and because an order directed at all twenty-one defendants would be gratuitous as well as overbroad. Indeed no evidence was presented at trial against most of the other defendants and we have no way of knowing what relief, if any, to require from them. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1531851/ | 236 B.R. 192 (1999)
In re Steve Westley ASBILL, Debtor.
Michelle Oswald, f/k/a Michelle Smith Asbill, Plaintiff,
v.
Steve Westley Asbill, a/k/a Steven Wesley Asbill, Defendant.
Bankruptcy No. 98-05819-W. Adversary No. 98-80194-W.
United States Bankruptcy Court, D. South Carolina.
March 15, 1999.
*193 *194 H. Eugene Trotter, Columbia, SC, for plaintiff.
John R. Lester, Columbia, SC, for defendant.
ORDER
JOHN E. WAITES, Bankruptcy Judge.
THIS MATTER comes before the Court upon the complaint of the Plaintiff, Michelle Oswald ("Ms. Oswald"), the former spouse of the Debtor/Defendant, Steve Westley Asbill ("Debtor" or "Mr. Asbill"), seeking a determination that a debt in the amount of $5,000.00 arising from the property settlement of the parties[1] in their divorce proceedings is excepted from discharge pursuant to 11 U.S.C. § 523(a)(15).[2]
After receiving the evidence, including the Stipulation of Facts filed by the parties, and weighing the credibility of the witnesses, the Court makes the following Findings of Fact and Conclusions of Law pursuant to Rule 52 of the Federal Rules of Civil Procedure, made applicable by Rule 7052 of the Federal Rules of Bankruptcy Procedure.[3]
FINDINGS OF FACTS
Mr. Asbill, filed for relief under Chapter 7 in this Court on July 9, 1998. Ms. Oswald is the ex-wife of the Debtor and a creditor in this Chapter 7 case. The parties divorced in 1995 and a Decree of Divorce with an attached separation agreement was entered on January 10, 1995 ("Decree"). Further marital issues were resolved by a subsequent Order signed on June 24, 1998 which was based on hearings delayed as a result of Mr. Asbill's actions.[4]*195 The Decree and subsequent Order of June 24, 1998 required Mr. Asbill to pay to Ms. Oswald Five Thousand ($5,000.00) dollars as a property settlement. Mr. Asbill was further ordered to pay to Ms. Oswald the sum of Two Thousand, Five Hundred ($2,500.00) dollars towards her attorneys' fees and $109.11 for medical expenses for the parties' minor child.
Mr. Asbill has not paid the $5,000.00 property settlement, which the parties have stipulated is in the nature of a property settlement and not an award of support, and has not paid the $2,500.00 towards Ms. Oswald's attorneys' fees but has paid the $109.11 for uncovered medical expenses for the parties' minor child. Mr. Asbill does not now contest that the award of $2,500.00 towards Plaintiff's attorneys' fees is an incident of support and is non-dischargeable in the Chapter 7 bankruptcy case pursuant to 11 U.S.C § 523(a)(5).
When the parties began divorce proceedings in 1995, Ms. Oswald had an income of $17,984.00 per year while Mr. Asbill's income was $43,602.00, a sizeable portion of which was income derived from his own after hours business called Asbill's Paint & Body, a business run out of a garage located at his residence. The parties placed into evidence the 1991 W-2 wage and tax statement of the Debtor from Corley's Paint and Body Shop which indicated the Debtor made $46,430.00 that year. Ms. Oswald testified that the Debtor had similar income during all of the years of their marriage and the Debtor did not contest this. Since the divorce, Ms. Oswald has continued to work and receive salary increases and in 1998 made approximately $26,000.00. She has also continued her education, started savings accounts for her children and was remarried to Mark C. Oswald, an employee of United Parcel Service who has an annual income of approximately $62,000.00. Mr. Asbill testified that his salary has decreased to approximately $26,000.00 since he has stopped working overtime and has ceased his after hours business.[5] He also has remarried a part-time teacher and student who makes $153.00 per month and he has apparently transferred the after hours business known as Asbill's Paint & Body to his current wife. Once her education is complete, Ms. Asbill's new spouse will have the earning capacity to contribute to the family's budget or, if she does not work, allow her to reduce the significant child care expenses which the family presently incurs.
While Mr. Asbill testified that he deliberately cut back his overtime in the past two years so he could spend more time with his new wife and children and to help prevent another broken marriage, this Court finds that Mr. Asbill is underemployed. By all accounts, it appears that the Debtor has the means and opportunity to supplement his income. Mr. Asbill's business, Asbill's Paint & Body, is already established and has been a regular source of supplemental income in the past. He has the location, the equipment and the skills to carry on that business and, for these reasons, the prospects of additional income do not appear speculative. The Family Court found that the Debtor's earning ability was $3,600.00 per month and this Court likewise finds that, based on the Debtor's long work history and skills, the Debtor has a capacity to earn at least $3,600.00 per month.[6]
*196 According to the Stipulation filed by the Debtor on October 20, 1998 in connection with a Motion for Relief from Stay, the Debtor presently has at least $3,300.00 in equity in the marital residence.
Ms. Oswald has custody of the sole child born into her marriage with Mr. Asbill and Mr. Asbill pays child support in the amount of $116.61 per week.
CONCLUSIONS OF LAW
When Mr. Asbill and Ms. Oswald divorced and divided their assets and liabilities, Mr. Asbill was allowed to keep the marital residence subject to paying Ms. Oswald's share of the equity in the house. While Mr. Asbill continues to live in the house in which there is equity, he now wants to discharge the award of $5,000.00.
Divorce property settlements are generally dischargeable in bankruptcy; however, two exceptions are found in § 523(a)(15). Section 523(a)(15) provides as follows:
(a) A discharge under section 727, 1141, 1228(a), 1228(b), or 1328(b) of this title does not discharge an individual debtor from any debt
(15) not of the kind described in paragraph (5) [alimony, maintenance or support] that is incurred by the debtor in the course of divorce or separation or in connection with a separation agreement, divorce decree or other order of a court of record, a determination made in accordance with State or territorial law by a governmental unit unless
(A) the debtor does not have the ability to pay such debt from income or property of the debtor not reasonably necessary to be expended for the maintenance or support of the debtor or a dependent of the debtor and, if the debtor is engaged in a business, for the payment of expenditures necessary for the continuation, preservation, and operation of such business; or
(B) discharging such debt would result in a benefit to the debtor that outweighs the detrimental consequences to a spouse, former spouse, or child of the debtor.
11 U.S.C. § 523(a)(15).
Having met the prerequisites of § 523(a)(15) based upon the stipulation of the parties that the $5,000.00 debt is a debt not of the kind described in paragraph § 523(a)(5) and was incurred by the Debtor in the course of a divorce or separation or in connection with a separation agreement, divorce decree or other order of a court, the Court must first determine whether the Debtor has the ability to pay the debts pursuant to § 523(a)(15)(A). The burden of proof under this subsection, as well as the burden under § 523(a)(15)(B), falls upon the Debtor and that burden of proof must be met by a preponderance of the evidence. In re Campbell, 198 B.R. 467 (Bkrtcy.D.S.C. 1996) and In re Scott, 194 B.R. 375 (Bkrtcy.D.S.C.1995).
Pursuant to § 523(a)(15)(A), the Court must apply an "ability to pay" test which equates to the Chapter 13 confirmation "disposable income" test of § 1325(b)(2). In re Campbell, 198 B.R. at 473, 474 citing In re Hill, 184 B.R. 750, 754, 755 (Bkrtcy.N.D.Ill.1995).
Considering his work history and apparent good health, Mr. Asbill is capable of earning at least $3,600 per month to support his family and pay his debts, an amount which is approximately equal to the monthly living expenses stated in his bankruptcy schedules.
However, a review of these living expenses leads this Court to conclude that some are overstated or not reasonably necessary to be expended for the maintenance and support of the Debtor and his dependents. Even considering Mr. Asbill's agreement to pay the nondischargeable attorneys fees and without ascribing a value to Mr. Asbill's wife's future contribution to the family's living expenses, it appears that the Debtor has at least $200.00 per month in disposable income which is available *197 to pay the indebtedness to Ms. Oswald. Even considering unforeseen living expenses, Mr. Asbill has the ability to pay the debt to Ms. Oswald within a reasonable period of time of three to five years.
Considering these factors, the Court finds that pursuant to § 523(a)(15)(A), Mr. Asbill has failed to meet his burden in demonstrating that he does not have the ability to pay the debt to Ms. Oswald.
However, because the tests under § 523(a)(15) are disjunctive, the Court must now determine, pursuant to § 523(a)(15)(B), whether the detrimental consequences to Ms. Oswald are outweighed by the benefit of the Debtor's fresh start.
To properly balance the equities, the court should consider, at a minimum, the following factors:
1. The amount of debt involved, including all payment terms;
2. The current income of the debtor, objecting creditor and their respective spouses;
3. The current expenses of the debtor, objecting creditor and their respective spouses;
4. The current assets, including exempt assets of the debtor, objecting creditor and their respective spouses;
5. The current liabilities, excluding those discharged by the debtor's bankruptcy, of the debtor, objecting creditor and their respective spouses;
6. The health, job skills, training, age, and education of the debtor, objecting creditor and their respective spouses;
7. The dependents of the debtor, objecting creditor and their respective spouses;
8. Any changes in the financial conditions of the debtor and the objecting creditor which may have occurred since the entry of the divorce decree;
9. The amount of debt which has been or will be discharged in the debtor's bankruptcy;
10. Whether the objecting creditor is eligible for relief under the Bankruptcy Code; and
11. Whether the parties have acted in good faith in the filing of the bankruptcy and the litigation of the § 523(a)(15) issues.
Smither, 194 B.R. at 111.
In re Armstrong, 205 B.R. 386 (Bkrtcy. W.D.Tenn.1996). Also see In re Celani, 194 B.R. 719 (Bkrtcy.D.Conn.1996). In making this determination, the Court believes the relative income, expenses, and worth of the new spouses of the parties is relevant.
Ms. Oswald is a 29-year-old bookkeeper and makes $12.75 per hour and averages 40 working hours per week. She is the mother of two minor children and is also enrolled as a student and testified that she had been attempting to complete her college education over a course of many years by going to school part time while working to support her family.
Ms. Oswald further testified that she has several student loans and tuition payments that she is paying as they become due and that she currently owes about $1,800.00. She originally intended to go back to school full time two years ago to complete her education but because Mr. Asbill did not pay the $5,000.00, she was forced to continue her full time employment and go to school part-time.
Ms. Oswald also testified that she and her current husband have significant living expenses, including a second mortgage on their house in the approximate amount of $20,000.00 on which they make monthly payments and that she contributes $100.00 each month into college savings accounts for each of her two sons.
Ms. Oswald also testified that she has paid $6,133.00 in attorney's fees arising from the divorce and that she continues to owe approximately $1,800.00. She also *198 testified that these amounts did not include the attorney's fees incurred in this adversary proceeding.
Mr. Asbill testified that he is currently employed full time by Southern Truck and has been continuously engaged in the auto painting and bodywork industry since prior to 1991. Ms. Oswald testified that the Debtor had income in the range of $43,000 to $46,000 during all of the years of their marriage and the Debtor did not contest this. In addition, as stated previously, the Lexington County Family Court found Mr. Asbill's testimony that he no longer does body work on the side not credible and that Mr. Asbill was voluntarily underemployed, and this Court agrees.
Other Courts have recognized that a debtor's underemployment is a factor to consider in making an analysis under § 523(a)(15)(B). In a recent opinion from the Seventh Circuit Court of Appeals, the Court remanded the case to the Bankruptcy Court to consider additional factors including the underemployment of the debtor.
The Court is concerned about the fact that Plaintiff does have much greater earning capacity and that she is voluntarily underemployed at this time. While the Court finds that Plaintiff may have valid reasons for not returning to the medical field, it has been held that where either a debtor or a creditor has voluntarily reduced their income, that voluntary reduction should be considered by the Court in making the evaluation under § 523(a)(15)(B). See In re Smither, [194 B.R. 102 (Bankr.W.D.Ky. 1996)] supra at 111.
In re Jenkins, 202 B.R. 102 (Bkrtcy. C.D.Ill.1996). Also see Matter of Crosswhite, 148 F.3d 879 (7th Cir.1998), In re Huddelston, 194 B.R. 681 (Bkrtcy.N.D.Ga. 1996) and In re Greenwalt, 200 B.R. 909 (Bkrtcy.W.D.Wash.1996).
Initially, the Court is mindful that Mr. Asbill is discharging over $10,000 of other debts in this proceeding and retains the marital residence, in which there is equity and on which the subject debt is based.[7]
Additionally, considering Mr. Asbill's voluntary underemployment, his delay of the Family Court hearing which led to the 1998 Order, and his inconsistent statements regarding the operation and ownership of Asbill's Paint and Body, the Court questions his good faith in filing bankruptcy and in conducting this dischargeability litigation.
Finally, while there is no doubt that the income of Ms. Oswald and her current husband exceeds even the imputed income of Ms. Asbill and his current wife and that neither party presented complete information regarding the current living expenses and liabilities of the respective families, this Court declines to adopt a rule that would deny recovery to Ms. Oswald under § 523(a)(15)(B) simply because she and her current husband are both working hard to provide for their dependants and raise their standard of living to a level which may exceed the standard of living presently chosen by the Debtor and his current wife. Rather than adopting a per se rule under which the party with the higher income or standard of living loses under § 523(a)(15)(B), the Court must weight the needs of the parties and balance the equities under the specific facts of each case. In this case, the evidence indicates that if this debt is not discharged, the Debtor should be able to meet his living expenses without detriment to his family or the lowering of his standard of living. Upon the completion of his current wife's education, she may contribute to the family's income or at a minimum reduce the significant child care expenses which the family presently incurs. If, however, the debt is discharged, Ms. Oswald will not be able to complete her education in as timely a fashion nor pay her student loans *199 and attorneys fees debt as she had contemplated nor save for the educational benefit of the child of the Debtor and Ms. Oswald. In such a situation, the equities and factors to be considered under § 523(a)(15)(B) weigh in favor of Ms. Oswald.
Considering the totality of each party's circumstances, including the lack of good faith in the Debtor's conduct, this Court concludes that the Debtor has failed to meet his burden under § 523(a)(15)(B) of convincing the Court that the benefit of the discharge of this debt outweighs the detrimental consequences to Ms. Oswald and the child of the Debtor.
For all of these reasons, it is the finding of the Court that the $5,000.00 debt owed to the Plaintiff is nondischargeable pursuant to 11 U.S.C. § 523(a)(15).
Additionally, based upon the stipulation of the parties, the debt in the amount of $2,500.00 to the Plaintiff as reimbursement of attorney's fees is also nondischargeable.
AND IT IS SO ORDERED.
NOTES
[1] The parties have stipulated that in the Decree of Divorce dated January 10, 1995 and the subsequent Order of June 26, 1998 of the Family Court which divided the marital property of the parties, that the Debtor was ordered to pay the sum of $2,500.00 to the Plaintiff for attorney's fees, $109.11 for uncovered medical expenses of the parties' minor child and $5,000.00 to the plaintiff as a property settlement. The parties have stipulated that the $109.11 for uncovered medicals expenses has now been paid. The parties also stipulate that the $2,500.00 award representing the Plaintiff's attorney's fees was incurred as an incident of support and are nondischargeable.
[2] Further references to the Bankruptcy Code, 11 U.S.C. § 101 et seq., shall be by section number only.
[3] The court notes that to the extent any of the following Findings of Fact constitute Conclusions of Law, they are adopted as such, and to the extent any Conclusions of Law constitute Findings of Fact, they are so adopted.
[4] Subsequent thereto, Mr. Asbill was found in contempt of the Family Court due to his failure to pay the $5,000.00 as ordered. Mr. Asbill filed his bankruptcy petition immediately thereafter.
[5] Mr. Asbill testified that he estimated his 1998 income to be about the same as the 1997 salary of $25,528.00.
[6] The Family Court, in its order of June 24, 1998, made a similar finding.
In addition, Plaintiff [Ms. Oswald] testified that the Defendant [Mr. Asbill] has done extra work of painting vehicles. Plaintiff testified that she has seen cars with primer on them at Defendant's father's place where he had done work on the side in the past. The Defendant testified that he was not doing work but another relative was doing that work. The Court does not find the testimony of the Defendant regarding his income to be credible. This Court finds that the Defendant is underemployed.
[7] The Court notes that of the $18,350.00 in unsecured debt which Mr. Asbill is attempting to discharge, $7,500.00 of that debt is owed to Ms. Oswald. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1531859/ | 370 S.W.2d 438 (1963)
ECONOMY SWIMMING POOL CO., Inc., et al., Appellants,
v.
Richard N. FREELING et ux., Appellees.
No. 5-2982.
Supreme Court of Arkansas.
September 16, 1963.
Willis v. Lewis, Little Rock, for appellants.
Wright, Lindsey, Jennings, Lester & Shults, Little Rock, for appellees.
JOHNSON, Justice.
This action arises out of a contract for the construction of a fallout shelter entered into on October 10, 1961, between appellees Richard N. Freeling and Marie H. Freeling, his wife, and appellants Economy Swimming Pool Co., Inc., and George P. Bilheimer, Jr. Appellants agreed, inter alia, that the shelter would be constructed with materials of good quality and that all *439 work would be done in a good workmanlike manner and "that the contractor [appellants] will be responsible for any water seepage into the vestibule or shelter and will repair same."
Appellees made a down payment in the amount of $500.00 on the contract, and work was begun on October 17, 1961. On October 26, 1961, appellees complained that the excavation was not of sufficient depth and that proper footings for the shelter had not been provided according to the plans and specifications. As the work progressed, appellees made frequent and additional complaints and employed a structural engineer to inspect the construction and advise appellees as to the quality of the work and whether it was in accordance with the plans and specifications.
Water seepage was one of the major problems. One wall of the fiberglass shelter bulged, which had to be corrected by appellants. The concrete was honeycombed. The overhead concrete slab was not resting on the columns designed to support it. Finally, one wall of the shelter caved in.
After working for over three months on this relatively small job, appellants on January 20, 1962, padlocked the shelter and put a fence around the top of it. A few days later appellants removed the air filter and air motor from the premises.
On February 13, 1962, appellees filed suit in the Pulaski Chancery Court alleging breach of contract by appellants and seeking rescission of the contract, recovery of the $500.00 down payment and damages to the premises of appellees. They also sought to have the liens against their property discharged by appellants.
This case was tried on September 12, 1962, and after hearing evidence on behalf of all parties, the Chancellor found in favor of appellees on the issue of the return of the $500.00 down payment and the discharge of the materialmen's liens, but did not award appellees any sum for damages to their property. The Chancellor also denied appellants' cross-complaint for the total sum mentioned in the contract. From the decree appellants prosecute this appeal. Appellees have not cross-appealed.
For reversal appellants contend that they were prevented from performing the contract by the fault of appellees and that appellants are entitled to recover the profits which would have been made had appellees carried out their contract.
From the record, it is true that some delays were occasioned by appellees' concern and determination to receive that which they had contracted for. From the whole case, however, it can hardly be said that the delays were not justified.
On the question of appellants' entitlement to profits, there is no showing whatever that appellants would have made a profit on this job.
The structure here in question was sold to appellees to be used by them and their family in the event of nuclear attack. Soon after construction started, appellees employed the services of Mr. Sanford Wilbourne, a highly qualified structural engineer, to periodically check on the progress of the construction of the fallout shelter. This was an understandable precaution, since the record reveals that Mr. Freeling has been totally blind for some years, a fact not mentioned in his brief. Mr. Wilbourne testified that at the time he first saw the shelter in the fall of 1961 there were two problems, one structural and the other waterproofing. He testified that at that time he believed the structural defects could be corrected, but the waterproofing could never be solved because the concrete was porous"honeycombed". Later, when he saw the bulge in the wall, he warned appellees not to let anyone enter the shelter because, in his opinion, "it was dangerous to be inside it just under ordinary circumstances." He further considered that the later cave-in of the wall was caused by outside water pressure as well as the weight *440 of the concrete and steel dome resting on the fiberglass shelter instead of on the concrete columns. From his last examination of the shelter in the spring of 1962, about the time work was halted, his expert opinion was that the shelter could not possibly be made structurally sound.
Appellants' own construction superintendent testified that after he had been on the job for a month and three days the whole northeast corner of the shelter fell in and that it would continue to give trouble from hydrostatic (water) pressure. He admitted that he had never been able to correct the water problem; that during that time they had gotten the shelter dry one time and it had stayed dry only overnight.
Appellant Bilheimer himself admitted that he was contemplating suit against the manufacturer of the fiberglass shelter because he had found from experience that the shelter would not withstand the hydrostatic pressure and that, if used according to the plans provided, would not do the job in this area.
It seems to be basic contract law apparently so basic that there is little case law on the pointthat where there is a material breach of contract, substantial nonperformance and entire or substantial failure of consideration, the injured party is entitled to rescission of the contract and restitution and recovery back of money paid. United States v. Haynes School Dist. No. 8, 102 F. Supp. 843 (E.D.Ark. 1951); 17A C.J.S. Contracts § 420, p. 515; Farrell v. Third National Bank, 20 Tenn. App. 540, 101 S.W.2d 158; 12 Am.Jur, Contracts, § 440, p. 1020; 5 Williston on Contracts, 4046, § 1455; Restatement, Contracts § 384(1), (1932); id., § 347; Fish v. Valley National Bank, 64 Ariz. 164, 167 P.2d 107; Barber v. Rochester, 52 Wash.2d 691, 328 P.2d 711; Texas Co. v. Northup, 154 Va. 428, 153 S.E. 659.
From the testimony above reviewed and other testimony of the same character and nature contained in the record, on trial de novo, we are impelled to the conclusion that the learned Chancellor's finding that the contract was breached and that appellees were entitled to rescission, restitution and discharge of the materialmen's liens was not against the preponderance of the evidence. Scott v. Vuurens, 236 Ark. 731, 368 S.W.2d 80.
Affirmed. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1531839/ | 370 S.W.2d 829 (1963)
A. J. HILLIARD
v.
L. H. PARK et al.
Donald MANTOOTH
v.
L. H. PARK et al.
Harvey WILLIAMS
v.
L. H. PARK et al.
W. L. WOOTEN et al.
v.
L. H. PARK et al.
Robert BECKLER
v.
L. H. PARK et al.
Richard MOOREHOUSE
v.
L. H. PARK et al.
Supreme Court of Tennessee.
September 11, 1963.
Rehearing Denied October 11, 1963.
*831 R. R. Kramer, R. Arnold, Kramer, Carter B. Wall, Kramer, Dye, McNabb & Greenwood, Knoxville, for petitioners in error.
William B. Felknor, Maryville, for defendants in error.
BURNETT, Chief Justice.
These six cases are election contests and were tried together in the Circuit Court of Polk County because basically the same question was involved in each case. The Sheriff, Circuit Court Clerk, the Registrar of Deeds, County Court Clerk and two Constables received the majority vote in the election of August 2, 1962, in Polk County. Their opposing candidates filed these respective suits to contest their respective elections. These cases were tried by the Circuit Judge without hearing proof, except certain statements of counsel, upon the petitions, demurrers, answers, etc., and certain stipulations of fact. Basically the question here involved comes down to the proposition that the petitions averred that there were included in the number of votes received by the victorious contestees, the Democratic candidates for the county-wide offices, 1,028 illegal and void absentee ballots; that there were a certain number of ballots cast for the Constables in each of the districts in which they were elected and that their ballots were proportionately increased by a part of these 1,028 illegal and void absentee ballots (whatever number cast in respective district). These ballots were alleged and averred to be void and illegal because the applications therefor failed to state a reason for the applicants' expected absence from the county on the day of election, or failed to have attached thereto a certificate of a physician or a registrar.
The first ground of the demurrer goes to the heart of this question, that is, whether or not the applicable statutes of the State of Tennessee require that applicants for absentee ballots state on their application the reason for expecting to be absent from the county on the day of the election.
Of course, there are numerous other allegations made in the various petitions, questions raised, etc., but essentially and basically this question determines these lawsuits.
In considering this question the trial judge, after deducting from these 1,028 absentee ballots 54 ballots, representing a number that were in the armed forces and 5 who had voted in this number on the basis of a doctor's certificate, leaving thus 969 said absentee ballots, held that these were illegal and void because the applications therefor did not state a reason for the applicants' expected absence from the county on the day of the election. Thus when this number of votes was taken from the total vote received by the respective candidates and in the Constable districts, they had not received a majority of the votes cast and consequently the election was void. In other words the election in *832 all these instances would have been altered if these 969 ballots had been cast for the contestants and thus the election was void.
Of course, holding thus simply means that the incumbents in these offices at the time this election was held void will hold over until their successors are elected and qualified by law. Conger v. Roy, 151 Tenn. 30, 267 S.W. 122.
The contestants have likewise appealed and assigned error due to the fact that the trial judge after holding as above didn't declare them elected on the basis of holding these 969 absentee ballots void. The argument in response to this assignment is that there was no showing how these 969 absentee ballots were cast, whether for the contestants or the contestees. This record, as made up, does show that these 1,028 ballots were marked by the Commissioners as Democratic ballots and the contestees were the Democratic candidates and thus it might be argued that there is an assumption that all the ballots were cast for them. Of course, in a contest of this kind such a presumption cannot be given legal validity, because this is not necessarily always true. In modern times many voters vote for either one or the other side of the contest. Because they are denominated as Democrats does not necessarily say that they voted for all Democratic candidates. Another thing, too, the trial judge here was not justified under this record in declaring contestees elected even though these ballots were held void. His judgment in the matter is justified. We therefore overrule and deny the contestants' assignments and application to be declared elected.
These causes for the first time bring to the attention of the Court a construction of the absentee voting statute of this State. This statute is Chapter 164, Public Acts of 1949, as codified beginning at § 2-1601, T.C.A. et seq. We find in the record a well thought out, well reasoned and excellent memorandum opinion of the trial judge on the questions involved. This opinion shows that he had given the matter much thought and research. In our reading of this record we have read the briefs of both sides two or three times, have read the entire absentee ballot voting act once or twice and the main sections here involved several times. After spending more than a week working on this case we have concluded that the trial judge has reached the correct legal conclusion and his reasoning is so apt that we in this opinion are going to adopt as our opinion a large portion of his opinion.
In the outset the Legislature by Section 1 of the Act, which is codified as § 2-1601, T.C.A., stated its intention in passing this absentee voting law. It is clearly shown by reading this Section that the intent of the Legislature in passing such an Act was to prevent fraud in elections by use of absentee votes, and in doing so the judges of the election were specifically directed to receive no absentee votes unless this Act had been literally complied with, and all of its provisions were mandatory. This very Section within itself shows that it was the intention of the Legislature in enacting this Act that the Act should be given a strict construction rather than a liberal construction. As said by the Supreme Court of Florida, speaking through its Chief Justice, in State ex rel. Whitley v. Rinehart, 140 Fla. 645, 192 So. 819, "Election laws should be construed liberally in favor of the right to vote but this is not the rule as to absentee voting laws. Being in derogation of the common law, they should be strictly construed. The reason for the difference is that purity of the ballot is more difficult to preserve when voting absent than when voting in person. Guice v. McGehee, 155 Miss. 858, 124 So. 643, 125 So. 433; Straughan v. Meyers, 268 Mo. 580, 187 S.W. 1159; In re Baker, 126 Misc. 49, 213 N.Y.S. 524; Opinion of Justices, 44 N.H. 633." This is the general rule though there are some cases to the contrary but upon reading them we generally find that there are factual situations which shade or bring about probably a different interpretation. The Florida court *833 further said: "This must be the rule; otherwise purity of the ballot is cast to the discard." See also on the subject Sutherland on Statutory Construction, 3rd Ed., Horack, § 7215, page 455, which section concludes with a quotation from a New York case thus:
"Recognizing the supreme importance of the right of franchise in our democracy and zealous in guarding the exercise thereof against anything and everything of a doubtful nature, the courts, in an endeavor to keep elections, primary and general, free from fraud, have uniformly insisted upon strict compliance with provisions of the Election Law. * * *"
Then we quote, which seems to us, a very reasonable statement from the Nebraska court in Miller et al. v. Mersch, 152 Neb. 746, 42 N.W.2d 652, thus:
"It is the policy of the law to prevent the disfranchisement of qualified electors who have cast their ballots in good faith by requiring only a substantial compliance with the election laws of the state. The privilege of voting, though the voter is absent from the voting precinct at the time of the election, requires a departure from the general rule governing the method of exercising the right to vote. Voting by mail constitutes a special privilege and requires a stricter adherence to the legislative conditions imposed upon its exercise.
"Compliance with the conditions imposed by the statutory grant is essential to the exercise of the right. The act itself prescribes the manner of its exercise when it states that an absentee elector may vote at such election only in a manner prescribed in the act." (Citing authorities).
This statement absolutely confirms the first Section of this absentee voting law of our State, above referred to.
On this same subject we likewise turn to a Minnesota case, that of Wichelmann v. City of Glencoe, 200 Minn. 62, 273 N.W. 638, where a number of very pertinent observations are made in reference to the question here being discussed. Among other things it is said:
"Absentee voting is an exception to the general rule and is in the nature of a special right or privilege which enables the absentee voter to exercise his right to vote in a manner not enjoyed by voters generally."
And the further observation is made that the statute prescribes a condition which is precedent to absentee voting and that the statute is mandatory, all of which is in compliance, or fits in with the requirements of our statute herein above referred to. This Minnesota court then says this:
"If ballots can be passed out for distribution without the making and filing of a verified application by the electors, the bars have been let down altogether. Frauds and corrupt elections are bound to result. It opens the door to frauds and abuses which all election laws seek to suppress and prevent."
Lastly, another illustration, where a statute requires a physician's certificate of physical disability and the application does not have such even though the physical disability is within the knowledge of the judges of election, they may not lawfully permit such an absentee vote. Davis v. Board of Education, etc., 186 N.C. 227, 119 S.E. 372. Thus it is that after a thorough consideration we are satisfied that the absentee voting law of this State must be strictly construed for the reasons above assigned.
The trial judge in his memorandum opinion found in the record, after quoting § 2-1602, T.C.A., which is styled, "Requisites to voting as absentee," and § 2-1603, T.C.A., which is styled, "Notice of intention or desire to vote by absentee ballot," makes *834 the following very succinct and pertinent observation:
"Thus, these statutes clearly limit the right to vote by absentee ballot to only four classes of voters, as follows:
"1. Those required to be, or expecting to be absent by reason of business, occupation, health, education, or travel.
"2. The wife of a voter required to be, or expecting to be, absent by reason of business, occupation, health, education, or travel, if she accompanies her husband.
"3. Those certified by a written certificate by a licensed physician as being so ill or disabled that they cannot safely appear at the voting precinct in person, and being within the county.
"4. Those residing temporarily in another county or state. Those whose temporary residence has exceeded 60 days must submit the certificate required by T.C.A. 2-1602 in order to be entitled to an absentee ballot.
"Clearly T.C.A. 2-1602 and T.C.A 2-1603 must be considered in pari materia, and must be construed together. `Such voter,' the beginning words of T.C.A. 2-1603, necessarily refer to the four classes of voters given the privilege of absentee voting by T.C.A. 2-1602.
"T.C.A. 2-1602 requires those temporarily residing in another county or state for more than 60 days to accompany their application for absentee ballot with a certificate signed by the person in charge of registration in the county or state of their temporary residence stating that they are not registered and qualified to vote in that county or state, and thus to provide their eligibility to receive and vote an absentee ballot. That class is required to submit proof to the election commissioners upon which that commission may judicially determine the sufficiency of the application.
"T.C.A. 2-1603 requires the sick and disabled within the county to prove that they cannot safely appear at the voting precinct in person, by attaching to their application for absentee ballot a certificate to that effect signed by a licensed physician. The sick and the disabled within the county are required to submit proof, written proof, to the county election commission upon which that commission may determine judicially whether the application is sufficient.
"Construing these two sections of the statute together, and considering the legislative intent and purpose expressed in T.C.A. 2-1601, there is no escape from the conclusion that those applying for an absentee ballot because of required or expected absence `by reason of business, occupation, health, education, or travel,' and wives accompanying their husbands on that account, are required to state the appropriate one of those statutory reasons for absence in the application for an absentee ballot, as a mandatory prerequisite to the privilege of receiving and voting an absentee ballot. To hold otherwise particularly in view of the statutory requirement that the sick and disabled within the county, and those temporarily absent for more than 60 days, must state their reasons in their applications for an absentee ballot and must submit documentary proof to substantiate their stated reasons, would require the court to say that the Legislature attached no significance at all to the words `by reason of business, occupation, health, education, or travel;' for that language is meaningless and impotent `to prevent fraud in elections by the use of absentee voters' ballots' if any person may apply for and receive and vote an absentee ballot by simply stating in his application that he expects to be absent from the county on election day, without *835 stating any reason whatever for the absence. It is not mere absence from the county that entitles a voter to vote by absentee ballot; instead, he is entitled to so vote only if he is absent for one or more of the specific reasons prescribed by the statute. Obviously, such a statutory reason must appear in his application for an absentee ballot, for otherwise the election commissioners have no basis whatever upon which to determine judicially whether the applicant is entitled to receive and use an absentee ballot.
"Then, this Court is driven to the conclusion from an exhaustive study of the law of this case, and from the facts which appear by admission in the pleadings and by counsel in this case that we need not go any further with these lawsuits. And that the Court must now declare what the judgment of the law should be in these cases. And we are compelled to hold, upon the basis of the opening statement of our Legislature in Section 2-1601 of the absentee voting law and upon the laws of other states, the authorities of other states, which have been quoted, that absentee voting statutes must be strictly construed. And that their regulatory provisions are mandatory.
"The Court is of the firm opinion, for the reasons indicated, that Section 2-1602 and 2-1603 of Tennessee Code Annotated must of necessity be construed together, and, particularly, in the light of the legislative intent expressed in T.C.A. 2-1601. And that an application for absentee ballot must state on its face facts constituting a statutory reason for the intended absence. The election commissioners act in a judicial capacity in passing upon applications for absentee ballots. If the application states no statutory reason for the voter's absence, or an insufficient reason for his absence, the election commissioners have no jurisdiction and have no basis whatever upon which to make a judicial determination that the applicant is entitled to receive and vote an absentee ballot.
"The purpose of the application is to enable the election commissioners to consider, the information given therein and determine from the facts stated whether or not the applicant is entitled to the ballot. The ballot will be deemed invalid where the application therefor is substantially erroneous as where it fails to furnish pertinent and necessary information.
* * * * * *
"The application for an absentee ballot filed as an exhibit within the answers of these defendants in these cases and which by their answer they say was used in the election in question, Form No. 1, furnished by State authority, does not even pretend to provide any place for a reason for the intended absence to be shown. There is a note following the place provided for the signature and the address of the applicant reading as follows:
"`If absentee ballot is claimed because of physical disability, Doctor's certificate to that effect must be attached.'
Outside of that, this application form makes no pretense whatsoever of providing any place upon its face for the applicant for an absentee ballot to state his reason. The application reads, in pertinent part, here, after being addressed to the Election Commissioners of a county in this state:
"`The undersigned expects to be
absent from his home County on
______ when the ____ election will
date
be held and will be unable to appear
at the polls on said date. I am a legally
qualified voter entitled to vote
in said election in the ____ precinct,
____ ward, of the City of
____ or the ____ precinct of the
____ civil district of said County.
*836 "`I apply for an absentee ballot to vote in the aforesaid election and desire that the said ballot be sent to me at the address given following my name.'
* * * * * *
"* * * How can it be said that the use of absentee ballot applications which state no reason whatsoever for the intended absence from the voter's polling place on election day could do otherwise than to render the result of elections incurably uncertain, or that the future omission of which, if permitted, `must necessarily prove avenues of fraud, tend to prevent a fair exercise of the franchise, or to render elections insecure and uncertain?' Who can doubt that to permit absentee ballots to be issued by a judicial body, which the Board of Election Commissioners is, and in the discharge of which they do and must act in a judicial capacity, to issue absentee ballots to people who stated no fact, no reason whatever, why they intended to be absent, who can doubt that such a practice would, if permitted, would inevitably and unavoidably and inexorably tend to prevent a fair exercise of the elective franchise, and to render elections inscure and uncertain?"
In addition to what has been so well said by the trial judge herein we think that Section 2 of the Act (§ 2-1602, T.C.A.) wherein it specifically provides that one is entitled to vote by absentee ballot "upon satisfactory proof of such illness or disability and inability to appear at his or her voting precinct * * *" clearly sets forth the intention of the Legislature and demands that in addition to the quoted language in this paragraph shows that it was the intention of the Legislature that before such a ballot could be issued the commissioner of elections must have "satisfactory proof" of their inability to be there by reason of business, occupation, health, education, or travel. This shows that it was the intention of the Legislature that the commissioners have satisfactory proof of the reasons of these various things before a ballot is issued.
This Court long ago in Southern R. Co. v. Rowland, 152 Tenn, 243, 276 S.W. 638, said this: "It will not be denied that it is within the province of the court, whenever necessary to effectuate the legislative intent, to supply language in construing an act, inserting such words and clauses as may reasonably appear to be called for." For this statement the Court there cited a number of earlier decisions of this Court as authority for this proposition. The question is well edited by the authors of Sutherland on Statutory Construction, 3rd Ed., Horack, § 4924, Page 453, et seq., wherein the quotation last above quoted from this Court is quoted in Horack. In reading this section from Sutherland, it is said further on in the same section that such insertion of words or phrases are demanded of the court in the interpretation of a legislative act "where legislative intent is clearly indicated by the context or other parts of the statute. * * *" For this statement a number of cases from various jurisdictions in the United States are cited. This statement seems absolutely sound to us. Thus it is that the court in interpreting this absentee voting statute in view of what has been said heretofore should read into the statute that the application for these absentee ballots under the conditions wherein they are granted as herein before referred to should demand that they be upon satisfactory proof, that is to the commissioners of election holding the particular election in the county, city or whatnot.
By doing this the Act is not changed; it merely is done to clarify the clear intention and meaning of the Legislature in enacting the Act. It is proper to consider the occasion and the necessity for the enactment of a statute, and that construction should be given which is best calculated to advance the object by suppressing the mischief and securing the benefits contemplated. If the purpose, and the well ascertained object of the statute, are *837 inconsistent with the exact words, the latter must yield to the controlling influence of the legislative will resulting from a consideration of the whole act. Of course, the statute should not be extended beyond the fair and reasonable meaning of its terms, but where the intent of the Legislature is shown it certainly is in line with the authorities of this State "in order to effectuate the legislative intent words may be modified, altered, or supplied." Hudgins v. Nashville Bridge Co., 172 Tenn. 580, 113 S.W.2d 738. In thus construing the statute herein we have adopted a construction from analogous provisions of this Act and thus are supplying an obvious omission. This is not judicial legislation, but is simply a method of arriving at a constitutional legislative intent which has been defectively expressed.
It is very forcibly and ably argued that the Court should accept the form which is filled out by these applicants for absentee ballots because of the fact the form had been approved by the coordinator of elections and in addition to the approval of the ballots in the instant case this form had been approved for all counties in the State and the election commissioners of all counties used such a form. As authority for this argument the case of New England Mutual Life Ins. Co. v. Reece, 169 Tenn. 84, 83 S.W.2d 238, is cited. This case is a well reasoned case and for the reasons therein stated the rule as contended for was adopted in that case. The Court though in this case cites, particularly on page 95 of 169 Tenn., on pages 241-242 of 83 S.W.2d many other of our cases holding to the contrary. We think that the rule and the reasons set forth in these cases are more applicable to the question here presented than is the factual background supporting the rule in the Reece case. Very recently this Court in Reynolds Tobacco Co. v. Carson, 187 Tenn. 157, 213 S.W.2d 45, adopted the contrary rule quoted from a previous case of National Life & Acc. Ins. Co. v. Dempster, 168 Tenn. 446, 461, 79 S.W.2d 564, 569, to the effect that regardless of the fact that other commissioners had approved a different policy their erroneous conclusion did not bind the court in such a situation. We think here that the intention of the Legislature, its caption, and particularly the first and second Sections, as codified above referred to, clearly show the intention of the Legislature and the coordinator of elections arrived at an erroneous conclusion merely from certain statements in Section 3 of the Act (§ 2-1603, T.C.A.) rather than a judicial consideration of the Act as a whole, which it clearly was his duty to consider in adopting and approving a form for absentee votes.
It is next very ably contended that even conceding that these ballots were illegal, nevertheless the court should have held that there was no showing that the voters who made such applications were not qualified voters and that there was not a valid expression of the peoples' will and thus that the election should have been held valid rather than void. Of course, the action of the court in holding the election void and in not declaring the contestants elected was on the fact that here nearly thirty (30%) per cent of the entire vote constituted these illegal votes. Thus it was that the court held that this being true there was irregularity that forced his conclusion that the election was void and that by reason of this number of votes being cast the will of the qualified voters was not expressed. It is true that when these ballots were cast there was an objection made to casting of each ballot as it went in. All of these were preserved, but clearly in view of the facts that such ballots were illegal the only conclusion that the trial court could reach was that the election was void by reason of the fact that this number of illegal votes was more than the majority that each candidate in the respective races secured. Thus the election is void and another election should be had for these respective offices. This record shows that in addition to these 1,028 ballots which have been held illegal the minority commissioner also had some four or five hundred ballots in his *838 hands that he didn't attempt to vote which he concedes in an answer herein were illegal and void. Clearly under the law as we construe it, and it was the intention of the Legislature to make this law mandatory or to have a strict construction of it, these people seeking to vote by absentee ballot were seeking to exercise a privilege and they must comply with the conditions of this privilege as a condition precedent to the exercise of such privilege. When they haven't done so the ballot does not express the will of the voter. In other words under the whole general circumstances and tenor of this case we have concluded that the trial judge arrived at the right conclusion in holding the election void. Apparently from the way the pleadings, etc., are shaped and the statements made the appellants are in office now and will hold office as hold overs until there is another election.
Thus it is under all circumstances of the case we have concluded that the trial judge is correct in his final conclusion herein. The result is that the judgment below must be affirmed with costs.
OPINION ON PETITION TO REHEAR FILED ON BEHALF OF APPELLEES-CONTESTANTS
The appellees-contestants question the following statement made by us in the original opinion. This statement is: "Of course, holding thus simply means that the incumbents in these offices at the time this election was held voil will hold over until their successors are elected and qualified by law. Conger v. Roy, 151 Tenn. 30, 267 S.W. 122."
The General Election in Polk County of August 2, 1962, was held void as to the above named parties. Prior to the suit, wherein this election was contested by the appellees-contestants, all of these parties were certified as the elected officials for the various offices and were duly inducted into office on September 1, 1962. They then assumed their respective offices to which they had been elected and were so serving at the time this election was held void. One of these parties, to-wit, Austin P. McClary, was, at the time of the election in 1962, the Sheriff of Polk County; and in the election of August, 1962, he was reelected to that office. As to McClary, we held in our original opinion that he was entitled to hold over until his successor was elected and qualified by law and we cited as authority for this holding the case of Conger v. Roy, supra. There is really no argument on this feature of these lawsuits in the present petition to rehear. The respondent-contestee, McClary, is thus distinguished from the other respondents-contestees who were elected for the first time in the August 2nd General Election and assumed their offices on September 1, 1962, prior to the election being held void. The Conger case covers McClary in every particular. It is contended though that the Conger case, which was decided in 1924, has been overruled by the subsequent cases of Hagan v. Henry, 168 Tenn. 223, 76 S.W.2d 994, and Shumate v. Claiborne County, 183 Tenn. 182, 191 S.W.2d 441.
After a careful consideration of Hagan and Shumate, we feel confident that neither of these cases in any way purports to overrule the Conger case. All that the Hagan case held was that a person who receives a certificate of election has prima facie title to the office pending an election contest. The Shumate case, if in any way similar to the present case, in effect is authority for the statement made above as quoted from our original opinion here. The Shumate case was a contest by three incumbents who had not sought reelection in the General Election that was subsequently declared void as to these particular offices. Thus none of them were elected in the voided election and none of them were in the position of hold overs at the time the election was voided. In the Shumate case the parties who had been elected in this void election had been issued certificates of election and had been sworn in to office, and this Court held that they were holding these offices to such an extent that there was no vacancy in them. In other words, they were at least de facto officers and thus the offices were *839 not vacant to such an extent as allowed one who was neither a de jure nor a de facto officer to contest this question.
The Conger case (and it has not been disturbed in this State so far as we can discover by careful investigation) is express authority for the proposition that an incumbent holds over in office after his election is declared void until his successor is elected and qualified. The question then presented is whether or not these people, who were first elected in August, 1962, and assumed these offices on September 1, 1962, under a certificate of election and prior to this election being held void, are incumbents.
The definition of the word, "incumbent," as contained in Webster's New International Dictionary, 2nd Ed., is, "One who is in present possession of a benefice or of any office."
This same definition has in effect been used by the courts. In Vol. 20-A, Words & Phrases, p. 403, it is said: "An `incumbent' is one who is in the present possession of an office. (citing authorities) * * * An `incumbent' of an office is one who is legally authorized to discharge the duties of that office. (Citing authority)."
We must conclude that all of these respondents to this petition to rehear are in present possession of the offices which they occupy and are, under these definitions, clearly incumbents. What we have just said is supported by the Shumate case, where Mr. Justice Chambliss, in analyzing the case of Hagan v. Henry, said: "it was held that upon issuance to one of the contestants for an elective office of a certificate of election by the Board of Election Commissioners and his induction, he acquires prima facie title to the office, and upon induction becomes the lawful occupant thereof."
Counsel in this petition to rehear relies upon Section 2-1924, T.C.A., as authority for his contention that there is a vacancy in the office. This Court in the Conger case considered and quoted in full this same statute, which was then Section 1332, Shannon's Code, and said this:
"We think this section applies only where there is a vacancy; in other words, where there is no one to hold the office. It does not and cannot apply where there is an incumbent who may hold over until his successor is elected and qualified, as provided by the Constitution. The constitutional provision must control."
In the present case, McClary is a de jure incumbent (he having been Sheriff prior to this election and holding office at the time of the election), and the other respondents to the present petition are de facto incumbents for the reasons above expressed. Thus it seems to us that all of these respondents are entitled to hold over on the basis of both the Shumate case and the Conger case.
Where an election has been held void and the office is occupied by either a de jure officer or a de facto officer the courts have no power to call a special election. This question was specifically and directly passed upon in the Conger case (it has not been weakened or overruled since, and seems to us logical), where it was said:
"We are of the opinion that there was no law which authorized the county judge, in the case of G.C. Puckett v. J.E. Conger, to order a special election to be held October 14, 1922, to elect Conger's successor, and that election was void, of no effect, and did not add anything to the right of complainant Conger to continue in said office. Conger, who was the incumbent at the time the regular election was held in August, 1922, and at the time that election was adjudged void on September 12, 1922, in the case of G.C. Puckett v. J.E. Conger, was entitled to hold said office until his successor was duly elected and qualified according to law."
*840 And further in the Conger case, the Court said:
"The Constitution does not provide for a special election to elect the hold over's successor, but we think it clearly implies that it shall be done at the next regular biennial election at which any of the county officers are to be elected.
"We think this holding is in accord with the true intent and meaning of our constitution."
The term or word "vacant" in the statute, Section 2-1924, T.C.A., when applied to an office means "without and incumbent" regardless of when or how it became vacant. Conger v. Roy, supra.
Therefore after careful thought, investigation and study we are satisfied with our original opinion on this question and the petition to rehear by the present petitioners, appellees-contestants, is denied. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1531855/ | 480 F. Supp. 1189 (1979)
UNITED STATES of America
v.
Susan D. McANDREW, B. Patrick Waldron and Patricia Warner.
Cr. No. 79-00058-R.
United States District Court, E. D. Virginia, Richmond Division.
November 21, 1979.
*1190 *1191 James H. Walsh, Sp. Prosecutor, Richmond, Va., for plaintiff.
Joseph M. Spivey, III, Dennis W. Dohnal, George Wm. Warren, IV, Richmond, Va., for defendants.
MEMORANDUM ORDER
CLARKE, District Judge.
The defendants in this proceeding have been charged with criminal contempt under 18 U.S.C. § 401(3) for wilfully violating provisions of a consent decree incorporated and approved by an order of this Court on June 20, 1978, in the case of Joe Bush, et al. v. Robert E. Bays, et al., 463 F. Supp. 59 (E.D.Va.). Specifically, the defendants are charged with wilfully failing to comply with paragraph 5 of that decree, which provides:
The United States Department of Agriculture agrees to provide lost benefits to members of the plaintiff class whose bonus level was not determined in accordance with directions and instructions issued pursuant to Gutierrez v. Butz [D.C., 415 F. Supp. 827] during the period of May 1, 1977, to October 31, 1977, inclusive. United States Department of Agriculture agrees to provide lost benefits to members of the plaintiff class in accordance with Federal procedures and policies. The parties will develop a list of persons in the plaintiff class potentially eligible for such benefits. Reasonable efforts will be made to notify and provide to such persons their lost benefits. Eligibility workers in the two local offices will screen all migrant applicants during the remainder of 1978 to determine eligibility for such lost benefits.
This paragraph was incorporated in the June 20 order through the following provision:
The parties representing to the Court that implementation of the Consent Agreement has commenced on a voluntary basis and that such Agreement on its face, appears to represent a fair and reasonable settlement of this Action, and is concurred in by the Court, it is further ORDERED that the parties shall, until further Order of this Court, continue to comply with the terms of such Agreement.
This order and the consent decree were drafted by the parties to that action, or their counsel, and were entered by Judge Warriner at the request of the parties.
Each of the defendants has filed a motion to dismiss or vacate the criminal contempt charges against them on various grounds. These motions will be considered together in this order.
The first ground relied upon by the defendants in their motions to dismiss is that the order and consent decree underlying these charges fail to meet the procedural requirements of Rule 65(d) of the Federal Rules of Civil Procedure, and therefore cannot form the basis for a charge of criminal contempt. Rule 65(d) provides:
Every order granting an injunction and every restraining order shall set forth the *1192 reasons for its issuance; shall be specific in terms; shall describe in reasonable detail, and not by reference to the complaint or other document, the act or acts sought to be restrained; and is binding only upon the parties to the action, their officers, agents, servants, employees, and attorneys, and upon those persons in active concert or participation with them who receive actual notice of the order by personal service or otherwise.
The defendants contend that the order which they are charged with violating contravenes this Rule by reason of its reference to an outside document, the consent decree, and is therefore totally defective. Moreover, they contend that this infirmity is compounded by the further reference in paragraph five of the decree to certain procedures, described simply as the "directions and instructions issued pursuant to Gutierrez v. Butz."
Rule 65(d) embodies the elementary due process requirement of notice. United States Steel Corp. v. United Mine Wkrs. of America, 519 F.2d 1236 (5th Cir. 1975), cert. denied, 428 U.S. 910, 96 S. Ct. 3221, 49 L. Ed. 2d 1217 (1976). It is designed to assure that "a federal court frame[s] its orders so that those who must obey them will know what the Court intends to require and what it means to forbid." International Longshoremen's Assoc., Local 1291 v. Philadelphia Marine Trade Assoc., 389 U.S. 64, 76, 88 S. Ct. 201, 208, 19 L. Ed. 2d 236 (1976). As Judge Wyzanski has eloquently noted, "Rule 65(d) is no mere extract from a manual of procedural practice. It is a page from the book of liberty." H. K. Porter Co., Inc. v. National Friction Products, 568 F.2d 24, 27 (7th Cir. 1977).
Compliance with this Rule is mandatory. Alberti v. Cruise, 383 F.2d 268, 272 (4th Cir. 1967). Its requirements, however, are not jurisdictional and a court's failure to adhere to every detail of that Rule's requirements does not necessarily render the order void under all circumstances and for all purposes. See Clarkson Co., Ltd. v. Shaheen, 544 F.2d 624, 632-33 (2d Cir. 1976); Shannon v. Retail Clerks, Int'l. P. Assoc., 128 F.2d 553, 555 (7th Cir. 1942). The object of this Rule may, in some instances, be satisfied by evidence that the parties charged with violating an order had actual knowledge of its terms and their obligation to carry out its command; and that they or those with whom they are in privity, have waived compliance with this Rule's formal requirements. The Court's inherent power to vindicate its authority, necessary to the preservation of the judicial institution, should not be inflexibly bound by procedural niceties where no actual prejudice to the defendants results and the evidence of a knowing and wilfull violation is clear.
The consent decree and accompanying order in this case were drafted by the parties in the underlying case. At least some of the defendants in this contempt proceeding allegedly participated in the negotiations and drafting process which produced these documents. The duty to carry out the mandate contained in this order and the consent decree allegedly was delegated to the defendants by their employer. This intimate familiarity with the terms of the order and consent decree and the defendants' awareness of their duties under them, if established at trial, clearly would satisfy the notice requirement advanced by Rule 65(d). To permit persons with such knowledge to avoid sanctions for failing to comply with the terms of an order enforcing a consent decree on the grounds that the form of that order is procedurally inadequate in the manner alleged by the defendants would unduly undermine the Court's authority to compel obedience to its lawful orders and to punish wilfull violations of those orders. Cf. Brumby Metals, Inc. v. Bargen, 275 F.2d 46, 49 (7th Cir. 1960).
This is not to say that the defendants' interests secured by the Rule 65(d) prohibition against reference to outside documents is unprotected. The government still must prove beyond a reasonable doubt that the defendants wilfully, contumaciously, intentionally, and with a wrongful state of mind violated a decree which was definite, *1193 clear, specific and left no doubt or uncertainty in the minds of those to whom it was addressed. Richmond Black Police Officers v. City of Richmond, 548 F.2d 123, 129 (4th Cir. 1977). See also United States v. Marx, 553 F.2d 874, 876 (4th Cir. 1977) (criminal intent is an essential element of criminal contempt). "In matters of contempt, persons are not held liable for the breach of a restraining order or injunction, unless they know or have notice, or are chargeable with knowledge or notice, that the writ has been issued, or the order entered ...; without service of process, or knowledge or notice or information of the pendency of proceedings, a violation cannot be made out." Pettibone v. United States, 148 U.S. 197, 206-207, 13 S. Ct. 542, 546, 37 L. Ed. 419 (1893).
These substantive elements assure that the defendants' due process interests are protected. Thus, these defendants have not been prejudiced by the alleged defects in the order. Although strict compliance with Rule 65(d) is the better course, the failure to abide by its technical requirements prohibiting reference to external documents did not, in the circumstances of this case, necessarily render void the order which the defendants are charged with violating. These requirements may be waived in such circumstances if it is shown that the defendants had knowledge or were chargeable with knowledge of the terms of that order and the incorporated provisions, and that they consented to the form of the order, or were in privity with persons who so consented, at the time the order was entered.
The defendants also allege that the terms of the order and consent decree are too vague to support a charge of criminal contempt. An order which is vague or otherwise fails adequately and in specific terms to inform those to whom it is directed of their duties under that order cannot be enforced by contempt. International Longshoremen's Assoc., Local 1291 v. Philadelphia Marine Trade Assoc., 389 U.S. 64, 88 S. Ct. 201, 19 L. Ed. 2d 236 (1967); United States v. Joyce, 498 F.2d 592 (7th Cir. 1974).
However, there is nothing unduly vague in this order and decree. The order specifically commands continued compliance with the decree. Paragraph five of that decree, which the defendants are charged with violating, directs them, inter alia, to make "[r]easonable efforts ... to notify and provide [eligible plaintiffs] their lost benefits." Importantly, this language was chosen by the parties themselves. Surely they may be charged with an understanding of its import. No objection was made to these directions at the time the order was entered. Cf. International Longshoremen's Assoc., Local 1291 v. Philadelphia Marine Trade Assoc., supra. Moreover, the defendants do not allege that their failure to comply with that order, if any, resulted from a lack of understanding as to their duties therein created.
Use of the term "reasonable effort" is not in itself a fatal deficiency. The term "reasonable" is often used in the law to describe the extent of burdens or duties. Doubt must be "reasonable" to sustain an acquittal; a person is charged with a duty to use "reasonable" care in his conduct toward others. The term "reasonable efforts" has on numerous occasions been found to have a specific legal meaning when viewed in context. See, e. g. United States v. Gonzalez, 582 F.2d 991, 992 (5 Cir. 1978) (considering what were "reasonable efforts" to locate an informant); Neubert v. Maryland Auto Ins. Fund, 274 Md. 445, 337 A.2d 59, 62 (1975) (statute required that "reasonable efforts" be made to locate unidentifiable driver causing accident); Frankel v. City of Miami Beach, 340 So. 2d 463, 470 (Fla.1976) ("reasonable efforts" required to be made to identify members of class in class-action). In Springett v. Colerick, 67 Mich. 362, 34 N.W. 683, 687 (1887), the Michigan Supreme Court defined a "reasonable effort" as such effort as "men ordinarily would exercise in their own business to protect their rights and interests."
The language of the order cannot be considered in isolation.
*1194 In a criminal contempt case involving a court order, such as the one before us, ... the court should consider the entire background behind the order including the conduct that the order was meant to enjoin or secure, the interests that it was trying to protect, the manner in which it was trying to protect them, and any past violations and warnings in determining whether the order is sufficiently specific and in determining whether the defendant knew or should have known that his conduct was wrongful. Terminal R.R. Ass'n v. United States, 266 U.S. 17, 29, 45 S. Ct. 5, 69 L. Ed. 150 (1924); United States v. Christie Indus., Inc., 465 F.2d 1002, 1007 (3d Cir. 1972).
United States v. Greyhound Corp., 508 F.2d 529 (7th Cir. 1974) (footnote omitted). Viewing the language of the order in light of the underlying circumstances, we cannot hold as a matter of law that the terms of the order and consent decree were so vague and imprecise as to warrant the dismissal of the charges against the defendants.
The defendants also argue that because they were not parties to the underlying action, and therefore not named parties to the order, they may not be held in criminal contempt for violating that order. This argument is also without merit.
Rule 65(d) of the Federal Rules of Civil Procedure specifically provides that "Every order granting an injunction ... is binding only upon the parties to the action, their officers, agents, servants, employees, and attorneys, and upon those persons in active concert or participation with them who receive actual notice of the order by personal service or otherwise." This Rule, the Supreme Court has concluded, "is derived from the common-law doctrine that a decree of injunction not only binds the parties defendant, but also those identified with them in interest, in `privity' with them, represented by them or subject to their control." Regal Knitwear Co. v. NLRB, 324 U.S. 9, 14, 65 S. Ct. 478, 481, 89 L. Ed. 661 (1945).
A corollary to these principles is that non-parties who are legally identified with parties may be held in contempt for violating an injunction if they have actual notice of the injunction. See In re Lennon, 166 U.S. 548, 554, 17 S. Ct. 658, 41 L. Ed. 1110 (1897); McGraw-Edison Co. v. Preformed Line Products Co., 362 F.2d 339 (9th Cir. 1966), cert. denied, 385 U.S. 919, 87 S. Ct. 229, 17 L. Ed. 2d 143 (1966). Personal service is not necessary to achieve this notice, so long as it appears that the non-party has received actual notice of the order. In re Lennon, supra. Vuitton et Fils S.A. v. Carousel Handbags, 592 F.2d 126, 129 (2d Cir. 1979).
That the defendants were not parties in the original action giving rise to the order is, therefore, not dispositive. Their duties under the order, if any, arose from their status as employees of the Department of Agriculture and as agents of other persons who were parties in that action. The relevant questions for determination at trial are whether these defendants were designated by the Secretary of Agriculture or another party or their delegates as these parties' agents to accomplish the mandate of the order, and whether they had actual knowledge of the order and its terms. If they did, they were bound by that order and are therefore subject to the criminal contempt power of this Court if they wilfully failed to comply with that order.
For these reasons, the defendants' motions to dismiss and vacate the criminal contempt charges against them are DENIED. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1531835/ | 236 B.R. 593 (1999)
In re U.S. PHYSICIANS, INC., (Jointly Administered with U.S. Medical Services of Pennsylvania, P.C., No. 98-34012DAS U.S. Medical Services of New Jersey, P.C., No. 98-34013DAS U.S. Rehabilitation Services of Pennsylvania, P.C., No. 98-34014DAS U.S. Medical Services of Delaware, P.A., No. 98-34023DAS), Debtors.
Bankruptcy No. 98-34011DAS.
United States Bankruptcy Court, E.D. Pennsylvania, Philadelphia Division.
July 29, 1999.
*594 *595 Gary M. Schildhorn, Adelman, Lavine, Gold and Levin, Philadelphia, PA, for Debtors.
Daniel M. Grauman, Bala Cynwyd, PA, for Trustee in U.S. Physicians Case.
Christine C. Shubert, Tabernacle, NJ, for Trustee in Other Cases.
Morton Brantzburg, Esquire, Klehr, Harrison, Harvey, Branzburg & Ellers, Philadelphia, PA, for Trustee Daniel M. Grauman.
Paul B. Maschmeyer, Ciardi, Maschmeyer & Karalis, P.C., Philadelphia, PA, for Trustee Christine C. Shubert.
Carl J. Greco, Carl J. Greco, P.C., Scranton, PA, for Movants.
Henry Dewerth-Jaffe, Pepper Hamilton, LLP, Philadelphia, PA, for HCFP Funding Inc.
Walter Weir, Jr., Weir & Partners, Philadelphia, PA, for Plaintiffs in Adv. No. 99-0225, raising a similar issue.
Frederic Baker, Ass't. U.S. Trustee, Philadelphia, PA.
OPINION
DAVID A. SCHOLL, Bankruptcy Judge.
A. INTRODUCTION
The contested matter before us is in substance an attempt by former member doctors ("the Doctors") of affiliated Debtors which attempted to form a consolidated medical practice group, to separate themselves from that group upon its financial demise and thereby assert their sole right to assets previously transferred by them to the Debtors, notably the right to collect certain pre-petition accounts receivable generated by the Doctors' incorporated medical practice. The Doctors have utilized the means of a motion for relief from the automatic stay ("the Motion") to accomplish this end.
*596 At bottom, this effort fails because the Doctors did not strictly adhere to prescribed contractual procedures in separating themselves from the Debtors, thus allowing the Debtors' trustees ("the Trustees"), standing in the shoes of the "ideal creditor," to successfully contest same. The Motion also fails under the terms of 11 U.S.C. § 362(d) of the Bankruptcy Code because the Doctors were unable to establish that they held a valid security interest under 13 Pa.C.S. § 9115 in their stock of their former practice ("the Stock"), which they had previously transferred to the Debtors in affiliating with them. The absence of a valid security interest eliminates 11 U.S.C. § 362(d)(2) as a basis for the Motion and the Doctors are unable to establish the requisite balance of hardships in their favor necessary to prevail as unsecured creditors under 11 U.S.C. § 362(d)(1).
We will therefore deny the Motion and allow the Trustees to continue to exercise their rights over the disputed assets.
B. PROCEDURAL AND FACTUAL HISTORY
This Motion is the latest in a series of attempts by doctors previously affiliated with U.S. PHYSICIANS, INC. ("USP"), and the four companies affiliated to it which are listed in the above caption ("the Debtors"), to recover assets transferred to the Debtors upon the Debtors' financial collapse. A similar dispute involving other physicians is reported in In re U.S. Physicians, Inc., 235 B.R. 367 (Bankr.E.D.Pa. 1999) ("USPI"). As is noted in USPI, at 370-71, having succeeded in its efforts to acquire numerous medical practices prior to obtaining a public stock offering ("the IPO") which it was contemplated would fund its large group practice, USP was ultimately unable to obtain the capital necessary to issue the IPO. That venture consequently failed. Many of the physicians who sold their practices to USP have filed claims as creditors in these cases, seeking various resolutions from the bankruptcy court. Dr. Joseph G. Cesare, Dr. P. Christopher Metzger, Dr. Alice R. Coyle, and Dr. Jack F. Henzes, who formed a corporate practice and thereafter a successor corporation among themselves, the Movants now before us, are typical of those physicians believing themselves entitled to assert rights in assets of their former respective practices against the claims to same of USP.
The Debtors' bankruptcy petitions were initially filed, on October 30, 1998, as voluntary Chapter 11 cases. When financing necessary to preserve the Debtors' structure during the requisite unwinding process could not be obtained, these cases were, at a very early stage, converted to cases under Chapter 7 of the Code on November 9, 1998. Christine Shubert, Esquire, was appointed as interim trustee of all five Debtors on November 10, 1998. Daniel Grauman (with Shubert, "the Trustees") was elected as the permanent Chapter 7 trustee in the USP case on April 12, 1999, while Shubert remains as trustee in the other four cases.
The Movants filed the Motion before us on February 26, 1999. After agreed continuances from the original hearing date of March 25, 1999, and the next scheduled date of April 29, 1999, the matter was listed on June 22, 1999, with several proceedings arising out of this case, mostly involving challenges by numerous physicians groups to the asserted first priority secured claim to most of the Debtors' assets by its principal lender, HCFP Funding, Inc. ("HCFP").
At the hearing, which in fact took place on June 22, 1999, when we refused to allow a further requested continuance, one of the four Movants, Dr. Cesare, testified. The Trustees and HCFP ("the Objectors") joined to oppose the Motion, with Grauman taking the lead. A post-hearing scheduling order required simultaneous initial submissions on July 2, 1999, and replies on July 9, 1999.
*597 It was established at the hearing that the Movants were the sole shareholders in a closely-held professional corporation and its successor. On July 30, 1997, they sold the Stock, consisting of all of the shares issued by their most recent incorporated practice, to USP in furtherance of USP's aforementioned plan to form a large physician practice management company. In the sale, the Movants exchanged the Stock for a combination of current cash and future payments. The future payments were represented by promissory notes ("the Notes") issued by USP to the Movants.
There were only four stock certificates ever issued by the Movants' medical practice corporations, and three of the four could not be found at the time of closing of the sale transaction. As a result, three of the Movants executed letter affidavits, attesting to the existence of the missing certificates; agreeing that they were "inducing" their practice to issue new certificates which would be "issued" to USP; and agreeing to indemnify their corporation from claims based on the lost certificates or the issuance of the new ones.
Completion of the sale was accompanied by the execution of numerous documents memorializing the terms agreed to by the parties to the transaction. Among the documents was a Stock Purchase Agreement ("the Purchase Agreement") and a Rider to the Purchase Agreement ("the Rider"). A term in the Rider provided an option for the Movants to repurchase the Stock in the event that the IPO failed to go forward as planned ("the Option"). A separate Pledge Agreement in which USP was the obligor was also executed, and it provided that, upon an event of default, "ownership of the Securities, free and clear of all liens, security interests, encumbrances and claims, [was to] automatically revert to [the Movants]." The Option included the following provisions, at paragraph 21:
(c) During the [the Exercise Period], Physicians who, in the aggregate, owned of record at least 66 2/3% of the outstanding capital stock of each class of the Company on the date hereof (the "Threshold Number") may give written notice (containing their signatures) to USP (the "IPO Repurchase Notice") that they desire to repurchase the Shares 30 days after the date of the delivery of the IPO repurchase Notice (the "IPO Termination Date"). If the IPO Repurchase Notice is given the Physicians shall deliver to USP the Deliverables (as defined below) . . . All Physicians who have signed the IPO Repurchase Notice shall jointly and severally be responsible and serve as surety and guarantor that the Deliverables are delivered no later than the IPO Termination Date.
(d) Except as provided in subparagraph 21(h), Deliverables means the Notes and the Common Shares. The Deliverables shall be delivered to USP on or before the IPO Termination Date. The portion of the Deliverables represented by the Common Shares shall be paid by the return to USP of all Common Shares beneficially owned by the Physicians (which shall equal the number of Common Shares issued to the Physicians by USP hereunder) together with executed stock powers with signature guarantee. Upon delivery of the Deliverables, all amounts of principal and interest due on the Notes shall no longer remain due, and the Notes will be delivered to USP on or before the IPO Termination Date and marked "Satisfied and Cancelled."
The Deliverables were further defined in the Rider, at ¶ 21(h), as "the Notes, the Common Shares, and all amounts paid to Physicians under the Notes through prepayment or otherwise, through the IPO Termination Date."
When USP's IPO did not occur as scheduled, the Movants were empowered to exercise the Option. In addition, the Movants allege that USP failed to submit the July 30, 1998, payment on the Notes, constituting an event of default under the *598 Pledge Agreement. However, the only step taken by the Movants to extricate themselves from the transaction was the dispatch of the following letter ("the Letter") of August 11, 1998, to USP's President:
As you know, [USP] has failed to pay the most recent installment due under the . . . Notes, . . . and such failure has now continued for ten (10) days. Accordingly, you are hereby given written notice of the failure to pay as required.
Moreover, in accordance with Paragraph 21 of the Purchase Agreement, with Rider, dated July 30, 1997, as amended, this letter is intended to serve as notice to [USP] that we desire to repurchase the shares of [our corporation] thirty (30) days after the date of delivery of this letter to you.
We will contact [USP] in the coming weeks to complete the transaction in accordance with our respective obligations.
The Debtor received the Letter on August 14, 1998. Pursuant to paragraph 23(j) of the Rider, the effective date of any termination properly set in motion by a notice received on August 14, 1999, would be September 14, 1998. The thirty days elapsed, during which time the Movants took no further action, neither returning the Notes nor initiating any further contact with USP to discuss the Letter. Neither did a response ensue from USP or any of its representatives. Believing that they had complied with the requirements of the Option, the Movants took no further action at any other time, and resumed their practice if they had regained ownership of the Stock and were no longer affiliated with USP.
The Movants displayed perhaps excessive deference to the bankruptcy process in couching the Motion as a request to lift of the automatic stay in order that they might quiet title and eliminate any competing claims for the Stock or benefits which might attend its ownership. More typically, it is a debtor that will invoke the automatic stay as a layer of protection against a creditor's actions, even when other causes of action are present. Compare USPI, at 374-76. Mindful of their need for some basis to penetrate this layer of protection once it was invoked, the Movants undertook at the hearing to assert their status as that of creditors secured by their interests in the Stock, doubtlessly recognizing that secured status is an important element for a creditor to prove in relief from stay litigation. However, apparently rethinking the strength of their claim to secured status and the wisdom of casting their cause of action against the Debtor in this posture, they began their opening Brief with arguments that the Debtors have no continuing "property interest" in the Stock because the Movants either validly exercised the Option or were entitled to invoke the "event of default" provisions of the Pledge Agreement.
Treating the Movants' cause of action as a "pure" § 362(d) Motion, the Objectors responded that the record is devoid of evidence regarding either the value of the Stock or of the Debtor's outstanding obligations on the Notes. Absent this evidence, the Objectors argued that the Movants have not met their initial burden of demonstrating USP's lack of equity in the Stock for purposes of particularly § 362(d)(2) and § 362(d)(1). The Objectors further asserted that the Movants have not perfected the security interest they claim in the Stock. While mostly addressing the validity of the Movants' security interests in the Stock under the Uniform Commercial Code of Pennsylvania, 13 Pa.C.S. §§ 1101, et seq. ("the UCC"), the Objectors also argued that the Movants never properly terminated their relationship with USP, as specified in the Purchase Agreement, and therefore have no right to the return of the Stock, at least as against the Trustees standing in the shoes of the "ideal creditor" under 11 U.S.C. § 544.
*599 C. DISCUSSION
1. The Movants Did Not Properly Exercise the Option, Since They Fulfilled Only One of Two Requirements in the Rider, and They Consequently Have No Ownership Claim in the Stock Deriving from the Option.
The Movants argued at length that the Letter constituted the proper exercise of the Option pursuant to paragraph 21 of the Rider. In so arguing, they are compelled to contend that the language of the Letter effected an unequivocal notice which constituted a proper tender of performance of their obligations necessary to exercise the Option. They support this assertion by observing that both they and USP treated the Movants as having terminated their relationship with USP following the delivery of the Letter.
However, Dr. Cesare, the sole witness in the hearing for the Movants, admitted that the Movants never delivered the Notes to USP. According to the Movants' apparent analysis, the return of the Notes was rendered unnecessary because of USP's alleged default on the payment due July 30, 1998. However, while a default was a necessary condition to successfully invoke the Option, it was not a sufficient condition to do so. Moreover, the alleged "agreement" of USP that the Letter was sufficient to constitute an exercise of the Option is not decisive. The actions of the Debtor do not bind the Trustees. What is controlling is whether the Movants satisfied all of the prerequisites for exercising of the Option as set forth in the pertinent documents.
As we recently stated in USPI, at 374-75,
[t]he principle [that a contract should be interpreted according to the course of performance between the parties,] applies only if there is some degree of ambiguity regarding the meaning of the contract terms regarding which the course of performance is at issue. As we held in In re St. Mary Hospital, 101 B.R. 451, 461 (Bankr.E.D.Pa.1989), an unambiguous contract provision must be interpreted as it is written, not as the parties may have meant it or interpreted it. See, e.g., Philadelphia, W. & B.R. v. Trimble, 77 U.S. (10 Wall.) 367, 377, 19 L. Ed. 948 (1870); In re Penn Central Transportation Co., 831 F.2d 1221, 1225-28 (3d Cir.1987); Mellon Bank, N.A. v. Aetna Business Credit, Inc., 619 F.2d 1001, 1009-14 (3d Cir.1980); In re Temp-Way Corp., 82 B.R. 747, 751 (Bankr.E.D.Pa.1988); 1 [A. CORBIN, CORBIN ON CONTRACTS,] 104, at 464 (1963); and 4 [S. WILLISTON, A TREATISE ON THE LAW OF CONTRACTS,] 610, at 499-500 (3d ed. Jaeger 1961). See also, e.g., In re St. Mary Hospital, 117 B.R. 125, 131-32 (Bankr. E.D.Pa.1990).
The instant contractual language is clear and unambiguous in requiring performance of two steps by the Movants in order for them to properly exercise the Option. Both notice of the intent to repurchase and delivery of the Deliverables, the Notes (marked "satisfied and canceled") and Common Shares of USP, were required. See the Rider, ¶¶ 21(c), (d), quoted at pages 597 - 598 supra. The Movants performed only the first of these two requirements. The second requirement, delivery of the Deliverables, was neither attempted nor accomplished.
We do note that only part of the Deliverables could have been returned to USP. USP's filing for bankruptcy protection was triggered by its failure to issue a public stock offering, so there were no common shares of USP in existence for the Movants to deliver in fulfillment of the second requirement. However, this factor, while relieving the Movants' burden in part, does not work to relieve them from the further requirement that the Notes were to be marked as "Satisfied and Canceled" and returned to USP in order to complete the exercise of the Option. We observe that, without the return of the Notes, the Movants would have had a one-way exit from *600 the venture, permitting them to return to private practice while still having the ability to hold USP to payment obligations on the Notes.
Nor does it appear, from the four corners of the Letter, that the Movants deemed themselves to have effected the Option merely by sending the Letter and then acting as if its dispatch alone constituted a sufficient performance to effect an exercise of the Option. The last paragraph of the Letter spoke in terms of "complet[ing] the transaction in accordance with our respective obligations" in the "coming weeks." However, no further performances by the Movants were forthcoming. Therefore, on its face, the Letter, we think correctly, observes that further "obligations" attended the exercise of the Option.
In response to the argument that the Debtor at least passively accepted the Debtor's performance as sufficient to constitute an exercise of the Option, we remind the Movants that the Trustees possess extraordinary powers pursuant to 11 U.S.C. § 544(a), as we thusly explained in a factually-analogous setting in In re Hunt's Pier Associates, 143 B.R. 36, 49 (Bankr.E.D.Pa.1992):
The Bankruptcy Code provides that the Trustee may avoid certain claims against the debtor's estate which, outside of bankruptcy, would not be avoidable. See e.g., In re Capital Center Equities, 137 B.R. 600, 609-10 (Bankr.E.D.Pa. 1992); and In re Rice, 133 B.R. 722, 728 (Bankr.E.D.Pa.1991). This result follows because these "strong-arm" provisions of the Code permit the trustee to stand in the shoes of a hypothetical "ideal" lien creditor or judgment creditor, or a bona fide purchaser of a debtor's real property. Capital Center, supra, 137 B.R. at 608.
The Trustees may therefore enforce the conditions of the Option necessary to terminate the Debtors' interests in the Stock, even though USP and the Debtors themselves, through nonfeasance, failed to do so.
The Movants appear to argue that they are nevertheless entitled to the "specific performance" of allowing them to exercise the Option as an appropriate remedy, citing Eichbaum v. Sample, 213 Pa. 216, 62 A. 837 (1906), in their support. The Movants appropriately contend that Eichbaum endorses the remedy of specific performance of forfeiture of stock where the matters in dispute are unique or difficult to value. It is true that Eichbaum involved a transaction somewhat similar to that between the Movants and USP. There, the defendant loaned money to the plaintiff in exchange for which the defendant held stock certificates as collateral to secure repayment of the loan. However, the facts of Eichbaum are distinct from the instant facts on two critical points. First, in Eichbaum, there was no written agreement between the parties. Second, the plaintiff had properly tendered his performance and the defendant had not yet done so. Years later in Aldrich v. Geahry, 360 Pa. 376, 381, 61 A.2d 843, 845 (1948), Eichbaum was cited for the principle that equity steps in only where there is no adequate remedy at law, no written agreement defined the payment terms, and the defendant refused to perform his part of the bargain despite the plaintiff's tender of the full payment before due.
In the instant factual setting, we have several documents which expressly define not only what constitutes a default, but also precisely what remedies are available upon default and the conditions for exercise of those remedies. Thus, even if it can be argued that USP was in default of the Purchase Agreement, the Rider to that Agreement set forth a specific remedy for that default through exercise of the Option. Again, the Movants failed to perform a significant necessary step in exercising the Option's prescribed remedy.
We therefore conclude that the Movants did not properly and effectively exercise the Option. Therefore, the Trustees correctly *601 argue that the rights of USP in the Stock were not to be extinguished at this juncture by the Movants.
2. The Movants Did Not Obtain a Valid Security Interest in the Stock, Since They Did Not Obtain Delivery of Same, and Therefore They Cannot Assert the Status of Creditors of USP Whose Rights Against It Were Secured by the Stock.
If the Movants had believed themselves capable of effectively arguing that they exercised the Option to recover title to the Stock prior to USP's bankruptcy filing, it would seem that they would have preferred to file a motion or proceeding simply declaring that the Trustees had no rights in the Stock rather than entering the thicket of obtaining relief from the automatic stay to effect a post-petition foreclosure of their rights. As we held in the prior headnote, the Movants could not sustain such an argument and hence accurately perceived that the Motion was necessary in order for them to foreclose the Trustees' interests in the Stock.
The Motion, as we noted previously, takes the form of a motion for relief from the automatic stay under 11 U.S.C. §§ 362(d)(1), (d)(2), which provide as follows:
(d) On request of a party in interest and after notice and a hearing, the court shall grant relief from the stay provided under subsection (a) of this section, such as by terminating, annulling, modifying, or conditioning such stay
(1) for cause, including the lack of adequate protection of an interest in property of such party in interest;
(2) with respect to a stay of an act against property under subsection (a) of this section, if
(A) the debtor does not have an equity in such property; and
(B) such property is not necessary to an effective reorganization.
The Movants correctly perceived that it was highly significant to the success of the Motion, under either § 362(d)(1) or § 362(d)(2), to establish their status as secured creditors in the context of the instant Chapter 7 liquidation cases. In such cases, the debts of secured creditors are satisfied first, and, following the satisfaction of administrative expenses and any other priority claims, any remaining funds are distributed among the unsecured creditors who have properly filed claims against the estate. Generally, it would defeat the purpose of this order of distribution to permit unsecured creditors to obtain relief from the automatic stay to assert their claims, thereby permitting them to act against property of the estate.
Unsecured creditors are generally relegated to asserting their claims under the bankruptcy claims process. See In re U.S. Physicians, Inc., 1999 WL 496475, at *3 (Bankr.E.D.Pa. July 7, 1999); and In re FRG, Inc., 121 B.R. 710, 714 (Bankr. E.D.Pa.1990). That is because actions by unsecured creditors in other forums would require expenditure of administrative resources of the estate to litigate in alternative forums. Therefore, allowing litigation by, as well as any recovery to, an unsecured creditor would tend to significantly reduce assets of the estate and undermine the ability of the secured creditors to satisfy the debts owed to them. Relief for unsecured creditors is therefore rarely granted in bankruptcy cases under 11 U.S.C. § 362(d). See generally In re LaBrum and Doak, 1998 WL 233749, at *5 (Bankr.E.D.Pa. May 8, 1998), citing In re Metro Transportation Co., 82 B.R. 351, 353 (Bankr.E.D.Pa.1988); and Hunt's Pier, supra, 143 B.R. at 50. Hence, in order to assess the Movants' right to relief, it is essential that we determine whether the Movants possessed a valid and perfected security interest in the Stock, thus giving them special rights to regain the Stock pursuant to the terms of the Pledge Agreement.
Security interests arising pursuant to transactions conducted in Pennsylvania are usually governed by Article 9 of the UCC. See 13 Pa.C.S. §§ 9101, et seq. This Article *602 was among those updated in 1996 in bringing Pennsylvania into conformity with the latest revisions to the UCC. See First Nat'l Bank of Palmerton v. Donaldson, Lufkin & Jenrette Securities Corp., 1999 WL 163606, at *7 FN1 (E.D.Pa. March 19, 1999); and R. Wittie, Review of Legislative Developments Affecting U.C.C. Article 8 and Investment Securities, 53 BUS. LAW. 1511, 1512 (1998).
The updates in Pennsylvania included a new section 9115 which sets forth, in part, the rights and responsibilities of parties participating in secured transactions involving "investment property." As defined in the statutory text, "investment property" means "a security, whether certificated or uncertificated." 13 Pa.C.S. § 9115(a). According to 13 Pa.C.S. §§ 9115(d)(1), (2), a security interest in investment property may generally be perfected either by control or by filing a financing statement. Id.
The Movants have designated 13 Pa.C.S. § 9115(d) as the statutory support for their claimed security interest in the Stock. Because only three of the four original stock certificates existed at the closing of the sale, the Movants argue that the stock interests in question are "uncertificated" securities. According to the Movants' interpretation of § 9115(d), perfection of an interest in such uncertificated securities may be accomplished by the ability to assert control over the securities, as well as by actual possession of the stock certificates, as was generally required under the "old" UCC, pursuant to 13 Pa.C.S. § 9304. The Movants further argue that "control" of the Stock shifted to them upon USP's defaults under the terms of the Notes, a point at which they believed it was possible for them to sell or otherwise transfer the Stock without USP's permission.
The Objectors rightly observe that the purpose and effect of § 9115 is only understood in coordination with definitions found elsewhere in the UCC. In order to understand what, exactly, constitutes "investment property," they contend that we must look to the definition of "security." "Security" is defined at 13 Pa.C.S. § 8102(a), as follows:
Except as otherwise provided in section 8103 . . . [a security is] an obligation of an issuer or a share, participation or other interest in an issuer or in property or an enterprise of an issuer . . . (3) which: (i) is, or is of a type, dealt in or traded on securities exchanges or securities markets. . . . (emphasis added).
Furthermore, an uncertificated security is defined as "a security that is not represented by a certificate." Id. See also 13 Pa.C.S. § 9115 (cross-referencing definitions in a comment to Article 8 of the UCC).
No evidence was introduced to suggest that the Stock fits these definitions in the manner suggested by the Movants. First, the Movants admitted that the Stock is not publicly traded and represents shares in a closely-held corporation. As the Objectors point out, stock in a closely-held corporation is considered an "instrument," see e.g. In re Fund Raiser Products Co., 163 B.R. 744, 748-49 (Bankr.E.D.Pa.1994), in which a security interest could be perfected only by possession under the 1991 version of the UCC, pursuant to 13 Pa.C.S. § 9305. Second, the Stock cannot be deemed "uncertificated securities" because all shares are accounted for and represented by stock certificates. Even the shares represented by the three missing certificates were issued as certificates that have never been formally canceled. Because the Stock is therefore not of the type of security defined in § 8102(a), a plain reading of the definitions renders the Movants' interpretation of § 9115 inaccurate.
Giving every consideration to the possibility that the Movants' interpretation has merit, we further examine the comments to § 8102 to determine if there remains room for interpretation of the intent of this legislation which would support their position. After this examination, we remain unpersuaded that the Stock qualifies under *603 the definition of a "security" for the purposes of § 9115.
The relevant portion of the comments reads as follows:
"Security." The definition of "security" has three components. First, there is the subparagraph (i) test that the interest or obligation be fully transferable, in the sense that the issuer either maintains transfer books or the obligation or interest is represented by a certificate in bearer or registered form. Second, there is the subparagraph (ii) test that the interest or obligation be divisible, that is, one of a class or series, as distinguished from individual obligations of the sort governed by ordinary contract law or by Article 3. Third, there is the subparagraph (iii) functional test, which generally turns on whether the interest or obligation is, or is of a type, dealt in or traded on securities markets or securities exchanges. There is, however, an "opt-in" provision in subparagraph (iii) which permits the issuer of any interest or obligation that is `a medium of investment' to specify that it is a security governed by Article 8.
The divisibility test of subparagraph (ii) applies to the securitythat is, the underlying intangible interestnot the means by which that interest is evidenced. Thus, securities issued in book-entry only form meet the divisibility test because the underlying intangible interest is divisible via the mechanism of the indirect holding system. This is so even though the clearing corporation is the only eligible direct holder of the security.
The third component, the functional test in subparagraph (iii), provides flexibility while ensuring that the Article 8 rules do not apply to interests or obligations in circumstances so unconnected with the securities markets that parties are unlikely to have thought of the possibility that Article 8 might apply. Subparagraph (iii)(A) covers interests or obligations that either are dealt in or traded on securities exchanges or securities markets, or are of a type dealt in or traded on securities exchanges or securities markets. The "is dealt in or traded on" phrase eliminates problems in the characterization of new forms of securities which are to be traded in the markets, even though no similar type has previously been dealt in or traded in the markets. Subparagraph (iii)(B) covers the broader category of media for investment, but it applies only if the terms of the interest or obligation specify that it is an Article 8 security. This opt-in provision allows for deliberate expansion of the scope of Article 8.
13 Pa.C.S. § 8102, Comment 15 (emphasis added).
Considering these comments, we first observe that the sole stock certificate available and produced for inspection at the hearing of June 22, 1999, reveals that the Stock was common stock issued in registered form. It therefore meets the subparagraph (i) test as a fully transferable obligation, as well as the subparagraph (ii) test as one of a class. However, it does not meet the subparagraph (iii) functional test requiring the securities therein referenced to be publicly traded. While the test suggests some measure of flexibility relative to the definition of securities traded on markets, we find that the revisions of 1996 only intended this provision to apply to "new forms" of securities. Common stock in a closely-held corporation is not likely to be confused with a "new form" of security.
Assuming, arguendo, that the Stock is either a certificated or an uncertificated stock of a type intended to fall under the dictates of § 9115(d), we can attempt to view the Movants' assertions from a slightly different perspective. We agree with Movants' statement that "[a] security interest in investment property may be perfected by control." 13 Pa.C.S. § 9115(d)(1). However, in examining the pertinent definitions, it can be ascertained that "control," "[w]ith respect to a certificated *604 security, uncertificated security or security entitlement, [refers to] the meaning specified in section 8106 (relating to control)." 13 Pa.C.S. § 9115(a).
Examining § 8106(a), we find that "control" of a security depends into which of four categories the security falls. Of the four available, we have no reason to examine the definition relative to a "security entitlement," as that category has not been alleged in this case, nor does it appear applicable. Remaining are the categories of a "Certificated Security in Bearer Form," a "Certificated Security in Registered Form," or an "Uncertificated Security." However, as to each of these categories, there is a requirement of taking delivery of the stock certificates in order to perfect a security interest therein, as indicated by the following:
(a) "Control" of certificated security in bearer form.A purchaser has "control" of a certificated security in bearer form if the certificated security is delivered to the purchaser.
(b) "Control" of certificated security in registered form.A purchaser has "control" of a certificated security in registered form if the certificated security is delivered to the purchaser and:
(1) the certificate is endorsed to the purchaser or in blank by an effective indorsement; or
(2) the certificate is registered in the name of the purchaser, upon original issue or registration of transfer by the issuer.
(c) "Control" of uncertificated security.A purchaser has "control" of an uncertificated security if:
(1) the uncertificated security is delivered to the purchaser; or
(2) the issuer has agreed that it will comply with instructions originated by the purchaser without further consent by the registered owner.
13 Pa.C.S. §§ 8106(a),(b), (c)(emphasis added).
Attempting to overcome these statutory pronouncements, the Movants argue that the requirement of "delivery" cannot be read too literally. They contend that what is meant thereby is merely an apparent ability to exercise control over the securities at issue. In the instant factual setting the Movants contend that their "Rights Upon Default," pursuant to Paragraph 7 of the Pledge Agreement, operated to automatically return ownership of the shares to them upon the occurrence of an event of default, and such reversion constituted their immediate ability to exercise control over the Stock. However, to exercise rights as a secured creditor of USP, the Movants were obliged to prove both a default triggering the exercise of their rights in the Stock and their valid security interest in the Stock. The method of perfection of the security interest in the Stock, as conveyed in the Pledge Agreement, is specified. The Stock is an "instrument." Therefore, perfection of the claimed security interest in it required, per the pertinent statutes, "delivery" of the stock certificates or their representative substitutes.
Moreover, we note that it was the Movants' own failure to obtain new certificates in furtherance of the Purchase Agreement which complicated their performance of the "delivery" requirement at the critical time between August and October, 1998. We therefore conclude that the Movants did not obtain the requisite delivery of the certificates, may not claim a perfected security interest in the Stock, and are therefore unsecured creditors of USP.
Addressing, in a general sense, the burdens upon a creditor seeking relief from the automatic stay in a chapter 7 case in In re Cabrillo, 101 B.R. 443, 447 (Bankr. E.D.Pa.1989), we stated as follows:
A party seeking relief from the stay bears the burden of proof on the issue of the Debtor's equity in the property. 11 U.S.C. § 362(g)(1). While the party opposing the motion bears the ultimate burden of proof on all other issues, 11 *605 U.S.C. § 362(g)(2), the party seeking relief bears an initial burden of producing evidence to show that it is entitled to relief. See, e.g., In re Ward, 837 F.2d 124, 128 (3d Cir.1988); In re Purnell, 92 B.R. 625, 632 (Bankr.E.D.Pa.1988); In re Metro Transportation Co., 82 B.R. 351, 353 (Bankr.E.D.Pa.1988); In re Stranahan Gear Co., 67 B.R. 834, 836-37 (Bankr.E.D.Pa.1986). See also 2 COLLIER [ON BANKRUPTCY,] ¶ 362.10, at 362-72 [(15th ed.1989)].
We also stated as follows in Hunt's Pier, supra, 143 B.R. at 50:
The alleged secured party bears the burden of proving the validity of its security interest in the debtor's property. See In re Harris, 115 B.R. 376, 377 (Bankr.M.D.Fla.1990); and In re Grant Broadcasting of Philadelphia, Inc., 71 B.R. 376, 385-86 (Bankr.E.D.Pa.), aff'd, 75 B.R. 819, 822-23 (E.D.Pa.1987). If a bankruptcy court has a serious doubt about the validity of the movant's security interest in the debtor's property, this factor weighs heavily upon the court's determination of a § 362(d) motion. See In re Cabrillo, 101 B.R. 443, 451 (Bankr. E.D.Pa.1989); In re Rice, 82 B.R. 623, 626 (Bankr.S.D.Ga.1987); In re Gurst, 75 B.R. 575, 579 (Bankr.E.D.Pa.1987); In re Paolino, 72 B.R. 555, 558 (Bankr. E.D.Pa.1987); In re Dennison, 50 B.R. 950, 955 (Bankr.E.D.Pa.1985); and United Companies Financial Corp. v. Brantley, 6 B.R. 178, 185 (Bankr. N.D.Fla.1980).
We further stated, at id. that
relief under § 362(d)(2), requiring, as it does, a debtor's lack of equity in the property regarding which relief is sought, is only appropriately granted when the movant has a security interest in that property. Even as to § 362(d)(1), a "valid secured status, while not a prerequisite, is a very important factor to be considered in deciding whether a moving party is entitled to relief from the automatic stay per 11 U.S.C. § 362(d)." In re Tashjian, 72 B.R. 968, 972 (Bankr.E.D.Pa.1987).
The instant Movants, being unable to convince us that they are enforcing a valid security interest in USP's property, are thrust into the unhappy posture of unsecured creditors. Relief from the automatic stay is available to unsecured creditors, under § 362(d)(1), only if the "balance of hardships" tips in the movant's favor. See Metro Transportation, supra, 82 B.R. at 353; In re Cherry, 78 B.R. 65, 68-69, 72 (Bankr.E.D.Pa.1987); and In re Ronald Perlstein Enterprises, Inc., 70 B.R. 1005, 1009-10 (Bankr.E.D.Pa.), appeal dismissed, C.A. No. 87-2364 (E.D. Pa. June 25, 1987).
Thus, the Movants are unsecured creditors who can obtain relief only by making a "strong showing" that the "balance of hardships" tips in their favor. Here, the Movants rested heavily on unsupported assertions that the Debtor lacks equity in the Stock. The Movants' heavy reliance on the absence of the Debtor's equity in the Stock would only be meaningful if it were supported by credible information regarding the value of the Stock and the related outstanding debt on the Notes which it was to secure. However, such evidence, as the Objectors point out, was not present in this record.
Moreover, even assuming arguendo that the Debtor's total lack of equity in the Stock were convincingly proven, we observed, in Perlstein, supra, 70 B.R. at 1008, that unsecured creditors are generally entitled to relief only where they have demonstrated that the debtor had engaged in morally culpable conduct and the creditor was barred from collection of valid judgments already in its favor unless the stay were lifted. The Movants have not established that the balance of hardships has tipped in their favor merely by asserting their perceived entitlement to specific performance of the Option, as opposed to proving actual hardships which they will suffer if relief is denied. If the Motion is denied, it appears that the Movants *606 will simply share the same financial status with the other frustrated physicians who were former members of the failed USP medical group.
Having examined the available arguments, we find that the Movants are not entitled to relief on the basis of the record before us. We therefore exercise our discretion in favor of denying the Motion before us. See In re Holtkamp, 669 F.2d 505, 507 (7th Cir.1982); In re Foxcroft Square Co., 184 B.R. 671, 677 (E.D.Pa. 1995) (GAWTHROP, J.); and In re Shariyf, 68 B.R. 604, 606-07 (E.D.Pa.1986) (J. KELLY, J.).
D. CONCLUSION
Accordingly, an order denying the instant Motion will be entered. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1531858/ | 480 F. Supp. 1072 (1979)
Cora GRIFFIN et al.
v.
Patricia Roberts HARRIS et al.
Civ. A. No. 76-278.
United States District Court, E. D. Pennsylvania, Civil Division.
September 27, 1979.
*1073 Harold R. Berk, Community Legal Services, Philadelphia, Pa., Kathleen Spann, Luzerne County Legal Services, Wilkes-Barre, Pa., for plaintiffs.
Peter F. Vaira, U. S. Atty., Robert S. Forster, Asst. U. S. Atty., Philadelphia, Pa., Carolyn B. Lieberman, U. S. Dept. of H. U. D., Washington, D. C., for defendants.
MEMORANDUM OF DECISION
McGLYNN, District Judge.
In January 1976, tenants of certain multi-family housing developments brought a class action on behalf of all low-income tenants in the nation who, at the time of commencement of this action, were receiving rent supplement payments pursuant to contracts between their landlords and the Department of Housing and Urban Development (HUD) in amounts less than those required by HUD's own regulations. In its decision of February 13, 1978, the United States Court of Appeals for the Third Circuit determined that money had been illegally withheld from plaintiffs by HUD, and remanded to this court the issue of plaintiffs' entitlement to retrospective monetary relief for the withheld benefits. 571 F.2d 767 (3rd Cir. 1978). By order dated July 27, 1978, this court entered partial summary judgment for the plaintiffs, granting them declaratory and injunctive relief and enjoining HUD from paying less than the regulatorily defined maximum supplement to eligible tenants in the future. The nationwide class of plaintiffs was decertified in a May 9, 1979 Order, D.C., 83 F.R.D. 72, and four tenants who have received rent supplements since 1971, 1972 and 1973, respectively, remain as named plaintiffs. Plaintiffs have filed a motion for summary judgment in the form of an order requiring HUD to pay them restitution back to December 22, *1074 1971, the date on which the regulations governing the rent supplement program (24 C.F.R. §§ 215.25 and 215.45) were issued. They seek restitution through a forward adjustment of their rental payments until such time as they have received the full amount of their restitution entitlement.[1] HUD has filed a cross-motion for summary judgment in opposition to plaintiffs' motion, claiming that sovereign immunity has not been waived and that the equities do not lie in plaintiffs' favor.
In its present posture, this case presents two primary questions: 1) whether the restitution of withheld benefits here sought by plaintiffs requires an explicit waiver of sovereign immunity; and 2) if so, whether sovereign immunity has been waived.
The Government has taken the view that plaintiffs have already received the only relief to which they are entitledinjunctive reliefand that they are not entitled to restitution since it would necessitate an appropriation of funds from the United States Treasury. HUD contends that not every substantive right creates a remedy, and that its budget authority to contract for the payment of rent supplements does not constitute funds or money available for payment of a judgment such as that contemplated here. Although it is well-settled that there must be an explicit waiver of sovereign immunity before a damage award can be recovered against the United States, the cases have made a distinction between money damage awards to persons having a right to receive money from the United States and the restoration of money improperly taken or improperly withheld. Davis v. Romney, 490 F.2d 1360, 1371 (3d Cir. 1974).
Restitution has generally been allowed without an express waiver of sovereign immunity where the remedy is essentially equitable in nature and can be considered an integral part of the injunctive or declaratory relief sought. In Carter v. Butz, 479 F.2d 1084 (3d Cir. 1973), cert. denied, 414 U.S. 1103, 94 S. Ct. 737, 38 L. Ed. 2d 559 (1973), it was found that the recipients' statutory entitlement to food stamp benefits imposed an obligation upon the Department of Agriculture to provide them with restitution for illegally withheld benefits, notwithstanding the fact that the effect of the remedy was to grant full relief at the expense of the federal government. Similarly, in Wetzel v. Liberty Mutual Insurance Co., 508 F.2d 239 (3d Cir. 1975), cert. denied, 421 U.S. 1011, 95 S. Ct. 2415, 44 L. Ed. 2d 679 (1975), the court found that plaintiffs were entitled to equitable restitution in an employment discrimination claim for back wages. It has also been held that restitution is an appropriate remedy in a suit by union members to enjoin their union from violating the Labor-Management Reporting and Disclosure Act's balloting procedure for a dues increase and to recover excessive dues paid in violation of the Act, Connor v. Highway Truck Drivers & Helpers, 68 F.R.D. 370 (E.D.Pa.1975), and in a suit in which patients whose Social Security checks were routinely appropriated to pay claims by the Commonwealth in violation of the plaintiffs' rights. Vecchione v. Wohlgemuth, 80 F.R.D. 32 (E.D.Pa.1978).
Since it has been determined that the plaintiffs here are entitled to have full rent supplements paid on their behalf up to 70% of rent when necessary to reduce their share of the rent to an amount equal to 25% of their adjusted gross income, which were withheld by HUD contrary to their own published regulations, and since the public must be deemed to have a strong interest in the proper operation of the rent supplement program, this court will order that plaintiffs recover the value of benefits wrongfully withheld.
The defendant argues that the relief sought by plaintiffs is barred as a result of the Supreme Court's decision in Edelman v. Jordan, 415 U.S. 651, 94 S. Ct. 1347, 39 *1075 L.Ed.2d 662 (1974). Edelman involved federal-state programs of Aid to the Aged, Blind and Disabled, in which Illinois public aid officials administered benefits pursuant to their own regulations and under time requirements which were less favorable to the recipients than the federal regulations set forth in 45 C.F.R. § 206.10(a)(3). The district court granted plaintiff recipients injunctive relief requiring the Illinois officials to comply with the federal time limits wrongfully withheld to all eligible applicants who had made applications between the date the regulations were issued and the date of the preliminary injunction. The Court of Appeals affirmed. The United States Supreme Court reversed holding that 1) a federal court's remedial power, consistent with the Eleventh Amendment, is necessarily limited to prospective injunctive relief and may not include a retroactive award which requires the payment of funds from the state treasury; and 2) Illinois by participating in the federal program, had not waived its immunity under the Eleventh Amendment from suit in a federal court. Relying on Edelman, the government in the case sub judice argues that the court cannot wrap an award of restitution within the cloak of its equitable power in order to avoid the bar of sovereign immunity. In my view, defendants have misread the holding of Edelman. I believe that as stated by the court in Rhodes v. Weinberger, 66 F.R.D. 601 (E.D.Pa.1975), Edelman does not hold "that an award of past benefits is not within a court's equity powers, but merely that these more flexible equity powers do not guarantee that all Eleventh Amendment problems will be eliminated". 66 F.R.D. at 604 n. 3. In addition, as plaintiffs have pointed out, Edelman did not involve the sovereign immunity of the federal government, but rather dealt with the effect of the Eleventh Amendment on actions against states. I am persuaded, therefore, that the plaintiffs' claims for restitution in the suit at bar should be considered as part and parcel of the injunctive relief already granted rather than as claims for money damages against the United States, and are not barred by the Supreme Court's holding in Edelman.
In any event, a waiver of sovereign immunity is provided by 12 U.S.C. § 1702.
As stated by HUD in its memorandum in support of its cross-motion for summary judgment, it is well-settled that a waiver of sovereign immunity where required must be specific and explicit, United States v. Testan, 424 U.S. 392, 96 S. Ct. 948, 47 L. Ed. 2d 114 (1976), and cannot be implied from an ambiguous statute or derived from the equitable powers of the court. Edelman v. Jordan, supra. However, it has been held that 12 U.S.C. § 1702 constitutes an express waiver of immunity with regard to cases such as the instant one arising under national housing legislation. Bennett Construction Co. v. Allen Gardens, Inc., 433 F. Supp. 825 (W.D.Mo.1977); Abrams v. Hills, 547 F.2d 1062 (9th Cir. 1976); Trans-Bay Engineers & Builders, Inc. v. Hills, 179 U.S.App.D.C. 184, 551 F.2d 370 (D.C.Cir. 1976); Brown v. Lynn, 385 F. Supp. 986 (N.D.Ill.1974), rehearing denied, 7 Cir., 392 F. Supp. 559. Plaintiffs' claims are, therefore, not barred by sovereign immunity.
Section 1702 provides in pertinent part as follows:
"[t]he Secretary [of HUD] shall, in carrying out the provisions of this subchapter and subchapters II, III, V, VI, VII, VIII, IX-A, IX-B, and X of this chapter, be authorized in his official capacity, to sue and be sued in any court of competent jurisdiction, State or Federal."
12 U.S.C. § 1702 (1976). In Bennett, the plaintiff's claim arose under § 236 of the National Housing Act (12 U.S.C. § 1715z-1), which provision is part of Subchapter II of Chapter 13 of the United States Codeone of the subchapters specifically enumerated in the waiver contained in § 1702. Similarly, Abrams and Trans-Bay Engineers & Builders involved actions arising under 12 U.S.C. § 1715z-1. Brown involved an action brought by mortgagors under the mortgage assistance and mortgage insurance programs of the National Housing Act alleging violation of statutory obligations on the part of the government defendant. *1076 The court in Brown stated that a plain reading of the National Housing Act demonstrates that the government through HUD has "statutorily consented to be sued in cases arising under this law." 385 F.Supp. at 991. However, the mortgage assistance and mortgage insurance provisions of the Act at issue in Brown also fall within the subchapters enumerated in the waiver contained in 12 U.S.C. § 1702.
There are other cases which have held, however, that § 1702 provides a waiver in actions arising under provisions of the National Housing Act which do not fall within the enumerated subchapters. In Pennsylvania v. Lynn, 501 F.2d 848 (D.C.Cir. 1974), it was held that the Secretary of HUD could not assert the defense of sovereign immunity in an action to compel the Secretary to reinstate certain low income housing programs under 12 U.S.C. §§ 1701s, 1701x, 1715z and 1715z-1. Sections 1701s and 1701x, relating to rent supplement payments and assistance to nonprofit sponsors of low and moderate income housing, respectively, do not fall within the enumerated subchapters. In Lynn, the District of Columbia Circuit considered the nature of the rent supplement program under which the federal government agrees to make monthly rental payments on behalf of qualified tenants in housing erected under other government programs. The court emphasized that the 1701s rent supplement program is "not an independent housing construction program but an incentive that is piggybacked onto projects under other programs," 501 F.2d at 850, and that its "continued vitality . . . is, therefore, dependent in the first instance upon the continued operation of the underlying construction programs onto which it is piggybacked". Id. at 867. Since the programs onto which the rent supplement program is generally "piggybacked" fall within the enumerated subchapters to which the § 1702 waiver applies, the District of Columbia Circuit concluded that the waiver should also be construed to apply to actions arising under the § 1701s rent supplement provision itself. Likewise, in Estrada v. Hills, 401 F. Supp. 429 (N.D.Ill.1975), it was found that the Secretary of HUD was amenable to suit by plaintiffs for alleged violation of HUD regulations regarding the maintenance of a vacant HUD-owned building regulations promulgated pursuant to 12 U.S.C. §§ 1701 and 1715b. Although § 1701 is not within one of the enumerated subdivisions, it was held that § 1702 was an effective waiver authorizing actions against the Secretary of HUD in his official capacity where carrying out the provisions of the National Housing Act and also authorized actions for money damages against government officials.
In Sacramento v. Secretary of HUD, 363 F. Supp. 736 (E.D.Cal.1972), the scope of the waiver contained in § 1702 was directly confronted. Taking the approach espoused by the Supreme Court in F. H. A. v. Burr, 309 U.S. 242, 60 S. Ct. 488, 84 L. Ed. 724 (1940), the court held that § 1702 should be liberally construed, and that the waiver should be denied only in suits which are clearly "not consistent with the statutory or constitutional scheme". 363 F.Supp. at 738, quoting F. H. A. v. Burr, 309 U.S. at 245, 60 S. Ct. 488. In Burr, the issue was whether garnishment of the Federal Housing Administration ("F.H.A.") for monies due an employee falls within the scope of the provision authorizing the Federal Housing Administrator (now the Secretary) to sue and be sued in carrying out the provisions of the Act. The court held that garnishment of the F.H.A. for monies due to an employee is within the consent to be sued contained in the National Housing Act. In its opinion, the Court noted the current disfavor of the doctrine of governmental immunity from suit and stated as a premise that waivers by Congress of governmental immunity in case of such federal instrumentalities should be liberally construed. Justice Douglas, writing for the Court, stated:
[W]hen Congress establishes such an agency, authorizes it to engage in commercial and business transactions with the public, and permits it to "sue and be sued," it cannot be lightly assumed that restrictions on that authority are to be implied. Rather if the general authority *1077 to "sue and be sued" is to be delimited by implied exceptions, it must be clearly shown that certain types of suits are not consistent with the statutory or constitutional scheme, that an implied restriction of the general authority is necessary to avoid grave interference with the performance of a governmental function, or that for other reasons it was plainly the purpose of Congress to use the "sue and be sued" clause in a narrow sense. In the absence of such showing, it must be presumed that when Congress launched a governmental agency into the commercial world and endowed it with authority to "sue [and] be sued", that agency is not less amenable to judicial process than a private enterprise under like circumstances would be.
309 U.S. at 245, 60 S.Ct. at 490. Following the Burr Court's reasoning, the district court in Sacramento concluded that the statement in § 1702 confining the waiver of immunity to the Secretary's actions in carrying out the provisions of the enumerated subchapters indicates the intent of Congress "to confine the Secretary's authority to sue and be sued to actions related to his official functions." 363 F.Supp. at 738. (emphasis supplied by the court). The court wrote: "The purpose of the National Housing Act is to promote the construction and purchase of residential housing by creating an extensive system of insuring home mortgages. Each of the ten subchapters under which the Secretary may sue or be sued promotes this basic scheme." Id.
In Bor-Son Bldg. Corp. v. Heller, 572 F.2d 174 (8th Cir. 1978), the United States Court of Appeals for the Eighth Circuit again held that the § 1702 waiver should be liberally construed. The Court of Appeals there noted that the case of Modular Technics Corp. v. South Haven Houses Housing Development Fund, 403 F. Supp. 204 (E.D.N.Y. 1975), in which the § 1702 waiver was strictly construed, stands alone against the weight of authority. In Bor-Son, the contractor on a federally insured housing projects brought suit against the Secretary of HUD for monies due on the construction contract after the owners of the projects had defaulted. Relying on the Supreme Court's analysis in Burr, the Eighth Circuit concluded that, although the Secretary was not a party to the construction contracts under which Bor-Son performed, the Secretary's role in carrying out her statutory duties commonly extends well beyond the execution and performance of the mortgage insurance contract. The court stated:
Under the circumstances we conclude that creation of a wall of separation between the Secretary and the builder would be inconsistent with the Secretary's statutory mandate and therefore with Burr. In the language of Burr, the Secretary has been "launched . . . into the commercial world" and, if her actions or the actions of those under her were such as would entail liability to Bor-Son on general legal and equitable principles, she "is not less amenable to judicial process than a private enterprise under like circumstances would be."
572 F.2d at 181 quoting F. H. A. v. Burr, 309 U.S. at 245, 60 S. Ct. 488. The Bor-Son court accordingly concluded that the Secretary was not immune from the claims asserted by plaintiff. See also City of Philadelphia v. Page, 363 F. Supp. 148 (E.D.Pa. 1973).
Although the rent supplement program as set forth in 12 U.S.C. § 1701s was enacted as part of the Housing and Urban Development Act of 1965 rather than as part of the National Housing Act itself, the provisions contained therein are clearly not inconsistent with the statutory scheme of the National Housing Act. As noted by the Court in Pennsylvania v. Lynn, supra, the program itself is actually an incentive that is superimposed upon other federal housing and mortgage insurance programs.
Construing the waiver to apply to suits arising under the rent supplement program is, therefore, consistent with the Supreme Court's statement in Burr that Congress intended the waiver language of § 1702 to confine the Secretary's authority to sue and be sued to actions related to the Secretary's official functions. In light of the nature of the rent supplement program, administration *1078 of its provisions must clearly be deemed a part of the Secretary's official functions. For these reasons, I conclude that the claims asserted by plaintiffs are not barred by sovereign immunity.
In response to plaintiffs' motion, defendant has also contended that this court has no jurisdiction over plaintiffs' claims. Plaintiffs have asserted jurisdiction under 28 U.S.C. §§ 1337 and 1361 (and, in their reply memorandum to HUD's cross-motion for summary judgment, under § 1331). It has been held that national housing legislation regulates commerce within the meaning of § 1337 and that the district courts have jurisdiction over actions arising thereunder. Davis v. Romney, 490 F.2d 1360 (3d Cir. 1974). Accord, Dubose v. Hills, 405 F. Supp. 1277 (D.C.Conn.1975), motion denied to vacate, 2 Cir., 420 F. Supp. 399; Metropolitan Area Housing Alliance v. United States Department of Housing & Urban Development, 69 F.R.D. 633 (N.D.Ill. 1976). In Davis, plaintiffs sought declaratory and injunctive relief and money damages against the United States alleging a violation of the requirement that insured mortgages be secured by property which meets requirements of local ordinances. Although plaintiffs' claim for money damages was dismissed for failure to state a claim, the Court of Appeals held that the district court properly had jurisdiction over this case under § 1337. The court stated: "The commerce power clearly is a significant source of federal power for the National Housing Act, which was largely designed to stimulate the building trades and increase employment, and to control various aspects of interstate commerce connected with mortgage financing." 490 F.2d at 1365-66 (citations omitted). For the reasons discussed above, the same rationale applies equally to the rent supplement program as an integral part of national housing legislation.
Finally, the government has argued that restitution should be denied plaintiffs as inequitable since plaintiffs have so long delayed in bringing their claims and since it would divert scarce housing assistance funds from those with current needs. As pointed out by plaintiffs, however, HUD was in a better position to know of the inconsistency between their published regulations and internal handbooks. HUD has admitted it believes $200,000,000 of budget authority for the rent supplement program for the fiscal year 1980 should be rescinded since it is not needed. It thus appears that, in light of the nature of the relief sought by plaintiffs (forward adjustment of their rent supplement payments) and the excess contract authority available to HUD, it would be inequitable to deny restitution to plaintiffs in the instant case.
Accordingly, an Order will be entered granting restitution to plaintiffs through a forward adjustment of their rent supplement payments until they have received credit for the full amount of rent supplement wrongfully withheld.
NOTES
[1] The parties have agreed that the difference between actual HUD rent supplement payments and the 70% rent level for the respective plaintiffs are as follows:
Cora Griffin $ 528.80
Bessie Williams $ 727.40
Martha Hughes $ 794.18
Marietta Harkins $1,459.48 | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1531910/ | 370 S.W.2d 422 (1963)
Eustace CATE, Appellant,
v.
O. B. HOLCOMB, Appellee.
No. 7445.
Court of Civil Appeals of Texas, Texarkana.
August 20, 1963.
Rehearing Denied September 10, 1963.
Ramey, Brelsford, Hull & Flock, Tyler, Sam B. Hall, Jr., Smith, Hall & Huffman, Marshall, for appellant.
Scott Baldwin, Baldwin & Baldwin, Marshall, Lyndon Olson, Bryan, Maxwell, Wilson & Olson, Waco, for appellee.
DAVIS, Justice.
Plaintiff-appellee sued defendant-appellant for personal injuries received by appellee as the result of an accident while appellee was riding in a truck being operated by appellant. Trial was to a jury, which answered the special issues in favor of appellee. Judgment was entered accordingly, and the appellant has perfected his appeal. He brings forward 13 points of error.
By his first 5 points of error appellant contends the trial court erred in rendering judgment against him because: 1. Appellee failed to meet the burden of proof that he did not occupy the status of a guest without payment for such transportation; 2. The findings of the jury did not remove appellee from the operation of the Texas Guest Statute, or change appellee's status as a guest without payment for such transportation; 3. The court's charge as a whole did not contain any issues inquiring as to whether appellant received anything of a definite tangible benefit which constituted the motivating influence for appellant furnishing the transportation to the appellee on the occasion in question; 4. The appellee failed to raise issues to show (1) that a definite relationship with appellant was established; (2) that a definite tangible benefit to appellant existed; (3) that such definite tangible benefit was the motivating influence which caused appellant *423 to furnish the transportation on the occasion in question; (5) In overruling appellant's objections and exceptions to the submission of special issue No. 15.
Appellant takes the position that the appellee was a "guest" within Art. 6701b, Vernon's Ann.Tex.St. Appellant was engaged in the business of general hauling. He owned a 1954 Chevrolet bobtail truck. He conducted his business from his home near McKinney, Texas. During the seasons, appellant hauled cantaloupes, onions, wheat and other crops for the farmers. On other occasions, he would take small jobs of hauling furniture. He was an independent contractor, and had no regular employees. When he needed help, he secured it from a place known as the "jockey lot" in McKinney, a place where unemployed persons desiring employment usually "hung around". They had been friends over quite a period of time. Appellee being unemployed most of the time was frequently given money by appellant just to "help him out". Appellee, a man 33 years of age, had made several trips with the appellant. On some of these trips, appellee was not paid anything, or did any work, except the appellant bought his meals and appellee did some of the driving. According to the evidence, on or about August 28, 1960, the appellant was contacted by a man who desired to engage him to haul a load of cantaloupes to New Orleans, Louisiana. He left his pickup at appellant's home and took appellant's bobtail truck to Princeton, where he loaded it with cantaloupes. About noon the same day, appellant drove by the "jockey lot" and asked the appellee if he would like to make a trip to New Orleans. Nothing was said at that time about any pay for appellee on the trip. Appellee got in the pickup with the appellant and they proceeded to Princeton where they got in the bobtailed truck loaded with cantaloupes and proceeded on their way to New Orleans. After they had started out, appellant told the appellee that he would pay him the same price for making this trip as he had paid on previous trips. The appellee further testified that he was supposed to drive back from New Orleans. Upon reaching Gladewater it commenced to rain, and continued to do so after they had passed through Longview and to a point about six miles east of Longview where the accident occurred. Appellant was driving, according to the jury findings, at a speed not in excess of 45 miles per hour. At the point of the accident, appellant's truck had traveled over a slight incline and into a slick spot on the highway that was apparently caused by the rain. After the truck reached the slick spot it suddenly veered to the left and the vehicle ended up overturning in the dirt portion of the center of the four lane highway. Appellee received the injuries resulting from the overturning of the vehicle. While appellee was being treated for the injuries in a hospital in Longview, appellant visited him and gave him some money.
The jury convicted the appellant of the following acts of negligence: Failure to keep the truck under proper control under the existing circumstances; that he operated the truck at an excessive rate of speed under the circumstances, and that such acts of negligence were the proximate cause of the injuries received by the appellee.
The jury also found under the evidence that the appellee was accompanying the appellant on the trip to Louisiana for the purpose of helping him drive the truck, and that appellant had agreed to pay appellee for the trip, and that both instances constituted a motivating cause to the appellant for taking appellee on the trip.
Much has been written as to who is a "guest" and who is a "passenger". In 28 NACCA Law Journal 83 the following is stated in a "Comment":
"Trial lawyers know that not even electronic computers can solve `guest' cases; each one must stand on its own bottom, and many of them remain gambles with respect to the recurrent questions of who is a guest, what is gross negligence or wilful, wanton misconduct, *424 and when the guest status begins and ends * * *."
In view of the evidence in this case, and the jury's findings in response thereto, the court must find that the appellee was a "passenger" being transported by appellant for a tangible benefit that was a motivating influence accruing to the appellant, and that appellant was guilty of acts of negligence that would make him liable. Gregory v. Otts (Ct.Civ.App.), 329 S.W.2d 904, W.R., N.R.E.; Truitt v. Gaines, D.C., 199 F. Supp. 143; Woodland v. Smith, 56 Wash.2d 552, 354 P.2d 391; Bailey v. Pennington et al., 8 Cir., 274 F.2d 328; 26-27 NACCA Law Journal 58; 29 NACCA Law Journal 51; Kruzie et al. v. Sanders et al., Cal., 143 P.2d 704, (superseding) Cal.App., 135 P.2d 710; 16 Negligence and Compensation Cases Annotated, 317-379; Drizanich v. Criley, 19 Cal. 2d 439, 122 P.2d 53; Burnett v. Howell, Tex.Civ.App., 294 S.W.2d 410, W.R., N.R.E. The points are overruled.
The other points have been carefully examined, found to be without any merit and they are overruled. The judgment of the trial court is affirmed. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1531900/ | 370 S.W.2d 924 (1963)
Carolyn LUCAS, Relator,
v.
Hon. Ethridge R. WRIGHT, Judge, et al., Respondents.
No. 6661.
Court of Civil Appeals of Texas, Beaumont.
June 20, 1963.
Rehearing Denied September 11, 1963.
Adams & Browne, Everett Lord, Beaumont, for relator.
W. O. Bowers, Jr., H. P. Robichau, Orgain, Bell & Tucker, Beaumont, for respondents.
McNEILL, Justice.
This is a proceeding brought by relator, Carolyn Lucas, for writ of mandamus against Hon. Ethridge R. Wright, presiding judge of the Court of Domestic Relations of Jefferson County, Philip Lucas and H. E. Dishman as respondents. The writ is sought to require said judge to allow a fuller inquiry in the taking of Mr. Dishman's deposition as trustee of certain *925 trusts. The facts from which the present controversy grew are:
On December 12, 1961, relator sued her husband, Philip Lucas, for divorce, for division of community property and for custody and support of the minor children of the marriage. She applied for commission to take the deposition of H. E. Dishman, as trustee, in certain trusts which had been theretofore established for the benefit of her husband, Philip B. Lucas, and others, by his late father, Harry Lucas. Mr. Dishman sought to restrain the taking of his deposition by filing application for an injunction in the divorce case. The application alleged that the information sought with reference to the properties of the trust were matters Carolyn Lucas had no right to since she had no beneficial interest therein. A temporary injunction so restraining taking said deposition was granted; from which appeal was taken to this court. A discussion of the situation of the parties, the trusts involved and the right to take the deposition, will be found in the opinion of this court in Lucas v. Lucas, Tex.Civ.App., 365 S.W.2d 372. We there held that Carolyn Lucas was entitled to take the trustee's deposition and dissolved the injunction. By way of explaining why we held the injunction improper, we stated that she was entitled to inquire into the income of the various trusts since the amount of the children's support was one sought to be established and testimony thereof would be relevant upon the question. As reflected there, the order of this court was one dissolving the injunction. The order reads: It is "ordered that the judgment of the court below be reversed and the temporary injunction is dissolved; that the appellee, Philip B. Lucas, pay all costs of this appeal; and this decision be certified below for observance." Mandate issued in due course on this order. Thereafter commission to take Dishman's deposition issued. When this was done two motions, one by respondent Lucas and one by respondent Dishman, were filed under Rule 186B, Texas Rules of Civil Procedure, in the trial court. The first part of the motions urged that the commission and subpoena duces tecum issued thereunder be quashed. In the alternative the motions prayed that the court limit the extent of taking the deposition. The trial court overruled the first part of the motions but made his order limiting the taking of the deposition of Mr. Dishman to an inquiry upon four items. These items were:
The trustee should be required to furnish information: (a) of all disbursements to Philip Lucas from all three trusts since August 20, 1955; (b) a record of all funds or properties received by the trusts from Philip Lucas; (c) a record of all credits and adjustments accorded Philip Lucas by each of trusts from August 20, 1955, to date; (d) a record of all loans made to Philip or other person for his benefit.
Relator excepted to this ruling of the trial court urging that it was entirely too restrictive and would not afford her opportunity of obtaining information relating to the income of the various trusts involved. At the hearing establishing the bounds of inquiry, certain matters of confidence and privilege were urged and in order to avoid delay and accommodate the parties, the trial judge repaired to the office of the trust and investigated the questions raised and thereafter made his ruling as to the items permitted to be disclosed. Relator attempted to obtain from the judge the records he investigated at the trust office and the time he took in doing so, but he declined to answer any inquiry thereon.
After the court's ruling aforesaid, Mr. Dishman's deposition was taken. Almost all of this record, containing 103 pages, was taken up with arguments, objections and exceptions of counsel, over information sought by relator. The trial court denied all effort of relator to inquire into or obtain information with reference to the income of the trusts since the marriage of the parties in 1955.
*926 Having thus been denied the right to question respondent Dishman with reference to the income from the various trusts in which her husband was beneficiary, relator urges she is entitled to the writ of mandamus so that the court will be required to allow her to take Mr. Dishman's deposition in accordance with the prior opinion and mandate of this court. The law is settled that mandamus will lie to compel the trial court to proceed in accordance with the mandate of a Court of Civil Appeals, 37 Tex.Jur. (2) 696. The mandate issued on our judgment in Lucas v. Lucas, Tex.Civ.App., 365 S.W.2d 376, informed the trial court that the temporary injunction against taking the deposition was dissolved. This was the substance of the mandate. However, relator calls our attention to the following language in our opinion just mentioned:
"* * * Under the facts, we think appellant would be entitled to inquire into the incomes of the various trusts and the amounts, regularity and time of support payments which have been made by the trustees to appellee as beneficiary. This inquiry would bear upon the setting of any amount of temporary alimony and support of the children."
and asserts that since the early decision of Wells v. Littlefield, 62 Tex. 28, it is the law that the opinion accompanying the mandate may be looked to to ascertain what judgment was to be rendered by the trial court as well as the mandate itself. Relator misconstrues the effect of this language in the opinion. It was no part of any order or instruction to the trial court, but was merely a reason which was given in explanation of the dissolution of the injunction restraining the taking of the deposition. The case cited by relator, Taylor v. Jones, Tex.Civ.App., 58 S.W. 47, involved much the same situation. The mandamus there sought was one seeking to require the trial court to retry only one issue of a remanded cause. The last part of the opinion explains the effect of language we think similar to our own. All of the other cases cited by relator in which mandamus was involved were cases where the judgment itself of the appellate court was not obeyed. To be entitled to mandamus, relator must have a clear legal right to performance by respondent of a particular duty sought to be enforced, and no intendments are to be indulged. Wortham v. Walker, 133 Tex. 255, 128 S.W.2d 1138. Examination of relator's application reveals complaint upon numerous rulings of the trial judge, who supervised the taking of the deposition. To consider the numerous items reflected would, in a substantial sense, be reviewing many claimed errors. Mandamus cannot be used to perform the office of appeal nor to correct erroneous rulings of inferior tribunals whether interlocutory or final. Robertson v. Work, District Judge, 114 Tex. 461, 270 S.W. 1006.
We do not recede from what we said, however, in the former opinion. While we think the trial court has acted in good faith, he has been too restrictive in his order. No doubt, he felt obligated to protect any confidence or privileged matter and was probably attempting to follow the procedure outlined by the Supreme Court with reference to such matters in Crane v. Tunks, 160 Tex. 182, 328 S.W.2d 434. We have read the record made on the hearing when the court made its order restricting the scope of the deposition and have also read the deposition thereafter taken and we have been unable to find any matters of confidence or privilege contended for except in two respects. The first, it was stated by Mr. Dishman that there was geological information in the trust records which he felt were of a confidential nature. We can see no relevance the geological information would have upon the questions sought to be elicited. The other item of confidence appeared to be that since he owned an undivided interest in the properties in which the trust held interest *927 and that the inquiry might divulge his personal affairs, this would be against his wishes. This court has no desire to have facts disclosed which improperly intrude upon a person's private and personal affairs but we have been unable to see any sound reason why respondent is entitled to protection because of the mere fact that it might disclose some of his personal affairs. If his affairs were so tied up with those of the trusts that it would be impossible to obtain information with reference to the income of the trusts without disclosing his income then his income would have to be exposed. The trustee testified that he had been a partner of Harry Lucas, the late father of Philip Lucas, for some 20 years in connection with oil properties which constituted the bulk of the trust properties. The partners, no doubt, shared many confidences. Since the elder Lucas' death, the trusts have succeeded largely to his interest. But, communications between partner and partner, however confidential in their nature, are not privileged. Texas Law of Evidence, McCormick & Ray, Vol. 1, p. 425. However, we doubt that an inquiry as to the income of the trusts would necessarily have to disclose any of the trustee's private or personal affairs. It appears that there were separate accounts kept for the trusts which did not include the personal funds of the trustee. This would seem to make it unnecessary to divulge the personal income of the trustee.
It is urged by relator that Mr. Dishman as trustee has waived any privilege that might have been attached to copies of the fiduciary income tax returns made in behalf of the trusts for the years involved. The trustee's testimony at the preliminary hearing on this point is as follows:
"Q. Mr. Dishman, is it your testimony that the fiduciary returns filed with the internal revenue on the Philip Lucas Trusts that they involve your personal property?
"A. We separate the money.
"Q. Yours are not involved are they?
"A. The money is always separated those returns, they are available to you.
"Q. Nothing privileged about that, you are not claiming that. How about your, the bank ledger sheets on the three trusts. You carry separate records on that don't you?
"A. Well, we separate the money. Everything is separated as far as money."
In our opinion, the above constitutes such waiver, although when the deposition was later taken, the trustee stated, "that would not have been my intention to state that." A waiver once made is waived for all times and all purposes. McCormick & Ray, Texas Evidence, Vol. 1, Sec. 490, pp. 411, 412. But whether waived or not, relevant parts of such copies of income tax returns are no doubt admissible in the inquiry sought by relator. Crane v. Tunks, supra; United States v. O'Mara, D.C., 122 F. Supp. 399. The latter case appears to have been approved in St. Regis Paper Co. v. U. S., 368 U.S. 208, 82 S. Ct. 289, 7 L. Ed. 2d 240.
We have gone into discussion of pertinent matters raised by the parties in order that the trial court may have our views thereon. There is additionally a matter upon which we should like to comment. From the trial court's ruling setting the bounds of inquiry in the deposition and his rulings in connection with the taking of the deposition itself, we take it that he is of the opinion that all properties and funds in the several trusts involved are no part of the community property of the parties; that since each trust in substance provides that unless and until trustee or trustees in their unbridled discretion shall deliver such funds or such properties to the beneficiary, Philip Lucas, such funds and property do not belong to him even as his separate property. It was contended in the original appeal by appellant, (now relator) that accumulated *928 and undistributed income of the trusts does constitute community property of the parties. We did not pass upon this point then and we do not now pass upon the point.
If, however, the trial court shall at the time trial of this case on its merits be of the same opinion such items are not community property, we deem it proper to suggest in view of the fact courts cannot pass upon hypothetical questions, that proof be allowed that there is, if such exist, accumulated and undistributed income (or assets purchased with such income) from the trusts and the nature of their source and other pertinent factors bearing upon their legal character so that in the event the cause is appealed after the final hearing, an authoritative decision may be rendered on appeal upon the question. In such a situation, if it is deemed that the trial court was in error, the cause may be remanded for trial that could finally dispose of the question. Should the court not allow facts to be brought up, either by admission in evidence or by bill of exception, pertaining to the question and it is held that this was error, the cause would have to be reversed to allow inquiry into the question and in all probability a second appeal would be necessary to lay the matter at rest. From what has been said, however, it must not be concluded that we have formed any opinion on the question and are not in any way nor to any extent passing on the final matter at issue. Since hypothetical cases may not be determined, we simply recommend that the factual framework pertaining to the problem mentioned be established in the trial court so that the questions of law may be settled in one appeal.
Though it was proper for the trial court to have made its preliminary order under the motions eliminating from inquiry in the deposition to have been taken matters of an irrelevant or privileged nature, it is our conclusion that the trial court's order was too restrictive. However, the authority of the Court of Civil Appeals to issue writs of mandamus is very limited and we conclude the relief sought by relator must be denied. Crane v. Tunks, supra; Johnson v. Court of Civil Appeals, 162 Tex. 613, 350 S.W.2d 330; Longbine v. Johnson, Tex. Civ.App., 347 S.W.2d 772.
Mandamus denied. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1531907/ | 370 S.W.2d 576 (1963)
Hoyt M. CARTER, Appellee,
v.
Leslie JETT, Sheriff of Davidson County, Tennessee, Appellant.
Court of Appeals of Tennessee, Middle Section at Nashville.
February 21, 1963.
Certiorari Denied September 11, 1963.
*577 Neill S. Brown, Newman Brandon, Nashville, for appellant.
W. Ovid Collins, Jr., Nashville, for Globe Indemnity Co.
J. F. Doty, Stockell, Rutherford & Crockett, Nashville, for appellee.
Certiorari Denied by Supreme Court September 11, 1963.
CHATTIN, Judge.
Complainant below, Hoyt M. Carter, filed this bill in Part I of the Chancery Court of Davidson County, Tennessee, against Sheriff Leslie Jett, of the same County, seeking to have a contract between the parties declared null and void. The bill charges the complainant was, at the time of the execution of the contract, working under Sheriff Jett as a Field Deputy Sheriff. The contract is exhibited to the bill and the pertinent parts of the contract for our consideration are as follows:
"1. The Deputy hereby agrees to devote his time and best efforts to the *578 service of all civil process, assigned to him by the Warrant Officer, in compliance with the rules of procedure from time to time approved by the Sheriff.
"2. Whenever the Deputy may serve any such civil process whereby the Sheriff is entitled to the fee specified in T.C.A. 8-2133, for the service thereof, the Sheriff will pay to the Deputy, as compensation, 70% of such fees thus earned by the Sheriff and served by the Deputy, but such compensation shall not exceed $550.00 in any one month in accordance with the limitations contained in T.C.A. 8-2003 as amended. The Deputy will be paid such compensation by the Sheriff as soon after the first of each month as the fees thus earned are determined and distributed to the Sheriff by the Circuit Court Clerk of Davidson County, Tennessee.
"3. The Deputy understands and agrees that the remaining 30% of the fees to which the Sheriff is entitled, under said statute, is needed to defray the costs of supervising the service of such process and other necessary expenses of the Sheriff's office, so that additional `tax money' will not be required to defray the expenses of operating the Sheriff's office."
The bill further charges complainant earned $1,005.93 from the time he signed the contract until the day he resigned as a Field Deputy Sheriff and that the Sheriff had deducted and kept the sum of $331.78 out of this money.
It is then charged the contract is illegal and void as against public policy because complainant's salary is fixed by Code Section T.C.A. § 8-2003, which we quote:
"No deputy or deputies nor assistants shall be allowed to any office, unless the officer himself is unable to discharge the duties of the office by devoting his entire working time thereto, except field deputy sheriffs; and in case the officer is incapacitated from any cause to perform the duties of his office, one (1) person working in the place of the officer himself shall neither be considered nor paid as a deputy or assistant; except that in addition to the regular salaried deputies provided for, the Sheriff in each county may appoint all necessary field deputies for misdemeanor and criminal work, and civil work before the justices of the peace; said field deputies to be appointed as provided under §§ 8-2001 and 8-2002. The salaries of said field deputies shall not exceed five hundred fifty dollars ($550) per month, for each deputy; provided, that said field deputy sheriffs shall earn said salaries from legal fees provided by statute; and all fees so earned by said field deputy sheriffs in excess of their fixed salaries shall be paid into the office of the sheriff of their said counties, and when so paid shall be paid to the county trustee of said county as provided in § 8-2203."
The bill futher charges the contract was procured by coercion and fraud.
The defendant demurred to the bill on the grounds the bill does not state a cause of action; and because the contract entered into by the parties was approved by Judges Leathers and Draper of the Criminal Court of Davidson County, and that his suit was instituted at least a year after the execution of the contract, and under which he had received and retained benefits and is, therefore, barred by laches to rescind the contract.
This demurrer was overruled by the Chancellor.
By leave of the Chancellor, the complainant filed an amendment to his bill in which he alleges the compensation of field deputy sheriffs is fixed by the Anti-Fee bill, Chapter 101, Public Acts of 1921. That a number of the field deputies had signed identical contracts with defendant; and, therefore, *579 complainant was entitled to a declaratory judgment in behalf of himself and the other field deputies.
The prayer of the amended bill is that the contracts be declared null and void as well as the decree of the Criminal Court ratifying them; and that all necessary references and accountings be ordered as may be required.
To the amended bill defendant filed a demurrer coupled with an answer. The grounds of the demurrer are that the complainant and other field deputies are not similarly situated; the number of field deputies are not too great for separate suits to be maintained; and there is no showing complainant has authority or permission from the other field deputies to bring this suit in their behalf.
The Chancellor sustained the demurrer in so far as complainant seeks to maintain the suit as a class action. The complainant excepted and prayed an appeal to this Court.
The answer denies the contract was secured by fraud or coercion.
The answer alleges that on January 5, 1961, complainant signed the contract after the defendant had explained to him the fees of his office for the period from September 1, 1960, at which time he took office, to January 1, 1961, failed to equal the necessary expenses of his office by $25,000.00. Therefore, it was necessary to either reduce the number of field deputies or the fees would have to be increased to meet the expenses of the office.
The answer avers the field deputies signed the contracts voluntarily and that they are not illegal or void.
Defendant further alleges that after the contracts were signed he filed a supplemental petition under authority of T.C.A. §§ 8-20018-2003 in the case of Leslie E. Jett, etc., v. Beverly Briley, etc., No. 12488 before Judges Leathers and Draper for the authority to appoint a number of field deputies and to have their compensation fixed. On April 5, 1961, this matter was heard and the following decree in part was entered:
"It is, accordingly, ordered, adjudged, and decreed by the Judges of this Court, that the agreement marked Exhibit `A' to his supplemental petition, and all the provisions thereof, which has heretofore been agreed to by petitioner and certain of his Special and Field Deputies as the instrument fixing their compensation for serving Civil Court processes, is in all things and respects approved; and
"It is further ordered by the Judges of this Court that petitioner be and hereby is authorized, from the Special and/or Field Deputies approved by said prior order in this cause, to set and fix the salaries, or compensation, of twelve (12) Special Field Deputies and a number of Field Deputies, not to exceed seventy-five (75), for the service of the several Civil Court processes delivered to and served by them, at an amount of money equivalent to Seventy Percent (70%) of the fees provided by T.C.A. 8-2133 for the petitioner, as Sheriff, to demand and receive for the service thereof, but no such deputy may be paid, from such fees thus earned, more than FIVE HUNDRED FIFTY AND 00/100 ($550.00) DOLLARS in any one month because of the limiting provisions of T.C.A. 8-2003, as amended."
It is next averred the complainant accepted the benefits of the contract from January 5, 1961, until on or about December 10, 1961, at which time he resigned as field deputy; and, therefore, complainant is estopped to deny the validity of the contract.
The answer admits the complainant earned fees totaling $1,005.93 from the time he entered into the contract until such time as he resigned from his office and *580 that defendant retained $331.78 under the terms of the contract.
The cause was tried upon oral and documentary proof pursuant to a written agreement of Counsel for the respective parties.
Complainant testified he signed the contract after Sheriff Jett had explained its terms. But he agreed to sign it because he had been a field deputy for twenty-three years and he knew if he did not sign the contract he would be kicked out and would have no employment. That he worked under the contract for about a year and learned that he could not make a living by giving up thirty per cent of his salary.
He further testified all the field deputies signed similar contracts.
He testified prior to the defendant's taking the office of Sheriff of Davidson County, the field deputies got all the fees they earned and paid all their expenses. If one earned more than the limit of $550.00, then the excess was turned over to the Sheriff's office. That prior to the signing of the contract, he had received his pay from the Clerks of the Court directly.
On cross examination he admitted Sheriff Jett had not told him he had to either sign the contract or turn in his commission.
The defendant testified he changed the policy of paying his field deputies in January, 1961, because his office was not collecting sufficient fees to meet the salaries and expenses of the same. That in January, 1961, his office was behind some $10,000.00 and for this reason he had the field deputies to agree to the contract.
He further testified he explained the contract to complainant and complainant signed it voluntarily.
He also testified he had no surplus funds in his office due to the contracts.
The Chancellor filed a memorandum opinion in which he found there was no fraud or coercion on the part of the defendant in procuring the contract.
He further found that T.C.A. § 8-2003, Section 8 of Chapter 101, Public Acts of 1921, fixed the salaries of field deputy sheriffs. He further found the criminal court had no authority to fix the salaries of field deputy sheriffs, but could only authorize the number to be appointed by the Sheriff. He, therefore, held the contract null and void. A decree was entered sustaining complainant's bill and ordering a judgment for $331.78 in favor of complainant.
Both complainant and defendant have appealed to this Court and have assigned errors.
Complainant assigns as error the action of the Chancellor in sustaining defendant's demurrer to the amended bill and dismissing it in so far as it prayed for a declaratory judgment.
The defendant has filed four assignments of error.
We will consider defendant's assignments of error first.
Defendant's first and second assignments of error complain of the action of the Chancellor in decreeing the Act, itself, fixed the salaries of field deputy sheriffs and the criminal court had no jurisdiction or discretion as to their salaries; but could only authorize the number of such deputies to be appointed by the Sheriff.
In construing Section 8 of the Anti-Fee Bill, as codified T.C.A. § 8-2003, we are governed by the following rules:
The legislative intent controls the construction of statutes. Chicago & Southern Air Lines, Inc., v. Evans, 192 Tenn. 218, 240 S.W.2d 249.
A statute should be construed as a whole, giving effect to each word. Anderson Fish and Oyster Company v. Olds, 197 Tenn. 604, 277 S.W.2d 344.
The Court in construing a statute should give it the construction which promotes *581 the purpose and object of the Act. Woodroff v. City of Nashville, 29 Tenn. App. 426, 197 S.W.2d 4.
In ascertaining the intent and purpose of the legislature it is our duty to look to the caption of the Act. Sealed Power Corp. v. Stokes, 174 Tenn. 493, 127 S.W.2d 114.
When we look to the caption of the Act, Chapter 101 of the Public Acts of 1921, we see its purpose is to fix salaries of certain county officials including the sheriff of each county; to provide for the disposition of the fees of the office; and to provide for the appointment and removal of deputies and assistants to said officers; and to prescribe the manner of fixing their compensation.
Section 7 of the Act, codified as T.C.A. § 8-2001 and § 8-2002, provides, "[t]he sheriff shall in like manner make application to the judge of the circuit court in his county, for deputies and assistants, showing the necessity therefor, the number required and the salary that should be paid each; provided, that, in the counties where criminal courts are established, the sheriff shall apply to a judge of such criminal court." The county judge of the county is named the party defendant to the petition and is required to answer the petition. Upon the hearing, the court may allow the number of deputies applied for or a less number, and may allow the salaries set out in the petition or smaller salaries, as the facts justify.
Section 8 of the Act, T.C.A. § 8-2003, provides the sheriff must apply to the court for the appointment of field deputy sheriffs, but need not show a necessity for their appointment. This section of the Act also provides the salaries of field deputies shall not be fixed at more than $550.00 per month, for each deputy. It also limits the amount a field deputy may be paid for a given month at the total of his earned fees, provided the fees so earned do not exceed his salary fixed by the court. Should his earned fees total more than his fixed salary, the excess becomes county revenue.
Thus, it is clear this section of the Act is an exception to the general Act. Exceptions to general Acts are strictly construed. Powers v. Vinsant, 165 Tenn. 390, 54 S.W.2d 398.
Hence, we think the use of the words "fixed salary" refer only to salaries fixed by the Court pursuant to T.C.A. § 8-2001 and § 8-2002.
The legislature could not have adequate knowledge of the requirements of the officers in the different counties of the State of the number of deputies and assistants necessary to efficiently operate their respective offices. Therefore, the legislature delegated to the courts the authority to determine the number of deputies and the salaries they were to receive. Hunter v. Conner, 152 Tenn. 258, 277 S.W. 71.
It was further said in Hunter v. Conner, supra, "when compensation is paid by the fee system, or on the basis of business done, it is not unusual to have a maximum sum fixed beyond which the officer is not to receive any emoluments."
Accordingly, we are of the opinion the Chancellor was in error in decreeing the courts have no authority to fix the salaries of field deputy sheriffs.
Defendant's first and second assignments are sustained.
Assignments three and four challenge the action of the Chancellor in decreeing the contract null and void and entering a decree for the amount sued for in favor of complainant.
But, from our view of the case, we do not reach that question. We think the Chancellor as well as the Attorneys have overlooked the real issue of the case. We think the decisive question is whether complainant is estopped to question the validity of the contract and recover the amount sued for.
*582 It is the law, as held by the Chancellor, an agreement to change or fix the compensation of a public official or employee does not estop or preclude the officer or employee from recovering the difference between the salary actually received by him and that to which he was legally entitled by law. Draper v. Putnam County, 25 Tenn.App. 269, 156 S.W.2d 348; Carmichael v. Hamby, 188 Tenn. 182, 217 S.W.2d 934; Gregory v. Trousdale County, 194 Tenn. 670, 254 S.W.2d 753; Lane v. Sumner County, 201 Tenn. 229, 298 S.W.2d 708.
We think, from an examination of these cases, this rule applies to that class of officers who are elected or appointed for a fixed term and authorized to collect the fees provided by law earned by the particular office; and whose salaries are fixed by law. This rule is based upon considerations of public policy.
It is conceded a deputy sheriff is a public officer in this state; but his salary is paid from fees collected by the office of the sheriff under whom he serves. By Section 7 of the Anti-Fee Bill, codified as T.C.A. § 8-2004 and § 8-2005, it is provided: "The order or decree fixing the number of deputies and salaries may be changed or modified by increasing or decreasing the number of deputies and the salary paid each, from time to time, upon application made in the manner above provided; or any such officers without such formal application may decrease either the number of deputies or assistants and the salaries of any of them where the facts justify such course. It shall be the duty of all officers mentioned above to reduce the number of deputies and assistants and/or the salaries paid them when it can be reasonably done * * *."
Thus, this section of the Act gives to the Sheriff the right to dismiss such deputies or assistants or reduce the salaries of any of them when the facts justify such a course. A deputy sheriff is, therefore, not appointed for a fixed term and his salary may be decreased or increased during the time of his service.
The Sheriff testified his office expenses were some $10,000.00 more than the fees collected from September 1, 1960, to January 1, 1961; and, for this reason, he called all of his field deputies in and discussed the situation with them and they all agreed to the reduction in salary rather than a reduction in personnel.
The Chancellor found there was no coercion or duress in procuring the contracts. We concur in this finding since the proof shows the Sheriff explained to the deputies the situation of his office and the two alternatives open to them. All the field deputies signed the contract.
Complainant worked under the contract for some twelve months and accepted the reduced salary, without objection. He testified he burned his commission and then filed this suit without first protesting to the Sheriff.
As we have pointed out, our Supreme Court in many cases has held a public officer is not estopped by accepting a less salary than fixed by law, although he may have expressly agreed to such a reduction. All these cases hold such agreements are contrary to public policy. This is not true under the facts of this case because the contract is executed rather than executory.
Accordingly, we are of the opinion the case falls under the principle announced by this Court in an opinion by Honorable Luke McAmis, Presiding Judge, in the case of Steele v. City of Chattanooga, 19 Tenn.App. 192, 84 S.W.2d 590, in which it is said: "There is now no possibility that the public good will be in any wise affected; the service of this particular employee having been terminated. Conceding, but not deciding, that a sound public policy would forbid the enforcement of an executory contract of this nature, we are unable to see wherein any question of public policy is involved *583 after the service has been performed and reduced compensation paid and accepted without protest by the officer. Second Nat. Bank v. Ferguson, 114 Ky. 516, 71 S.W. 429; De Boest v. Gambell, 35 Or. 368, 58 P. 72, 353. In the latter case the court observed and applied a distinction between an executed and an executory contract to accept a reduction in salary.
"We are of opinion complainant should be repelled from a court of conscience in his attempt to gain an unconscionable advantage from an agreement to which he voluntarily assented for his own benefit and that the chancellor correctly held him estopped from recovering in this case." See Annotation in 70 A.L.R. 976, and 118 A.L.R. 1458.
Accordingly, we are of the opinion complainant is estopped to question the validity of the contract and to recover the amount withheld under the terms of the contract he voluntarily signed for his own benefit.
As stated, Counsel overlooked assigning as error the failure of the Chancellor to consider the question of estoppel. However, the rules of this Court reserve to the Court the right to "notice an error overlooked by counsel" in their assignments of error. Rule 12 of the Court of Appeals; Life & Casualty Insurance Co. of Tenn. v. Robertson, 6 Tenn. App. 43.
Since we must reverse the decree of the Chancellor and dismiss complainant's bill, it would be useless for us to consider complainant's assignment of error, which challenges the action of the Chancellor in refusing to make a declaration as to the rights of complainant and other field deputies similarly situated.
The decree of the Chancellor is reversed and complainant's suit dismissed with costs.
SHRIVER and HUMPHREYS, JJ., concur. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1531897/ | 370 S.W.2d 769 (1963)
Pauline Ardis KLEIN, Appellant,
v.
Robert E. KLEIN, Appellee.
No. 3798.
Court of Civil Appeals of Texas, Eastland.
June 28, 1963.
On Motion for Rehearing September 6, 1963.
Rehearing Denied October 4, 1963.
*770 William Andress, Jr., Dallas, for appellant.
Matthews & Weaver, Dallas, for appellee.
GRISSOM, Chief Justice.
Appealed from the Court of Domestic Relations Number 1 of Dallas County.
Mrs. Klein sued Mr. Klein for divorce, custody of their adopted son and partition of property. The defendant filed a cross-action seeking the same relief. Judgment was rendered giving Mr. Klein a divorce, awarding custody of the son to Mrs. Klein and dividing the property. Mrs. Klein has appealed.
Appellant complains only of the property division. The court recognized that the Hood Street property was the separate property of the wife. It was awarded to Mrs. Klein. But, she complains because the court, having found that Mrs. Klein was indebted to the community estate, fixed a lien on that property for $1,625.11, in favor of the community estate, subject to all home-stead rights of Mrs. Klein, and so partitioned the community estate as to award such lien to appellee, subject to said homestead rights. Appellant's first point is that the wife's separate property not being liable for her general spending of community funds, the judgment, insofar as it fixed a lien on her separate property for the benefit of the husband, is erroneous and void. She argues that a wife is not liable for community debts to a greater extent than the community property she has received and that community creditors have no right to subject her separate property to payment of community debts and that her husband has no greater right than the creditors. Appellee's counter point is that the court did not err in establishing an equitable lien in favor of the community and in so partitioning the community as to award appellee said lien, subject to homestead rights. Appellee correctly points out that there was evidence that monthly payments were made by the community estate totaling $1,625.11, to discharge a purchase money lien on the Hood Street property. Appellee says that where community funds are thus expended, the community estate is entitled to reimbursement and an equitable lien on separate property. In Dakan v. Dakan, 125 Tex. 305, 83 S.W.2d 620, 627, the court said:
"Our decisions hold that where a spouse improves his or her separate property with the funds belonging to the community estate, the other spouse, or his or her heirs, would be entitled to reimbursement out of his or her separate property, to the extent of their share of the community funds so used, and *771 that their claim for such reimbursement is in the nature of a charge upon the property so improved. Rice v. Rice, 21 Tex. 58; Cameron v. Fay, 55 Tex. 58, 61; Roberson v. McIlhenny [Hutchins & Co.], 59 Tex. 615; Furrh v. Winston, 66 Tex. 521, 525, 1 S.W. 527; Clift v. Clift, 72 Tex. 144, 149, 10 S.W. 338; Robinson v. Moore, 1 Tex. Civ. App. 93, 20 S.W. 994. In other words, the principles of reimbursement in accounting between estates apply, without distinction, to both separate and community estates."
The court further said at page 629 of 83 S. W.2d that:
"In case a complete partition in kind cannot be had, so as to award each party his or her equitable portion, the court can, if necessary, award certain property to one or more of the interested parties, impressing it with a money charge in favor of another, which charge may be ordered enforced by sale, if not satisfied by payment of the money within a fixed period of time."
Appellee also cites in support of said contention Smith v. Smith, Tex.Civ.App., 187 S.W.2d 116. The cases of Norris v. Vaughan, 152 Tex. 491, 260 S.W.2d 676, and Manning v. Benham, Tex.Civ.App., 359 S.W.2d 927, (Ref.N.R.E.), relied upon by appellant as authority for her contention that the court erred in impressing a lien on the Hood Street property, are distinguishable on the facts. The Norris case concerned efforts of a husband to obtain reimbursement from the community for separate funds expended for "living expenses", not in discharging a purchase money lien against the wife's separate property, as was done here. It held, however, that the community should be reimbursed for its funds spent on separate property. Manning v. Benham was not a divorce suit and Article 4638, Vernon's Ann.Civ.St., which directs a division of the "estate of the parties", meaning all property of the parties, whether community, separate or homestead, was not applicable.
The court had authority to fix a lien in favor of the community for the community funds expended in discharging a purchase money lien against the separate property of the wife. The lien fixed by the court in favor of the community against appellant's separate property became an asset of the community estate and was subject to distribution as any other asset. Article 4638 provides that in pronouncing judgment in a divorce case the court shall order a division of the "estate of the parties" in such a way as the court shall deem just and right. The court's discretion in dividing the "estate of the parties" will not be disturbed unless it is manifestly unjust and unfair. The appellant has the burden of showing an abuse of discretion. Hailey v. Hailey, 160 Tex. 372, 331 S.W.2d 299; Hedtke v. Hedtke, 112 Tex. 404, 248 S.W. 21. The "estate of the parties" directed divided by Article 4638 includes all property of the parties, community, separate and homestead. 20 Tex.Jur.2d 549. In Williams v. Williams, Tex.Civ.App., 171 S.W.2d 530, the court said:
"On a certified question in the case of Hedtke v. Hedtke, 112 Tex. 404, 248 S.W. 21, 23, in discussing the power vested by statute in the trial court, Judge Greenwood, speaking for the Supreme Court, said: `The court pronouncing a decree of divorce is invested with wide discretion in disposing of any and all property of the parties, separate or community, and * * * its action, in the exercise of such discretion should be corrected on appeal only where an abuse of discretion is shown in that the disposition made of some property is manifestly unjust and unfair."
The evidence justifies conclusions that the community debts were past due at the time of the trial, most were incurred after separation, some after the divorce suit was filed and that all benefited appellant. They totaled $5,999.48, excluding the indebtedness on the Princess Lane house and payments made by appellee to appellant after the suit was filed. The evidence supports a conclusion *772 that of the $12,219.96 community assets received by both parties from March 21, 1961, until March 13, 1962, the date of the trial, appellant received $8,952.12 and appellee received $3,167.84. Under the circumstances, it is not shown that the court erred in awarding the community claim against the Hood Street property to appellee. We cannot say the partition was manifestly unfair and unjust.
Appellant's second point is that the community homestead and other exempt community property is not subject to the claims of unsecured creditors and the judgment ordering application of the funds from their sale to general debts, rather than to the spouses, is erroneous and an abuse of discretion. The record shows that counsel for both parties were appointed as receivers, without bond and without compensation, to take charge of certain community property, sell it and pay the proceeds into the registry of the court. Appellant says they were ordered to sell it for payment of the debts listed in an exhibit attached to the judgment. There is a list of debts attached to the judgment, but the judgment does not provide, except as to insurance, that the proceeds of the community property ordered sold shall be used to discharge such debts, merely that the proceeds shall be paid into the registry of the court, presumably to be equitably divided between the parties. The community property ordered sold included an automobile, the homestead on Princess Lane, the household furniture and furnishings, and a half interest in the cash value of the husband's life insurance. Appellant says that the Princess Lane house, household and kitchen furniture and automobile and the cash surrender value of life insurance policies in force more than two years are exempt from the claims of creditors; that no creditor had the right to have them sold and the proceeds applied to discharge unsecured debts and, therefore, the court did not have the power to order said property sold and so applied, but that the court should have ordered the exempt property sold and, after payment of lien creditors only, divided the net proceeds between the spouses. The judgment is modified so that the proceeds of all exempt property shall be paid into the registry of the court, to be divided as to the court may seem just and fair.
Appellee says the court did not err in appointing receivers to sell the community property, including the Princess Lane house and the 1959 Oldsmobile and ordering the proceeds paid into the registry of the court in order to conserve the community estate and protect it from loss through forced sale. Appellee says that, as a matter of fact, appellant agreed to and participated in the sale of the Princess Lane Homestead. This statement is not denied. He says it is evident that appellant does not object to designation of the Hood Street property as her homestead; that the real question presented is: When in a divorce action a wife agrees to the sale of the community homestead and designation of another house as such and, thereafter, such first house is sold, is the court required to divide the proceeds equally between husband and wife, or may the court in its discretion award part, or all, of such proceeds to either upon evidence that such a division is fair and just? Appellee says there is no requirement that the court shall equally divide the proceeds of sale of exempt community property between the spouses. He quotes the following from Hailey v. Hailey, 160 Tex. 372, 331 S.W.2d 299, 302:
"* * * The trial court is required, under Art. 4638, to decree and order a division of the estate of the parties in such a way as the court shall deem just and right, having due regard to the rights of each party and their children, if any. Nothing therein shall be construed to compel either party to divest himself or herself of the title to real estate. In other words, the statute puts the duty on the trial court to make a partition of the community property whenever the pleadings of either party show the existence of such property. The trial court shall consider all the facts and circumstances shown by the *773 evidence and then partition the community property, both personal and real estate, in such manner as may be just and right. * * * If it is not subject to partition in kind the trial court can appoint a receiver and order so much of the property as is incapable of partition to be sole and the proceeds divided between the parties in such portions as, in the discretion of the court, may be a just, fair and equitable partition, having in mind the rights of the parties and the children."
We agree with appellee's said contentions. See 20 Tex.Jur.2d 549; Berg v. Berg, Tex. Civ.App., 232 S.W.2d 783. Reversible error is not shown.
Appellant's third point is to the effect that the court erred in failing to fix a purchase money lien in her favor on the Princess Lane house for the amount of her separate cash invested in it. Appellant testified that she made a cash payment of $3,000.00 when the Princess Lane house was purchased. She testified that she got the money in cash out of a safety deposit box in an unnamed bank. Her testimony with reference to such payment did not compel belief by the court any more than the testimony which was disbelieved in Ex parte Preston, 162 Tex. 379, 347 S.W.2d 938, 939. There was evidence from which the court could properly conclude, as it apparently did, that such payment was made from community funds.
Points five and six are to the effect that the court erred in holding that the diamond earclips, a bracelet and a mower and edger were community property. There was evidence that they were brought during marriage and paid for out of community funds. They were presumed to be community property. The party asserting the contrary had the burden of proving it. The court, unquestionably, had the right to conclude they were community property. Article 4619; Hardee v. Vincent, 136 Tex. 99, 147 S.W.2d 1072.
Point seven is to the effect that the court erred in ignoring a check for $10,000.00, signed by the husband and payable to the wife, in adjusting the property rights of the parties. Mrs. Klein introduced a check for $10,000.00 dated December 25, 1966. The wife's testimony was to the effect that the check was for money the husband owed her; that it was given in June, 1957, and that it was dated far into the future because her husband thought he would then have that much money in the bank. The husband testified that he executed said check on December 25, 1956; that he didn't have any money to buy his wife a Christmas present and that she jokingly suggested he write her a check for $10,000.00, and that he wrote the check, as a joke, under such circumstances. The court had a right to believe the husband's testimony, as it did.
Appellant's case has been ably presented by counsel who did not participate in the trial, but we think reversible error is not shown. All points are overruled. The judgment, as modified, is affirmed.
ON MOTION FOR REHEARING
Mrs. Klein urges that we should reform the judgment by (1) holding the lien against her Hood Street house invalid; (2) instructing the trial court not to pay the proceeds of the sale of exempt property to unsecured creditors; (3) properly divide the cash surrender value of appellee's life insurance policy and (4) award the 1959 Oldsmobile to appellant. We sustain the first two contentions, the third in part and overrule the fourth.
Appellant first contends that we erred in holding there was evidence that monthly payments were made from community funds to discharge a purchase money lien on her Hood Street house, or that the trial court so found; that we erred in holding a lien was properly fixed against appellant's Hood Street house, because there was no evidence, or finding, of enhancement in its value by reason of such payments, if any. Appellant says appellee did not plead that community funds were spent for the benefit of her separate property, for which the community was entitled to reimbursement. *774 She says that the lien for $1625.11, was fixed against her Hood Street house by virtue of a finding by the trial court that the wife was "generally" indebted to the community, presumably because of her general and free spending of community funds. Appellant says there is no evidence of enhancement in the value of said property by virtue of such payments by the community, if any. The rule relative to enhancement of the value of the property of one estate by payments made by another applies to improvements. It is not necessary to decide whether it applies to payments to discharge a purchase money debt and lien. The right to reimbursement between estates is not a fixed right in the property sought to be charged but only an equity. "The decisions have correctly classified the right of the one making such advancement as an equity, and the final determination of the rights of the respective parties is to be determined upon equitable principles as to the amount of reimbursement, as well as the means of enforcing the same. It is not a mere question of balancing ledger accounts." Dakan v. Dakan, 125 Tex. 305, 83 S.W.2d 620, 627. In Colden v. Alexander, 141 Tex. 134, 171 S.W.2d 328, 334, the court said "interest paid during coverture out of community funds on the prenuptial debts of either the husband or the wife on land, and taxes, would not even create an equitable claim for reimbursement, unless it is shown that the expenditures by the community are greater than the benefits received." It is true, as pointed out by appellant, that appellee definitely testified that he did not make any payment on the Hood Street house. However, he did thereafter testify that some check records showed payments out of a fund unnamed, for a purpose unstated, to Metropolitan Savings and Loan on Mrs. Ardis' house on Hood Street. (See s. f. 355). Appellant correctly contends the trial court made no express finding that such payments were made out of the community estate to discharge a purchase money debt and lien against appellant's Hood Street house. Defendant's exhibits 24, 25 and 26 show fourteen payments to Metropolitan of $48.95 and one of $112.61, aggregating $797.91. This could not sustain the lien to the extent of $1625.11 against appellant's Hood Street house in favor of the community. The record shows that for some period of time during the existence of the marriage the Hood Street house was rented for $60.00 per month. The rent belonged to the community. Since the right to reimbursement is but an equity and the record does not disclose that income from the property to the community was less than the amount paid out by the community, if any, on said property, under the holding of the Colden case, supra, there was not even an equitable claim for reimbursement. We sustain said first contention, grant the motion for rehearing to that extent and reform the judgment so as to disallow any lien in favor of the community against appellant's Hood Street house.
We also sustain appellant's second contention. The court cannot, over appellant's objection, pay the proceeds of exempt property to unsecured creditors. We also sustain appellant's third contention, in part. Under Article 3832a the cash surrender value of appellee's life insurance policy, in force more than two years, is exempt from liability for debts and cannot, over appellant's objection, be applied to the payment of unsecured creditors. It is community property and is to be divided between the parties in accord with established legal principles. See 20 Tex.Jur.2d 556, 559. As we understand the evidence, despite that pointed out by appellant, there was evidence that the automobile was not paid for out of appellant's separate estate. Its status was a question of fact. The fourth contention is overruled.
No one asks for a reversal of the judgment. Appellant prays that it only be reformed. Our former judgment is set aside. Costs of appeal are taxed against the appellee. The motion for rehearing is granted in part and the judgment of the trial court is reformed in accord with our holdings on appellant's first three stated contentions. As so reformed, the judgment is affirmed. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1531893/ | 370 S.W.2d 341 (1963)
Donald A. HELLESEN, Appellant,
v.
KNAUS TRUCK LINES, INC., Respondent.
No. 49845.
Supreme Court of Missouri, Division No. 2.
September 9, 1963.
*342 Frank O. Benson, Quinn, Peebles & Hickman, Kansas City, for appellant.
John C. Russell, Donald E. Raymond, Kansas City, for respondent.
EAGER, Judge.
In this case the trial court sustained a motion to dismiss, and dismissed plaintiff's first amended petition with prejudice. The suit is one for libel. We have jurisdiction because the prayer of the petition is for $30,000. The petition alleged: that plaintiff was employed by defendant as an over-the-road truck driver, and that he was a member of Local 41 of the International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America (which we shall hereafter refer to as Teamsters); that the contract setting forth the "terms and conditions" of plaintiff's employment contained in Article X the following: "The Employer shall not discharge nor suspend any employee without just cause, but in respect to discharge or suspension shall give at least one (1) warning notice of the complaint against such employee to the employee, in writing, and a copy of the same to the Union affected, except that no warning notice need be given to an employee before he is discharged if the cause of such discharge is dishonesty or drunkenness, or recklessness resulting in serious accident while on duty, or the carrying of unauthorized passengers. The warning notice as herein provided shall not remain in effect for a period of more than nine (9) months from date of said warning notice. Discharge must be by proper written notice to the employee and the Union affected." Plaintiff then alleged that on June 28, 1960, one F. E. Crowder, defendant's agent, acting within the scope of his agency, willfully, wrongfully and maliciously published concerning plaintiff the following letter, alleged to be false, defamatory and libelous:
"Mr. Donald A. Helleson 3238 Independence Ave. Kansas City, Missouri Dear Sir: On June 10, 1960, you were a member of a sleeper team who delivered a load of wheat at the Beardstown Mills Company, Beardstown, Illinois. Starting on that date, a survey or check of peddle time was conducted lasting for two weeks, report of which was recently received by this office. The report reveals that your actual peddle time was twenty-five minutes, you charged this company one and one half hours as evidenced by your pay sheet and log book. Penalties for dishonesty are clearly outlined in Article X of the Central States Area Over-the-Road Motor Freight Agreement; however, this Company elects to reduce the severity of the penalty of this instance. In view of the *343 above-mentioned facts, I am issuing this warning letter for dishonesty as outlined in Article Z of the Over-the-Road Agreement. Should this occur in the future, more severe disciplinary action will be necessary. Yours very truly, KNAUS TRUCK LINES, INC., F. E. Crowder, Safety Supervisor, FEC:gm CC: Local Union #41."
Plaintiff further alleged: that the letter was published "by placing said copy in defendant's files and records * * *" and by causing a copy "to be mailed and delivered to said Teamsters Local Union No. 41 in Kansas City, Missouri" where it became a part of plaintiff's union record; that the letter falsely attributed to plaintiff the commission of a "fraud, theft and embezzlement, and of stealing by means of deceit, * * *" the latter being a crime under §§ 560.156 and 560.161, RSMo 1959, V.A. M.S.,[1] as amended; that the letter directly tended to prejudice plaintiff in his trade and employment (as elaborated somewhat in the petition) and tended to expose him to public hatred, contempt and ridicule (also amplified) in violation of § 559.410; that plaintiff's reputation was thus blackened, he was humiliated, and that his ability to acquire and retain jobs had been affected. Compensatory damages of $15,000 were sought, along with punitive damages in the same amount. The motion to dismiss was predicated upon the ground that the petition failed to state a claim upon which relief could be granted. We gather that "peddle time" means time spent in waiting for a truck to be unloaded, though the briefs do not elaborate.
Since no special damages are pleaded, the letter must have constituted a libel per se in order to be actionable. Langworthy v. Pulitzer Publishing Co., Mo., 368 S.W.2d 385; Nordlund v. Consolidated Electric Co-Op., Mo., 289 S.W.2d 93, 57 A.L.R. 2d 832. In such a situation we consider the words of the letter, stripped of extraneous allegations. Langworthy, supra. And always, the words are to be considered in their "ordinary meaning in the plain and popular sense," and the instrument "must be interpreted from its four corners." Jacobs v. Transcontinental & Western Air, Inc., 358 Mo. 674, 216 S.W.2d 523, 525, 6 A.L.R. 2d 1002.
Plaintiff asserts here that the letter did constitute a libel per se, both as (a) imputing the commission of a crime, i. e., stealing under § 560.156, and (b) as tending to disgrace and degrade plaintiff, expose him to public hatred, contempt and ridicule, and as reflecting on his integrity, character and good name. As to (a), he cites generally Lightfoot v. Jennings, 363 Mo. 878, 254 S.W.2d 596; Starnes v. St. Joseph Railway, Light, Heat & Power Co., 331 Mo. 44, 52 S.W.2d 852; and Priest v. Central States Fire Ins. Co., 223 Mo.App. 122, 9 S.W.2d 543. Those cases are applicable here only as stating general principles, with perhaps the further proposition that the specific crime need not be named if the language used is susceptible only of the construction that some crime is charged. As to (b), we note § 559.410 defining the term libel; that statute primarily concerns criminal libel, but it has been held that the definition is applicable both in criminal and civil cases, and that "* * * any false, unprivileged, written communication which, reasonably construed, comes within the statutory definition is libelous per se. Seested v. Post Printing & Publishing Co., 326 Mo. 559, 575, 31 S.W.2d 1045, 1052 [4-7.]" Coots v. Payton, Banc, 365 Mo. 180, 280 S.W.2d 47, loc. cit. 53. But the article (or letter) must be one defamatory in itself before the provisions of this statute attach. Coots v. Payton, Banc, 365 Mo. 180, 280 S.W.2d 47; Langworthy v. Pulitzer Publishing Co., Mo., 368 S.W.2d 385. Defendant argues that this letter was not libelous: (a) because the petition alleged no special damages and the allegations cannot constitute a libel per quod; and (b) because, considered from the standpoint of a libel per se, the innuendo asserting the charge of a crime cannot enlarge the words actually *344 used (Grossman v. Globe-Democrat Pub. Co., 347 Mo. 869, 149 S.W.2d 362), and because the letter did not charge that plaintiff had acquired any money or property of defendant wrongfully, or even that the log book and pay sheet were the basis of computing plaintiff's wages; further, that only by a strained construction could the letter be construed as an accusation of a crime. Our "stealing" statute has not been effective long enough to have been the subject of many constructions; it is not necessary to construe it specifically here. For the present purpose we shall assume that the letter charged plaintiff with the crime of acquiring or stealing defendant's property by deceit, or of an attempt to do so. See, on the latter, § 556.150. We note also that the letter referred to "Penalties for dishonesty" as outlined in Article X of the labor contract, and also that the letter was issued as a "warning letter for dishonesty * * *."
The real questions here involve the doctrines of qualified privilege and consent. The issues have been confused somewhat by arguments pro and con that there was and was not an actionable publication but, upon analysis, it seems obvious that what defendant's counsel really mean is that such publication as was made was fully protected, while plaintiff's counsel insist that there was a publication, protected only by a qualified privilege. At this point we note that although plaintiff alleged generally that the defendant's agent wrote and "published" the supposed libelous words, when we read the petition from its "four corners" we find that this generally stated conclusion is limited by the specific allegations that defendant "published" the letter by placing a copy in its files and by mailing a copy to the Teamsters Local. We shall only consider these specific allegations. Farm & Home Savings & Loan Ass'n of Missouri v. Armstrong, 337 Mo. 349, 85 S.W.2d 461, 464-465; Coble v. Economy Forms Corp., Mo.App., 304 S.W.2d 47, 53.
The petition discloses that plaintiff belonged to Local 41 of the Teamsters; his union will be conclusively presumed to have been his agent in negotiating and executing the labor contract. That contract required a warning notice before any discharge or suspension, with a copy to the union, except in case of a discharge for dishonesty, drunkenness, recklessness on duty, etc. Here the defendant elected to give a warning notice in a situation where it was probably not required to do so; but its election not to discharge plaintiff immediately and to give a notice was for his benefit, and we think that the defendant was fully justified in electing the more lenient course. Having properly done so, a copy of the letter was necessarily sent to the Local of the Union. Defendant could (and undoubtedly would) have discharged plaintiff by precisely the same kind of letter it used here.
We shall dispose first of the contention that defendant effected an actionable publication of the alleged libel by placing a copy in its files; we are cited to no case, pro or con, specifically in point. While there seems to be some divergence of thought on the subject generally, it appears to be the better and majority rule that communications between officers of the same corporation in the due and regular course of the corporate business, or between different offices of the same corporation, are not publications to third persons. Biggs v. Atlantic Coast Line R. Co. (CA 5), 66 F.2d 87, citing many cases; Rodgers v. Wise, 193 S.C. 5, 7 S.E.2d 517; Prins v. Holland-North America Mortgage Co., 107 Wash. 206, 181 P. 680, 5 A.L.R. 451; George v. Georgia Power Co., 43 Ga.App. 596, 159 S.E. 756; Chalkley v. Atlantic Coast Line R. Co., 150 Va. 301, 143 S.E. 631; Lehner v. Associated Press, 215 Wis. 254, 254 N.W. 664. As said in Prins, supra, such an act by a corporation "is but communicating with itself." If such is the correct rule, then certainly a corporation which, through its regularly assigned agent, writes a letter in the due course of its business and places a copy in its own files, does not thereby publish the supposed libel to a third person. We so hold. To rule otherwise would penalize *345 a business, individual or corporate, for performing a perfectly normal and proper business practice.
We next consider the sending of a copy of the letter to the Teamsters' Local. Plaintiff concedes that this act was qualifiedly privileged, but insists that he is entitled to a trial to permit a showing of malice and an abuse of the privilege. He cites Coots v. Payton, Banc, 365 Mo. 180, 280 S.W.2d 47; Laun v. Union Electric Co. of Missouri, 350 Mo. 572, 166 S.W.2d 1065, 144 A.L.R. 622; Boehm v. Western Leather Clothing Co., Mo.App., 161 S.W.2d 710; and he insists that there was and is no absolute privilege. Construed in its technical sense, "absolute privilege" means that under certain circumstances, as in legislative and judicial proceedings, it is in the public interest to permit interested persons to speak freely and without fear of suit for defamation. The occasions are rather strictly limited, and in those instances even malice does not create liability. See the discussion in Laun v. Union Electric Co. of Missouri, 350 Mo. 572, 166 S.W.2d 1065, 144 A.L.R. 622. Occasions of qualified privilege occur much more often but the privilege is also much more limited. In Polk v. Missouri Pac. R. Co., 156 Ark. 84, 245 S.W. 186, the Court said, loc. cit. 188, 29 A.L.R. 220: "`A communication is held to be qualifiedly privileged when it is made in good faith upon any subject-matter in which the person making the communication has an interest or in reference to which he has a duty, and to a person having a corresponding interest or duty, although it contains matter which, without such privilege, would be actionable. Upon such occasion and under such circumstances, although the matter communicated is defamatory and false, the law will not infer malice, but the existence thereof must be shown by some evidence beyond the falsity of the statements communicated.'" Our cases follow the same rule. Coots v. Payton, Banc, 365 Mo. 180, 280 S.W.2d 47; Boehm v. Western Leather Clothing Co., Mo.App., 161 S.W.2d 710. Generally, it is for the court to decide whether the circumstances are such as to give rise to a qualified privilege,at least, in the absence of any controversy as to the character of the surrounding circumstances and relationships. Chaloupka v. Lacina, 301 Ill.App. 173, 21 N.E.2d 909. In such cases, however, if a fact issue is raised on the existence of good faith or malice, or on whether or not the statements made exceed the exigencies of the situation so as to constitute an abuse of the privilege, such fact questions are for the jury. Coots, supra; Boehm, supra. If the question of qualified privilege were the decisive factor here, as plaintiff insists, we would be required to decide whether enough is alleged in this petition to raise an issue of fact on the questions of good faith, malice and excess of the requirements of the situation. Many petitions do present such fact issues, Coots, supra; some do not, and we have considerable doubt that the present one does, since the vital factual allegations are based on pleaded documents.
However, another principle is decisive here. We quote from Restatement of Torts, Ch. 25, § 583, p. 220 et seq., as follows: "General Principle. Except as stated in § 584, the publication of false and defamatory matter of another is absolutely privileged if the other consents thereto. * * * f. The privilege conferred by the consent of the person about whom the defamatory matter is published is absolute. The protection given by it is complete and it is not affected by the ill will or personal hostility of the publisher or by any improper purpose for which he may make the publication, unless the consent is to its publication for a particular purpose in which case the publication for any other purpose is not within the scope of the consent."
In 33 Am.Jur., Libel & Slander, § 93, pp. 105-106, it is said: "It is generally held that the publication, of a libel or slander, invited or procured by plaintiff, or by a person acting for him in the matter, is not sufficient to support an action for defamation. Thus, the delivery of a letter of recommendation for a former employee *346 to a person who, by his authority, requested it is not a publishing of any libel contained in it. Again, there is no publication where communications, concerning the cause of discharge, are made by an employer or his agent to one procured by a discharged employee to intercede for his reinstatement." See, also, 53 C.J.S. Libel and Slander § 95, p. 151, where it is said: "When no previous publication has been made, the publication is, as a general rule, privileged if the fact appears that the particular publication under consideration was procured or invited by plaintiff or his authorized agent, and if the answer of defendant does not go beyond plaintiff's question; * * *." The true meaning of the principle seems to be that in such cases there is no actionable publication, or that the publication is absolutely privileged (though not in the technical sense of "absolute privilege"), which really amounts to the same thing.
We have found no Missouri cases actually announcing this principle. Applicable, at least by analogy, are: McDaniel v. Crescent Motors, 249 Ala. 330, 31 So. 2d 343, 172 A.L.R. 204; Taylor v. McDaniels, 139 Okl. 262, 281 P. 967, 66 A.L.R. 1246; Wuttke v. Ladanyi, 226 Ill.App. 402. In McDaniel, the allegedly slanderous statements were made to the business agent of plaintiff's union and in the presence of two other representatives of the defendant; it was held that the union representative was acting as plaintiff's agent and that such a publication would not support an action for slander. In Taylor, an allegedly libelous letter concerning plaintiff was written by defendant's Division Superintendent to a representative of the plaintiff's Brotherhood, and the Brotherhood file containing the letter was sent to plaintiff's local at his own request. It was held there that the Brotherhood official was plaintiff's agent, it appearing that he had intervened concerning plaintiff's discharge and that he had requested the information on plaintiff's behalf and at plaintiff's instigation. It was thus held that there could be no actionable defamation in writing and sending the letter initially, and also, that the same protection was to be accorded to the transmittal of the letter to the local lodge for a hearing, since plaintiff had requested it. In those cases it was indicated that the court did not reach any question of qualified privilege, because there had been no actionable publication. In Wuttke v. Ladanyi, supra, the court said, in part, loc. cit. 405-406: "It would be a dangerous precedent to hold that an employer could not, privately and confidentially, give an explanation bona fide to a discharged employee, or his representative, who has solicited an explanation of the discharge, without laying himself open to the charge of slander. The alternative would be that he must refuse to explain or must give some fictitious excuse, which would be unfair to the employee."
Plaintiff has cited: Massee v. Williams (CA 6), 207 F. 222; Richardson v. Gunby, 88 Kan. 47, 127 P. 533, 42 L.R.A.,N.S., 520; Alabama & Vicksburg R.R. Co. v. Brooks, 69 Miss. 168, 13 So. 847; Brown v. Elm City Lumber Co., 167 N.C. 9, 82 S.E. 961, L.R.A.1915E, 275. The Massee case was decided largely on a question of qualified privilege; it also held that a publication to plaintiff's agent was sufficient; but the facts there were vastly different from ours, and the case has little applicability. The essential holding was that the evidence at the trial disclosed that defendant had far exceeded the limits of his qualified privilege. Richardson, supra, seems wholly inapplicable; Brooks, supra, was decided on the proposition that the defendant's charges exceeded the bounds of a qualified privilege; that rule was applied to defendant's answer to an inquiry made by plaintiff's attorneys. The case may be opposed in result to the stated theory of consent; however, it is a very old case and the doctrine of consent is not even discussed. In Brown, supra, the letter was held to be a legitimate answer to an inquiry or claim from plaintiff's attorney, in which more "latitude" is allowed; the letter was held thus to be qualifiedly privileged, even though "published" by sending it to plaintiff's attorneys.
*347 That case is of no help to plaintiff. We do not construe these cases (except possibly Brooks, 1891) as substantially opposed to the rule of consent as previously outlined. If they are, we do not choose to follow them.
Plaintiff's counsel, in their reply brief, argue that the Missouri cases adhere to the theory of qualified privilege. Hoeffner v. Western Leather Clothing Co., Mo. App., 161 S.W.2d 722; Boehm v. Western Leather Clothing Co., Mo.App., 161 S.W.2d 710. True, we find no Missouri case expressly decided upon the theory of consent, but the doctrine is well established and it is applicable here. We have determined that, through the Union Contract, plaintiff consented to the sending of this letter to the Local. It was a communication which directly involved the employer-employee relationship. It was related strictly to matters covered by the contract. We hold that under these circumstances the statements therein were fully privileged. Plaintiff cites no case to the contrary; he contends that the result in such cases as Hoeffner and Boehm, supra, are opposed to the ruling here. As already indicated, however, those cases were decided strictly on the question of qualified privilege and the exceeding of the privilege; the doctrine of consent was not even discussed, and the circumstances were such as to make the application of that doctrine at least most doubtful, had it been an issue.
There are certainly no factual allegations here in the petition or in the documents pleaded to show or fairly infer any abuse by defendant of the circumstances of the consent, if that can be an issue. Counsel argue here that defendant was not required by the contract to write this letter and that it merely chose to do so. We have already touched on that subject; upon the disclosure of the facts defendant had the choice of discharging plaintiff immediately, and by a very similar letter, or of writing as it did. We have and do hold that its choice was lawful and proper. It is also urged that a consent did not include a consent to a defamation; the authorities already discussed hold that if plaintiff consented to the sending of a letter under such circumstances, he thereby took his chances on that score. We do not have a case where a defendant has obviously taken advantage of the situation to abuse and villify the plaintiff, outside the "exigencies" of the situation. There will be time enough to rule that point when and if we reach it.
Under these circumstances there is no point in discussing in detail the cases plaintiff has cited on the doctrine of qualified privilege. Finding no error in the order of dismissal, that judgment is affirmed.
All of the Judges concur.
NOTES
[1] All statutory citations will refer to this revision. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1531926/ | 370 S.W.2d 207 (1963)
Marguerite G. DeLAUGHTER, Appellant,
v.
Kenneth G. DeLAUGHTER, Appellee.
No. 7505.
Court of Civil Appeals of Texas, Texarkana.
August 6, 1963.
Rehearing Denied August 27, 1963.
Harry Friedman: Harkness & Friedman, Texarkana, for appellant.
Bun L. Hutchinson: Atchley, Russell, Hutchinson & Waldrop, Texarkana, for appellee.
FANNING, Justice.
Marguerite G. DeLaughter brought suit in a District Court of Bowie County, Texas, for a change of custody of two minor children. Kenneth D. DeLaughter, the defendant, filed a motion to dismiss for want of jurisdiction, which motion was granted and plaintiff's suit was dismissed. The trial court made findings of fact and conclusions of law and refused to make additional findings requested by appellant to which appellant excepted. Appellant has appealed.
*208 Appellant presents one point on appeal wherein she contends that the trial court erred in dismissing the cause on defendant's plea to the jurisdiction.
Defendant's plea to the jurisdiction was in essence to the effect that both he and his minor children were residents of and domiciled in the State of New Hampshire and were without the jurisdiction of the trial court and that the trial court had no jurisdiction over the persons or subject matter of the suit.
The trial court heard evidence on the plea to the jurisdiction and made the following findings of fact and conclusions of law:
"FINDINGS OF FACT
"1. By an order of the 72nd Judicial District Court of Lubbock County, Texas entered on the 12th day of September, 1961 in Cause No. 35,626 styled Marguerite G. DeLaughter vs. Kenneth G. DeLaughter, the exclusive care, custody and control of the minor children involved herein, to-wit, Sandra DeLaughter and Tammera Ann DeLaughter, was granted to the Defendant, Kenneth G. DeLaughter.
"2. At the time of the institution of this proceeding and at the time of service of process herein upon the defendant and at the time of the hearing hereon the defendant, Kenneth G. DeLaughter, was a resident of and was domiciled in the State of New Hampshire.
"3. At the time of the hearing hereon the said minor children were actually and physically present, residing and domiciled in the State of New Hampshire.
"CONCLUSIONS OF LAW
"This Court was without jurisdiction to determine the question of the change of custody of said minors."
We have carefully reviewed the statement of facts and hold that the evidence was sufficient to support the fact findings made by the trial court. We also hold that under this record the trial court was authorized to refuse to make the additional fact findings requested by defendant.
Although the minor children were physically present in Bowie County, Texas, at the home of their paternal grandmother at the time the suit was filed, they were in the State of New Hampshire with their father prior to and at the time of the hearing in the trial court. At the time of the institution of the suit the father, Kenneth G. DeLaughter, was an actual resident of and domiciled in New Hampshire, was also physically present in New Hampshire and was served with a non-resident notice in New Hampshire.
The minor children were never brought before the trial court by any process for the hearing before the court and as found by the trial court at the time of the hearing the minor children were actually and physically present, residing and domiciled in the State of New Hampshire. It thus appears very clearly that the minor children were not physically present before the trial court or physically present in the State of Texas at the time of the hearing nor were they domiciled in the State of Texas at the time of the suit or at the time of the hearing but were at all times material hereto domiciled in the State of New Hampshire.
There are two basic alternative prerequisites for custody jurisdiction: (a) domicile of the child in the State and (b) its presence in the State. See Ex Parte Birmingham, 150 Tex. 595, 244 S.W.2d 977, wherein it is stated in part as follows:
"In Lanning v. Gregory, 100 Tex. 310, 99 S.W. 542, 10 L.R.A.,N.S., 690, we held a Texas court to be without jurisdiction to adjudicate the custody of a child domiciled in Louisiana but present in the state on a visit. Both the disputing father and mother were *209 before the court, but were domiciled respectively in Louisiana and Kentucky, having been divorced at an earlier date by a decree which contained no custody provision. The decision is indeed not authority for the proposition that a Texas domicile on the part of the child is essential to our custody jurisdiction. See Wicks v. Cox, 146 Tex. 489, 208 S.W.2d 876, A.L.R.2d 1. See also Worden v. Worden, 148 Tex. 356, 224 S.W.2d 187. However, it still stands as authority for at least this much: that the power of the court over the persons of the contending parties is not of itself sufficient to confer custody jurisdiction. If such power were enough, clearly we would have sustained jurisdiction and not rejected it. From the two recent decisions last above cited and those to which the recent decisions last above cited and those to which the opinions therein refer, it is shown that the two basic alternative prerequisites for custody jurisdiction are (a) domicile of the child in the state and (b) its presence in the state. Thus we have held in Peacock v. Bradshaw, 145 Tex. 68, 194 S.W.2d 551, that custody of a Texas child may be adjudicated here even though the child be then residing beyond the state, and on the other hand, as in Worden v. Worden, supra; Wicks v. Cox, supra; Goldsmith v. Salkey, 131 Tex. 139, 112 S.W.2d 165, 116 A.L.R. 1293, and Campbell v. Storer, 101 Tex. 82, 104 S.W. 1047, that, under particular sets of facts, each of which included the presence, though not the domicile, of the child within the state, our courts may determine custody. Except where the child is domiciled or physically present within the state, we have yet to hold our courts to be vested with custody jurisdiction, while considerable authority from other sources has expressly rejected jurisdiction where both of these prerequisites are lacking, and this although the contending parents may both be before the court. * * *" (Emphasis added).
It is our further view that where the only basis for jurisdiction is the fact of the physical presence of the child in this state, that such physical presence relates not merely alone to the time when the custody suit was filed but also in particular relates to the time of the hearing by the court. In this connection see Black v. Adams, Tex.Civ.App., 214 S.W.2d 703, wherein it is stated in part as follows:
"* * * We think the question here raised was decided against the contentions of relator by the Supreme Court in a similar case styled and reported Wicks v. Cox [146 Tex. 489], 208 S.W.2d 876. In that case the court held that technical legal domicile of a child in the State is not essential to give a court of this State jurisdiction of a child custody case where the child and all parties concerned are before the court for the hearing. The court further held in that case that the principles underlying jurisdiction of the subject matter in such cases is the welfare of society, primarily as evidenced by the welfare of the child, and such also involves the right and duty of a state to look after the welfare of minor children within its borders. We cite this case and other authorities therein cited in support of our position here taken." (Emphasis added).
Since the children in question were legally domiciled in the State of New Hampshire at all times material hereto and also were not physically present in Texas at the time of the hearing before the trial court we hold that the trial court correctly sustained the plea to the jurisdiction under the record in this cause. See the following authorities: Campbell v. Storer, 101 Tex. 82, 104 S.W. 1047; Goldsmith v. Salkey, 131 Tex. 139, 112 S.W.2d 165, 116 A.L.R. 1293; Peacock v. Bradshaw, 145 Tex. 68, *210 194 S.W.2d 551; Wicks et al. v. Cox et al., 146 Tex. 489, 208 S.W.2d 876, 4 A.L.R. 2d 1; Black et al. v. Adams et al., Tex.Civ.App., 214 S.W.2d 703; Avenier v. Avenier, Tex. Civ.App., 216 S.W.2d 638, wr. ref., n. r. e.; Worden v. Worden, 148 Tex. 356, 224 S.W.2d 187; Ex Parte Birmingham, 150 Tex. 595, 244 S.W.2d 977.
The judgment of the trial court is affirmed. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1531946/ | 370 S.W.2d 918 (1963)
Dorothy GILLESPIE, Appellant,
v.
William B. WESSON, Appellee.
No. 16446.
Court of Civil Appeals of Texas, Fort Worth.
September 13, 1963.
Rehearing Denied October 11, 1963.
*919 Mock, Banner & McIntosh and Jack Banner, Wichita Falls, for appellant.
Ewing Clagett, Fillmore, Schaeffer & Fillmore and Roy Schaeffer, Wichita Falls, for appellee.
MASSEY, Chief Justice.
Dorothy Gillespie brought suit for damages against William B. Wesson on account of personal injuries growing out of a fall onto the concrete parking apron in front of a building. Such occurred as result of hanging her shoe heel on a "nosing" on the threshold at the front door of defendant's premises as she was walking from the inside thereof out to her automobile parked outside. $2,900.00 was the amount of plaintiff's damages. The jury made other answers in its verdict which convicted defendant Wesson of negligence which proximately caused plaintiff's injuries by finding that the defendant negligently maintained the doorway to his premises with a concrete threshold projecting above the level of the floor. That the circumstances were such that defendant was charged with notice of said condition of his premises was conclusively established in the evidence.
On motion and notice under Texas Rules of Civil Procedure, Rule 301, "Judgments", the trial court ruled and ordered that the jury's Special Issue Findings, made in establishment of a case of liability against the defendant, had no support in the evidence and should be disregarded, and in view thereof the verdict did not entitle plaintiff to a judgment. Accordingly, judgment dated and entered on October 19, 1962 directed that plaintiff take nothing. From this judgment an appeal was perfected.
Our holding is that the Special Issue Findings were erroneously disregarded. Judgment should have been entered on the verdict. Accordingly, we reverse the judgment below and render judgment for damages in favor of the plaintiff and against the defendant in the amount of $2,900.00.
Premise of defendant's argument in his brief is succinctly stated by a quote we have selected therefrom: "The most that could be said of the evidence relied upon by Appellant is that it showed that the threshold in question was dangerous. The mere showing of a dangerous condition does not necessarily constitute some evidence of negligence unless some duty is owed to an injured party and that duty is violated."
Photographs of the construction of the threshold were in evidence. These alone demonstrate a condition which made a fact issue upon the matter of defendant's negligence in its maintenance. As a person opened the door to leave the building there was a concrete strip, somewhat rounded, which was at the edge of the closed door. It was the type of construction sometimes found at exterior doors of buildings intended to aid in causing rain to drain out onto the ground rather than into the building, and to deflect the wind so that it would not blow under the door. Toward the interior of the building the edge of the concrete strip (intended to come into contact with the door when it was closed) amounted to a "nosing", in that it was vertical for one-quarter to three-quarters of an inch above the tile of the floor. Immediately outside the building and to the outside of the aforesaid strip there is one concrete step. A person leaving the building would usually take one step onto it and his second step would bring him to ground level. There was both lay and expert testimony which raised the issue of negligence on the matter of construction of the concrete strip and "nosing" thereof, or its maintenance after construction.
The defendant's business was that of "cocktail lounge", and there is no question *920 but that plaintiff, a patron, was an invitee. In the ordinary case evidence and fact findings thereon as made in this instance would require a judgment for the plaintiff. See 64 A.L.R. 2d 398, Annotation: "Liability of proprietor of store, office, or similar business premises for injury from fall due to defect in stairway"; Walgreen-Texas Co. v. Shivers, 1941, 137 Tex. 493, 154 S.W.2d 625.
Defendant has apparently placed his theory of non-liability upon the concept that plaintiff did actually know or was charged with full knowledge of the defective condition at the threshold of defendant's premises which caused or resulted in plaintiff's injury,by reason of which defendant was under "no duty" to protect plaintiff from injury stemming therefrom.
The "no duty" doctrine is this: the occupier of land or premises is required to keep his land or premises in a reasonably safe condition for his invitees. This includes a duty of the occupier to inspect and discover dangerous conditions. His duty is to protect his invitee from dangers of which he, the occupier, knows, or (because of his duty to inspect) of which he should know in the exercise of ordinary care. If there are dangers which are not open and obvious, he is under a duty to take such precautions as a reasonably prudent person would take to protect his invitees therefrom and to warn them thereof. But if there are open and obvious dangers of which the invitees know, or of which they are charged with knowledge, then the occupier owes them "no duty" to warn a person of things he already knows, or of dangerous conditions or activities which are so open and obvious that as a matter of law he will be charged with knowledge and appreciation thereof. In a suit for damages brought against the occupier by an invitee the occupier, as the defendant,if he pleads the defense of "no duty' in avoidance or as an affirmative defense under the provisions of T.R.C.P. 94, "Affirmative Defenses",is entitled to cast a burden upon the invitee to prove not only that he was injured as a proximate result of encountering a condition on the premises involving an unreasonable risk of harm, but also (upon the defendant's introduction of evidence raising an issue under the defense so plead) to prove as a part of his plaintiff's case that the occupier owed him a duty to take reasonable precautions to warn him or protect him from such danger, i. e., to negative the "no duty" doctrine invoked by the affirmative defensive pleading. Natalie K. Halepeska v. Callihan Interests, Inc., 6 Tex. Supreme Court Journal, August 3, 1963, pp. 644, 652, in which is disapproved a small but important part of the law as announced in McKee, General Contractor v. Patterson, 1954, 153 Tex. 517, 271 S.W.2d 391.
Model forms of submitting special issues in such a situation are considered and discussed by Dean W. Page Keeton in his article at 33 Tex.Law Review, pp. 1, 10, to be viewed as altered by Halepeska. Another article by Dean Keeton on cases of this type is in 20 Tex.Law Review, p. 562.
On trial in the court below there was no request by the defendant for the submission of any issue on the matter of defendant's duty to warn or protect the plaintiff from the danger in question. Neither was there any objection on the part of the defendant because of the absence of such an issue as part of the plaintiff's case. In view of the pleadings of defendant raising a defense under the "no duty" doctrine it would seem that error would have existed in the charge if defendant had objected because of the absence therein of an appropriate issue.
We believe that the defendant waived his right to have such an issue submitted. T.R.C.P. 274, "Objections and Requests", and T.R.C.P. 279, "Submission of Issues". The ground of defense was that of the defendant and if raised as an issue of fact by evidence the defendant would be entitled to have it submitted. In view of what is said in Halepeska and *921 McKee the burden on such an issue, if submitted, would properly be cast on the plaintiff. It would amount to what Professor Hodges treats as an Inferential-Rebuttal issue. See Hodges on Special Issue Submission in Texas, Ch. III, p. 44, Inferential-Rebuttal Issues, § 17, "Pleading and Proof". Simple example of such an issue is the usual one of unavoidable accident in a negligence case. That issue is in the case when the defendant pleads it and the evidence raises it, but in such a situation the defense is waived where there is no issue in the charge inquiring whether the event was an unavoidable accident unless the defendant objects because of its absence. If an issue thereon is submitted the burden thereof would be properly cast on the plaintiff.
Burden of producing evidence is upon the party relying on an inferential-rebuttal issue, but the burden of persuasion on the issue, when submitted, is upon the opponent. Of course the "no duty" doctrine would involve an issue which is grounded in contract implied in fact in that the invitee would be treated as having consented, in consideration of his use of the premises, to hazards thereon the dangers of which were fully within his knowledge and appreciation. We believe this is a distinction without a difference.
Only in the event it might be properly determined that the "no duty" doctrine required that the question be resolved as a matter of law in favor of the defendant and against the plaintiff would defendant be entitled to prevail in this instance, since defendant had waived right to a factual issue under his pleading. From our examination of the state of the evidence we are convinced that no more than a fact question could be said to exist. Therefore the question could not be treated as resolved as a matter of law. Plaintiff testified on cross-examination that there was no difference "about those steps" on the night in question than on any other night she had "walked across there", and that "it always (had) been dangerous and (she) so considered it, but (she) kept using it anyway". That the hazard about which she was testifying was the concrete strip and "nosing" thereof on the threshold is not certain. Furthermore uncertain was plaintiff's appreciation of the danger or risk of catching her toe or heel and thus tripping by reason of the "nosing".
Defendant contends that even though the trial court erred in disregarding the jury's answers to special issues he was nevertheless entitled to the judgment he did receive under the doctrine of volenti non fit injuria in that plaintiff's injuries were received as the result of having voluntarily exposed herself to a known and appreciated danger. This is an affirmative defense upon which any issues submitted should cast the burden upon the defendant. Disregarding the question of whether defendant's pleadings entitled him to such issues the fact remains that they were not submitted. There was no objection because they were not submitted nor request for any such. The evidence did not establish such defense as a matter of law. The trial court correctly ruled against the defendant on his motion for judgment non obstante veredicto on this ground.
Judgment for the plaintiff should have been rendered on the verdict of the jury. We therefore reverse the judgment of the court below and here order and direct entry of judgment for plaintiff Dorothy Gillespie against defendant William B. Wesson for her damages in the amount of $2,900.00, plus legal interest from date of October 19, 1962, and for all costs | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1531937/ | 370 S.W.2d 425 (1963)
William D. (Bill) WARD, Appellant,
v.
STATE of Arkansas, Appellee.
No. 5073.
Supreme Court of Arkansas.
September 16, 1963.
Lee Ward, Jonesboro, for appellant.
Bruce Bennett, Atty. Gen., by Russell J. Wools, Asst. Atty. Gen., Little Rock, for appellee.
WARD, Justice.
Appellant, William D. Ward, was sentenced to a term of three years in the state penitentiary for the crime of fondling a male child under the age of 14 years in violation of Ark.Stat.Ann. § 41-1128 (Supp. 1961). On appeal appellant contends the *426 case should be reversed because of three alleged errors. One, the jury was invited to let the court fix the punishment. Two, the argument of the prosecuting attorney was prejudicial. Three, the court should not have permitted the introduction of testimony pertaining to prior and unrelated incidents. These alleged errors will be discussed in the order above mentioned.
One. Instruction no. 5 given, along with other instructions, when the case was submitted to the jury, reads:
"You are further instructed that if you find the defendant guilty as charged but are unable to agree upon the punishment to be imposed, you may return a verdict of guilty and leave the punishment to be fixed by the court."
Ark.Stat.Ann. § 43-2306 (1947), in pertinent part and in substance provides, that when "a jury find a verdict of guilty, and fail to agree on the punishment to be inflicted * * * the court shall assess and declare the punishment * * *." The question then arises: When should the jurors be told they can leave to the court the responsibility of fixing the punishment before they retire or after they find they cannot agree? The giving of a similar instruction as it was given here has been approved by us previously. See: Knighton v. State, 210 Ark. 248, 195 S.W.2d 47; Keese and Pilgreen v. State, 223 Ark. 261, 265 S.W.2d 542; Downs v. State, 231 Ark. 466, 330 S.W.2d 281. In the case of Underwood v. State, 205 Ark. 864, 874, 171 S.W.2d 304, the court seemingly indicated a preference for the procedure followed in the case under considerationbefore the jury retired.
Appellant, obviously aware of the above decisions, contends however that the statute clearly indicates it is the province of the jury to first honestly endeavor to fix the punishment before they are informed they can leave the responsibility to the court. The reason given by appellant for his position is that it is human nature for a person to avoid making difficult decisions when he knows it is not necessary to do so. This line of reasoning seems to find some support in the recent case of Edens v. State, 235 Ark. 996, 363 S.W.2d 923 where, in commenting on the decision in the Underwood case, we said:
"Even so, we did not intend to state that the instruction should routinely be given in every case, and if the Underwood case has been so interpreted we take this opportunity to point out that ordinarily there is no occasion for the jury to be supplied with this information."
Thus, it appears, we have not previously announced any required rule in this regard to guide the trial courts. So, after careful consideration, we now hold that the jury should not be told initially they can let the court impose the punishment but should be told only after they report they have reached a verdict of guilty but are unable to agree on the punishment to be imposed. We do not reverse the trial court for failing to follow this procedure in this instance because it was not aware of what we later said in the Edens case, supra.
Two. Appellant strenuously insists the jury was prejudiced by the allegedly heated argument of the prosecuting attorney, which argument we have carefully read although it is not fully abstracted. Since we have concluded that the case must be reversed and remanded because of the error later discussed, we deem it unnecessary to comment on all the objections raised by appellant to the argument.
As stated in Hall v. State, 161 Ark. 453, 257 S.W. 61, and in many other decisions of this Court, we, recognizing that jurors are men of good sense and sound judgment, have always held that a wide range must be given to the argument of counsel and much discretion must be left to the trial court. In particular, appellant here refers to certain remarks of the prosecuting attorney to the effect that he and his deputy would receive no extra pay if appellant were convicted, *427 and that appellant's attorney (once a deputy prosecuting attorney) would have prosecuted the appellant had the same facts been presented to him. We think the jurors were capable of assessing such arguments for what they were worththat they had no bearing on the guilt or innocence of appellant. Consequently no reversible error has been shown.
Three. Finally it is contended the case must be reversed because the jury was allowed to consider evidence intended to prove appellant had engaged in similar unnatural sex activities with other young boys on former occasions.
The statute under which appellant was convicted provides, in all pertinent parts, that it shall be unlawful for any person with lascivious intent to place his hands on the sexual part of a male under the age of 14 years. The succeeding section fixes the punishment for violation at one to five years in the penitentiary.
Appellant, age 36, went to the Beasley Home at about 9:30 a. m. to install telephones. Mrs. Beasley, who was out temporarily, had left her son Tommy, age 11 (together with his brother Terry, age 8), at the house to point out the locations for the phones. Tommy stated positively that appellant fondled him two or three times on that occasion. He was corroborated in part by Terry. Appellant denied emphatically and categorically that he in any way mistreated Tommy. There was no other direct testimony to show appellant's guilt or innocence of the offense for which he was being tried. This situation obviously presented a clear-cut issue of credibility to the jury.
On behalf of appellant it was shown that he had a good reputation; that he had been post commander of the American Legion, and was now its service officer; that he belonged to the Masonic Lodge; and, that he had once served as Chapter Dad of the local DeMolay organization. On the other hand the state, evidently hoping to convince the jury that Tommy and Terry Beasley (and not appellant) had told the truth, offered testimony tending to convince the jury that appellant had, on two former occasions, indulged in similar unnatural sex relations with other boys.
We have concluded that the testimony relative to one of the incidents was clearly inadmissible and prejudicial, and calls for a reversal. Over appellant's objections and exceptions a witness was permitted to testify that some four or five years previously, during a conclave of the DeMolay organization in a gymnasium at Piggott, he saw appellant engage in some acts which be thought were unbecoming; that appellant had one of the smaller boys kinda armed up, had his arm around him nudging him toward the south door, and he presumed he was loving the boy up a little bitthis didn't continue very longthe boy's father was present. Regarding the same occasion, another witness gave similar testimony, but neither witness saw anything approaching a violation of the statute.
We thing the above testimony was most prejudicial, and we have no way of knowing to what extent it influenced the jury. It is reasonable to suppose the jury gave considerable weight to the testimony because it was given by two witnesses who, apparently, stood high in the community. One was with the Weights Division of the State Police and lived in Piggott all his life; the other was a grain broker and a member of the International Supreme Council of the Order of DeMolay, and he was also an Executive Officer of this State.
It is difficult to think of a more dangerous precedent than to sanction the type of testimony above described. It would tend to establish guilt based on suspicion alone. The jury may have attached the most lascivious motives to what could have been perfectly innocent and meaningless acts of appellant.
In respect to the other incident a different situation obtains. There, the testimony *428 was definite and left nothing to the imagination. However, since the case may be retried, we deem it advisable to discuss a contention made by appellant here and which may be made at another trial.
In substance, appellant contends that testimony of other similar offenses is admissible only to show intent, and, that since no question of intent is presented in this case, all the testimony (regarding the previous incidents) was inadmissible. We agree that the issue of intent (on the part of appellant) is not an issue here. To sustain his point appellant relies almost entirely on what we said and held in the case of Alford v. State, 223 Ark. 330, 266 S.W.2d 804. We said there that "our cases very plainly support the common-sense conclusion that proof of other offenses is competent when it actually sheds light on the defendant's intent; otherwise it must be excluded." The statement was correct as applied to the particular facts of that case, and the opinion shows it was to be so limited. It appears, however, in the Alford case and in other decisions of this Court that a different rule applies to unnatural sex cases such as in the case under consideration. In the Alford case we recognized this distinction in using the following language:
"* * * where the charge involves unnatural sexual acts proof of prior similar offenses has been received. Hummel v. State, 210 Ark. 471, 196 S.W.2d 594; Roach v. State, 210 Ark. [222 Ark. 738], 262 S.W.2d 647. Such evidence shows not that the accused is a criminal but that he has "a depraved sexual instinct' * * *." (Emphasis added.)
In the Hummel case, supra, where the Court was concerned with an unnatural sex crime, testimony, relative to similar previous acts, was introduced over defendant's objection. There, on appeal, we approved the following instruction:
"You are instructed that evidence introduced by the state in this case, of a similar offense occurring prior to the offense charged in the indictment was admitted solely for the purpose of showing the defendant's intent, motive, habits and practices, and you may consider it for this purpose and this purpose only. * * *" (Emphasis added.)
In our opinion the distinction above pointed out is based on sound reasoning. If it can be shown that a person has a depraved sexual instinct or that he has the habit of indulging in unnatural sex activities such fact would tend to corroborate other testimony that he committed the unnatural offense for which he is being tried.
Likewise, we believe such testimony should not be excluded solely on the ground that it is too remote in this particular case. The question of remoteness of the incidents has not been raised by appellant on this appeal, but it could be raised on a second trial. The general rule is that such testimony must not be too remote. However, as pointed out above, a case of this kind is not, in all respects, governed by the general rule. So, once it is established that a mature person has developed the proclivity to indulge in unnatural sex acts, we are not prepared or willing to say it would be erased by the lapse of 4 or 5 years.
For reasons above set out the judgment is reversed, and the cause is remanded.
Reversed and remanded.
McFADDIN, J., concurs.
ROBINSON, J., dissents.
McFADDIN, Justice (concurring).
I concur in the reversal. Not only was the evidence as to the gymnasium incident inadmissible, as the Majority holds; but I am of the opinion that the evidence as to the other incident (as referred to in the final paragraph of the Majority Opinion) was also inadmissible. That incident occurred *429 more than five years before the offense for which the appellant was here being tried; and I think testimony of an incident more than five years away is too remote, and is inadmissible.
ROBINSON, Justice (dissenting).
Of course we all make errors, and in my humble opinion the majority is making a most serious error in reversing this case. Those committing crimes through the commission of unnatural sex acts are perhaps the most dangerous of criminals. It frequently happens that such persons commit the more serious crime of murder to avoid disclosure of their sexual proclivities. One can hardly read the daily papers on any day without seeing the account of a murder committed in connection with a sex crime. Such cases have been before this court several times. Smith v. State, 205 Ark. 1075, 172 S.W.2d 248; Leggett v. State, 227 Ark. 393, 299 S.W.2d 59. But frequently the killer is never apprehended. He has evaded detection by killing the victim of his lustthe only witness who could identify him.
The majority concedes that evidence of other unnatural sex offenses committed by the defendant is admissible in a case of this kind, but the majority then proceeds to reverse the judgment because the State introduced evidence of what could be considered an unnatural sexual act committed by the defendant. If the defendant put his arms around the little boy and "hugged him up" in an improper manner, this would be an unnatural sexual act, and according to the rule of evidence recognized as valid by the majority, evidence of such act could be properly introduced. On the other hand, if the placing of his arms around the child was merely a friendly gesture, certainly evidence of such act would in no way be prejudicial to the defendant. It would be just like proving that he shook hands with the little boy. In these circumstances the trial court thought the evidence was admissible for what it was worth.
If the defendant's act was improper, it was admissible. If, on the other hand, it was not improper, there could be no prejudice to him. Whether the defendant's conduct indicated depraved sexual desires or merely a friendly gesture was to be argued by the lawyers in the case, but in any event, the evidence was admissible to show the jury what happened.
For the reasons set out herein, I respectfully dissent. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1531975/ | 278 A.2d 831 (1971)
In the Matter of William H. BENNETHUM, III.
Supreme Court of Delaware.
June 14, 1971.
William H. Bennethum, III, pro se.
Charles S. Crompton, Jr., Wilmington, for Censor Committee.
WOLCOTT, C. J., and CAREY and HERRMANN, JJ., sitting.
*832 WOLCOTT, Chief Justice:
William H. Bennethum petitions for reinstatement as a member of the Bar of this Court. He was disbarred on May 27, 1960. The opinion of this Court ordering his disbarment is reported as In Re Bennethum, 2 Storey 504, 161 A.2d 229, 162 A.2d 429. Reference to that opinion will disclose the detailed circumstances. Basically he was ordered disbarred because he was found to be guilty of having given false testimony and introducing fabricated evidence in his criminal trial in the Federal District Court for the willful failure to file income tax returns, and in the proceedings before the Censor Committee of this Court following his acquittal in the Federal District Court.
In 1963 the petitioner applied for reinstatement, which application was referred by this Court to a Special Committee of the Bar for consideration and investigation. Following a hearing, the Committee unanimously recommended against reinstatement and reinstatement was denied.
In 1964 petitioner filed a second petition for reinstatement in which, for the first time, he admitted wrongful conduct in the defense of the charge against him of failure to file income tax returns, and stated that he sincerely repented of his past wrongful conduct. A hearing was held before this Court and in April of 1965 we denied reinstatement. No opinion was filed, but the order of denial makes it clear that basically the decision rested upon the fact that it was only in 1964 that "petitioner acknowledged for the first time that he had testified falsely under oath" in the Federal Court and in the proceedings against him before the Censor Committee.
On July 10, 1970 the petition for reinstatement now before us was filed, and in September of 1970 we referred it to the Censor Committee for its investigation and recommendation. Notice was given to the petitioner in accordance with the rules of the Committee, and an investigation and hearing was held by the Censor Committee.
The Censor Committee thereafter unanimously recommended that Mr. Bennethum be reinstated as a member of the Bar of this Court. The recommendation of the Censor Committee is based upon the belief of the Committee that the petitioner is sincere in his recognition of his past wrongs and in his regret therefor; that the petitioner's conduct since his disbarment is such as to have demonstrated his rehabilitation, and is sufficient to indicate that he could be expected to be truthful and candid if he should be reinstated. Finally, the Committee believed that a sufficient period of time had passed since his disbarment more than 10 years ago and since his first admission of wrongdoing more than five years ago to justify the Committee's recommendation.
The general law is that an order of disbarment is not punitive against the offending lawyer, but is entered for the protection of the profession of law and of the public, and that it has also a subordinate purpose of reformation of the offender. It has accordingly been recognized from the early days that disbarment of an attorney does not necessarily work a permanent disability. It is generally recognized that a disbarred attorney may, within the discretion of the Court, on petition and upon a due showing of good character, reformation, rehabilitation and repentence, be reinstated. Annotation, 70 A.L.R. 2d 268.
There is one reported decision in Delaware dealing with a petition for reinstatement of a former member of the Bar who had been disbarred for misconduct. This case is In Re Hawkins, 4 Boyce 200, 87 A. 243 (Super.Ct.1913). At the time of this decision, admissions to the Bar in Delaware *833 were made on a county basis and, also, discipline of members of the Bar was imposed on a county basis. The decision is therefore of the Superior Court of Kent County, from the roll of which Bar the name of Mr. Hawkins had been struck. He had in fact plead guilty to a charge of embezzlement from a client, and had been sentenced to and served a jail term. Thirteen years later he petitioned for reinstatement. His submission was that he had made restitution to his former client; that his conduct since his disbarment and release from prison had been exemplary; that the local Bar Association had investigated his conduct and unanimously supported his petition for reinstatement; that his life subsequent to his disbarment had been without offense of any kind; that he had demonstrated that he had atoned for his offense and, finally, that the length of time since his disbarment was sufficient to demonstrate the sincere contrition and reformation he had undergone. Upon these circumstances his reinstatement to the Bar of Kent County was ordered.
We think In Re Hawkins is a recognition of the general rule prevailing throughout the states. If the offense for which a lawyer has been disbarred is not of such a heinous character that under no circumstances could he demonstrate sufficient contrition and atonement to justify his reinstatement as a member of the profession, then the court in its discretion, under particularly appealing circumstances, may order his reinstatement.
We are of the opinion that William H. Bennethum, in the more than 10 years that have elapsed since his disbarment, has demonstrated by his life in the community, by his conduct, by his scrupulous avoidance of any semblance of the practice of law, and by his sincere contrition and regret for his past action, that he is worthy of being reinstated to the Bar of this Court. We rely in particular upon the testimony of two witnesses who testified before the Censor Committee at the hearing following the investigation of his petition for reinstatement. These two gentlemen, outstanding and respected members of the Bar of this Court, are receivers of a very large insurance company. With the permission of the Chancellor and of the Chief Justice, they retained the services of Mr. Bennethum for the processing of a great number of claims filed in a receivership proceeding. Mr. Bennethum has performed this task with eminent satisfaction to the receivers and to the Chancellor. In so doing, he has avoided any semblance of holding himself out as a lawyer, and has performed his functions in this respect with fidelity and complete satisfaction to the receivers. They are entirely satisfied with his performance and both testified specifically and emphatically that in their opinion Mr. Bennethum has sincerely repented of the misdeeds for which he was disbarred, and that, if readmitted to the Bar, would perform in accordance with the standards laid down for the professional conduct of lawyers.
We note, also, that the misdeeds for which Mr. Bennethum was disbarred were not at the expense of any client. His misconduct related to the payment of taxes to the Federal and State Governments. He has now complied with all requirements imposed upon him by the Federal and State taxing authorities, has filed the necessary returns and has made arrangements for the payment of his tax delinquencies to the satisfaction of the Federal and State taxing authorities. In one sense, therefore, it might be said that he has made restitution for his delinquency.
We have considered the facet of the decision in In Re Hawkins to the effect that great weight was placed upon the unanimous recommendation of the Kent County Bar that Mr. Hawkins be reinstated. We think the unanimous recommendation of the Censor Committee, a cross section of the Bar, is the equivalent.
Under all the circumstances, therefore, we think we are justified in ordering the *834 reinstatement to the roll of attorneys of the Bar of this Court of the name of William H. Bennethum, III. In so doing, we will follow the precedent set in the case of In Re Hawkins, supra. We will enter an order that the petitioner, William H. Bennethum, III, be reinstated as a member of the Bar of this Court, and that his name be restored to the roll of attorneys of this Court.
We point out that the decision we have made today is not to be regarded as a precedent for the reinstatement of any other disbarred member of the Bar of this Court. The facts of any such petition must necessarily be considered as a separate matter. Mere passage of time and penitence are not alone sufficient grounds for reinstatement. Of prime importance, we think, is the fact that no innocent client has suffered by reason of the misconduct of Mr. Bennethum. That circumstance, we think, is an essential element in the consideration of an application for reinstatement. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1532053/ | 429 F. Supp. 1271 (1977)
UNITED STATES of America, Plaintiff,
v.
HAMMERMILL PAPER COMPANY, Defendant.
Civ. A. No. 89-68 Erie.
United States District Court, W. D. Pennsylvania.
March 16, 1977.
*1272 *1273 Willie L. Hudgins, Jr., Richard E. LaFarge, Attys., Dept. of Justice, Antitrust Div., Washington, D. C., for plaintiff.
Mortimer E. Graham, Robert J. Kilgore, Erie, Pa., Howard Adler, Jr., and Donald L. Hardison, Washington, D. C., for defendant.
OPINION
WEBER, Chief Judge.
This is the forest primeval. The murmuring
pines and the hemlocks,
Bearded with moss, and in garments
green, indistinct in the twilight,
Stand like Druids of eld, with voices sad
and prophetic,
Stand like Harpers hoar, with beards that
rest on their bosoms.
Evangeline, H. W. Longfellow
"Well, essentially, Fraser's business is certainly quite a bit different than Hammermill's business. We are kind of a little Weyerhaeuser in that we have a vast number of trees and the trees sit in the forest growing and when they reach maturity they have to be cut, and there is a tremendous impetus to keep cutting the trees and keep running the machines because the trees keep growing and we have a difficult time generally keeping up with the cut. My guess is that Hammermill's tree position is considerably different than ours.
Mr. Dolan, Fraser Paper Co.
Testimony, Tr. 895.
INTRODUCTION
This is an action brought by the United States under 15 U.S.C. § 25 which complains that Defendant Hammermill Paper Company (Hammermill) violated Section 7 of the Clayton Act (15 U.S.C. § 18) by its acquisition of the assets of Western Newspaper Union (WNU) and all of the capital stock of Carter Rice Storrs and Bement, Inc. (Carter Rice). The complaint prays for an order of divestiture, an injunction and such further relief as the court may deem appropriate.
Section 7 of the Clayton Act (15 U.S.C. § 18 provides:
No corporation engaged in commerce shall acquire, directly or indirectly, the whole or any part of the stock or other share capital and no corporation subject to the jurisdiction of the Federal Trade Commission shall acquire the whole or any part of the assets of another corporation engaged also in commerce, where in any line of commerce in any section of the country, the effect of such acquisition may be substantially to lessen competition, or tend to create a monopoly.
JURISDICTION AND VENUE
Hammermill is a corporation organized and existing under the laws of Pennsylvania, with its principal office in Erie, Pennsylvania and transacting business and being found within the Western District of Pennsylvania. At all times pertinent it has shipped and sold paper products in interstate commerce.
Western Newspaper Union was a Delaware corporation with its principal office in New York, N. Y., prior to the acquisition of its assets by Hammermill in 1961, and purchased and sold paper products which were shipped in interstate commerce.
Carter Rice Storrs and Bement, Inc., is a Massachusetts corporation with its principal office in Boston, Massachusetts, and at the time of the acquisition of its stock by Hammermill in 1966 it purchased and sold paper products which were shipped in interstate commerce.
*1274 THE LINE OF COMMERCE
By agreement of the parties the line of commerce in this case within the meaning of Sec. 7 of the Clayton Act is the manufacture and sale of printing and fine paper for the purpose of measuring the effects of the acquisitions challenged in this litigation. The term "printing and fine paper" includes coated and uncoated book papers, coated and uncoated printing papers, offset papers, text and cover papers, sulphite bond papers, rag or cotton content papers, mimeograph and duplication papers, onionskin, ledger papers and bristols.
Printing and fine paper is principally sold by mills to book and magazine publishers, and by paper merchants to commercial printers and lithographers, communication centers, stationers, insurance companies, plants, institutions and schools having in-house printing and duplicating operations, and by mills to greeting card and envelope manufacturers and other converters.
In the context of this case Hammermill is a manufacturer or "supplying firm", and Western and Carter Rice are paper merchants or "purchasing firms".
HAMMERMILL PAPER COMPANY
Hammermill was founded in 1898. It produces printing and fine papers at mills located in Oswego, New York; Lock Haven, Pennsylvania; Erie, Pennsylvania; Hamilton, Ohio; Watervliet, Michigan; West Springfield, Massachusetts; Turners Falls, Massachusetts; and Woronoco, Massachusetts. Hammermill is also a one-third owner of a printing and fine paper mill located in Hoquiam, Washington, and is responsible for selling its entire production.
Among the 20 leading manufacturers of printing and fine papers, Hammermill ranked sixth in total United States tonnage and share of the industry in 1967, its share being 4.98%.
In 1966 it ranked fifth with 5.07% of total United States shipments; in 1970 it ranked seventh with 4.29%, and in 1971 it ranked sixth with 4.4%.
However, in the line of fine paper or writing paper, including rag or cotton content papers, ledger papers, and sulphite bond papers, it is the world's largest producer, accounting for 9.5% of United States shipments in 1967.
Hammermill's share of the major segments of the printing and fine paper line for 1967 are:
Uncoated book paper 5.0%
Coated Paper 2.6%
Fine paper 9.5%
MARKET SHARES SELLERS
The rank and market shares of the supplying firms in the printing and fine paper industry for a 12 year period does not reveal either high concentration or a trend to concentration.
In 1960, the highest market share was 8.54%, the highest 4 had a cumulative share of 28.03%, the highest 8 had 46.46%, and the highest 20 had 72.29%. Hammermill ranked 10th with a market share of 3.34%.
From 1961 through 1971 cumulative market shares of the highest 4, and highest 8, were as follows:
1961 1962 1963 1964 1965 1966
Top 4 27.06% 27.14% 26.66% 26.70% 25.76% 25.82%
1967 1968 1969 1970 1971
25.94% 26.25% 26.81% 26.21% 27.0%
1961 1962 1963 1964 1965 1966
Top 8 44.75% 45.01% 44.46% 43.76% 44.20% 44.18%
1967 1968 1969 1970 1971
44.27% 43.41% 44.52% 44.52% 44.4%
*1275 In 1971 the cumulative market share of the 20 largest firms was 74%. In that year Hammermill ranked sixth in market share.
The following table shows for 1967 the rank and share of the 20 leading manufacturers of printing and fine paper reporting to the statistical paper group:
Total Share of Cumulate Share
Rank Manufacturer Tonnage Industry of Total Reported
1 International 700,635 8.11%
2 Mead 545,941 6.33% 14.44%
3 Champion 536,891 6.22% 20.66%
4 Kimberly-Clark 456,172 5.28% 25.94%
5 West Virginia 436,042 5.05% 30.99%
6 Hammermill 430,095 4.98% 35.97%
7 St. Regis 362,330 4.22% 40.19%
8 Oxford 352,597 4.08% 44.27%
9 Consolidated 342,398 3.96% 48.23%
10 Crown Zellerbach 286,243 3.31% 51.54%
11 Boise Cascade 231,095 3.68% 54.22%
12 Weyerhaeuser 215,024 2.49% 56.71%
13 Northwest 214,824 2.49% 59.50%
14 Nekoosa Edwards 198,217 2.30% 61.50%
15 S. D. Warren 176,346 2.00% 63.50%
16 Blandin 175,383 1.98% 65.48%
17 Fraser 170,130 1.97% 67.45%
18 Glatfelter 136,147 1.58% 69.03%
19 New York & Penn 113,796 1.33% 70.36%
20 Union Camp 113,714 1.32% 71.68%
DISTRIBUTION THROUGH PAPER MERCHANTS
Manufacturers use various methods of selling printing and fine paper, including wholesale paper merchants, wholesalers other than paper merchants, office and duplicating equipment supply houses, and direct sales to printers, publishers, farms, manufacturers, converters, and other users of paper.
The term "paper merchant" is used and accepted in the paper industry to describe a type of paper wholesaler who performs certain services to the manufacturers and users of printing and fine paper. They are not the ultimate consumers of paper, but *1276 are middlemen providing services to both parties. The ultimate consumers of printing and fine paper are principally commercial printing and in-house printing plants.
The "paper merchant" provides services to manufacturers of printing and fine papers by warehousing large and varied inventories in local areas throughout the country, by providing a sales force to promote the sale of a manufacturer's product throughout the country, and providing advice and guidance to the manufacturer of the problems and needs of the users of the paper.
The paper merchant provides services to users of printing and fine papers by assuring them of immediate availability of a wide variety of papers, by supplying credit to the users of paper, by supplying a sales force to give samples, counselling in selection, technical assistance concerning the properties of various papers, cost computations, cutting and trimming paper to custom sizes, and by consultation on the problems of printers and other users.
There were 933 paper merchant outlets in the United States in 1967.
Hammermill sells about 70% of its production of printing and fine papers through paper merchants. At the end of World War II direct sales (other than through paper merchants) accounted for about 40% of total sales, but as of 1972 direct sales accounted for about 60% of tonnage and 55% dollar value total printing and fine paper sales in the total United States market.
Representative manufacturers sell their production of printing and fine papers directly or through paper merchants as follows:
Direct via Paper Merchants
Hammermill Paper Company 28-30% 70-72%
West Virginia Pulp and 100% 0
Paper Co.
Lincoln Pulp and Paper 0 100%
Co.
Newton Falls Paper Co. 100% 0
Oxford Paper Company
Total Production 60% 40%
Magazine paper 90% 10%
Commercial print 0 100%
Penntech Corporation 75% 25%
Fraser Paper Company 78% 22%
Union Camp Corporation
Total Production 70% 30%
Commercial print 0 100%
Nekoosa Edwards Paper Co. 50% 50%
Millers Falls Paper Co. 50% 50%
Rising Paper Co. 50% 50%
Pollack Forests, Inc. 25% 75%
Georgia-Pacific Corp. 10% 90%
Hopper Div.
*1277
Brown Co. Direct via Paper Merchants
Eagle A Division 20% 80%
WESTERN NEWSPAPER UNION
In 1961, WNU had three wholly-owned subsidiaries, Western Paper Company, Midwestern Paper Company, and E. C. Palmer Paper Company through which it operated paper merchant establishments in 19 cities and 13 states:
Little Rock Arkansas
Billings Montana
Dallas Texas
Houston Texas
Des Moines Iowa
Sioux City Iowa
Fargo North Dakota
Kansas City Missouri
Omaha Nebraska
Lincoln Nebraska
Memphis Tennessee
Miami Florida
Tampa Florida
New Orleans Louisiana
Shreveport Louisiana
Oklahoma City Oklahoma
Tulsa Oklahoma
Salt Lake City Utah
Wichita Kansas
81% of WNU's sales in 1961 were of printing and fine paper.
In 1958, WNU accounted for 1.02% of total United States paper merchant sales of printing and fine paper.
CARTER RICE STORRS and BEMENT, INC.
In 1966, Carter Rice had five wholly-owned subsidiaries; Bulkley Dutton Linde Lothrop Inc.; Stanford Paper Co.; Lehigh Valley Paper Corporation; Paper Merchants, Inc. and Baltimore-Warner Co. Inc. Carter Rice and its subsidiaries operated paper merchant establishments in 13 cities in 8 states and the District of Columbia:
Baltimore Maryland
New York New York
East Hartford Connecticut
New Haven Connecticut
Pawtucket Rhode Island
Boston Massachusetts
Springfield Massachusetts
Worcester Massachusetts
Augusta Maine
East Rutherford New Jersey
Allentown Pennsylvania
Philadelphia Pennsylvania
Washington District of Columbia
88% of the sales of Carter Rice in 1967 were of printing and fine paper.
In 1967 Carter Rice and WNU accounted for 4.8% of the total United States paper merchant sales of printing and fine paper.
THE SECTION OF THE COUNTRY
The parties have agreed that the nation as a whole is a relevant geographic market or in the words of the statute "section of the country" for the purposes of this case, and all of the evidence supports this conclusion.
The government argues, however, for a finding that the six New England States constitute a relevant submarket in this case because one of the acquired paper merchant firms, Carter Rice, is the largest paper merchant firm operating in the six New England States of Maine, Vermont, New Hampshire, Massachusetts, Connecticut and Rhode Island, having three outlets in Massachusetts, two in Connecticut, one in Maine and one in Rhode Island. Carter Rice accounted *1278 for 31.9% of the total paper merchant sales of printing and fine paper in New England in 1967.
This is a vertical combination case and the issue is whether the effect on competition is to be measured with reference to the market in which the manufacturing and selling firms in the line of commerce compete or the market in which the products are purchased for consumption or resale.
In this case the area of effective competition for manufacturers of printing and fine paper includes the entire United States, with the possible exception with respect to some grades of paper of territory west of the Rockies, a factor not material here.
With respect to such manufacturers there is no freight rate barrier that isolates New England from the rest of the country and creates it as a separate marketing area. Paper manufacturers located in New England compete effectively in the Midwest against manufacturers with mills located there, and mills in the Midwest compete for sales in New England. Paper manufacturers in New England do not sell primarily in New England but sell throughout the United States. Paper manufacturers do not find it necessary to build mills in New England to participate in the New England trade. Hammermill has only one mill in the New England states which accounts for 10% of its total production, and supplies the great preponderance of its New England sales from mills outside New England. For some grades of printing and fine paper there is only one pricing zone throughout the United States; for other grades there is one pricing zone through the United States east of the Rockies. There is no separate delivered pricing zone for New England. The paper merchants in New England receive much of their stock from mills outside New England. Carter Rice outlets outside New England purchased from New England mills as much stock as the outlets within New England, while its New England outlets purchased the greater part of their requirements outside New England.
In United States v. Kimberly-Clark Corp., 264 F. Supp. 439 [N.D.Cal.1967], the leading Clayton Act case dealing with the paper industry, the court held six western states to be a separate geographic submarket in the paper industry in which the anticompetitive effect of the acquisitions could be determined. After considering the 3 Pacific Coast states and the 11 state western market, the court chose a six state area in which the manufacturers operated and competed for consumers. The compelling reason for this finding was undoubtedly the fact that freight rates increased dramatically at Denver and precluded effective competition in the western United States by mills located east of the Rocky Mountains. The industry witnesses all testified that they recognized the western states as a separate market; the defendant companies tailored their operation to a separate western market; industry representatives testified that it was essential to have mills in the west to compete in the western market; the defendant manufacturer testified that it was necessary to have production facilities in the area to be able to compete in the western market; and the paper merchants in the area purchased the great preponderance of their supplies from mills located in the area.
None of these facts have been established in this case and in fact the government has admitted that the economic factors differentiating the Western market for paper products from the rest of the country have no application to the New England market contended for here.
The argument of the United States is that the principal users of printing and fine papers are printers who, because of their needs for quick delivery of a variety of lines of paper in varying quantities, must be closely tied to the local paper merchant outlets. Conversely, in order to serve his market, the paper merchant must establish outlets near his customers. The arguments that paper merchants in New England "cannot and do not compete with paper merchants located in other sections of the country" does not establish that New England is a separate section of the country for measuring the anticompetitive effect of *1279 Hammermill's acquisition, because the same criteria apply to all paper merchants in any section of the country. The principal function of a paper merchant anywhere is to serve the local printing trade with a variety of lines, locally warehoused, and available for quick delivery in a large range of quantities.
We cannot find the facts establishing the close relationship between paper merchants and printers to be relevant to the question of the effect of this acquisition to lessen competition among manufacturers of printing and fine papers in the sale of their products to paper merchants.
The relevant market is not the area in which Hammermill's customer operated before the acquisition of the customer by the manufacturer, but the area in which Hammermill and its competitors operate and in which they compete for the available customers.
In Tampa Electric Co. v. Nashville Coal Co., 365 U.S. 320, 81 S. Ct. 623, 5 L. Ed. 2d 580 [1961], the question at issue was the validity of a vertical arrangement where an electrical utility company in Tampa, Florida, serving a sixty mile area contracted to buy all of its requirements of coal for its power generator from the defendant mining company. The maximum requirements of the utility company exceeded the total consumption of coal in peninsular Florida, but did not amount to more than 1% of the coal produced by all mining companies in the defendant mining company's producing area. In an action to enforce the contract defendant raised the defense of illegality of the contract under Section 3 of the Clayton Act. The Supreme Court, in considering the probable foreclosure of competition in a substantial share of the line of commerce affected, held that the relevant market in which to measure the effect of this agreement was not the Florida area where the coal is consumed, but the area in which the defendant and 700 other producers effectively compete. Because the Tampa contract covered less than 1% of their area's total production, the Court found it quite insubstantial. While Section 3 of the Clayton Act does not use the language of Section 7 "in any section of the country", the Court relied upon and quoted Tampa Electric in a Section 7 case in United States v. Philadelphia National Bank, 374 U.S. 321, 83 S. Ct. 1715, 10 L. Ed. 2d 915 [1963], and in United States v. Phillipsburg National Bank & Trust Co., 399 U.S. 350, 90 S. Ct. 2035, 26 L. Ed. 2d 658 [1970].
The government cites Brown Shoe Co. v. United States, 370 U.S. 294, 82 S. Ct. 1502, 8 L. Ed. 2d 510 [1962], a Section 7 case. However, we find that Brown Shoe involved both vertical and horizontal mergers between Brown, a leading manufacturer, the third largest seller of shoes by dollar volume with over 1,230 owned or controlled retail outlets, and Kinney, a manufacturer and retailer with 350 retail stores, the eighth largest company by dollar volume of those engaged primarily in selling.
With respect to the vertical effect of this merger, the court found:
"[T]he relevant geographic market is the entire Nation. The relationships of product, value, bulk, weight and consumer demand enable manufacturers to distribute their shoes on a nationwide basis, as Brown and Kinney, in fact, do. The anti-competitive effects of the merger are to be measured within this range of distribution." (p. 328, 82 S.Ct. p. 1525)
However, examining the horizontal aspects of this merger at the retail level the Court found a relevant geographic market to be those cities of populations exceeding 10,000, with their environs, where both corporations retailed shoes through their own outlets, and where, by reason of the merger competition may be substantially lessened.
We conclude that there is no identifiable submarket consisting of New England, in which the effect on competition in the sale of printing and fine papers by manufacturers, can be separately measured aside from its effect on competition in the nation as a whole.
Judge Zipoli in Kimberly-Clark, supra, refused to apply the Tampa Electric rule. His primary reason was set forth in 264 F.Supp. at p. 459, fn. 22, where he recites *1280 that Tampa Electric was a case brought under Section 3 of the Clayton Act which expressly omits the phrase "any section of the country", and hence the precise language of Section 7 was never considered in that case. He also noted that the seller and all his competitors were located in the Appalachian coal area and, therefore, all coal coming from that area was the proper universe. However, as to paper manufacturers, he found mills to be located throughout the country, and that there were economic and industrial differentiations of regional markets. He found:
"The West is such a different market, one which, as this Court noted, is distinguished by freight rates, common economic and competitive factors, service and convenience advantages which adhere to regional producers, and industry recognition of the area as a separate market. These factors and the geographic differentiation which they demonstrate were not present in Tampa Electric which involved a unitary market devoid of such differentiation." (p. 459).
The striking element in Kimberly-Clark was the evidence that paper manufacturers could only sell in the Western market if they had mills there. Kimberly-Clark had two mills in that area and they acquired the paper merchant chain in that area to distribute the tonnage generated by their mills. We see no departure from the Tampa Electric rules under these facts.
MARKET SHARES AS A FACTOR IN DETERMINING SUBSTANTIAL PROBABILITY OF FORECLOSURE
In 1958, WNU accounted for 1.02% of total United States paper merchant sales of printing and fine paper.
In 1966, Carter Rice accounted for 3.7% of total United States paper merchant sales of printing and fine paper.
In 1966, after Hammermill's acquisition of both companies, WNU and Carter Rice accounted for 4.6% of total United States paper merchant sales of printing and fine paper.
In 1969, WNU accounted for .8% and Carter Rice accounted for 3.29% for a combined total of 4.09% of total United States sales of printing and fine paper by paper merchants. With respect to the purchases of total mill products, both by paper merchants and direct sales, WNU accounted for .47% of all purchases and Carter Rice for 2.19%, or a combined total of 2.66% of total mill sales in 1969 of printing and fine paper in the United States.
The Merger Guidelines issued by the Antitrust Division of the Department of Justice on May 30, 1968, state that:
"In determining whether to challenge a vertical merger on the ground that it may significantly lessen existing or potential competition in the supplying firm's market, the Department attaches primary significance to (i) the market share of the supplying firm, (ii) the market share of the purchasing firm or firms, and (iii) the conditions of entry in the purchasing firm's market. Accordingly, the Department will ordinarily challenge a merger or series of mergers between a supplying firm, accounting for approximately 10% or more of the sales in its market, and one or more purchasing firms, accounting in toto for approximately 6% or more of the total purchases in that market, unless it clearly appears that there are no significant barriers to entry into the business of the purchasing firm or firms."
These Guidelines do not have the force of law and are not binding on the courts, but courts have paid them some deference:
". . . But because the Justice Department is obviously one of the principal government agencies charged with the duty of enforcing the antitrust laws, I think its position is entitled to some consideration, particularly when elements of the Guidelines find support in the developing case law. (See, e. g. FTC v. Procter & Gamble Co., 386 U.S. 568, 87 S. Ct. 1224, 18 L. Ed. 2d 303 (1967); United States v. Continental Can Co., 378 U.S. 441, 84 S. Ct. 1738, 12 L. Ed. 2d 953 (1964); *1281 United States v. Penn-Olin Co., 378 U.S. 158, 84 S. Ct. 1710, 12 L. Ed. 2d 775 (1964); United States v. El Paso Natural Gas Co., 376 U.S. 651, 84 S. Ct. 1044, 12 L. Ed. 2d 12 (1964); General Foods Corp. v. FTC, 386 F.2d 936 [3rd Cir. 1967]; United States v. Wilson Sporting Goods Co., 288 F. Supp. 543 [N.D.Ill.1968]." Allis-Chalmers Mfg. Co. v. White Consolidated Ind., Inc., 414 F.2d 506, 524 [3rd Cir. 1969].
Under Brown Shoe, supra, the starting point in analyzing a vertical arrangement is the size of the market share which may be foreclosed by the acquiring manufacturer (370 U.S. p. 328, 82 S. Ct. 1502), although this factor will seldom be determinative. Brown, the acquiring company was the 4th largest manufacturer of shoes in the country producing about 4% of the total national production. It acquired Kinney, the 12th largest manufacturer which accounted for .5% of national production. The District Court found this merger of Brown's and Kinney's manufacturing facilities was economically too insignificant to come within the prohibitions of the Clayton Act, and the government did not appeal this finding (p. 335, 82 S. Ct. 1502).
It was the merger of Brown's and Kinney's retail outlets that was contested, and which provided the basis for the finding that each city in which both maintained retail outlets was the relevant geographic market. Brown previously owned or controlled about 1200 retail outlets. Kinney operated the largest family style retail shoe chain in the country, with over 400 outlets, making them about 1.2% of dollar volume of all national retail sales. As a result of the merger Brown moved into second place in terms of retail stores directly owned. It placed under Brown's control almost 1600 outlets, or about 7.2% of the nation's retail "shoe stores" (separately operated shoe stores or separately leased shoe departments), and about 2.3% of the nation's total retail "shoe outlets" (where shoes are included in general merchandise). The result was that in 32 cities, the combined market share of women's shoes exceeded 20%; in 7 of these cities the combined share of women's shoes sold ranged from 33% to 57%. In 31 cities the combined share of childrens' shoes exceeded 20% and in 6 cities exceeded 40%; in 118 cities exceeded 40%; in 118 cities the combined share in one line of shoes exceeded 5%; and in 47 cities the combined share of all 3 lines exceeded 5%.
The court found the effect on competition to be measurable in cities with populations exceeding 10,000 and their environs in which both Brown and Kinney retailed shoes through their own outlets.
In United States v. Kimberly-Clark Corporation, 264 F. Supp. 439 [N.D.Cal.1967], Kimberly-Clark had three product lines: (1) printing and fine paper, (2) sanitary paper, (3) coarse paper, and a combination of (1) and (3). Kimberly-Clark was the fourth largest corporation in terms of sales, accounting for the following shares of the total United States market: 7.5% of printing and fine papers, 24% of sanitary papers. In particular lines within these broad product classifications, the paper merchant chain that it acquired, BMT, was a "dual house" which handled both lines of printing and fine papers and also lines of coarse or industrial papers. It served principally 6 western states from 34 outlets and was one of the largest chains of paper merchants in the area not owned by a paper mill. It bought 69% of its purchases from mills in the 6 western states and accounted for 15% of all paper merchant sales in the area.
The court determined that 6 western states properly formed a western market as a relevant "section of the country" in which the effects of the acquisition might be measured. This determination was based on the impact of freight rates, the advantage of service and convenience, common economic and competitive factors in the area, and industry recognition of the west as a separate market.
Other relevant market percentages disclosed in combination cases under Section 7 of the Clayton Act and their effect on competition have been noted in the following cases.
In United States v. Sybron Corp., 329 F. Supp. 919, [E.D.Pa.1971], the court concluded *1282 that where the manufacturer had 18.1% of the dental equipment submarket and the purchasing distributor had 6.5% of the retail market this, together with other factors of concentration in the industry, led to a conclusion that the merger may substantially lessen competition in the dental equipment submarket. However, as to the dental sundries submarket, the manufacturer of 4.3% of the dental sundries in the United States market combined with the retailer of 7.5% of the market was not sufficient to prove foreclosure of the market, considering other factors such as ease of entry into the market. Also in the dental products submarket the court found that a manufacturer with 9.2% of total sales and a retailer of 8% of total sales did not, in the light of realities of absolute foreclosure, prove a possibility of substantial lessening of competition.
Similarly, in United Nuclear Corp. v. Combustion Engineering Corp., Inc., 302 F. Supp. 539 [E.D.Pa.1969], after finding a horizontal combination to be violative of Sec. 7, the court proceeded to consider the vertical aspects of the merger. This was a backward vertical integration, the acquisition of a supplier by a consumer, in the market of yellow cake, a uranium concentrate developed from crude uranium ore. The court found the yellow cake market a line of commerce of national scope. The purchasing firm bought 5½% of total national purchases; the supplying firm had 19% share of its market; the purchasing firm acquired the supplier. The court found these market share statistics insufficient to prove that the backward vertical merger would have anti-competitive effects, in view of the other elements considered. The court determined, after considering market share statistics: "But there is much more to the present case than mere arithmetic." (p. 554).
One fallacy of reliance on arithmetic was illustrated in United Nuclear, where the acquiring firm, the customer, accounted for 5½% of all commercial purchases, and the producer acquired accounts for 19% of all commercial sales. The acquisition of the producer by the customer could foreclose the producer only to the extent of the customer's needs.
In Hammermill, to foreclose competition in sales to its acquired paper merchants, WNU and Carter Rice, Hammermill would have to devote substantially all of its production to these two companies. In 1969, Hammermill's total sales to paper merchant houses was $91,812,174, whereas WNU's and Carter Rice's combined purchases of printing and fine paper were $81,095,754.
Also, in this case, Hammermill already had a substantial pre-existing supply position with WNU and Carter Rice. The evidence was that this relationship was likely to continue. Prior to the acquisitions, Hammermill accounted for 40% to 50% of WNU's total purchases and 10% to 15% of Carter Rice's. Thus, the market share represented by Hammermill's previous supply to WNU and Carter Rice is not subject to foreclosure.
The extent of divestiture required in the Meade and Champion cases.
While a consent decree may be of weak precedential value it represents an informed determination of the Department of Justice which is a principal agency charged with the enforcement of the anti-trust laws. Its position is entitled to some consideration in the same manner as consideration is given to its Guidelines. See citation of Allis-Chalmers v. White Consolidated Industries, Inc. at pp. 1280-1281 above.
In a consent decree in United States v. Champion Papers, Inc., (Civil Action No. 022708, D.Neb.1965), Champion which owned merchant paper houses having total sales of $145,173,852 in 1967 was allowed to retain, after the divestiture, merchant paper houses having printing and fine paper sales of approximately $100,000,000.
In a consent decree in United States v. The Meade Corporation, (Civil Action No. 3576, S.D.Ohio 1968), the Mead Corporation owned paper merchant houses in whole or in part having printing and fine paper sales in 1968, of $181,440,480 and wholly owned houses having printing sales of $135,948,000. *1283 After divestiture Mead would be allowed to retain paper merchant houses, in whole or in part, which in 1968 had printing and fine paper sales of $128,712,333 and wholly owned houses having printing and fine paper sales of $113,201,000.
The total sales of the paper merchant houses that Champion and Mead were allowed to retain were considerably higher.
As a consequence of these settlements, two leading paper mills, each with an aggressive history of acquisition of paper merchant houses, were each permitted to retain paper merchant houses with printing and fine paper sales in excess of the total sales of Western and Carter Rice combined.
This consent decree provides the Court with some informed judgment on the size of a particular market that is not deemed a threat to competition by the possibility of foreclosure.
MARKET SHARES NOT SUBJECT TO FORECLOSURE
(a) Pre-acquisition Volume of Sales.
Hammermill had been a supplier of both WNU and Carter Rice since 1912. Supplier and distributor relationships in the printing and fine paper industry are stable and long lasting. There is no evidence to show that sales by Hammermill to these two paper merchants would have been lost had they continued in business as independent paper merchants.
Hammermill had supplied about 45% of the printing and fine paper requirements of WNU and about 10 to 15% of those of Carter Rice before the acquisition of these firms by Hammermill. The stable pre-acquisition business relationship between the supplier and the purchasers removes from the area of potential foreclosure that share of the market already occupied. This factor was recognized in United States v. International Tel. & Tel. Corp. (Canteen), 1971 Trade Cases, 90,530 at p. 90,559:
"Even were Canteen to provide food service to all of the ITT locations which it does not presently serve, the share of the market which would be foreclosed to competing food service suppliers would be de minimus under the foregoing authorities . . .. After subtracting these locations already served by Canteen, the Government's economist estimated that the remaining ITT locations with 250 or more employees represented 0.48% of all such industrial locations in the United States and only 0.34% of the total employment at such locations."
(b) Government Contract Business.
Carter Rice, in its New York and Washington, D. C. locations conducts a brokerage service, whereby it assists paper manufacturers, including Hammermill, in bidding on government contract business. In this operation Carter Rice provides none of the usual paper merchant functions, such as sales promotion, warehousing or extension of credit. Many paper merchants perform the function for paper mills, but some paper mills perform this function for themselves. They have no control over the government's purchasing, they merely submit bids in competition with other paper merchants representing mills and paper mills bidding directly, and the government award is made to the lowest bidder. The bids are made on a public basis and any attempt by Carter Rice to favor Hammermill would be known to the other paper mills interested and Carter Rice's function in this line of business would be destroyed. Carter Rice has represented some 25 or 30 separate mills which have submitted bids through it for government purchases. To maintain this function on a profitable basis Carter Rice must be able to submit bids for a large number of mills.
In 1969 sales for government contracts represented $17,000,000 of its total sales or approximately .7% of the total United States merchant sales.
The government's response to this evidence is that Carter Rice's position is still anticompetitive, that other mills continue to use Carter Rice's government bidding services because they need the services and expertise of Carter Rice and because they may be bidding on types of paper that *1284 Hammermill does not supply or does not wish to bid on, although Hammermill is one of the fullest line producers of printing and fine paper in the country.
For 1969, Carter Rice's total sales of printing and fine paper amount to 3.29% of all paper merchant sales of printing and fine paper. Of this total, .72% were sales on government contracts.
Accepting the argument that it is anti-competitive to have Hammermill as the owner of the house that supplies the service for other paper mills, the evidence is offered and received as an indication that the share of the market represented by the total printing and fine paper sales of WNU and Carter Rice is not the true reflection of the share of the market subject to foreclosure by the acquisition, it must be discounted to reflect these factors.
(c) Product Lines Not Manufactured by Hammermill.
A final reflection on the statistics of WNU and Carter Rice total sales as a measure of the market subject to foreclosure is the evidence produced as to the capacity of Hammermill to manufacture and supply all the products that a paper merchant must carry, including those that Hammermill does not manufacture and those "specification" items which customers order by brand names.
Hammermill does not supply certain lines that are carried by paper merchants such as groundwood papers, no-carbon required papers, tag, and only a limited supply of coated and converting grades, recycled paper and lightweight papers. The government agreed that Hammermill could not supply all these lines but insists that the bulk of the paper merchant's business is in the standard grades which Hammermill could supply and Hammermill has been shown to supply 40-50% of WNU's total purchases. Nevertheless, WNU's sales in 1969 amounted to .8% of total U.S. paper merchant sales of printing and fine papers, and of this .14% was accounted for by sales of printing and fine paper products not made by Hammermill. Of the combined sales of printing and fine paper in 1969 by WNU and Carter Rice, 4.09% of the U.S. total sales, 1.09% is accounted for by sales of products not made by Hammermill.
Western's and Carter Rice's respective 1969 purchases accounted for .47% and 2.19% for a total of 2.66% of U.S. paper mill sales of printing and fine paper, both direct and paper merchant sales.
The government argues the unreliability of the estimates produced by Hammermill because they are derived from total purchases. The government argues that actual sales records supplied for 1967 would show that WNU and Carter Rice accounted for 4.8% of total paper merchant sales in that year. We do not find the fractional difference in statistics for two different years significant.
(d) Other Avenues of Sales.
The acquisition of paper merchant outlets for the sale of printing and fine paper presents a possibility of foreclosure to manufacturers only to the extent that they distribute through such outlets. Thus the market share subject to possible foreclosure should be measured by the total sales of paper manufacturers. While WNU's and Carter Rice's share amounted to 4.09% (or 4.8%) of the total sales of printing and fine paper by paper merchants, their combined share of purchases in the total United States production of printing and fine paper accounted for 2.66% in 1969.
The decline in the purchases of printing and fine papers by paper merchants is attributable to the development of new lines of printing and fine papers for use by business houses with their own in-house printing and duplicating facilities. These include business forms and computer printout papers. Business machine houses, such as A. B. Dick and Xerox, are substantial consumers of these lines of papers, which are sold on a direct basis.
There has been an increase in direct selling by paper manufacturers. On the other hand, there is a decline in paper merchant sales as a proportion of total sales of printing and fine paper. The total Hammermill *1285 sales of printing and fine paper to paper merchants decreased in tonnage from 88% in 1960 to 70.7% in 1968, and in dollar value from 85.7% to 73.2% in those years.
(e) The Business Factors Precluding Foreclosure.
We have noted elsewhere Hammermill's profitable results in operating WNU and Carter Rice as independent separate profit centers. Any attempt to force Hammermill lines on them would destroy the value of these assets. As paper merchants they must offer a wide variety of types, grades, lines, colors and finishes that no single manufacturer can supply. The overwhelming weight of the testimony of industry witnesses, manufacturers, paper merchants and printers concurred in testimony to this effect.
A side effect of any such attempt to force its line exclusively on WNU and Carter Rice would be the loss of experienced salesmen.
Because Hammermill depends upon paper merchant distribution most heavily in its sales program, to a greater extent than most other manufacturers, it must conduct its business in a manner so as to continue its good relations with the other independent paper merchants which account for about 84% of its total distribution. It was necessary for Hammermill to demonstrate to them that they were being treated the same as the Hammermill owned houses, and their testimony recognized this fact where objective and commercial factors would make it self-defeating for a supplier to foreclose competitors from its owned outlet. "The traditional assumptions concerning foreclosure are not, as such, applicable." United States v. Sybron Corp., supra, 329 F.Supp. at 930.
EASE OF ENTRY INTO THE PAPER MERCHANT BUSINESS
Hammermill's acquisition of these paper merchant chains is challenged on the grounds of its anticompetitive effect because of the probability of foreclosure of access by manufacturers to distribution through paper merchants.
That this is highly improbable is most evident from the evidence of ease of entry into the paper merchant business. Entry barriers are low. All that is needed is a truck, a warehouse, a salesman, and inventory. No major capital investment is required; in fact the only capital investment needed would be for inventory because the truck and warehouse could be rented. While the government asserts that the amount required to open a new paper merchant house or establish a new branch house might run as high as $200,000, defendant's evidence shows that a new or branch house with substantial sales volume can be established for substantially lower figures. (Omaha Paper Co., founded in 1964 for $100,000, sales volume 1972, $1,400,000; Reis Paper Company, Albany, New York branch, established for $150,000, sales volume in 1972, $750,000). Whichever figure is chosen, this is not a significant sum. It would not be difficult for an established paper merchant to raise funds to open a new branch, nor for a new entrant. It presents a constant opportunity for experienced salesmen of existing houses, and this very opportunity presents a deterrent to Hammermill to prevent it from restricting its paper merchant houses to its own lines. The salesman would go elsewhere to a house with more lines available, or set up his own house.
Abundant testimony has established that experienced salesmen are available to newly-opened merchant paper houses or branches, particularly where they have the lines of more manufacturers available to them.
Ease of entry into the paper merchant business is illustrated by evidence showing that the number of paper merchant outlets in the United States increased from 882 to 933 during the period 1963-1967. There was abundant testimony showing the opening of new branch outlets by existing paper merchants during the relevant period.
Therefore, any attempt by Hammermill to foreclose access by competitors to its *1286 paper merchant outlets would produce the reaction of increasing the number of paper merchant outlets, either newly established firms or new branches, and increasing the experienced sales staff available to them. More outlets would be available to competing manufacturers.
The importance of the factor of ease of entry in the purchasing firm's market in vertical acquisitions is recognized by the Department of Justice in its Merger Guidelines, § 12, where the market shares of the acquired purchasing firm are not deemed to be critical in restricting competition where "it clearly appears that there are no significant barriers to entry into the business of the purchasing firm or firms."
THE DECLINING IMPORTANCE OF PAPER MERCHANTS IN DISTRIBUTION
For 1970 total United States direct sales of printing and fine papers by manufacturers amounted to 59.8% by tonnage and 55% by dollar value, and sales through paper merchants amounted to 40.2% in tonnage and 45% in dollar value. This is a reversal of the prior ratio in which direct sales accounted for about 40% of total sales. While total United States paper merchant sales increased in dollar volume from $1,472,829,000 in 1960 to $2,370,755,000 in 1969, representing a 60% increase in dollar amount over a ten year period, it must be discounted for the inflation prevalent during this period when the Consumer Price Index rose from 103.1 in 1960 to 127.7 in 1969, an increase of 24%.
While the dollar volume of total paper merchant sales increased, the total United States production of printing, writing and related paper (excluding newsprint) increased from 7,157,234 short tons in 1961 to 11,246,212 short tons in 1969, an increase of 57%.
From all these factors and from the testimony produced we conclude that distribution of printing and fine papers through paper merchants is a declining situation in the industry, to a point where direct selling is the dominant pattern in the industry.
EASE OF ENTRY AT MANUFACTURING LEVEL
The capital cost of building a complete new paper mill is high, but new firms do enter the printing and fine paper line and existing paper firms convert their facilities to enter this line. Because they already have access to pulp wood supplies and have the basic pulp and paper making facilities, their conversion to this line is relatively easy. Manufacturers of kraft paper such as Nekoosa-Edwards and Union Camp Corporation have entered this line. Others have entered the printing and fine paper industry by the purchase of small mills, converting them to printing and fine paper, and building new mills. Defunct and inactive mills have been purchased and converted to printing and fine paper production. They have all had access to distribution through paper merchants and have not been affected by Hammermill's acquisition of WNU and Carter Rice.
A substantial element of new entry into the industry has been the growth of utility or commodity grades of printing and fine paper. These are cheaper, unwatermarked grades that are not readily identifiable with any manufacturer and are subject to intense price competition. The greatly increased demand for these grades has induced many large producers to enter this field because successful marketing does not depend upon prior established markets. These are papers to supply users of offset printing, reproduction facilities, copiers, office machines and the like. Many large paper firms equipped with large, high speed equipment and large holdings of timber have converted to this production and entered the printing and fine paper field, providing strong competition in the field of utility and commodity papers. Hammermill is not in a strong position in this field because of lack of equipment adaptable to this production, lack of large low cost timber reserves, and its concentration on a large variety of specialized papers.
*1287 THE NATURE AND PURPOSE OF THE ARRANGEMENT
The Supreme Court has directed the courts to examine the nature and purpose of the arrangement:
"Between these extremes, in cases such as the one before us, in which the foreclosure is neither of monopoly nor de minimis proportions, the percentage of the market foreclosed by the vertical arrangement cannot itself be decisive. In such cases, it becomes necessary to undertake an examination of various economic and historical factors in order to determine whether the arrangement under review is of the type Congress sought to proscribe.
A most important such factor to examine is the very nature and purpose of the arrangement.48 Congress not only indicated that `the tests of illegality [under § 7] are intended to be similar to those which the courts have applied in interpreting the same language as used in other sections of the Clayton Act,' but also chose for § 7 language virtually identical to that of § 3 of the Clayton Act, 15 U.S.C. § 14, which had been interpreted by this Court to require an examination of the interdependence of the market share foreclosed by, and the economic purpose of, the vertical arrangement." Brown Shoe Co. v. United States, 370 U.S. 294, at p. 329, 82 S. Ct. 1502, at p. 1526, 8 L. Ed. 2d 510 (1962)
48 Although it is "unnecessary for the Government to speculate as to what is in the `back of the minds' of those who promote a merger," H.R.Rep. No. 1191, 81st Cong., 1st Sess. 8, evidence indicating the purpose of the merging parties, where available, is an aid in predicting the probable future conduct of the parties and thus the probable effect of the merger. Swift & Co. v. United States, 196 U.S. 375, 396, 25 S. Ct. 276, 279, 49 L. Ed. 518; United States v. Maryland & Virginia Milk Producers Assn., 167 F. Supp. 799, 804 [D.C.D. C.], aff'd 362 U.S. 458, 80 S. Ct. 847, 4 L. Ed. 2d 880.
In Brown the Court found a specific intent to foreclose. Brown was the fourth largest manufacturer with sales of about 25,000,000 pairs of shoes, and Kinney owned the largest independent chain of family shoe stores with 350 outlets and sales of about 8,000,000 pairs.
"Thus, in this industry, no merger between a manufacturer and an independent retailer could involve a larger potential market foreclosure. Moreover, it is apparent both from past behavior of Brown and from the testimony of Brown's President, that Brown would use its ownership of Kinney to force Brown shoes into Kinney stores. Thus, in operation this vertical arrangement would be quite analogous to one involving a tying clause." (pp. 331-332, 82 S.Ct. p. 1527)
Kinney stores had not previously sold Brown shoes.
In United States v. Kimberly-Clark, 264 F. Supp. 439 [N.D.Cal.1967], the manufacturer was the fourth largest manufacturer of paper and paper products in the United States, selling 7½% of the national market of printing and fine papers, the world's largest producer of sanitary paper products selling 24% of total national shipments, selling 23.7% of the total market of tissue paper, and 5.6% of the total market of special industrial paper. The paper merchant chain was the largest independent chain in its market, operating 34 outlets in as many cities, and accounting for 15% of all paper merchant sales in that area. Kimberly Clark had also acquired nine paper merchant or converter firms during the period from 1951 through 1962. In addition to these findings the court rejected the defendant's argument that the acquisition was for the purpose of investment by finding that it would benefit K-C to acquire the outlet to secure the tonnage necessary for the programmed expansion of its west coast manufacturing facilities. (pp. 445, 447, 448).
The post-acquisition evidence showing the probability of foreclosure was that Kimberly Clark no longer operated the acquired paper merchant as an autonomous unit, it became a division of Kimberly Clark which put its own personnel in charge of operations, it added more of its own lines to the paper merchant's stock and greatly increased its sales of all lines to the acquired *1288 house. In the terms of Brown Shoe, this is analogous to a tying contract:
"The usual tying contract forces the customer to take a product or brand he does not necessarily want in order to secure one which he does desire. Because such an arrangement is inherently anticompetitive, we have held that its use by an established company is likely `substantially to lessen competition' although only a relatively small amount of commerce is affected. International Salt Co. v. United States, supra [332 U.S. 392, 68 S. Ct. 12, 92 L. Ed. 20]. Thus unless the tying device is employed by a small company in an attempt to break into a market, cf. Harley-Davidson Motor Co., 50 F.T.C. 1047, 1066, the use of a tying device can rarely be harmonized with the strictures of the antitrust laws, which are intended primarily to preserve and stimulate competition." (footnotes omitted). 370 U.S. at 330, 82 S.Ct. at 1526-1527.
On the other hand the Court adopted a different rule for those arrangements analogous to requirement contracts:
"On the other hand, requirement contracts are frequently negotiated at the behest of the customer who has chosen the particular supplier and his product on the basis of competitive merit. See, e. g., Tampa Electric Co. v. Nashville Coal Co., supra [365 U.S. 320, 81 S. Ct. 623, 5 L. Ed. 2d 580]. Of course, the fact that requirement contracts are not inherently anticompetitive will not save a particular agreement if, in fact, it is likely `substantially to lessen competition, or to tend to create a monopoly.' . . . Yet a requirement contract may escape censure if only a small share of the market is involved, if the purpose of the agreement is to insure to the customer a sufficient supply of a commodity vital to the customer's trade or to insure the supplier a market for his output and if there is no trend toward concentration in the industry. Tampa Electric Co. v. Nashville Coal Co., supra. Similar considerations are pertinent to a judgment under § 7 of the Act." p. 330, 82 S.Ct. p. 1527.
Applying the Brown criteria in United Nuclear Corp. v. Combustion Engineering, Inc., supra, the Court found that the acquisition of a supplier by a customer was analogous to a requirement contract and would foreclose the supplier as a source of supply only to the extent of the customers' needs. In a situation where the supplier provided 19% of the market production and the purchaser accounted for 5½% of the market consumption the Court found these neither monopolistic nor de minimus, and applying the requirement contract standard, found that the burden of proof had not been met that a substantial lessening of competition was likely.
In the absence of any evidence of a specific intent or purpose to foreclose access by other paper mills to Western and Carter Rice, either viewed in the light of the motive for the acquisition or the post-acquisition history, we view the Hammermill acquisition of Western and Carter Rice in the nature of a requirement contract, in which all the factors tending to show the probability of foreclosure must be examined.
The government argues that lack of anticompetitive intent is irrelevant in a Section 7 case, but in Brown Shoe the Court found evidence of an intent to foreclose relevant in reaching its determination that the stringent per se rule of tying arrangements should be applied. The lack of evidence of intent to foreclose in the instant case is material. A good motive will not justify a merger once it has been shown to be substantially anticompetitive. United States v. E. I. du Pont de Nemours & Co., 353 U.S. 586, 77 S. Ct. 872, 1 L. Ed. 2d 1057 [1957]; United States v. Pennzoil Co., 252 F. Supp. 962 [W.D.Pa.1965]. But "knowledge of intent may help the court to interpret facts and predict consequences." Chicago Board of Trade v. United States, 246 U.S. 231, 38 S. Ct. 242, 62 L. Ed. 683 [1918].
The pre-acquisition evidence of Hammermill's intent is voluminous if not enlightening. The government does not contest that Hammermill was not attempting to seek outlets for new production facilities, or that it was attempting to gain access to markets *1289 served by the acquired paper merchant houses, or seeking additional distribution in their territories. There is no contention that Hammermill was attempting to foreclose competing suppliers from access to the acquired paper merchant outlets.
Hammermill's motives may be characterized as defensive, to preserve a distribution system to which it had been strongly committed, that of independent paper merchant houses. While it had a corporate policy not to acquire paper merchant houses, it acquired Western and Carter Rice when it faced the possibility that those firms might be sold or liquidated under conditions that they would not continue to function as traditional paper merchant houses in the distribution of Hammermill's products. There is no evidence that Hammermill's distribution through Western and Carter Rice would have been lost had those firms continued as viable independent paper merchant outlets.
While in a broad statement in Kimberly-Clark, supra, p. 462, Judge Zirpoli stated:
". . . It makes little difference whether the purpose of the acquisition is to protect existing distribution, as in the case of Hammermill and Nekoosa-Edwards, or to acquire distribution, as was K-C's acquisition of BMT. In either case the acquisition seeks and obtains for the acquiring mill the power to control significant channels of distribution and violated amended Section 7 `whether or not actual restraints or monopolies, or the substantial lessening of competition, have occurred or are intended.' United States v. E. I. du Pont de Nemours, supra, 353 U.S. at 589, 77 S.Ct. at 875, 1 L. Ed. 2d 1057. `The Government's burden is not to show that competition will be lessened by the acquisition, but only that it may tend to be lessened.' United States v. Pennzoil Co., 252 F. Supp. 962, 977-978 (W.D.Pa.1965)."
Of course, Judge Zirpoli was not determining that Hammermill's acquisition of Western would tend to lessen competition, and the remark is dictum to that extent. He referred to the testimony of Mr. Franzen of Hammermill in the Kimberly-Clark trial who expressed fear that acquisition of Western by a competitor would place this distribution out of its control. Mr. Franzen also testified at the trial of the present case and stated that the same concern would be felt in any change of ownership of an established independent paper merchant with which a sales or marketing representation had built up a stable business relationship over the years.
We believe that the defensive nature of the acquisition must be viewed together with all of the evidence of motivation, to the extent that motivation for an acquisition is a relevant Section 7 criterion. See United States v. Sybron Corporation, 329 F. Supp. 919 [E.D.Pa.1971].
THE POST-ACQUISITION EVIDENCE
(a) The effect of separate profit center operation.
In United States v. White Consolidated Industries, 323 F. Supp. 1397 [N.D.Ohio, 1971] the court examined the post-acquisition evidence to determine the validity of defendant's claim of separate profit center operation of the acquired outlet and rejected it on the evidence that "since entering into the agreement to merge, White Consolidated has been pursuing an intensified sales program at White Motors, with the clear purpose of taking full advantage of the impending merger between the two firms." (p. 1399). "The evidence and testimony presented to this Court . . . indicates a much firmer and more centralized control than the defendants would have us believe; and it would appear that it is the overall corporate profits, not divisional ones, which are of paramount importance to White Consolidated's central office." (p. 1399).
The separate profit center operation in United States v. International Telephone and Telegraph (Canteen) cit. supra, was given consideration:
"The evidence showed . . . foreclosure is unlikely to result from the merger. As previously indicated . . . ITT gives no preference to affiliated *1290 units in the purchase of products and services. On the contrary, one profit center will purchase from another only where it is offered the best price, quantity and service." (p. 90,599)
Similarly, in United States v. International Telephone and Telegraph Corp., 324 F. Supp. 19 [D.Conn.1970], (Grinnell) the court noted;
"The `profit center' concept around which ITT is organized is not conducive to vertical foreclosure.", (pp. 39, 40)
and concluded that this mode of organization effectively eliminated any probability that ITT's theoretical power to foreclose would be exercised.
(b) The evidence of separate profit center operation by Hammermill.
Since 1956, when Hammermill acquired Watervliet Paper Company, its policy has been to operate newly-acquired units as separate profit center operations. Under this system each profit center manager is responsible for producing a profit with the assets under his control. No artificial barriers are erected which would distort this record of performance. This pattern has been followed at WNU and Carter Rice. The former management and key personnel were retained, with authority to hire and fire branch managers and other employees, to develop future management, and to see that the necessary products were available in his market to make each branch successful. Each branch manager is compensated on the basis of the profitability of his operation. Purchasing decisions are made at the merchant level rather than at the mill level and Hammermill salesmen call upon them in the same way that they call upon independent merchants. This testimony is unrebutted except for the argument that it is irrelevant because Hammermill retains the power to foreclose and that it is difficult to believe that Hammermill would not avail itself of the opportunity to increase its profits and the profits of its paper merchant houses by favoring certain Hammermill lines. It is argued that there is no evidence to show that Hammermill will not so act in the future, despite its present policies.
Despite the fact that Hammermill has the power to control the purchases of WNU and Carter Rice and foreclose sales of other producers to them, the probability of such action is remote because of the economic factors shown by the evidence.
WNU and Carter Rice, operated as autonomous units, are very profitable operations for Hammermill and represented a steadily increasing percentage of Hammermill's total profits. While their percentage of total Hammermill sales has remained steady for 1969, 1970 and 1971, they represent an increasing share of total profits for these three years, 11%, 16% and 23%. A substantial share of this profit is derived from the sale of products of other manufacturers by WNU and Carter Rice.
To limit WNU and Carter Rice to Hammermill products would destroy the effectiveness of WNU and Carter Rice as paper merchants because printers and specification buyers would not turn to them for the many services which paper merchants supply.
Salesmen, who depend upon commissions, and enjoy commissions on a large number of competitive lines handled by a paper merchant, would be restricted and would seek employment with a house not tied to a single manufacturer's line.
Hammermill could not supply all the lines of printing and fine paper required by an aggressive paper merchant, as well as the other paper products stock and sold by merchants. No single mill makes all of the printing and fine paper required to maintain an efficient paper merchant house.
Since the acquisition of Western by Hammermill in 1960, sales to Western by Hammermill increased by 65% in 1966 and by 66% in 1968 over those of the year prior to acquisition. Since the acquisition of Carter Rice in 1966, Hammermill sales to it increased 15% by 1967, 18% by 1968, and 14% by 1969 over the year prior to acquisition.
However, Western's purchases from all major suppliers has been increasing at the same time. Western's total purchases of printing and fine papers from all suppliers *1291 was $7,011,587 in 1960, $10,815,807 in 1966, and $12,192,969 in 1969, the shares of Hammermill and other major suppliers in those respective years remaining relatively constant; 60.3%/39.7%, 58.5%/41.5% and 61.4%/38.6%. Of course, this increase in dollar amount of purchases and sales must be discounted to reflect the inflationary growth in the price index of 24% for this period.
From 1965 to 1969 Carter Rice's total purchases of printing and fine paper rose from $54,487,630 to $68,902,785. Hammermill's share of Carter Rice's total purchases rose from 15.3% in 1965 to 17.3% in 1969.
At the same time that Western's and Carter Rice's total purchases from Hammermill were rising Hammermill's total sales, both measured in dollars and tonnage were rising, as well as its total sales to paper merchants.
In 1960 Hammermill's total sales of printing and fine paper were 175,073 tons, in the dollar amount of $65,449,973. Of this, 154,033 tons or $56,076,392 in dollar amount were sold to paper merchants, or 88% of tonnage. By 1965, sales were 345,283 tons, or $129,023,806, of which 243,780 tons or $91,509,257 were sold to paper merchants, or 70% tonnage, and in 1966, a peak year for this period total sales were 395,711 tons, or $142,531,401 of which 259,387 tons or $99,419,475 were sold to paper merchants, or 65.5% of tonnage.
Therefore, while Hammermill experienced a share increase in the purchases of Western and Carter Rice, its sales to all customers increased at the same time, while the relative importance of the paper merchant in the scheme of distribution declined. In major segments of the printing and fine paper line Hammermill demonstrated substantial growth in the decade 1958-1967 in the uncoated, book paper line, from 17,562 tons to a peak of 124,558 tons, and from 1.1% to 5.3% of the total United States share. In the fine paper line it rose from 83,221 tons or 5.9% of the market share to 2,553,000 tons or 9.1% of the market share. On the other hand, in coated papers its growth was limited from 1959 through 1964, but increased substantially thereafter, although only accounting for 3.1% of the national share in the peak year 1966. Its market share position among the leading manufacturers remained relatively constant.
From the mass of statistical evidence presented we find that the increase of sales by Hammermill to Western and Carter Rice during the post-acquisition was consistent with its sales history with these houses prior to the acquisition, that the increase in its sales to Western and Carter Rice was consistent with increase in sales to comparable non-owned paper merchant houses, that the increase in purchases by Western and Carter Rice from Hammermill is not disproportionate to the overall increases in their purchases, that several of Hammermill's leading competitors have increased their sales to Western and Carter Rice at a greater rate than that of Hammermill, and that Hammermill was no more successful in selling new lines and grades to Western and Carter Rice than to non-owned paper merchants.
THE TREND TOWARD VERTICAL INTEGRATION IN THE INDUSTRY
The government has stressed the evidence of a trend to vertical integration in the industry where a number of the manufacturers have acquired paper merchant houses. From 1956 to 1966 nine manufacturers of printing and fine paper acquired 33 individual paper merchants, five major printing and fine paper manufacturers, Mead, Champion, Kimberly-Clark, Hammermill and Nekoosa-Edwards account for twenty-five of these acquisitions, including the two acquisitions by Hammermill involved in this case. The government admits that the trend slowed down in the late 1960's and attributed that to government action beginning with United States v. Kimberly-Clark Corp., supra, which produced a divestiture order. Government action was brought in United States v. Champion Papers, [Civil Action No. 22708, D.Nebr. 1965] and in United States v. The Mead Corporation, [Civil Action No. 3576, S.D. Ohio 1968], both of which resulted in consent *1292 decrees involving a partial divestiture. From 1966 through 1972, three mills acquired six paper merchant houses. The trend was also ended, in considerable measure, by changing business conditions in the paper merchant industry.
Of the 33 acquisitions from 1956 to 1966, 16 were by Mead Corporation, and 4 were by Champion Papers, Inc., which were the subject matter of the consent decrees cited above.
Brown Shoe, supra, considers the impact of trends in a Section 7 case in the following language:
"Another important factor to consider is the trend toward concentration in the industry. It is true, of course, that the statute prohibits a given merger only if the effect of that merger may be substantially to lessen competition. But the very wording of § 7 requires a prognosis of the probable future effect of the merger.
The existence of a trend toward vertical integration, which the District Court found, is well substantiated by the record. Moreover, the court found a tendency of the acquiring manufacturers to become increasingly important sources of supply for their acquired outlets. The necessary corollary of these trends is the foreclosure of independent manufacturers from markets otherwise open to them. And because these trends are not the product of accident but are rather the result of deliberate policies of Brown and other leading shoe manufacturers, account must be taken of these facts in order to predict the probable future consequences of this merger. It is against this background of continuing concentration that the present merger must be viewed." (emphasis by the Court). 370 U.S. pp. 332, 333, 82 S.Ct. p. 1527, 1528.
Also, in United Nuclear, supra, the court considered the probative effect of evidence of a possible trend:
"The remaining factor under Brown Shoe is whether or not there is a trend toward vertical integration in the industry, and, if so, what effect this trend can be expected to have on concentration in the market of either supplier or buyer. It is clear on the present record that the proposed acquisition is the first attempt toward vertical integration. However, the plaintiff's expert opined that consummation of the proposed acquisition would trigger further vertical acquisitions, on the theory that Combustion's need to overcome high ore costs is not unique, and supports the inference that similar acquisitions by the NSSS manufacturers would follow.
Assuming that further integration will occur, it is difficult to determine what effects, if any, the acquisition will have on concentration in either market area. There are presently 47 companies or joint ventures actively exploring for uranium deposits, and 17 operating uranium mining facilities. Moreover, United Nuclear's market share of 15% of proven ore reserves is based solely on $8 per pound uranium, and in no way takes into account the substantial uranium reserves which the AEC has acquired through its purchase programs. In the NSSS market, with its four participants, no firm prediction can be made." 302 F. Supp. 556.
We conclude that under the Brown Shoe rule the trend is only of consequence if the probable future effect of the merger under examination may be substantially to lessen competition.
The evidence of trend cited by the government was largely over when Hammermill purchased Carter Rice. It had acquired WNU in 1960 and had operated it for a period of six years without any hint of government anti-trust inquiry. During this period, and without any pre-litigation motivation, it had conducted WNU as a separate profit center without any evidence of a purpose or intent to foreclose access by competitors. Nor has the government shown that the trend to acquisition has led to any increase in concentration in the industry.
An important consideration in Brown Shoe was the fact that the intent and purpose of Brown to foreclose was manifest in *1293 the evidence, and Brown was the leader and instigator of the trend [307 U.S. at p. 302]. Hammermill, on the other hand, had a policy of favoring distribution through a large number of independent paper merchant houses, it was recognized in the industry as strongly committed to that policy, and only acquired the two houses in question at widely spaced intervals, for motives, at least in part, of having their operations continued in the traditional pattern of independent paper merchant houses.
The trend having substantially ended before Hammermill's acquisition of Carter Rice, the Carter Rice acquisition being the instigating force of the Government antitrust investigation of Hammermill, the dearth of evidence of an intent or purpose to foreclose, and the lack of evidence that any trend was leading to concentration in the industry, all make any evidence of a trend insufficient to forecast the probable future effect of the acquisitions in question here.
SUMMARY FINDINGS OF FACT
There were few disagreements between the parties on basic facts; all disputes concerned interpretations, inferences and conclusions to be drawn therefrom, the relevancy of facts to prove the ultimate issues and the legal consequences of these facts. Because we were involved in a vertical integration where the share of the market foreclosed does not approach monopoly proportions it became necessary to undertake an examination of various economic and historical factors in order to determine whether the arrangement under review is of the type Congress sought to proscribe. The courts have, in the light of Congress' expressed intent, recognized the relevance and importance of economic data that places every given merger under consideration within an industry framework almost unique in every case. See Brown Shoe, supra, fn. 38, and p. 329, 82 S. Ct. 1502.
The court finds from the evidence that:
1. The manufacture and sale of printing and fine papers is not a concentrated line of commerce.
2. There is no trend to concentration in this line of commerce.
3. The market share of Hammermill in this line of commerce does not approach monopolistic proportions, is relatively stable, and did not increase after the acquisitions.
4. The combined market shares of the purchasing firms in this line of commerce do not approach monopolistic proportions.
5. The total sales of the purchasing firms are not the measure of potential foreclosure because of Hammermill's long standing prior relationship to them, the inability of Hammermill to supply all their requirements, and the need of Hammermill to supply a large number of established paper merchant customers.
6. The possibility of foreclosure of access by manufacturers is barred by:
a) Ease of entry into the paper merchant business;
b) Relative ease of entry of other paper manufacturers into the printing and fine paper lines by conversion of existing facilities to mass produce competing less expensive grades;
c) The growth and dominance of direct sales in the distribution system.
7. The possibility of any attempt by Hammermill to foreclose access by other manufacturers to its owned paper merchants is barred by:
a) The traditional function of a paper merchant as a supplier of a wide line of products of many manufacturers;
b) Hammermill's historic policy of distribution through paper merchants;
c) Hammermill's dependence upon the continued good will of a large group of independent paper merchants which would be damaged by any attempt to force its produce on its owned houses;
d) The successful and profitable operation of these owned houses under Hammermill's separate profit center concept.
*1294 8. There is no evidence to support a conclusion that prior to acquisition Hammermill intended to acquire these paper merchant houses to dispose of excess productive capacity, or to enter new markets, or acquire new customers, or to foreclose access to them by other manufacturers, and there is no evidence to support any such conclusion from its operations after the acquisition.
9. There is no evidence to support a conclusion that Hammermill's acquisition of these merchant paper houses was part of a trend of acquisition for the purpose of foreclosing competition by other paper manufacturers, and there is no evidence that any trend of acquisition has resulted in greater concentration in the manufacture and sale of printing and fine paper.
10. From all the evidence in the case the court finds that the United States has not carried its burden of proof that the effect of the acquisition of Western Newspaper Union and Carter Rice Storrs and Bement, Inc. by Hammermill Paper Company may be substantially to lessen competition in the manufacture and sale of printing and fine paper in the United States.
CONCLUSIONS OF LAW
1. This court has jurisdiction over the parties and the subject matter;
2. Venue is proper in this judicial district;
3. The following is the line of commerce within the meaning of Section 7 of the Clayton Act:
The manufacture and sale of printing and fine paper;
4. As to this line of commerce the United States as a whole is the appropriate section of the country within the meaning of Section 7 of the Clayton Act;
5. The effect of the acquisition by Hammermill Paper Company of the assets of Western Newspaper Union and the capital stock of Carter Rice Storrs and Bement, Inc. will not be substantially to lessen competition in the lines of manufacture and sale of printing and fine paper;
6. The acquisitions of the stock of Carter Rice Storrs and Bement, Inc. and the assets of Western Newspaper Union by Hammermill Paper Company are not violations of Section 7 of the Clayton Act. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1532097/ | 370 S.W.2d 543 (1963)
Lawrence Alton SMITH
v.
STATE of Tennessee.
Supreme Court of Tennessee.
September 11, 1963.
*544 A. B. McNabb, Vester Neal Agee, Lebanon, for plaintiff in error.
George F. McCanless, Atty. Gen., Thomas E. Fox, Asst. Atty. Gen., Nashville, for the State.
FELTS, Justice.
The plaintiff in error, Lawrence Alton Smith, hereinafter called defendant, was indicted for murder in the first degree of E.L. Martin, the office and business manager for Castle Heights Military Academy in Lebanon, Tennessee.
Upon trial, the jury found defendant guilty of murder in the second degree and he was sentenced to serve ten years in the State Penitentiary (T.C.A. § 39-2403). Defendant has appealed in error and insists, among his other assignments, that the evidence preponderates against the verdict of guilt and in favor of his innocence.
There is little or no dispute as to the facts and circumstances of the killing. Defendant was a man 33 years of age, of good character, and had been employed as nightwatchman at Castle Heights School for about a year. It was while he was performing his duties as such nightwatchman at about 1:45 A.M. July 13, 1961, that the homicide occurred in the commissary which is located in the "Main Hall" near the business office of the school.
It appears that for some time prior to the shooting, the deceased, E.L. Martin, business manager of the school, suspected that some unknown person was pilfering petty cash from the several boxes kept in the commissary. Acting upon this suspicion, he had been secreting himself in the business office of the commissary and keeping a nightly watch in the hope of catching the culprit. On the night in question, he had come to his office, located in the "Main Hall" near the commissary, and had concealed himself in his office to watch for the thief.
It was a custom known and permitted by the deceased for defendant and the other nightwatchmen alternating with him to carry a pistol while on duty as nightwatchman. On the night in question defendant, in the course of his regular duty, entered the "Main Hall" to make a routine check for burglars or fires; and then, as was customary for the nightwatchmen there, he went into the commissary about 1:45 A.M. to get a snack. He did not turn on any lights, but used his flashlight, got a cold drink and some ice cream, and put the money for them in the change box.
Just as he was doing that, he heard a noise coming from the area of the manager's office, and saw a "bulk of something" with a flashlight coming toward him; and, as he testified, the area was without lights and so dark that one could not recognize another. Seeing this figure in the dark coming toward him, he became excited, and, as he put it, to protect himself and the property he was hired to watch, he pulled his pistol and fired its seven shots in the direction of the figure, killing the man who later turned out to be the deceased Martin.
After the shooting, defendant, without turning on the lights in the Main Hall, and without knowing whom he had shot, rushed out the door, which automatically locked behind him, and ran about a mile and a half from the Castle Heights School to the Lebanon Police Station, arriving there in a state of great emotion, crying hysterically, and told the police he thought he had shot a man.
It appears that prior to the trial an examination had been made of defendant by the experts on the staff at the Central State Hospital for the Insane, and they made a report regarding his mental condition, which was read into the record. This report stated that, while defendant was not insane, and appeared to know wrong from right so as to be responsible for his acts, he suffered from a chronic brain damage and was excitable and highly emotional. *545 The pertinent part of this report was as follows:
"He has a chronic brain syndrome, which means brain damage of a permanent type due to a previous injury or injuries; he is highly emotional, becomes upset, and shakes considerably in relating events which disturb him. He shows loss of coordination, some memory disturbance and serious impairment of hearing * * *"
It is true the verdict and the judgment thereon displaced the presumption of defendant's innocence, raised a presumption of his guilt in this Court, and put upon him the burden of showing that the evidence preponderates against the verdict and in favor of his innocence. Ivy v. State, 197 Tenn. 650, 652, 277 S.W.2d 363, 364; Anderson v. State, 207 Tenn. 486, 495, 341 S.W.2d 385, 389.
Upon full consideration of the evidence, however, we think defendant has carried the burden of showing that the evidence preponderates against the verdict and judgment of murder; that there was really no evidence upon which the jury could reasonably find that in the shooting defendant acted with "malice aforethought," which is an indispensible ingredient of murder in the second degree. T.C.A. §§ 39-240139-2403. See also Garrison v. State, 163 Tenn. 108, 40 S.W.2d 1009, 1010; Harper v. State, 206 Tenn. 509, 515, 334 S.W.2d 933, 935.
It is true the fact of killing with a deadly weapon raises a presumption of malice in the absence of evidence to rebut this presumed fact. Foster v. State, 74 Tenn. 213, 214, 216; Lewis v. State, 202 Tenn. 328, 332-333, 304 S.W.2d 322, 324-325. We think the undisputed facts rebutted the presumption of malice in the case before us.
There was no evidence of any actual malice or ill will on the part of defendant toward deceased, and he was unaware that deceased had hidden himself in the office. Defendant was employed as a nightwatchman, and permitted to arm himself, much like a peace officer, to guard and protect the property of the school. None of the lights in the commissary were turned on, and there was very little light in the place at the time of the shooting. The evidence indicates that it was difficult, if not impossible, for one person to recognize another under such conditions.
From a reading of the record, it seems clear that when defendant heard the noise and saw the "bulk of something" in the dark coming toward him with a flashlight, thinking it might be a robber engaged in a burglary or a prowler about to do violence to him, defendant became excited and emptied his pistol, firing seven times in the direction of the figure in the dark. He said he did this only to guard the property and protect himself. We think the undisputed evidence shows he acted under the stress of excitement and without "malice aforethought" and that this completely negatives a charge of murder in the second degree.
We think the evidence likewise shows that defendant was not guilty of the lesser included offense of voluntary manslaughter, which is the unlawful and intentional killing by one of another, without malice, but upon a sudden heat or passion produced by provocation adequate to obscure the reason of an ordinary man, and thus negative malice. T.C.A. § 39-2409. Whitsett v. State, 201 Tenn. 317, 299 S.W.2d 2, 6; Nelson v. State, 65 Tenn. 418, 421.
As above stated, we think the undisputed evidence makes it clear that defendant was acting under stress of excitement, and only to guard the property and protect himself, and not upon any sudden heat or passion with the intention of killing deceased; and that he was, therefore, not guilty of the lesser included offense of voluntary manslaughter.
We think, however, the evidence does show that defendant, in shooting at *546 the figure in the dark with a flashlight, without waiting to ask any question or trying to ascertain the identity or purpose of that person, acted without proper precaution. Even though he was under the stress of excitement and in shooting intended only to guard the property and protect himself, he, nevertheless was guilty of such culpable negligence as to make the killing unlawful and to constitute involuntary manslaughter. T.C.A. § 39-2410. Copeland v. State, 154 Tenn. 7, 285 S.W.2d 565, 49 A.L.R. 605; Roe v. State, 210 Tenn. 282, 358 S.W.2d 308, 314, and cases there cited.
Upon the authority of Corlew v. State, 181 Tenn. 220, 180 S.W.2d 900; Forsha v. State, 183 Tenn. 604, 610-612, 194 S.W.2d 463, 466-467; Cooper v. State, 210 Tenn. 63, 356 S.W.2d 405, 411, the verdict and judgment of murder in the second degree will be set aside and the judgment herein will be modified so as to adjudge defendant guilty of involuntary manslaughter and fix his punishment at one year in the penitentiary, that being the minimum (T.C.A. § 39-2411), provided the State consents. Otherwise, the case will be remanded for a new trial. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/717605/ | 83 F.3d 175
50 Soc.Sec.Rep.Ser. 656, Medicare & Medicaid GuideP 44,180The PUBLIC HOSPITAL OF the TOWN OF SALEM, Plaintiff-Appellant,v.Donna E. SHALALA, Secretary of Health and Human Services,Defendant-Appellee.
No. 95-3511.
United States Court of Appeals,Seventh Circuit.
Argued April 19, 1996.Decided May 7, 1996.
Appeal from the United States District Court for the Southern District of Illinois. No. 94-CV-0615-PER--Paul E. Riley, Judge.
Dorothy Ward, Lawrence A. Manson (argued), Keck, Mahin & Cate, Chicago, IL, for Plaintiff-Appellant.
Barbara F. Altman (argued), Department of Health and Human Services, Chicago, IL, for Defendant-Appellee.
Before FLAUM, EASTERBROOK and MANION, Circuit Judges.
EASTERBROOK, Circuit Judge.
1
Until March 1988 patients at the Public Hospital of Salem, Illinois, had to travel more than 20 miles to a hospital in Centralia for computerized tomography (CT) services. That month United States Medical Management, Inc. (USMM) installed a CT scanner at the Hospital. Under the contract, USMM services the scanner (which it owns and insures), keeps the software up to date, and trains the Hospital's technicians in its use. The Hospital supplies the space, electricity, and staff for daily operation. It pays USMM $285 per scan. The contract does not provide for a monthly rental or for a minimum number of scans. Arranging matters this way served the Hospital's interests, because it was unwilling to take the risk of a purchase or large monthly payment while usage of the scanner remained uncertain. It also served USMM's, which for tax purposes remained the owner of the scanner and was entitled to depreciate the equipment.
2
Tax deductions were worthless to the Hospital, a nonprofit public entity; allocating them to USMM worked to the Hospital's benefit indirectly, through lower prices. But the choice of contractual form had other consequences. The Hospital wants to treat the CT scanner as a capital asset for purposes of the Medicare program. Between October 1983 and September 1991, Medicare providers received extra reimbursement for "capital-related costs." See Carle Foundation Hospital v. Shalala, 57 F.3d 597 (7th Cir.1995), for a description of this program. The Hospital sought reimbursement for $137,000 of capital-related costs on account of the CT scanner in fiscal year 1989, and another $123,000 in fiscal 1990. Although the Provider Reimbursement Review Board concluded that the Hospital is entitled to this reimbursement, the Administrator of the Health Care Financing Administration disagreed. The Administrator acts as the Secretary's delegate; his decision was the final administrative step. On review under 42 U.S.C. § 1395oo(f)(1), the district court entered summary judgment for the Secretary.
3
As we explained in Carle Foundation Hospital, the Medicare statute delegated to the Secretary power to define reimbursable capital-related costs. The Secretary exercised that power by promulgating 42 C.F.R. § 413.130. Section 413.130(a)(3) permits reimbursement for "leases and rentals, including license and royalty fees, for the use of depreciable assets or land, as described in paragraph (b) of this section." That leads us to subsection (b)(1):
4
Subject to the qualifications of paragraphs (b)(2), (4), (5), and (8) of this section, leases and rentals, including licenses and royalty fees, are includable in capital-related costs if they relate to the use of assets that would be depreciable if the provider owned them outright or they relate to land, which is neither depreciable nor amortizable if owned outright. The terms "leases" and "rentals of assets" signify that the provider has possession, use, and enjoyment of the assets.
5
Paragraphs (b)(2), (4), (5), and (8) do not affect the Hospital's claim, but one other subsection of § 413.130 has some bearing:
6
(h)(2) If the supplying organization is not related to the provider within the meaning of § 413.17, no part of the charge to the provider may be considered a capital-related cost ... unless-
7
(i) The capital-related equipment is leased or rented (as described in paragraph (b) of this section) by the provider;
8
(ii) The capital-related equipment is located on the provider's premises, or is located offsite and is on real estate owned, leased or rented by the provider; and
9
(iii) The capital-related portion of the charge is separately specified in the charge to the provider.
10
Subsection (h)(2)(iii) is a potential obstacle to reimbursement, because the contract between USMM and the Hospital did not specify a capital portion of the charge. But USMM later sent the Hospital a letter fixing this at 77 percent of the price, and, although the Administrator was not impressed, the Secretary's appellate brief does not urge this as a ground on which to support the decision. Under § 413.130(h)(2)(i), then, everything depends on whether the CT scanner "is leased or rented (as described in paragraph (b) of this section)". Because the scanner would be depreciable if owned outright, the dispositive question is whether "the provider has possession, use, and enjoyment of the assets."
11
The Administrator gave a negative answer for three principal reasons. First, because USMM was in charge of maintaining the scanner, the Hospital did not have exclusive control of the scanner. Second, the structure of the contract left USMM with all of the risks of loss, low use, or obsolescence of the equipment. Third, the compensation term ($285 per scan, with no minimum) showed that USMM was selling the Hospital a service rather than use of the machine for a period of time. Service fees are operating costs, reimbursed (though only in part) under other provisions of the Medicare Act.
12
St. Vincent Memorial Hospital Corp. v. Shalala, 827 F. Supp. 517 (C.D.Ill.1993), which likewise concerned reimbursement for a CT scanner at a hospital in Illinois, held that a similarly reasoned decision by the Administrator was contrary to § 413.130(b)(1). The court stated that the Secretary may not rely on who bears the risk of loss, or how payment is structured, because Black's Law Dictionary does not define "possession" using those concepts. The district court's opinion in St. Vincent Memorial Hospital persuaded the Provider Reimbursement Review Board, but not the Administrator--who was entitled to maintain his position. A dictionary collects standard usages, but it does not set limits on the scope of language. Both the linguistic and the functional contexts of words offer better clues to meaning than do dictionaries. Congress delegated power to the Secretary, who chose words to implement a particular substantive view. An agency with power to change substance has a corresponding power to interpret; otherwise the rule may fail to achieve its objective. See Homemakers North Shore, Inc. v. Bowen, 832 F.2d 408 (7th Cir.1987). That is why courts regularly grant the author of a regulation leeway in its interpretation, Shalala v. Guernsey Memorial Hospital, --- U.S. ----, ---- - ----, 115 S. Ct. 1232, 1236-37, 131 L. Ed. 2d 106 (1995); Thomas Jefferson University v. Shalala, --- U.S. ----, ----, 114 S. Ct. 2381, 2386, 129 L. Ed. 2d 405 (1994), a principle we applied to § 413.130 in Carle Foundation Hospital. The district court in St. Vincent Memorial Hospital gave too much sway to the compilers of a dictionary, too little to the rule's author.
13
"Lease" can cover everything from the British 99-year ground lease (a close substitute for title) to financing leases (close substitutes for purchases on credit, with a purchase money security interest) to sale-and-leaseback deals (which enable owners to borrow against the value of their assets) to term leases without commitment to long term possession (e.g., the admiralty barebottom charter) to daily or even hourly leases (e.g., hotel rooms or rental cars). Lessees get possession under each device, but they have very different economic attributes. Long-term or financing leases entitle the lessees to treat the assets as if owned; the lessees bear the market risk of changes in value but also obtain any gains from this source. Tax law allows such lessees to obtain the legal benefits of ownership (including depreciation); the Medicare regulations follow suit. Yet no one, we suppose, would think that an auto rented for a single day, at a price of 50 cents per mile, qualifies as a capital asset under § 413.130(b)(1). The duration, risk, and payment terms make the rental car functionally equivalent to the purchase of a service (say, a ride in a taxi). We concluded in Carle Foundation Hospital that the Secretary is trying to limit capital-asset treatment to leases near the financing-lease side of the spectrum, and is entitled to read the phrase "possession, use, and enjoyment of the assets" in that light--as signifying the type of control an owner enjoys.
14
The Hospital does not dispute the Administrator's conclusion that it lacks that kind of control. Repairs and updates are in the hands of USMM; changes in the market value of the equipment work to the benefit or detriment of USMM; any alteration in the Hospital's pattern of use is on USMM's tab; if patients from elsewhere use the CT scanner at Salem Hospital (as the Hospital's patients once went to Centralia), USMM rather than the Hospital reaps the additional revenue. The economic terms on which the Hospital uses this scanner are little different from those on which the vending machines in its halls dispense soft drinks. One arm of the federal government recognizes this by allowing USMM to depreciate the CT scanner and reduce its taxes; it cannot be arbitrary and capricious for another arm of the federal government to reach the same conclusion: that USMM rather than the Hospital incurs the capital-related costs and benefits.
15
AFFIRMED. | 01-03-2023 | 04-17-2012 |
https://www.courtlistener.com/api/rest/v3/opinions/854196/ | United States Court of Appeals
For the Eighth Circuit
___________________________
No. 12-2388
___________________________
United States of America
lllllllllllllllllllll Plaintiff - Appellee
v.
Jim R. Harris
lllllllllllllllllllll Defendant - Appellant
____________
Appeal from United States District Court
for the Eastern District of Missouri - Cape Girardeau
____________
Submitted: February 19, 2013
Filed: March 4, 2013
[Unpublished]
____________
Before WOLLMAN, BOWMAN, and GRUENDER, Circuit Judges.
____________
PER CURIAM.
Jim Harris appeals the district court’s1 judgment entered after he pleaded guilty
to interfering with commerce by threat or violence, in violation of 18 U.S.C. § 1951;
1
The Honorable Carol E. Jackson, United States District Judge for the Eastern
District of Missouri.
possessing a firearm in furtherance of a crime of violence, in violation of 18 U.S.C.
§ 924(c); and being a felon in possession of ammunition, in violation of 18 U.S.C.
§ 922(g)(1). The district court found that Harris had three prior violent-felony
convictions under the Armed Career Criminal Act, 18 U.S.C. § 924(e), and sentenced
him to concurrent 180-month prison terms on Counts 1 and 3, and a consecutive 120-
month term on Count 2, for a total sentence of 300 months in prison.
Harris’s counsel has moved to withdraw and filed a brief under Anders v.
California, 386 U.S. 738 (1967), stating that Harris does not believe he has three prior
violent-felony convictions. In his pro se brief, Harris argues that the court forced him
to plead guilty by refusing to continue the trial and refusing to appoint new counsel,
that the indictment was unconstitutional, and that counsel was ineffective for not fully
investigating and presenting a suppression issue.
Counsel argued below that Harris’s 1997 Illinois conviction for aggravated
possession of a stolen motor vehicle should not count as a violent felony, as the
statute allowed for conviction based on inaction. The court ultimately found that the
conviction was a violent felony under Sykes v. United States, 131 S. Ct. 2267 (2011).
We agree. We have recently held that a conviction under a nearly identical
Minnesota statute was categorically a violent felony based on the Supreme Court’s
holding in Sykes. See United States v. Bartel, 698 F.3d 658, 662 (8th Cir. 2012).
As for the pro se arguments, because Harris did not move to withdraw his
guilty plea in the district court, he cannot challenge the voluntariness of his plea on
direct appeal, but only under 28 U.S.C. § 2255, see United States v. Umanzor, 617
F.3d 1053, 1060 (8th Cir. 2010); thus, any claim that the district court erred in its
suppression ruling is not before us, see United States v. Limley, 510 F.3d 825, 827
(8th Cir. 2007) (valid guilty plea waives all nonjurisdictional defects and defenses).
We reject Harris’s claim that the indictment was unconstitutional, which appears to
be based on his argument in the district court that section 922(g)(1) violates the
-2-
Second Amendment, see United States v. Joos, 638 F.3d 581, 586 (8th Cir. 2011);
and we decline to address on direct appeal any claim of ineffective assistance of
counsel, see United States v. McAdory, 501 F.3d 868, 872-73 (8th Cir. 2007).
Having reviewed the record independently under Penson v. Ohio, 488 U.S. 75
(1988), we have found no nonfrivolous issues. Accordingly, the judgment of the
district court is affirmed. We deny Harris’s pro se motion to supplement the record.
We grant counsel’s motion to withdraw, subject to counsel informing Harris about
procedures for seeking rehearing or filing a petition for certiorari.
______________________________
-3- | 01-03-2023 | 03-04-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/854212/ | NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
___________
No. 12-3782
___________
ROBERT L. GARY,
Appellant
v.
GOURI NANDAN DBA HOLIDAY INN CENTER CITY ALLENTOWN;
INTERCONTINENTAL HOTELS GROUP, (I.H.G.);
RICHARD C. LOBACH, GENERAL MANAGER
____________________________________
On Appeal from the United States District Court
for the Eastern District of Pennsylvania
(D.C. Civil No. 5:10-cv-02082)
District Judge: Honorable Juan R. Sánchez
____________________________________
Submitted Pursuant to Third Circuit LAR 34.1(a)
March 1, 2013
Before: SMITH, CHAGARES, and HARDIMAN ∗, Circuit Judges
(Opinion filed: March 4, 2013)
_________
OPINION
_________
PER CURIAM
In his amended complaint, pro se plaintiff Robert Gary accused the defendants of
∗
Judge Hardiman has been substituted for Judge Weis.
terminating his employment based on an impermissible, retaliatory racial motivation. 1 The
complaint stated a variety of causes of action, sounding under 42 U.S.C. §§ 1981, 1983, 1985–
86, and Title VII of the Civil Rights Act, 42 U.S.C. § 2000e et seq. The District Court
dismissed the §§ 1983, 1985, and 1986 claims, reasoning that Gary had failed to allege the
requisite state action or had inadequately pleaded a conspiracy. Following discovery, summary
judgment was granted on the remainder of the claims in favor of the defendants. Gary timely
sought review. 2
We have reviewed the District Court record and will affirm its judgment. For
substantially the reasons stated in its dismissal orders, the District Court properly dismissed
Gary’s §§ 1983, 1985, and 1986 claims. With regard to summary judgment, we conclude that,
while the factual record below does contain inconsistencies and disputes over facts, none of the
details in contention is “material” for the purposes of summary judgment because none would
affect the outcome of the suit under governing law. See Haybarger v. Lawrence Cnty. Adult
Prob. & Parole, 667 F.3d 408, 412 (3d Cir. 2012). At the very least, and assuming without
deciding that Gary established a prima facie case of discrimination, the defendants pointed to a
legitimate, nondiscriminatory reason for his firing—Gary’s use of profanity in front of hotel
guests, a “[c]ritical offense[] . . . justif[ying] immediate termination”—and Gary thereafter
failed to adduce evidence from which a reasonable jury could conclude “that the employer’s
1
Gary also sued the Pennsylvania Human Relations Commission and the EEOC in a separate action.
We recently affirmed the District Court’s judgment in that case. See generally Gary v. Pa. Human
Rels. Comm’n, No. 12-2257, 2012 U.S. App. LEXIS 19758 (3d Cir. Pa. Sept. 20, 2012) (unpublished
per curiam).
2
We have jurisdiction under 28 U.S.C. § 1291, and conduct plenary review of orders granting
summary judgment and dismissing claims under Fed. R. Civ. P. 12(b)(6). Atkinson v. Lafayette Coll.,
460 F.3d 447, 451 (3d Cir. 2006).
2
proffered reasons were merely a pretext for discrimination, and not the real motivation for the
unfavorable job action.” Sarullo v. U.S. Postal Serv., 352 F.3d 789, 797 (3d Cir. 2003) (per
curiam); see also id. at 799–800 (discussing further the showing required). The same test
applies to Gary’s retaliation and § 1981 claims, which fail for the same reason. See Moore v.
City of Phila., 461 F.3d 331, 342 (3d Cir. 2006); McKenna v. Pac. Rail Serv., 32 F.3d 820, 825
n.3 (3d Cir. 1994). Having so decided, we need not address the District Court’s alternative
rationales for granting judgment in favor of defendant IHG, including its decision to sanction
Gary for discovery failures by dismissing some of his claims. See Smith v. Phillips, 455 U.S.
209, 215 n.6 (1982). Finally, the District Court did not abuse its discretion in declining to
allow Gary to further amend. See Connelly v. Steel Valley Sch. Dist., No. 11-4206 , ___ F.3d
___, 2013 U.S. App. LEXIS 1882, at *17 (3d Cir. Jan 24, 2013).
Thus, for the foregoing reasons, the judgment of the District Court will be affirmed.
3 | 01-03-2023 | 03-04-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/854215/ | FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
GREAT OLD BROADS FOR No. 11-16183
WILDERNESS; THE WILDERNESS
SOCIETY , D.C. No.
Plaintiffs-Appellants, 3:07-cv-00170-
RLH-RAM
v.
ABIGAIL KIMBELL, Chief, United OPINION
States Forest Service; MIKE
JOHANNS, Secretary of Agriculture;
EDWARD MONNING , Humboldt-
Toiyabe National Forest Supervisor;
JACK TROYER, Intermountain
Regional Forester; UNITED STATES
FOREST SERVICE ; UNITED STATES OF
AMERICA ,
Defendants-Appellees.
Appeal from the United States District Court
for the District of Nevada
Roger L. Hunt, Senior District Judge, Presiding
Argued and Submitted
November 6, 2012—San Francisco, California
Filed March 4, 2013
2 GREAT OLD BROADS FOR WILDERNESS V . KIMBELL
Before: Robert D. Sack,* Ronald M. Gould,
and Milan D. Smith, Jr., Circuit Judges.
Opinion by Judge Gould
SUMMARY**
Environmental Law
The panel reversed in part and affirmed in part the district
court’s judgment in favor of the United States Forest Service
in an action challenging the Forest Service’s approval of the
restoration of a flood-damaged road in the Humboldt-Toiyabe
National Forest in Nevada.
The panel reversed the district court’s holding on
exhaustion, and held that each of the claims presented on
appeal were adequately exhausted by plaintiff’s submissions
to the Forest Service. The panel affirmed the district court’s
alternative holding on the merits, granting summary judgment
in favor of the Forest Service. The panel held that the Forest
Service’s Record of Decision conformed to the National
Forest Management Act, Executive Order 11988, and the
National Environmental Policy Act.
*
The Honorable Robert D. Sack, Senior Circuit Judge for the U.S. Court
of Appeals for the Second Circuit, sitting by designation.
**
This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
GREAT OLD BROADS FOR WILDERNESS V . KIMBELL 3
COUNSEL
Alison Christine Flint (argued) and Michael Freeman,
Earthjustice, Denver, Colorado; Craig Coleman, Faegre
Baker Daniels LLP, Minneapolis, Minnesota; Henry Egghart,
Attorney, Reno, Nevada, for Appellants.
Elizabeth Ann Peterson (argued), Environment & Natural
Resources Division, Department of Justice, Washington,
D.C.; Andrew A. Smith, Assistant United States Attorney,
Albuquerque, New Mexico, for Appellees.
OPINION
GOULD, Circuit Judge:
This case arises out of the long and contentious process to
repair a flood-damaged road in a sensitive area of the
Humboldt-Toiyabe National Forest in Elko County, Nevada.
A related dispute reached us twice before, when we ordered
that Appellants Great Old Broads and the Wilderness Society
(collectively, “Great Old Broads”) be allowed to intervene in
court-directed settlement talks to determine how best to repair
or replace the road, rejecting timeliness and standing
challenges. See United States v. Carpenter (Carpenter I),
298 F.3d 1122, 1125 (9th Cir. 2002); United States v.
Carpenter (Carpenter II), 526 F.3d 1237, 1240 (9th Cir.
2008). Great Old Broads now appeals the district court’s
grant of summary judgment to the United States Forest
Service (“Forest Service”) on Great Old Broads’s claims
related to the Forest Service’s record of decision (“ROD”)
determining the method for restoring the South Canyon Road
as a part of the Jarbidge Canyon Project (the “Project”). The
4 GREAT OLD BROADS FOR WILDERNESS V . KIMBELL
Project was an effort to reestablish the South Canyon Road
after flood waters damaged the road in 1995, eliminating
vehicle access to the Snowslide Gulch Wilderness Portal in
the Jarbidge Wilderness. Great Old Broads sought review in
federal court, contending that the Forest Service’s approval
of the Project violated (1) the National Forest Management
Act (“NFMA”), 16 U.S.C. §§ 1600–1687, because the Project
offended the Fisheries and Wildlife Restoration standard FW-
2 of the Inland Native Fish Strategy (“INFISH”), which is
incorporated into the Humboldt National Forest Land and
Resource Management Plan (“Humboldt Plan”); (2)
Executive Order 11988, (“EO 11988”), 42 Fed. Reg. 26951
(1977); and (3) the National Environmental Policy Act of
1969 (“NEPA”), 42 U.S.C. §§ 4321–4370f.
The district court gave summary judgment to the Forest
Service, holding that Great Old Broads did not exhaust its
administrative remedies and, alternatively, that Great Old
Broads’s claims failed on the merits. We have jurisdiction
under 28 U.S.C. § 1291. We reverse the district court’s
conclusion on exhaustion and affirm its alternate decision on
the merits.
I. BACKGROUND
Jarbidge Canyon is in the northeast corner of Nevada,
between Twin Falls, Idaho, and Elko, Nevada. The Jarbidge
River flows north from the Jarbidge Wilderness into Idaho,
where it joins the Bruneau River and eventually the Snake
and Columbia Rivers. The Jarbidge River is home to the only
population of bull trout known to exist south of the Snake
River. This population has been isolated from other bull trout
for more than 100 years by a combination of human and
natural barriers.
GREAT OLD BROADS FOR WILDERNESS V . KIMBELL 5
The South Canyon Road (indexed as Forest Road # 064)
follows the West Fork of the Jarbidge River through Jarbidge
Canyon. The road dates to 1909, when gold was discovered
in the canyon, leading to one of the last gold rushes in the
United States and spurring development of access roads
throughout the canyon. The disputed segment of the road
was completed between 1911 and 1918. In 1974, the road
was closed above Snowslide Gulch because annual landslides
made maintenance impractical. Until 1995, the South
Canyon Road gave the only motorized-vehicle access to the
wilderness area at Snowslide Gulch. The road climbs one
mile from Pine Creek Campground to the Urdahl
Concentrated Use Area (“Urdahl”) and then another half mile
to Snowslide Gulch. In 1995, the Jarbidge River flooded,
making this part of the South Canyon Road unpassable to
passenger vehicles for at least the fifth time since 1970.
In 1997, the Forest Service prepared an environmental
assessment and made a finding of no significant impact
(“FONSI”) for the recommended repair of the entire South
Canyon Road. Trout Unlimited mounted an administrative
challenge to this FONSI, arguing that the proposed
reconstruction would harm the bull trout population and
habitat, and suggesting that harm would lead to the trout’s
listing under the Endangered Species Act (“ESA”). The
Regional Forester remanded the environmental assessment to
the Forest Service to consider Trout Unlimited’s claims.
In June 1998, the United States Fish and Wildlife Service
(“FWS”) proposed listing the Jarbidge River bull trout as a
threatened species under the ESA. At the same time, after
receiving comments on its 1997 environmental assessment
and conducting more analysis in response to Trout
Unlimited’s suit, the Forest Service published a second
6 GREAT OLD BROADS FOR WILDERNESS V . KIMBELL
environmental assessment. This 1998 environmental
assessment identified a hiking trail as the preferred
alternative, eliminating motorized access along the entire
relevant stretch of the South Canyon Road.
In response to this proposed ESA listing and the
recommendation of the 1998 environmental assessment, Elko
County unilaterally directed its road department to begin
repair of the South Canyon Road, citing its need to access the
South Canyon to fight forest fires. While rebuilding the road,
Elko County diverted the river into a straight channel. This
channelization lifted a plume of sediment that stretched 3.5
miles down the river and damaged the river bank. Elko
County’s repair work was blocked by the Nevada Division of
Environmental Protection, but the repairs had so damaged the
river habitat that FWS issued an emergency listing of the
Jarbidge bull trout as endangered in August 1998.
Emergency Listing of the Jarbidge River Population Segment
of Bull Trout as Endangered, 63 Fed. Reg. 42757, August 11,
1998. Predicting that “impacts from the road reconstruction
to bull trout habitat will likely remain for years,” FWS
permanently listed the bull trout as threatened on April 8,
1999. Endangered and Threatened Wildlife and Plants;
Determination of Threatened Status for the Jarbidge River
Population Segment of Bull Trout, 64 Fed. Reg. 17110, April
8, 1999.
The Forest Service and Elko County tried to negotiate a
plan to reopen the road over the next few months, but this
effort failed. Frustrated by lack of progress and determined
to enable vehicle access to the wilderness area, a local
citizens’ group calling itself the “Shovel Brigade” decided to
reopen the road by hand. In October of 1999, District Judge
Hagen blocked the Brigade’s plan to reopen the road and
GREAT OLD BROADS FOR WILDERNESS V . KIMBELL 7
required the Brigade, Elko County, and the Forest Service to
enter confidential mediation. Off-road vehicle (ORV) riders
continued to enter the South Canyon, undeterred by road
conditions and the Forest Service’s attempts to block access.
These ORVs established trails along the length of the
washed-out road and further damaged the river habitat.
After months of unsuccessful talks, the Shovel Brigade
again made plans to reopen the road by hand. This time the
Brigade styled its effort as a protest scheduled on July 4,
2000. The district court did not enjoin the Brigade from its
plan, and the Brigade successfully opened a rudimentary,
quarter-mile road. In response, the United States charged
members of the Shovel Brigade with trespassing and renewed
a suit against Elko County for damage caused by the
County’s earlier road work. Elko County entered a cross-
claim to quiet title to a right of way in the South Canyon
Road under Revised Statute 2477 (RS 2477).1
Judge Hagen again ordered the Forest Service, Elko
County, and the Shovel Brigade (represented by named
defendant John Carpenter) into confidential settlement talks.
On March 2, 2001, the parties told the court that they had
reached an agreement. Carpenter I, 298 F.3d at 1124. In the
proposed settlement agreement (“Proposed Settlement”), (1)
1
RS 2477 formerly provided that “the right of way for the construction
of highways over public lands, not reserved for public uses, is hereby
granted.” 43 U.S.C. § 932 (1970), repealed by Federal Land Policy
M anagement Act (“FLPMA”), Pub. L. No. 94-579, § 706(a), 90 Stat.
2743, 2793 (1976). The FLPMA preserved rights-of-way that existed
before 1976. 43 U.S.C. § 1769(a). Parties claiming RS 2477 easements
must show the road on which their claim is based was built before the land
it crosses lost its public character. Humboldt County v. United States,
684 F.2d 1276, 1281 (9th Cir. 1982).
8 GREAT OLD BROADS FOR WILDERNESS V . KIMBELL
the parties released all claims against each other; (2) the
Forest Service recognized Elko County’s RS 2477 right of
way and agreed to allow the County to restore the South
Canyon Road; and (3) Elko County and Carpenter agreed that
the United States had authority to manage the land in accord
with federal environmental laws and promised to obtain
Forest Service authorization before performing any work on
the South Canyon Road.
At this point, the details of the Proposed Settlement were
publicized, and Great Old Broads moved to intervene as a
defendant in Elko County’s Quiet Title Act claim. Id. Great
Old Broads claimed that the Proposed Settlement “improperly
ceded a property interest in the road to the County of Elko,
thereby substantially diminishing the environmental
protections for the adjacent wilderness areas.” Id. The
district court rejected Great Old Broads’s motion as untimely
and accepted the Proposed Settlement. Id. Great Old Broads
appealed. We vacated the approval of the Proposed
Settlement and ordered that Great Old Broads be allowed to
intervene. Id. at 1125.
Great Old Broads renewed its motion to intervene in the
district court on the Quiet Title Act claim and filed
Administrative Procedure Act (“APA”) cross-claims against
the United States, challenging the settlement under NEPA,
the Federal Land Policy and Management Act, 43 U.S.C.
§ 1701 et seq., and Forest Service regulations, 36 C.F.R.
§ 251. Carpenter II, 526 F.3d at 1239. The district court
held that Great Old Broads lacked standing to challenge Elko
County’s Quiet Title Act claim. Id. And although the district
court allowed Great Old Broads to intervene on its other
claims, it dismissed them on the ground that the Attorney
General’s decision to settle was not reviewable under the
GREAT OLD BROADS FOR WILDERNESS V . KIMBELL 9
APA. Id. Nevertheless, the district court recognized that “the
government circumvented certain procedural mandates
imposed by Congress,” so the district court stayed its
approval until the United States demonstrated that the
Proposed Settlement complied with the environmental
statutes and regulations raised in Great Old Broads’s cross-
claims. Id. at 1239–40.
After entering this order, Judge Hagen retired, and Judge
Hunt succeeded to judicial responsibility on the case. Id. at
1240; see Wilderness Soc’y v. U.S. Forest Serv.,
3:07-CV-00170-RLH, 2011 WL 1042612 (D. Nev. Mar. 17,
2011). Judge Hunt lifted the stay, relieving the government
of its obligation to demonstrate that the Proposed Settlement
did not violate the environmental laws identified by Great
Old Broads. Carpenter II, 526 F.3d at 1240. After lifting the
stay, Judge Hunt held hearings on the merits of the Proposed
Settlement. Id. Great Old Broads was not permitted to
present evidence or participate as a party. Id. After these
hearings, the district court approved the Proposed Settlement,
and Great Old Broads appealed. Id.
We again reversed the district court, holding that its
ruling that Great Old Broads did not have standing to
intervene in the Quiet Title Act claim was foreclosed by our
earlier decision. Id. (citing Carpenter I, 298 F.3d at
1125–26). We further held that Great Old Broads’s cross-
claims were reviewable under the APA. Id. at 1241–42. We
vacated the approval of the Quiet Title Act settlement and
reversed the dismissal of Great Old Broads’s cross-claims.
Id. at 1243.
While Great Old Broads litigated its right to intervene,
Elko County and the Forest Service worked to put the
10 GREAT OLD BROADS FOR WILDERNESS V . KIMBELL
Proposed Settlement into effect. Elko County proposed a
plan to reestablish the road on August 16, 2002, as called for
by the Proposed Settlement. In April 2003, the Forest Service
published a draft Environmental Impact Statement (“EIS”),
that analyzed the Elko County proposal, and six other
management alternatives for the Project. Great Old Broads
commented on the draft EIS.
In April 2005, the Forest Service issued a draft Record of
Decision (“ROD”). The draft ROD did not adopt any of the
alternatives analyzed in the draft EIS to form the management
alternative selected for the Project (the “Selected
Alternative”). Instead, the Selected Alternative was a
combination of elements from the following draft EIS
alternatives:
Alternative 1 (The No-Action Alternative)
left the road in its condition as of early 2005,
including the primitive restoration work
performed by the Shovel Brigade and the
routes defined by unauthorized users.
Alternative 3 restored the road up to Urdahl
but replaced it with a hiking trail from there,
providing non-motorized access to Snowslide
Gulch. Alternative 3 required the
construction of two new bridges and several
new road segments.
Alternative 4 (The Elko County Proposal)
relocated the river and road to their 1995 pre-
flood locations, providing passenger-vehicle
access to Snowslide Gulch.
GREAT OLD BROADS FOR WILDERNESS V . KIMBELL 11
The Selected Alternative largely followed Alternative 4,
restoring the road for the mile from Pine Creek Campground
to Urdahl, but it incorporated the hiking trail analyzed in
Alternative 3 from Urdahl to Snowslide Gulch. Alternative
3 reclaimed the road above Urdahl, so the Selected
Alternative allowed only non-motorized access in the last
half-mile to the wilderness area. The Selected Alternative
also avoided river and road relocation and bridge construction
in Alternatives 3 and 4 by replacing those features with low-
water crossings from the user-defined routes in Alternative 1.
The Selected Alternative did not recognize Elko County’s
claim to title in a right of way through the South Canyon.
The Selected Alternative incorporated no part of Great
Old Broads’s preferred alternative, Alternative 2, which
would have replaced the road with a hiking trail from Pine
Creek Campground to Snowslide Gulch, or Alternatives 5
and 6, which would have raised the road above the Jarbidge
River floodplain. Alternative 7, like Alternative 1,
contemplated no repairs to the road. It differed from
Alternative 1 in that it included a Road Management Plan and
Water Projects.
On April 13, 2005, Great Old Broads submitted a
comment letter on the ROD. Great Old Broads wrote that the
Selected Alternative represented a “substantial improvement”
over Elko County’s proposal, but Great Old Broads continued
to object to any decision to reconstruct the South Canyon
Road above Pine Creek Campground. Great Old Broads
urged that the Forest Service adopt Alternative 2, which the
Forest Service found would result in the lowest impacts from
erosion and mass wasting events. Great Old Broads also
argued that the Selected Alternative, unlike Alternative 2, was
legally infirm for three reasons: (1) the Selected Alternative
12 GREAT OLD BROADS FOR WILDERNESS V . KIMBELL
“would not meet the INFISH standards that are incorporated
into the [Humboldt Plan]”; (2) by rebuilding the South
Canyon Road, the Selected Alternative “contravenes [EO
11988] because it does not avoid the Jarbidge River
floodplain”; and (3) the Selected Alternative “represents a
significant change that merits further environmental
analysis.”
The Forest Service issued the final ROD and final EIS at
the end of April, adopting the Selected Alternative in a form
essentially unchanged from the draft ROD. The final EIS
analyzed the same seven alternatives considered in the draft
EIS and did not add additional analysis of the Selected
Alternative. The final ROD included a more detailed
explanation of the Selected Alternative, and the Forest
Supervisor explained that he “considered all views that have
been expressed” and that “[t]hese comments have helped me
make a better informed decision.” Neither the ROD nor the
final EIS attached or responded to Great Old Broads’s
comments in its April 13 letter.
On June 14, 2005, Great Old Broads filed an
administrative appeal of the decision to approve the ROD and
the final EIS “to protect [its] rights to challenge the decision”
if Elko County were to appeal. In its appeal letter, Great Old
Broads once again advocated the non-motorized trail
considered as Alternative 2. Great Old Broads also
contended that the Selected Alternative was arbitrary,
capricious, and did not comply with applicable law “[f]or the
reasons stated in the attached comment letters.” Of seven
attached letters, labeled Exhibits 1–7, the first five related to
the draft EIS. Exhibit 6 was the April 13 letter on the draft
ROD. Exhibit 7 commented on the draft biological opinion
that coincided with the draft ROD.
GREAT OLD BROADS FOR WILDERNESS V . KIMBELL 13
On July 5, Great Old Broads told the Forest Service that
it would not withdraw its appeal “[i]n light of the Shovel
Brigade’s administrative appeal, and Elko County’s decision
to re-commence litigation.” See United States v. Carpenter,
3:99-CV-00547-RLH, 2012 WL 3686872 (D. Nev. Aug. 27,
2012). The July 5 letter set out fuller descriptions of the
issues on which Great Old Broads contested the Selected
Alternative and responded to arguments made by Elko
County and the Shovel Brigade in their respective appeals.
Great Old Broads characterized the decision to leave the road
open from Pine Creek Campground to Urdahl as “an effort to
compromise with Elko County, and thus resolve this dispute
without further litigation.” “In light of the intransigence of
Elko County and the Shovel Brigade,” Great Old Broads
again urged the Forest Service to adopt a hiking trail as
analyzed in Alternative 2. The Forest Service’s Appeal
Deciding Officer notified Great Old Broads that the July 5
letter was untimely and would not be considered. See
36 C.F.R. § 215.15 (appeal time periods for National Forest
System Projects).
On July 21, 2005, the Forest Service denied Great Old
Broads’s appeal and affirmed the decision approving the
ROD and final EIS. The Appeal Deciding Officer did not
consider issues raised in the attachments because Great Old
Broads’s appeal letter did not explain how the initial decision
had failed to consider substantive comments and did not
identify the unconsidered aspects of the attached letters.
Based on this limited review, the Appeal Deciding Officer
held that the decision was “reasonable, based on
documentation in the record and consistent with the
[Humboldt] Plan.”
14 GREAT OLD BROADS FOR WILDERNESS V . KIMBELL
Great Old Broads timely filed an action in the U.S.
District Court for the District of Nevada seeking review of the
Forest Service’s actions. The district court granted the Forest
Service’s motion for summary judgment, holding that Great
Old Broads did not exhaust its administrative remedies on
any claim and that, in the alternative, Great Old Broads’s
claims failed on the merits. This appeal followed.
II. STANDARD OF REVIEW
We review the district court’s grant of summary judgment
de novo. Gardner v. U.S. Bureau of Land Mgmt., 638 F.3d
1217, 1220 (9th Cir. 2011). Section 706 of the APA governs
judicial review of agency decisions under the NFMA, NEPA,
and EO 11988. 5 U.S.C. § 706; see Native Ecosystems
Council v. Dombeck, 304 F.3d 886, 891 (9th Cir. 2002)
(applying arbitrary and capricious standard to NEPA and
NFMA claims); City of Carmel-By-The-Sea v. U.S. Dep’t of
Transp., 123 F.3d 1142, 1166 (9th Cir. 1997) (applying
arbitrary and capricious standard to EO 11988 claims). We
will not overturn agency action unless it is “arbitrary,
capricious, an abuse of discretion, or otherwise not in
accordance with law.” 5 U.S.C. § 706(2)(A).
Agency action is arbitrary and capricious if “the agency
has relied on factors which Congress has not intended it to
consider, entirely failed to consider an important aspect of the
problem, offered an explanation for its decision that runs
counter to the evidence before the agency, or is so
implausible that it could not be ascribed to a difference in
view or the product of agency expertise.” City of Sausalito v.
O’Neill, 386 F.3d 1186, 1206 (9th Cir. 2004) (citations
omitted). A reviewing court “generally must be ‘at its most
deferential’ when reviewing scientific judgments and
GREAT OLD BROADS FOR WILDERNESS V . KIMBELL 15
technical analyses within the agency’s expertise.” N. Plains
Res. Council, Inc. v. Surface Transp. Bd., 668 F.3d 1067,
1075 (9th Cir. 2011) (quoting Balt. Gas & Elec. Co. v.
Natural Res. Def. Council, Inc., 462 U.S. 87, 103 (1983)).
III. DISCUSSION
A. Exhaustion of Administrative Remedies
The Forest Service contends, and the district court held,
that Great Old Broads failed to exhaust its challenge to the
ROD. We disagree.
The exhaustion doctrine serves “to permit administrative
agencies to utilize their expertise, correct any mistakes, and
avoid unnecessary judicial intervention in the process.”
Lands Council v. McNair, 629 F.3d 1070, 1076 (9th Cir.
2010) (en banc) (citing Buckingham v. U.S. Dep’t of Agric.,
603 F.3d 1073, 1080 (9th Cir. 2010)). The APA requires that
plaintiffs exhaust available administrative remedies before
bringing grievances to federal court, 5 U.S.C. § 704,
including the specific appeal procedures established by the
Secretary before bringing an action in court against the
Secretary of Agriculture. 7 U.S.C. § 6912(e); 36 C.F.R.
§ 215. Plaintiffs need not frame issues in “precise legal
formulations,” so long as “the appeal, taken as a whole,
provide[s] sufficient notice to the Forest Service to afford it
the opportunity to rectify the violations that the plaintiffs
alleged.” Native Ecosystems Council, 304 F.3d at 899–900.
When appellants object to a Forest Service decision, “claims
raised at the administrative appeal and in the federal
complaint must be so similar that the district court can
ascertain that the agency was on notice of, and had an
16 GREAT OLD BROADS FOR WILDERNESS V . KIMBELL
opportunity to consider and decide, the same claims now
raised in federal court.” Id. (quotation removed).
The Forest Service and the district court, when reviewing
Great Old Broads’s claims, considered only the appeal letter
itself and not the attachments. The Appeal Deciding Officer
did not consider the attached comment letters because the
appeal letter did not explain which parts of which comments
in the attached letters were relevant to each element of the
appeal. But Forest Service regulations provide that
attachments are a part of an appeal, see 36 C.F.R. § 215.15(a)
(“Written appeals, including any attachments, must be filed”),
and we have previously allowed judicial review of claims
made in comment letters on a draft EIS when those comment
letters were not even attached to formal appeals. See Great
Basin Mine Watch v. Hankins, 456 F.3d 955, 965 (9th Cir.
2006).
The district court mistakenly seems not to have
recognized that Great Old Broads commented on the ROD at
all. In ruling that Great Old Broads did not exhaust its
administrative remedies, the district court found that “the
attached comment letters address the draft EIS rather than the
actual 2005 Decision.” Wilderness Soc’y, 2011 WL 1042612,
at *4. But one of the attachments, the letter of April 13,
2005, did address the ROD. That letter clearly asserted the
three issues that were raised in the appellate briefing: (1) that
the selected decision did not meet INFISH standards; (2) that
keeping the road open offended Executive Order 11988
because it did not avoid the Jarbidge River floodplain; and (3)
that the selected alternative, while an improvement,
represented a “significant change that merits further
environmental analysis,” and that the decision “did not
GREAT OLD BROADS FOR WILDERNESS V . KIMBELL 17
provide a full analysis of the environmental impacts now
being considered over time.”
This was not a case where the agency was asked to piece
together an appeal from a mountain of undifferentiated
comment letters. Great Old Broads attached its comment
letters as distinct exhibits. Any careful reviewer should have
recognized that one of the seven addressed the ROD and
should also have been able to see that the others gave added
context for the appeal. In the one letter addressing the ROD,
Great Old Broads succinctly stated three legal objections.
The appeal, taken as a whole, includes the attached comment
letters.
The Forest Service argues that even if Great Old Broads’s
April 13 letter were properly considered as part of its appeal,
the attachment was insufficient to exhaust Great Old Broads’s
claims under our recent decision in Native Village of Kivalina
IRA Council v. U.S. Environmental Protection Agency,
687 F.3d 1216 (9th Cir. 2012), because Great Old Broads did
not explain why it believed the ROD did not consider the
claims made in its April 13 comment letter. See 36 C.F.R.
§ 215.14(b)(8). This argument contradicts Great Basin Mine
Watch and misreads Kivalina.
In Kivalina, the Village of Kivalina petitioned for review
of a National Pollutant Discharge Elimination System permit
that allowed the discharge of wastewater from a mine into the
Wulik River, which enters the Chukchi Sea near Kivalina. Id.
at 1218. The Environmental Appeals Board (“EAB”) of the
Environmental Protection Agency (“EPA”) declined to
review the permit, concluding that Kivalina “had not satisfied
the procedural requirements to obtain review under 40 C.F.R.
§ 124.19(a) because it did not demonstrate why the [EPA’s]
18 GREAT OLD BROADS FOR WILDERNESS V . KIMBELL
responses to comments were clearly erroneous or otherwise
warranted review.” Id. In denying Kivalina’s petition, we
noted that the EAB has consistently applied § 124.19(a) to
deny review “where petitioners merely reiterate or attach
comments previously submitted regarding a draft permit and
do not engage the EPA’s responses to those comments.” Id.
at 1220. This policy is similar to the Forest Service’s appeal
requirement that appellants demonstrate “[w]hy the appellant
believes the Responsible Official’s decision failed to consider
the substantive comments.” 36 C.F.R. § 215.14(b)(8).
Because of this similarity, the Forest Service contends that
our analysis in Kivalina controls here.
We reject the Forest Service’s argument for several
reasons. First, despite the facial similarity of the two
standards, Kivalina arose in an entirely different legal
context. The exhaustion of administrative remedies was not
at issue in Kivalina. See 687 F.3d at 1218–22. Thus,
Kivalina’s holding does not apply to the exhaustion issue
here, although its reasoning may be considered to the extent
persuasive on exhaustion. Instead of addressing an issue of
exhaustion of administrative remedies, Kivalina reviewed the
EAB’s decision to decline to review the grant of an EPA
permit. Id. We have consistently “defined the exhaustion
requirement broadly,” Great Basin Mine Watch, 456 F.3d at
965. But by contrast we held in Kivalina that the EAB’s
“power of review should be only sparingly exercised.”
687 F.3d at 1219 (quotation removed). Unlike judicial
review of agency actions under the APA, EAB review is only
available to petitioners who have: (1) demonstrated that the
challenged permit decision was clearly erroneous or (2)
convinced the EAB to exercise its discretion to review the
permit. Id. (quoting 40 C.F.R. § 124.19(a)). These different
standards of review do not aid the Forest Service’s argument
GREAT OLD BROADS FOR WILDERNESS V . KIMBELL 19
seeking to avoid review on the merits. Because Kivalina
addressed a more restrictive threshold for review than that
faced by Great Old Broads, Kivalina does not control the
outcome here.
Second, although the two situations have some similarity,
and Kivalina’s reasoning is instructive, this reasoning tends
to support Great Old Broads’s position on exhaustion, not that
of the government. In Kivalina, the EAB refused to consider
Kivalina’s challenge because Kivalina did not “engage the
EPA’s responses to public comments.” Id. at 1221. In its
decision to issue the permit, the EPA reproduced and
addressed several public comments, including comments by
Kivalina, on the monitoring provisions at issue. Id. at
1220–22. Rather than engaging with the EPA’s responses to
comments and explaining why those responses did not answer
Kivalina’s expressed concerns or justify the permitting
decision, Kivalina raised entirely new issues. See, e.g., id. at
1221. Here, by contrast, the Forest Service did not
acknowledge or respond to Great Old Broads’s April 13 letter
in the final EIS or the final ROD. The final EIS answered
Great Old Broads’s comments on the draft EIS, and the
Appeal Deciding Officer cited those responses when denying
Great Old Broads’s administrative appeal. But the only
indication that the Forest Service had considered the April 13
letter at all was the Forest Supervisor’s conclusory statement
that he had “considered all views that have been expressed.”
Where, as in Kivalina, an agency reproduces and responds
to comments, parties seeking review have a chance to bring
their own expertise to bear and explain why the agency’s
responses to comments do not dispose of their complaints.
Even in the sparingly-exercised EAB review, petitioners are
only required to “engage the EPA’s responses to [their]
20 GREAT OLD BROADS FOR WILDERNESS V . KIMBELL
comments.” Kivalina, 687 F.3d at 1220 (emphasis added).
But here the Forest Service did not clearly respond to Great
Old Broads’s comments in its April 13 letter, so the Forest
Service cannot reasonably require Great Old Broads to
explain why the “decision failed to consider th[ose]
substantive comments.” See 36 C.F.R. § 215.14(b)(8).
Stated another way, when an agency clearly responds to
comments, it creates a rebuttable presumption that it has
considered and answered the commenter’s concerns. To
overcome that presumption, the commenting party must
engage with those responses and at least say why they are
thought to be inadequate. If an agency does not respond,
however, appellants have nothing with which to engage.
To be presented on appeal, each of Great Old Broads’s
three claims must have been exhausted before the Forest
Service. We first address Great Old Broads’s contention that
the ROD violates the NFMA because it did not comply with
INFISH standard FW-2, which governs “fish and wildlife
interpretive and other user-enhancement facilities.” In its
April 13 letter, Great Old Broads argued that the Selected
Alternative did “not meet the INFISH standards that are
incorporated into the [Humboldt Plan].” Great Old Broads
cited pages in the draft EIS that described FW-2 as “one
INFISH standard and guideline . . . that pertains to fish and
wildlife for the Jarbidge Canyon EIS.” FW-2 is the first
standard listed under the first heading in the cited pages, and
its prominence put the Forest Service on notice that Great Old
Broads took issue with the ROD’s compliance with FW-2.
Second, Great Old Broads contends that the ROD violates
EO 11988, which limits agency actions in floodplains. In the
same April 13 letter, Great Old Broads argued that the
decision “contravenes Executive Order 11988, because it
GREAT OLD BROADS FOR WILDERNESS V . KIMBELL 21
does not avoid the Jarbidge River floodplain.” EO 11988 is
focused exclusively on preventing unnecessary development
in floodplains and limiting the harmful effects of actions that
must be sited in floodplains. By citing EO 11988, Great Old
Broads exhausted this claim.
Great Old Broads also exhausted its third claim, that the
Forest Service violated NEPA by not preparing a
supplemental EIS (“SEIS”) for the Selected Alternative. In
its April 13 letter, Great Old Broads explained that the
Selected Alternative, “while a major improvement over [draft
EIS] Alternative 4, represent[ed] a significant change that
merits further environmental analysis.” On this issue as with
the preceding two, Great Old Broads’s April 13 letter
“allow[ed] the agency to give the issue meaningful
consideration.” Great Basin Mine Watch, 456 F.3d at 971
(quoting Dep’t of Transp. v. Pub. Citizen, 541 U.S. 752, 764
(2004)).
We hold that the three claims presented on this appeal
each were adequately exhausted by Great Old Broads’s
submissions to the Forest Service, and we reach the merits of
Great Old Broads’s appeal.
B. Consideration of Claims on the Merits
Great Old Broads suggests three theories why the ROD
was an arbitrary and capricious action by the Forest Service:
(1) that the ROD violated the NFMA; (2) that the ROD
violated EO 11988; and (3) that the ROD violated NEPA.
The district court in its alternative holding granted summary
judgment in favor of the Forest Service on all three theories,
and we discuss each in turn.
22 GREAT OLD BROADS FOR WILDERNESS V . KIMBELL
1. The National Forest Management Act
The NFMA directs the Forest Service to develop a
comprehensive land and resource management plan (“Forest
Plan”) for each unit in the national forest system. 16 U.S.C.
§ 1604(a). Forest Plans aim to balance environmental and
economic concerns, while furthering the NFMA’s purpose to
“provide for diversity of plant and animal communities” in
national forests. Native Ecosystems Council v. Weldon,
697 F.3d 1043, 1056 (9th Cir. 2012) (quoting 16 U.S.C.
§ 1604(g)(3)(B)). After a Forest Plan has been developed and
implemented, the NFMA prohibits site-specific activities that
are inconsistent with the governing Forest Plan. Lands
Council v. Powell, 395 F.3d 1019, 1033 (9th Cir. 2005). The
Forest Service’s “interpretation and implementation of its
own forest plan is entitled to substantial deference.” Native
Ecosystems Council, 697 F.3d at 1056; see also Auer v.
Robbins, 519 U.S. 452, 461 (1997) (An agency’s
interpretation of its own regulations is controlling unless
“plainly erroneous or inconsistent with the regulation.”).
Great Old Broads contends that the ROD does not comply
with the Humboldt Plan because it violates FW-2, one of
INFISH’s fish and wildlife restoration standards.
The Humboldt Plan governs the Forest Service’s site-
specific decisions in the Jarbidge Canyon. The Humboldt
Plan was amended in 1995 by INFISH to give more
protections for habitat and populations of resident native fish,
including the bull trout. See Inland Native Fish Strategy:
Decision Notice and Finding of No Significant Impact (1995)
(INFISH 95); see also Inland Native Fish Strategy, 60 Fed.
Reg. 39927, August 4, 1995. For watersheds occupied by
inland native fish, INFISH supplies Riparian Management
Objectives (“RMOs”) that set goals for pool frequency,
GREAT OLD BROADS FOR WILDERNESS V . KIMBELL 23
density of large woody debris, bank stability, width-to-depth
ratio, and water temperature. These categories identify
characteristics of healthy fish habitat. INFISH does not
require RMOs to be achieved as soon as they are announced;
instead, they serve as benchmarks against which progress can
be measured and degradation prevented.
For individual rivers, the Forest Service designates buffer
zones around Riparian Habitat Conservation Areas
(“RHCAs”). Parts of the South Canyon Road are in the
Jarbidge River RHCA. To promote attainment of RMOs,
INFISH sets standards and guidelines for activities inside
these buffer zones, including road-building, mining, logging,
and restoring fisheries and wildlife habitat. INFISH 95 A-6
to A-13. One standard, FW-2, requires the Forest Service to:
Design, construct, and operate fish and
wildlife interpretive and other user-
enhancement facilities in a manner that does
not retard or prevent attainment of the
Riparian Management Objectives or adversely
affect inland native fish. For existing fish and
wildlife interpretive and other user-
enhancement facilities inside Riparian Habitat
Conservation Areas, assure that Riparian
Management Objectives are met and adverse
effects on inland native fish are avoided.
Where Riparian Management Objectives
cannot be met or adverse effects on inland
native fish avoided, relocate or close such
facilities.
INFISH 95 A-13.
24 GREAT OLD BROADS FOR WILDERNESS V . KIMBELL
Great Old Broads contends that several findings in the
final EIS show that the ROD violates Fisheries and Wildlife
Restoration standard FW-2, and therefore the Humboldt Plan
and the NFMA. In the final EIS, the Forest Service identified
FW-2 as “one INFISH standard . . . that pertains to fish and
wildlife for the Jarbidge Canyon EIS.” When analyzing each
alternative in the final EIS, the Forest Service assessed
whether it would or would not comply with FW-2 and
described the effect each alternative would have on the
RMOs. The alternatives that were combined to form the
Selected Alternative all had negative effects on RMOs. Great
Old Broads contends that these references to FW-2 in the
final EIS show (1) that the standard applies to the road
reconstruction and (2) that the ROD violates the standard, so
the road must be “relocated or closed.”2
We disagree. The final EIS does indicate that FW-2
applies in the Project. But even if FW-2 does apply to “fish
and wildlife in the Jarbidge Canyon EIS,” it requires action
only for “fish and wildlife interpretive and other
user-enhancement facilities.” The term “user enhancement
facilities” does not appear to apply to roads but instead, as the
Forest Service suggests, to trailhead facilities such as parking
2
Because we hold that FW -2 does not apply to road reconstruction, we
do not reach Great Old Broads’s second contention. W e note, however,
that the ROD finds that the combined alternatives and the mitigation
strategies in the Selected Alternative would not retard attainment of the
RMOs under INFISH. This finding, which is due substantial deference as
the product of the Forest Service’s technical expertise, see Native
Ecosystems Council, 697 F.3d at 1056, could possibly prevent FW -2 from
mandating the closure of the road even if it did apply to the road.
GREAT OLD BROADS FOR WILDERNESS V . KIMBELL 25
areas and toilets.3 By contrast, INFISH “Roads
Management” standards explicitly apply to the Jarbidge
Canyon Road. INFISH 95 A-7 to A-8. The final EIS
described these as the “standards and guidelines for road
management that pertain to the Jarbidge Canyon project,” and
the ROD explained that the Selected Alternative complied
with INFISH by reference to Roads Management standards
RF-2 to RF-4. Like FW-2, the Roads Management standards
are concerned with attainment of RMOs. They promote
attainment of RMOs by requiring various design
modifications and mitigation strategies, many of which were
included in the ROD. Unlike FW-2, the Roads Management
standards do not require that roads be relocated or closed
unless the roads are obsolete.
The text of related INFISH standards also guides against
reading “user-enhancement facilities” to include roads. The
introduction to the collected standards and the Minerals
Management standard MM-2 include both “roads” and
“facilities” on lists, showing that INFISH considered
“facilities” and “roads” to be distinct categories. INFISH 95
A-6, A-10. There is no evidence in the final EIS that FW-2
applies beyond what its plain language indicates.
We will defer to the Forest Service’s interpretation of
FW-2 unless it is plainly erroneous or inconsistent with the
standard. Siskiyou Reg’l Educ. Project v. U.S. Forest Serv.,
565 F.3d 545, 557 (9th Cir. 2009). It is neither. We hold that
the Forest Service’s interpretation of FW-2 is reasonable and
that the ROD does not violate the NFMA.
3
The Selected Alternative removed toilets at Urdahl and Snowslide
Gulch, as FW -2 would require.
26 GREAT OLD BROADS FOR WILDERNESS V . KIMBELL
2. Executive Order 11988: Floodplain Management
EO 11988 calls on “federal agencies taking action ‘in or
affecting a floodplain’ to think twice.” Carmel-By-The-Sea,
123 F.3d at 1166. This executive order discourages
unnecessary development in floodplains. Agencies must
avoid siting actions in floodplains unless the head of the
agency finds there is no practicable alternative. 42 Fed. Reg.
26951 § 2(a)(2) (1977). If there is no practicable alternative,
the agency must “(i) design or modify its action in order to
minimize potential harm to or within the flood plain,” and
“(ii) prepare and circulate a notice containing an explanation
of why the action is proposed to be located in the flood
plain.” Id. We will set aside agency findings under EO
11988 only if they are arbitrary, capricious, or an abuse of
discretion. Carmel-By-The-Sea, 123 F.3d at 1166.
Great Old Broads contends that the Forest Service did not
comply with any of EO 11988’s three requirements,
beginning with the fact that it made no formal finding that
there was no practicable alternative to siting the road in the
Jarbidge Canyon floodplain. But the South Canyon Road had
been sited in the floodplain for years before the area was
added to the national forest system—long before EO 11988
was contemplated. Great Old Broads claims that this appeal
to the status quo is a prohibited post-hoc argument. But the
final EIS explained that the proposed action was “to authorize
the reestablishment of the South Canyon Road,” and the
Forest Service characterized the preexisting road, situated in
the floodplain, as the no-action alternative in the final EIS
and the ROD. Great Old Broads has not challenged those
characterizations and provides no authority showing that EO
11988 requires the relocation of existing roads that require
restoration or improvement. Longstanding custom and usage
GREAT OLD BROADS FOR WILDERNESS V . KIMBELL 27
of a community is not irrelevant to a sensible application of
environmental law. In considering options for the South
Canyon Road, the Forest Service was not siting a new project
but was crafting the next “phase in an essentially continuous
activity.” See Sierra Club v. Hassell, 636 F.2d 1095, 1099
(5th Cir. 1981) (quoting City & County of San Francisco v.
United States, 615 F.2d 498, 501 (9th Cir. 1980)). The Forest
Service was entitled to rely on the established location of the
South Canyon Road to comply with this first element of EO
11988.
EO 11988 separately requires that agencies “prepare and
circulate a notice containing an explanation of why the action
is proposed to be located in the floodplain.” 42 Fed. Reg.
26951 § 2(a)(2). This notice should be included in the
agency’s NEPA statement. Id. § 2(a)(1). As Great Old
Broads admits, this notice requirement is “closely related” to
the requirement that the agency make a finding of no
practicable alternative. Where the latter has been fulfilled,
courts have not found the former to be insufficient. See e.g.,
Carmel-by-the-Sea, 123 F.3d at 1166; Hassell, 636 F.3d at
1100. In addition to the indicators discussed above that show
the Forest Service complied with the requirement that it make
a finding of impracticability, the Forest Service advised
readers in the final EIS that it was considering the commands
of EO 11988, and the final EIS explicitly analyzed two
out-of-floodplain alternatives. This was sufficient notice.
Finally, EO 11988 requires an agency taking action in a
floodplain to “design or modify its action in order to
minimize potential harm to or within the floodplain.” 42 Fed.
Reg. 26951 § 2(a)(2). In forming the Selected Alternative,
the Forest Service took elements from Alternatives 1, 3, and
4 and modified the combination to minimize the road’s
28 GREAT OLD BROADS FOR WILDERNESS V . KIMBELL
impact on the floodplain. These modifications included: (1)
Replacing the upper part of the road with a hiking trail to
ameliorate mass wasting, which provided for “road
reclamation in the most unstable portion of the canyon
bottom.” (2) Choosing not to widen or realign the road,
which “decrease[d] the amount of sediment entering the river
over time” and avoided the “increased erosion noted for other
road alternatives.” (3) Replacing proposed structures in
Alternatives 3 and 4 with low-water crossings. The proposed
structures would have “impede[d] flow during high-water
events” and prevented the “pass-through of debris from large
flows.”
Great Old Broads contends these modifications were not
enough because EO 11988 requires an agency to “modify its
action in order to minimize potential harm to or within the
floodplain.” Id. § 2(a)(2). Great Old Broads argues that
“minimize” means the Forest Service must reduce potential
harm to “the smallest quantity, number, or degree possible or
permissible.” Webster’s New Twentieth Century Dictionary
1145 (2d ed.). But when we have considered the word
“minimize” in similar contexts, we have held any mitigation
only needs to be reasonable. The Department of
Transportation Act of 1970 mandates that all measures
“technically possible . . . be implemented” to “minimize
harm” to public parks. 49 U.S.C. § 1653(f)(2). We held that
“implied within the statement ‘all measures,’ is the condition
that such efforts to minimize harm be feasible and prudent, or
reasonable.” Adler v. Lewis, 675 F.2d 1085, 1094 (9th Cir.
1982). This understanding of “minimize” parallels the
definition of “practicable” that we have used when reviewing
actions under EO 11988. In Carmel-by-the-Sea, we
understood “practicable” to mean: “capable of being done
within reasonable natural, social, or economic constraints.”
GREAT OLD BROADS FOR WILDERNESS V . KIMBELL 29
123 F.3d at 1166 n.20 (quoting 23 C.F.R. § 650.105(k)). In
applying EO 11988, the D.C. Circuit held that the National
Park Service fulfilled its obligation to minimize impacts
when it “affirmatively required design changes to ameliorate
adverse effects on the floodplain.” Daingerfield Island
Protective Soc. v. Babbitt, 40 F.3d 442, 447 (D.C. Cir. 1994).
The D.C. Circuit did not analyze the degree to which those
modifications would ameliorate any adverse affects. Id.
The changes the Forest Service made in finalizing the
Selected Alternative possibly do not limit the floodplain
impacts of the ROD to the smallest degree possible, but they
were reasonable, affirmatively-required design changes that
the Forest Service determined would ameliorate adverse
effects on the floodplain. We will not second-guess that
determination. The Forest Service’s actions were not
arbitrary or capricious under EO 11988.
3. National Environmental Policy Act
Great Old Broads contends that “combining Alternatives
1, 3, and 4 dramatically changed their environmental impacts,
[so] the Forest Service violated NEPA by failing to prepare
a supplemental EIS (SEIS).” We review the Forest Service’s
decision not to prepare an SEIS under the arbitrary or
capricious standard. Russell Country Sportsmen v. U.S.
Forest Serv., 668 F.3d 1037, 1044 (9th Cir. 2011), cert.
denied, 132 S. Ct. 2439 (2012). We review de novo the
district court’s grant of summary judgment that no SEIS was
required. Friends of the Clearwater v. Dombeck, 222 F.3d
552, 556 (9th Cir. 2000). We affirm.
Under NEPA, an agency must prepare an EIS for any
proposed federal action “significantly affecting the quality of
30 GREAT OLD BROADS FOR WILDERNESS V . KIMBELL
the human environment.” 42 U.S.C. § 4332(2)(C). The EIS
must consider “the environmental impact of the proposed
action” and “any adverse environmental effects which cannot
be avoided should the proposal be implemented.” Id.
§ 4332(2)(C)(i)–(ii). The range of relevant effects is broad,
and the EIS must “[r]igorously explore and objectively
evaluate all reasonable alternatives.” 40 C.F.R. § 1502.14(a).
By requiring this evaluation before a project is finalized,
“NEPA ensures that the agency will not act on incomplete
information, only to regret its decision after it is too late to
correct.” Marsh v. Oregon Natural Res. Council, 490 U.S.
360, 371 (1989).
An agency “must have some flexibility to modify
alternatives canvassed in the draft EIS to reflect public
input.” California v. Block, 690 F.2d 753, 771 (9th Cir.
1982). But if after this process, an “agency makes substantial
changes in the proposed action that are relevant to
environmental concerns,” the agency must prepare an SEIS.
40 C.F.R. § 1502.9(c). In considering the terms “substantial
changes” and “environmental concerns,” we have adopted the
Council for Environmental Quality’s (“CEQ”) guidance that
“supplementation is not required when two requirements are
satisfied: (1) the new alternative is a ‘minor variation of one
of the alternatives discussed in the draft EIS,’ and (2) the new
alternative is ‘qualitatively within the spectrum of alternatives
that were discussed in the draft [EIS].’” Russell Country
Sportsmen, 668 F.3d at 1045 (emphasis added in Russell
Country Sportsmen) (quoting Forty Most Asked Questions
Concerning CEQ’s National Environmental Policy Act
Regulations, 46 Fed. Reg. 18,026, 18,035 (Mar. 23, 1981)).
Great Old Broads points to no specific changes that it
deems not adequately analyzed in the final EIS. Instead,
GREAT OLD BROADS FOR WILDERNESS V . KIMBELL 31
Great Old Broads relies on the First Circuit’s decision in
Dubois v. U.S. Department of Agriculture to argue that an
SEIS is required whenever a proposed project constitutes “a
different configuration” of previously analyzed elements.
102 F.3d 1273, 1291–93 (1st Cir. 1996). In Dubois, the
Forest Service published an EIS analyzing the effects of a
proposed ski resort. Id. at 1278. The preferred alternative
adapted an analyzed alternative to a smaller parcel of land,
eliminating woodland buffer zones between ski trails and
proposing an unanalyzed “28,500-square-foot base lodge
facility within the existing permit area.” Id. at 1292. The
First Circuit held that these were “substantial changes from
the previously-discussed alternatives, not mere modifications
‘within the spectrum’ of those prior alternatives.” Id.
Here, by contrast, the Selected Alternative is primarily
made of elements from Alternatives 1, 3, and 4 that were
analyzed—as elements—in the final EIS. From that analysis,
the Forest Service and the public could assess the cumulative
effect of these elements, and the Forest Service could
reasonably determine that the combination was “within the
spectrum” of previously analyzed alternatives.
In addition to these elements, the Selected Decision
incorporated several mitigating modifications. Most, such as
(1) minimizing the number of river crossings by heavy
equipment during construction, (2) clearly marking low-water
crossings and posting them with 5 MPH speed limits, and (3)
removing toilets at Snowslide Gulch and Urdahl, were
“minor variation[s] of one of the alternatives discussed in the
draft EIS.” See Russell Country Sportsmen, 668 F.3d at 1045
(internal quotation omitted). Another modification changed
the targeted “design vehicle” from a passenger car to a four-
wheel-drive vehicle. The “design vehicle” is the type of
32 GREAT OLD BROADS FOR WILDERNESS V . KIMBELL
vehicle that the road is designed to accommodate, so this
change lowered the construction and maintenance costs for
the road and limited the amount of traffic the road is likely to
bear. Although this change is not identified as an element
from one of the analyzed alternatives, only a four-wheel-drive
vehicle could use the road as it was at the time of the final
EIS, so the reduction in service level brought the Selected
Alternative in line with Alternative 1—the no-action
alternative.
Great Old Broads alternatively contends that even if the
Forest Service correctly decided that an SEIS was not
required, it violated NEPA because it did not adequately
document that determination in the record. An agency must
make a reasoned decision whether an SEIS is required, see
Friends of the Clearwater, 222 F.3d at 557, and the Forest
Service often presents this threshold determination in a
supplemental information report (“SIR”). See Forest Service
Handbook 1909.15, ch. 10 §§ 18.1-18.2. Here the Forest
Service did not prepare a separate SIR, but it did make a
reasoned decision, documented in the record, that an SEIS
was not warranted.
An agency must document its decision that no SEIS is
required to ensure that it remains “alert to new information
that may alter the results of its original environmental
analysis, and continue[s] to take a ‘hard look at the
environmental effects of [its] planned action, even after a
proposal has received initial approval.’” Friends of the
Clearwater, 222 F.3d at 557 (quoting Marsh, 490 U.S. at
374). In Friends of the Clearwater, appellants challenged a
timber sale in the Nez Perce National Forest for which they
claimed the environmental analysis was inadequate. Id. at
554. The Forest Service completed a programmatic EIS for
GREAT OLD BROADS FOR WILDERNESS V . KIMBELL 33
the entire National Forest in 1987 and a site-specific EIS for
several timber sales in 1989. Id. at 554–55. In 1996, the last
two of those sales were awarded. Id. at 555. When
challenging those sales, appellants explained that the
project’s EIS did not consider the designation of sensitive tree
species in the ten years since the Forest Service completed the
site-specific EIS. Id. Those designations, appellants
contended, “constituted significant new information that
should be considered in an SEIS.” Id. at 555–56.
We faulted the Forest Service because there was “no
evidence in the record that . . . the Forest Service ever
considered whether the seven new sensitive [tree] species
designations . . . were sufficiently significant to require
preparation of an SEIS.” Id. at 558. By contrast, Great Old
Broads points to no new information that was not considered
in the final EIS, and the Forest Supervisor explained in the
ROD that he “determined that the Selected Alternative was
fully analyzed in Chapter 3 of the [final EIS].” This was
adequate documentation of the Forest Service’s reasoned
decision that no SEIS was required.
IV. CONCLUSION
We hold that Great Old Broads exhausted its claims
before the Forest Service but that the ROD conforms to the
NFMA, EO 11988, and NEPA. We reverse the district court
on its analysis of exhaustion, but we affirm the district court
on its alternate decision on the merits as to each of the claims
presented. The parties shall bear their own costs.
REVERSED ON EXHAUSTION and AFFIRMED ON
THE MERITS. | 01-03-2023 | 03-04-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/399282/ | 670 F.2d 440
9 Fed. R. Evid. Serv. 1369
KERSHNER, Royce, Ryan, Bernard, on their own behalf and onbehalf of others similarly situated, Appellants,v.MAZURKIEWICZ, J. F., Superintendent; Gerber, Gary R.,Librarian, SCI at Rockview, Bellefonte, Pa., Appellees.
No. 81-1042.
United States Court of Appeals,Third Circuit.
Argued May 19, 1981.Reargued Nov. 23, 1981.Decided Feb. 1, 1982.
Richard G. Fishman (argued), Keystone Legal Services, Inc., State College, Pa., for appellants.
Gregory R. Neuhauser (argued), Francis R. Filipi, Deputy Attys. Gen., Leroy S. Zimmerman, Atty. Gen., Harrisburg, Pa., for appellees.
Argued May 19, 1981.
Before ADAMS, ROSENN and HIGGINBOTHAM, Circuit Judges.
Reargued In Banc Nov. 23, 1981.
Before SEITZ, Chief Judge, ALDISERT, ADAMS, GIBBONS, HUNTER, WEIS, GARTH, HIGGINBOTHAM and SLOVITER, Circuit Judges.
OPINION OF THE COURT
ADAMS, Circuit Judge.
1
On January 30, 1980, appellants Royce Kerchner1 and Bernard Ryan, inmates at the State Correctional Institution at Rockview (Rockview) filed a class action civil rights complaint under 42 U.S.C. § 1983 seeking preliminary and final injunctive relief against two prison officials. Appellants contended that defendants were required by the sixth and fourteenth amendments to provide indigent inmates with free legal supplies including pads, pens, pencils, photocopying, and postage. Three issues are presented for consideration: first, whether the district court erred when it denied the inmates' motion for a preliminary injunction; second, whether this Court has appellate jurisdiction to review at this time the district court's denial of class certification; and finally, assuming there is jurisdiction over the denial of class certification, whether the trial court abused its discretion in denying class certification. We believe that the district court did not err in denying the motion for preliminary injunctive relief, and affirm the judgment of the district court in this regard. Because we conclude, however, that the order denying class certification is not now appealable, we do not reach the merits of the third issue.
I.
2
Kerchner and Ryan brought suit against Dr. J. F. Mazurkiewicz, the Superintendent of Rockview, and Gary R. Gerber, the Librarian at Rockview, for their alleged refusal to provide without cost certain legal supplies and documents both to the named plaintiffs and to other allegedly indigent inmates. In this respect, Pennsylvania law provides that: "Adequate legal size paper shall be available in institution commissaries for purchase by inmates." 37 Pa.Code § 93.2(a). The inmate handbook for Rockview further provides:
LEGAL MATERIAL AND NOTARY PUBLIC
3
1. You may purchase any legal material you believe to be valuable to you in seeking legal remedies. The amount permitted in your cell at any one time may be limited depending on individual circumstances.
4
2. Some legal materials are available at the institutional library for your use.
5
3. The institution will provide notary service for documents requiring notarization. A request slip should be directed to the Records Office in the institution for Notary Public Services.
6
Appendix at 37.
7
As a result of the operation of the above policy, Kerchner complains that he has been "forced ... to pay for legal supplies and materials in seeking ... legal remedies ... despite his indigency and (has been) placed ... in the position of either foregoing these supplies and materials in the pursuit of legal remedies or giving up the few amenities available in prison life." P 16, Plaintiffs' Complaint, Appendix at 10.
8
Kerchner earns $35.00 per month from his institutional job. During his incarceration Kerchner has had less than $60.00 in his institutional account at any one time; his average balance through January 2, 1980 was approximately $21.72. Ryan's average balance was $12.00; on January 2, 1980, he had $25.85 in his institutional account. Appendix at 19-23.
II.
9
At the outset it must be stressed that the appellants did not establish that there was any instance in which they were unable to pursue any legal action because of the cost of legal supplies and photocopying. Rather, they assert that in being required to use their own limited funds they have been or will be deprived of certain unspecified amenities. The first issue before us, then, is simply whether the district court erred in denying a preliminary injunction that would have required the Commonwealth to supply, without cost to the named plaintiffs, pads, pens, pencils, postage, photocopying and other legal materials when the plaintiffs had funds in their institutional accounts sufficient to purchase those items.2A.
10
A preliminary injunction is not granted as a matter of right. Eli Lilly & Co. v. Premo Pharmaceutical Laboratories, Inc., 630 F.2d 120, 136 (3d Cir.), cert. denied, 449 U.S. 1014, 101 S.Ct. 573, 66 L.Ed.2d 473 (1980). It may be granted, however, if the moving party demonstrates both a reasonable probability of eventual success in the litigation and that the party "will be irreparably injured pendente lite if relief is not granted." Id. at 136; Kennecott Corp. v. Smith, 637 F.2d 181, 187 (3d Cir. 1980). The trial court may also consider the possibility of harm to other interested persons from the grant or denial of the injunction, as well as harm to the public interest. Eli Lilly & Co., 630 F.2d at 136. The grant or denial of a preliminary injunction is committed to the sound discretion of the district judge, who must balance all of these factors in making a decision. Penn Galvanizing Co. v. Lukens Steel Co., 468 F.2d 1021, 1023 (3d Cir. 1972). Consequently, the scope of appellate review of a trial court's ruling is narrow. Unless the trial court abused its discretion, or committed an error in applying the law, we must take the judgment of the trial court as presumptively correct. Continental Group, Inc. v. Amoco Chemicals Corp., 614 F.2d 351, 357 (3d Cir. 1980).
11
In this instance, the case was referred to Magistrate Raymond J. Durkin, who wrote a thoughtful opinion and recommendation. He concluded that the plaintiffs failed to carry their burden to show either "a probability of success on the merits or that they will suffer irreparable harm if the preliminary injunction is not granted." Appendix at 57. Magistrate Durkin found that
12
there has been no demonstration in the complaint or other documents that any prisoner has not been able to perfect and pursue a legal action due to the written policy concerning postage and the policy regarding paper and writing utensils, even if informal. With respect to the specific matters in dispute, it is recognized by plaintiffs that each inmate is permitted without cost to mail 10 one-ounce first class letters or the equivalent thereof in postage per month up to $1.50, and there has been no demonstration that any prisoner who exceeded this limit and was without funds and found himself in an emergency situation with respect to court matters was refused postage. In the absence of such demonstration, it would appear that prison officials would be free to establish some limitation on free postage.
13
With respect to the matter of free photocopying, plaintiffs once again have not pointed to any instance in which an inmate was actually denied access to the courts by reason of being unable to photocopy documents when he did not have the funds to pay for the photocopying service.
14
Appendix at 58, 60. The district court approved and adopted the Magistrate's recommendation to deny the preliminary injunction "for the reasons set forth in his report." Appendix at 69.
B.
15
On appeal, the inmates reiterate their claim that they were irreparably harmed because they were forced into a position in which they had "to choose to forego legal remedies for the few 'amenities of prison life' they have funds to purchase, or forego these 'amenities in pursuit of legal remedies.' " Appendix at 53. But appellants do not in any way specify what these amenities are. Nor do they allege that they were deprived of their basic necessities. They assert merely that they have "clear" constitutional rights that are being violated, and that the violation of constitutional rights for even minimal periods of time constitutes the required showing of irreparable harm. Jurisdiction is vested in this Court pursuant to 28 U.S.C. § 1292(a)(1).
16
It is now established, of course, "that prisoners have a constitutional right of access to the courts." Bounds v. Smith, 430 U.S. 817, 821, 97 S.Ct. 1491, 1494, 52 L.Ed.2d 72 (1977). But at this stage in the litigation, there has been no showing that this proceeding involves "access to the courts."3 Although broad constitutional claims are asserted, the present matter is quite different from any of the major constitutional cases relied upon by the appellants: This is not a situation in which prisoners are being denied the right to file petitions for habeas corpus unless the petitioners are found "properly drawn" by the legal investigator for the Parole Board. Ex parte Hull, 312 U.S. 546, 549, 61 S.Ct. 640, 641, 85 L.Ed. 1034 (1941). This is not a case in which the state has "effectively foreclosed" indigent prisoners from filing appeals and habeas corpus petitions by requiring the payment of docket fees. Smith v. Bennett, 365 U.S. 708, 81 S.Ct. 895, 6 L.Ed.2d 39 (1961); Burns v. Ohio, 360 U.S. 252, 257, 79 S.Ct. 1164, 1168, 3 L.Ed.2d 1209 (1959). This is not a case in which an indigent inmate cannot acquire trial records because of his inability to pay for them. Griffin v. Illinois, 351 U.S. 12, 20, 76 S.Ct. 585, 591, 100 L.Ed. 891 (1956). See also Draper v. Washington, 372 U.S. 487, 83 S.Ct. 774, 9 L.Ed.2d 899 (1963); Eskridge v. Washington Prison Board, 357 U.S. 214, 78 S.Ct. 1061, 2 L.Ed.2d 1269 (1958). L.Ed.2d 899 (1963). This is not a case in which indigent inmates are denied "a meaningful appeal" from their convictions because of the state's failure to appoint counsel. Douglas v. California, 372 U.S. 353, 358, 83 S.Ct. 814, 817, 9 L.Ed.2d 811 (1963). This is not a case in which the state prison system failed to provide adequate legal library facilities, Bounds, supra. Nor is this a case in which the state is closing a prison law clinic and does not provide an adequate law library, Wade v. Kane, 448 F.Supp. 678 (E.D.Pa.1978), aff'd 591 F.2d 1338 (3d Cir. 1979). Plaintiffs have been permitted to proceed in forma pauperis in this and in all their other cases, and thus the case at hand is also unlike Souder v. McGuire, 516 F.2d 820 (3d Cir. 1975), in which the plaintiffs were denied the right to proceed in forma pauperis.
17
Appellants rely heavily on Bounds v. Smith, 430 U.S. 817, 97 S.Ct. 1491, 52 L.Ed.2d 72 (1977). In the very first sentence in Bounds, however, the majority stated its perception of the primary issue before the Court as follows: "The issue in this case is whether States must protect the right of prisoners to access to the courts by providing them with law libraries or alternative sources of legal knowledge." 430 U.S. at 817, 97 S.Ct. at 1492-93 (emphasis added). Pads, pens, pencils, and photocopy machines are, of course, neither "law libraries" nor "alternative sources of legal knowledge." In a lengthy discourse on somewhat collateral issues, however, the Court said: "It is indisputable that indigent inmates must be provided at state expense with paper and pen to draft legal documents, with notarial services to authenticate them, and with stamps to mail them." 430 U.S. at 824-25, 97 S.Ct. at 1496 (emphasis added). Whether the latter statement was dictum or a holding is irrelevant for our purposes because the touchstone was the word "indigent," though the Court proffered no definition of indigency.
18
Magistrate Durkin's report suggests that the plaintiffs may not have been "indigent" for the purpose of purchasing the modest supplies at issue here. Further, and more important, the Magistrate stressed that there was no proof adduced that "any prisoner has not been able to perfect and pursue a legal action due to the written policy concerning postage and the policy regarding paper and writing utensils ...." Appendix at 58. He noted that each inmate was allowed to mail ten first class letters without cost per month and found that plaintiffs were unable to point "to any instance in which an inmate was actually denied access to the courts by reason of being unable to photocopy documents when he did not have the funds to pay for the photocopying service." Appendix at 60. We agree with the district court that appellants have not met their burden of showing irreparable injury in this regard. As the Court of Appeals for the Tenth Circuit recently observed in Johnson v. Parke:
19
The constitutional concept of an inmate's right of access to the courts does not require that prison officials provide inmates free or unlimited access to photocopying machinery. See Harrell v. Keohane (621 F.2d 1059 (10th Cir. 1980) ). When an inmate's access to the courts is not unduly hampered by the denial of access to such machinery, he cannot complain.
20
642 F.2d 377, 380 (10th Cir. 1981) (emphasis added).
21
We therefore will affirm the district court's order denying appellants' motion for preliminary injunctive relief.
III.
22
Appellants urge that, in addition to ruling on the preliminary injunction issue, we should also consider that portion of the district court's order that denied certification of the purported class of inmates. We conclude, however, that we lack appellate jurisdiction at this time over the latter issue.
A.
23
The appealability of a district court order denying a motion for class certification was, until recently, an unresolved issue. In 1978, however, the Supreme Court established that such orders are not generally appealable, inasmuch as they are neither "final decisions" for purposes of 28 U.S.C. § 1291,4 Coopers & Lybrand v. Livesay, 437 U.S. 463, 98 S.Ct. 2454, 57 L.Ed.2d 351 (1978), nor refusals of injunctive relief for purposes of 28 U.S.C. § 1292(a)(1),5 Gardner v. Westinghouse Broadcasting Co., 437 U.S. 478, 98 S.Ct. 2451, 57 L.Ed.2d 364 (1978). Cf. DeMasi v. Weiss, 669 F.2d 114 at 119 (3d Cir. 1982) (refusing to employ mandamus to review class certification order). In the present case, however, class certification was denied in the same order as the refusal of preliminary injunctive relief. Both parties agree that this Court has jurisdiction, under section 1292(a)(1), to review that portion of the order declining to issue the requested injunction. The disputed question is whether we may also review the class certification issue that was disposed of in the same order.
24
Appellants exhort us to embrace what one federal court has termed the doctrine of "pendent appellate jurisdiction," Marcera v. Chinlund, 595 F.2d 1231, 1236 n.8 (2d Cir.), vacated on other grounds sub nom. Lombard v. Marcera, 442 U.S. 915, 99 S.Ct. 2833, 61 L.Ed.2d 281 (1979). That doctrine, a judicially crafted exception to the interlocutory appeal rules of 28 U.S.C. § 1292, would provide that once an appellate court is accorded jurisdiction over the grant, refusal or modification of an injunction pursuant to § 1292(a)(1), the court in its discretion may review the entire order, including those portions of the order which otherwise would not qualify for interlocutory review.
25
While the Supreme Court has yet to address the propriety of pendent appellate jurisdiction,6 our circuit has had a number of opportunities to explore the concept. An examination of the opinions reveals, however, that this Court has never formulated a consistent approach to the problem. In several decisions, this Court appears to have adopted a broad view of appellate jurisdiction under section 1292. In D'Iorio v. County of Delaware, 592 F.2d 681 (3d Cir. 1978), for example, the Court stated:
26
(B)ecause the district court granted D'Iorio's requested injunctive relief and ordered his reinstatement as a county detective, this appeal is properly before us under 28 U.S.C. § 1292(a)(1) (authorizing appeals from injunctive orders). When appellate jurisdiction is established on this basis, the entire order, and not simply the propriety of the injunctive relief, is before the court for review.
27
592 F.2d at 685 n.4 (emphasis added). Similarly, in Kohn v. American Metal Climax, Inc., 458 F.2d 255 (3d Cir.), cert. denied, 409 U.S. 874, 93 S.Ct. 120, 34 L.Ed.2d 126 (1972), the Court asserted that certain provisions of the district court's orders were "injunctions within the meaning of section 1292(a)(1) .... Given jurisdiction over these aspects of the district court's orders we can review the merits of the entire case as it now rests." 458 F.2d at 262. See also Jaffee v. United States, 592 F.2d 712, 715 (3d Cir.), cert. denied, 441 U.S. 961, 99 S.Ct. 2406, 60 L.Ed.2d 1066 (1979); Merrell-National Laboratories, Inc. v. Zenith Laboratories, Inc., 579 F.2d 786, 791 (3d Cir. 1978).
28
The reach of Kohn, however, was explicitly constricted in W. L. Gore & Assoc. v. Carlisle Corp., 529 F.2d 614, 618 (3d Cir. 1976), a patent infringement case in which Judge Maris, writing for a unanimous panel, concluded that
29
the jurisdiction conferred upon the court of appeals does not extend to other claims or issues determined by the judgment which have no bearing upon the propriety of the action of the court with respect to the injunction.... Our decision in Kohn ... is not to the contrary. For in that case an injunction was the principal relief sought and all the issues decided by the district court in its interlocutory judgment which was appealed under § 1292(a)(1) appear to have been involved in the plaintiff's right to injunctive relief.
30
Finally, a later case, Concerned Citizens of Bushkill Township v. Costle, 592 F.2d 164, 168 (3d Cir. 1979), would appear to be even more directly at variance with Kohn and D'Iorio. Considering a district court order that disposed both of plaintiff's motion for a preliminary injunction and of defendant-intervenor's motion to file a supplemental answer, the court stated summarily: "This court's jurisdiction is limited to reviewing that portion of the ... order refusing to grant an injunction." Bushkill thus represents a narrow approach to section 1292(a)(1) that would restrict our jurisdiction to the literal terms of the statute.
B.
31
Section 1292(a)(1) provides that the appellate courts "shall have jurisdiction of appeals from ... (i)nterlocutory orders of the district courts ... granting, continuing, modifying, refusing or dissolving injunctions, or refusing to dissolve or modify injunctions...." 28 U.S.C. § 1292(a)(1) (1976). The provision is one of four exceptions7 to the general rule that our appellate jurisdiction extends to final decisions of district courts. 28 U.S.C. § 1291 (1976). The history of § 1292 has been recounted elsewhere, see, e.g., Baltimore Contractors, Inc. v. Bodinger, 348 U.S. 176, 75 S.Ct. 249, 99 L.Ed. 233 (1955); Katz v. Carte Blanche Corp., 496 F.2d 747, 753-54 (3d Cir.), cert. denied, 419 U.S. 885, 95 S.Ct. 152, 42 L.Ed.2d 125 (1974); Stewart-Warner Corp. v. Westinghouse Electric Corp., 325 F.2d 822, 829-30 (2d Cir. 1963) (Friendly, J., dissenting), cert. denied, 376 U.S. 944, 84 S.Ct. 800, 11 L.Ed.2d 767 (1964). It is sufficient to note here that section 1292(a)(1) "creates an exception to the long-established policy against piecemeal appeals, which this Court is not authorized to enlarge or extend. The exception is a narrow one and is keyed to the 'need to permit litigants to effectually challenge interlocutory orders of serious, perhaps irreparable, consequence.' " Gardner v. Westinghouse Broadcasting Co., 437 U.S. 478, 480, 98 S.Ct. 2451, 2453, 57 L.Ed.2d 364 (1978) (quoting Baltimore Contractors v. Bodinger, 348 U.S. 176, 181, 75 S.Ct. 249, 252, 99 L.Ed. 233 (1955) (footnote omitted)); accord, Carson v. American Brands, Inc., 450 U.S. 79, 101 S.Ct. 993, 67 L.Ed.2d 59 (1981). Because section 1292(a)(1) is an exception to an otherwise fundamental rule of federal appellate jurisdiction, we must construe the scope of the provision with great care and circumspection. Indeed, as the Supreme Court declared in Switzerland Cheese Assoc. v. E. Horne's Market, Inc., 385 U.S. 23, 24, 87 S.Ct. 193, 195, 17 L.Ed.2d 23 (1966), it is necessary that we "approach this statute somewhat gingerly lest a floodgate be opened that brings into the exception many pretrial orders."
32
A broad grant of section 1292(a)(1) jurisdiction posited by such cases as D'Iorio and Kohn appears directly to contravene the admonition of the Supreme Court in Gardner and Switzerland Cheese. Kohn, however, relied upon a different line of Supreme Court precedent, the genesis of which was Smith v. Vulcan Iron Works, 165 U.S. 518, 525, 17 S.Ct. 407, 410, 41 L.Ed. 810 (1897). In Smith, the Supreme Court construed the predecessor of section 1292(a)(1) to authorize "according to its grammatical construction and natural meaning, an appeal to be taken from the whole of such interlocutory order or decree, and not from that part of it only which grants or continues an injunction." Reliance upon Smith, however, was misplaced. In Smith, the Supreme Court went on to say that the intent of the provision in question was "not only to permit the defendant to obtain immediate relief from an injunction ... but also to save both parties from the expense of further litigation, should the appellate court be of opinion that the plaintiff was not entitled to an injunction because his bill had no equity to support it." 165 U.S. at 525, 17 S.Ct. at 410 (emphasis added).8 Smith holds, therefore, that where appellate jurisdiction is based on section 1292(a) but it appears to the appellate court that there is no merit to the complaint whatever, the entire case will be dismissed. This holding is much narrower than the excerpt quoted in Kohn would appear to suggest.
33
N.L.R.B. v. Interstate Dress Carriers, Inc., 610 F.2d 99 (3d Cir. 1979), reflects more accurately the meaning of the Smith case. There, the district court denied a motion for a preliminary injunction and, in the same order, directed that discovery go forward. We decline to review the discovery order, concluding that, unless "subject matter jurisdiction is entirely lacking or the pleadings disclose no claim upon which relief could be granted ... the discovery order is interlocutory and unreviewable." 610 F.2d at 104.
34
The other circuits that have considered the issue appear to have taken the more restrictive view of section 1292(a)(1) that is reflected in such opinions as Interstate Dress Carriers and Gore, discussed supra. Both the Second and Seventh Circuit approaches deserve close examination. In Hurwitz v. Directors Guild of America, Inc., 364 F.2d 67, 70 (2d Cir.), cert. denied, 385 U.S. 971, 87 S.Ct. 508, 17 L.Ed.2d 435 (1966), Judge Lumbard-reflecting the Smith court rationale-noted that
35
(a)s a general rule, when an appeal is taken from the grant or denial of a preliminary injunction, the reviewing court will go no further into the merits than is necessary to decide the interlocutory appeal.... However, this rule is subject to a general exception-the appellate court may dismiss the complaint on the merits if its examination of the record upon an interlocutory appeal reveals that the case is entirely void of merit.... Such an exception serves the obvious interest of economy of litigation....
36
The Second Circuit carved out another narrow exception to the general rule in Sanders v. Levy, 558 F.2d 636, 643 (2d Cir. 1976), adhered to on this point en banc, 558 F.2d 646, 647-48 (2d Cir. 1977), rev'd on other grounds sub nom. Oppenheimer Fund, Inc. v. Sanders, 437 U.S. 340, 98 S.Ct. 2380, 57 L.Ed.2d 253 (1978). There, the Court concluded that it could review an otherwise nonappealable class action determination because there was "sufficient overlap in the factors relevant" to the class action issue and the other, properly appealable, issues. See also Marcera v. Chinlund, 595 F.2d 1231, 1236 n.8 (2d Cir.) vacated on other grounds, sub nom. Lombard v. Marcera, 442 U.S. 915, 99 S.Ct. 2833, 61 L.Ed.2d 281 (1979). Judge Waterman, in State of New York v. Nuclear Regulatory Commission, 550 F.2d 745 (2d Cir. 1977), carefully delineated the rationale behind the Hurwitz and Sanders decisions. Declining to review the merits of the entire case after properly assuming jurisdiction under section 1292(a)(1), he concluded:
37
What Hurwitz and Sanders have in common, and what distinguishes them from the present case, is that in each of them the expanded review undertaken by the appellate court required no greater expenditure of effort by that court than if it had strictly confined its review to the interlocutory order which was independently appealable.
38
550 F.2d at 760 (emphasis added).
39
A similarly circumscribed approach was adopted by the Seventh Circuit in Jenkins v. Blue Cross Mutual Insurance, Inc., 522 F.2d 1235 (7th Cir. 1975), aff'd on rehearing, 538 F.2d 164 (7th Cir.), cert. denied, 429 U.S. 986, 97 S.Ct. 506, 50 L.Ed.2d 598 (1976). There, the plaintiff, a former employee of Blue Cross, charged her former employer with sex discrimination in violation of Title VII. The requested injunctive relief would have enjoined the defendants' current employee evaluation and promotion practices. In refusing to grant the plaintiff's motion to certify a class including all current employees of Blue Cross, the district court effectively precluded the requested injunctive relief: because the plaintiff was no longer employed, she could not demonstrate "irreparable harm" to herself resulting from continued use of the evaluation and promotion practices. On these facts, the Seventh Circuit held the class certification question appealable, concluding that "there can be no doubt that the district court's earlier refusal to certify the suit as a class action directly controlled its subsequent decision on the requested preliminary injunction." Id. at 1238 (emphasis added) (footnote omitted).9
40
A fair reading of the relevant Supreme Court precedents, as well as the discussions of section 1292(a)(1) found in the decisions of the other circuits that have considered the issue, lead us to conclude that the broad grant of section 1292(a)(1) jurisdiction adopted in such cases as D'Iorio and Kohn is incorrect. The Congress that drafted section 1292 set forth four exceptions-and only four-from the basic rule that interlocutory orders are not appealable. Mindful of the Supreme Court's counsel in Gardner, supra, and Switzerland Cheese, supra, we decline to reach out and extend our jurisdiction absent further directives from Congress. Instead, we hold that a pendent class certification order is not appealable under section 1292(a)(1) unless the preliminary injunction issue cannot properly be decided without reference to the class certification question.10
41
Our holding today reflects the carefully tailored reading of section 1292(a) (1) that has been mandated by the Supreme Court and advocated explicitly by the Second and Seventh Circuits. If the preliminary injunction issue appealable under section 1292(a)(1) cannot be resolved without reference to the otherwise nonappealable class certification issue-either because the latter issue directly controls disposition of the former, or because the issues are, in some other way, inextricably bound-then both issues must be addressed in order to resolve properly the section 1292(a)(1) preliminary injunction issue.11 In such a situation, the appellate court has no choice: any more limited review would deprive the appellant of his or her congressionally mandated right to a section 1292(a)(1) interlocutory appeal. If, on the other hand, the appellate court can dispose of the section 1292(a)(1) appeal without venturing into otherwise nonreviewable matters, its jurisdiction should be limited accordingly.12
42
A contrary rule would have serious and unfortunate consequences. For one thing, extending appellate jurisdiction over interlocutory orders not explicitly covered by section 1292(a) could disrupt the functioning of the district court by prematurely taking matters out of the district judge's hands. An appellate court decision to assume jurisdiction over a class certification order, for example, which "may be altered or amended before the decision on the merits," Fed.R.Civ.P. 23(c)(1), is-in the absence of extraordinary circumstances-a usurpation of the district court's role. In addition, any rule that encourages a broad range of appeals under section 1292(a)(1) invites abuse. Litigants desiring immediate appellate review could simply encumber their complaints or counterclaims with prayers for injunctive relief. Finally, and most importantly, the standard arguably suggested in D'Iorio and Kohn could effectively undermine the final decision rule. Once we begin reviewing a broad range of interlocutory orders, we defeat the narrow scope of section 1292(a) that was clearly intended by Congress.13
C.
43
Turning to the present appeal, we conclude that the order denying the class certification is not appealable as a concomitant of the order denying preliminary injunctive relief. Under the standard that is inferrable from section 1292(a), a mere nexus between the two orders is not sufficient to justify a decision to assume jurisdiction. Thus, the fact that the definition of the term "indigency" was relevant to both issues is not enough, by itself, to warrant the extension of our jurisdiction. Unlike Jenkins v. Blue Cross Mutual Insurance, Inc., supra, this is not a case in which the order denying the class certification "directly controlled" the refusal to grant a preliminary injunction. As an appellate court, we can resolve the preliminary injunction issue without even a reference to the order denying class certification. Indeed, it is instructive to note that, in this case, the Magistrate disposed of the preliminary injunction issue in its entirety before addressing the motion for class certification. Appendix at 62. Additionally, as the appellees point out, "it is conceivable that preliminary injunctive relief could have been granted while class action status (was) denied and the same result desired by the inmates would have been achieved." Brief for Appellees at 15. The two issues are separate and distinct; in no way can they be said to be "inextricably bound."
IV.
44
We therefore hold (a) that the ruling of the district court denying the request for a preliminary injunction will be affirmed, and (b) that the class certification order is not reviewable under section 1292(a)(1) at this point in the litigation.
45
The matter will be remanded to the district court for action consistent with this opinion.
46
SEITZ, Chief Judge, concurring.
47
I join that portion of the majority's opinion affirming the district court's denial of appellants' motion for preliminary injunctive relief. I also agree that we do not have jurisdiction to consider an appeal from the district court's denial of class certification. My disagreement with the majority is narrow: I believe that a different standard should govern the scope of our appellate jurisdiction under 28 U.S.C. § 1292(a)(1) (1976).
48
I fully agree with the premise of the majority's opinion: "Because section 1292(a)(1) is an exception to an otherwise fundamental rule of federal appellate jurisdiction, we must construe the scope of the provision with great care and circumspection." Maj. Op. at 447 (emphasis in original). I am also in accord with the majority's view that section 1292(a)(1) does not confer a broad grant of pendent appellate jurisdiction on the federal courts and that we should overrule prior decisions in this circuit-including one which I authored-to the extent that they have expansively interpreted the statute to permit review of all otherwise unappealable orders, or any portion of an order, accompanying a grant or denial of injunctive relief. See, e.g., D'Iorio v. County of Delaware, 592 F.2d 681 (3d Cir. 1978); Kohn v. American Metal Climax, Inc., 458 F.2d 255 (3d Cir.), cert. denied, 409 U.S. 874, 93 S.Ct. 120, 34 L.Ed.2d 126 (1972).
49
I believe, however, that the strong policy against piecemeal appellate review embodied in section 1292(a)(1), and recently emphasized by the Supreme Court in Gardner v. Westinghouse Broadcasting Co., 437 U.S. 478, 480, 98 S.Ct. 2451, 2453, 57 L.Ed.2d 364 (1978), counsels for an even more restrictive approach than that suggested by the majority. I would hold that when a court of appeals reviews a district court's order with respect to injunctive relief, section 1292(a)(1) does not confer jurisdiction to review any other order of the district court.1
50
Under my approach, a court may affirm, modify, or reverse an order that is appealable under section 1292(a)(1), but is without jurisdiction to review any ancillary orders of the district court, whether or not they directly control an order granting or denying injunctive relief. This court must, of course, consider all issues raised by appealable orders even if such determinations directly impact on a nonappealable order. This process does no more than effectuate the right of complete interlocutory review of appealable orders.
51
Thus, even when consideration of a district court's ruling on a motion for preliminary injunctive relief can be said to affect a class certification order, I believe that the court should only act on the former, appealable, order.2 This does not mean that the district court cannot thereafter take cognizance of our determination to the extent it impacts on the validity of the class certification.
52
My formulation differs from the majority's in two respects. First, under the majority's view, a nonappealable order becomes appealable if it directly controls or is inextricably linked to an order granting or denying injunctive relief, whereas I would hold that an order, or a portion of an order, that is not independently reviewable under the statute, is never appealable under section 1292(a)(1). This formulation better recognizes that, as an exception to the general rule against interlocutory appeals, the scope of our jurisdiction under section 1292(a)(1) should be narrowly circumscribed. The majority does not abandon the doctrine of "pendent appellate jurisdiction" implicitly adopted in our previous decisions, but merely establishes more stringent standards for its application. I believe the doctrine should be rejected.
53
Second, permitting consideration of only those issues necessary to decide an appealable order would produce a more circumscribed grant of appellate jurisdiction than does the majority's approach. The majority would permit review of an order if it "directly controls" the injunctive order or if "the issues are, in some other way, 'inextricably bound.' " Maj. Op. at 449. I believe that the "inextricably bound" aspect of the formulation is inherently vague, and leaves the door open to expansive appellate review. Moreover, this standard invites dispute whether a particular nonappealable order is merely factually related to or is inextricably bound up with an appealable determination. In an area of law where certainty is important, I believe such latitude is unwise. See Baltimore Contractors v. Bodinger, 348 U.S. 176, 181, 75 S.Ct. 249, 253, 99 L.Ed. 233 (1955) ("ad hoc decisions (on questions of appealability) disorganize practice by encouraging attempts to secure or oppose appeals with a consequent waste of time and money").3 In light of the Supreme Court's recent strict construction of the statute, particularly with respect to the appealability of class action certification, Coopers & Lybrand v. Livesay, 437 U.S. 463, 467, 98 S.Ct. 2454, 2457, 57 L.Ed.2d 351 (1978) (holding class certification orders are not final decisions under § 1291); Gardner v. Westinghouse Broadcasting Co., 437 U.S. 478, 480, 98 S.Ct. 2451, 2453, 57 L.Ed.2d 364 (1978) (holding class certification orders are not injunctions under § 1292(a)(1)), I believe that a narrow approach is desirable. My approach effectuates the literal command of section 1291(a)(2), which permits appeals only from orders granting, denying or modifying interlocutory injunctive relief, and safeguards against expansive appellate review of ancillary interlocutory orders.4 At the same time, it does not prevent a district court in a proper case from making use of any issue determination that may be relevant to other matters that are still before it.
54
A. LEON HIGGINBOTHAM, Jr., Circuit Judge, concurring and dissenting.
55
I concur in the majority opinion insofar as it affirms the district court's denial of a preliminary injunction. I believe the majority's view "that a pendent class certification order is not appealable under section 1292(a)(1) unless the preliminary injunction issue cannot properly be decided without reference to the class certification question" is too narrow a rule. Majority Opinion, at 448 (footnote omitted). Furthermore, I would extend pendent appellate jurisdiction to the issue of class certification in this case because I have concluded that it is intertwined with the court's denial of injunctive relief.
I.
56
The cases, including the majority and concurring opinions here, reveal four basic approaches to the issue of pendent appellate jurisdiction. In D'Iorio v. County of Delaware, 592 F.2d 681, 685 n.4 (3d Cir. 1978), a most thoughtful and analytical opinion by Judge Garth, our court expressed the view that "(w)hen appellate jurisdiction is established (under § 1292(a)(1)), the entire order, and not simply the propriety of the injunctive relief, is before the court for review." This case is illustrative of the most liberal and expansive approach to pendent appellate jurisdiction.
57
The majority today repudiates D'Iorio and adopts a rule whereby there can be no pendent appellate jurisdiction unless "the preliminary injunction issue appealable under section 1292(a)(1) cannot be resolved without reference to the otherwise nonappealable class certification issue...." Majority Opinion, at 449 (emphasis in original). The concurring opinion would go even further and eliminate completely our discretion to assume pendent appellate jurisdiction. In Chief Judge Seitz' view, appellate courts are vested with no jurisdiction to review ancillary orders of the district court, whether or not they directly control an order granting or denying injunctive relief.
58
Although the D'Iorio rule and the approach suggested by the concurring opinion do establish bright line rules which have the virtue of ease of application, I believe that D'Iorio is too permissive and the concurrence too restrictive. The majority, which continues to allow discretion, albeit closely circumscribed, would not allow for pendent appellate jurisdiction in the class of cases where, because of the intertwining of facts or law, it is useful and economical to reach the non-appealable issue along with the appealable one.
59
The Second Circuit has adopted a rule that allows for a broader measure of flexibility in the interest of judicial economy. The Second Circuit would assume pendent appellate jurisdiction where there is "sufficient overlap in factors relevant" to both the appealable and otherwise non-appealable issues. Sanders v. Levy, 558 F.2d 636, 643 (2d Cir. 1976), adhered to on this point en banc, 558 F.2d 646, 647-48 (2d Cir. 1977), rev'd on other grounds sub nom., Oppenheimer Fund, Inc. v. Sanders, 437 U.S. 340, 98 S.Ct. 2380, 57 L.Ed.2d 253 (1978). As the majority noted, Judge Waterman, in State of New York v. Nuclear Regulatory Commission, 550 F.2d 745, 760 (2d Cir. 1977), interpreted the Second Circuit's rule to allow for pendent appellate jurisdiction where "the expanded review undertaken by the appellate court require(s) no greater expenditure of effort by that court than if it ... strictly confine(s) its review to the interlocutory order which (is) independently appealable."
60
Professor Moore stated this approach somewhat differently but to the same effect when he wrote,
61
Where an interlocutory appeal is taken, as from an order granting an injunction, the appellate court will not go any further into the merits of the case than is necessary to decide the matter upon appeal. The appellate court is not, however, limited solely to a consideration of the order upon which the appeal is based, for its jurisdiction embraces such other orders, although interlocutory and in themselves non-appealable, and such questions are basic to and underlie the order supporting the appeal.
62
9 Moore's Federal Practice, P 110.25 at 269-70 (2d ed. 1970) (footnotes omitted; emphasis added).
63
I do not believe that appellate jurisdiction needs to be as closely circumscribed as the majority would have it. The flexibility present in the Second Circuit's rule would allow us to dispose of issues where very little extra work is required. In fact, the present case is one in which there is a basic underlying question relevant to both the injunction and class certification issues. The magistrate admitted that he was recommending denial of the injunction and of class certification because of the difficulty in defining indigency. Granted, the majority is accurate in its conclusion that the injunction issue can be reviewed separately from the class certification question. Nevertheless, the issues have been fully briefed, there is an obvious overlap in factors relevant to both and it would require very little extra effort to reach the otherwise non-appealable class certification issue. I would adopt a rule similar to that used by the Second Circuit and assume pendent appellate jurisdiction in this case.
1
Kerchner's name was docketed as Kershner, but except for the caption we will use the correct spelling of his name in this opinion. See Ford Motor Credit Co. v. Milhollin, 444 U.S. 555, 555 n*, 100 S.Ct. 790, 790-91 n*, 63 L.Ed.2d 22 (1980)
2
While there is a claim that there was a failure to provide § 1983 forms for prisoners, the failure to provide enough § 1983 forms was found by the Magistrate to be nothing more than a "temporary short fall (which) resulted ... (when) a check disclosed that there were only 5 sets of forms on hand. Gerber felt he had to limit the number of forms given to Ryan, until supplies could be replenished, when one considers that there are 850 men in the prison (sic) ... Moreover, this court can take notice that many handwritten civil rights complaints, not on the required forms, are filed in this district." Appendix at 60. We cannot conclude that these findings were clearly erroneous
3
It must be emphasized that this case comes to us as an appeal from the denial of a preliminary injunction. It does not arrive with a detailed record. No testimony has been taken, and the case was decided on the basis of sparse affidavits. What may be error on an appeal from a final order may not constitute error at the present posture of review. Continental Group Inc. v. Amoco Chemicals Corp., 614 F.2d 351, 357 (3d Cir. 1980)
4
Section 1291 provides: "The courts of appeals shall have jurisdiction of appeals from all final decisions of the district courts ... except where a direct review may be had in the Supreme Court." 28 U.S.C. § 1291 (1976)
5
See note 7 infra & accompanying text
6
This issue was specifically reserved in Gardner v. Westinghouse Broadcasting Co., 437 U.S. 478, 479 n.3, 98 S.Ct. 2451, 2453 n.3, 57 L.Ed.2d 364 (1978)
7
Section 1292(a) also extends appellate jurisdiction to interlocutory orders appointing receivers, or refusing orders to wind up receiverships or to take steps to accomplish the purposes thereof, such as directing sales or other disposals of property, 28 U.S.C. § 1292(a)(2); interlocutory decrees of such district courts or the judges thereof determining the rights and liabilities of the parties to admiralty cases in which appeals from final decrees are allowed, 28 U.S.C. § 1292(a)(3); and judgments in civil actions for patent infringement which are final except for accounting, 28 U.S.C. § 1292(a)(4)
Section 1292(b) permits a district judge to certify a question of law to the appellate court if the judge believes that "the order involves a controlling question of law as to which there is substantial ground for difference of opinion and that an immediate appeal from the order may materially advance the ultimate termination of the litigation."
8
See also Deckert v. Independence Shares Corp., 311 U.S. 282, 286-87, 61 S.Ct. 229, 232-233, 85 L.Ed. 189 (1940), in which the Supreme Court, citing Smith, held that the Court of Appeals "properly examined the interlocutory order denying the motions to dismiss, although generally it could consider such an order only on appeal from a final decision" because " '(i)f insuperable objection to maintaining the bill clearly appears, it may be dismissed and the litigation terminated' " (quoting Meccano, Ltd. v. Wanamaker, 253 U.S. 136, 141, 40 S.Ct. 463, 465, 64 L.Ed. 822 (1920))
9
See also Loya v. Immigration and Naturalization Service, 583 F.2d 1110, 1113 (9th Cir. 1978) (footnote omitted), in which the court held that the order refusing to certify the class was not appealable under either § 1291, citing Coopers & Lybrand v. Livesay, 437 U.S. 463, 98 S.Ct. 2454, 57 L.Ed.2d 351 (1978), or § 1292(a)(1): "We need not decide now if we would adopt the Jenkins holding. Under its own terms it cannot apply to the present case. In Jenkins the failure to certify the class 'directly controlled' the later decision to refuse a preliminary injunction. In the instant case, the district court granted partial summary judgment denying injunctive relief for reasons independent of whether the suit was maintained individually or as a class action."
10
Similarly, if inquiry into the preliminary injunction issue reveals that the case has no merit and that judicial resources would be wasted were the case to continue, it would appear salutary to dismiss the action in its entirety. See Smith v. Vulcan Iron Works, supra; Hurwitz v. Directors Guild of America, Inc., supra. The present case does not raise this issue, however
11
This test has been adopted by at least one authority. See C. Wright, Law of Federal Courts § 102, at 513 (3d ed. 1976) ("(R)eview quite properly extends to all matters inextricably bound up with the remedial decision and the court, if it sees fit, may consider and decide the merits of the case and may order dismissal of the action"). In contrast, the second edition of Professor Wright's treatise read: "It is settled that an appeal from an order granting or refusing an injunction brings before the appellate court the entire order, not merely the propriety of injunctive relief, and that the appellate court may consider and decide the merits of the case and may order dismissal of the action." C. Wright, Law of Federal Courts § 102, at 459 (2d ed. 1970). We can infer that the change in Professor Wright's approach occurred in response to such cases as Sanders, supra, and Jenkins, supra
12
Our holding today in no way impairs the vitality of such cases as Latrobe Steel Co. v. United Steelworkers, 545 F.2d 1336 (3d Cir. 1976) and United States v. Spectro Foods Corp., 544 F.2d 1175 (3d Cir. 1976), in which we held that "an appellate court may consider the matter of a civil contempt in connection with an appeal from the underlying preliminary injunction." Latrobe Steel, 545 F.2d at 1340
13
Of course, there may be an appeal at this stage in the litigation when the district court certifies such an appeal under § 1292(b). See note 7 supra
1
To simplify the exposition of my approach, I have assumed that the district court's disposition of the class action certification motion is contained in one order, and its disposition of the request for injunctive relief is contained in another. My analysis would apply with equal force, however, where the two determinations are contained in the same order, as they are in this case. Thus, alternatively stated, I would hold that § 1292(a)(1) confers jurisdiction to review only that portion of the order granting or denying injunctive relief, and that we may not review any portion of the order that is not independently appealable
2
In Deckert v. Independence Shares Corp., 311 U.S. 282, 61 S.Ct. 229, 85 L.Ed. 189 (1940), the United States Supreme Court held that, when reviewing an interlocutory order granting or denying injunctive relief, an appellate court "is not limited to mere consideration of, and action upon, the order appealed from", but may review the district court's denial of defendant's motion to dismiss if "insuperable objection to maintaining the bill clearly appears". Id. at 287, 61 S.Ct. at 232. See Smith v. Vulcan Iron Works, 165 U.S. 518, 525, 17 S.Ct. 407, 410, 41 L.Ed. 810 (1906); Ex parte Nat'l Enameling Co., 201 U.S. 156, 162, 26 S.Ct. 404, 406, 50 L.Ed. 707 (1905) ("If an injunction is granted by an interlocutory order and the order is taken on appeal to the Circuit Court of Appeals, and that court is of the opinion that the patent on its face is absolutely void, it would be a waste of time and an unnecessary continuance of litigation to simply enter an order setting aside the injunction and remanding the case for further proceedings."). As the majority observes, these cases establish an independent exception to § 1291, applicable only when it appears, upon review of an appealable interlocutory order, that the equitable action lacks merit, and permits the court to dismiss the case entirely
3
The majority cites the Second Circuit's decisions in Sanders v. Levy, 558 F.2d 636, 643 (2d Cir. 1976), adhered to on this point en banc, 558 F.2d 646, 647-48 (2d Cir. 1977), rev'd on other grounds sub nom. Oppenheimer Fund, Inc. v. Sanders, 437 U.S. 340, 98 S.Ct. 2380, 57 L.Ed.2d 253 (1978) and Marcera v. Chinlund, 595 F.2d 1231, 1236 n.8 (2d Cir.), vacated on other grounds sub nom. Lombard v. Marcera, 442 U.S. 915, 99 S.Ct. 2833, 61 L.Ed.2d 281 (1979). If these cases are cited with approval, I disagree. I do not believe we may review a class action determination in conjunction with an appealable interlocutory order merely because there is a "sufficient overlap in the factors relevant." Sanders, 558 F.2d at 643
4
Because it is not necessary to review an order of civil contempt in order to review an appealable injunction on which it is based, I recognize that my formulation appears to conflict with our prior decisions in that area. See, e.g., Latrobe Steel Co. v. United Steelworkers, 545 F.2d 1336, 1340 (3d Cir. 1976) ("an appellate court may consider the matter of civil contempt in connection with an appeal from the underlying preliminary injunction"); United States v. Spectro Foods, 544 F.2d 1175 (3d Cir. 1976). Nor do I believe that these cases are easily reconcilable with the majority's approach. This circuit has never set forth in detail the rationale for its treatment of civil contempt orders, and I do not believe it is necessary either to embrace or reject this longstanding rule until it is properly before the court in banc | 01-03-2023 | 08-23-2011 |
https://www.courtlistener.com/api/rest/v3/opinions/854258/ | Case: 12-40189 Document: 00512161191 Page: 1 Date Filed: 03/01/2013
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
March 1, 2013
No. 12-40189 Lyle W. Cayce
Clerk
PPI TECHNOLOGY SERVICES, L.P.,
Plaintiff–Appellant
v.
LIBERTY MUTUAL INSURANCE CO.
Defendant–Appellee
Appeal from the United States District Court
for the Southern District of Texas
USDC No. 2:11-CV-47
ON PETITION FOR PANEL REHEARING
Before WIENER, CLEMENT, and PRADO, Circuit Judges.
EDWARD C. PRADO, Circuit Judge:*
The petition for panel rehearing is GRANTED. We withdraw our prior
opinion, and substitute the following. Defendant–Appellee, Liberty Mutual
Insurance Co., (“Liberty Mutual”), insured Plaintiff–Appellant, PPI Technology
Services, L.P., (“PPI”). PPI was retained by several third parties to assist in
planning well-drilling operations. After a well was drilled in the wrong area,
*
Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH CIR.
R. 47.5.4.
Case: 12-40189 Document: 00512161191 Page: 2 Date Filed: 03/01/2013
No. 12-40189
PPI was sued by the third parties. PPI then sought defense and indemnification
from its insurance company, Liberty Mutual. When Liberty Mutual refused, PPI
brought suit claiming breach of contract, violation of the Texas Prompt Payment
Statute, and breach of the duty of good faith and fair dealing. On Cross Motions
for Summary Judgment, the district court found for Liberty Mutual, holding that
it did not have a duty to defend PPI against two underlying lawsuits. PPI
appeals the district court’s judgment, arguing that the district court erred in
refusing to consider some allegations in the underlying lawsuits as “factual
allegations,” and in its determination that, of the “factual allegations,” none
alleged “property damage” from an “occurrence” as required by PPI’s insurance
policy with Liberty Mutual. We AFFIRM the district court’s dismissal.
I. FACTUAL AND PROCEDURAL BACKGROUND
A. The Insurance Policy
Liberty Mutual issued a commercial general liability policy to PPI (the
“Policy”). The Policy provided that Liberty Mutual would defend and indemnify
PPI for claims arising out of PPI’s exploration and production business
operations. The Policy provides “Bodily Injury and Property Damage Liability”
coverage (Coverage A) for “property damage” caused by an “occurrence.” The
Policy defines “property damage” as follows:
a. Physical injury to tangible property, including all resulting loss
of use of that property. All such loss of use shall be deemed to occur
at the time of the physical injury that caused it; or
b. Loss of use of tangible property that is not physically injured. All
such loss of use shall be deemed to occur at the time of the
“occurrence” that caused it.
The Policy also provides coverage for “property damage” within the
“underground resources and equipment hazard” endorsement to the Policy. The
2
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No. 12-40189
Policy defines the term “underground resources and equipment hazard” to
include:
‘Property damage’ to any of the following:
a. Oil, gas, water or other mineral substances which have not been
reduced to physical possession above the surface of the earth or
above the surface of any body of water;
b. Any well, hole, formation, strata or area in or through which
exploration for or production of any substance is carried on;
c. Any casing, pipe, bit, tool, pump or other drilling or well servicing
machinery or equipment located beneath the surface of the earth in
any such well or hole or beneath the surface of any body of water.
B. Underlying Lawsuits
Royal Production Company, Inc. (“Royal”) is the lessor and operator of
three leases located in Lake Boudreaux, Louisiana. Royal retained PPI as the
representative of the working interest owners, including Blue Moon Exploration
Company, L.L.C. (“Blue Moon”). PPI was allegedly to assist in well-planning
and oversee the drilling of wells on the leases.
A well was dug on the wrong lease, plugged, and abandoned. Royal and
the non-operator working interest owners filed suit against PPI and sought to
compel arbitration. Both the Royal and the Blue Moon petitions were
consolidated and referred to arbitration. We refer to the consolidated claims
collectively as the “underlying lawsuits.”
The relevant allegations are as follows: Royal contends that “PPI caused
the drilling rig to be towed to [] and placed upon [] the wrong location.”
Subsequently, towing the rig to the wrong lease resulted in “the well being
drilled in the wrong location” and a “dry hole.” Drilling in the wrong location
caused Royal and the nonoperating working interest owners to “expend[] in
excess of $4,200,000.00 for the drilling of the Well in the wrong location.” The
Blue Moon Plaintiffs seek $737,752.40 in delay rentals to maintain the lease
where the well was ultimately drilled. Additionally, Royal alleges that PPI
3
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No. 12-40189
caused “property damage to Royal as an owner in the property where the well
was being drilled” including “physical injury to tangible property, including all
resulting loss of use of the property.” Finally, Royal alleges that PPI’s “acts and
omissions constitut[e] negligence and negligence per se.”
C. The Present Case
PPI tendered the underlying lawsuits to Liberty Mutual for defense and
indemnification. Liberty Mutual denied that it owed PPI either. In a complaint
filed in Texas state court, and timely removed to federal district court, PPI
brought three claims against Liberty Mutual: (1) breach of insurance contract;
(2) breach of section 541.060 of the Texas Insurance Code; and (3) breach of the
duty of good faith and fair dealing.
PPI filed a Motion for Partial Summary Judgment seeking a judicial
declaration that Liberty Mutual had a duty to defend PPI based upon the
allegations in the underlying lawsuits. Liberty Mutual responded by filing a
Motion for Summary Judgment, arguing it had no duty to defend or indemnify
PPI because the underlying lawsuits did not contain factual allegations of
“property damage” caused by an “occurrence” as required by the Policy, and that,
in the alternative, policy exclusions precluded coverage.
The district court denied PPI’s Motion for Partial Summary Judgment and
granted Liberty Mutual’s Motion for Summary Judgment, dismissing all of PPI’s
claims against Liberty Mutual. First, the district court declined to consider the
allegations of “property damage,” concluding that they were legal, rather than
factual, allegations. The district court concluded that the “property damage”
allegations were legal in nature because they “concern the definition and
categorization of certain conduct and objects, rather than the ‘facts giving rise
to the alleged actionable conduct.’” PPI Tech. Servs., LP, v. Liberty Mut. Ins. Co.,
2012 WL 130380, at *11 (S.D. Tex. 2012) (citing Merchs. Fast, 939 S.W.2d at 141
(quoting Adamo, 853 S.W.2d at 676)). “As mere legal assertions, these
4
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No. 12-40189
statements do not qualify as ‘allegations’ for purpose of the eight-corners rule.”
Id. PPI timely appealed, invoking our jurisdiction pursuant to 28 U.S.C. § 1291.
II. STANDARD OF REVIEW
This Court reviews a grant of summary judgment de novo. Gore Design
Completions, Ltd. v. Hartford Fire Ins. Co., 538 F.3d 365, 368 (5th Cir. 2008).
Summary judgment is appropriate when the pleadings and the record show
“there is no genuine dispute as to any material fact and the movant is entitled
to judgment as a matter of law.” Fed. R. Civ. P. 56(a); see Gore Design
Completions, Ltd., 538 F.3d at 368 (quoting Celotex v. Catrett, 477 U.S. 317, 322
(1986)). Because federal jurisdiction is based on diversity of citizenship, the
federal court looks to the substantive law of the forum state, here, Texas. See
Erie R.R. Co. v. Tompkins, 304 U.S. 64, 78 (1938); Tex. Indus., Inc. v. Factory
Mut. Ins. Co., 486 F.3d 844, 846 (5th Cir. 2007).
III. DISCUSSION
On appeal, PPI challenges the district court’s determinations that the
underlying lawsuits did not include factual allegations of “property damage” and
that they did not allege an “occurrence” as required under the Policy. Because
the underlying complaints did not include factual allegations of property
damage, we affirm the district court’s dismissal. Our holding is limited to the
facts of the case presented.1
A. Breach of Contract
PPI argues, in its first count, that Liberty Mutual breached its contract by
neglecting its duties to defend and indemnify PPI against the underlying
lawsuits filed by Royal and Blue Moon. We conclude that Liberty Mutual has
1
Our holding is not intended to alter Texas pleading standards.
5
Case: 12-40189 Document: 00512161191 Page: 6 Date Filed: 03/01/2013
No. 12-40189
not breached its contract because it has no duty to defend.2 The allegations in
the underlying lawsuits are either for economic damages, and thus not covered,
or are legal conclusions, rather than factual allegations as required.
1. Duty to Defend
a. Standards for Duty to Defend
Texas follows the eight-corners rule. Colony Ins. Co v. Peachtree Constr.,
Ltd., 647 F.3d 248, 253 (5th Cir. 2011) (citing Pine Oak Builders, Inc. v. Great
Am. Lloyds Ins. Co., 279 S.W.3d 650, 654 (Tex. 2009)). The insurance company’s
duty to defend the insured party is determined solely on the facts alleged in the
underlying lawsuit and the terms of the policy. Id. “Thus, the duty to defend
arises only when the facts alleged in the [underlying lawsuit], if taken as true,
would potentially state a cause of action falling within the terms of the policy.”
Northfield Ins. Co. v. Loving Home Care, Inc., 363 F.3d 523, 528 (5th Cir. 2004)
(first emphasis added).
If there is a “doubt as to whether or not the allegations of a complaint
against the insured state a cause of action within the coverage of a liability
policy sufficient to compel the insurer to defend the action, such doubt will be
resolved in the insured’s favor.” Nat’l Union Fire Ins. Co. of Pittsburgh, Pa. v.
Merchs. Fast Motor Lines, Inc., 939 S.W.2d 139, 141 (Tex. 1997) (citation
omitted). The insured bears the initial burden of showing that the claim against
it is potentially within the policy’s coverage. Sentry Ins. v. R.J. Weber Co., 2 F.3d
554, 556 (5th Cir. 1993).
The eight-corners rule requires courts to focus on the factual allegations
contained in the underlying suits. “If a petition does not allege facts within the
2
We do not reach the issue of whether the underlying lawsuits allege “personal and
advertising injury” under Coverage B of the Policy, as PPI asserted originally. The district
court held that the allegations did not allege “personal and advertising injury,” and PPI states
in its briefs that it “does not challenge th[is] holding at this time.”
6
Case: 12-40189 Document: 00512161191 Page: 7 Date Filed: 03/01/2013
No. 12-40189
scope of coverage, an insurer is not legally required to defend a suit against its
insured.” Merchs. Fast, 939 S.W.2d at 141. More specifically, “the court must
focus on the factual allegations that show the origin of the damages rather than
on the legal theories alleged.” Id. “It is not the cause of action alleged that
determines coverage but the facts giving rise to the alleged actionable conduct.”
Merchs. Fast, 939 S.W.2d at 141 (quoting Adamo v. State Farm Lloyd’s Co., 853
S.W.2d 673, 676 (Tex. App.—Houston [14th Dist.] 1993, writ denied)); see also
Farmers Tex. Cnty. Mut. Ins. Co. v. Griffin, 955 S.W.2d 81, 82 (Tex. 1997) (“A
court must focus on the factual allegations rather than the legal theories
asserted in reviewing the underlying petition.”).
b. Property Damage
At issue is whether the underlying lawsuits against PPI raise factual
allegations that come within the coverage of the Policy. The parties dispute
whether the allegations in the underlying lawsuits include “property damage”
as covered under the Policy. As noted above, the Policy defines “property
damage” to be: “(a) physical injury to tangible property including the loss of use
of that property . . . ; or (b) loss of use of tangible property that is not physically
injured.” The Policy does not define the key phrases “physical injury,” “loss of
use,” or “tangible property.”
Under these facts, we hold that the underlying complaints did not contain
factual allegations of property damage. See, e.g., Mid-Continent Cas. Co., v.
Camaley Energy Co., 364 F. Supp. 2d 600, 605–06 (deciding on other grounds but
finding that the underlying lawsuit, despite its inclusion of the phrase property
damage, “clearly did not allege physical injury to tangible property”). Just as
the Camaley underlying complaints included the term property damage, but did
not allege facts supporting actual damage to or loss of tangible property, here,
the underlying complaints contain no factual allegations of actual damage to or
loss of tangible property. The allegations in the underlying lawsuits are either
7
Case: 12-40189 Document: 00512161191 Page: 8 Date Filed: 03/01/2013
No. 12-40189
for economic damages, and thus not covered, or are legal conclusions, rather
than factual allegations as required. Thus, we do not reach the issue of whether
any damage was caused by “an occurrence.” Nor do we reach the Policy
Exclusions.
c. Underground Resources and Equipment Hazard
By its terms, the “underground resources” coverage is a specific type of
“property damage.” By not alleging any “property damage” generally, the
underlying lawsuits fail to allege damage to “underground resources.”
2. Duty to Indemnify
Both parties acknowledge that the duty-to-indemnify issue has become
moot since the time of the district court’s decision.
B. Texas Insurance Code: Prompt Payment of Claims Act
To prevail under the Prompt Payment of Claims Act, the plaintiff must
establish that there is a claim under the insurance policy for which the insurer
is liable. If the policy does not provide coverage for the claims in the underlying
lawsuits, the insurer is not liable under the statute. See Progressive Cnty. Mut.
Ins. Co. v. Boyd, 177 S.W.3d 919, 922 (Tex. 2005). Because we affirm the breach
of contract claim’s dismissal, we affirm the Texas Insurance Code claim’s
dismissal as well.
C. Breach of Duty of Good Faith and Fair Dealing
The district court dismissed PPI’s action for breach of the duty of good
faith and fair dealing. The Texas Supreme Court has stated that there “can be
no claim for bad faith when an insurer has promptly denied a claim that is in
fact not covered.” Republic Ins. Co. v. Stoker, 903 S.W.2d 338, 341 (Tex. 1995).
Therefore, because we affirm the district court’s dismissal of the breach of
contract claim, we also affirm its dismissal of the breach of duty of good faith and
fair dealing claim.
8
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No. 12-40189
IV. CONCLUSION
For the foregoing reasons, we affirm the district court’s dismissal of PPI’s
breach of contract, breach of the Texas Insurance Code, and breach of the duty
of good faith and fair dealing claims. Thus, we deny PPI’s motion to certify
questions to the Texas Supreme Court.
AFFIRMED.
9 | 01-03-2023 | 03-05-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/654248/ | 6 F.3d 519
42 Soc.Sec.Rep.Ser. 362, Medicare&Medicaid Guide P 41,659ARKANSAS MEDICAL SOCIETY, INC.; Independent Living ResourceCenter, Inc., Mainstream Living; Mahlon O. Maris, M.D.;Arkansas Disability Coalition; Arkansas Association of HomeHealth Agencies, Inc.; Phyllis Henry; Michael Finan, M.D.;Betty Parker, Mother and Guardian of Barbara Parker;Barbara Parker; Arkansas State Dental Association; LesterM. Stizes, III, D.D.S.; Arkansas Adapt; ArkansasSpeech-Language-Hearing Association, Inc.; AmericanPhysical Therapy Association, Arkansas Chapter; ArkansasChiropractic Association; Arkansas Podiatric MedicalAssociation, Appellees,v.Jack REYNOLDS, Director, Department of Human Services, Stateof Arkansas, Appellant.
Nos. 92-3146, 93-2352.
United States Court of Appeals,Eighth Circuit.
Submitted July 23, 1993.Decided Sept. 10, 1993.
Debby Thetford Nye, Little Rock, AR, for appellant.
David L. Ivers, Little Rock, AR (Michael W. Mitchell, on brief), for appellees.
Before FAGG, Circuit Judge, PECK,* Senior Circuit Judge, and MAGILL, Circuit Judge.
MAGILL, Circuit Judge.
1
In this 42 U.S.C. Sec. 1983 action, we consider whether the Arkansas Department of Human Services violated 42 U.S.C. Sec. 1396a(a)(30)(A) by failing to consider whether proposed reimbursement rate reductions to Medicaid providers were consistent with efficiency, economy, and quality of care and whether the rate cuts would affect Medicaid recipients' access to health care services. Concluding that the agency's action did violate the Medicaid statute, we affirm the decision of the district court.1
I. BACKGROUND
2
Medicaid is a cooperative federal/state program through which the federal government grants funds to participating states to provide health care services to needy individuals. See 42 U.S.C. Sec. 1396; Wilder v. Virginia Hosp. Ass'n, 496 U.S. 498, 502, 110 S. Ct. 2510, 2513, 110 L. Ed. 2d 455 (1990). State participation in Medicaid is voluntary, but if states choose to participate, they must comply with the requirements outlined in the Medicaid statute. Wilder, 496 U.S. at 502, 110 S.Ct. at 2513. To qualify for federal funds, a state must submit a plan to the Secretary of Health and Human Services (HHS) which complies with fifty-eight subsections outlined in 42 U.S.C. Sec. 1396a(a). Id. The state plan must include a system of reimbursing costs incurred by health care providers in providing services to Medicaid recipients. Id.
3
On June 24, 1992, the Arkansas Department of Human Services (DHS) issued an emergency rule cutting reimbursement rates to noninstitutional2 Medicaid providers effective July 1, 1992. The rule mandated a 20% across the board cut in reimbursement rates in order to offset a $60 million shortfall in the state's Medicaid budget.
4
The plaintiffs/appellees in this case are three individual Medicaid providers, seven professional associations, two individual Medicaid recipients, and three disability associations who advocate the rights of Medicaid recipients. For ease of identification, they will be collectively called the Medicaid providers. The defendant/appellant in this action is the Director of DHS, the agency which administers Medicaid in Arkansas. The appellant will be referred to as DHS.
5
The Medicaid providers brought suit in the district court under 42 U.S.C. Sec. 1983 alleging that DHS had deprived them of federal rights by violating the Medicaid statute, specifically, 42 U.S.C. Sec. 1396a(a)(30)(A). This particular section of the Medicaid statute and its corresponding regulation at 42 C.F.R. Sec. 447.204 require states to ensure that Medicaid recipients have access to medical care that is at least equal to that of the general population. This feature of the Medicaid law is typically called the equal access provision. The Medicaid providers sought a preliminary and permanent injunction, declaratory judgment and other relief.
6
After a hearing on July 20, 1992, the district court issued a verbal order enjoining DHS from implementing the 20% reduction in reimbursement rates with respect to obstetrical and pediatric care, and speech, physical and occupational therapy for children, pending a trial on the merits. The cut in reimbursement rates to noninstitutional providers of other services remained in effect. The district court held a second hearing on August 18-19, 1992, regarding the other services, but declined to extend the injunction. On September 14, 1992, DHS appealed from the preliminary injunction in No. 92-3146.
7
The district court then held a final hearing from November 30 to December 3, 1992. At the final hearing, DHS announced that it had withdrawn its portion of the plan that attempted to apply the 20% reimbursement rate reduction in obstetrics and pediatrics. DHS asserted that the issue was now moot with respect to those two specialties.
8
The district court combined the evidence from all three hearings, and on April 20, 1993, the court issued its final order, 819 F. Supp. 816. First, the district court rejected DHS's contention that the matter was moot with respect to obstetrics and pediatrics. Second, the district court held that DHS's reimbursement rate scheme was set solely on the basis of budgetary considerations, and without regard to the requirements of the federal Medicaid statute. Therefore, the district court concluded, DHS's plan was invalid under federal law. Because immediate invalidation of the reimbursement rates would have potentially severe detrimental effects on DHS and Medicaid recipients, the district court allowed DHS 120 days to establish a plan conforming with federal law.
9
DHS now appeals from that final decision of the district court in No. 93-2352. Because it applies to all services including obstetrics and pediatrics, the April 20, 1993, order rendered moot the preliminary injunction issued July 20, 1992. This court consolidated the appeals and addresses all issues raised.
II. ANALYSIS
A. Section 1983 Enforceability
10
The Medicaid providers have fashioned this lawsuit as a 42 U.S.C. Sec. 1983 action. This well-known statute allows plaintiffs to sue officials acting under color of state law for alleged deprivations of "rights, privileges, or immunities secured by the Constitution and laws" of the United States. 42 U.S.C. Sec. 1983. As a threshold matter, we must determine whether this statute allows the Medicaid providers to sue in this particular situation.
11
Plaintiffs may use Sec. 1983 to enforce not only rights contained in the Constitution, but also rights that are defined by federal statutes. Maine v. Thiboutot, 448 U.S. 1, 6-8, 100 S. Ct. 2502, 2505-06, 65 L. Ed. 2d 555 (1980). The question of what constitutes a "right," however, has been the subject of much judicial inquiry.
12
For example, in Pennhurst State Sch. & Hosp. v. Halderman, 451 U.S. 1, 101 S. Ct. 1531, 67 L. Ed. 2d 694 (1981), the Court held that certain purported "rights" defined by Congress in the Developmentally Disabled Assistance and Bill of Rights Act, 42 U.S.C. Secs. 6000-6083, were not enforceable because they were not express conditions for the receipt of federal funds. The Court wrote that "if Congress intends to impose a condition on the grant of federal moneys, it must do so unambiguously." Pennhurst, 451 U.S. at 17, 101 S.Ct. at 1540. In the Developmentally Disabled Assistance Act, the terms used to articulate the "right" were too general and vague to provide specific notice to states as to what obligations were actually imposed. Id. at 24-25, 101 S.Ct. at 1543-44. Rather, Congress's language in the statute was more in the nature of a preference for certain types of treatment for developmentally disabled individuals. Id. at 19-20, 101 S.Ct. at 1540-41. Accordingly, the Supreme Court held that because the statute did not establish with sufficient specificity what kinds of services states were required to provide, the statute did not create an enforceable "right" on behalf of the recipients.
13
In Golden State Transit Corp. v. City of Los Angeles, 493 U.S. 103, 110 S. Ct. 444, 107 L. Ed. 2d 420 (1989), the Supreme Court, incorporating ideas from Pennhurst and other cases from the 1980s,3 established a framework for analyzing Sec. 1983 enforceability questions. The framework is really a two-step process. In step one, a court must decide whether the claim actually involves a violation of a federal right, as opposed to a violation of a federal law. Id. at 106, 110 S.Ct. at 448. For this first step, the plaintiff asserting the right has the burden. Id. Factors which bear on the resolution of this question include: (a) whether the statutory provision in question was intended to benefit the plaintiff; (b) whether the statute creates a binding obligation on the state government as opposed to merely expressing a congressional preference; and (c) whether the interest asserted by the plaintiff is sufficiently specific and definite as to be within the competence of the judiciary to enforce. Id.; see also Evelyn V. v. Kings County Hosp. Ctr., 819 F. Supp. 183, 192 (E.D.N.Y.1993). In the second step, the court must determine if Congress has foreclosed enforcement under Sec. 1983. Golden State, 493 U.S. at 106, 110 S. Ct. at 448. On this point, the defendant bears the burden and the inquiry focuses on whether Congress has provided a comprehensive and carefully tailored remedial scheme within the statute in question, so as to make enforcement under Sec. 1983 inconsistent. Id. at 106-07, 110 S.Ct. at 448-49; see also Evelyn V., 819 F. Supp. at 192.
14
In Wilder v. Virginia Hosp. Ass'n, 496 U.S. 498, 110 S. Ct. 2510, 110 L. Ed. 2d 455 (1990), the Supreme Court had occasion to apply the Golden State analysis to the Medicaid statute. In Wilder, an association representing hospitals sued several Commonwealth of Virginia officials alleging violations of 42 U.S.C. Sec. 1983 because the Virginia Medicaid plan violated 42 U.S.C. Sec. 1396a(a)(13)(A) of the Medicaid statute. This provision, commonly known as the Boren Amendment, provides the following:
15
A State plan for medical assistance must--
16
....
17
(13) provide--
18
(A) for payment ... of the hospital services, nursing facility services, and services in an intermediate care facility for the mentally retarded provided under the plan through the use of rates ... which the State finds, and makes assurances satisfactory to the Secretary [of HHS], are reasonable and adequate to meet the costs which must be incurred by efficiently and economically operated facilities in order to provide care and services in conformity with applicable State and Federal laws, regulations, and quality and safety standards and to assure that individuals eligible for medical assistance have reasonable access (taking into account geographic location and reasonable travel time) to inpatient hospital services of adequate quality....
19
42 U.S.C. Sec. 1396a(a)(13)(A).
20
In the first step of the Golden State analysis, the Wilder Court addressed the first issue and concluded "[t]here can be little doubt that health care providers are the intended beneficiaries of the Boren Amendment." Wilder, 496 U.S. at 510, 110 S.Ct. at 2517. As to the second issue of the first step, Wilder held that a binding obligation was imposed upon the states because the language of the Boren Amendment was "mandatory rather than precatory." Id. at 512, 110 S.Ct. at 2519. The Court noted the state plan "must" provide certain features and the Secretary of HHS "shall" withhold federal funds from noncomplying states. Id.; 42 U.S.C. Sec. 1396c. As to the final issue in the first step, the Wilder Court rejected the notion that the Boren Amendment was too vague and amorphous. Wilder, 496 U.S. at 519, 110 S.Ct. at 2522. The Court cited the specific factors Congress had outlined in the statute and the federal regulations and noted the "objective benchmark of an 'efficiently and economically operated facility'...." Id. Furthermore, the Court acknowledged that Congress gave states considerable discretion, and there could be a "range of reasonable rates," but concluded that the Boren Amendment language was nonetheless enforceable by the judiciary. Id. at 519-20, 110 S.Ct. at 2522-23. Accordingly, the Wilder Court found that the statute did provide a federal right.
21
As to the second step of the Golden State framework, the Court highlighted the defendant's heavy burden to show how Congress had foreclosed the Sec. 1983 remedy. Id. at 520-21, 110 S.Ct. at 2523. Then the Court noted "[o]n only two occasions have we found a remedial scheme established by Congress sufficient to displace the remedy provided in Sec. 1983." Id. at 521, 110 S.Ct. at 2523. (citing Sea Clammers, 453 U.S. at 13, 101 S.Ct. at 2622; Smith, 468 U.S. at 1010-11, 104 S.Ct. at 3467). Finally, after examining the Medicaid Act, the Court concluded that the statute did not foreclose Sec. 1983 relief. Wilder, 496 U.S. at 522, 110 S.Ct. at 2524.
22
Just last year, the Supreme Court addressed another Sec. 1983 case, Suter v. Artist M., --- U.S. ----, 112 S. Ct. 1360, 118 L. Ed. 2d 1 (1992). This case concerned the enforceability of a provision in the Adoption Assistance and Child Welfare Act of 1980, 42 U.S.C. Secs. 620-628, 670-679a. The Supreme Court held that the Suter plaintiffs could not bring a Sec. 1983 action to enforce a statutory requirement that Illinois Department of Children and Family Services use "reasonable efforts" to prevent the need for removing a child from his home and to make it possible for the child to return home. Suter, --- U.S. at ----, 112 S. Ct. at 1370.
23
In this opinion, however, the Court did not proceed analytically as it had in recent precedents. While Suter did not reverse Golden State, Wilder, or Wright, it did not follow the Golden State two-step paradigm. See Stowell v. Ives, 976 F.2d 65, 68 (1st Cir.1992); Evelyn V., 819 F. Supp. at 193. Nor did the Supreme Court replace the Golden State framework with a different analytical model. Stowell, 976 F.2d at 68.
24
Rather, the Suter Court reemphasized the point of Pennhurst, "namely, that when legislation is enacted pursuant to Congress's spending power, any conditions imposed on the grant of federal monies must be imposed 'unambiguously.' " Evelyn V., 819 F. Supp. at 193 (citing Suter, --- U.S. at ----, 112 S. Ct. at 1366). The Suter Court noted that the Wright and Wilder opinions "took pains to analyze the statutory provisions in detail, in light of the entire legislative enactment, to determine whether the language in question created 'enforceable rights, privileges, or immunities within the meaning of Sec. 1983.' " Suter, --- U.S. at ----, 112 S. Ct. at 1367 (quoting Wright, 479 U.S. at 423, 107 S.Ct. at 770); see also Suter, --- U.S. at ----, 112 S. Ct. at 1367 n. 8 ("[O]ur holding today ... counsels that each statute must be interpreted by its own terms."). The Court noted further that the Adoption Assistance and Child Welfare Act, unlike the Medicaid statute, did not give sufficient detail about what constituted "reasonable efforts." Suter, --- U.S. at ----, 112 S. Ct. at 1368. According to the Court, the statute's only real requirement was that the state submit a plan to the Secretary of Health and Human Services that contained the requisite features broadly outlined in the Act. Id. at ----, 112 S.Ct. at 1369. The states had discretion to provide the particular details of those broad features. Id. Because of the lack of specificity and detail in the legislation, the "reasonable efforts" language did not create a right enforceable by Sec. 1983. Id. at ----, 112 S. Ct. at 1370.
25
For the purposes of our analysis, we note the following. First, Suter did not create an analytical framework to replace Golden State. Second, Suter did not overrule Wilder. Third, Suter placed great emphasis on the fact that rights must be "unambiguously" conferred to be enforceable. And fourth, Suter emphasized that each statute must be examined on its own basis.
26
Accordingly, although some commentators have found Suter and Wilder difficult to reconcile,4 we choose to synthesize the two cases by proceeding with the two-step Golden State analysis used in Wilder, bearing in mind the additional considerations mandated by Suter. This approach is consistent with the two other federal cases that have attempted to harmonize Suter and Wilder. See Stowell, 976 F.2d at 68 ("[W]e think it is much too early to post epitaphs for Wilder and its kin.... [W]e believe that it is both prudent and possible to synthesize the teachings of Suter with the Court's prior precedents, [and] we examine appellants' claims under the Wilder framework as reconfigured by the neoteric principles announced in Suter."); Evelyn V., 819 F. Supp. at 194.
27
Our analysis in this case is greatly simplified by the Wilder opinion. Although focusing on a different subsection, Wilder addressed the same statute facing us in this case. Suter urges a careful scrutiny of the exact legislation at issue and Wilder has already done that. Furthermore, the equal access provision is very analogous to the Boren Amendment examined in Wilder; they are similar not only in function but also in the specific language employed. See Illinois Hosp. Ass'n v. Edgar, 765 F. Supp. 1343, 1349 (N.D.Ill.1991) ("Section 1396a(a)(30) appears to complement the Boren Amendment....").
28
For the first step of the Golden State framework, determining whether a federal right is provided in the statute, we must initially decide whether the plaintiffs are the intended beneficiaries of the equal access provision. The provision states:
29
A State plan for medical assistance must--
30
....
31
(30)(A) provide such methods and procedures relating to the utilization of, and the payment for, care and services available under the plan ... as may be necessary to safeguard against unnecessary utilization of such care and services and to assure that payments are consistent with efficiency, economy, and quality of care and are sufficient to enlist enough providers so that care and services are available under the plan at least to the extent that such care and services are available to the general population in the geographic area.
32
42 U.S.C. Sec. 1396a(a)(30)(A).
33
The plaintiffs in this case include both Medicaid providers and Medicaid recipients as well as organizations whose purposes are to promote the interests of each group. The equal access provision is indisputably intended to benefit the recipients by allowing them equivalent access to health care services. The question of whether the Medicaid providers are intended beneficiaries is also easily resolved. Wilder concluded that institutional providers were intended beneficiaries of the Boren Amendment because the Amendment concerned their reimbursement. Wilder, 496 U.S. at 510, 110 S.Ct. at 2517. Similarly, the equal access provision addresses payment for "care and services" provided by noninstitutional providers. The providers here are beneficiaries for the same reason that the providers in Wilder were beneficiaries. Moreover, this court, prior to Wilder, had determined that "Medicaid service providers" could enforce compliance with the Medicaid laws. Nebraska Health Care Ass'n v. Dunning, 778 F.2d 1291, 1295 (8th Cir.1985), cert. denied, 479 U.S. 1063, 107 S. Ct. 947, 93 L. Ed. 2d 996 (1987). Furthermore, at least one district court has held explicitly that the equal access provision grants a right in favor of health care providers. Oklahoma Nursing Home Ass'n v. Demps, 792 F. Supp. 721, 727 (W.D.Okla.1992). For all these reasons, we conclude that the plaintiffs are intended beneficiaries of the equal access provision and the first requirement is satisfied.
34
As to the second issue in the first prong, we find that there is sufficient mandatory language in the statute to create a binding obligation on the state. The equal access provision and the Boren Amendment are both introduced by the compulsory language "[a] State plan for medical assistance must...." 42 U.S.C. Sec. 1396a. This language is not merely precatory, it is imperative. Additionally, as discussed in Wilder, 42 U.S.C. Sec. 1396c stipulates, using mandatory language, that if the Secretary of HHS finds that a plan "no longer complies with the provisions of section 1396a of this title; or ... that in the administration of the plan there is a failure to comply substantially with any such provision; the Secretary shall notify such State agency that further payments will not be made to the State...." 42 U.S.C. Sec. 1396c; Wilder, 496 U.S. at 512, 110 S.Ct. at 2518.5 Just as with the Boren Amendment, the equal access language "sets forth a congressional command which is wholly uncharacteristic of a mere suggestion or 'nudge.' " Wilder, 496 U.S. at 512, 110 S. Ct. at 2519 (citations omitted).
35
Mindful of the Court's language in Suter urging examination of the "entire legislative enactment" and "the context of the entire Act," Suter, --- U.S. at ----, ----, 112 S. Ct. at 1367, 1370, we find further evidence of the equal access provision's mandatory nature in the legislative history and context of the statute. In 1989, Congress determined that the equal access provision, which up until that time had been contained only in federal regulations, was receiving inadequate enforcement. See H.R.Rep. No. 101-247, 101st Cong., 1st Sess. 389-90 (1989), reprinted in 1989 U.S.C.C.A.N. 2060, 2115-16. Accordingly, Congress decided to place this provision directly into the legislation. As stated in the House Report:
36
The Committee Bill would codify, with one clarification, the current regulation, 42 C.F.R. 447.204, requiring adequate payment levels. Specifically, the Committee bill would require that Medicaid payments for all practitioners be sufficient to enlist enough providers so that care and service are available under the plan at least to the extent that such care and services are available to the general population in the geographic area.
37
H.R.Rep. No. 101-247, 101st Cong., 1st Sess. 390 (1989), reprinted in 1989 U.S.C.C.A.N. 2060, 2116 (emphasis added). This decision to place the equal access provision in the text of the Medicaid statute to highlight its importance not only reinforces our conclusion that the provision is mandatory in nature, it also helps to indicate Congress's unambiguous conferring of a right to the beneficiaries.
38
The final issue in the first step is to examine whether the statute's language is too vague and amorphous to enforce a right via Sec. 1983. DHS argues that the term "general population" is a vague standard for comparing access. According to DHS, it is unclear whether that term refers to the entire population or just the insured population, and therefore the language is too amorphous as to be judicially enforceable. We disagree for three reasons.
39
First, to construe the language "general population" to include the uninsured members of the population would be directly contrary to the intent of the Medicaid statute. The Medicaid system is designed to ensure that qualifying individuals have adequate access to medical care. Uninsured individuals have very limited, if any, access to medical care. To suggest that Congress appropriated vast sums of money and enacted a huge bureaucratic structure to ensure that recipients of the federal Medicaid program have equivalent access to medical services as their uninsured neighbors (i.e., close to none) is ridiculous. Congress must have meant that Medicaid recipients are entitled to access equal to that of the insured population.
40
Second, this logical interpretation is completely supported by the legislative history and regulations surrounding the statute. Because the term "general population" is theoretically susceptible to DHS's reading, it is somewhat ambiguous. To resolve an ambiguous statute, courts may examine legislative history. See Toibb v. Radloff, --- U.S. ----, ----, 111 S. Ct. 2197, 2200 (1991). The House Budget Committee Report clearly states that the Secretary of HHS should "compare the access of beneficiaries to the access of other individuals in the same geographic area with private or public coverage...." H.R.Rep. No. 101-247, 101st Cong., 1st Sess. 390 (1989), reprinted in 1989 U.S.C.C.A.N. 2060, 2116 (emphasis added). Also, as the court in Clark v. Kizer, 758 F. Supp. 572, 576 (E.D.Cal.1990), aff'd, 967 F.2d 585 (9th Cir.1992), pointed out, HHS regulations measure compliance by comparing Medicaid recipient access with access of the insured population. See, e.g., Department of Health, Education and Welfare, Handbook of Public Assistance Administration, Supplement D: Medical Assistance Programs (1966-67) Part 7-5340.
41
Third, other courts who have examined the language of the equal access provision have found it sufficiently specific to be enforceable by Medicaid providers. See Orthopaedic Hosp. v. Kizer, No. 90-4209, 1992 WL 345652 at * 2 (C.D.Cal. Oct. 5, 1992); Ohio Hosp. Ass'n v. Ohio Dep't of Human Servs., 62 Ohio St. 3d 97, 579 N.E.2d 695, 698 (1991), cert. denied, --- U.S. ----, 112 S. Ct. 1483, 117 L. Ed. 2d 625 (1992); Illinois Hosp. Ass'n, 765 F. Supp. at 1349; Clark, 758 F. Supp. at 575-79.
42
In Fulkerson v. Commissioner, Me. Dep't of Human Servs., 802 F. Supp. 529 (D.Me.1992), the district court specifically found that the provision in the statute ensuring equal access with the general population was sufficiently specific, citing the Clark opinion. Id. at 534. However, the Fulkerson court concluded that the provision requiring payments consistent with "efficiency, economy, and quality of care" was not specific enough to allow enforceability under 42 U.S.C. Sec. 1983, citing no authority. Id. at 534-35. We disagree with the Fulkerson court on this point because of the Wilder opinion.
43
In Wilder, the Supreme Court found the language of the Boren Amendment, which is arguably more nebulous than the language of the equal access provision, sufficiently specific to be enforceable under Sec. 1983. The Boren Amendment talks about "reasonable access," and nowhere in the statute is that term defined. Wilder, 496 U.S. at 507, 110 S.Ct. at 2516. The equal access provision, by contrast, actually gives a measuring rod for accessibility which, as discussed above, is sufficiently specific. Both provisions contain almost identical language about efficiency, economy, and quality of care. The Wilder Court found that such language provided an "objective benchmark," id. at 519, 110 S.Ct. at 2523, and we must agree. Both subsections leave room for states to use their discretion, but as noted in Wilder, such discretion does not place the language outside the competence of the judiciary to enforce. Id. at 520, 110 S.Ct. at 2523.
44
For all of the foregoing reasons, we finish the first prong of the Golden State analysis by concluding that the equal access provision does involve a federal right. Through our explication, we are also satisfied that we have remained faithful to the Court's admonition in Suter to find a right that is unambiguously conferred.
45
As to the second prong of the Golden State test, we need go no further than the Wilder opinion. The Wilder Court found that Congress had not foreclosed Sec. 1983 enforcement in the Medicaid statute, Wilder, 496 U.S. at 520-23, 110 S.Ct. at 2523-24, and we are bound by that judgment. Therefore, the second step has been satisfied as well, and the equal access provision may be enforced by Medicaid recipients and providers using 42 U.S.C. Sec. 1983.
B. Standing, Abstention, Mootness
46
DHS also advances three other jurisdictional arguments, all of which are easily resolved.
47
The first contention is that the associations that are among the plaintiffs in this case lack standing. The Supreme Court in Hunt v. Washington Apple Advertising Comm'n, 432 U.S. 333, 343, 97 S. Ct. 2434, 2441, 53 L. Ed. 2d 383 (1977), established a three-part test for associational standing. An organization has standing to sue on behalf of its members when (1) its members would have standing to sue in their own right, (2) the association is seeking to protect interests that are germane to the organization's purpose, and (3) neither the claim asserted nor the relief requested requires the participation of individual members in the lawsuit. Id.
48
The professional associations and the Medicaid recipients organizations advancing this action meet the three-part test. First, Medicaid recipients and providers individually have standing to contest the Medicaid laws. See Wilder, 496 U.S. at 509, 110 S.Ct. at 2517 (holding Medicaid providers have an enforceable right); Hodgson v. Board of County Comm'rs, 614 F.2d 601, 606 n. 7 (8th Cir.1980) (citing with approval district court case upholding standing of Medicaid patients, physicians, and medical clinics); Minnesota Ass'n of Health Care Facilities, Inc. v. Minnesota Dep't of Pub. Welfare, 602 F.2d 150, 152 n. 6 (8th Cir.1979) (holding Medicaid providers have standing to challenge alleged violations of Social Security laws). Second, the organizations, through this lawsuit, are obviously seeking to protect interests that are directly relevant to the organizations' purposes.
49
Finally, the resolution of this case does not require the participation of individual association members. It is alleged that DHS violated the equal access provision. The gravamen of the Medicaid providers' complaint is that DHS reduced the reimbursement rates for purely budgetary reasons and did not consider the factors of equal access, efficiency, economy, and quality of care called for in the statute. As the district court noted, in determining whether DHS has complied with the equal access provision, the court considers DHS's actions prior to the rate reductions, and examines state-wide statistics including average participation and reimbursement rates that can easily be supplied by the organizations. Arkansas Medical Soc'y v. Reynolds, 834 F. Supp. 1097, 1100-01 (E.D.Ark.1992); see also Clark, 758 F. Supp. at 576. Individual participation by association members is not necessary for this type of scrutiny. Furthermore, the plaintiffs seek injunctions, a declaratory judgment, and other prospective relief. These types of relief have been recognized as legitimate goals for litigation brought by representative organizations in Warth v. Seldin, 422 U.S. 490, 515, 95 S. Ct. 2197, 2213, 45 L. Ed. 2d 343 (1975), and do not require the participation of individual members. Accordingly, the organizations do have standing.
50
DHS's second argument is that the district court should have abstained under the doctrine of Burford v. Sun Oil Co., 319 U.S. 315, 63 S. Ct. 1098, 87 L. Ed. 1424 (1943). "Burford abstention applies when a state has established a complex regulatory scheme supervised by state courts and serving important state interests, and when resolution of the case demands specialized knowledge and application of complicated state laws." Bilden v. United Equitable Ins. Co., 921 F.2d 822, 825 (8th Cir.1990). In general, abstention is " 'an extraordinary and narrow exception to the duty of a District Court to adjudicate a controversy properly before it.' " Colorado River Water Conservation Dist. v. United States, 424 U.S. 800, 813, 96 S. Ct. 1236, 1244, 47 L. Ed. 2d 483 (1976) (quoting County of Allegheny v. Frank Mashuda Co., 360 U.S. 185, 188, 79 S. Ct. 1060, 1063, 3 L. Ed. 2d 1163 (1959)). DHS has not demonstrated that there is such a complex, established administrative scheme to address the rights of Medicaid providers. Furthermore, the Medicaid laws are routinely interpreted by federal courts and no specialized knowledge of state law is required. Abstention was not appropriate in this case.
51
Finally, DHS argues that its decision to withdraw the 20% reduction in obstetrical and pediatric services prior to trial renders the issue moot with regard to those specific services. We disagree. "It is well settled that a defendant's voluntary cessation of a challenged practice does not deprive a federal court of its power to determine the legality of the practice." City of Mesquite v. Aladdin's Castle, Inc., 455 U.S. 283, 289, 102 S. Ct. 1070, 1074, 71 L. Ed. 2d 152 (1982). While a case may still be rendered moot if the defendant is able to demonstrate that "there is no reasonable expectation that the wrong will be repeated," the defendant's burden is "a heavy one." Steele v. Van Buren Pub. Sch. Dist., 845 F.2d 1492, 1494 (8th Cir.1988) (citations omitted). In this situation, DHS reserves the right to set reimbursement rates, and DHS has clearly not met its burden of showing that a reduction will not be repeated. This aspect of the case is therefore not moot.
C. Violation of the Equal Access Provision
52
The Medicaid providers allege that DHS has violated their rights under 42 U.S.C. Sec. 1983 because DHS did not comply with the substantive requirements of the equal access provision. Specifically, the Medicaid providers contend that in cutting reimbursement rates to noninstitutional sources by 20%, DHS did not consider the relevant factors of equal access, efficiency, economy, and quality of care and thereby violated the statute.
53
The parties are in agreement that the challenged action involves state agency rate-making as opposed to adjudication. In reviewing DHS's rate-making decision, we must decide whether the action is "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law." Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 414, 91 S. Ct. 814, 822, 28 L. Ed. 2d 136 (1971). An agency acts arbitrarily and capriciously if it fails to "consider whether the decision was based on a consideration of the relevant factors." Id. at 416, 91 S.Ct. at 824; American Paper Inst. v. American Elec. Power Serv. Corp., 461 U.S. 402, 413, 103 S. Ct. 1921, 1928, 76 L. Ed. 2d 22 (1983). Review under the arbitrary and capricious standard is narrow, and a court may not substitute its judgment for that of the agency. Motor Vehicle Mfrs. Ass'n of the United States, Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43, 103 S. Ct. 2856, 2866, 77 L. Ed. 2d 443 (1983). While it is a deferential standard of review, the agency must still articulate a "rational connection between the facts found and the choice made," Baltimore Gas & Elec. Co. v. Natural Resources Defense Council, Inc., 462 U.S. 87, 105, 103 S. Ct. 2246, 2256, 76 L. Ed. 2d 437 (1983), and this court must engage in a "substantial inquiry." Citizens to Preserve Overton Park, 401 U.S. at 415, 91 S.Ct. at 823. Our review of the state plan must include "a determination whether the [state] plan complies with the requirements of federal law." Illinois Health Care Ass'n v. Bradley, 776 F. Supp. 411, 417 (N.D.Ill.1991) (citation omitted), aff'd, 983 F.2d 1460 (7th Cir.1993).
54
Again, we take direction from the Wilder decision to determine the relevant factors that DHS must consider. In Wilder, the Court found that the Boren Amendment contained a substantive requirement ("the adoption of reimbursement rates that are reasonable and adequate to meet the costs of an efficiently and economically operated facility") which state agencies had to meet in order to submit a valid plan. Wilder, 496 U.S. at 510, 513-15, 110 S. Ct. at 2517, 251920. The relevant factors to consider, therefore, were whether the rates were reasonable and adequate as required by the statute. The Wilder Court determined that the Virginia agency had not acted to ensure reasonable and adequate rates. Many other federal courts have also found state plans that failed to meet the requirements outlined in the Boren Amendment to be invalid. See, e.g., Temple Univ. v. White, 941 F.2d 201 (3d Cir.1991), cert. denied, --- U.S. ----, 112 S. Ct. 873, 116 L. Ed. 2d 778 (1992); AMISUB (PSL), Inc. v. Colorado Dep't of Social Servs., 879 F.2d 789 (10th Cir.1989), cert. denied, 496 U.S. 935, 110 S. Ct. 3212, 110 L. Ed. 2d 660 (1990); Nebraska Health Care Ass'n, 778 F.2d 1291; Missouri Health Care Ass'n v. Stangler, 765 F. Supp. 1413 (W.D.Mo.1991).
55
We agree with the trial court's conclusion that the relevant factors that DHS is obliged to consider in its rate-making decisions are the factors outlined in 42 U.S.C. Sec. 1396a(a)(30)(A). As already discussed, the equal access provision provides an unambiguous and compulsory framework to guide substantive agency decisions regarding reimbursement rates for noninstitutional providers. The statute requires that the reimbursement rates are sufficient "to assure that payments are consistent with efficiency, economy, and quality of care and are sufficient to enlist enough providers so that care and services are available under the plan at least to the extent that such care and services are available to the general population in the geographic area." 42 U.S.C. Sec. 1396a(a)(30)(A). The purpose of this subsection is to ensure adequate access and quality of care in the context of noninstitutional Medicaid providers, just as the purpose of the Boren Amendment is to ensure adequate access and quality of care in the context of institutional providers. Moreover, the language in the two subsections closely parallel each other. Accordingly, DHS must consider the relevant factors of equal access, efficiency, economy, and quality of care as designated in the statute when setting reimbursement rates.
56
Two recent decisions from other jurisdictions confirm that these are the relevant factors. In Ohio Hosp. Ass'n v. Ohio Dep't of Human Servs., the Supreme Court of Ohio affirmed a lower court ruling that the ODHS "violated the statute by adopting the rule due to its own budgetary constraints and by failing to consider the rule's effect on efficiency, economy, and the quality of care." Ohio Hosp. Ass'n, 579 N.E.2d at 697. The court also acknowledged the influence of the Wilder decision by stating: "The same reasons relied on by the United States Supreme Court in Wilder support a decision that ODHS violated section 1396a(a)(30)(A) by basing its decision solely on budgetary concerns." Id. 579 N.E.2d at 698. Similarly, in Orthopaedic Hosp. v. Kizer, the court treated "efficiency, economy, and quality of care" as the relevant factors and then asked whether the relevant factors were considered in the agency decision-making. Orthopaedic Hosp., 1992 WL 345652 at * 3. The district court concluded that Medicaid rate-setting methodology at issue violated 42 U.S.C. Sec. 1396a(a)(30)(A) because it largely failed to consider the relevant factors. Id. at * 12-13.
57
Our examination of the record in this case yields the same conclusion as these two precedents. DHS has offered no evidence to show that the relevant factors have been considered. DHS argues that it followed the requirements of the Arkansas Administrative Procedures Act, but such procedural compliance is not the same as substantive adherence to the requirements of the Medicaid statute. DHS contends that it considered reimbursement rates for providers in other states. DHS has not shown, however, how such a comparison has any bearing on equal access, efficiency, economy, and quality of care in Arkansas. Furthermore, DHS admitted in a letter dated July 6, 1992, that "[a]ny studies in regard to the cuts on providers that goes into effect July 1 for example, the effect cuts will have on accessibility ... [do] not exist according to our records." Pl.'s Ex. 57. The only evidence offered during the hearings regarding the rate cuts' effect on accessibility was purely speculative and could only be confirmed by historical data accumulated after the cuts were made. Tr. of Nov. 30, 1992, Hr'g at 364-68.
58
Indeed, there is ample evidence suggesting that the reimbursement rate reductions were overwhelmingly based on budgetary concerns. The public explanation for the rate cuts was exclusively budgetary. The press release announcing the cuts stated explicitly: "The proposed change in reimbursement rates is due to budgetary constraints." Pl.'s Ex. 55. Moreover, the director of the DHS Division of Economic and Medical Services testified that the cuts were for budgetary reasons. Tr. of July 20, 1992, Hr'g at 40, 337, 340. In its own brief, DHS admitted that it "would not have made the reduction in rates but for the need to balance the budget." Def.'s Reply to Pl.'s Posttrial Br. at 14.
59
Abundant persuasive precedent supports the proposition that budgetary considerations cannot be the conclusive factor in decisions regarding Medicaid. See, e.g., AMISUB, 879 F.2d at 800-01; Alabama Nursing Ass'n v. Harris, 617 F.2d 388, 396 (5th Cir.1980); Friedman v. Perales, 668 F. Supp. 216, 221 (S.D.N.Y.1987), aff'd, 841 F.2d 47 (2d Cir.1988); Michigan Hosp. Ass'n v. Babcock, 736 F. Supp. 759, 764 (W.D.Mich.1990); Illinois Hosp. Ass'n v. Illinois Dep't of Pub. Aid, 576 F. Supp. 360, 368 (N.D.Ill.1983); Thomas v. Johnston, 557 F. Supp. 879, 914 (W.D.Tex.1983). DHS may take state budget factors into consideration when setting its reimbursement methodology. See Illinois Hosp. Ass'n, 576 F. Supp. at 371. However, the state may not ignore the Medicaid Act's requirements in order to suit budgetary needs. Id. (citing Alabama Nursing Ass'n, 617 F.2d 396). Given all the evidence, we must agree with the district court's conclusion that budgetary reasons were the guiding force and the relevant factors did not in any way form the basis for DHS's rate-making decision. Because it failed to consider the rate reduction's impact on equality of access, efficiency, economy, and quality of care, DHS's decision violated the requirements of 42 U.S.C. Sec. 1396a(a)(30)(A).
III. CONCLUSION
60
Based on the foregoing, the decision of the district court is affirmed.
*
THE HONORABLE JOHN W. PECK, Senior United States Circuit Judge for the Sixth Circuit, sitting by designation, took part in oral argument, subsequent conferences of the panel, and concurred in this opinion prior to his death on September 7, 1993
1
The Honorable Susan Webber Wright, United States District Judge for the Eastern District of Arkansas
2
The Medicaid statute differentiates between institutional Medicaid providers which include hospitals, nursing facilities, and intermediate care facilities for the mentally retarded, see 42 U.S.C. Sec. 1396a(a)(13)(A), and noninstitutional providers which include individual physicians, professional associations, and other providers, see 42 U.S.C. Sec. 1396a(a)(30)(A)
3
These cases include Wright v. Roanoke Redevelopment & Hous. Auth., 479 U.S. 418, 107 S. Ct. 766, 93 L. Ed. 2d 781 (1987); Smith v. Robinson, 468 U.S. 992, 104 S. Ct. 3457, 82 L. Ed. 2d 746 (1984); and Middlesex County Sewerage Auth. v. National Sea Clammers Ass'n, 453 U.S. 1, 101 S. Ct. 2615, 69 L. Ed. 2d 435 (1981)
4
See Evelyn V., 819 F. Supp. at 193 n. 5
5
We are aware that this mandatory language is directed towards the Secretary of HHS, who, of course, is a federal not a state official. This distinction was important to the court in Stowell, 976 F.2d at 69. However, it is not important here because the operative effect of this section is to underscore the mandatory nature of the state plan requirements by expressly prohibiting the Secretary's discretion to approve funds for state provisions that do not conform to federal law | 01-03-2023 | 04-16-2012 |
https://www.courtlistener.com/api/rest/v3/opinions/740233/ | 112 F.3d 645
30 Bankr.Ct.Dec. 969, Bankr. L. Rep. P 77,407
PITTSBURGH FOOD & BEVERAGE, INC., Appellantv.Lawrence F. RANALLO, Trustee for the estate of PittsburghFood & Beverage, Inc.; Integra Business Credit Company;Pitney Bowes Credit Corporation; Commonwealth ofPennsylvania Department of Revenue; Commonwealth ofPennsylvania Department of Labor & Industry; EmeryWorldwide; American Flint Glass Workers Union; KathrynO'Brien; Helen B. Schachte, Tax Collector for Mt. PleasantTownship, Pennsylvania and the Mt. Pleasant Area SchoolDistrict; Mt. Pleasant Township, Pennsylvania; Mt.Pleasant Area School District; Westmoreland County TaxClaim Bureau; Fayette Bank; Ford Motor Credit Co.
Nos. 95-3633, 95-3634.
United States Court of Appeals,Third Circuit.
Submitted under Third Circuit LAR 34.1(a)April 14, 1997.Decided May 1, 1997.
Gary W. Short, Phillip S. Simon, Pittsburgh, PA, for Appellant.
Robert G. Sable, Thomas M. Ferguson, Sable, Makoroff & Gusky, Pittsburgh, PA, for appellee, Lawrence F. Ranallo.
Morris D. Weiss, Weil, Gotshal & Manges, Miami, FL, for appellee American Glass, Inc.
Before: GREENBERG, ALITO, and SEITZ, Circuit Judges.
OPINION OF THE COURT
GREENBERG, Circuit Judge.
I. FACTUAL AND PROCEDURAL HISTORY
1
Appellant, Pittsburgh Food and Beverage, Inc. ("PFB"), appeals from two orders of the district court dismissing its appeal from a bankruptcy court order that approved a sale of assets of PFB's wholly owned subsidiary L.E. Smith Glass Company ("Smith") to American Glass, Inc. ("American"). American and the trustee of PFB, Lawrence Ranallo, are the appellees.
2
On February 20, 1995, creditors of PFB filed an involuntary bankruptcy petition seeking relief under Chapter 11 of the Bankruptcy Code against PFB. The bankruptcy court entered an order for relief against PFB on February 27, 1995, and on March 24, 1995, it appointed Ranallo trustee of PFB's bankruptcy estate. On July 8, 1995, Ranallo petitioned the bankruptcy court for approval of the sale of Smith's assets free and clear of all liens under 11 U.S.C. § 363(b). PFB, acting through its own attorney who was independent of the trustee and apparently represented its prior management, objected to the sale, but at a hearing on July 25, 1995, the bankruptcy court approved the sale to American for $5,725,000, a price which included an assumption of $3,508,190 of Smith's liabilities.
3
At the end of the hearing on July 25, 1995, PFB made an unsuccessful oral motion to the bankruptcy court for a stay of the order approving the sale pending appeal. On August 4, 1995, PFB appealed to the district court from the order approving the sale. PFB then requested a stay of the sale from the district court, but on August 14, 1995, the district court, after hearing argument, denied the motion. Then, on that same day, the sale of Smith's assets to American Glass closed. PFB has not appealed the denial of the stay by the district court.
4
In view of the closing of the sale, American and Ranallo filed motions in the district court to dismiss PFB's appeal on the grounds that the appeal was moot under 11 U.S.C. § 363(m) by virtue of PFB's inability to obtain a stay of the order approving the sale. Section 363(m) provides that a reversal or modification of an order approving a sale under section 363(b) "does not affect the validity of [the] sale ... under such authorization to an entity that purchased ... such property in good faith, whether or not such entity knew of the pendency of the appeal, unless such authorization and such sale were stayed pending appeal." In two orders issued on October 16 and 17, 1995, the district court granted the motions and dismissed PFB's appeal. On November 15, 1995, PFB filed this appeal seeking a reversal of the orders of the district court dismissing the appeal and a remand to that court for consideration of the merits of PFB's appeal.
5
The bankruptcy court had jurisdiction under 28 U.S.C. § 157(b)(2)(N), and the district court had jurisdiction under 28 U.S.C. § 158(a). We have jurisdiction under 28 U.S.C. § 158(d) and exercise plenary review over the district court orders. See In re Continental Airlines, 91 F.3d 553, 557 (3d Cir.1996) (in banc), cert. denied, --- U.S. ----, 117 S.Ct. 686, 136 L.Ed.2d 610 (1997); In re Swedeland Dev. Group, Inc., 16 F.3d 552, 559 (3d Cir.1994) (in banc).
II. DISCUSSION
6
PFB argues that its appeal to the district court was not moot, contending that Smith's assets were not property of the bankruptcy estate so that the Bankruptcy Code provisions governing sales of property of an estate and appeals from orders approving such sales are inapplicable in this case. PFB also claims that because Smith's assets were not property of the bankruptcy estate, the bankruptcy court did not have jurisdiction over the sale, so its order approving the sale was void and thus was not insulated from review in the district court. Finally, PFB contends that consummation of the sale did not render its appeal moot for, in its view, notwithstanding section 363(m) if the district court reversed the order approving the sale it could have granted PFB meaningful relief.
7
Ranallo first responds that Smith's assets were property of the bankruptcy estate. He argues, however, that we need not decide whether he is correct on this point because under section 363(m) PFB's inability to obtain a stay of the order approving the sale rendered the appeal to the district court moot even though PFB predicated the appeal on jurisdictional grounds. Ranallo also argues that the district court could not have granted effective relief even if PFB's appeal had been successful.
8
American contends that the appeal to the district court of the order approving the sale was moot under section 363(m). American, like Ranallo, argues that Smith's assets were property of the bankruptcy estate, and it also claims that we need not consider PFB's argument to the contrary because PFB did not obtain a stay pending appeal. Finally, American argues that section 363(m) does not require a finding that effective relief cannot be granted before an appeal properly may be dismissed. Rather, American contends that section 363(m) sets forth the only requirements for dismissal of the appeal: i.e., that the bankruptcy court authorized the sale under section 363(b); the sale was proposed in good faith and made to a good faith purchaser; and the order approving the sale was not stayed pending appeal. American asserts that these criteria have been satisfied and thus section 363(m) bars appellate review of the bankruptcy court's order approving the sale. Alternatively, American contends that the appeal to the district court was moot because the district court could not have granted effective relief to PFB inasmuch as American and Ranallo consummated the sale during the pendency of the appeal.
9
Section 363(b)(1) provides that the "trustee, after notice and a hearing, may ... sell ... other than in the ordinary course of business, property of the estate." We reiterate that section 363(m) then provides that "[t]he reversal or modification on appeal of an authorization under subsection (b) or (c) of this section of a sale ... of property does not affect the validity of a sale ... under such authorization to an entity that purchased ... such property in good faith, whether or not such entity knew of the pendency of the appeal, unless such authorization and such sale ... were stayed pending appeal." We have explained that section 363(m) fosters the "policy of not only affording finality to the judgment of the bankruptcy court, but particularly to give finality to those orders and judgments upon which third parties rely." In re Abbotts Dairies of Pennsylvania, Inc., 788 F.2d 143, 147 (3d Cir.1986) (internal quotation marks and citation omitted).
10
We also have recognized that section 363(m) is one of only two provisions in the Bankruptcy Code explicitly requiring a stay of a bankruptcy court order pending appeal. See, e.g., In re Joshua Slocum Ltd., 922 F.2d 1081, 1085 (3d Cir.1990); In re Highway Truck Drivers & Helpers Local Union 107, 888 F.2d 293, 297 (3d Cir.1989). In Highway Truck Drivers we noted, however, that the absence of such a requirement in a code section would not necessarily relieve appellants of the burden to obtain stays because "in the context of bankruptcy proceedings ... '[g]enerally, an appeal will be dismissed as moot when events occur during the pendency of the appeal which prevent the appellate court from granting any effective relief.' " Id. at 297 (citations omitted). Many bankruptcy proceedings, particularly those involving operating businesses, are likely to include such events. Cf. Swedeland, 16 F.3d at 556 ("Not surprisingly, in the fluid situation presented by the ongoing construction of a major real estate project, events moved rapidly in the bankruptcy court.").
11
We seem not to have addressed conclusively in any published opinion the immediate consequences of an appellant's failure to obtain a stay of an order approving a sale on an appeal of that order. We, recently, however, addressed the other code provision which requires a stay pending appeal of a bankruptcy order: 11 U.S.C. § 364(e), which relates to appeals from orders creating liens with preferential position or authorizing debt against the bankruptcy estate under 11 U.S.C. § 364(d). In re Swedeland Dev. Group, Inc., 16 F.3d 552. Section 364(e) provides:
12
The reversal or modification on appeal of an authorization under [section 364] to obtain credit or incur debt, or of a grant under [section 364] of a priority or a lien, does not affect the validity of any debt so incurred, or any priority or lien so granted, to an entity that extended such credit in good faith, whether or not such entity knew of the pendency of the appeal, unless such authorization and the incurring of such debt, or the granting of such priority or lien, were stayed pending appeal.
13
In Swedeland we held that section 364(e), by its terms, does not require dismissal of an appeal if the appellant does not obtain a stay. Id. at 559. We explained that section 364(e) "does not preclude a court from reversing an authorization absent a stay. What it limits is the effect of a reversal." Id. at 562 (footnote omitted). We found that the statute contemplated that the appeal might go forward in the absence of a stay for, as we explained, "how ... can [there] be a 'reversal or modification' of an order, if the appeal from the order has been dismissed." Id. at 559. Thus, we looked beyond section 364(e) to determine whether the appeal in Swedeland was moot, and in doing so we examined cases, principally Church of Scientology v. United States, 506 U.S. 9, 113 S.Ct. 447, 121 L.Ed.2d 313 (1992), holding that appeals should not be dismissed as moot unless the court cannot grant any relief upon a reversal or modification of the order appealed. Swedeland, 16 F.3d at 559-60.
14
Swedeland is significant here because the language of section 363(m) with respect to a stay pending appeal is almost identical to that in section 364(e). Accordingly, we could apply Swedeland and hold that section 363(m) does not in itself require dismissal of an appeal where a stay is not obtained. Such a conclusion would require us to consider whether, in accordance with general principles of mootness pending appeal, the district court could have granted any effective relief if it modified or reversed the order approving the sale. However, Swedeland 's possible application in this case may be somewhat circumscribed. In Swedeland we noted that an analogy to section 363(m) in a case involving section 364(e) was "not particularly helpful because a consideration of whether a successful appellant can be granted effective relief upon the reversal of an order depends on the circumstances in each case." Id. at 560 n. 6. In particular, we explained that there were significant differences between a consummated sale and an executory lien: "Obviously it might be more difficult to fashion effective relief in the case of a completed and unassailable sale or lease of a property than in a case involving a loan in which the transaction is partially executory." Id.
15
We need not decide, however, whether we should construe section 363(m) as we construed section 364(e) in Swedeland because the outcome of this case would not differ whether we read section 363(m) to mandate dismissal based solely on PFB's failure to obtain a stay barring the closing of the sale or to require dismissal only because the district court could not have granted effective relief without affecting the validity of the sale. Clearly, an appeal which is moot under the second formulation, i.e., a Swedeland-type analysis, also would be moot under a reading of section 363(m) requiring the dismissal of the appeal merely because the appellant did not obtain a stay pending appeal. Thus, we proceed here as we did in Swedeland inasmuch as our conclusion that the appeal was moot because the district court could not grant effective relief requires that we affirm its orders of dismissal.1
16
With the foregoing considerations in mind, we reiterate the parties' positions. PFB makes the following specific suggestions as to what relief the court could grant if the sale cannot be undone. It contends that the bankruptcy court, presumably on remand from the district court, can determine whether: (1) "the Trustee and American knew that the Bankruptcy Court did not have authority to sell these assets"; (2) "the Trustee's conduct depressed the value of the estate's interest in [American]"; (3) "the sale procedure discouraged significant offers and additional bidding"; and (4) "the value of the estate's interest in [American], if retained as a going concern under a confirmed plan, was substantially greater than the value received by the Debtor's estate through this sale." Br. at 18-19. PFB then indicates that, if warranted, the court could "fashion an appropriate equitable remedy." Br. at 19. This equitable remedy would require Ranallo or American "to reimburse [PFB] for the loss caused by their participation in the sale process." Id.
17
In response, Ranallo argues that there is no relief that could be granted and that PFB has not presented any evidence of how its requested relief could be quantified or effected. American responds to PFB's argument by pointing out that during the sale transaction American wire transferred more than $2.1 million to Ranallo; Smith conveyed its property to American by bill of sale and special warranty deed; and American assumed Smith's liabilities in excess of $3.5 million. Then, because of the debt assumptions, some of Smith's secured and unsecured creditors released Smith from certain liabilities. Additionally, third parties have extended credit to American. American argues that any relief granted would affect many third parties, and might do serious injustice to them. Finally, American contends that any relief awarded in effect would modify a term of the sale of assets (e.g., if American "reimbursed" PFB, it would be paying a higher than agreed upon sale price) in violation of section 363(m). See, e.g., In re The Charter Co., 829 F.2d 1054, 1056 (11th Cir.1987) ("One cannot challenge the validity of a central element of a purchase, the sale price, without challenging the validity of the sale itself.").
18
We agree with Ranallo and American. PFB in making its suggestions does not accommodate the fact that section 363(m) does not say that absent a stay the reversal or modification of an order authorizing a sale cannot lead to the nullification of a sale. Instead, section 363(m) provides that without a stay the reversal or modification "does not affect the validity" of the sale. Plainly, a finding against Ranallo as the trustee or American as the buyer on any of the inquiries that PFB proposes the bankruptcy court undertake ultimately leading to the imposition of the "equitable remedy" PFB seeks, though not nullifying the sale would affect its validity, as the inquiries all seek to demonstrate that the sale was flawed. For example, what would be the purpose in an appeal from an order approving a sale of a finding that Ranallo and American "knew that the Bankruptcy Court did not have authority to sell" Smith's assets other than to affect the validity of the sale? Furthermore, if the bankruptcy court, on remand from the district court, required Ranallo or American to pay PFB additional money, as PFB suggests that it could do, surely the court's order would affect the validity of the sale because the order would be founded on a holding that the sale price was inadequate. Thus, the appeal to the district court was moot.
19
PFB's argument that the bankruptcy court did not have jurisdiction over Smith's assets does not undermine our conclusion because section 363(m) does not distinguish between a challenge to an order approving a sale predicated on jurisdictional grounds and a challenge based on other grounds. We recognize that it might be claimed that a bankruptcy court usurped power so that even absent a stay, notwithstanding section 363(m), an order reversing an order approving a sale permissibly could affect the validity of the sale of assets. Such a case in theory could arise if the bankruptcy court approved the sale of assets not even colorably within its jurisdiction. But we are not concerned with that possibility as the bankruptcy court, at least arguably, had jurisdiction over Smith's assets which PFB indirectly owned through its ownership of Smith. Thus, we have no occasion to consider whether the bankruptcy court acted appropriately when it reached through Smith's corporate structure to approve a sale of its assets.
20
Opinions of other courts of appeals support our result. The Court of Appeals for the Seventh Circuit, in a case directly on point, has explained that "an appeal of a bankruptcy sale is moot if the stay required by [section] 363(m) is not obtained." In re Sax, 796 F.2d 994, 997 (7th Cir.1986) (footnotes and citations omitted). In Sax, the appellant, an entity with a claim on the debtor's yacht, challenged the sale of the yacht to another entity. The appellant argued that the yacht was not part of the debtor's estate so that its sale was not authorized under section 363(b). Therefore, according to the appellant, the bankruptcy court lacked the subject matter jurisdiction necessary to authorize the sale so section 363(m) did not apply. The court of appeals refused to address this jurisdictional argument, explaining that: "In the case of a bankruptcy sale, the failure to obtain a stay of the sale, pending appeal, allows the sale to be completed, thus preventing an appellate court from granting relief and thereby rendering the appeal moot." Id. at 997 (citation and internal quotation marks omitted).
21
Addressing the appellant's argument in Sax that the yacht was not property of the debtor's estate, the court indicated that appellant:
22
misses the point. Section 363(m) does not say that the sale must be proper under § 363(b); it says the sale must be authorized under § 363(b). There is no doubt that when the bankruptcy court authorized the sale and ordered that the Yacht be turned over to the purchaser, it was acting under § 363(b). At this juncture, it matters not whether the authorization was correct or incorrect. The point is that the proper procedures must be followed to challenge an authorization under § 363(b). As stated earlier, § 363(m) and the cases interpreting it have clearly held that a stay is necessary to challenge a bankruptcy sale authorized under § 363(b).
23
Id. at 997-98 (footnote omitted).
24
The court went on to explain that appellant "essentially has asked us to create an exception such that a stay is required to challenge a § 363(b) authorized sale except when the appellant argues that the property did not belong to the debtor's estate. To create such an exception would seriously undermine the purpose of § 363(m) and could destroy the rule altogether." Id. at 998; see also In re CGI Indus., Inc., 27 F.3d 296, 299 (7th Cir.1994).
25
The Court of Appeals for the Fifth Circuit also has considered a jurisdictional argument similar to that raised by PFB. In In re Gilchrist, 891 F.2d 559 (5th Cir.1990), the appellant appealed from an order of the district court dismissing as moot its appeal from the order of the bankruptcy court denying his motion for a new trial. The bankruptcy court initially had entered an order approving the sale of certain assets; the debtor neither appealed the order nor obtained a stay pending appeal. Two years later the debtor filed a motion for reconsideration, which the bankruptcy court denied. The debtor then appealed to the district court. The district court dismissed the appeal as moot under section 363(m).
26
The court of appeals affirmed the dismissal, explaining: "Section 363(m) patently protects, from later modification on appeal, an authorized sale where the purchaser acted in good faith and the sale was not stayed pending appeal. We have interpreted this section to moot an appeal in the absence of a stay." Id. at 560 (citation and footnote omitted). The court of appeals rejected the debtor's argument that section 363(m) should not apply because the bankruptcy court did not have jurisdiction over the sale:
27
We pretermit the jurisdictional question because [the debtor] failed properly to obtain a stay or to attack the validity of the sale for more than two years after that sale occurred.... [The debtor's] failure to obtain a stay is fatal to his position, regardless of whether there was jurisdiction; he forfeited the opportunity to contest jurisdiction and cannot be heard to complain at this late date.
28
Id. at 561 (citing as support In re Sax). Similarly, PFB's argument attacking the jurisdiction of the bankruptcy court does not lead us to a different result than we would have reached if jurisdiction had not been an issue.
29
Other courts of appeals also have considered section 363(m) mootness and have concluded that a stay is required before a sale order can be challenged on appeal. See United States v. Salerno, 932 F.2d 117, 122-23 (2d Cir.1991) (where sale order not stayed and sale consummated, appeal is moot); In re Stadium Management Corp., 895 F.2d 845, 847 (1st Cir.1990) ("[E]ffect of [section] 363(m) is that 'when an order confirming a sale to a good faith purchaser is entered and a stay of that sale is not obtained, the sale becomes final and cannot be reversed on appeal....' Absent a stay, the court must dismiss a pending appeal as moot because the court has no remedy that it can fashion even if it would have determined the issues differently.") (citations omitted); In re The Charter Co., 829 F.2d at 1056 ("Because [section 363(m) ] prevents an appellate court from granting effective relief if a sale is not stayed, the failure to obtain a stay renders the appeal moot.") (citations omitted); In re Magwood, 785 F.2d 1077, 1080 (D.C.Cir.1986) (under section 363(m), where no stay has been obtained, court cannot reverse sale of property to good faith purchaser); see also In re District 65, United Auto. Aerospace and Agric. Implement Workers of America, 184 B.R. 196, 200 (S.D.N.Y.1995) (Appeal is moot and "the court must dismiss the appeal of a sale once it has been consummated because there is no remedy that it can fashion even if it would have determined the issues differently.") (citation omitted); In re Vista Del Mar Assoc., Inc., 181 B.R. 422, 424 (B.A.P. 9th Cir.1995) ("[W]hen an appellant fails to obtain a stay from an order that permits a sale of the debtor's asset, the appeal will be rendered moot regardless of whether the purchaser has taken irreversible steps following the sale.") (citation omitted). While these cases have not necessarily followed our methodology they support our result.
30
It is clear from section 363(m) and the case law that because of PFB's inability to obtain a stay of the bankruptcy court's order approving the sale of Smith's assets, the district court was unable to grant effective relief to PFB without affecting the validity of the sale. Thus, PFB's appeal to the district court was moot, and that court properly dismissed the appeal.III. CONCLUSION
31
The orders of October 16 and October 17, 1995, will be affirmed.
1
In In re Continental Airlines, 91 F.3d 553, we recently addressed the doctrine of equitable mootness in the bankruptcy context; this doctrine permits dismissal of an appeal " 'when, even though effective relief could conceivably be fashioned, implementation of that relief would be inequitable.' " Id. at 559 (citation omitted). Obviously, equitable mootness is broader than mootness under a Swedeland analysis, and thus we need not consider Continental Airlines here. In this case we are concerned with mootness predicated on the statutory and prudential considerations of whether it is possible to grant relief as opposed to equitable considerations of the type involved in Continental Airlines. Thus, while Continental Airlines speaks of "prudential," "considerations," "reasons," or "factors" leading to a finding of mootness, id. at 559-60, "prudential" in that context relates to equitable mootness rather than mootness predicated on a court's inability to grant relief | 01-03-2023 | 04-17-2012 |
https://www.courtlistener.com/api/rest/v3/opinions/392831/ | 655 F.2d 568
J. W. GAMBLE, Petitioner-Appellant,v.Carl THOMAS, Sheriff, and Unknown White Lady Officer, DallasCounty, Texas, Respondents-Appellees.
No. 81-1143
Summary Calendar.
United States Court of Appeals,Fifth Circuit.
Unit A
Aug. 26, 1981.
J. W. Gamble, pro se.
Charles J. Baldree, Asst. Dist. Atty., Dallas, Tex., for respondents-appellees.
Appeal from the United States District Court for the Northern District of Texas.
Before GEE, GARZA and TATE, Circuit Judges.
TATE, Circuit Judge:
1
The plaintiff Gamble, a Texas prisoner, filed a timely notice of appeal from dismissal of his federal civil rights complaint, 42 U.S.C. § 1983, and we granted his pro se application for leave to appeal in forma pauperis. Subsequently, after the records and briefs were filed in this court, counsel for the opposing party brought to the notice of this court that Gamble had died on May 27, 1981. Under these circumstances, and where no personal representative has moved to substitute himself as party and no personal representative is shown to have been appointed, Fed.R.App.P. 43(a) provides: "If the deceased party has no representative, any party may suggest the death on the record and proceedings shall then be had as the court of appeals may direct."
2
Accordingly, we accepted the suggestion of the appellees by their counsel's letter of June 3, 1981, that the appellant Gamble had died. At the direction of the court, the clerk's office then obtained from the Texas Department of Corrections a list of persons that included the names and current addresses of all members of the appellant Gamble's family known to them (which included three children, two sisters, a brother-in-law, and a cousin, as well as friends with whom the decedent had been in correspondence). On July 8, 1981, the clerk's office then wrote each of the individuals so listed, informing them of the pending appeal, and inquiring of them as to whether any personal representative desired to be substituted. We requested that the court be informed by July 28, 1981 as to whether any motion for substitution would be made. No response has been received by this date that indicates that any personal representative or member of the decedent's family desires to prosecute further this appeal.
3
Fed.R.App.P. 43(a) does not contain any express provision that the appeal shall be dismissed if no motion for substitution is made within a reasonable period to be fixed by the appellate court. However, when no personal representative is known to exist, the rule authorizes that further proceedings "be had as the court of appeal may direct." Rule 43(a) is derived from Fed.R.Civ.P. 25(a). Advisory Committee's Note; 16 Wright, Miller, Cooper & Gressman, Federal Practice and Procedure, § 3989 (1977). The latter rule, as well as Supreme Court Rule 48(1), expressly authorize the dismissal of the proceedings if substitution is not made within the time set by rule or by order of the court. We deem that Rule 43(a) implies the power to make similar disposition, if the court of appeal so directs.
4
Accordingly, reasonable efforts having been made to inform known survivors of the decedent of the need for substitution if any of them desire to have the appeal further prosecuted, and no survivor having informed us of any desire to do so, the appeal is DISMISSED. Notice of this action shall be given to all survivors on record with our clerk's office.
5
APPEAL DISMISSED. | 01-03-2023 | 08-23-2011 |
https://www.courtlistener.com/api/rest/v3/opinions/854289/ | Filed 3/4/13 P. v. DeLeon CA2/3
Opinion following rehearing
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication
or ordered published for purposes of rule 8.1115.
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION THREE
THE PEOPLE, B226617
Plaintiff and Respondent, (Los Angeles County
Super. Ct. No. PA062172)
v.
MICHAEL DeLEON,
Defendant and Appellant.
APPEAL from a judgment of the Superior Court of Los Angeles County,
John David Lord, Judge. Affirmed.
Laura S. Kelly, under appointment by the Court of Appeal, for Defendant and
Appellant.
Kamala D. Harris, Attorney General, Dane R. Gillette, Chief Assistant Attorney
General, Chung L. Mar and Corey J. Robins, Deputy Attorneys General, for Plaintiff and
Respondent.
_________________________
Michael DeLeon appeals from the judgment entered following his convictions by
jury on count 1 – second degree murder (Pen. Code, § 1871) with findings a principal
personally and intentionally used a firearm, discharged a firearm, and discharged a
firearm causing great bodily injury or death (former § 12022.53, subds. (b)-(d) & (e)(1)),
and on count 2 – discharge of a firearm with gross negligence (§ 246.3, subd. (a)) with
findings appellant committed the above offenses for the benefit of a criminal street gang
(former § 186.22, subd. (b)). The court sentenced appellant to prison for 40 years to life.
We affirm the judgment.
FACTUAL SUMMARY
Viewed in accordance with the usual rules on appeal (People v. Ochoa (1993)
6 Cal. 4th 1199, 1206), the evidence established in June 2007, Jovani Leiva knew
appellant, Jesse Silva, and Marco Flores.2 The monikers of the last three were Dreamer,
Cholo (which means gangster), and Diablo, respectively. Leiva had met the three at
Branford Park. According to Leiva, appellant was from the Pacoima Trece gang, Silva
was from the Pacoima gang, and Flores was from the Orcas gang.
On the evening of June 15, 2007, David Delgado was at a party at 12462 Osborne
in Los Angeles County. After midnight, Delgado and Albert Molina (the decedent) were
inside the gate of the property and conducting patdown weapons searches of persons
entering.
Leiva drove a car containing appellant, Silva, Flores, and a person named Lalo
from Branford Park to a location near the party. Leiva parked and the group walked to
the house. Leiva saw a black firearm in Flores‘s waistband. The group approached the
gate.
1
Unless otherwise indicated, subsequent statutory references are to the Penal Code.
2
Codefendants appellant and Silva were jointly charged but separately tried. Silva
is not a party to this appeal.
2
According to Leiva, as Leiva walked towards the gate, he knew Flores had a gun,
but Leiva did not say anything to Flores or to anyone else in the group. Leiva testified,
―Who is going to tell these guys? You couldn‘t tell them nothing.‖
Appellant and Silva were searched. The persons conducting the search discovered
the gun. Silva threw a punch at one of them and the gate was closed. Flores gave the gun
to appellant and appellant shot it two to five times in the air. Leiva testified that, before
any shots were fired, he heard ―their gangs‖ being ―yelled out.‖ Appellant and Silva
yelled Pacoima, and Flores yelled Orcas.
After appellant shot in the air, Silva obtained the gun and fired three or five shots
into the crowd. During the shooting, someone was yelling Pacoima. Leiva was trying to
convince people at the gate to let his group inside when he heard the shots in the air,
looked back, and saw appellant handing the gun to Silva. After the shooting and as Leiva
was running to his car, someone was yelling Pacoima. Leiva let the group enter his car
because they had a gun and he could not stop them. Leiva testified the group was saying
―get away.‖ He also testified Flores took bullets from the gun and ―they were throwing it
[sic] out the window.‖ Leiva initially made false statements to police because he was
afraid.
According to Delgado, Delgado told members of the group at the gate to submit to
a search. Delgado believed the group consisted of about four persons. A person, later
identified as Silva, had one hand inside his waistband while his other hand held a beer
bottle. Delgado testified someone in the group entered through the gate, and someone
indicated ―we‘re just going to come in. Nobody is going to search us.‖ Delgado insisted
on searching them.
At least two men in the group screamed profanities, yelled gang-related statements
like ―Fuck Vineland‖ and ―Vegetables,‖ and indicated they were looking for Vineland
gang members. The word ―vegetables‖ was a derogatory reference to the ―Vineland
Boyz‖ gang (Vineland). The males who were yelling stepped back, and one of Delgado‘s
friends closed the gate.
3
Silva threw the bottle at Delgado and his companions, and the bottle broke on the
gate. Someone in appellant‘s group tried to open the gate, but Delgado‘s group stopped
them. Silva drew a gun and fired it once or twice in the air. Silva pointed the gun in the
direction of the crowd and shot towards the crowd. Silva then moved the gun towards
Delgado‘s group. Delgado grabbed Molina and moved, then Delgado heard a shot.
Molina stepped back, held his chest, and said he could not breathe. Molina was mortally
wounded. At the time of the shooting neither Delgado nor Molina had a gun.
Appellant‘s group fled.
Los Angeles Police Detective Jose Martinez testified he had seen appellant prior to
trial. A photograph shown to Martinez at trial depicted appellant‘s hair as short as
Martinez had seen it in the past. Appellant‘s hair in the past appeared different than his
hair at trial. Other photographs depicted tattoos on appellant‘s left hand and the letter P
on appellant‘s left foot or left shin.
On June 9, 2008, Martinez, in the presence of appellant‘s mother, interviewed
appellant at the police station about the above shootings. Martinez told appellant that
Silva had said appellant did the shooting. Appellant told Martinez that Silva was out of
control.
Appellant also told Martinez the following. Appellant did not shoot anyone.
Appellant and his companions were walking to a party, a girl started repeatedly
screaming Vineland, ―[a]nd then start shooting.‖ (Sic.) Appellant‘s companions were
Silva, Flores, and someone else. Leiva was driving, and appellant thought Flores threw
shells out the window. The gun was a chrome revolver with a black handle.
Appellant later told Martinez the following. Appellant shot the gun twice in the
air that night because he saw many people coming towards him. Appellant told Martinez,
―And then he was like, ‗Give it to me.‘ ‖ That person then shot for no reason. Appellant
also said ―they were coming at us‖ and that this occurred after appellant had fired shots.
The approaching people were throwing beer bottles, and two of them closed the gate.
Appellant later left with others.
4
Still later, appellant told Martinez the following. Appellant and his companions
took a gun ―just because‖ and because there were ―three different hoods‖ going to the
party. Treces and Orcas did not get along with Vineland. Flores had the gun when the
group was ―rolling up‖ on the party. An intoxicated girl was saying Vineland, so
appellant and those with him started saying ―fuck‖ ―[v]egetables.‖ Appellant obtained
the gun when his group was near the gate. Persons at the gate were trying to conduct a
search. Appellant had the gun ―right here,‖ moved back, ―then that‘s when they tried to
rush me.‖ Appellant ―pulled it out and shot two.‖ Appellant‘s group was about to leave,
then Silva ―just gets it and started letting loose.‖
Appellant also told Martinez a person grabbed appellant and said the person was
going to search appellant. Appellant backed off and hit the person. The person appellant
hit went back, a group of persons went inside, the gate was closed, then another person
started throwing bottles. Appellant was later told the person who had been shot had died.
Martinez asked appellant if he shouted Paca Treces, Paca, or Pacoima, and
appellant replied, ―I just said Pacoima.‖ Martinez indicated one person shouted Orcas,
and Martinez asked what Silva was shouting. Appellant replied, ―Cayugas.‖ Martinez
asked appellant if appellant said Pacoima before or after the shooting. Appellant replied,
―We said it before and after.‖ Martinez asked why, and appellant replied he did not
know. Martinez asked if it was done to scare people, and appellant replied, ―I guess. We
were just – it was in the moment, you know, screaming the hood out loud.‖ Appellant
told Martinez that appellant was 17 years old.
Los Angeles Police Officer Michael Yoro testified appellant, in the courtroom,
had a full head of hair and was wearing glasses, but Yoro denied appellant always had
had a full head of hair and always had worn glasses. During Yoro‘s previous contacts
with appellant, appellant always had a shaved head or closely cut hair.
Yoro, a gang expert, testified concerning the Pacoima Treces (PT) gang. The
Pacoima Cayuga Street Locos (PCSL) gang and the ―Orkas‖ gang were allies of, and
derived from, PT. Vineland was a rival gang of PT. The address of 12462 Osborne was
5
in an area occupied by members of, inter alia, PT. PT members congregated in Branford
Park. Appellant and Flores were PT members.3 Silva was a PCSL member who
perceived Vineland as his enemy.
The prosecutor posed without objection a hypothetical question which was based
on facts corresponding to evidence of the events leading to and including the above
shootings, and the prosecutor asked whether the ―shooting was for the benefit of or in the
association with or at the direction of a criminal street gang, [PT].‖ In response, Yoro
opined the shooting in the air, as well as the shooting and killing of the decedent, were
gang-related and ―done in benefit and in association of the [PT] gang.‖
Yoro testified ―the fact that these individuals arrived at the party and refused to be
searched shows that they will not be disrespected and, how dare you come to our
neighborhood and either charge us or search us. You will allow us entry. That‘s their
mentality.‖ Yoro also testified ―these gang members‖ communicated verbally by
claiming their gang territory by yelling Pacoima, and communicated nonverbally by
firing shots into the air and later towards the crowd, resulting in the death of a person
conducting a search. Yoro testified this ―[s]hows that they will not be disrespected and
you will recognize and fear our gang.‖ Appellant presented no defense evidence.
ISSUES
Appellant claims (1) his statement to Martinez was inadmissible under Miranda,4
(2) the trial court erroneously permitted the prosecutor to pose leading questions to Leiva,
(3) the prosecutor committed misconduct during jury argument, (4) Yoro‘s expert
testimony was elicited through the prosecutor‘s impermissible hypothetical questions,
(5) cumulative prejudicial error occurred, and (6) appellant‘s sentence constituted cruel
and unusual punishment.
3
Yoro testified it had been said Flores was a member of Orkas, a gang closely
associated with PT.
4
Miranda v. Arizona (1966) 384 U.S. 436 [16 L. Ed. 2d 694] (Miranda).
6
DISCUSSION
1. No Miranda Error Occurred.
a. Pertinent Facts.
During pretrial proceedings, appellant moved to exclude his statement to Martinez
on the ground he obtained it in violation of Miranda. At the hearing on the motion,
appellant indicated he was disputing whether he was in custody for purposes of Miranda.
Martinez later testified at the hearing as follows. On June 9, 2008, Martinez was
investigating a case involving appellant, Silva, and Flores. Prior to June 9, 2008,
Martinez had spoken to Silva and had read a report prepared by a detective who had
spoken to Flores.
On the morning of June 9, 2008, Martinez served a search warrant at appellant‘s
home. Appellant was not present but his mother was. Martinez told appellant‘s mother
that Martinez was investigating appellant in relation to a murder. Martinez told
appellant‘s mother that Martinez had an arrest warrant for appellant. The warrant was
not for the 2008 murder of Johnny Lopez.5
Later on June 9, 2008, appellant‘s mother brought appellant to the Foothill station.
Nonetheless, Martinez would have let appellant walk out if appellant had chosen to do so.
At the time, appellant was a suspect in the Molina murder. Martinez was not at the
station when appellant arrived. Martinez was called, and he returned to the station to
interview appellant.
During cross-examination, Martinez testified as follows. Once Martinez arrived at
the station, if appellant had walked out, Martinez would have let appellant leave, even
though Martinez had the arrest warrant. At the time, Martinez was not going to take
appellant into custody for either murder. During cross-examination, appellant‘s counsel
indicated he was asking Martinez about whether Martinez was going to take appellant
into custody for the Molina murder, and Martinez replied, ―At that point, no.‖ When
5
Respondent concedes Martinez obtained the arrest warrant ―for appellant‘s arrest
with respect to the Molina murder,‖ and so informed appellant‘s mother.
7
appellant and his mother came to the station to talk to Martinez, Martinez told appellant
that appellant was free to go. Martinez testified, ―Actually, I told them that [appellant]
could go at any time prior to any conversation and he could leave any time.‖
Prior to the interview, Martinez told appellant that appellant was not under arrest
and appellant could go whenever he wanted to go. After Martinez said this to appellant,
Martinez began questioning appellant about the Molina and Lopez murders. Appellant
was not in handcuffs when Martinez began interviewing him. The interview occurred in
an interview room. Appellant‘s mother was present but no officer other than Martinez
was present. Martinez recorded the conversation from its inception.
The interview of appellant and his mother lasted about 110 minutes. Martinez
denied that during the first approximate 30 minutes of the interview, appellant implicated
himself in the 2007 Molina incident by ―admit[ing] to being there.‖ Probably the
majority of the first 30 minutes consisted of Martinez ―interviewing [appellant‘s] mother
and us discussing‖ the Lopez murder. About 55 minutes into the interview, Martinez
began discussing with appellant that appellant was present during the Molina incident.
Appellant was never charged with the Lopez murder and the portion of Martinez‘s
conversation with appellant about that murder was investigatory. During the interview,
appellant gave Martinez a statement that implicated appellant in the Molina murder.
Martinez did not advise appellant of his Miranda rights prior to, or during, the interview.
Based on appellant‘s statement implicating him in the Molina murder, Martinez
decided to take appellant into custody. At the end of the interview, Martinez told
appellant that appellant was going to be arrested for firing a gun. Martinez also testified
he told this to appellant, ―I would say 7/8‘s in the complete interview.‖ After the
interview concluded, Martinez took appellant into custody in his mother‘s presence.
Another officer read to appellant his Miranda rights at that time. Appellant‘s mother left
after the interview. No one testified at the hearing as to appellant‘s age.
During argument on the motion, appellant urged as follows. Based on Martinez‘s
conversations with the codefendants, his obtaining of a search warrant for appellant‘s
8
home, and Martinez‘s obtaining of an arrest warrant for appellant, appellant was a
suspect at least in the Molina murder case and was going to be arrested. Appellant‘s
mother brought appellant into the station and, although ―that was voluntarily,‖ appellant
should have been advised of his Miranda rights at that time. As to the Lopez murder,
appellant conceded Martinez might have been merely conducting an investigation.
The trial court stated, ―State of the law after Berkemer[6] . . . would be that it would
require more than what was within the police officer‘s mind.‖ The court denied
appellant‘s motion to exclude his statement.
b. Analysis.
Appellant claims his statement to Martinez was inadmissible under Miranda. We
disagree. The issue is whether any interrogation of appellant was custodial. Whether a
person is in custody is an objective test; the pertinent inquiries are whether there was a
formal arrest or a restraint on freedom of movement of the degree associated with a
formal arrest and whether a reasonable person in the defendant‘s position would have felt
free to end the questioning and leave. (People v. Leonard (2007) 40 Cal. 4th 1370, 1400.)
We ―[d]isregard[] the uncommunicated subjective impressions of police regarding the
defendant‘s custodial status as irrelevant.‖ (People v. Stansbury (1995) 9 Cal. 4th 824,
830 (Stansbury), italics added.)
In the present case, there was substantial evidence as follows. Appellant was not
formally arrested until after the interview concluded. Although Martinez had an arrest
warrant for appellant, no evidence was presented at the hearing that this fact or the fact
appellant was a suspect was ever communicated to appellant. Appellant conceded below
his mother brought him to the station voluntarily, and there was no evidence he came
other than voluntarily. When appellant and his mother arrived, Martinez told appellant
and his mother that appellant could go at any time prior to any conversation, and that he
could leave at any time.
6
The trial court was presumably referring to Berkemer v. McCarty (1984) 468 U.S.
420, 439-440 [82 L. Ed. 2d 317] (Berkemer).)
9
Prior to the interview, Martinez told appellant that appellant was not under arrest.
Although Martinez interviewed appellant for almost two hours at the station, appellant‘s
mother was present and the only officer present was Martinez. Appellant was not
handcuffed when the interview began, no evidence was presented at the hearing that any
restrictions were placed on his movement during the interview, and no evidence was
presented Martinez was aggressive, confrontational, or accusatory, or that Martinez
pressured appellant. Apparently, Martinez and appellant‘s mother conversed during the
first approximate 15 minutes of the interview; appellant‘s involvement in that portion of
the interview was not clear. Appellant did not dispute below Martinez‘s conversation
with appellant about the Lopez murder was investigatory.
We conclude there was substantial evidence supporting the trial court‘s implied
finding no custodial interrogation occurred. When appellant made his statement to
Martinez, appellant was not in custody for purposes of Miranda. (Cf. People v. Whitson
(1998) 17 Cal. 4th 229, 248; Stansbury, supra, 9 Cal.4th at p. 830; People v. Clair (1992)
2 Cal. 4th 629, 679; People v. Pilster (2006) 138 Cal. App. 4th 1395, 1403-1404; In re
Kenneth S. (2005) 133 Cal. App. 4th 54, 63-66; People v. Lopez (1985) 163 Cal. App. 3d
602, 608; United States v. Hinojosa (6th Cir. 2010) 606 F.3d 875, 883-884; United States
v. Reynolds (6th Cir.1985) 762 F.2d 489, 491-494.) Nor does the record of the hearing
demonstrate Martinez attempted to circumvent Miranda.
J. D. B. v. North Carolina (2011) 564 U.S. ___ [180 L. Ed. 2d 310] (J. D. B.), cited
by appellant and involving police questioning of a 13-year-old (id. at p. ___ [180 L.Ed.2d
at p. 319]), does not compel a contrary conclusion. J. D. B. ―addressed custody
determinations for purposes of requiring Miranda warnings. In that case, the high court
held a child suspect‘s age, when known to the interrogating officer or objectively
apparent to a reasonable officer, is relevant to the determination whether, considering all
the objective circumstances of an interrogation, a reasonable person in the suspect‘s
position would understand his freedom to terminate police questioning and leave.‖
(People v. Nelson (2012) 53 Cal. 4th 367, 383, fn.7.) J. D. B. reversed a state supreme
10
court decision which (1) concluded the minor was not in custody for purposes of Miranda
but (2) expressly declined to extend the test for custody to include consideration of the
age of an individual subjected to police questioning. (J. D. B., at pp. ___ [180 L.Ed.2d at
pp. 320-321, 329].)
Unlike the case in J. D. B., no court involved in the present case has expressly
declined to extend the Miranda custody test to include consideration of appellant‘s age.
Moreover, no testimony or substantial evidence was presented at the hearing in the
present case that appellant was a juvenile, that, if appellant was a juvenile, Martinez
knew it, or that appellant‘s age as a juvenile was objectively apparent to Martinez.
2. The Trial Court Did Not Erroneously Permit Leading Questions by the Prosecutor.
Appellant claims the trial court erroneously permitted the prosecutor during her
redirect examination of Leiva to ask two leading questions eliciting Leiva‘s testimony
that he saw appellant extend his hand to give the gun to Silva. Appellant argues the
testimony was crucial to the People‘s effort to prove he aided and abetted murder, or
assault with a deadly weapon. The two questions are italicized below and, for the reasons
discussed below, we reject the claim.
a. Pertinent Facts.
Leiva testified during cross-examination to the effect that when he was trying to
enter the gate, he heard shots in the air, looked back, and saw appellant ―handing the gun
to [Silva].‖ Leiva also testified, ―I don‘t know if [Silva] grabbed it or it was a [handoff].‖
Leiva further testified he was ―not sure if it was [a handoff] or grabbed it.‖ (Sic.)
During redirect examination, the following occurred: ―Q. And when you say you
don‘t know whether [Silva] grabbed the gun or whether there was a [handoff], did you
actually see [appellant] hand the gun? [¶] A. Yes. [¶] . . . [¶] A. Then he shot
towards -- [¶] Q. Then [Silva] took it? [¶] A. Yeah. [¶] Q. . . . But you actually saw
[appellant] extend his hands? [¶] A. Yeah. [¶] [Appellant‘s Counsel:] Objection,
leading the witness. [¶] The Court: Overruled. [¶] Q. (By [The Prosecutor:]) And
when I say extend his hand, I mean extend his hand with a gun to [Silva]? [¶] A. To
11
[Silva]. [¶] [Appellant‘s Counsel:] Again, your Honor, objection, leading. [¶] The
Court: Overruled.‖ During recross-examination, Leiva testified that appellant gave the
gun to Silva, and that Silva grabbed it.
b. Analysis.
Evidence Code section 764 states, ―A ‗leading question‘ is a question that suggests
to the witness the answer that the examining party desires.‖ Evidence Code section 767,
subdivision (a)(1), states, ―(a) Except under special circumstances where the interests of
justice otherwise require: [¶] (1) A leading question may not be asked of a witness on
direct or redirect examination.‖ (Italics added.) Trial courts have broad discretion to
decide when such special circumstances are present. (People v. Williams (1997)
16 Cal. 4th 635, 672 (Williams).) For example, ―A leading question is permissible on
direct examination when it serves ‗to stimulate or revive [the witness‘s] recollection.‘ ‖
(Id. at p. 672.)
Prior to the two challenged questions, portions of Leiva‘s cross-examination
testimony could be understood to indicate Leiva saw appellant in the process of handing
the gun to Silva prior to the point of transfer of the gun from appellant to Silva, but Leiva
―[did not] know‖ and ―was not sure‖ whether, at the point of transfer, appellant handed
the gun to Silva or Silva merely grabbed it. Assuming appellant posed timely objections
to the challenged questions and they were leading, they were permissible to serve to
stimulate or revive Leiva‘s recollection about what happened at the point of transfer. The
court did not abuse its discretion in permitting the challenged questions. (Cf. People v.
Collins (2010) 49 Cal. 4th 175, 215; Williams, supra, 16 Cal.4th at p. 672-673.)
Moreover, even if the trial court erred, it does not follow we must reverse the
judgment. During appellant‘s cross-examination of Leiva, Leiva testified he saw
appellant ―handing the gun to [Silva].‖ Leiva‘s redirect examination testimony prior to
the challenged questions reasonably may be understood to indicate Leiva actually saw
appellant hand the gun to Silva and Silva take it. Leiva‘s testimony during recross-
examination indicated, inter alia, appellant gave the gun to Silva.
12
As our Factual Summary reveals, there was ample other evidence appellant was an
aider and abettor to Silva‘s murder of Molina, including gang evidence providing a
motive for appellant to aid and abet Molina‘s murder, and statements appellant made to
Martinez which reasonably may be construed as admissions appellant gave the gun to
Silva. Any trial court error in permitting the two challenged questions was not
prejudicial. (Cf. Williams, supra, 16 Cal.4th at p. 673; People v. Watson (1956)
46 Cal. 2d 818, 836.)
3. No Prejudicial Prosecutorial Misconduct Occurred.
a. Pertinent Facts.
During opening argument, the prosecutor argued that under aiding and abetting
law, what appellant did was, in many ways, worse than what Silva did because appellant
handed Silva, appellant‘s ―homie,‖ a loaded gun when they were confronting rivals.
The prosecutor then commented without objection, “And although [appellant] sits
here looking like he’s going to -- a nice school boy with a full head of hair and his nice
studious glasses, that‘s not the Michael DeLeon at the party that killed Albert Molina.
He didn‘t have the full head of hair. He didn‘t have the glasses. But he did have a loaded
gun. This isn‘t the sweet, innocent kid that he portrays himself to be right here in this
courtroom. I guess we’re all on our best behaviors in the courtroom, especially when
we’re the ones on trial. He isn‘t innocent. He is a full-fledged member, a documented
member, of the Paca Trece gang. He is a hood rat who walked around with his other
hood rats using guns and killing people just because they thought they were dissed, just
because they thought they didn‘t like the people at the party.‖ (Italics added.)
At the end of the prosecutor‘s closing argument, the prosecutor commented
without objection, ―We’re not hearing about this 16-year-old getting a respectable job.
We’re not hearing about this 16-year-old going to school and going to college. We’re
not hearing about this 16-year-old doing anything like that. This 16-year-old is a killer
and a gang member and that‘s all he is. I ask you for a verdict of guilty. Thank you.‖
(Italics added.)
13
b. Analysis.
Appellant claims the prosecutor committed misconduct during jury argument. We
address appellant‘s arguments the prosecutor (1) commented upon appellant‘s demeanor
in the courtroom, (2) invoked racial and class stereotypes, and (3) commented upon
appellant‘s failure to present character evidence.
At the outset, we conclude appellant waived all issues of prosecutorial misconduct
by appellant‘s failure to object to the challenged comments on the ground of
prosecutorial misconduct and by his failure to request a jury admonition with respect to
said comments, which would have cured any harm. (Cf. People v. Gionis (1995)
9 Cal. 4th 1196, 1215; People v. Sandoval (1992) 4 Cal. 4th 155, 185.)
Even if the issues were not waived, appellant‘s claim lacks merit for the reasons
discussed below. Prosecutorial argument may be vigorous as long as it amounts to fair
comment on the evidence. (People v. Hill (1998) 17 Cal. 4th 800, 819.) The testimony of
Martinez and Yoro provided evidence appellant‘s hair had been shorter prior to trial than
appellant‘s hair was at trial and, although appellant was wearing glasses at trial, he had
not always done so prior to trial. The first two previously italicized comments of the
prosecutor were fair comment on the evidence. We reject appellant‘s vague claim the
prosecutor improperly commented upon appellant‘s courtroom demeanor.
Moreover, the first two previously italicized comments reasonably could be
construed as arguments the jury should disregard appellant‘s courtroom demeanor in
favor of considering the evidence, in which case no misconduct occurred. (Cf. People v.
Yeoman (2003) 31 Cal. 4th 93, 148-149 (Yeoman); People v. Boyette (2002) 29 Cal. 4th
381, 434.)
As to the prosecutor‘s use of the term ―hood rat,‖ appellant, citing an Internet
dictionary, asserts the term is derogatory and invokes racial and class-based stereotypes.
According to appellant, the dictionary he cites gives two meanings for the term (1) a
young promiscuous woman from an impoverished urban area, and (2) ― ‗someone who
hangs around the [black] neighborhood.‘ ‖ (Bracketed word in the original.)
14
The term ―hood rat‖ does not expressly refer to race or class. However, we
assume without deciding the jury understood the term to refer to the alleged second
meaning from the Internet dictionary. While we do not condone the use of opprobrious
terms during jury argument, the prosecutor‘s brief references to the term during closing
argument (which was otherwise free of prejudicial prosecutorial language) cannot
reasonably be considered prejudicial prosecutorial misconduct in light of the ample
evidence of appellant‘s guilt. (Cf. Yeoman, supra, 31 Cal.4th at p. 149.)
Our conclusion is reinforced by the facts the court, using CALCRIM No. 200,
instructed the jury not to let bias, including bias based on race or socioeconomic status,
influence their decision; that same instruction told the jury to decide this case based only
on the evidence; and the court, using CALCRIM No. 222, instructed that nothing
attorneys said was evidence. To the extent appellant relies on the mere reference to
―hood,‖ we note appellant told Martinez that appellant and his companions took a gun
―just because‖ and because there were ―three different hoods‖ going to the party.
We reach the same conclusion, as to the prosecutor‘s comments pertaining to a
respectable job and college. Finally, to the extent appellant claims he received
ineffective assistance of counsel by reason of his trial counsel‘s failure to object to the
challenged argument, our analysis compels the conclusion no such ineffective assistance
occurred.
4. Yoro’s Gang Expert Testimony Was Admissible.
Appellant claims Yoro‘s gang expert testimony was elicited through the
prosecutor‘s impermissible hypothetical questions, in response to which, according to
appellant, Yoro presented expert opinion testimony on whether the offenses appellant
committed were gang-related and done for the benefit of, and in association with, PT.
Appellant argues that, as a result, his conviction on count 1, and the true findings as to the
former section 186.22, subdivision (b) enhancement allegations, must be reversed.7
7
Appellant acknowledges that, at the time he filed his opening brief, a related issue
of whether a trial court erred by permitting certain hypothetical questions to a prosecution
15
Appellant failed to object below to Yoro‘s expert testimony which appellant now
challenges; therefore, appellant waived the issues. (Evid. Code, § 353, subd. (a)). Even
if the issues were not waived, they lack merit. In Vang, supra, 52 Cal. 4th 1038, a gang
expert, in response to hypothetical questions posed by a prosecutor, testified an assault
would benefit a named gang and was committed in association with the gang and at the
direction of the gang‘s members. The expert also testified the attack was gang-
motivated. Vang concluded the prosecutor‘s hypothetical questions, although based on
evidence-specific assumptions, were properly based on evidence at trial and the expert‘s
opinion testimony in response was admissible and not rendered inadmissible by the fact,
if true, the testimony pertained to an ultimate issue(s) to be decided by the trier of fact.
(Id. at pp. 1042-1049.)
In the present case, the prosecutor essentially posed a hypothetical question which
asked Yoro, an expert, to assume various facts based on the evidence. The prosecutor‘s
question was proper and, in response, Yoro properly gave his expert opinion testimony.
(Cf. Vang, supra, 52 Cal.4th at pp. 1042-1049.) To the extent appellant claims he
received ineffective assistance of counsel by reason of his trial counsel‘s failure to object
to Yoro‘s expert testimony, our analysis compels the conclusion no such ineffective
assistance occurred. We also reject appellant‘s claim cumulative prejudicial error
occurred.
5. Appellant’s Sentence on Count 1 Does Not Violate the Eighth Amendment.
Appellant claims as to count 1 the Eighth Amendment categorically bars a
sentence of 40 years to life for a homicide committed by a juvenile who did not kill or
intend to kill and bars a mandatory sentence of 40 years to life for a homicide committed
expert witness was pending before our Supreme Court in People v. Vang (2010)
185 Cal. App. 4th 309, review granted September 15, 2010 (S184212). In his reply brief,
he acknowledges our Supreme Court‘s decision in People v. Vang (2011) 52 Cal. 4th
1038 (Vang), and claims ―for purposes of further review in federal court‖ the prosecutor‘s
hypothetical and Yoro‘s answer violated appellant‘s Fifth, Sixth, and Fourteenth
Amendment rights.
16
by a juvenile.8 He also claims his sentence violates the Eighth Amendment based on the
circumstances in his case.
a. Pertinent Facts.
As to count 1, the trial court instructed the jury on, inter alia, express and implied
malice, first degree willful, deliberate, and premeditated murder, and a section 190.2,
subdivision (a)(22) special circumstance applicable if appellant committed first degree
murder, intentionally killing the victim while appellant was an active participant in a
criminal street gang. The court also instructed the jury as follows. A person could be
criminally liable as a perpetrator or as an aider and abettor. An aider and abettor knew
the perpetrator‘s unlawful purpose and ―specifically intend[ed] to, and [did] in fact‖ aid,
facilitate, promote, encourage, or instigate the perpetrator‘s commission of the crime.
Appellant was liable for murder as an aider and abettor if he aided and abetted the
intended crime of murder or the intended crime of assault with a firearm, a natural and
probable consequence of which was murder.
During jury argument, the prosecutor defined aiding and abetting consistent with
the court‘s instruction and argued appellant aided and abetted Silva‘s commission of first
degree willful, deliberate, and premeditated murder because, before Silva committed that
crime, appellant gave the gun to Silva, knew of Silva‘s unlawful purpose to kill, and
intended to facilitate the commission of the offense.
The prosecutor also argued appellant aided and abetted second degree implied
malice murder because appellant gave the gun to Silva and knew of Silva‘s unlawful
purpose to commit assault with a firearm (i.e., knew of Silva‘s unlawful purpose to
commit an intentional act the natural and probable consequences of which would
endanger life). Discussing this implied malice theory, the prosecutor commented
appellant gave the gun ―knowing that any reasonable person would know that assaulting
people with a loaded gun is dangerous to human life‖ (italics added) and appellant ―knew
8
We asked for, and received, supplemental briefing on these and other issues.
17
Jesse Silva would assault with that gun.‖ (Italics added.) The prosecutor did not argue
appellant was liable for murder as an aider and abettor on the theory he aided and abetted
the intended crime of assault with a firearm, a natural and probable consequence of which
was murder. The jury convicted appellant as previously indicated but did not find true
the special circumstance allegation.
The probation report, prepared for a June 2009 hearing, reflects as follows.
Appellant was born on March 24, 1991. He was placed on juvenile probation in July
2007 for grand theft and had a pending probation violation. Appellant was a PCP abuser.
He lived with his family of eight and attended school until April 2008. Appellant was a
16-year-old gang member when he committed the present offenses and he was involved
with the ―Primera Flats E/S; Pacoima 13‖ (some capitalization omitted) gang. He told
police he punched Molina, fired shots in the air, and handed the gun to Silva, and Silva
shot Molina. The probation officer stated, ―the defendant and co-defendants discharged a
firearm towards the air and the victim, murdering him; while shouting their gang names.
The crimes were merciless and the victim‘s life [cannot] be recovered.‖
The report listed as aggravating factors that the crime involved great violence,
great bodily harm, a threat of great bodily harm or other acts disclosing a high degree of
cruelty, viciousness or callousness, and appellant had engaged in a pattern of violent
conduct which indicated a serious danger to society. The report indicated there were no
mitigating factors and, if special allegations were found true, consecutive sentences were
required.
During the August 4, 2010 sentencing hearing, Molina‘s sister addressed the court.
Later, the court, which had presided at appellant‘s jury trial, stated, ―. . . Mr. Molina‘s
sister was exactly correct. . . . [E]ven though you may not have pulled the trigger on the
final shot, you‘re a cold-blooded murderer. You took an active role in this whole
situation, which resulted in the death of somebody who had absolutely, positively no
reason whatsoever to be in the line of fire. So you will almost certainly die in prison,
which is appropriate because you stole Mr. Molina‘s life for no reason whatsoever.‖ The
18
court, without objection, sentenced appellant to prison for 40 years to life, consisting of
15 years to life for second degree murder, plus 25 years to life pursuant to section
12022.53, subdivisions (d) and (e). The court found section 654 applied to count 2. The
trial court awarded appellant 787 days of custody credit.
b. Analysis.
(1) No Eighth Amendment Violation Occurred.
(a) Applicable Law.
In Graham v. Florida (2010) 560 U.S. ___ [176 L. Ed. 2d 825] (Graham), our
Supreme Court observed the Eighth Amendment prohibits not only barbaric punishments
but disproportionate ones. (Graham, at p. ___ [176 L.Ed.2d at p. 835].) Prior to
Graham, cases addressing sentence proportionality fell into two general categories, i.e.,
challenges to the length of ―term-of-years sentences given all the circumstances in a
particular case‖ (id. at p. ___ [176 L.Ed.2d at p. 836]) and cases involving categorical
restrictions on the death penalty (ibid.).
As to the first category, Graham observed, ―The controlling opinion [in Harmelin
v. Michigan (1991) 501 U.S. 957 [115 L. Ed. 2d 836] (Harmelin)] concluded that the
Eighth Amendment contains a ‗narrow proportionality principle,‘ that . . . ‗forbids only
extreme sentences that are ―grossly disproportionate‖ to the crime.‘ ‖ (Graham, at p. __
[176 L.Ed.2d at p. 836.]) Analysis of this category of cases involves a determination of
whether a penalty is so disproportionate to the crime that the penalty shocks the
conscience and offends fundamental notions of human dignity. (People v. Cunningham
(2001) 25 Cal. 4th 926, 1042.) We refer to this as the ―traditional‖ (People v. Mendez
(2010) 188 Cal. App. 4th 47, 64 (Mendez)) approach.
We consider the second category of cases, not in the order in which they were
decided, but generally in the order of their decreasingly severe sentences and offenses.
As discussed below, those sentences range from death, to LWOP, to a ―de facto‖ LWOP.
19
Roper v. Simmons (2005) 543 U.S. 551 [161 L. Ed. 2d 1] (Roper) exemplifies the
second category of cases. In Roper, the high court held the Eighth Amendment
categorically bars imposition of the death penalty on a juvenile offender. (Roper, at
p. 578 [161 L.Ed.2d at p. 28].) In Miller v. Alabama (2012) 567 U.S. ___ [183 L. Ed. 2d
407] (Miller), a case involving homicides (id. at p. ___ [183 L.Ed.2d at p. 414]), the high
court expressly left open the question of whether the Eighth Amendment categorically
bars an LWOP sentence for juvenile offenders, or at least for those 14 years old and
younger. (Miller, at p. ___ [183 L.Ed.2d at p. 424].) This suggests it is also an open
question whether the Eighth Amendment categorically bars imposition of a ―de facto‖
LWOP sentence for such offenders, i.e., a life sentence with a minimum term that
exceeds the juvenile‘s life expectancy (see discussion post).
However, Miller, analogizing mandatory adult death sentences to mandatory
LWOP sentences for juvenile offenders, and noting the former violated the Eighth
Amendment, concluded the latter violated the Eighth Amendment as well. (Miller,
supra, 567 U.S. at pp. ___ [183 L.Ed.2d at pp. 414-415, 417-418, 421-424.]) This
suggests the Eighth Amendment also bars mandatory de facto LWOP sentences for such
offenders.
In People v. Caballero (2012) 55 Cal. 4th 262 (Caballero), our Supreme Court
held the Eighth Amendment categorically bars a prison sentence of 110 years to life for
nonhomicide offenses (attempted murders) committed by a juvenile.9 (Caballero, at
p. 265.) Caballero concluded the minimum term of 110 years, a term beyond the
juvenile‘s life expectancy, was a ―de facto‖ (id. at p. 269) LWOP.
Graham applied a categorical approach to nonhomicide offenses, holding the
Eighth Amendment categorically bars a sentence of life without the possibility of parole
9
In Caballero, a jury convicted the defendant of three attempted murders (hereafter,
counts 1-3) and the term of 110 years to life consisted of 15 years to life for each
attempted murder, plus 25 years to life for a firearm enhancement pertaining to count 1,
plus a 20-year firearm enhancement as to each of counts 2 and 3. (Caballero, supra,
55 Cal.4th at p. 265.)
20
(LWOP) for nonhomicide offenses (armed burglary and attempted armed robbery)
committed by a juvenile. (Graham, supra, 560 U.S. at pp. __ [176 L.Ed.2d at pp. 832,
834, 845].)
(b) Application of the Law to This Case.
(i) Appellant’s Sentence Is Not Categorically Barred.
Appellant, relying on Graham, claims as to count 1 the Eighth Amendment
categorically bars a sentence of 40 years to life for a homicide committed by a juvenile
who did not kill or intend to kill.10 We note at the outset the court did not sentence
appellant to prison for 40 years to life merely for a homicide but, more accurately, to 15
years to life for homicide (second degree murder), plus 25 years to life for the gang-
related enhancement applicable because a principal personally and intentionally
discharged a firearm, proximately causing death. We assume the jury could have
concluded appellant did not directly kill and did not intend to kill.11
10
Appellant expressly denies he has contended the Eighth Amendment categorically
bars a sentence of 40 years to life for any homicide committed by a juvenile.
11
Appellant argues his ―murder conviction was based on the natural and probable
consequences doctrine, a doctrine that allows for a murder conviction where the
defendant personally does not harbor malice or intent to kill, but aids and abets a crime,
the natural and probable consequences of which are murder.‖ In support of this
argument, appellant relies on various citations to the prosecutor‘s arguments to the jury.
However, as those citations and the record reveal, the prosecutor argued to the jury that
appellant aided and abetted intended crimes of murder, i.e., (1) the intended crime of
express malice murder based in part on appellant‘s knowledge that Silva intended to kill
and (2) the intended crime of implied malice murder based in part on appellant‘s
knowledge that Silva intended to do an act (the act of committing assault with a firearm)
the ―natural and probable consequences‖ of which would endanger life. That is, the
prosecutor‘s references to ―natural and probable consequence[s]‖ were solely in the
context of that phrase as a component of implied malice. Although the prosecutor‘s
argument on the above issues was not a model of clarity, the prosecutor never argued that
appellant aided and abetted the intended crime of assault with a firearm and that murder
was a ―natural and probable consequence‖ of that assault, or that appellant aided and
abetted the intended crime of assault with a firearm and murder was simply a reasonably
foreseeable consequence of that assault.
21
Appellant was born in March 1991. His life expectancy12 is therefore 72 years.13
In August 2010, when appellant was 19 years old, the court sentenced him to prison for
40 years to life and awarded him 787 days of custody credit. Even if one ignores the
award of over two years of custody credit, the 40 years will expire when appellant is 59
years old, an age substantially less than his life expectancy of 72 years. In other words,
the court sentenced appellant to prison for life with a minimum term that did not exceed
his life expectancy. Moreover, that sentence included the possibility of parole, and
included a substantial period of years after the expiration of his minimum term but before
his life expectancy.
Moreover, the fact the jury found not true the special circumstance allegation did
not demonstrate the jury concluded appellant lacked intent to kill. There was ample
evidence appellant committed second degree murder based on express malice. The jury
reasonably could have found not true the special circumstance allegation simply because
they did not believe appellant committed first degree willful, deliberate, and premeditated
murder, even though they believed he committed second degree murder based on express
malice.
12
Caballero stated, ―. . . the term ‗life expectancy‘ means the normal life expectancy
of a healthy person of defendant‘s age and gender living in the United States.‖
(Caballero, supra, 55 Cal.4th at p. 267, fn. 3.)
13
Center for Disease Control and Prevention, Death: Final Data for 2010, table 8
[Life expectancy at birth by race, Hispanic origin, race for non-Hispanic population, and
sex: United States, 1940, 1950, 1960, 1970 and 1975-2010]
(as of March 4, 2013).
(See Mendez, supra, 188 Cal.App.4th at pp. 62-63; People v. Romero (2002) 99
Cal. App. 4th 1418, 1427, fn. 12.) Table 8 lists the life expectancy of a United States male
born in 1991 as 72.0 years. This would add 53 years to appellant‘s age of 19 at time of
sentencing. Respondent calculates appellant‘s life expectancy as 77 years (adding 58
years to appellant‘s age of 19 at time of sentencing). However, the period of 58 years is
based on a 2006 table and refers to an age group for United States males between 18 and
19 years old, instead of appellant‘s age group which, at time of sentencing, was between
19 and 20 years old. Appellant‘s calculation of his life expectancy as 71.8 years is based
on a table referring to persons born in 1990. Appellant was born in 1991.
22
A death sentence, an LWOP sentence, and a de facto LWOP sentence each exceed
the defendant‘s life expectancy, obviously so for a death sentence. As to each such
sentence, there is no possibility of parole. However, appellant invites us to apply an
Eighth Amendment categorical bar to his sentence which includes a possibility of parole.
For the reasons discussed below, we decline to do so.
Central to Graham‘s extension of the categorical approach to hold the Eighth
Amendment categorically barred an LWOP sentence for nonhomicide offenses
committed by a juvenile was the fact the juvenile‘s sentence was in fact an LWOP
sentence. In its categorical analysis, Graham relied on several facts. First, LWOP
sentences imposed upon juveniles for nonhomicide offenses were ―exceedingly rare‖
(Graham, supra, 560 U.S. at p. ___ [176 L.Ed.2d at p. 841]) and ― ‗a national consensus
ha[d] developed against [them]‘ ‖ (ibid.). Graham reached the latter conclusion only
after a statistical analysis of the infrequent imposition, nationwide, of LWOP sentences
for juveniles who committed nonhomicide offenses. (Id. at pp. __ [176 L.Ed.2d at
pp. 837-839.)
Second, an LWOP sentence was ― ‗the second most severe penalty permitted by
law‘ ‖ (Graham, supra, 560 U.S. at p. __ [176 L.Ed.2d at p. 842]) and shared
―characteristics with death sentences that are shared by no other sentences‖ (ibid.), such
as an irrevocable forfeiture and a deprivation of liberty without hope of restoration.
Third, an LWOP sentence for a juvenile was especially harsh because the juvenile ―will
on average serve more years and a greater percentage of his life in prison than an adult
offender‖ (id. at p. __[176 L.Ed.2d at p. 843]). Appellant has failed to demonstrate that
the above analysis applies with equal force to a life sentence the minimum term of which
does not exceed the juvenile‘s life expectancy, a sentence which therefore includes the
possibility of parole.
Graham also concluded penological justifications—retribution, deterrence,
incapacitation, and rehabilitation—could not support an LWOP sentence for a juvenile for
a nonhomicide offense. (Graham, supra, 560 U.S. at pp. ___ [176 L.Ed.2d at pp. 843-
23
845].) Graham noted incapacitation could not justify an LWOP sentence because such a
sentence presumed the juvenile was incorrigible, and ― ‗incorrigibility is inconsistent with
youth.‘ ‖ (Id. at p. ___ [176 L.Ed.2d at p. 844].) According to Graham, rehabilitation
could not justify an LWOP sentence because ―the penalty forswears altogether the
rehabilitative ideal.‖ (Id. at p. ___ [176 L.Ed.2d at p. 845], italics added.) Graham found
support for its conclusion that LWOP sentences for juveniles for nonhomicide offenses
violated the Eighth Amendment in the fact ― ‗the United States now stands alone in a
world that has turned its face against‘ life without parole for juvenile nonhomicide
offenders. [Citation.]‖ (Graham, at p. ___ [176 L.Ed.2d at p. 850], italics added.)
Appellant has not demonstrated the above analysis applies with equal force to his
sentence.
It is true that Graham, focusing on the offender and the offense, also considered
the facts juveniles have less culpability than adults, and a juvenile who does not kill or
intend to kill has a twice diminished moral culpability than an adult murderer. (Graham,
supra, 560 U.S. at p. ___ [176 L.Ed.2d at p. 842].) However, as indicated, these facts
were only part of the high court‘s categorical analysis that heavily relied on the fact the
sentence in that case was an LWOP sentence. In light of the above, we conclude
juveniles with (1) LWOP sentences or de facto LWOP sentences and (2) juveniles with
life sentences with a minimum term that not only does not exceed life expectancy but is
more than a decade short of life expectancy, are too dissimilar to justify an Eighth
Amendment categorical bar to a sentence of 40 years to life for a homicide committed by
a juvenile in a gang-related case in which a principal shot and killed the decedent.
Beyond that, we believe those dissimilarities preclude a categorical bar to a
sentence of 40 years to life even if said juvenile did not directly kill and did not intend to
kill.
The high court has employed a categorical approach to remedy mismatches
between a penalty and a class of offenders, as when the court concluded in Roper that the
Eighth Amendment categorically bars death sentences on juvenile offenders. The high
24
court has employed a categorical approach to remedy mismatches between a penalty and
a class of offenses, as when the court concluded in Kennedy v. Louisiana (2008) 554 U.S.
407 [171 L. Ed. 2d 525] that the Eighth Amendment categorically bars death sentences for
nonhomicide crimes. (Graham, supra, 560 U.S. at pp. ___ [176 L.Ed. at pp. 836-837].)
In Graham, the high court employed a categorical approach to remedy the mismatch
between a penalty (an LWOP sentence), a class of offenders (juveniles), and a class of
offenses (nonhomicide crimes).
However, appellant cites no authority employing a categorical approach to remedy
a perceived mismatch between a penalty, a class of offenders (juveniles), and a—
potentially endless—class of facts about an offense. Yet appellant invites us to employ
just such an approach when he claims the Eighth Amendment categorically bars a
sentence of 40 years to life for an offense committed by a juvenile who did not kill or
intend to kill.
The high court in Miller was aware defendants who do not kill or intend to kill are
categorically less deserving of the most serious forms of punishment than murderers, and
was aware juvenile offenders in such circumstances have twice diminished moral
culpability. (Miller, supra, 567 U.S. at p. ___ [183 L.Ed.2d at p. 423].) Notwithstanding
that knowledge, Miller expressly refrained from considering whether the Eighth
Amendment categorically bars LWOP sentences for juvenile offenders (Miller, at p. ___
[183 L.Ed.2d at p. 424]) and did not conclude the Eighth Amendment categorically
barred LWOP sentences for juvenile offenders who did not kill or intend to kill.
A conclusion the Eighth Amendment categorically bars a sentence of 40 years to
life for a homicide committed by a juvenile who did not directly kill or intend to kill
presents additional problems. First, as mentioned, the high court left open the question of
whether the Eighth Amendment categorically bars LWOP sentences for juvenile
offenders, and this suggests it is also an open question whether the Eighth Amendment
categorically bars de facto LWOP sentences for juvenile offenders. If we concluded the
Eighth Amendment categorically bars a sentence of 40 years to life for a homicide
25
committed by a juvenile who did not kill or intend to kill, we see no principled basis on
which we could avoid concluding, a fortiori, the Eighth Amendment categorically bars
more severe LWOP and de facto LWOP sentences for juvenile offenders who did not kill
or intend to kill. We would thereby resolve these issues absent any information as to
whether, e.g., a national consensus exists against such sentences, and despite the fact it
appears the high court carefully has left undecided these issues.
Second, there appears to be no principled basis on which we could conclude the
Eighth Amendment categorically bars a sentence of 40 years to life for a homicide
committed by a juvenile who did not directly kill or intend to kill, without also having to
conclude lesser sentences for homicides committed by juveniles who did not directly kill
or intend to kill are categorically barred. This would include a sentence of 25 years to
life, by itself, for a juvenile accomplice to first degree felony murder (§§ 189, 190, subd.
(a)). It would include a sentence of 35 years to life, i.e., 15 years to life for a juvenile
accomplice to second degree murder based on implied malice (§ 190, subd. (a)) plus 20
years for personal and intentional discharge of a firearm (§ 12022.53, subd. (c)). It would
include a sentence of 15 years to life, by itself, for a juvenile accomplice to second degree
murder based on implied malice.
Indeed, once one applies an Eighth Amendment categorical approach to bar a
sentence of 40 years to life for a homicide committed by a juvenile who did not directly
kill or intend to kill, it is not clear why the Eighth Amendment would not categorically
bar lengthy determinate terms for homicides committed by juveniles who do not directly
kill or intend to kill. This would include a sentence of 11 years in prison for voluntary
manslaughter (§ 193, subd. (a)), even though that sentence includes the possibility of
parole (§ 3000, subd. (b)(1)). The next logical step would be to challenge a four-year
sentence for involuntary manslaughter, even though that sentence too includes the
possibility of parole (§ 193, subd. (b); 3000, subd. (b)(1)).
26
Third, a conclusion the Eighth Amendment categorically bars a sentence of 40
years to life for a homicide committed by a juvenile who did not kill or intend to kill
would be largely inconsistent with pre-Miller cases employing a traditional Eighth
Amendment approach to conclude the Eighth Amendment did not bar imposition of even
lengthier sentences in cases similar to this one involving juvenile offenders. (People v.
Em (2009) 171 Cal. App. 4th 964, 966-967, 969 (Em) [25 years to life for first degree
murder, plus 25 years to life for the gang-related firearm enhancement]; People v.
Gonzalez (2001) 87 Cal. App. 4th 1, 5, 7, 11-12, 16-19 [same]; see People v. Demirdjian
(2006) 144 Cal. App. 4th 10, 12 [consecutive term of 25 years to life for each of two
murders; People v. Villegas (2001) 92 Cal. App. 4th 1217, 1228-1230 [40 years to life
consisting of life with the possibility of parole for attempted premeditated murder, 15
years to life for a gang enhancement, and 25 years to life for a firearm enhancement].)
In People v. Argeta (2012) 210 Cal. App. 4th 1478 (Argeta), a defendant who was
five months past his 18th birthday when he committed murder and attempted murders
relied on Graham, Mendez, Miller, and Caballero to claim the Eighth Amendment
categorically barred his sentence, which apparently was a de facto LWOP sentence.
(Argeta, supra, 210 Cal.App.4th at pp. 1480-1482.) Argeta stated, ―while ‗[d]rawing the
line at 18 . . . is subject . . . to the objections always raised against categorical rules
. . . [, that] is the point where society draws the line for many purposes between
childhood and adulthood. . . .‘ [Citations.] Making an exception for a defendant who
committed a crime just five months past his 18th birthday opens the door for the next
defendant who is only six months into adulthood. Such arguments would have no logical
end, and so a line must be drawn at some point. We respect the line our society has
drawn and which the United States Supreme Court has relied on for sentencing purposes,
and conclude Argeta‘s sentence is not cruel and/or unusual under Graham, Miller, or
Caballero.‖ (Argeta, supra, 210 Cal.App.4th at p. 1482.)
27
Current Eighth Amendment jurisprudence suggests that in the constitutional
calibration of offenses and penalties, the protections of categorical bars to sentences
diminish not only as one advances from minority to adulthood, but as sentences lessen in
severity. Sentences for criminal homicides generally diminish in severity as the gravity
of the offenses lessen. Accordingly, there are sentences of death, LWOP sentences, de
facto LWOP sentences, sentences of life with a minimum term that does not exceed life
expectancy (the sentence at issue in this case), and determinate terms. The first three
sentences lack the possibility of parole; the last two do not.
Just as a line may be drawn at minority, preventing application of an Eighth
Amendment categorical bar to de facto LWOP sentences for adults, a line may be drawn
at a de facto LWOP sentence, preventing application of a categorical bar to less severe
sentences for a juvenile, such as the sentence in this case. If the line is not drawn here,
categorical bars to lesser sentences such as appellant‘s could effectively eviscerate
traditional analysis.
We hold the Eighth Amendment does not categorically bar imposition of a
sentence of 40 years to life for a homicide committed by a juvenile who did not kill or
intend to kill. Our employment of a bright-line rule rejecting an Eighth Amendment
categorical bar to such a sentence is consistent with the current state of Eighth
Amendment jurisprudence, the unique severity of an LWOP or de facto LWOP sentence,
and the importance of the fact the defendant in Graham received an LWOP sentence to
the high court‘s application of a categorical approach in that case. Our holding does not
leave appellant without Eighth Amendment review of his sentence, since we will later
consider his sentence under the traditional approach.
(ii) Appellant’s Mandatory Sentence Is Not Barred.
We similarly reject appellant‘s claim the Eighth Amendment bars a mandatory
sentence of 40 years to life for a homicide committed by a juvenile. As mentioned, the
court sentenced appellant, more accurately, to 15 years to life for homicide (murder), plus
25 years to life for the gang-related firearm enhancement. Miller held the Eighth
28
Amendment bars a mandatory LWOP sentence for a juvenile, but Miller reached that
conclusion by analogizing to case law holding mandatory death sentences for adults
violated the Eighth Amendment, and Miller heavily relied on the fact the sentence at
issue in that case was an LWOP sentence. (Miller, supra, 567 U.S. at pp. ___
[183 L.Ed.2d at pp. 414-415, 417-418, 421-424].) For reasons previously discussed, a
sentence of 40 years to life significantly differs from a death sentence, an LWOP
sentence, and a de facto LWOP sentence. Moreover, appellant‘s sentence not only
includes a possibility of parole but a substantial period of years after the expiration of his
minimum term but before his life expectancy. Appellant cites no case holding his
mandatory sentence is cruel and unusual.
Further, there appears to be no principled basis on which we could conclude the
Eighth Amendment bars a mandatory sentence of 40 years to life for a homicide
committed by a juvenile under the circumstances presented in this case, without also
having to conclude the Eighth Amendment bars lesser mandatory sentences previously
discussed. Those would include 25 years to life for first degree felony murder and 15
years to life for second degree murder. A ―sentence which is not otherwise cruel and
unusual [does not] become[] so simply because it is ‗mandatory.‘ ‖ (Harmelin, supra,
501 U.S. at p. 995 [115 L.Ed.2d at p. 865].) Having concluded the Eighth Amendment
does not categorically bar appellant‘s sentence, the remaining issue is whether the Eighth
Amendment bars his sentence under the traditional approach (and we conclude below it
does not); therefore, appellant‘s sentence which is not otherwise cruel and unusual does
not become so simply because it is mandatory.
(iii) Appellant’s Sentence Is Not Disproportionate.
Finally, appellant claims his sentence on count 1 violates the Eighth Amendment
under a traditional analysis. We conclude otherwise. First, he waived the issue by
failing to raise it below. (People v. Norman (2003) 109 Cal. App. 4th 221, 229.)
Even if the issue were not waived, appellant‘s claim is without merit. We presume
the trial court read and considered the probation report (People v. Black (2007) 41 Cal. 4th
29
799, 818, fn. 7) and was therefore aware of appellant‘s age at the time he murdered
Molina. We have set forth pertinent facts concerning appellant, his background, and the
murder of Molina.
Appellant aided and abetted a gang-related intentional shooting and murder of an
unarmed victim, and there was substantial evidence appellant provided the gun to Silva
with intent to kill. Even taking into consideration appellant‘s age and factors discussed in
Miller, supra, 567 U.S. at pp. ___ [183 L.Ed.2d at pp. 422-423] and Caballero, supra,
55 Cal.4th at pp. 268-269, relating to his youth and background at the time of the
offenses, we conclude appellant has failed to raise an inference of gross
disproportionality for purposes of Eighth Amendment traditional analysis, and has failed
to demonstrate his sentence was that ―exquisite rarity‖ (Em, supra, 171 Cal.App.4th at
p. 972) that violated federal and/or state constitutional prohibitions against cruel and/or
unusual punishment. As mentioned, case law upholds, as against Eighth Amendment
challenges, the imposition on juvenile murderers of a life sentence with a minimum term
not exceeding the life expectancy of the juvenile. (See Em, at pp. 971-977; Demirdjian,
supra, 144 Cal.App.4th at pp. 12-16; Gonzales, supra, 87 Cal.App.4th at pp. 16-19.)
Appellant‘s constitutional challenges fail.14
(2) Senate Bill No. 9 Is Inapplicable.
Appellant argues we must construe recent Senate Bill No. 9 to permit resentencing
of appellant, otherwise his sentence violates his equal protection rights and constitutes
cruel and unusual punishment. We disagree.
In 2012, the Legislature enacted Senate Bill No. 9, which, inter alia, amended
section 1170 by adding section 1170, subdivision (d)(2). The legislation was enacted on
September 30, 2012, during the 2011-2012 regular session (Stats. 2012, ch. 828, § 1) and
not as urgency legislation; therefore, the legislation became effective on January 1, 2013.
14
The trial court‘s comment, not factually substantiated at the hearing, that appellant
would almost certainly die in prison (a comment obviously impacted by previous
comments from Molina‘s sister) does not compel a contrary conclusion.
30
(Cal. Const., art. IV, § 8, subd. (c)(1); Gov. Code, § 9600, subd. (a).) The legislation is
retroactive. (§ 1170, subd. (d)(2)(J).)
To summarize, section 1170, subdivision (d)(2) generally provides ―a defendant
who was under 18 years of age at the time of the commission of the offense for which the
defendant was sentenced to imprisonment for life without the possibility of parole‖
(§ 1170, subd. (d)(2)(A)(i)) and who has served at least 15 years of that sentence may file
with the sentencing court a petition for resentencing that states statutorily-required
mitigating information, including one of four mitigating factors (§ 1170, subd.
(d)(2)(B)(i-iv)).
If the court finds the statements are true, the court must hold a hearing to consider
whether to resentence de novo the juvenile (§ 1170, subd. (d)(2)(E)), and that
resentencing determination is based on, inter alia, additional statutorily-specified criteria
(§ 1170, subd. (d)(2)(F)(i-viii)). The court has the discretion to resentence de novo the
juvenile. (§ 1170, subd. (d)(2)(G).) If the court denies the petition, the juvenile can
submit successive petitions after serving 20 years, then 24 years, and finally during the
25th year of the sentence. (§ 1170, subd. (d)(2)(H).)
― ‗ ―To determine legislative intent, a court begins with the words of the statute,
because they generally provide the most reliable indicator of legislative intent.‖
[Citation.] If it is clear and unambiguous our inquiry ends. There is no need for judicial
construction and a court may not indulge in it. [Citation.] ―If there is no ambiguity in the
language, we presume the Legislature meant what it said and the plain meaning of the
statute governs.‖ [Citation.]‘ [Citation.]‖ (People v. Superior Court (Ghilotti) (2002)
27 Cal. 4th 888, 905.)
Section 1170, subdivision (d)(2) clearly and unambiguously applies to juveniles
―sentenced to imprisonment for life without the possibility of parole.‖ (§ 1170, subd.
(d)(2)(A)(i).) According to the plain meaning of its terms, the section does not apply to
juveniles, like appellant, who were sentenced to prison for 40 years to life, i.e., a sentence
31
including the possibility of parole. Appellant is effectively inviting us to rewrite the
statute. We decline to do so.
Appellant‘s equal protection argument is without merit simply because appellant
has failed to demonstrate a juvenile who received an LWOP sentence, the harshest
sentence a juvenile can receive, and a juvenile such as appellant who received a less
harsh sentence of 40 years to life, a sentence including the possibility of parole, are
similarly situated with respect to the legislative objective of permitting resentencing.
State legislation need not be comprehensive and can address a problem piecemeal or only
in those aspects where the need for regulation appears to the legislature to be greatest.
(Cf. Warden v. State Bar (1999) 21 Cal. 4th 628, 644-645.) Since the persons at issue are
not similarly situated, appellant‘s equal protection claim fails. (See Gonzales, supra,
87 Cal.App.4th at pp. 12-13.) The fact section 1170, subdivision (d)(2) provides for a
resentencing procedure for juveniles with LWOP sentences does not affect our previous
Eighth Amendment analysis and his instant claim does not demonstrate any other Eighth
Amendment violation.
32
DISPOSITION
The judgment is affirmed.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
KITCHING, J.
We concur:
CROSKEY, Acting P. J.
ALDRICH, J.
33 | 01-03-2023 | 03-05-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/854323/ | Case: 12-20599 Document: 00512164302 Page: 1 Date Filed: 03/05/2013
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
March 5, 2013
No. 12-20599 Lyle W. Cayce
Clerk
DANIELS HEALTH SCIENCES, L.L.C.,
Plaintiff - Appellee
v.
VASCULAR HEALTH SCIENCES, L.L.C.,
Defendant - Appellant
Appeals from the United States District Court
for the Southern District of Texas
Before WIENER, CLEMENT, and PRADO, Circuit Judges.
EDITH BROWN CLEMENT, Circuit Judge:
This dispute arises from the marketing and sale of the cardiovascular
health drug Arterosil. Daniels Health Sciences (“DHS”) engaged Vascular
Health Sciences (“VHS”) to market and sell the drug Provasca. After that
relationship ended, VHS began to manufacture, market, and sell Arterosil, a
product similar in many respects to Provasca. DHS sued VHS for
misappropriation of trade secrets, breach of contract, and trademark violations.
The district court first granted a temporary restraining order on the grounds
that DHS would likely succeed on its breach of contract and misappropriation
of trade secrets claims. It later granted a preliminary injunction on the same
Case: 12-20599 Document: 00512164302 Page: 2 Date Filed: 03/05/2013
No. 12-20599
grounds, also finding a substantial threat of irreparable injury absent an
injunction, that the balance of hardships favored the plaintiff, and that the
public interest would not be disserved by a grant of injunctive relief. VHS filed
a motion in this court requesting a stay of the injunction, which was granted,
and now appeals the grant of the preliminary injunction and its scope. We
AFFIRM the preliminary injunction, lift the stay, and remand to the district
court with instructions to expedite trial and to attempt to narrow its preliminary
injunction.
FACTUAL AND PROCEDURAL BACKGROUND
In 2007, a dietary supplement company called Endomatrix filed for
bankruptcy. One of its researchers, Dr. Daniels, purchased Endomatrix’s
intellectual property out of the bankruptcy estate. This property included the
trademark for a dietary supplement named Provasca and the leftover inventory
and raw materials for the supplement. Dr. Daniels approached his brother,
David, and a marketing executive, Robert Long, in 2010 to help him secure
funding for further research and marketing of Provasca. They formed two
entities in 2011: DHS to research Provasca and VHS to market the supplement.
Dr. Daniels compiled a distilled version of the science and research behind
Provasca into a PowerPoint presentation titled “The Path to Provasca” to
educate David Daniels and Long on the supplement and help them communicate
its potential to investors. Dr. Daniels required that VHS receive his approval
before it presented potential investors with information on the supplement,
including The Path to Provasca, and also that VHS have them sign a
Confidentiality and Non-Disclosure Agreement (“CNDA”) prior to the
presentation. He also prohibited VHS from presenting information on the
supplement to venture capital groups and others that might seek to use it
independently. Moreover, according to DHS’s complaint, before sharing
information with VHS, “Dr. Daniels made it clear that the information he was
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No. 12-20599
sharing needed to be kept confidential.” If VHS principals had not agreed to
those terms, “Dr. Daniels wouldn’t have shared [the information] with them.”
A year after assembling The Path to Provasca, Dr. Daniels also had VHS
sign a CNDA. DHS was less successful, however, in reaching a licensing
agreement with VHS, and in February 2012, VHS called off the deal. Despite
severing its ties with DHS, VHS continued to attempt to secure investors for a
supplement. It also developed a rival product, Arterosil. Provasca and Arterosil
both contain the same seaweed extract alleged to help repair and maintain blood
vessel walls. But Provasca’s other ingredient is L-Arginine, an amino acid, while
Arterosil has a blend of fruit and vegetable extracts in addition to the seaweed
extract.
DHS filed suit, asserting that VHS violated the CNDA by using
confidential information to develop and market Arterosil. It also alleged
misappropriation of trade secrets and trademark violations, among several other
claims. It requested and obtained a temporary restraining order to prevent VHS
from using DHS’s confidential information to research or sell Arterosil. It then
filed for a preliminary injunction. Following briefing, the district court heard
two days of testimony on the merits of the injunction. Three weeks later, the
court granted the injunction. The court concluded, based on its factual findings,
that DHS was substantially likely to succeed on its breach of contract and trade
secret misappropriation claims. It went on to determine that DHS faced a
substantial threat of irreparable injury absent an injunction, which outweighed
the harm that might result if the injunction was granted. Finally, it concluded
that an injunction would not disserve the public interest. VHS moved to clarify
the scope of the injunction, and the court denied the motion.
VHS appeals, arguing that this court should vacate the injunction because
DHS did not sustain its burden of proof, and because the injunction covered
activities that did not involve the use of DHS’s alleged confidential information.
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A panel of this court granted VHS’s motion to stay the preliminary injunction
pending appeal and expedited the appeal.
STANDARD OF REVIEW
Reviewing a district court’s grant of a preliminary injunction, this court
asks “whether the issuance of the injunction, in the light of the applicable
standard, constitutes an abuse of discretion.” Concerned Women for Am., Inc.
v. Lafayette Cnty., 883 F.2d 32, 34 (5th Cir. 1989) (citation and alterations
omitted). “[F]indings of fact that support the district court’s decision are
examined for clear error, whereas conclusions of law are reviewed de novo.”
Affiliated Prof’l Home Health Care Agency v. Shalala, 164 F.3d 282, 284–85 (5th
Cir. 1999).
DISCUSSION
VHS asks the court to vacate the district court’s preliminary injunction.
It contends that DHS did not offer proof that it met the standard for a
preliminary injunction. VHS also argues that the court did not limit the
injunction to use of DHS’s alleged confidential information.
I. The district court’s grant of the preliminary injunction
VHS first argues that the district court erred when it found that DHS
carried its burden of proof for each of the four requirements for a preliminary
injunction: substantial likelihood of success on the merits, substantial threat of
irreparable harm absent an injunction, a balance of hardships in DHS’s favor,
and no disservice to the public interest. Byrum v. Landreth, 566 F.3d 442, 445
(5th Cir. 2009). Because the district court found sufficient facts to support its
conclusion that the four requirements were met, however, it did not abuse its
discretion by granting the injunction.
A. Likelihood of success on the merits
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No. 12-20599
VHS argues that the district court erred in determining that DHS was
likely to succeed on its breach of contract and misappropriation of trade secrets
claims. To show a likelihood of success, the plaintiff must present a prima facie
case, but need not prove that he is entitled to summary judgment. See Janvey
v. Alguire, 647 F.3d 585, 595–96 (5th Cir. 2011). With respect to the contract
claim, VHS first contends that DHS did not show damages. It is true that the
court did not specifically discuss damages in the section of its opinion on the
merits of DHS’s contract claim. But it later expressly observed that VHS’s
alleged breach and misappropriation would impair Provasca’s chances at FDA
approval for medical use and make it difficult for DHS to secure research
funding for the drug. These findings are sufficient to support the court’s
conclusion that DHS likely will be able to prove damages at trial.
Next, VHS argues that the district court did not identify the confidential
information that VHS allegedly used in breach of its agreement with DHS. But
the court found that “Dr. Daniels disclosed [in meetings with VHS] new scientific
and clinical research, some of which he found in the public domain, but had
compiled and distilled.” It also found that “the compilation was not public
knowledge” and that Dr. Daniels “later expanded that compilation into a
presentation entitled ‘The Path to Provasca.’” The court went on to explain:
The evidence shows that after learning the science and reviewing
the compilation of research that Dr. Daniels generated and
produced for fundraising, [VHS] and its operatives set out to
delegitimatize Provasca and produce their own product, all without
notice or [DHS’s] permission. The CNDA prohibits this conduct;
hence, the Court is of the view that a factfinder will conclude that
[VHS] breached its agreement with [DHS].
These findings specifically identify the confidential information that VHS
misused and how it misused that information in breach of the CNDA. Although,
under VHS’s interpretation of the CNDA, the agreement does not cover this
information, the district court did not err in determining that the ultimate
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No. 12-20599
factfinder would likely agree with DHS that the information is covered. In
particular, the district court noted that the CNDA broadly includes “all
confidential or proprietary written, recorded, electronic or oral information . . .
(whether such confidentiality or proprietary status is indicated orally or,
whether or not the specific words ‘confidential’ or ‘proprietary’ are used).”
VHS also argues that DHS did not offer sufficient evidence for the district
court to conclude that DHS likely would succeed on its trade secrets claim. To
establish trade secret misappropriation in Texas, a plaintiff must show “(a) the
existence of a trade secret; (b) a breach of a confidential relationship or improper
discovery of the trade secret; (c) use of the trade secret; and (d) damages.” Taco
Cabana Int’l, Inc. v. Two Pesos, Inc., 932 F.2d 1113, 1123 (5th Cir. 1991) (citation
omitted) aff’d sub nom. Two Pesos, Inc. v. Taco Cabana, Inc., 505 U.S. 763
(1992). VHS contends that the first requirement was not met because neither
DHS nor the district court specifically identified the alleged trade secret, and,
in any event, DHS had no trade secrets because all of its research on the
cardiovascular benefits of seaweed extract was public knowledge. This
argument is largely repetitive of VHS’s charge that the confidential information
was not identified in the breach of contract claim because no such information
existed. But in this case, the court looks to the legal definition of a trade secret
rather than the broad contractual definition of “confidential information” in the
CNDA.
“A trade secret is any formula, pattern, device or compilation of
information used in one’s business, and which gives an opportunity to obtain an
advantage over competitors who do not know or use it.” Id. (citing Hyde Corp.
v. Huffines, 314 S.W.2d 763, 776 (Tex. 1958)) (emphasis added). Under Texas
law, this trade secret determination is made by weighing six factors: “(1) the
extent to which the information is known outside of the business; (2) the extent
to which it is known by employees and others involved in the business; (3) the
6
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No. 12-20599
extent of measures taken to guard the secrecy of the information; (4) the value
of the information to the business and to its competitors; (5) the amount of effort
or money expended in developing the information; (6) the ease or difficulty with
which the information could be properly acquired or duplicated by others.”
Tewari De–Ox Sys., Inc. v. Mountain States/Rosen, L.L.C., 637 F.3d 604, 610
(5th Cir. 2011) (quoting In re Union Pac. R.R. Co., 294 S.W.3d 589, 592 (Tex.
2009)). Although “[i]nformation that is public knowledge or that is generally
known in an industry cannot be a trade secret,” this court has “specifically
rejected the contention that a combination of disclosed technologies cannot itself
constitute a trade secret.” Id. at 611, 613 (citations and internal quotation
marks omitted).
As with the breach of contract claim, the district court specifically
identified Dr. Daniels’s “compilation [that] was not public knowledge” of “new
scientific and clinical research, some of which he found in the public domain,”
but which he had “compiled and distilled” and later expanded into The Path to
Provasca. The district court did not err when it concluded that this compilation
of information, consisting partially of disclosed technologies, nevertheless met
the standard for a trade secret under Texas’s six-factor test. Although it did not
analyze each factor, the court found that (1) the compilation “was not public
knowledge”; (2) the compilation consisted of “Dr. Daniels’ concept and his work
behind Provasca”; (3) “[b]efore sharing his confidential information with his
brother and others, Dr. Daniels insisted that the information that he shared
with them be kept confidential”; and (4) it had taken Dr. Daniels “many years
of scientific research” to develop the information. These findings are sufficient
to support the district court’s determination that the compilation is a trade
secret.
Finally, VHS challenges the district court’s conclusions that VHS and DHS
had a confidential relationship and that VHS used the alleged trade secret to
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No. 12-20599
develop and market Arterosil. VHS claims that it had no confidentiality
obligation when DHS disclosed The Path to Provasca because there was no oral
agreement on confidentiality in place at that time. However, under Texas law,
an agreement is not required to prove the existence of a confidential
relationship. “[A]n express agreement [is] not necessary where the actions of the
parties, the nature of their arrangement, the ‘whole picture’ of their relationship
established the existence of a confidential relationship.” Furr’s Inc. v. United
Specialty Adver. Co., 385 S.W.2d 456, 459 (Tex. App.—El Paso 1964, writ ref’d
n.r.e) (citing Huffines, 158 Tex. 566); see also H.E. Butt Grocery Co. v. Moody’s
Quality Meats, Inc., 951 S.W.2d 33, 35–36 (Tex. App.—Corpus Christi 1997).
There is sufficient evidence in the pleadings and exhibits to present a
prima facie case that VHS should have understood that the information DHS
provided was confidential. As stated above, the district court found that
“[b]efore sharing his confidential information with his brother and others, Dr.
Daniels insisted that the information that he shared with them be kept
confidential. At least, this was the agreement between Dr. Daniels, David
Daniels and Bob Long.” Whenever VHS sought presentation materials from Dr.
Daniels, he specified that presentations could only be made to potential investors
and not others who might use the information for their own ends. Further, Dr.
Daniels required VHS to obtain his approval before each use of the information,
and to have meeting attendees sign a nondisclosure agreement. Dr. Daniels’s
sharing of the information was contingent on VHS’s agreement with these
conditions. This evidence is sufficient to constitute a prima facie case that DHS
and VHS had established a confidential relationship—regardless of the absence
of an express agreement.
With regard to VHS’s use of the alleged confidential information, VHS
argues that it “independently” developed Arterosil, and, even if it did not, DHS
must show that VHS used the entire trade secret compilation, not merely pieces
8
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No. 12-20599
of publically available information within it. Despite these claims of
independence, the court found that “[w]ithin a few months” of breaking ties with
DHS, VHS was able to develop a “rival product” and “make the same essential
claims [about it] that were attributed to Provasca.” Furthermore, in its view,
“[t]he evidence shows that after learning the science and reviewing the
compilation of research that Dr. Daniels generated and produced for fundraising,
[VHS] and its operatives set out to delegitimatize Provasca and produce their
own product, all without notice or [DHS’s] permission.” These findings, although
weaker, are still enough to support the court’s conclusion that VHS used the
compilation itself to develop Arterosil. Because DHS need only present a prima
facie case, rather than meet the standard for summary judgment, to establish
a likelihood of success on the merits, the district court’s findings are sufficient.
It did not err when it determined that DHS satisfied this element of the
preliminary injunction test.
B. Irreparable harm
To satisfy this prong of the preliminary injunction test, DHS must show
that it is “likely to suffer irreparable harm,” that is, harm for which there is no
adequate remedy at law. Winter v. Natural Res. Def. Council, Inc., 555 U.S. 7,
20 (2008); see Janvey, 647 F.3d at 600. VHS’s only argument on this element of
the test is that DHS has not shown that irreparable harm is likely rather than
merely possible. VHS contends that the claim of reputational harm is
“speculative.” It is true that “[s]peculative injury is not sufficient; there must be
more than an unfounded fear on the part of the applicant.” Holland Am. Ins. Co.
v. Succession of Roy, 777 F.2d 992, 997 (5th Cir. 1985). But Dr. Daniels testified
that other scientists in the field were familiar with his work and that a poor
knock-off would be associated with him to his reputational detriment. The
district court did not err when it credited this unrebutted testimony and
concluded that such harm was likely. VHS also argues that DHS presented no
9
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No. 12-20599
evidence that VHS’s alleged knock-off supplement would threaten funding
opportunities for DHS’s Provasca. As with the issue of reputational harm,
however, the court heard testimony that an ill-conceived or even unsafe knock-
off likely would damage DHS’s funding chances. Crediting that testimony was
not erroneous.
C. Balance of hardships
Against these harms, the court weighed the money that VHS has spent to
market and sell Arterosil. It observed that these damages were compensable,
that the market for the supplement would not go away, and that there was no
evidence of substantial contracts between VHS and supplement vendors. In
light of these findings, the court did not err when it concluded that these harms
did not outweigh the likely irreparable injury to DHS absent an injunction.
D. Disservice to the public interest
Finally, VHS argues that the injunction disserves the public interest by
barring public access to a supplement with significant potential health benefits
and prohibiting VHS from turning a profit that it could use for further health
research. But the district court found that the public had a greater interest in
the development of “a historical scientific breakthrough” if Dr. Daniels had the
chance to substantiate his early research. The odds of this breakthrough, in the
district court’s opinion, would be seriously harmed if VHS’s sale of Aterosil hurt
DHS’s funding chances. The district court also found that the public is served
when the law is followed. It did not err by placing more weight on these latter
public interests than on VHS’s proffered public interests.
The district court did not clearly err in any of its factual determinations,
and it correctly applied the legal standard for issuance of a preliminary
injunction to those facts. Therefore, it did not abuse its discretion in granting
the injunction.
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No. 12-20599
II. The scope of the district court’s preliminary injunction
VHS also argues that the preliminary injunction is overbroad because it
prohibits “the use, dissemination, destroying, selling, conveying, or distributing
of any information and/or intellectual property that [VHS] and operatives
received from [DHS].” (Emphasis added.) It also objects that enjoining it “from
marketing, selling, advertising, distributing, or conveying any product bearing
the word ‘Provasca’ or derivatives of that term; or product based on the science
received and reviewed” is too broad. VHS points out that this language would
prohibit it from disseminating copies of public third-party journal articles that
Dr. Daniels included when he compiled The Path to Provasca. In addition, VHS
alleges that the injunction bars it from marketing or selling drugs unrelated to
Provasca, such as cholesterol-lowering medications, if they are nevertheless
based on “the science received and reviewed” from DHS on general
cardiovascular health.
The district court’s order granting the injunction must “state its terms
specifically” and “describe in reasonable detail” the conduct restrained or
required. FED. R. CIV. P. 65(d). Furthermore, the court “must narrowly tailor an
injunction to remedy the specific action which gives rise to the order.” John Doe
#1 v. Veneman, 380 F.3d 807, 818 (5th Cir. 2004).
The issue of whether the injunction complies with Rule 65 presents a close
question. Even though VHS asked the district court to clarify the injunction,
VHS has never indicated its desire to disseminate third-party journal articles or
market cholesterol drugs. As the Supreme Court has noted,
If defendants enter upon transactions which raise doubts as to the
applicability of the injunction, they may petition the court granting
it for a modification or construction of the order. While such relief
would be in the sound discretion of the court, we think courts would
not be apt to withhold a clarification in the light of a concrete
situation that left parties . . . in the dark as to their duty toward the
court.
11
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No. 12-20599
Regal Knitwear Co. v. NLRB, 324 U.S. 9, 15 (1945) (emphasis added); cf. Gulf
King Shrimp Co. v. Wirtz, 407 F.2d 508, 517 (5th Cir. 1969) (“If for some reason
Gulf King had doubts about the meaning of any part of the injunction, it could
have sought district court clarification.”). VHS has not alleged an intent to enter
into such transactions. And it is impossible for courts to craft injunctions that
address all hypotheticals.1 Nevertheless, because the injunction is quite broad
relative to the “reasonably detailed and sufficiently specific to the underlying
action” standard, we instruct the district court on remand to try to narrow the
scope of its injunction.
CONCLUSION
The district court granted DHS’s request for a preliminary injunction after
making sufficient findings of fact to support each element of the analysis and
applying the correct legal standard to those facts. Therefore, we AFFIRM the
district court’s grant of a preliminary injunction in full and lift the stay of the
injunction. We further remand the case and direct the district court to expedite
trial on the permanent injunction and to attempt to narrow the breadth of its
preliminary injunction.
1
In its Emergency Motion to Clarify the Preliminary Injunction to the district court, VHS
alleged that the injunction was unclear as to whether VHS’s ongoing clinical trials of Arterosil were
enjoined. The district court’s refusal to clarify whether the injunction covered such trials may have been
erroneous, but VHS does not raise this issue on appeal.
12 | 01-03-2023 | 03-06-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/545509/ | 909 F.2d 818
17 Fed.R.Serv.3d 1070
Terrence John LOWNDES, Plaintiff-Appellant,v.GLOBAL MARINE DRILLING COMPANY, Defendant,M-I Drilling Fluids Company, a/k/a Magcobar and DresserIndustries, Inc., Defendants-Appellees.
No. 89-4727Summary Calendar.
United States Court of Appeals,Fifth Circuit.
Aug. 27, 1990.
Gordon P. Serou, Jr., John H. Ryan, Ryan & Willeford, New Orleans, La., for plaintiff-appellant.
Terence John Lowndes, Milton, Fla., pro se.
John E. Galloway, Galloway, Johnson, Tompkins & Burr, New Orleans, La., for defendants-appellees.
Appeal from the United States District Court For the Western District of Louisiana.
Before JOHNSON, GARWOOD and DUHE, Circuit Judges.
DUHE, Circuit Judge:
1
We are called upon to decide whether the district court abused its discretion in declining to reconsider its grant of an unopposed motion for summary judgment. The motion to reconsider is based upon evidence sought to be submitted over four months after the delay previously granted to oppose the motion had expired, and over two months after the evidence had been obtained. Finding no abuse of discretion, we affirm.
FACTS
2
In April 1986, appellant Lowndes brought this maritime tort action against Global Marine Drilling Company. He subsequently settled with Global and his claim against it was dismissed in July 1989.
3
In September 1987, appellant supplemented his complaint to add as an additional defendant "M-I Drilling Fluids Co., a/k/a Magcobar". In April 1988, appellant again amended to add as additional defendants "Magcobar Co., a Division of Dresser Industries, Inc." and "Dresser Industries, Inc.".
4
All these added defendants moved for summary judgment in October 1988 alleging that they had no connection with appellant's injury but that a separate corporation, "Dresser Europe-Egyptian Branch" operated the premises where plaintiff claimed to have been injured. Hearing on the motion was scheduled for December 19, 1988. On December 1, 1988, appellant moved for an extension of time within which to oppose the summary judgment motion. He was granted until December 9, 1988 to oppose. On December 9, appellant filed an unsupported opposition and moved to continue the hearing on the motion to allow him time to take discovery regarding the relationship between the added defendants and Dresser Europe-Egyptian Branch for the purpose of opposing the motion for summary judgment. On January 10, 1989, the court granted thirty additional days to conduct discovery for this purpose.
5
On February 1, 1989, appellant moved for an additional thirty-day delay within which to complete discovery. On February 2, 1989, the court granted an additional twenty days.
6
No opposition was ever filed. On June 29, 1989, the district court granted the summary judgment noting that "the plaintiff has failed to find any evidence that would render the defendants' liable."
7
On July 17, 1989, appellant filed a "Motion for Reconsideration and/or alternatively for a New Trial of the Ruling on the Defendants' Motion for Summary Judgment" submitting therewith a memorandum to which was attached a transcript of a deposition which had been taken on May 5, 1989. The court denied the motion for reconsideration holding that "plaintiff argues matters which could have been previously raised in a timely fashion." Judgment was entered and an appeal taken.
DISCUSSION
8
Appellant does not argue that the district court erred in granting the motion for summary judgment but rather argues that the motion for a new trial or reconsideration should have been considered as a Fed.R.Civ.P. 60(b)(1) motion and that it should have been granted due to excusable neglect. There are two problems with this position. First, it assumes that the district court did not consider the motion as one under Rule 60(b)(1). This assumption is not warranted. On the contrary, the district court's comment "the plaintiff argues matters which could have been raised in a timely fashion" indicates that the district judge did consider Rule 60(b)(1). Second, the motion provided no excuse why the deposition in support of the opposition to the motion for summary judgment had not been timely taken and filed. Appellant now admits this failure but argues that it can be determined from the record that trial counsel was excused because he had no indication that a ruling was forthcoming. But when the court might rule is not the issue. Counsel's failure to comply with the extended deadline is. The court granted counsel until March 2, 1987 within which to complete his discovery. This was less than requested, clearly indicating the court was ready to rule. Counsel did not even take the deposition until May 5. He had no basis to assume that he could submit anything in opposition to the motion after the delay afforded him by the district court had expired.
9
Appellant places great reliance on Hibernia National Bank v. Administracion Central Sociedad Anonima, 776 F.2d 1277 (5th Cir.1985). This case is, however, clearly distinguishable. There the delay was caused in part by counsel's unfamiliarity with the local rules. Here counsel was clearly aware of the date the court-ordered extension expired. Additionally, in Hibernia the evidence opposing the motion was submitted, albeit unsigned, one day after the delay expired. Here the evidence was not even obtained until more than two months after the delay to do so expired and the information was not submitted to the court until more than two weeks after the motion for summary judgment was granted.
10
In Hibernia we were unable to determine whether the district court granted the motion for summary judgment simply because it was unopposed or because it considered the merits of the motion. Here the district court clearly considered the affidavit submitted in support of the motion for summary judgment which unequivocally established that the added defendants had absolutely nothing to do with the premises on which the appellant was injured.
11
While it is true that Rule 60(b) motions must be applied in a manner to achieve substantial justice, if we were to adopt the position avowed by the appellant cutoff dates established by the district court in the orderly administration of the matters before it would become meaningless. Rule 60(b) motions would have to be granted without any showing of excusable neglect. Particularly in a case such as this where there is absolutely no reason given for the failure to timely comply after numerous delays were granted we can find no abuse of discretion.
12
AFFIRMED. | 01-03-2023 | 08-23-2011 |
https://www.courtlistener.com/api/rest/v3/opinions/2689731/ | 33
The State ex rel. Maurer et al., Appellants, v. Sheward, Judge,
Appellee.
Wilkinson, Dir., et al., Appellants, v. Maurer et al., Appellees.
[Cite as State ex rel. Maurer v. Sheward (1994), ___ Ohio St.3d
___.]
Constitutional law — Commutations of death sentences by Governor
not subject to application process outlined in R.C. 2967.07
— Section 11, Article III, Ohio Constitution, construed.
(Nos. 92-1350 and 93-1165 — Submitted September 20, 1994 —
Decided December 30, 1994.)
Appeals from the Court of Appeals for Franklin County, Nos.
91AP-1442, 92AP-674, 92AP-675, 92AP-677 and 92AP-678.
Case No. 93-1165
On January 10, 1991, two business days before the expiration
of his term in office, former Ohio Governor Richard F. Celeste
commuted the sentences of eight inmates and granted one full
pardon. Two additional inmates also were granted clemency, but
their appeals below were either withdrawn or properly found to be
moot.1
Donald Lee Maurer, Leonard Jenkins, Debra Brown, Willie Lee
Jester, Elizabeth Green, Lee Seiber and Rosalie Grant had been
convicted of aggravated murder and sentenced to death. With the
exception of Rosalie Grant, former Governor Celeste commuted the
death sentences to life imprisonment without eligibility for
parole. The Governor commuted Rosalie Grant’s death sentence to
life in prison with no restriction as to parole eligibility.
Ralph DeLeo had been convicted of murder and was serving a
sentence of fifteen years to life. Former Governor Celeste
commuted his sentence to time served. John Salim had been
convicted of felonious assault. He was serving a sentence of six
to twenty-one years when former Governor Celeste granted him a
full pardon.
When the former Governor granted the pardon and
commutations, the Ohio Adult Parole Authority (“APA”) had not
been asked to conduct investigations or formulate recommendations
for seven of the applicants who had been sentenced to death.
Instead, their applications for clemency were filed directly with
the former Governor. With respect to Ralph DeLeo and John Salim,
their applications were submitted to the APA between December 6
and December 17, 1990. By January 9, 1991, the APA had taken no
final action on the two applications. On that day, a
representative from former Governor Celeste’s office called the
APA to request that it expedite review of the two applications.
The APA responded that it could not complete the review process
in two business days.
On January 29, 1991, George Wilson, Director of the
Department of Rehabilitation and Correction, and John Shoemaker,
Chief of the APA,2 filed a complaint for declaratory judgment in
the Franklin County Court of Common Pleas seeking a determination
that former Governor Celeste’s actions were in contravention of
Section 11, Article III of the Ohio Constitution, and R.C.
Chapter 2967. The plaintiffs sought a declaration that the
pardon and commutations granted to the defendants by former
Governor Celeste were void. Current Governor George V. Voinovich
successfully petitioned the court for leave to intervene as a
plaintiff.
On March 6, 1991, the defendants moved to dismiss the
complaint for lack of jurisdiction, alleging that the matter was
nonjusticiable, because any judicial declaration as to the
validity of executive clemency would unconstitutionally infringe
upon the Governor’s clemency power. The trial court overruled
the motion on September 26, 1991. Following a bench trial, the
trial judge issued a decision and entry granting a declaratory
judgment to plaintiffs. The court explained that “full
compliance with the requirements of R.C. 2967.07 and R.C. 2967.12
is a condition precedent to the valid exercise of the clemency
power by the Governor * * *” and that the pardon and commutations
granted by former Governor Celeste were invalid.
The eleven defendants appealed in six separate notices of
appeal to the Tenth District Court of Appeals; their appeals were
consolidated for decision. The court of appeals reversed the
decision of the trial court. After considering the language of
Section 11, Article III, the court of appeals found that the
clause that subjects the Governor’s clemency power to “such
regulations, as to the manner of applying for pardons” applies
only to the Governor’s power to grant pardons. The court stated
that the constitutional provision does not provide the General
Assembly with authority to regulate the Governor’s power to grant
commutations. The court of appeals also determined that
regulations enacted by the General Assembly apply to individuals
applying for pardons but do not affect the ability of the
Governor to grant a pardon on his own initiative. Specifically,
the court of appeals held that nothing in Section 11, Article III
of the Ohio Constitution or R.C. Chapter 2967 could limit the
Governor’s power to grant clemency on his own initiative, even if
he chose to do so without first receiving a recommendation from
the APA.
This cause is now before this court upon the allowance of a
motion to certify the record.
Case No. 92-1350
The second cause submitted for review emerged from the
underlying declaratory judgment action discussed above. On
December 10, 1991, after the trial court denied the defendants’
motion to dismiss the action, but prior to trial, the defendants
sought a writ of prohibition in the Franklin County Court of
Appeals. Defendants urged the court of appeals to bar the trial
judge from exercising judicial power over the declaratory
judgment action, because the action did not present a justiciable
question. On January 28, 1992, a referee concluded that the
defendants’ arguments lacked merit and recommended that the court
of appeals dismiss the prohibition action on the basis of this
court’s decision in State ex rel. Ney v. Governor (1991), 58 Ohio
St.3d 602, 567 N.E.2d 986. The court of appeals adopted the
referee’s recommendation and dismissed the petition.
This cause is now before this court upon an appeal as of
right and has been consolidated with case No. 93-1165 for
purposes of final determination.
___________________
Ken Murray, for appellant Debra Brown in case No. 92-1350.
Barry W. Wilford and Dennis Pusateri, for Ralph DeLeo.
S. Adele Shank, for Rosalie Grant.
D. Shannon Smith and Timothy A. Smith, for Elizabeth Green.
Elizabeth A. McNellie, Joy Maciejewski and Sean M. McAvoy,
for appellant Leonard Jenkins in case No. 92-1350.
Shaw, Pittman, Potts & Trowbridge, Thomas C. Hill, Alvin
Dunn and Joseph Figini; Matan & Smith and Steven L. Smith, for
Willie L. Jester.
Sowash, Carson & Shostak and Herman A. Carson, for Donald
Maurer.
Richard B. Igo, for Freddie Moore and John Salim.
Gregory W. Meyers, for Lee Seiber.
Michael Miller, Franklin County Prosecuting Attorney, and
Bonnie L. Maxon, Assistant Prosecuting Attorney, for appellee in
case No. 92-1350.
Lee Fisher, Attorney General, John J. Gideon and Jack W.
Decker, Assistant Attorneys General, for appellants in case No.
93-1165 and urging affirmance for amici curiae, George Voinovich,
Reginald Wilkinson and Jill Goldhart in case No. 92-1350.
K. Ronald Bailey, for appellee Debra Brown in case No. 93-
1165.
Melanie S. Corcoran, James W. Brown III and Christopher P.
Thorman, for appellee Leonard Jenkins in case No. 93-1165.
Steven H. Steinglass, urging dismissal or affirmance for
amicus curiae, Law Professors’ Brief Amicus Curiae Committee in
case No. 93-1165.
Kevin Francis O’Neill, Peter Joy, Daniel T. Kobil and Paul
Moke; Moots, Cope & Stanton and Benson A. Wolman, urging
affirmance for amicus curiae, American Civil Liberties Union of
Ohio Foundation in case No. 93-1165.
Squire, Sanders & Dempsey and David J. Young, urging affirmance
for amicus curiae, Catholic Conference of Ohio in case No. 93-
1165.
Law Enforcement Legal Association, Inc., Paul L. Cox and
Walter T. Florence, urging reversal for amicus curiae, Fraternal
Order of Police of Ohio, Inc., in case No. 93-1165.
___________________
Per Curiam. Case No. 93-1165 requires this court to decide
three issues: (1) Does Section 11, Article III of the Ohio
Constitution authorize the General Assembly to prescribe
procedural prerequisites to the exercise of the Governor’s
clemency power?; (2) If so, does the General Assembly have the
authority to prescribe procedural prerequisites for commutations
as well as pardons?; and (3) Has the General Assembly in fact
imposed procedural prerequisites upon the Governor’s clemency
power?
We will address case No. 92-1350, which raises issues also
implicated by case No. 93-1165, in Part IV of this opinion.
I
Section 11, Article III of the Ohio Constitution provides
the authority for the Governor’s clemency power:
“He [the Governor] shall have power, after conviction, to
grant reprieves, commutations, and pardons, for all crimes and
offenses, except treason and cases of impeachment, upon such
conditions as he may think proper; subject, however, to such
regulations, as to the manner of applying for pardons, as may be
prescribed by law. Upon conviction for treason, he may suspend
the execution of the sentence, and report the case to the general
assembly, at its next meeting, when the general assembly shall
either pardon, commute the sentence, direct its execution, or
grant a further reprieve. He shall communicate to the general
assembly, at every regular session, each case of reprieve,
commutation, or pardon granted, stating the name and crime of the
convict, the sentence, its date, and the date of the commutation,
pardon, or reprieve, with his reasons therefor.”
Section 11, Article III was adopted as part of extensive
revisions to the Constitution made in 1851. Prior to 1851, the
Governor’s clemency power was set forth in Section 5, Article II
of the Ohio Constitution of 1802, which provided in its entirety:
“He [the Governor] shall have the power to grant reprieves and
pardons, after conviction, except in cases of impeachment.” This
section was modeled after Section 2, Article II of the United
States Constitution, which gives the President the “Power to
grant Reprieves and Pardons for Offences against the United
States, except in Cases of Impeachment.”
Both the United States Constitution and the Ohio
Constitution of 1802 conferred broad powers of executive
clemency. The only limitations on the clemency power were that
it could be exercised only after conviction (Ohio Constitution)
and that clemency could not be granted in cases of impeachment
(both Ohio and United States Constitutions). Neither
Constitution authorized the enactment of laws to curtail the
executive’s clemency power. However, with the adoption of
Section 11, Article III, Ohio significantly altered its provision
on executive clemency.
Although the Ohio Constitution places the clemency power in
the hands of the Governor, that power clearly is not absolute.
The Governor’s clemency power is subject to whatever restrictions
are contained in Section 11, Article III. See State v. Morris
(1978), 55 Ohio St.2d 101, 111, 9 O.O.3d 92, 98, 378 N.E.2d 708,
714. These restrictions provide that clemency may be granted
only after conviction, may be granted only partially in cases of
treason, and not at all in cases of impeachment.
Though the Governor’s power to grant clemency is limited,
the only limits on the clemency power are those specifically
authorized by Section 11, Article III. Knapp v. Thomas (1883),
39 Ohio St. 377, 392. The General Assembly may not interfere
with the discretion of the Governor in exercising the clemency
power. Morris, 55 Ohio St.2d at 111, 9 O.O.3d at 98, 378 N.E.2d
at 714. Likewise, the Governor’s exercise of discretion in using
the clemency power is not subject to judicial review. See State
ex rel. Whiteman v. Chase (1856), 5 Ohio St. 528, 535; Knapp, 39
Ohio St. at 391.3
The specific limitation at issue in this case comes from the
“subject to” clause of Section 11, Article III:
“He [the Governor] shall have power, after conviction, to
grant reprieves, commutations, and pardons, for all crimes and
offenses, except treason and cases of impeachment, upon such
conditions as he may think proper; subject, however, to such
regulations, as to the manner of applying for pardons, as may be
prescribed by law.” (Emphasis added.)
It is apparent from the structure of the first sentence of
Section 11 that the “subject to” clause modifies the word
“power.” The first clause of the first sentence provides the
Governor the power to grant executive clemency. The presence of
the word “however” in the second clause indicates a limit on that
power. Thus, the Governor’s power to grant clemency is limited
by the “subject to” clause. However, the authority granted to
the General Assembly under the “subject to” clause is itself
limited to regulating the application process. Furthermore, as
we conclude below, the “subject to” clause only provides the
General Assembly with the authority to regulate “as to the manner
of applying for pardons.” (Emphasis added.) Consistent with
Knapp and Morris, the authority to issue regulations is further
limited in that those regulations may not interfere with the
Governor’s discretion to grant or deny pardons.
We believe that the authority to prescribe regulations “as
to the manner of applying for pardons” provides the General
Assembly with the authority to prescribe a regulatory scheme
governing the manner and procedure of applying for pardons.
Unlike the court of appeals, we do not believe that the General
Assembly has the authority to regulate only the applicants for
pardons. We interpret the language of the “subject to” clause as
providing the General Assembly with the authority to establish a
regulatory scheme that includes prerequisites to the exercise of
the Governor’s power to grant pardons.4 Our interpretation is
consistent with the purpose of the “subject to” clause, which was
to provide the General Assembly with the authority to establish
procedural safeguards against the granting of pardons. The
drafters of Section 11 were concerned that without such
safeguards, the Governor might grant pardons without thorough
consideration or might be too easily influenced by political
factors to grant or deny clemency for reasons other than the
merits of an inmate’s claim. See 1 Report of the Debates and
Proceedings of the Convention for the Revision of the
Constitution of the State of Ohio 1850-1851 (1851) 306-307.
Consistent with the language and purpose of Section 11, the
authority to regulate the application process must also include
the authority to establish prerequisites to the Governor’s
exercise of the power to grant pardons. To exempt the Governor
from the “subject to” clause would allow the Governor to
circumvent the procedural safeguards for which the clause was
adopted, rendering the clause meaningless.
For the foregoing reasons, we hold that the General Assembly
is authorized by Section 11, Article III of the Ohio Constitution
to prescribe procedural prerequisites to the application process
for executive pardons. In order to be valid, any grant of a
pardon must be based on an application that complies with the
procedural prerequisites. The General Assembly is not authorized
to prescribe substantive regulations concerning the Governor’s
discretion in the use of the clemency power, or in any way
intrude on the discretion of the Governor. For example, the
General Assembly could not, acting under the limited authority
provided by Section 11, Article III, enact a statute requiring
the Governor to accept the recommendation of the APA in the
exercise of his clemency power. Likewise, the General Assembly
could not enact a statute forbidding the Governor from exercising
the clemency power in any specific class of cases.
II
Having determined that Section 11, Article III authorizes
the General Assembly to prescribe procedural regulations as to
the application process for pardons, we next consider whether
that authority extends to any other types of clemency.
The language of Section 11 expressly provides the extent of
the General Assembly’s authority to regulate the application
process for executive clemency: “[The Governor] shall have power
* * * to grant reprieves, commutations, and pardons * * *;
subject, however, to such regulations, as to the manner of
applying for pardons, as may be prescribed by law.” (Emphasis
added.) The language of Section 11 clearly provides the General
Assembly with the authority to regulate the application process
for pardons. However, the “subject to” clause does not implicate
in any way the Governor’s powers with respect to commutations or
reprieves.5 The issue then becomes whether commutations, even
though they are not mentioned within the “subject to” clause, may
also be regulated.
Plaintiffs argue that the authority to regulate the
application process for “pardons” also includes the authority to
similarly regulate commutations. They reach that conclusion
based upon their perception that the word “pardons” may be
interpreted broadly to include all types of executive clemency.
In other words, the plaintiffs argue that commutations are a
subset of pardons, and by using the word “pardons” the drafters
intended that the General Assembly have the power to regulate
commutations as well as pardons.
We do not believe that commutations are a subset of pardons.
The first step in determining the meaning of a constitutional
provision is to look at the language of the provision itself.
Where the meaning of a provision is clear on its face, we will
not look beyond the provision in an attempt to divine what the
drafters intended it to mean. Slingluff v. Weaver (1902), 66
Ohio St. 621, 64 N.E. 574.
The meaning of Section 11 is obvious after a careful review
of that provision. The first sentence provides the Governor with
the power to grant three different types of clemency — reprieves,
commutations and pardons. The end of the first sentence is
equally clear in providing the General Assembly with the
authority to regulate the application process for only one type
of clemency — pardons. The language of Section 11 could not be
clearer in limiting the General Assembly’s authority to regulate
only pardons. Moreover, any argument that commutations are a
subset of pardons is, as shown below, simply unsupportable.
The canons of statutory interpretation, which guide our
interpretation of constitutional and statutory text, support the
conclusion that the word “pardons” in the “subject to” clause
does not include commutations. This court has consistently held
that words used more than once in the same provision have the
same meaning throughout the provision, unless there is clear
evidence to the contrary. State ex rel. Bohan v. Indus. Comm.
(1946), 146 Ohio St. 618, 33 O.O. 92, 67 N.E.2d 536, paragraph
one of the syllabus, overruled on other grounds, State ex rel.
Walker v. Indus. Comm. (1979), 58 Ohio St.2d 402, 12 O.O.3d 347,
390 N.E.2d 1190. The three types of clemency are each listed
together four different times in Section 11. In fact, the only
time one type of clemency is mentioned alone is when “pardons”
appears within the “subject to” clause. To define pardons to
include commutations when the two types of clemency are each
listed together so many times within the same small section would
be nonsensical. Additionally, interpreting “pardons” to include
commutations has the problem of rendering the presence of the
word “commutations” useless. Our prior cases require that we
reject that result, because if possible we must give meaning to
every word in a provision. Steele, Hopkins & Meredith Co. v.
Miller (1915), 92 Ohio St. 115, 110 N.E. 648.
The argument that commutations are a subset of pardons is
also contrary to our previous decisions where we have held that
commutations and pardons are two entirely different types of
clemency. In In re Victor (1877), 31 Ohio St. 206, 207, this
court defined a commutation as “a change of punishment from a
higher to a lower degree, in the scale of crimes and penalties
fixed by the law * * *.” In State ex rel. Atty. Gen. v. Peters
(1885), 43 Ohio St. 629, 650-651, 4 N.E. 81, 87-88, this court
defined pardons:
“A pardon discharges the individual designated from all or
some specified penal consequences of his crime. It may be full
or partial, absolute or conditional.
“A full and absolute pardon releases the offender from the
entire punishment prescribed for his offense, and from all the
disabilities consequent on his conviction.
“[A] commutation is ‘the change of a punishment to which a
person has been condemned into a less severe one.’
“It is not a conditional pardon, but the substitution of a
lower for a higher grade of punishment * * *.” (Citation omitted
and emphasis added.)
The Peters case conclusively established that pardons are
different from, and do not include, commutations. The
interpretation of Section 11 ends here, with the unmistakable
conclusion that the “subject to” clause does not provide the
authority to regulate commutations.
Instead of approaching Section 11 by considering its plain
language, the dissent attempts to justify its interpretation that
the word “pardons” in the “subject to” clause includes
commutations by wading into the morass of speeches made by the
drafters of Section 11. The dissent bases its interpretation on
the perception that because several drafters did not distinguish
between commutations and pardons in their speeches regarding the
reporting clause of Section 11, they intended that the word
pardon in the “subject to” clause include commutations. Such a
conclusion is simply incomprehensible. We do not agree that
imprecise speeches by individual drafters give courts carte
blanche to ignore the plain language of a constitutional
provision. Those drafters were precise when they wrote the
reporting provision. That provision, which is the last sentence
of Section 11, precisely distinguishes among the three different
types of clemency: “He shall communicate to the general
assembly, at every regular session, each case of reprieve,
commutation, or pardon granted, stating the name and crime of the
convict, the sentence, its date, and the date of the commutation,
pardon, or reprieve, with the reasons therefor.” (Emphasis
added.) Moreover, as we stated in Slingluff, we will not look to
the history of a provision where, as here, the language of the
provision is clear.
Given our tradition of interpreting statutory and
constitutional language, the only plausible interpretation of
Section 11 is the one we adopt today — the “subject to” clause
provides authority to the General Assembly to regulate the
application process for pardons and not commutations.
III
Because we have established that Section 11, Article III
authorizes the General Assembly to regulate the application
process for pardons, we must determine whether the General
Assembly has, in fact, prescribed any regulations. Plaintiffs
claim that the General Assembly, through R.C. Chapter 2967 in
general and R.C. 2967.07 in particular, has established
procedural requirements that must be fulfilled before a pardon
may be granted. Defendants argue that R.C. 2967 is merely a
directory statute setting forth procedures which the Governor
may choose to ignore.
R.C. 2967.07 provides:
“All applications for pardon, commutation of sentence, or
reprieve shall be made in writing to the adult parole authority.
Upon the filing of such application, or when directed by the
governor in any case, a thorough investigation into the propriety
of granting a pardon, commutation, or reprieve shall be made by
the authority, which shall report in writing to the governor a
brief statement of the facts in the case, together with the
recommendation of the authority for or against the granting of a
pardon, commutation, or reprieve, the grounds therefor and the
records or minutes relating to the case.”
As we determined above, Section 11, Article III of the Ohio
Constitution authorizes the General Assembly to regulate the
application process only with respect to pardons, and not
commutations or reprieves. Because the grant of the clemency
power with respect to commutations and reprieves is unfettered,
any regulation by the General Assembly that acts to limit the
Governor’s power to grant commutations or reprieves is a
violation of the Constitution. To the extent that the regulatory
scheme under R.C. Chapter 2967 places limits or preconditions on
the Governor’s power to grant commutations or reprieves, it is
unconstitutional and void. We are particularly concerned with
R.C. 2967.07. As we note below, the General Assembly in R.C.
2967.07 has provided a regulatory prerequisite to the granting of
commutations, as well as pardons and reprieves: a clemency
application must be made to and acted on by the Adult Parole
Authority before the Governor may grant clemency. We do not
question the wisdom of this legislation, but it has no
constitutional underpinnings beyond pardons.
The question becomes whether we may sever the
unconstitutional references to commutations and reprieves from
the otherwise constitutional portions of R.C. 2967.07. R.C. 1.50
provides that statutory provisions are presumptively severable:
“If any provision of a section of the Revised Code or the
application thereof to any person or circumstance is held
invalid, the invalidity does not affect other provisions or
applications of the section or related sections which can be
given effect without the invalid provision or application, and to
this end the provisions are severable.” In order to sever a
portion of a statute, we must first find that such a severance
will not fundamentally disrupt the statutory scheme of which the
unconstitutional provision is a part. We set forth the test for
determining whether an unconstitutional provision may in fact be
severed in Geiger v. Geiger (1927), 117 Ohio St. 451, 466, 160
N.E. 28, 33:
“‘(1) Are the constitutional and the unconstitutional parts
capable of separation so that each may be read and may stand by
itself? (2) Is the unconstitutional part so connected with the
general scope of the whole as to make it impossible to give
effect to the apparent intention of the Legislature if the clause
or part is stricken out? (3) Is the insertion of words or terms
necessary in order to separate the constitutional part from the
unconstitutional part, and to give effect to the former only?’”
Id., quoting State v. Bickford (1913), 28 N.D. 36, 147 N.W. 407,
paragraph nineteen of the syllabus.
The references to commutations and reprieves meet the test
for severability provided in Geiger. R.C. 2967.07 provides a
regulatory scheme that imposes the same regulations upon the
three types of clemency. In other words, it is as if there were
three separate but identical statutes each regulating one type of
clemency. Therefore, the regulation of each type of clemency is
essentially independent of the others. Because of their
independence, the regulation of commutations and reprieves are
not so connected to the regulation of pardons that without
reference to commutations and reprieves the regulatory scheme
will not give effect to the intention of the General Assembly.
The requirements of the regulatory scheme concerning pardons will
not change. We need only excise the constitutionally offensive
references to commutations and reprieves in R.C. 2967.07 and need
not add any other language in order to give effect to its
regulatory scheme. Thus, we hold that, pursuant to the Ohio
Constitution, R.C. 2967.07 may regulate the application process
for pardons only.
Because only a portion of the statute is constitutional,
only the Governor’s grant or denial of a pardon is “subject to”
the application process outlined in R.C. 2967.07. His power to
grant or deny commutations is not subject to those regulations.
Therefore, the commutations at issue in this case remain valid.
The validity of the one pardon granted without an
application in compliance with the procedure outlined in R.C.
2967.07 remains at issue. We must now determine whether this
noncompliance precluded the Governor from granting a pardon. As
we noted above, the Governor exercises the pardoning power
“subject to” these regulations, even though the General Assembly
is not authorized by Section 11, Article III to intrude in any
way upon the Governor’s discretion to grant or deny a pardon.
The exercise of the pardoning power involves two distinct
elements — the application process and the consideration process.
The phrase “manner of applying” for pardons includes the entire
application process, which encompasses the filing of the
application itself, the investigation, the recommendation, and
the full report compiled by the APA. We find that the General
Assembly’s authority to regulate the application process extends
to the time just before the Governor reaches a substantive
decision concerning a pardon. Once this point is reached, the
General Assembly’s constitutionally granted authority to regulate
procedurally the pardoning power of the Governor is at its end.
By its clear terms, R.C. 2967.07 contemplates that an
investigation by the APA that leads to a recommendation for or
against a pardon may be initiated in two distinct ways. The
first way is for an applicant (or someone on the applicant’s
behalf) to file a pardon request directly with the APA. The
second way is for the Governor to direct that the investigation
occur. The real issue in this case is whether the Governor is
required to await the APA investigation and recommendation before
he may grant a pardon.
The first sentence of R.C. 2967.07 requires that all
pplications for pardons shall be made to the APA. The General
Assembly has chosen the word “all” to indicate that every request
for a pardon must go to the APA for evaluation. In addition, the
General Assembly has chosen to use the word “shall” in R.C.
2967.07 three times in connection with the APA’s role in the
pardon application process. This indicates the mandatory nature
of the APA investigation and of the entire APA involvement in the
application process.
We hold that R.C. 2967.07 mandates that the APA
investigation report and recommendation must be presented to the
Governor before he may grant a pardon. This mandate includes
those situations in which the Governor initiates the APA
investigation.
The requirement of APA involvement by the General Assembly
is permissible, because it is within the General Assembly’s
authority to “legislate in aid of the [pardoning] power.” Knapp,
39 Ohio St. at 392-393. The statute is meant to ensure that
information about each person for whom a pardon is considered
will be available to the Governor, so that an informed decision
may be made. This is precisely the type of regulation “as to the
manner of applying for pardons” contemplated by Section 11,
Article III. The Governor’s power to grant pardons is subject to
this procedural mechanism, which requires the APA to investigate,
recommend and report before the Governor may grant a pardon.
Because the Governor has ultimate substantive discretion
whether to grant or deny a pardon, there is no requirement that
the Governor place any weight whatsoever on either the
investigative report or the recommendation of the APA. However,
the power to disregard is not equivalent to the power to proceed
without the procedural requirements first being fulfilled. The
abuses sought to be remedied by addition of the “subject to”
clause in Section 11, Article III are those that occur during the
application process. Thus, the process is subject to regulation,
and procedural requirements may be placed on the Governor’s power
to pardon. To find otherwise would be to read the “subject to”
clause out of Section 11, Article III, when it is clear that that
clause affects the power of the Governor to grant pardons.
Defendants argue that if R.C. 2967.07 regulates in a way
which affects the Governor’s power to pardon, then the statute is
unconstitutional. However, the regulations placed on the
pardoning power are those authorized by the Constitution itself.
See Knapp, 39 Ohio St. at 392. Since R.C 2967.07 was enacted
pursuant to the authority of Section 11, Article III, the statute
is constitutional to the extent that it regulates the application
process for pardons.
We recognize that the pardoning power conferred on the
Governor by the Ohio Constitution is essential to ensure justice
in particular cases. Indeed, as Alexander Hamilton stated in The
Federalist No. 74 (Cooke Ed. 1961) 500-501, in support of the
broad clemency power conferred on the President by Section 2,
Article II of the United States Constitution: “Humanity and good
policy conspire to dictate, that the benign prerogative of
pardoning should be as little as possible fettered or
embarrassed. The criminal code of every country partakes so much
of necessary severity, that without an easy access to exceptions
in favor of unfortunate guilt, justice would wear a countenance
too sanguinary and cruel.”
However, the power to pardon is subject to abuse. The
framers therefore authorized the Ohio General Assembly to enact
regulations to limit those abuses, thereby allowing procedural
requirements which limit the Governor’s exercise of the power.
In R.C. Chapter 2967, the General Assembly has enacted the
authorized regulations as safeguards against abuse. Those
safeguards do not stand in the way of the Governor’s substantive
exercise of the pardoning power. It would take an amendment to
Ohio’s Constitution to authorize substantive limitations.
Nevertheless, the safeguards do impose procedural requirements
which were bypassed in this case. The pardon purportedly granted
was invalid from the outset.
Amicus curiae American Civil Liberties Union of Ohio
Foundation argues that if this court reverses the decision of the
court of appeals, the cause should be remanded to the court of
appeals to resolve issues that court did not reach in its
previous opinion. However, we have determined, as a matter of
law, that former Governor Celeste acted outside the scope of his
constitutionally conferred clemency authority in granting the
pardon. The other assignments of error raised in the court of
appeals cannot alter that finding. The judgment of the court of
appeals in case No. 93-1165 is affirmed with respect to the
commutations and reversed as to the pardon. The declaratory
judgment of the trial court that the pardon is invalid is
reinstated.
IV
Case No. 92-1350
In case No. 92-1350, the defendants in case No. 93-1165
appeal from the court of appeals’ denial of their complaint for a
writ of prohibition. Defendants contend that the court of
appeals erred in refusing to stop the trial court from exercising
jurisdiction in the declaratory judgment action, which is the
subject of the appeal in case No. 93-1165. We find that our
resolution of the issues in case No. 93-1165 is determinative of
the issues raised in this appeal, and that any remaining issues
therefore are moot. Accordingly, we affirm the judgment of the
court of appeals in case No. 92-1350.
Judgment affirmed
in case No. 92-1350.
Judgment affirmed in part
and reversed in part
in case No. 93-1165.
A.W. Sweeney, Wright and Evans, JJ., concur.
Moyer, C.J., concurs separately.
Douglas, Resnick and F.E. Sweeney, JJ., concur in part and
dissent in part.
John R. Evans, J., of the Third Appellate District, sitting
for Resnick, J.
FOOTNOTES:
1. In his application for clemency, Saram Bellinger stated that
he was convicted of aggravated robbery with firearm
specifications and was sentenced to an indefinite term of five to
twenty-five years’ imprisonment, to be served consecutively with
three years’ actual incarceration. Both former Governor Celeste
and Governor George V. Voinovich commuted that sentence to time
served. Bellinger withdrew his appeal.
According to his application for clemency, Freddie Moore was
convicted of operating a gambling house and received a suspended
sentence. Former Governor Celeste granted Moore a full and
unconditional pardon on January 11, 1991, after which Governor
Voinovich pardoned him on August 24, 1992. The court of appeals
noted that his appeal had been rendered moot by the pardon from
Governor Voinovich.
2. Reginald Wilkinson was substituted as a party to this action
pursuant to Civ.R. 25(D)(1) when he replaced George W. Wilson as
the Director of Rehabilitation and Correction effective March 25,
1991.
Jill Goldhart was substituted as a party for John W.
Shoemaker when she became Acting Chief of the APA.
3. Even though courts may not review the substantive decision
of the Governor on whether to exercise clemency in a particular
case, courts may consider whether constitutionally authorized
limitations on the clemency power have been respected. For
example, if a Governor attempted to grant a pardon before the
recipient had been convicted, the purported grant would be
outside the scope of the clemency power conferred by Section 11,
Article III and constitutionally invalid from the outset.
Similarly, a purported pardon is not really a pardon at all if
constitutionally authorized procedural limitations on the
pardoning power are ignored. Knapp held that a pardon, once
granted and delivered, is irrevocable. Id., 39 Ohio St. 377,
syllabus. However, Knapp did not consider the issue of
constitutional limitations on the Governor’s power. An attempted
pardon which is granted without adherence to constitutionally
authorized requirements is invalid, and is not immune to
challenge.
4. Interpreting the “subject to” clause as authorizing the
General Assembly to set up a regulatory scheme which includes
prerequisites to the exercise of the Governor’s pardoning power
is consistent with our earlier analysis where we found that the
clemency power is subject to whatever limits are set forth in
Section 11, Article III. In the case of the “subject to” clause,
the limit takes the form of an authorization to the General
Assembly to issue regulations that will themselves limit the
Governor’s pardoning power.
5. Though the validity of a reprieve is not at issue in this
case, we believe that any interpretation of the “subject to”
clause is necessarily incomplete without considering each of the
three types of executive clemency. In terms of reprieves, we
believe that they are fundamentally different from pardons. A
reprieve is temporary; execution of a sentence is delayed when
the Governor grants a reprieve. A reprieve is not permanent in
the way that a pardon is. Reprieves, by their very nature, often
require prompt, totally unfettered action by the Governor.
Consequently, we find that reprieves are not governed by the
“subject to” clause and, consistent with our analysis below, the
General Assembly may not regulate the application process for
reprieves.
Moyer, C.J., concurring separately. I concur in the
judgment and opinion of the majority that apply Section 11,
Article III, Ohio Constitution and R.C. Chapter 2967 as clearly
intended by the drafters of the Ohio Constitution and by the
General Assembly. I write separately to discuss an aspect of the
majority decision that demonstrates one of the very difficult
responsibilities of being a judge.
The majority’s careful and restrained interpretation
produces the only conclusion that is faithful to the words of the
Constitution and to R.C. Chapter 2967. We are not required or
even requested to review the wisdom or the judgment of the acts
of Governor Celeste when he pardoned and commuted the sentences
of the defendants two business days before he left office. If
that were the issue, my vote would be to invalidate all of the
Governor’s actions. That, however, is not the issue we are
required to decide. Nor is there any dispute that even if the
Governor were required by the Constitution and the statutes to
receive a report from the Ohio Adult Parole Authority before
granting a pardon or commutation, he could disregard the
recommendation contained in the report and grant the pardon or
commutation. Indeed, the manner in which Governor Celeste
granted the commutations and pardon in the cases before us
suggests that even if he had followed the statutory procedure, it
is unlikely he would have followed a recommendation of the Adult
Parole Authority that any of the defendants not be granted a
commutation or pardon. It appears that that is precisely the
reason the dissent advocates an amendment to the Constitution
that would limit the power of the Governor to grant pardons,
commutations and reprieves beyond the limitations in Section 11,
Article III. As Chief Justice Marshall observed, “[c]ourts are
the mere instruments of the law, and can will nothing.” Osborn
v. Bank of United States (1824), 22 U.S. (9 Wheat.) 738, 866, 6
L.Ed. 204, 234.
The majority opinion reflects the fundamental role of
judicial responsibility and restraint. Every judge faithful to
the judicial oath of office must be able to separate the law from
his or her personal views when deciding cases. That fundamental
aspect of judging is a unique challenge to judicial decision-
making. In separating personal opinion from the constitutional
issues before us, I am reminded of the observation that “[i]f the
provisions of the Constitution be not upheld when they pinch as
well as when they comfort, they may as well be abandoned.” Home
Bldg. & Loan Assn. v. Blaisdell (1934), 290 U.S. 398, 483, 54
S.Ct. 231, 256, 78 L.Ed. 413, 452 (Sutherland, J., dissenting).
There is no comfort in applying the plain language of the Ohio
Constitution to the facts in the case before us. The conduct of
the death-penalty defendants that produced their convictions and
death sentences is the lowest form of human behavior. If the
death penalty is appropriate for anyone, it is appropriate for
them. However, that personal belief has no relevance to the
legal issues before us and must be separated from the judicial
decision we are required to render. The words of the
Constitution can be given their plain meaning only as applied by
the majority decision. To analyze away the words of the
Constitution is to engage in an act of corroborating one’s own
belief that the Governor’s actions were unwise.
The distribution of power among the three branches of
government rests on a delicate balance. It is a fundamental
element of American government. S. Euclid v. Jemison (1986), 28
Ohio St.3d 157, 28 OBR 250, 503 N.E.2d 136. We are urged by the
successor in the office of governor to exercise our
constitutional power to invalidate the commutations and a pardon
of his predecessor in office. Restraint should characterize the
exercise of judicial power in such a case. If we abandon the
words of the Constitution as adopted by the citizens of Ohio in
1851, we invade both the authority of the executive branch and
the will of the people.
For the foregoing reasons, I concur, albeit regretfully, in
the per curiam opinion.
Alice Robie Resnick, J., concurring in part and dissenting
in part.
I
By a stroke of a pen a Governor is authorized by today’s
opinion to overturn the death penalty verdicts of judges and
juries which have been upheld by countless state appellate
judges, Supreme Court justices and federal court judges. Today’s
per curiam opinion says it is perfectly acceptable for a Governor
in the last days of his or her administration to grant
commutations to whomever he or she desires without first awaiting
the APA investigation and report. The basis of such a holding is
that the Constitution does not specifically authorize regulations
“as to the manner of applying for commutations.” As a result,
only full and absolute pardons are “subject to” any regulations
enacted by the General Assembly.
The per curiam opinion misconstrues Section 11, Article III,
and in the process engages in an inaccurate interpretation of the
scope of the Governor’s pardoning power.6 While I agree that the
pardon purportedly granted by former Governor Celeste should be
invalidated, it is clear to me that the commutations he
purportedly granted also should fail for the very same reason
advanced for the failure of the pardon. The per curiam opinion
proclaims that Section 11, Article III is unambiguous, and
essentially ends its analysis of the “subject to” clause at that
point. However, this case involves constitutional interpretation
which is not readily resolvable by resort solely to hornbook
rules of construction, as if in a vacuum, but must be considered
with an eye on the historical context underlying Section 11,
Article III’s evolution into its current form. The per curiam
opinion, in focusing on a supposed semantical difference between
pardons and commutations, does not grasp the importance of this
historical development, and thereby fails to comprehend the
entire scope of this issue. Section 11, Article III is certainly
capable of more than one interpretation, and the reference to the
“manner of applying for pardons” is not so clear as the per
curiam opinion rashly presumes. Given that the constitutional
provision is ambiguous, resort to constitutional history is not
only appropriate, it is crucial. Even a cursory consideration of
constitutional history reveals that the per curiam opinion is
erroneous.
The drafters of Section 11, Article III were concerned with
precisely the type of abuse of pardoning power which former
Governor Celeste accomplished in his last days in office. As
this case graphically illustrates, the power to commute is just
as easily abused as is the power to pardon. Former Governor
Celeste intentionally bypassed established procedures and flouted
the constitutional limits on his clemency authority, ignoring the
procedural safeguards the Constitution authorizes the General
Assembly to put into place regarding the application process for
executive clemency. Members of this court are unwilling to give
effect to the binding statutory prerequisite for exercise of the
clemency power, finding that an APA investigation and
recommendation (along with the accompanying required
notifications relating to victims’ rights) are conditions
precedent for the Governor’s grant of a pardon, but that no APA
involvement is necessary for a commutation.7
This seems an especially curious result when one considers
that both the pardon and the commutation are aspects of the
Governor’s clemency power, which has as its source Section 11,
Article III. Given the per curiam opinion, when the Governor
considers whether to pardon an applicant for clemency, the
Governor must wait until the APA process is complete before
acting, but if the Governor contemplates a commutation, in the
alternative, for that same applicant, the procedural
investigation safeguards of the APA can be ignored. The near
schizophrenic result engendered by the per curiam opinion makes
the point better than any other argument that the Constitution
does in fact authorize the General Assembly to regulate the
application process for executive clemency, and allows that body
to require APA involvement to ensure that the Governor is able to
make an informed clemency decision, whether the Governor is
considering a pardon or a commutation.
In order to underscore the magnitude of this case, a brief
recapitulation of the circumstances of each defendant’s criminal
conviction is in order and appropriate.
A
Donald Lee Maurer confessed to the killing of seven-year-old
Dawn M. Hendershot. The evidence presented at trial revealed
that on September 29, 1982, Maurer drove to a school in
Massillon, Ohio, to pick up his stepchildren and a few
neighborhood children at the end of the school day. Dawn
Hendershot was the first to arrive. Rather than wait for the
other children to appear, Maurer decided to depart alone with
Dawn. Maurer drove Dawn out into the country to a wooded area,
where he stopped the vehicle, removed a twelve-gauge shotgun, and
led Dawn into the trees. He then began to sexually molest the
girl. At some point Maurer became frightened by his actions and
attempted to strangle Dawn with her sweater. When she started to
struggle, Maurer shot Dawn in the back, covered her lifeless body
with twigs and leaves, and left the scene to return to his home.
A jury found Maurer guilty of aggravated murder with a
specification, kidnapping, and gross sexual imposition. The
trial court adopted the jury’s recommendation that the defendant
be executed. His conviction and sentence were affirmed on direct
appeal to the court of appeals and this court. See State v.
Maurer (Feb. 13, 1984), Stark App. No. CA-6166, unreported, 1984
WL 4469, affirmed (1984), 15 Ohio St.3d 239, 15 OBR 379, 473
N.E.2d 768. On January 10, 1991, former Governor Celeste
purportedly commuted Donald Maurer’s death sentence to life
imprisonment without parole eligibility.
B
Leonard Jenkins was
convicted of aggravated murder with specifications, eight counts
of robbery, one count of attempted murder and five counts of
kidnapping. The convictions stemmed from a robbery that occurred
in Cuyahoga County, Ohio, on October 21, 1981. Jenkins and
another individual entered a branch office of National City Bank
and held bank employees and patrons at gunpoint. During the
robbery, Jenkins observed a police officer, Anthony Johnson,
approach the front door of the bank and peer inside. Upon seeing
the officer, Jenkins stated that he and his partner would have to
shoot their way out of the bank. Officer Johnson was mortally
injured by a gunshot to the head when Jenkins exited the bank and
the two exchanged gunfire. A jury recommended and the trial
court imposed a sentence of death. His conviction and sentence
were affirmed on direct appeal to the court of appeals and to
this court. See State v. Jenkins (Feb. 24, 1984), Cuyahoga App.
No. 45231, unreported, 1984 WL 14150, affirmed (1984), 15 Ohio
St.3d 164, 15 OBR 311, 473 N.E.2d 264. On January 10, 1991,
former Governor Celeste purportedly commuted Jenkins death
sentence to life imprisonment without parole eligibility.
C
A jury convicted Debra Brown of the murder of fifteen-year-
old Tonnie Storey. The evidence showed that on the morning of
July 11, 1984, Tonnie left her home in Cincinnati to attend
summer school. She was last seen on that day with a man
identified as Alton Coleman and a woman matching Brown’s
description. On July 19, 1984, a realtor entered an abandoned
building that he was preparing to show to a prospective buyer and
found a partially decomposed body. Scrawled above the body on
the wall were the words “I hate niggers death.” Police
ultimately identified the body as that of Tonnie Storey. The
evidence presented during trial included Brown’s fingerprints on
a Michael Jackson button Tonnie had been wearing the day she
disappeared. Brown admitted to another individual that she had
killed Tonnie “for her clothes” and that she, Brown, “had to do
what [she] had to do.” The state further introduced evidence
linking Brown to at least five other murders and several other
attempted murders or assaults. After finding Brown guilty of
Tonnie’s murder, the jury recommended and the trial judge imposed
a sentence of death. Her conviction and sentence were affirmed
in a direct appeal to the court of appeals and to this court.
See State v. Brown (Apr. 15, 1987), Hamilton App. No. C-850434,
unreported, 1987 WL 9743, affirmed (1988), 38 Ohio St.3d 305, 528
N.E.2d 523. On January 10, 1991, former Governor Celeste
purportedly commuted Brown’s death sentence to life imprisonment
without parole eligibility.
D
On the morning of August 5, 1983, Willie Lee Jester entered
an AmeriTrust Company branch office in Cleveland, Ohio, soon
after it opened for the day. Jester approached Patrolman
Benjamin Grair, the bank’s security guard, while he was sitting
at a desk speaking on the telephone and shot him in the chest.
Jester then ran to the bank counter, leaped over it, and took a
total of $3,122 from a teller’s drawer. Patrolman Grair died as a
result of the gunshot wound to his torso. The fatal injuries to
his heart, right lung and liver were caused by a single, hollow-
point bullet — a bullet specifically designed to cause more
damage than a smooth-point bullet. Upon finding Jester guilty of
aggravated murder with two specifications, the jury recommended
and the trial court imposed a sentence of death. The conviction
and sentence were affirmed in a direct appeal to the court of
appeals and to this court. See State v. Jester (Sept. 26, 1985),
Cuyahoga App. No. 49065, unreported, 1985 WL 8631, affirmed
(1987), 32 Ohio St.3d 147, 512 N.E.2d 962. On January 10, 1991,
former Governor Celeste purportedly commuted the death sentence
to life imprisonment without parole eligibility.
E
A three-judge panel in Hamilton County convicted and
sentenced Elizabeth Green to death for aggravated murder and to a
consecutive term of ten to twenty-five years for aggravated
robbery. The convictions stemmed from the killing and robbery of
Thomas Willis, a neighbor of one of Green’s friends, Belinda
Coulter. On January 4, 1988, Coulter sold Willis some food
stamps so that she and Green could in turn use the cash to
purchase drugs. Later that day, Green, with Coulter, entered
Willis’s apartment wearing socks on her hands so as to avoid
leaving any fingerprints. Green then stabbed Willis and took his
money. Thomas Willis died as a result of one hundred nine knife
wounds to his neck, torso and arms. Green admitted to a
psychologist that she had participated in the attack but claimed
she had stabbed Willis only three times. Green’s conviction and
sentence of death were affirmed in a direct appeal to the court
of appeals and to this court. See State v. Green (July 11,
1990), Hamilton App. No. C-880504, unreported, 1990 WL 95357,
affirmed (1993), 66 Ohio St.3d 141, 609 N.E.2d 1253. On January
10, 1991, former Governor Celeste purportedly commuted Green’s
death sentence to life imprisonment without parole eligibility.
F
A jury convicted Lee “Crazy Horse” Seiber of aggravated
murder with three death penalty specifications in connection with
the killing of Stanton Norris. On May 21, 1985, Seiber entered a
Columbus bar for the second time that evening, carrying a loaded,
cocked .38 caliber revolver. An accomplice stood at the closed
front door, shotgun in hand, barring anyone from leaving. Seiber
had returned to the bar to confront two men, Alvie and Louis
Schoenberger, one of whom had criticized Seiber during his
earlier visit for making lewd remarks to a woman in the bar.
After forcing the brothers to lie face down on the floor and
holding them at gunpoint, Seiber threatened the crowd and tried
to find out who were friends of the Schoenbergers. Stanton
Norris, who was drinking a beer at the bar, admitted to being a
friend of the Schoenbergers. When Norris refused to comply with
his order to lie face down on the floor, Seiber grabbed Norris by
the shoulders and fatally shot him in the back. The jury
recommended and the trial court imposed a sentence of death.
Seiber’s conviction and sentence were affirmed on direct appeal
to the court of appeals and to this court. See State v. Seiber
(June 8, 1989), Franklin App. No. 87AP-530, unreported, 1989 WL
61733, affirmed (1990), 56 Ohio St.3d 4, 564 N.E.2d 408. On
January 10, 1991, former Governor Celeste purportedly commuted
the death sentence to life imprisonment without parole
eligibility.
G
Rosalie Grant was convicted by a jury of two counts of
aggravated murder, each with two death penalty specifications,
and one count of aggravated arson. The evidence presented at
trial revealed that around 6:00 a.m. on April 1, 1983, a fire
ignited in the bedroom of Grant’s two infant sons, one-year-old
Donovan and two-year-old Joseph. The boys died in the fire as a
result of severe burns and smoke inhalation. Grant, however,
escaped from the burning house entirely unharmed, fully dressed
in pants, jacket, shoes and socks, with unsinged hair, no soot on
her face or eyes, and free of any signs of smoke inhalation.
Other than Grant’s claim that she had tried to save her babies
when the smoke first awoke her, there was no evidence presented
that Grant had attempted to put out the fire or to save the
children. Arson investigators determined that the fire had been
intentionally set and fueled by a liquid accelerant. No
determination was made as to the exact type of accelerant that
had been used. The evidence also revealed that approximately two
weeks before the fire, Grant had purchased $5,000 worth of life
insurance for each of the boys with Grant listed as the
beneficiary. Grant had not purchased a policy for herself or for
her three-year-old daughter Shylene, who was living elsewhere.
Furthermore, a can of charcoal lighter fluid, bearing Grant’s
fingerprints, and a partially burned kitchen chair matching those
in Grant’s home were found four days after the fire in a nearby
vacant house. The conviction and sentence were affirmed on
direct appeal to the court of appeals and to this court. See
State v. Grant (Nov. 9, 1990), Mahoning App. No. 83 C.A. 144,
unreported, 1990 WL 176825, affirmed (1993), 67 Ohio St.3d 465,
620 N.E.2d 50. On January 10, 1991, former Governor Celeste
purportedly commuted Grant’s death sentence to life imprisonment
with no restriction as to parole eligibility.
H
According to the court of appeals’ opinion, in May 1979,
Ralph F. DeLeo pled guilty to the murder of Dr. Walter Bond.
After pleading guilty, DeLeo was immediately sentenced to an
indefinite term of fifteen years to life imprisonment. In 1989,
the court of appeals affirmed the trial court’s dismissal of
DeLeo’s petition for enforcement of a plea bargain as to parole,
or, in the alternative, a petition to vacate the conviction and
sentence. See State v. DeLeo (Sept. 19, 1989), Franklin App. No.
89AP-107, unreported, 1989 WL 107559. On January 10, 1991,
former Governor Celeste purportedly commuted DeLeo’s sentence to
time served.
I
A jury convicted John Salim of felonious assault with
violence and gun specifications in connection with an incident
that occurred on January 23, 1988. The evidence, as set forth in
the court of appeals’ opinion, showed that on that date Salim
fired a gun at William Terbrack as the latter prepared to drive
out of a hardware store parking lot. A bullet was retrieved from
the window post on the passenger side of Terbrack’s car. Salim
was sentenced to three years’ actual incarceration for the gun
specification to be served prior to a three-to fifteen-year term
for felonious assault. The conviction and sentence were affirmed
on appeal to the court of appeals. See State v. Salim (May 17,
1990), Cuyahoga App. Nos. 56925 and 57964, unreported, 1990 WL
66467. On January 10, 1991, former Governor Celeste purportedly
granted Salim a full pardon. As the above facts indicate, among
those who purportedly received clemency from former Governor
Celeste were some of the most notorious killers on death row.
Celeste made the clemency decisions without awaiting the APA
investigation and report. Yet, given the per curiam opinion,
only the unfortunate John Salim, who supposed he had received a
full pardon (as opposed to a commutation), must pay the price for
Celeste’s wholesale disregard of the Constitution.
II
While I agree with the per curiam opinion that Section 11,
Article III of the Ohio Constitution authorizes the General
Assembly to prescribe procedural regulations as to the
application process for executive clemency, my interpretation of
Section 11, Article III convinces me that the authority granted
by the “subject to” clause to regulate “the manner of applying
for pardons” includes commutations. The per curiam opinion pays
lip service to the history behind the evolution of current
Section 11, Article III, without realizing the consequences of
that evolution. A thoughtful analysis of the addition of the
“subject to” requirement of the Ohio Constitution should include
consideration of the reason that clause was added. The per
curiam opinion fails to consider and put into effect the
intention of the drafters of Section 11, Article III.
At the 1850-1851 Ohio Constitutional Convention, the debate
on Section 11, Article III was limited to the so-called reporting
requirement, the last sentence of Section 11, Article III. A
delegate, Mr. Riddle, commenting on the insertion of the clause,
stated: “It was known that the exercise of [the pardoning] power
was much complained of. * * * [I]t was but too easy to excite the
sympathies of men in behalf of the convicted criminal. Gentlemen
of the committee were aware from their own experience that they
had often put their names to papers soliciting reprieves and
pardons on the representation of persons, in whom they had
confidence. They knew also that persons in the same manner might
influence the governor; and they further knew that on the
strength of that influence brought to bear on him by the names of
persons standing high in society he often exercised that power in
instances in which the public could not see any propriety. The
power, no doubt, had been abused, but when they looked into the
entire matter they would find that no blame could be attached to
the Governor.” 1 Report of the Debates and Proceedings of the
Convention for the Revision of the Constitution of the State of
Ohio 1850-1851(1851) 306-307.
In choosing to alter its constitutional provision on
executive clemency, Ohio adopted a provision remarkably similar
to that incorporated by the state of New York into its
Constitution of 1846.8 Only a brief discussion of the New York
debates is necessary to illustrate that Ohio’s drafters of
Section 11, Article III must have been motivated by the same
concerns as New York’s drafters when they decided to place
restrictions on the Governor’s pardoning power. The recorded
proceedings of the New York Constitutional Convention which
authored the provision altering that state’s executive pardoning
powers reveal that the provision was extensively debated. In
particular, several amendments were offered relative to
restrictions on the Governor’s pardoning power, including one, by
a Mr. Chatfield, that would have greatly curtailed the Governor’s
pardoning power by making it subject to “such restrictions as may
be prescribed by law.” Report of the Debates and Proceedings of
the Convention for the Revision of the Constitution of the State
of New York (1846) 351. This Chatfield amendment ultimately was
rejected, id. at 353, and the wording “subject to such
regulations as may be provided by law relative to the manner of
applying for pardons,” proposed by Mr. Taylor, was adopted. In
support of his position, Mr. Taylor “agreed that there should be
some conditions relative to the manner of applying the power, and
he would offer an amendment to carry his idea out in relation to
that. This would leave the Legislature to provide rules for its
carrying out, leaving the exercise of the power entirely with the
Governor.” Id. at 357.
Since the “subject to” clause of Section 11, Article III of
the Ohio Constitution mirrors so closely the language of New
York’s comparable section, it is fair to assume that the Ohio
delegates of 1850-1851 shared New York’s concerns about abuses of
the pardoning power, while also sharing the conviction of New
York’s delegates that the Governor’s ultimate discretion to
exercise the pardoning power should not be infringed. The
“subject to” clause is a compromise which reflects those
concerns.
Ohio’s 1802 Constitution, in Section 5, Article II, gave the
Governor “the power to grant reprieves and pardons.” No mention
of commutations was included in this authorization. The word
“commutations” was added in 1851 to Section 11, Article III at
the Constitutional Convention of 1850-1851, which also added the
“subject to” clause at the end of the same sentence.
“The terms ‘pardon’ and ‘reprieve’ have been adopted into
the constitution of this state without defining or explaining
them.” Sterling v. Drake (1876), 29 Ohio St. 457, 460. Just as
“pardon” and “reprieve” are not defined in the Constitution,
“commutation” also is not defined, so that we must look to the
common law for its meaning. Although current statutes define
these terms,9 those statutory definitions do not necessarily
control the consideration of their meanings in the Constitution.
In State ex rel. Gordon v. Zangerle (1940), 136 Ohio St.
371, 375, 16 O.O. 536, 538, 26 N.E.2d 190, 194, the court
considered the “scope of the executive power” conferred by
Section 11, Article III, determining that the common-law meaning
of the terms “reprieves” and “commutations” are “not materially
different” from the statutory definitions (which are the same
today). Thus, the court noted, a reprieve was defined as “‘the
temporary suspension by the Governor of the execution of a
sentence,’10 and commutation of sentence as ‘the substitution of
a lesser for a greater punishment.’” Id.
The Gordon court went on to consider the definition of
“pardon” and the different forms of pardon:
“A pardon may be absolute or conditional, full or partial;
and a conditional pardon may be granted upon conditions precedent
or subsequent.
“A full pardon purges away all guilt and leaves the
recipient from a legal standpoint, in the same condition as if
the crime had never been committed (Knapp v. Thomas, 39 Ohio St.,
377, 381, 48 Am. Rep., 462); a partial pardon releases from
punishment without remission of guilt. Lee v. Murphy, 63 Va. (22
Gratt.), 789, 12 Am. Rep., 563. The essential characteristics of
full and partial pardons are such that either may be granted with
or without conditions. * * *
“ An absolute pardon sets the accused free from the custody
of the law, prevents further court action, terminates existing
probation and makes anticipated probation impossible. * * *
“The power of executive pardon carries with it, as
incidental thereto, the right to impose such valid conditions,
precedent or subsequent, as the pardoning power may determine.* *
*” Gordon, 136 Ohio St. at 376-377, 16 O.O. at 538, 26 N.E.2d at
194.
The per curiam opinion appears to equate “pardon” with “full
and unconditional pardon.” However, as the passage from Gordon
illustrates, the word “pardon” encompasses several concepts. A
“full and unconditional” pardon, which purges all guilt and
places the recipient in the same position as if no crime had been
committed, is only one subset of the several types of pardons.
Another type of pardon, a “partial” pardon, which releases from
punishment without remitting guilt, appears to be virtually
synonymous with a “commutation,” which substitutes a lesser for a
greater punishment, but does not remit guilt. Any definition of
“pardon” which limits its meaning to clemency actions of the
Governor that remit guilt is a narrow definition. While this
narrow definition may appropriately be applied in some
situations, the common-law meaning of “pardon,” when applied in
the broader sense, also can easily encompass the concept of
commutation, so that commutation is a subset of pardon.
The per curiam opinion’s citation of State ex rel. Atty.
Gen. v. Peters (1885), 43 Ohio St. 629, 4 N.E. 81, does not
establish that pardons and commutations are in all cases mutually
exclusive terms. In fact, the per curiam opinion includes
Peters’s definition of pardon among the material quoted from that
case: “A pardon discharges the individual designated from all or
some specified penal consequences of his crime. It may be full
or partial, absolute or conditional.”
(Emphasis added.) Id. at 650, 4 N.E. at 87. By the Peters
definition, a partial pardon (which discharges the individual
from “some * * * penal consequences of his crime”) is a pardon
just as a “full and absolute pardon” is a pardon. The very
language quoted belies the per curiam opinion’s conclusion. The
constitutional meaning of “pardon,” as well as the common-law
meaning of the word, is by no means precise. It is not possible,
as the per curiam opinion attempts, to conclude that pardons and
commutations are two totally distinct concepts. Recognition of
the ambiguity in the word “pardon” instead leads to the
conclusion that commutation is a subset of pardon when pardon is
used in the inclusive sense, and that the “subject to” clause
clearly does provide the authority to regulate commutations.
In this case, defendant Ralph DeLeo purportedly received a
commutation to time served, while defendant John Salim
purportedly received a full pardon. The per curiam opinion
upholds DeLeo’s purported commutation, but invalidates Salim’s
purported full pardon. Yet, under the definition of “pardon” set
forth in Peters and in Gordon, what DeLeo purportedly received
could just as easily be termed a partial pardon, in which case,
presumably according to the per curiam opinion, Governor Celeste
would have had to await the APA investigation and recommendation
before granting clemency to time served. This point, as much as
any other, belies the per curiam opinion’s assertion that the
word “pardon” is used with precision throughout Section 11,
Article III.
When Section 11, Article III was adopted in 1851 and the
power of commutation was specifically mentioned as one of the
Governor’s clemency powers, the delegates to the Constitutional
Convention of 1850-1851 were either conferring a new power for
the Governor to exercise, or they were explicitly conferring a
power which had been implicit in the 1802 Constitution’s
conferral of the power to grant pardons. If the delegates were
conferring a new power, then it would be safe to assume that the
power to grant commutations was considered to be something
different from the power to grant pardons, and was not to be made
subject to regulations “as to the manner of applying for
pardons.” But if the delegates were confirming a power which
already existed under the power to grant pardons, then it may be
fairly concluded that the use of the phrase “as to the manner of
applying for pardons” in the “subject to” clause was meant to
include the commutation power. If the latter is the case, and if
the word “pardon” is broad enough to encompass the word
“commutation” in this way, then Section 11, Article III uses
“pardon” in two senses: in a limited way as one aspect of the
clemency powers in the first clause of the first sentence of
Section 11, Article III, and also, in the “subject to” clause, in
an expansive way that includes the concept of “commutation.”
The records of the debates of the Ohio Constitutional
Convention of 1850-1851 give no insight into why the “subject to”
clause of Section 11, Article III uses the words “as to the
manner of applying for pardons,” or into whether Section 5,
Article II of the Ohio Constitution of 1802 conferred on Ohio’s
Governor the power to commute sentences.
However, the discussions regarding the addition of the
reporting requirement to the executive clemency provision of the
Constitution at the 1850-1851 Constitutional Convention do reveal
that many of the delegates indiscriminately used the term
“pardon” to refer generically to the Governor’s clemency power.
One delegate, Mr. Riddle, stated that “[t]he [Executive
Department] committee inserted that clause [the reporting
requirement] into the report for the purpose, that the
legislature at its annual or biennial sessions might know what
the Governor had done during the vacation in the exercise of the
pardoning power.” (Emphasis added.) 1 Debates and Proceedings,
supra, at 306. Because the reporting requirement as proposed
required the Governor to communicate “each case of reprieve,
commutation, or pardon granted,” id. at 300,11 Mr. Riddle thus
used the inclusive term “pardoning power” to refer to the power
to grant any type of executive clemency.
Similarly, another delegate, Mr. McCormick, thought that the
provision requiring the Governor to report each reprieve,
commutation, or pardon granted “required nothing to be
communicated to the Legislature except the names of the persons
pardoned. If men had interfered improperly in getting reprieves
for criminals, there was nothing in that section as it now stood,
which required the naming of the persons who interfered to obtain
it * * *. The only object to be gained by this section was the
ascertainment of the number of prisoners pardoned * * *.”
(Emphasis added.) Id. at 307. Mr. McCormick thus used the word
“pardon” in a broad sense to refer to any act of executive
clemency.
Another delegate, Mr. Stanton, opposed a proposal to further
require the Governor to report the names of all persons who had
applied for a reprieve, pardon or commutation. “He supposed that
the latter part of the section was intended for the purpose of
making the Governor accountable to the people for the exercise of
the pardoning power, and to inform them whom he had pardoned.”
(Emphasis added.) Id.
Yet another delegate, Mr. Larwill, stated that “[t]he
Governor would no doubt have good reasons for exercising the
pardoning power.” (Emphasis added.) Id.
These delegates’ statements persuasively refute defendants’
argument that the framers of Section 11, Article III used the
word “pardon” in a narrow sense that did not include the concept
of commutation. Many of the delegates at the Constitutional
Convention of 1850-1851 used “pardoning power” to mean clemency
power. Furthermore, the word “pardon” was used to refer to any
executive exercise of the clemency power.
Not long after Ohio (in 1851) had amended its Constitution’s
executive clemency provision to specifically include the power to
grant commutations, the United States Supreme Court decided Ex
Parte Wells (1855), 59 U.S. (18 How.) 307, 15 L.Ed. 421. In the
words of the court:
“The petitioner was convicted of murder in the District of
Columbia, and sentenced to be hung on the 23d of April, 1852.
President Fillmore granted to him a conditional pardon. The
material part of it is as follows: ‘For divers good and
sufficient reasons I have granted, and do hereby grant unto him,
the said William Wells, a pardon of the offense of which he was
convicted — upon condition that he be imprisoned during his
natural life; that is, the sentence of death is hereby commuted
to imprisonment for life * * *.’” Id. at 308, 15 L.Ed. at 423.
Wells petitioned for a writ of habeas corpus, pointing out
that Section 2, Article II of the United States Constitution
authorizes the President to grant pardons and reprieves, but does
not explicitly authorize the President to place conditions upon a
grant of pardon. Wells argued that Section 2, Article II
authorizes only absolute pardons, and that since he had been
pardoned under the authority conferred by that section, he must
have received such an absolute pardon with a void condition, so
that his sentence actually was remitted entirely. Id. at 309, 15
L.Ed. at 423. The Circuit Court of the District of Columbia
refused the application, and the Supreme Court affirmed.
The court in Ex Parte Wells determined that the President’s
power to grant “conditional pardons”12 (commutations) was
implicit within the power to grant “reprieves and pardons”
conferred by Section 2, Article II of the United States
Constitution. In so determining, the court found that the
petitioner’s argument was mistaken, “arising from the want of due
consideration of the legal meaning of the word pardon. It is
supposed that it was meant to be used exclusively with reference
to an absolute pardon, exempting a criminal from the punishment
which the law inflicts for a crime he has committed.” 59 U.S.
(18 How.) at 309, 15 L.Ed. at 423.
The Ex Parte Wells court determined that the word “pardon”
is not so narrow as to include only an “absolute pardon”: “In
the law it has different meanings, which were as well understood
when the Constitution was made as any other legal word in the
Constitution now is.” Id. at 310, 15 L.Ed. at 423. The court
went on to state that “[i]n this view of the constitution, by
giving to its words their proper meaning, the power to pardon
conditionally is not one of inference at all, but one conferred
in terms.
“The mistake in the argument is, in considering an incident
of the power to pardon the exercise of a new power, instead of
its being a part of the power to pardon.” Id. at 315, 15 L.Ed.
at 425.
If the United States Supreme Court determined in 1855 that
the President’s power to commute a sentence is implicit in the
power to pardon, it is reasonable to assume that Ohio’s Governors
operating under the authority of the state’s 1802 Constitution
also had the implicit power to commute sentences, since the 1802
Ohio Constitution’s provision on executive clemency closely
resembled that of the United States Constitution. The delegates
to the 1850-1851 Constitutional Convention therefore did not add
a totally new power to the Constitution by adding the word
“commutations” in adopting Section 11, Article III, but affirmed
a power the Governor already possessed.13
It is apparent that the inclusion of “commutations” in the
first line of Section 11, Article III as one of the Governor’s
clemency powers was done to quiet doubt that the power to pardon
was so limited that it did not include the power to commute. The
meaning of “pardon” was not thereby magically altered into some
precise word with only one connotation. The statements of the
delegates to the 1850-1851 Constitutional Convention indicate the
imprecision of the word “pardon.” In addition, R.C. 2967.01(B)’s
provision that pardons may be “partial,” and the Peters and
Gordon courts’ recognition of partial pardons, further
demonstrate that a “full and absolute pardon” is only one type of
pardon, and that there is an overlap between the generic sense of
the word “pardon” and the concept of commutation. Thus, since
the power of commutation can be understood to be contained within
the power to pardon (in its broad sense) Section 11, Article
III’s provision that the Governor’s power to commute (as well as
to pardon) is “subject * * * to * * * regulations, as to the
manner of applying for pardons” is broad enough to include
regulations as to the manner of applying for commutations.
In short, even though the power to grant commutations may be
a power distinct from the power to grant pardons, the common-law
meaning of “pardon” included “commutation.” Section 11, Article
III clearly subjects the Governor’s power to grant commutations,
as well as the Governor’s power to grant pardons, to authorized
regulations. Hence the Governor’s power to grant commutations
pursuant to Section 11, Article III is subject to regulations
enacted by the General Assembly as to the application process.
Defendants argue that the omission of the word
“commutations” from the “subject to” clause of Section 11,
Article III reflects a conscious decision by the drafters to make
only the manner of applying for pardons, and not commutations,
subject to regulation. Defendants claim that a pardon, because
it remits guilt as well as punishment so that the recipient is in
the same position as if no crime had been committed, is the
ultimate act and was meant to be singled out. They further claim
that a commutation, which merely reduces punishment without
remitting guilt, is a lesser degree of clemency and so was
intentionally left out of the “subject to” clause.
Defendants’ reasoning is specious. Although a “full and
unconditional” pardon is the ultimate pardon, whether a
commutation differs greatly from a pardon is in the eye of the
beholder. To the recipient of a full and unconditional pardon,
that pardon is much different from a commutation (even a
commutation to time served, which would also remit punishment)
because the full pardon relieves the recipient of disabilities
associated with the finding of guilt and wipes the record clean.
However, to society as a whole, there is virtually no difference
between a commutation to time served and a full pardon. As
mentioned earlier, defendant DeLeo in this case was purportedly
granted a commutation to time served, and defendant Salim was
purportedly granted a full pardon, yet the action of Governor
Celeste allowed both offenders to receive clemency despite the
determination of guilt in the judicial system which led to the
imposition of the original longer terms of punishment. Although
some of the purported commutations in this case reduced a death
sentence to life imprisonment without parole, and so did not
effect the release of the recipients, commutations, like pardons,
are very significant actions by the Governor. To permit a
Governor in the last hours of his term to grant commutations
without first applying to the APA would be a devastating blow in
a day when victims’ rights are finally being recognized. One of
the most important factors under R.C. Chapter 2967 is the
requirement that at least three weeks before the APA recommends
any pardon or commutation, notice of the pendency of the clemency
application must be “sent to the prosecuting attorney and the
judge of the court of common pleas of the county in which the
indictment against the convict was found.” R.C. 2967.12.
Additionally, under certain circumstances the APA must send a
similar notice to the victim of the crime, or to a representative
member of the victim’s family. R.C. 2967.12(B). There are very
good reasons for these requirements. One is to avoid the shock
the families of the victims would encounter when they first hear
over the news that the sentences of the convicts who senselessly
murdered their loved ones were commuted.
Lastly, the doctrine of expressio unius est exclusio
alterius has no application regarding the “subject to” clause.
Even though the words “commutation” and “pardon” appear together
elsewhere three times in Section 11, Article III, the fact that
the “subject to” clause does not specifically mention
commutations does not require a narrow reading of the word
“pardons” in that clause. It is readily apparent that the
“subject to” clause was inserted into Section 11, Article III as
a compromise to regulate the application process invoking the
entire clemency power, and not just the power to grant pardons
(with pardon used in its narrow sense). More significantly,
consideration of the debates of the Ohio Constitutional
Convention of 1850-1851 regarding the reporting requirement of
Section 11, Article III makes it readily apparent that the
drafters did not use the terms “pardon” and “commutation” with
the precision which would require a finding that “pardons” in the
Ssubject to” clause does not include commutations.
Since the application process leading to the Governor’s
grant of clemency was seen as subject to abuse, the drafters of
Section 11, Article III allowed regulations to be prescribed to
curb that abuse. Those regulations were authorized for the
application process, whether initiated by the applicant (or
someone on the applicant’s behalf) or by the Governor, but the
power of the Governor to act is specifically exercised subject to
the regulations. A Governor may in certain situations choose to
grant only a commutation when the applicant may have applied for
a full pardon. The interrelationship of the concepts of pardon
and commutation cannot be ignored, an interrelationship obviously
recognized by the reported statements of the delegates to the
Ohio Constitutional Convention of 1850-1851. It is inconceivable
that the omission of the word “commutation” from the “subject to”
clause was intended to exclude commutations from regulation.
III
From the foregoing it is apparent that Section 11, Article
III authorizes the General Assembly to regulate the application
process for executive clemency, whether it is a pardon or a
commutation which is being considered. I emphatically disagree
with the per curiam opinion’s conclusion that Section 11, Article
III authorizes regulations only with respect to pardons, and not
commutations. The per curiam opinion’s misguided attempt to
sever the supposedly offending portions of R.C. 2967.07 is made
necessary by its equally misguided conclusion that the Governor’s
power to commute sentences is unfettered by the Constitution.
R.C. 2967.07 is constitutional in toto, and makes APA involvement
mandatory before the Governor may grant a pardon or a
commutation.
In view of today’s decision it should become a top priority
of the citizens of this state to ensure that such reckless
behavior on the part of a Governor will not be repeated. It is
ironic that the reasons for amending the Constitution today are
similar to the reasons the 1850-1851 Constitutional Convention
amended the Constitution of 1802. The delegates to the 1850-1851
Constitutional Convention felt the need to enumerate the
Governor’s pardoning powers. Even though the 1802 Constitution
did give the Governor power to commute, there remained a small
degree of doubt (later put to rest by the United States Supreme
Court in Ex Parte Wells) that it did not, so the Ohio
Constitution was amended to clarify the matter. In much the same
way, it appears that our Constitution must be amended to specify
that the manner of applying for clemency includes applications
for commutations as well as for pardons. While it is clear to me
that no such amendment should be necessary, members of this court
do not agree. After this case, I am strongly convinced that it
is time for the people of Ohio to consider a constitutional
amendment placing explicit and unavoidable limitations on the
Governor’s clemency power (including the power to pardon and to
commute, but not to reprieve), to go so far as to place specific
limits on the Governor’s discretion in the use of the power.
While I agree that the pardoning power is an indispensable aspect
of our criminal justice system, the pardoning power is too
important to be trusted with relatively few conditions to the
unfettered whims of a lame duck Governor.
I would reverse the judgment of the court of appeals in case
No. 93-1165 and reinstate the declaratory judgment of the trial
court that the purported pardon and commutations are invalid.
Douglas and F.E. Sweeney, JJ., concur in the foregoing
opinion.
FOOTNOTES:
6. It is appropriate to refer to the Governor’s “pardoning
power” synonymously with “clemency power.” The power to commute
has historically been understood to be an aspect of the pardoning
power. For a thorough discussion of the development and scope of
the pardoning power of the President of the United States, see
Hoffa v. Saxbe (D.D.C.1974), 378 F.Supp. 1221.
7. With respect to the manner in which the Ohio Adult Parole
Authority functions, the trial court found as follows:
“When the APA receives a clemency application, the
application is referred to the investigation section of the APA,
which prepares a report on the details of the crimes, the
applicant’s adjustment to prison or the community, and the
support available to the applicant in the community. When the
completed investigation report is received by the Parole Board,
an initial vote is taken whether to immediately recommend against
granting clemency or to conduct a hearing. If a hearing is to be
conducted, notice is sent to the local Prosecutor, the sentencing
Judge, and those victims or victims’ family members designated to
receive notice by R.C. §§ 4943.04(A) and 2945.07(A), and as
required by R.C. § 2967.12(A) and (B). These obviously
interested individuals are then given the opportunity to submit
comments to the APA on whether the applicant should receive
clemency. Generally, these individuals are allowed three weeks’
time within which to respond to the APA notice. At the hearing,
consisting of a panel of at least a majority of the members of
the Parole Board, the Board will consider the investigation, the
microfiche records of the Ohio Department of Rehabilitation and
Corrections, and the testimony of the applicant. After a vote is
taken, a report is then prepared for the signature of the board
members. See R.C. §§ 2967.07 and 2967.12. Usually, there is a
two to three week delay after the vote is taken to circulate the
recommendations among the voting Board members, who travel to
each of Ohio’s 22 penal institutions attending hearings. After
signature, the APA submits the written report to the Governor
which includes a brief statement of the facts in the case,
together with the recommendation of the APA. In such instances
that an application is submitted directly to the Governor, it is
still required to be channeled back through the APA review
process pursuant to R.C. § 2967.07.”
8. Section 5, Article IV of the New York Constitution of 1846
provided:
“The governor shall have the power to grant reprieves,
commutations, and pardons after conviction, for all offenses
except treason and cases of impeachment, upon such conditions and
with such restrictions and limitations, as he may think proper,
subject to such regulation as may be provided by law relative to
the manner of applying for pardons. * * * He shall annually
communicate to the legislature each case of reprieve,
commutation, or pardon granted, stating the name of the convict,
the crime of which he was convicted, the sentence and its date,
and the date of the commutation, pardon or reprieve.” New York
State Constitution Annotated (1938) 54.
When Ohio’s Constitutional Convention of 1850-1851 discussed
the substance of what was to become Section 11, Article III of
the Constitution of 1851, the Standing Committee on the Executive
Department presented for debate a draft version on executive
clemency which very closely resembled Section 5, Article IV of
the New York Constitution of 1846. For the language of this
draft version, see 1 Report of the Debates and Proceedings of the
Convention for the Revision of the Constitution of the State of
Ohio 1850-1851 (1851) 300. The text of the draft version is
reproduced in footnote 6 of this opinion.
9. R.C. 2967.01(B) provides:
“‘Pardon’ means the remission of penalty by the governor in
accordance with the power vested in him by the constitution.
Pardons may be granted after conviction and may be absolute and
entire, or partial, and may be granted upon conditions precedent
or subsequent.”
R.C. 2967.01(C) provides:
“‘Commutation’ or ‘commutation of sentence’ means the
substitution by the governor of a lesser for a greater
punishment. A sentence may be commuted without the consent of
the convict, except when granted upon the acceptance and
performance by the convict of conditions precedent. After
commutation, the commuted sentence shall be the only one in
existence. The commutation may be stated in terms of commuting
from a named crime to a lesser included crime, in terms of
commuting from a minimum and maximum sentence in months and years
to a minimum and maximum sentence in months and years, or in
terms of commuting from one definite sentence in months and years
to a lesser definite sentence in months and years.”
R.C. 2967.01(D) provides:
“‘Reprieve’ means the temporary suspension by the governor
of the execution of a sentence. A reprieve may be granted
without the consent of and against the will of the convict.”
10. I agree that reprieves do not fall within the broader
meaning of “pardons.” Reprieves and pardons are recognized as
being fundamentally different at common law because a reprieve is
temporary. However, pardons and commutations are not recognized
as fundamentally different at common law, but are interrelated
concepts. Even though the power to grant reprieves often is said
to come within the scope of the Governor’s pardoning power, a
constitutional provision allowing procedural regulation of “the
manner of applying for pardons” does not allow for regulation of
the manner of applying for reprieves. Because of this
fundamental difference between reprieves and pardons, Section 5,
Article II of Ohio’s 1802 Constitution, and Section 2, Article II
of the United States Constitution each conferred upon the
executive the power to grant both reprieves and pardons.
The General Assembly has recognized the fundamental
difference between pardons and reprieves. R.C. 2967.08 provides
that “[t]he governor may grant a reprieve for a definite time to
a person under sentence of death, with or without notices or
application.” This provision obviously recognizes the importance
of prompt action in some reprieve cases and makes clear that
procedural requirements need not be fulfilled before a reprieve
may be granted. In addition, R.C. 2967.03, authorizing the Adult
Parole Authority to recommend a pardon, commutation, or reprieve
to the Governor, provides procedural requirements which must be
fulfilled before the authority may recommend a pardon or
commutation, but any such requirements regarding the
recommendation of a reprieve are conspicuously absent.
11. As reported by Mr. Leadbetter from the Standing Committee on
the Executive Department, the provision later incorporated into
the Constitution of 1851 as Section 11, Article III originally
read:
“Sec. 11. The Governor shall have the power to grant
reprieves, commutations and pardons after conviction, for all
offenses, except treason, and cases of impeachment, upon such
conditions, and such restrictions and limitations as he may think
proper, subject to such regulations as may be provided by law,
relative to the manner of applying for pardons. Upon conviction
for treason, he shall have power to suspend the execution of the
sentence, until the case shall be reported to the Legislature at
its next meeting, when the Legislature shall either pardon,
commute the sentence, direct the execution of the sentence, or
grant a further reprieve. He shall annually communicate to the
Legislature each case of reprieve, commutation, or pardon
granted; stating the name of the convict, the crime for which he
was convicted, the sentence and its date, and the date of the
commutation, pardon or reprieve.” 1 Debates and Proceedings,
supra, at 300.
The report of the Executive Committee reached its present
form as Section 11, Article III after proposed amendments to the
committee report were debated by the delegates and voted on.
12. The court of appeals in the case sub judice went to some
lengths to distinguish between a commutation and a conditional
pardon, basing the distinction in part upon the necessity of
acceptance by the recipient before a conditional pardon is valid.
However, one major factor that separates the two is the
attachment of a condition, which is what makes a conditional
pardon “conditional.” In the same way that a pardon can have a
condition attached, a commutation can also be subject to a
condition. It is when the condition is attached that the
recipient must consent before the conditional pardon or
conditional commutation is effective. No consent is required
when no condition is attached to the pardon or commutation. In
re Victor (1877), 31 Ohio St. 206, paragraph three of the
syllabus, recognized that in Ohio, a commutation is not the same
as a conditional pardon, even though the Ex Parte Wells court
stated that it was for purposes of interpreting the United States
Constitution. Since Victor presumed that a commutation is “for
the culprit’s benefit,” no acceptance of an unconditional
commutation is required for its validity. See 31 Ohio St. 206,
at paragraph three of the syllabus.
13. One researcher has determined that the power to commute is
implicit within the power to pardon:
“The [Ohio] Constitutional Convention of 1851 added the term
‘commutation’ to the pardon provision in present section 11 of
Article III. However, the term ‘commutation,’ although not used
in early constitutions, has long been interpreted as being
included within pardon, and texts have often not disassociated
the power to commute from the power to pardon.” 3 Ohio
Constitutional Revision Commission 1970-1977, Proceedings &
Research of the Legislative-Executive Committee (Mar. 31, 1972),
Research Study No. 11. | 01-03-2023 | 08-01-2014 |
https://www.courtlistener.com/api/rest/v3/opinions/1535210/ | 780 A.2d 704 (2001)
COMMONWEALTH of Pennsylvania, Appellee
v.
William Mike FIORE, Appellant.
Superior Court of Pennsylvania.
Submitted March 12, 2001.
Filed July 20, 2001.
Reargument Denied September 20, 2001.
*706 Mark H. Rubenstein, Pittsburgh, for appellant.
John S. Robinette, Pittsburgh, for Commonwealth, appellee.
*707 BEFORE: JOHNSON, STEVENS and POPOVICH, JJ.
*705 POPOVICH, J.
¶ 1 This is an appeal from the June 8, 2000, order of the Court of Common Pleas, Westmoreland County denying Appellant's petition filed pursuant to the Post Conviction Relief Act, 42 Pa.C.S.A. §§ 9541-9546. William Mike Fiore's sole argument on appeal is whether the PCRA Court erred in denying a new trial based on a finding that Appellant's after-discovered evidence was of questionable credibility and would not have affected the outcome of the trial. For the following reasons, we reverse the order and remand for a new trial.
¶ 2 The procedural and factual histories of this case are quite complex. The relevant facts and procedure are fully set forth in this Court's Memorandum Opinion filed on August 23, 1995, at 1834 PGH 1994.
Appellant, William Fiore, and Nikolai Zdrale, were acquainted with one another, as both men were landfill operators in Allegheny and Westmoreland Counties. Enactment of new federal laws in 1979-1980 resulted in a reclassification of the types of materials which could be accepted at Mr. Fiore's landfill. Consequently, he was required to obtain new permits from the Pennsylvania Department of Environmental Resources (DER) in order to continue his acceptance of these materials. In 1979, Mr. Fiore met with a DER employee, Charles Duritsa, and offered to pay him $5,000 if he would expedite the issuance of Mr. Fiore's phase I permit. Mr. Duritsa refused and notified the pertinent authorities of this incident. No action was taken against Mr. Fiore at this time and Mr. Fiore subsequently received his permit.
Mr. Fiore thereafter made application for a phase II permit at the landfill site. However, the DER determined that there were problems with respect to the permissible phase I operations. As a result, the DER suspended Mr. Fiore's phase I permit in 1983, thus causing Mr. Fiore to incur financial losses of approximately $300,000.00 per month. Mr. Fiore subsequently entered into a consent order with the DER pursuant to which he agreed to rectify the noted deficiencies. Mr. Fiore did not correct the problems, however.
Throughout this time period, Mr. Fiore had paid Vito Luci, a subordinate DER employee, money in exchange for his consultation with respect to Mr. Fiore's permit applications.4 Due to his frustration at the DER's failure to issue a phase II permit, Mr. Fiore apprised Mr. Luci of his intent to initiate a lawsuit against the DER. Mr. Fiore further indicated that he would name Mr. Luci as one of the defendants therein. In an attempt to preclude his superiors from discovering his relationship with Mr. Fiore, Mr. Luci contacted Mr. Fiore in an attempt to mollify him. This meeting occurred in May, 1984. During this conversation, Mr. Fiore told Mr. Luci to tell Mr. Duritsa and a DER attorney, Howard Wein, that he would have them killed if he did not receive his permits by May 18th.
After his meeting with Mr. Luci, Mr. Fiore filed a lawsuit against the DER and Mr. Luci. The DER officials met to discuss the litigation and at this time Mr. Luci divulged Mr. Fiore's death threat. Mr. Luci ultimately disclosed his relationship with Mr. Fiore as well. Although Mr. Fiore was informed that the DER was aware of his threat, no other action was taken against Mr. Fiore.
In 1985, Mr. Zdrale had hired James Thomas to perform handyman-type *708 work at his home. Mr. Thomas was acquainted with Leroy Bradley Smith and at some point introduced Mr. Smith to Mr. Zdrale. Both Mr. Thomas and Mr. Smith are convicts. Over the summer months of 1985, Mr. Zdrale indicated to Mr. Smith that his friend, Bill, wanted an individual, later identified as Charles Duritsa, to be "taken care of," i.e., killed. Mr. Thomas, Mr. Zdrale and Mr. Smith subsequently went to a restaurant in McKeesport for the purpose of permitting Mr. Fiore to see the individual whom Mr. Zdrale had selected to perform the job. After the men were in the restaurant, Mr. Fiore entered and was identified to Mr. Smith by Mr. Thomas. However, Mr. Fiore never spoke to Mr. Smith; rather, Mr. Zdrale and Mr. Fiore ate separately.
Following this meeting, Mr. Zdrale, Mr. Smith and Mr. Thomas drove to the East Liberty section of Pittsburgh where they waited for Mr. Duritsa to leave the DER's offices. Mr. Zdrale identified Mr. Duritsa to Mr. Smith as the man whom Mr. Smith was to kill. Mr. Smith received $5,000.00 from Mr. Zdrale as a down payment on the contract.5 Mr. Smith and Mr. Thomas subsequently drove to Bedford County where Mr. Smith stole an acquaintance's black truck. The men then drove the truck to Greensburg. After purchasing gloves and alcohol, the men proceeded to East Liberty the next day in the stolen truck. Armed with a shotgun, Mr. Thomas and Mr. Smith drove around East Liberty in search of Mr. Duritsa. However, the men could not find him and decided to abandon the stolen truck in an alley. The men wiped the interior and exterior of the truck with the alcohol and returned to Greensburg in Mr. Zdrale's vehicle. No further attempts were made to kill Mr. Duritsa.
The relationship between Mr. Thomas, Mr. Zdrale and Mr. Smith thereafter soured such that Mr. Thomas notified the law enforcement authorities of the above events. As a result, a grand jury was convened to investigate these matters. In April, 1987, the grand jury recommended that Mr. Fiore and Mr. Zdrale be prosecuted. Mr. Fiore and Mr. Zdrale were convicted of the above offenses [of criminal solicitation and criminal conspiracy to commit murder] following a joint trial in January of 1988.6 Mr. Fiore filed post-trial motions which were denied. The trial court subsequently imposed a sentence of five (5) to ten (10) years imprisonment with regard to Mr. Fiore's conspiracy conviction. This sentence was initially set to run concurrently with the sentence Mr. Fiore received for his Allegheny County convictions, as the trial court inadvertently failed to direct otherwise at the time of sentencing.7 However, the Commonwealth filed a motion to modify sentence, such that the sentence would be directed to run consecutively to Mr. Fiore's other term of incarceration. The trial court granted the motion and re-sentenced Mr. Fiore, who was not present at the re-sentencing.8
Mr. Fiore appealed to this court. We vacated the sentence and remanded for re-sentencing because Mr. Fiore had not been present when his sentence was changed; in all other respects his conviction was affirmed. Commonwealth v. Fiore (I), 407 Pa.Super. 644, 584 A.2d 1046 (1990) (unpublished memorandum), Nos. 964 and 1228 Pittsburgh 1989. Mr. Fiore then filed a petition for allowance of appeal with the Supreme Court.
While his petition was pending in the Supreme Court, the trial court proceeded to re-sentence Mr. Fiore in 1991 in accordance with this court's directives. Mr. Fiore again appealed to this court, *709 which vacated the sentence; in reaching this result, we concluded that the trial court had no jurisdiction to act on this matter since Mr. Fiore's petition for allowance of appeal was before the Supreme Court. Commonwealth v. Fiore (II), 418 Pa.Super. 630, 606 A.2d 1227 (1991) (unpublished memorandum), No. 00398 Pittsburgh 1991. The Supreme Court ultimately reversed this court's decision in Fiore I based on the reasoning set forth in Commonwealth v. Zdrale, 530 Pa. 313, 608 A.2d 1037 (1992). Commonwealth v. Fiore, 531 Pa. 460, 613 A.2d 1208 (1992). Consequently, Mr. Fiore was awarded a new trial. The Supreme Court remanded the record to the lower court on October 26, 1992.
The Commonwealth had 120 days from the date of remand, or until February 23, 1993, in which to retry appellant. However, trial did not take place by this date due to the fact that defense counsel filed a motion for habeas corpus relief and a motion to quash the information in December of 1992. Extensive hearings on these motions were held in February and March of 1993. The motions were later denied on June 15, 1993.9 Mr. Fiore was again convicted following a jury trial held in July of 1993.10 Timely post-trial motions and supplemental post-trial motions were filed and ultimately denied.11 After his motions were denied, appellant was sentenced on October 4, 1994 to a period of five (5) to ten (10) years imprisonment; this sentence was directed to run consecutively to the sentences imposed with respect to appellant's other convictions. A post-sentencing motion was filed and likewise denied.
4 As a result of this conduct, Mr. Luci resigned from the DER and was subsequently convicted of bribery and other offenses.
5 Although Mr. Smith initially thought that this payment was in connection with another matter in which he and Mr. Zdrale were involved, he later discovered that the payment was for the "hit" on Mr. Duritsa and that the money was initially paid by appellant.
6 Mr. Zdrale appealed to this court which affirmed in an unpublished memorandum. Commonwealth v. Zdrale, 397 Pa.Super. 167, 579 A.2d 1309 (1990). However, the Supreme Court vacated his conviction and granted him a new trial. Commonwealth v. Zdrale, 530 Pa. 313, 608 A.2d 1037 (1992). Mr. Zdrale was re-tried and was ultimately acquitted in January of 1994.
7 During the pendency of the conspiracy proceedings, Mr. Fiore was convicted of bribery, perjury and violations of the Solid Waste Act in Allegheny County. Mr. Fiore later filed a petition for post-conviction relief with the Allegheny County Court of Common Pleas. The lower court denied this petition. Mr. Fiore's appeal therefrom is currently pending in this court. Commonwealth v. Fiore, No. 01892 Pittsburgh 1994.
8 Mr. Fiore filed a motion to quash the Commonwealth's motion as well as his own motion for modification of sentence. Both motions were denied.
9 While these motions were pending, the Legislature amended the statute codified at 42 Pa.C.S.A. § 5912. Under the prior version of the statute, individuals who had been convicted of perjury were incompetent witnesses for any person. See 42 Pa.C.S.A. § 5912 (prior version). Mr. Fiore and Mr. Zdrale were initially granted a new trial on this basis, since the Commonwealth had introduced the testimony of Mr. Smith, a convicted perjurer, at their first trial. The amendments to section 5912 removed the bar of incompetency so that convicted perjurers were no longer disqualified from testifying, although the existence of their conviction could be employed to impeach their credibility. See 42 Pa.C.S.A. § 5912 (amended version). The amendment was made applicable to all criminal matters which were pending on the effective date of the statute. Because these criminal proceedings were pending against Mr. Fiore at the time the amendments went into effect, the amended version applied. Consequently, Mr. Smith was permitted to testify against Mr. Fiore upon his re-trial.
10 Mr. Fiore was represented during the pre-trial and trial proceedings by Thomas Ceraso, Esq. Although Mr. Ceraso filed post-trial *710 motions on Mr. Fiore's behalf, he was thereafter discharged by appellant.
11 During the post-verdict motion proceedings, Mr. Fiore represented himself pro se, however, he retained John Cupp, Esq. to act in an advisory capacity only. Mr. Fiore subsequently discharged Mr. Cupp and retained Harold Gondelman, Esq. to represent him. Mr. Gondelman filed a post-sentencing motion on appellant's behalf. Mr. Gondelman represented appellant at sentencing and has continued to represent him in this appeal.
Commonwealth v. Fiore, 447 Pa.Super. 625, 668 A.2d 1189 (Pa.Super.1995) (unpublished memorandum). Our Supreme Court denied allocatur on March 19, 1996.
¶ 3 On March 17, 1997, Appellant filed a PCRA petition.[1] The lower court denied his petition without conducting an evidentiary hearing. Appellant appealed the denial to this Court. We reversed the order and remanded the case to the PCRA court to conduct an evidentiary hearing. Commonwealth v. Fiore, 718 A.2d 856 (Pa.Super.1998) (unpublished memorandum).
¶ 4 The PCRA court conducted a video deposition of Mr. Zdrale on October 16, 1998. The PCRA hearing was concluded on March 21, 2000. On June 8, 2000, the PCRA court issued its order and opinion denying Appellant's request for post-conviction relief. This timely appeal followed.
¶ 5 On appeal, Appellant presents the sole issue of whether the PCRA court erred in denying his request for a new trial in finding the after-discovered evidence is of questionable credibility, involves testimony inconsistent with abundant trial evidence and is not likely to have changed the outcome of the trial.
¶ 6 Our review of denial of PCRA relief is limited to determining whether the record supports the findings of the PCRA court and whether these findings are free of legal error. See Commonwealth v. Yager, 454 Pa.Super. 428, 685 A.2d 1000, 1003 (1996) (en banc). We will view the PCRA court's legal conclusions keeping this standard in mind.[2]
¶ 7 To be eligible for collateral relief, Appellant must satisfy the dictates of the PCRA, which provides in relevant part as follows. Section 9543(A) requires that the petitioner must plead and prove by a preponderance of the evidence:
(1) That the petitioner has been convicted of a crime under the laws of this Commonwealth and is at the time relief is granted:
(i) currently serving a sentence of imprisonment, probation or parole for the crime;
* * *
(2) That the conviction or sentence resulted from one or more of the following:
* * *
(vi) The unavailability at the time of trial of exculpatory evidence that has subsequently become available and would have changed the *711 outcome of the trial if it had been introduced.
* * *
(3) That the allegation of error has not been previously litigated or waived.
(4) That the failure to litigate the issue prior to or during trial, during unitary review or on direct appeal could not have been the result of any rational, strategic or tactical decision by counsel.
42 Pa.C.S.A. § 9543(A).
¶ 8 Appellant's issue on appeal involves § 9543(a)(2)(vi). But before addressing that issue, we will briefly examine the other requirements for collateral relief.
¶ 9 Our first inquiry is whether allegation of error has been previously litigated. Relevant to Appellant's petition, § 9544(a)(2) provides that an issue is previously litigated where the highest appellate court in which the petitioner could have had review as a matter of right has ruled on the merits of the issue. See Commonwealth v. Szuchon, 548 Pa. 37, 693 A.2d 959 (1997). Appellant's request for a new trial for after-discovered evidence had not been raised during his previous appeals to this Court or our Supreme Court.
¶ 10 If an issue has not been previously litigated, inquiry is then made as to whether the issue has been waived. An issue is deemed waived if the petitioner failed to raise it and "it could have been raised before the trial, at the trial, during unitary review, on appeal or in a prior state post-conviction proceeding." 42 Pa. C.S.A. § 9544(b). Appellant was unable to raise his claim of after-discovered evidence during his appeals because the evidence was not discovered until after Appellant's appeals had been concluded.
¶ 11 Having concluded that Appellant's issue on appeal has not been previously litigated or waived and considering that he is currently incarcerated for the convictions for criminal conspiracy to commit murder and criminal solicitation, we will now conduct an inquiry into his issue on appeal.
¶ 12 As noted above, § 9543(a)(2)(vi) provides for post-conviction relief where a petitioner could prove a claim of newly discovered exculpatory evidence. In order to succeed on such a claim, the petitioner must establish by a preponderance of the evidence that:
(1) the evidence has been discovered after the trial and it could not have been obtained at or prior to trial through reasonable diligence;
(2) such evidence is not cumulative;
(3) it is not being used solely to impeach credibility; and
(4) such evidence would likely compel a different verdict.
Commonwealth v. Abu-Jamal, 553 Pa. 485, 517, 720 A.2d 79, 94 (1998) (citations omitted).
¶ 13 In his petition for collateral relief, Appellant alleges that the testimony of Mr. Zdrale, who was unavailable to testify at Appellant's second trial because he was awaiting his own separate trial on the same charges, would have established that Appellant was innocent of the charges. Mr. Zdrale died on July 29, 1999. His testimony was preserved, in anticipation of his death, for the PCRA hearing and any further proceedings via video deposition on October 16, 1998.
¶ 14 We first note that the PCRA court correctly ruled that Mr. Zdrale was unavailable to testify at Appellant's second trial. A witness's invocation of his Fifth Amendment rights renders him unavailable. See Commonwealth v. Franklin, 397 Pa.Super. 265, 580 A.2d 25, 29 (1990). Prior to trial, Mr. Zdrale's attorney *712 advised Appellant's attorney that Mr. Zdrale would invoke his Fifth Amendment right to remain silent if he was called to testify at Appellant's trial. Therefore, Mr. Zdrale was unavailable to testify at Appellant's second trial. Mr. Zdrale only became available after his own second trial in which he was acquitted of the same charges that Appellant was convicted of. Accordingly, Mr. Zdrale's ability to testify was after-discovered evidence that could not have been obtained prior to trial because of his assertion of his Fifth Amendment rights. Therefore, Appellant has met the first prong of § 9543(a)(2)(vi).
¶ 15 We also note that Mr. Zdrale's testimony was neither cumulative of testimony presented at Appellant's trial nor would be used to impeach credibility. Appellant did not testify on his own behalf at any of the proceedings and had steadfastly maintained his innocence. Mr. Zdrale testified as to what transpired between him and Appellant and that he and Appellant, while not liking Mr. Duritsa, were innocent of the charges of conspiring to murder him. Since this evidence was not available from any other source, we find Appellant has satisfied the second and third prongs in that the unavailable evidence was not merely cumulative of evidence presented by Messrs. Jones and Smith and would not be used solely to impeach their credibility.
¶ 16 The final prong is that "such evidence would likely compel a different verdict." Abu-Jamal, at 517, 720 A.2d at 94; 42 Pa.C.S.A. § 9543(a)(2)(vi). The PCRA court concluded that the after-discovered evidence was of questionable credibility, involves testimony inconsistent with abundant trial evidence and was not likely to have changed the outcome of the trial. See Commonwealth v. Fiore, 731 Criminal 1987 (Westmoreland County, Pezze, J., 6/8/2000). For the following reasons, we disagree with the PCRA court's legal conclusions.
¶ 17 Where the record supports the credibility determination of the post-conviction court, the reviewing court is to defer to that determination. Commonwealth v. Whitney, 550 Pa. 618, 630, 708 A.2d 471, 476 (1998). The PCRA court determined that Mr. Zdrale's testimony was of "questionable credibility." We note that the PCRA court did not find that Mr. Zdrale was incredible, but instead noted Mr. Zdrale's questionable credibility in determining that his testimony would not likely have compelled a different verdict.
¶ 18 Mr. Zdrale was deposed on October 16, 1998, some thirteen years after the time period in which the conspiracy allegedly transpired. His deposition also occurred over two years after an accident in which he received an injury to his brain. This injury impaired Mr. Zdrale's memory. He indicated that sometimes he would have trouble remembering things but other times he had no trouble. On the date of the deposition, Mr. Zdrale indicated that he was not having any memory difficulties and was having "a good [memory] day." See N.T., Zdrale Dep., 10/16/98, at 7. He then proceeded to answer the questions presented. Some of the answers Mr. Zdrale gave were internally inconsistent. Early in the deposition, he stated that Mr. Smith did not work for him. See id., at 11. Then, he stated that he paid Mr. Smith to drive him, see id., at 51, and to do errands for him see id., at 58. Mr. Zdrale also stated that Mr. Thomas did not work for him, see id., at 34, and then, he stated that he fired Mr. Thomas because he was a bad worker, see id., at 12. However, we note that these inconsistencies were relatively minor in that Mr. Smith and Mr. Thomas did not work for Mr. Zdrale's businesses but did errands for him personally, and in that the inconsistencies did not substantively *713 affect the charges against Appellant. Specifically, Appellant was charged with requesting Mr. Zdrale to solicit an individual, namely Mr. Smith, to commit the murder of Mr. Duritsa for pay and with conspiring with Messrs. Zdrale, Smith and Thomas to commit the murder of Mr. Duritsa. Mr. Zdrale's employment of Mr. Smith and Thomas was not material to the Appellant's charges of solicitation and conspiracy.
¶ 19 The PCRA court found that Mr. Zdrale's testimony was inconsistent with trial testimony and documentary evidence.[3] As we previously discussed, many of these inconsistencies had to do with Mr. Zdrale's employment of Mr. Smith and Mr. Thomas. For example, Mr. Zdrale stated that Mr. Thomas did not work for him. However, at trial, Mr. Thomas stated that he worked for Mr. Zdrale's business and that Mr. Zdrale paid him with a check. See, N.T., Fiore Trial II, 7/15/93-7/23/93, at 561. As we previously noted, these inconsistencies do not go to the heart of the charges against Appellant. Additionally, Mr. Zdrale's testimony that there was no conspiracy was inconsistent with Mr. Thomas and Mr. Smith's testimony that a conspiracy existed. However, as with all charges of a conspiracy and subsequent denials thereof, there will be inconsistent testimony at trial regarding the conspiracy.
¶ 20 This leads us to the final conclusion of the PCRA court, that Mr. Zdrale's testimony was not likely to have changed the outcome of the trial.[4] The PCRA court determined his testimony was not so persuasive as to compel a different result. In evaluating Mr. Zdrale's testimony, the PCRA court used the same factors it would have asked the jury to consider. The PCRA recognized that Mr. Zdrale had a friendship with Appellant and animosity toward other persons in the case, he had numerous inconsistencies and inaccuracies in his testimony and he had suffered a brain injury that impaired his memory. Even considering this to be true, Mr. Zdrale's testimony that there was no conspiracy, if believed by the jury, would have changed the outcome of this case.
¶ 21 The Commonwealth's case was essentially that Appellant asked Mr. Zdrale to find someone to murder Mr. Duritsa. The Commonwealth attempted to prove Appellant's involvement through statements made between Mr. Zdrale and Mr. Thomas and Mr. Smith, the men hired to conduct the murder. Mr. Zdrale's testimony would be essential to the defense to contradict the testimony of Mr. Smith, a convicted perjurer with a criminal background, and Mr. Thomas, a person with an extensive criminal history. Mr. Thomas admitted to lying to the police about the events in question and gave conflicting versions under oath. See N.T., Fiore Trial II, at 660-674. Mr. Thomas also received a sentence of six to twenty-three months for his involvement in these charges in return for his cooperation with the Commonwealth. See id., at 648. He also received immunity from prosecution for any future charges in return for testifying before the grand jury and at Fiore's trial. See id., at 616. Additionally, the testimony of both Mr. Smith and Mr. Thomas was inconsistent with previous statements they had given under oath.
*714 ¶ 22 Mr. Zdrale's testimony contradicts the Commonwealth's case-in-chief. At trial, the Commonwealth contended that Mr. Zdrale was the middleman in the murder-for-hire conspiracy. He was the link between Mr. Fiore, the person who wanted Mr. Duritsa killed, and Mr. Smith and Mr. Thomas, the men hired to kill Mr. Duritsa. Mr. Zdrale professed that there was no conspiracy. We believe that a jury should be presented with the testimony of Mr. Zdrale to permit it to determine whether his version of the events is more credible than that of Mr. Smith and Mr. Thomas.[5]
¶ 23 Accordingly, we find Appellant proved by a preponderance of the evidence that Mr. Zdrale was unavailable for purposes of Appellant's trial and that his testimony if believed by a jury would likely have changed the outcome of the trial.
¶ 24 Order reversed. Case remanded for a new trial. Jurisdiction relinquished.
¶ 25 STEVENS, J. files a Dissenting Opinion.
STEVENS, J., Dissenting.
¶ 1 I respectfully dissent from the Majority's decision to reverse Appellant's judgment of sentence and grant him a new trial based on after-discovered evidence.
¶ 2 As indicated by the Majority, "[w]here the credibility determination of the post-conviction court is supported by the record, the reviewing court is to defer to that determination." Commonwealth v. Whitney, 550 Pa. 618, 630, 708 A.2d 471, 476 (1998). In the present case, Nikolai Zdrale acknowledged in his deposition testimony, which was self-serving, See, e.g., N.T. Deposition dated 10/16/98 at 9-10, and wrought with inconsistencies, his failing health and impaired memory and recollection of events. See, e.g., Id. at 24-27. Therefore, there exists support for the PCRA court's finding that this after-discovered evidence was of questionable credibility, contradicted abundant trial testimony and, thus, was not likely to have changed the outcome of the trial.[6] Therefore, I would affirm on the basis of the PCRA court's opinion.
NOTES
[1] Appellant's petition for collateral relief was filed nearly two years after the 1995 Amendments to the PCRA went into effect. Therefore, we must apply the PCRA as it existed at the time he filed his petition for collateral relief.
[2] We note that Appellant argues that we should not give the PCRA court's findings undue deference because the PCRA court was not the same court that conducted the trial and Mr. Zdrale's deposition is available to this Court for plenary review. However, in a PCRA proceeding, we, as an appellate court, do not reweigh the evidence. The PCRA court had an opportunity to observe Mr. Zdrale during his deposition and made its findings regarding Appellant's petition. We will examine the PCRA court's findings to see if the record supports them and if any legal error was made.
[3] The PCRA court did not state how Mr. Zdrale's testimony was inconsistent with the trial testimony and documentary evidence.
[4] The 1995 amendments to the PCRA changed the language in § 9543(a)(2)(vi) "would have affected the outcome of the trial" to "would have changed the outcome of the trial."
[5] It is interesting to note that Mr. Zdrale was acquitted of the same solicitation and conspiracy charges when tried using essentially the same evidence. However, we recognize that consistency in verdicts is not necessary and that a co-conspirator's acquittal at a subsequent trial does not require reversal of the other co-conspirator's previous conviction. See Commonwealth v. Campbell, 539 Pa. 212, 651 A.2d 1096 (1994).
[6] In addition, it is noted that the Majority cites no caselaw to support its determination that Mr. Zdrale's ability to testify was after-discovered evidence that could not have been obtained prior to trial because of his assertion of his Fifth Amendment rights. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1535225/ | 340 A.2d 140 (1975)
AGAR SUPPLY CO., INC.
v.
DAVID-HODOSH CO., INC.
No. 74-46-Appeal.
Supreme Court of Rhode Island.
June 27, 1975.
Adler, Pollock & Sheehan Inc., John F. Bomster, Providence, Englander, Englander & Englander, Malcom D. Finks, Boston, Mass., for plaintiff.
Friedman, Kramer, Kessler & Andreoni, Harold I. Kessler, Providence, for defendant.
OPINION
DORIS, Justice.
This is a civil action wherein the plaintiff seeks to recover the value of goods sold and delivered to the defendant. The defendant in its answer filed a counter claim for damages, alleging that the goods were unfit for human consumption and of unmerchantable quality. Trial was held to a Superior Court justice sitting without a jury, and judgment was entered for the plaintiff in the amount of $7,051.20, plus interest of $775.63, for a total of $7,826.83. From this judgment, the defendant now appeals.
The plaintiff, Agar Supply Co., Inc. (hereinafter Agar), a Massachusetts corporation, is principally engaged in distributing fresh pork products. The defendant, David-Hodosh Co., Inc., (hereinafter David-Hodosh), a Rhode Island corporation, *141 is also engaged in the distribution of meat products. Both corporations have been engaged in the meat distribution business for many years, and both operate government inspected plants.
It appears that on December 1, 1971, Agar placed an order with Klayman Company (hereinafter Klayman), a pork packaging firm located in Philadelphia, Pennsylvania, for 500 boxes of pork loins. The pork was to be slaughtered on Wednesday and cut on Thursday, for a Friday, December 3, delivery to Agar at Boston. On Thursday, December 2, 1971, David-Hodosh placed an order with Agar for 200 boxes of Klayman pork loins for delivery at Providence. The 500 boxes of pork loins from Klayman arrived at Agar's Boston plant at or about 6 a. m. on Friday, December 3, 1971. Allan Bressler, manager of Agar, testified that shortly after arrival in Boston, the Klayman trailer was checked as to seals and temperature. A random inspection was also performed, which included the opening of boxes and a visual inspection of the meats and bones for color and soundness. The internal temperature of the pork was also taken.
Two hundred boxes of the pork loins were then loaded onto a refrigerated Agar truck and were transported to Providence for David-Hodosh. The shipment arrived in Providence between 9 a. m. and 10 a. m. on December 3, and was received by Samuel David, an officer of David-Hodosh, who inspected a few boxes and signed a receipt for the pork products. The receipt contained the statement, "all claims must be made immediately." Samuel David testified that after being received, the pork loins were placed in defendant's cooler for delivery to customers on the following day.
On Saturday, December 4, 145 boxes of the Klayman pork loins, received from Agar, were delivered by defendant in refrigerated trucks to various branches of Almac's, Inc., an operator of supermarkets in the Providence area. Mr. David testified that on Monday, December 6, defendant received complaints from Almac's that the pork was unmerchantable, and that sometime later the pork was returned to David-Hodosh, stored in a commercial cooler, and still later sold for a price far below the price at which it was ordered from Agar. Mr. David further stated that on Monday, December 6, 1971, following complaints from Almac's, David-Fiodosh notified Agar by telephone of the unmerchantability of the pork loins. He also testified that 55 of the 200 boxes of pork loins received from Agar which had not been delivered to Almac's were found to be unfit on Monday morning. He stated that these 55 boxes had been in defendant's cooler since the time of delivery by Agar on Friday.
Carl Bressler, owner and founder of Agar, testified that he was present and had observed his son Allan unloading and checking the pork loins with a meat thermometer as they arrived from Klayman on December 3, 1971. He stated that he personally examined the pork and found it fit and in good condition. He indicated that approximately 40 boxes were inspected at random. Carl Bressler concluded his testimony by stating that it was the custom and usage of the meat industry to allow a buyer of pork products to reject the goods on the same day they were tendered but not later than the following morning. He further stated that it was an industry policy that when pork products were signed for and placed in the cooler of the buyer, the products became the property of the buyer.
Samuel David testified that he too was familiar with the customs and usages prevalent in the meat industry, but that it was his understanding that in the event the product was discovered to be unfit after delivery, complaint could be made to the supplier within a reasonable time after discovery. He also disputed the statement of Carl Bressler that according to custom and *142 usage of the trade, the buyer becomes the owner of the product when it is delivered and placed in the buyer's cooler.
The defendant contends that the trial justice misconceived both the evidence and the law applicable to the evidence. In effect defendant takes the position that the testimony by Mr. David that the pork was placed in defendant's cooler almost immediately upon arrival in Providence on December 3, 1971, and the testimony that the 55 boxes of pork which never left the cooler were unfit on Monday, December 6, necessarily requires the conclusion that the product was not merchantable at the time of delivery.
The trial justice found that the pork was of good and merchantable quality when received by plaintiff on December 3, and that it was in the same good merchantable condition when received by defendant later the same day. It is well settled that the findings of a trial justice sitting without a jury will not be disturbed on appeal unless the trial justice was clearly wrong or has overlooked or misconceived material evidence. Engelhardt v. Bergeron, 113 R.I. 50, 317 A.2d 877 (1974) ; Jackson v. Quinlan, 111 R.I. 701, 306 A.2d 185 (1973).
We have carefully reviewed the record before us, and we conclude that defendant has failed to establish that the trial justice was clearly wrong or that he overlooked or misconceived material evidence. It is apparent that the trial justice gave great weight to the testimony of Carl Bressler, plaintiff's witness, as to the condition of the pork products on receipt from Klayman in Boston just prior to shipping them to defendant in Providence. The trial justice also noted that the goods were transshipped immediately and that other buyers of the remaining 300 boxes of pork received from Klayman were apparently satisfied with the condition of the pork.
In our opinion this is sufficient evidence on which the trial justice could conclude that the pork was of merchantable quality on arrival in Boston and was thereafter shipped to defendant in Providence under conditions which preclude any conclusion of deterioration by the time of delivery. Moreover, we note that there is no evidence in the record as to the circumstances surrounding the storage of the pork from the time of delivery to Almac's on Saturday to the time of the complaints of its unmerchantability on Monday. Since the findings of the trial justice were based on competent evidence, his findings will not be disturbed on appeal.
The defendant also contends that the trial justice misconceived the law. In support of this contention, it directs our attention to provisions of the Uniform Commercial Code, G.L.1956 (1969 Reenactment) §§ 6A-2-601 and 6A-2-602. These sections set forth the buyer's right to reject nonconforming goods. Here, since the trial justice found that the pork was merchantable on delivery to the defendant and since this finding is supported by competent evidence, there is no showing that the plaintiff was ever in breach of his contract. See Strauss v. West, 100 R.I. 388, 216 A.2d 366 (1966). The defendant, therefore, has no remedy under the Uniform Commercial Code, and his contention that the trial justice committed an error of law is without merit.
The defendant's appeal is denied and dismissed, the judgment appealed from is affirmed, and the cause is remanded to the Superior Court. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1535230/ | 235 Pa. Super. 352 (1975)
Commonwealth
v.
Diaz, Appellant.
Superior Court of Pennsylvania.
Submitted December 6, 1974.
June 24, 1975.
*353 Before WATKINS, P.J., JACOBS, HOFFMAN, CERCONE, PRICE, VAN DER VOORT, and SPAETH, JJ.
John W. Packel, Assistant Defender, and Vincent J. Ziccardi, Defender, for appellant.
Marianne E. Cox, Mark Sendrow, and Steven H. Goldblatt, Assistant District Attorneys, Abraham J. Gafni, Deputy District Attorney, and F. Emmett Fitzpatrick, District Attorney, for Commonwealth, appellee.
OPINION BY VAN DER VOORT, J., June 24, 1975:
Appeal is taken to this Court from denial of appellant's motion to dismiss indictment and pursuant to certification of the case to us by the lower court and our allowance of this interlocutory appeal.
The facts are that appellant appeared before Judge Thomas SHIOMOS, sitting in the Philadelphia Municipal Court, on April 18, 1974, for a preliminary hearing upon charges of attempted rape, kidnapping, indecent assault, terroristic threats, and simple assault.[1] He purported to enter a plea of guilty to attempted rape to a bill of indictment by signing his name after the following words written *354 upon the magistrate's transcript: "Preliminary Hearing and Grand Jury waived (plea negotiated) defendant plead guilty to attempted rape." The judge thereupon sentenced him to five years probation. At said preliminary hearing, there of course had not yet been written any bill of indictment, although there is mention of appellant's desire to waive presentment of indictment to the grand jury. On application of the Commonwealth the judge discharged appellant as to the charges other than attempted rape.
Shortly thereafter it appeared to Judge SHIOMOS that the court lacked jurisdiction to accept a guilty plea and impose sentence. On April 22, 1974, a new complaint was made before Judge SHIOMOS and he issued a warrant for the re-arrest of appellant. On or about April 23, 1974, appellant appealed from the judgment of sentence to our Court;[2] he also filed a habeas corpus petition to the Philadelphia County Common Pleas Court. On April 24, 1974, Judge SHIOMOS vacated the guilty plea and the sentence of April 18, 1974. On April 29, 1974, appellant moved the lower court to dismiss the complaint and quash the re-arrest warrant; these were denied. On June 10, 1974, appellant was indicted for the crimes above stated. On September 23, 1974, appellant moved to suppress testimony and to dismiss the indictment. It is Judge Lisa RICHETTE'S denial of appellant's motion to dismiss the indictments which is the subject of this appeal.
The sole question which we will consider is appellant's argument that his entry of a guilty plea, and its acceptance by the court, precludes later prosecution for the same offense. Appellant's position brings into question the issue of jurisdiction existing in the lower court at the time of entry of the guilty plea. Therefore, we shall first examine *355 the function of a grand jury indictment and a defendant's privilege to waive it, and secondly, jurisdiction of the court.
Article I, Section 10 of the Pennsylvania Constitution provides that no person shall be proceeded against except by indictment. We have referred to grand jurors as a body who "deliberate in their historic role of protecting individuals from arbitrary and overzealous prosecutions in cases lacking sufficient foundation." Commonwealth v. Phillips, 208 Pa. Super. 121, 129, 220 A.2d 345 (1966). Not only is a grand jury indictment a protection for the individual charged, it is also an embodiment of the charge upon which a trial court may ground its deliberation. The indictment thus becomes the foundation for the court's subject-matter jurisdiction.
A defendant may waive his Constitutional right to have an indictment presented to the grand jury, the procedure being that "[t]he waiver shall be endorsed on the bill of indictment and signed by the defendant and his attorney, if any." Pennsylvania Rule of Criminal Procedure 215(a), formerly Act of 1907, April 15, P.L. 62, Sec. 1 (19 P.S. § 241). Thus a district attorney's bill of indictment, with defendant's waiver endorsed thereon, takes the place of an indictment returned by the grand jury. See Commonwealth v. Howard, 210 Pa. Super. 284, 289 A.2d 223 (1967), for the statement of this principle under the former provisions of 19 P.S. § 241.
There is nothing in our Rules of Court which prevents a guilty plea from being entered at preliminary hearing. There is likewise nothing which precludes a hearing court from accepting defendant's waiver of indictment. But in order to be consistent with the Constitutional provision that there exist a bill of indictment, with Rule of Criminal Procedure 215 regarding waiver with defendant's endorsement, with case law regarding subject-matter jurisdiction, and with Rules of Criminal Procedure 141 and 143 regarding the function of a preliminary *356 hearing and the establishment of a prima facie case and possible disposition thereat, we hold that a bill of indictment or an indictment is a necessary concommitant to subject-matter jurisdiction before a sentence may be imposed for offenses in court cases. The duty of a judge presiding as an issuing authority is to hear the charges against a defendant and to determine whether or not a prima facie case is made out. If he determines that one has been made out he holds the defendant for court, then the posture of the case against the defendant takes on a new stance, where the existence of a bill of indictment or an indictment is necessary to properly delineate the charges. Indeed, should the defendant, as here, indicate a willingness to plead guilty and waive presentment, he should be held for court pursuant to Rule of Criminal Procedure 143 so that a bill of indictment may be prepared for the endorsement of defendant's waiver on it.
A guilty plea waives all nonjurisdictional issues. See Commonwealth v. Allen, 443 Pa. 447, 277 A.2d 818 (1971) and Commonwealth v. Tolbert, 450 Pa. 149, 299 A.2d 252 (1973). But ". . . lack of subject-matter jurisdiction can never be waived; it may be raised at any stage in the proceedings by the parties or by a court on its own motion." Commonwealth v. Little, 455 Pa. 163, 167, 314 A.2d 270, 272 (1974). In the instant case, appellant's guilty plea could not waive the jurisdictional defect of a lack of a bill of indictment.
We therefore hold that the acceptance of guilty plea and sentencing were a nullity, the court lacking jurisdiction. In the absence of an accusation sufficient to bring a case within the jurisdiction of the court imposing sentence, there can be no sentence, and this deficiency may not be waived. See Commonwealth ex rel. Fagan v. Francies, 53 Pa. Super. 278 (1913). The nullity of these proceedings against appellant was correctly perceived and they were properly vacated. Jeopardy did not attach because the Court did not have jurisdiction; consequently, *357 appellant's contention that the proceedings now lodged against him, evidenced by indictments, place him twice in jeopardy, is without merit.
Appellant further argues that Pa. R. Crim. P. 1100 (e) has been violated in that trial on the charges here in question did not proceed within ninety (90) days (now one hundred twenty (120) days) after our Order remanded the case to the trial court in May of 1974. Appellant mistakenly construes our remand to be an Order for a new trial. It did not have the effect of ordering a retrial for the reason especially that there has as yet been no trial. Such delay as has occurred in the trial upon the instant charges has been brought about by actions initiated by appellant and is attributable to him.
Order affirmed and case remanded for further proceedings upon the indictment.
JACOBS and SPAETH, JJ., concur in the result.
NOTES
[1] These are violations of the "Crimes Code," Sections 901, 2901, 3126, 2706 and 2701, Title 18, Consolidated Purdon's Statutes Annotated.
[2] In the Superior Court of Pennsylvania, No. 879, October Term, 1974; the case was ordered remanded to the lower court on May 2, 1974. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1535236/ | 234 Pa. Super. 486 (1975)
Leach, Appellant,
v.
Philadelphia Saving Fund Society et al.
Superior Court of Pennsylvania.
Argued March 18, 1975.
June 24, 1975.
*488 Before WATKINS, P.J., JACOBS, CERCONE, PRICE, VAN DER VOORT, and SPAETH, JJ. (HOFFMAN, J., absent).
S. Allen Needleman, with him Joel D. Caney, Barry L. Kratzer, and Needleman, Needleman, Tabb & Eisman, for appellant.
Leonard C. Homer, with him John J. Tinaglia, and Ballard, Spahr, Andrews & Ingersoll, for appellee, The Philadelphia Saving Fund Society.
C.M. Leibson, for amicus curiae.
OPINION BY JACOBS, J., June 24, 1975:
This is an appeal by plaintiff Omega Leach from a summary judgment entered in favor of appellee, Philadelphia Saving Fund Society.
The instant litigation arose from an incident which occurred on April 26, 1967, when the appellant was under the employ of Leonard Shaffer Associates, then engaged under contract in the remodeling of premises located at 1812-14 Chestnut Street in Philadelphia. While the appellant was working on the premises, a plaster and wire *489 ceiling which had been installed some 26 years earlier suddenly fell, causing severe injuries to the appellant. The appellant instituted suit against Haverstick-Borthwick Co., which had designed and installed the ceiling in 1941; the appellee, Philadelphia Saving Fund Society [hereinafter P.S.F.S.], which was the record owner of the premises between 1936 and 1946 and which had engaged Haverstick-Borthwick to install the ceiling; McIntire, Magee & Brown, the owner of the premises between 1946 and 1950; and against Bausch & Lomb, Inc., the record title holder of the premises from 1950 through the date of the accident. A.L.K. Corporation, the lessee in possession of the premises on the date of the accident, and Leonard Shaffer Associates, the employer of the appellant, were joined as additional defendants.
The case is before us in a limited posture. The appellee, P.S.F.S., filed a motion for summary judgment[1] contending that as a matter of law under the Act of December 22, 1965,[2] no cause of action against it existed. The motion was granted and this appeal followed.
The statute upon which the appellee relies, which is similar to legislation recently enacted in over 30 jurisdictions, is designed to limit the time during which an action may be brought against persons responsible for deficiencies in improvements to real property. It states that
"[n]o action . . . to recover damages:
(1) [f]or any deficiency in the design, planning, supervision or observation of construction or construction of an improvement to real property, [or] . . .
(3) [f]or injury to the person . . . arising out of any such deficiency . . .
shall be brought against any person lawfully performing or furnishing the design, planning, supervision or *490 observation of construction, or construction of such improvement more than twelve years after completion of such an improvement."[3]
The appellant attacks the Act as unconstitutional under the Pennsylvania and United States Constitutions and also asserts that the Act, even if constitutional, does not protect the appellee, P.S.F.S., which stands in the position of a mere landowner. We shall address ourselves initially to the appellant's latter contention.
The primary rule of statutory construction is to ascertain and effectuate the intent of the legislature as expressed in the statute. Pa. Human Relations Comm'n v. Alto-Reste Park Cemetery Ass'n, 453 Pa. 124, 306 A.2d 881 (1973). In the instant statute the legislature included as the class of persons protected by the statute those persons "lawfully performing or furnishing the design, planning, supervision or observation of construction, or construction" of improvements to real property. The statute is not limited to persons performing professional or licensed services, and a court cannot supply such an omission to statutory language. Commonwealth v. Rieck Inv. Corp., 419 Pa. 52, 213 A.2d 277 (1965). Neither is the protected class identified by profession or occupation.[4] The Pennsylvania statute[5] identifies its class not by the *491 status or occupation of its members but rather by the contribution or acts done in relation to the improvement to the real property. Thus the statute immunizes from liability after 12 years "any" person lawfully performing or furnishing such activities. The word "any" is generally used in the sense of "all" or "every" and its meaning is most comprehensive. Belefski Estate, 413 Pa. 365, 196 A.2d 850 (1964).
The appellant herein would have us conclude that landowners as a group are not within the contemplation of the statute and thus cannot avail themselves of its protections. Arguing the converse, P.S.F.S. would have us conclude that landowners as a class are included and may always avail themselves of the statutory protection.[6] Both arguments are too broad in their scope. It is true that under Section 4 of the Act the owner of the improvement "at the time any deficiency in such an improvement constitutes the proximate cause of the injury" cannot take advantage of the statute. However, under any other circumstances a landowner who performs any of the enumerated activities is included in the protection of the statute. Where he is not an owner within the contemplation of Section 4, his status, be it architect, brick-mason, landscaper or landowner is immaterial. The only relevant test, as shown by a careful reading of the statute, is whether the individual in fact lawfully furnished or performed any of the listed activities.
A review of the record in this case reveals nothing about the nature of the activities, if any, performed by P.S.F.S. in relation to the ceiling installed by Haverstick-Borthwick. The complaint alleges that P.S.F.S. failed to make reasonable inspections, failed to make necessary repairs, failed to give appropriate warnings and permitted *492 a dangerous condition of which it knew or should have known to exist. No effort is made by the appellant to bring P.S.F.S. within the purview of Section 4 of the Act. The answer denies each allegation. Nowhere in the record is there any factual information relevant to the actual conduct or activity of P.S.F.S.; yet because the statute is drafted in terms of activity performed or furnished rather than the status of the defendant such information is essential before P.S.F.S. may avail itself of the protections of the statute.
Summary judgment may be entered only in the clearest of cases where there is not the slightest doubt as to the absence of an issue of material fact. Granthum v. Textile Machine Works, 230 Pa. Super. 199, 326 A.2d 449 (1974). The burden is upon the moving party, in this case P.S.F.S., to prove that no genuine issue of material fact existed. Prince v. Pavoni, 225 Pa. Super. 286, 302 A.2d 452 (1973). In the instant case no proof was offered which would permit the lower court to find that P.S.F.S. fell within the protections of the statute. The existence of that issue of material fact renders the summary judgment procedure premature and inappropriate. Granthum v. Textile Machine Works, supra.
P.S.F.S. having failed to bring itself within the class of persons protected by the statute in question, we need not consider the arguments directed towards the constitutionality of the statute.
Judgment reversed.
VAN DER VOORT, J., dissents.
HOFFMAN, J., did not participate in the consideration or decision of this case.
NOTES
[1] Pa.R.C.P. 1035.
[2] Act of December 22, 1965, P.L. 1183, § 1, et seq.; 12 P.S. § 65.1 et seq. (Supp. 1974-75).
[3] Act of December 22, 1965, P.L. 1183, § 1; 12 P.S. § 65.1 (Supp. 1974-75).
[4] Some states restrict coverage to architects, and professional engineers: Fla. Stat. Ann. § 95.11(10) (Supp. 1975-76); Mich. Comp. Laws Ann. § 600.5839 (Supp. 1974); Ohio Rev. Code Ann. § 2305.131 (1975); others expressly include other occupations such as surveyors: Ark. Stat. Ann. § 37-241 (Supp. 1973); Cal. Civ. Pro. Code § 337.1 (a) (1) (West Supp. 1975); Tenn. Code Ann. §§ 28-314 to 318 (Supp. 1974); Wash. Rev. Code Ann. §§ 4.16.300.320 (Supp. 1974); or repairmen: Ark. Stat. Ann. § 37-237 (Supp. 1973).
[5] The Pennsylvania statute is typical of the majority of statutes. These are collected as of 1969 in Comment, Limitation of Action Statutes for Architects and Builders Blueprints for Nonaction, 18 Cath.U.L. Rev. 361 (1969).
[6] The parties do not dispute that the Act excludes the owner of the improvement or any person in actual possession or control "at the time any deficiency in such an improvement constitutes the proximate cause of the injury." See § 65.4 of the Act. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1535244/ | 340 A.2d 45 (1975)
STATE of Vermont
v.
Mansur KERWIN.
No. 99-74.
Supreme Court of Vermont, Windsor.
June 3, 1975.
*46 Michael J. Sheehan, Windsor County State's Atty., White River Junction, for plaintiff.
Robert J. Kurrle, Montpelier, for defendant.
Before BARNEY, C. J., and SMITH, KEYSER, DALEY and LARROW, JJ.
SMITH, Justice.
The defendant, Mansur Kerwin, was found guilty by jury verdict on January 11, 1974, in the Vermont District Court, Windsor Circuit, Unit No. 6, on a four count criminal information charging him with recklessly engaging in conduct that placed other persons in danger of death and serious bodily injury in violation of 13 V.S.A. § 1025. From the verdict and subsequent judgment of the lower court the defendant has taken his appeal here.
On September 20, 1972, the four complainants, Roland J. Hamel, Franklin E. Crowe, Donald Cutter, Jr., and Edgar LaBelle were coon hunting, with a dog, at or near the residence of the defendant in a remote area of Norwich, Vermont. Coon hunting is done at night, and the complainants used a four wheel vehicle to follow a little used town road, with the Plott hound used for this hunt ranging ahead of the vehicle. When the hound trailed and treed a coon, the complainants would follow the dog and shoot the coon, using a .22 pistol or revolver. On the night in question they had just shot the second coon of the hunt when, according to their complaints, three shots from a small caliber firearm as well as two blasts from a shotgun were fired in their direction by some person unknown. These shots, according to the testimony of the complainants, sent bullets and pellets through the brush and trees, under which they immediately took cover. After shouting to make their presence known to whomever had fired the shots, they cautiously returned to their vehicle and continued to follow the back road until their way ahead was blocked by a vehicle parked in the narrow roadway.
This vehicle turned out to be a state vehicle used by the defendant, who lived with his wife and then visiting son in a trailer located nearby. A confrontation took place between the complainants and the defendant, who was armed with a pistol, backed up by his son, who carried a shotgun. This confrontation became heated and argumentative.
The defendant apparently believed that the complainants were illegally hunting deer on his premises. He admitted firing the shots that they had heard, but denied that the shots were fired at them, contending *47 that they were fired at a forty-five degree angle into the air. Eventually the defendant moved his vehicle, the complainants left and related the incident to a game warden and then to a state trooper. These officers went to the trailer of the defendant about midnight and took statements from him regarding his version of the incident.
What complicates the issues before us is that the defendant was charged with two separate offenses. His first of two jury trials was also for a 13 V.S.A. § 1025 offense, the complaint being based upon the charge that he stuck a pistol in the stomach of Crowe, and threatened him, at the time that the complainants and the defendant had their encounter near the parked vehicles. This trial, in which the defendant was represented by able counsel, resulted in a verdict of not guilty.
The case now before us for consideration was based on the charges for firing the shots. The defendant, possibly for financial reasons or out of the belief that an acquittal on one charge resulting from the September 20th incident would insure an acquittal on another, chose to represent himself. Self representation, permissible under the law, rarely provides competent and lawyer-like representation. Although the trial court must be commended for its careful instructions to the defendant on how to conduct his case, the record discloses that this self representation, to a large extent, is responsible for the questions raised here. After the guilty verdict was returned, the defendant employed counsel for the purpose of presenting various motions to the trial court as well as the presentation of this appeal.
The first question is rather novel. The defendant attacks himself, contending that his pro se performance constituted ineffective assistance of counsel denying him the right to a fair trial. This and other questions presented need not be considered, as our resolution of other issues will require a reversal of the judgment below.
The defendant complains that the State's Attorney propounded prejudicial questions during his cross-examination.
"Q. You testified that you have a temper don't you?
A. I don't know a human being that doesn't.
Q. But you have an unusual one?
A. No.
Q. Isn't it twice you threatened me, twice this afternoon."
The reference in the last question was apparently to an alleged conversation between the defendant and the State's Attorney outside the courtroom. Although the question was not objected to by the defendant, it was, in effect, testimony by the State's Attorney as to acts of the defendant which would have been inadmissible under proper objection and was prejudicial to the defendant.
The record of the prior trial ending in defendant's acquittal is before us and shows that there the trial court had scrupulously kept from the jury any evidence of the September 20th incident that did not relate to the "gun in the stomach" charge. The defendant asserts that in the second trial the court allowed references to the earlier charge for pointing a gun at one of the complaining witnesses to be admitted into evidence to his prejudice.
One of the complaining witnesses, Mr. Hamel, in answer to the State's Attorney's question, "Do you know how long you were in front of the Kerwin residence?" replied, "Ten or fifteen minutes. It felt like a lot longer with that pistol pointed at you, incidentally there was another man there with a shot gun." Another reference to the subject of the first trial came when, under cross-examination, the state trooper, when asked what he investigated, responded, "Four people were shot at and when they tried to get out of the woods they had a pistol stuck in the stomach of one of them."
*48 The defendant was aware that the introduction of evidence relative to the first charge upon which he had been tried and acquitted was improper. While his objections to this testimony were couched in rather inept language, they were sufficient to apprise the court of the evidence objected to and the reason for the objections. The trial court overruled the objections. Such rulings were in error, for the defendant had been acquitted of the first charge, and evidence of it was not proper for the consideration of the jury trying him on the second charge.
There can be no doubt that such testimony influenced the thinking of the members of the jury. They returned some time after the original charge had been given them by the trial court, and the foreman inquired, "I think the question is, can we use the incident that occurred at the cars in the road as evidence to find guilt or innocence of the defendant?" At that time the trial court correctly charged that they could not consider the incident of the gun in the stomach.
Whether or not this supplementary instruction to the jury could remedy the wrongful admission of evidence and how the jury would have resolved the issue of the defendant's guilt or innocence in the absence of such evidence is subject to conjecture. State v. Ovitt, 126 Vt. 320, 324, 229 A.2d 237 (1967); State v. Garceau, 122 Vt. 303, 307, 170 A.2d 623, 625 (1961). "The harm, once done, is not necessarily erased nor the error corrected by a subsequent charge to the jury to disregard it." State v. Garceau, supra. This Court found such erasure or correction in State v. Rebideau, 132 Vt. 445, 448-49, 321 A.2d 58 (1974), where the prejudicial testimony was but one isolated, improper answer in a long trial in which there was, independent of such testimony, overwhelming evidence of guilt, and the jurors had been properly instructed at a much earlier time. We will not do so here under the differing circumstances that prevailed at the trial below.
Furthermore, this trial was not otherwise error free.
During the cross-examination of Mrs. Kerwin, the State offered in evidence a statement given by Michael Kerwin, son of the defendant, adopting the rather unusual procedure of first reading the statement and then offering it in evidence. This was objected to by the defendant as being hearsay. At the time of the first trial, Michael Kerwin had been present and had testified; however, the statement was not admitted because deemed "confusing." The defendant had requested that Michael be subpoenaed in this second trial, Michael being stationed at a military post at some distance from Vermont, and the request was refused.
We think that the statement of Michael, as here admitted, was hearsay, pure and simple, he not being under oath or having been subject to the test of cross-examination. In re Petition of Trustees of Westminister, 108 Vt. 352, 359, 187 A. 519 (1936).
The defendant next objects to the admission of testimony by Mr. Crowe. Mr. Crowe testified that a Dr. Janiewicz, for whom the defendant worked as a meat inspector in the State Department of Agriculture, asked him if he would attempt to get the charges against the defendant dropped if the defendant would apologize to him. While it does not appear that the defendant made an objection to such evidence as hearsay, which it clearly was, he did request time to call Dr. Janiewicz to have him appear as a witness. The court denied this request as immaterial, but allowed the testimony of Crowe, relative to his conversation over the telephone with Dr. Janiewicz, to remain on the record. In a post-trial hearing based on the defendant's motion for a new trial, Dr. Janiewicz denied telling Crowe that the defendant admitted his guilt and would apologize.
As the State argues, it is true that many of the claimed errors in the trial advanced *49 here were not properly objected to by the defendant. However, the defendant did make his objections known to the introduction of evidence relative to the "gun in the stomach" incident upon which he had been formerly tried and acquitted, as well as to the admission of the statement given by his son to the state police officer. All of such objections should have been sustained.
The record before us, with its combination of errors and irregularities, convinces us that the defendant did not have a fair trial, and that his rights were impaired to his legal detriment. State v. Ovitt, supra, 126 Vt. at 328, 229 A.2d 237.
Judgment reversed and the cause remanded for a new trial. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/419201/ | 708 F.2d 372
Marshall J. ORLOFF, M.D., Plaintiff-Appellant,v.Max CLELAND, as Administrator, of the VeteransAdministration, et al., Defendants-Appellees.
No. 80-5597.
United States Court of Appeals,Ninth Circuit.
Argued and Submitted Dec. 9, 1981.Decided April 25, 1983.
Charles H. Dick, MacDonald, Halsted & Laybourne, San Diego, Cal., for plaintiff-appellant.
Peter W. Bowie, Robert E. Noel, Asst. U.S. Attys., San Diego, Cal., for defendants-appellees.
Appeal from the United States District Court for the Southern District of California.
Before: FLETCHER, and ALARCON, Circuit Judges, and SOLOMON,* District Judge.
FLETCHER, Circuit Judge:
1
Orloff, a former part-time physician employee of a Veterans' Administration (VA) hospital, brought suit against the VA Administrator and various other individuals, in their official capacities, for violations of the Veterans' Preference Act and the Due Process Clause of the Constitution. He alleged that the VA terminated his employment without regard to the procedural requirements of either the Veterans' Preference Act or the Due Process Clause of the Constitution. He further alleged that public disclosure of the VA's charges against him constituted a deprivation of a protected liberty interest without due process. Both parties moved for summary judgment. The district court awarded summary judgment to the defendants, holding that the requirements of the Veterans' Preference Act need not be met and that the requirements of the Due Process Clause had substantially been met. We reverse.
FACTS
2
The Veterans' Hospital in San Diego employed Orloff as a part-time staff physician. His initial appointment began on September 16, 1973, for a term not to exceed thirteen months. The VA renewed his appointment for successive periods until it terminated him on November 3, 1978.
3
Orloff received notice of his termination of part-time employment effective July 29, 1978, by a letter dated July 3, 1978. The letter stated, as reasons for the termination, that an investigation at the Veterans' Hospital had revealed that Orloff had assigned VA hospital physicians to visit the Kern Medical Center on behalf of a private corporation, and that Orloff, himself, had visited Kern Medical Center on behalf of a private corporation when he was supposedly on duty at the Veterans' Hospital and that Orloff's records indicated that he had listed time spent in surgery at the University Hospital during the same period he was credited with duty at the Veterans' Hospital. The letter further noted that Orloff had no entitlement in the VA to any further review of the termination.
4
On July 17, 1978, Orloff wrote to Max Cleland, Chief Administrator of the Veterans Administration, requesting reconsideration of his termination. Shortly thereafter, the VA extended Orloff's termination date from July 29, 1978 to August 31, 1978. In August, the VA extended the termination date indefinitely to permit the VA General Counsel's Office to review the proposed termination. On November 1, 1978, Cleland approved Orloff's termination and Orloff's appointment terminated on November 3, 1978. The VA withheld $3,258.98 from his final paycheck, which is the amount of money the agency calculated that Orloff received for services he did not render. Following Orloff's termination, various newspapers reported the circumstances surrounding his discharge.
STANDARD OF REVIEW
5
Summary judgment is proper only when, viewing the evidence in the light most favorable to the nonmoving party, there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56; Hutchinson v. United States, 677 F.2d 1322, 1325 (9th Cir.1982).
DISCUSSION
6
* The district court concluded that although the procedural requirements of the Veterans' Preference Act did not apply to Orloff, he had been afforded due process under both the Veterans Preference Act and the Due Process Clause of the United States Constitution. As discussed below, we do not agree with the district court that, even if we assume a property or liberty interest, there is sufficient evidence in the record to determine conclusively that the VA afforded Orloff procedural due process. Because of the conclusion we reach on this issue, we must reach the additional questions as to whether: (1) the procedural protections of the Veterans' Preference Act apply to Orloff; or (2) a liberty or property interest was implicated by the termination in the circumstances of this case.
II
A. The Veterans' Preference Act
7
Orloff argues that the manner of his termination violated the procedural protections of the Veterans' Preference Act. See 5 U.S.C. Sec. 7513.1 Orloff is a veteran and would ordinarily be entitled to the protections of the Act. 5 U.S.C. Secs. 2108(1)(A) and 2108(3)(A). The VA argues that these procedural requirements do not apply because the Administrator appointed Orloff pursuant to a statute authorizing the employment of part-time physicians "without regard to civil service or classification laws." 38 U.S.C. Sec. 4114(a)(1). We agree with the VA. The plain language of the statute states that civil service laws shall not apply to part-time physicians employed by the VA and the Veterans Preference Act falls within the category of "civil service laws."2
8
Orloff argues that Congress meant the phrase "civil service laws" in the statute to mean the "classification" laws.3 See 5 U.S.C. Secs. 5101 et seq. and 5331 et seq. But the plain meaning of the term "civil service" laws would encompass a scope of laws broader than just the classification laws. See, e.g., 5 U.S.C. Sec. 3301 et seq. If Orloff's interpretation had been Congress's meaning, it is inexplicable why they would use the phrase "civil service or classification laws" if they thought the terms were equivalent. See Tabor v. Ulloa, 323 F.2d 823, 824 (9th Cir.1963) (Congress, in enactment of statute, is presumed to have used no superfluous words).4
9
Nevertheless, Orloff argues that his interpretation is supported by the legislative history of the Act. See Heppner v. Alyeska Pipeline Service Co., 665 F.2d 868 (9th Cir.1981) (discussion of the appropriateness of considering legislative history in interpretation of facially clear statute). The legislative history indicates that, when Sec. 4114 was enacted in 1946, the quality of health care provided by VA doctors concerned Congress. 91 Cong.Rec. 11656-65 (1945). It is true, as Orloff argues, that when Congress amended the statute in 1962 to include the phrase "civil service laws," it intended to give the VA authority to hire additional personnel on a fee-basis in order to obtain the services of qualified personnel without the constraints of the classification laws, which require equal pay for performances of similar jobs in the federal government. See 1962 U.S.Code Cong. & Admin.News 2101-03. Congress in adopting Sec. 4114 also wanted to give the Administrator authority to employ or discharge doctors without the usual time-consuming and detailed civil service procedures. 91 Cong.Rec. 111656-65. This purpose is consistent with a Congressional desire to free the Administrator of the procedural requirements of such statutes as the Veterans' Preference Act. It allows the Administrator to obtain more easily the services of highly qualified personnel and to release more easily unsatisfactory personnel. See Heppner, 665 F.2d at 871-72 ("When the statutory language together with the legislative history makes one interpretation overwhelmingly more plausible than a second interpretation, there is no necessity that the legislative history explicitly rule out the second interpretation").
10
Finally, we note that the regulations promulgated by the Office of Personnel Management (and formerly by the Civil Service Commission) make this exclusion of the Veterans Preference Act even more explicit by listing the Act as one of the various statutes which does not apply to appointments made pursuant to Sec. 4114(a). See 5 C.F.R. Sec. 752.401(c)(14).5 See also 5 C.F.R. Sec. 212.101(b). In reviewing the administrative interpretation given a statute by the enforcing agency, the agency interpretation is entitled to deference. See Udall v. Tallman, 380 U.S. 1, 16, 85 S.Ct. 792, 801, 13 L.Ed.2d 616 (1965); Faulkner v. Watt, 661 F.2d 809 (9th Cir.1981). We conclude that the procedural protections of the Veterans' Preference Act do not apply to part-time physicians, such as Orloff, hired by the VA under the authority of 38 U.S.C. Sec. 4114(a).
B. The Due Process Clause
11
The threshold inquiry we must make is whether the VA's actions deprived Orloff of an interest in property or liberty. Board of Regents v. Roth, 408 U.S. 564, 92 S.Ct. 2701, 33 L.Ed.2d 548 (1972).
1. Property Interest in the Appointment
12
To have a property interest in a governmental benefit, including employment, an individual must have an entitlement to the benefit. Id. at 577, 92 S.Ct. at 2709. Entitlements are created by "rules or understandings" from independent sources, such as statutes, regulations, and ordinances, or express or implied contracts. Id.; Perry v. Sindermann, 408 U.S. 593, 92 S.Ct. 2694, 33 L.Ed.2d 570 (1972).
13
An entitlement may spring from an understanding if the understanding is "mutually explicit." Board of Regents v. Roth, 408 U.S. at 577, 92 S.Ct. at 2709. Orloff argues that the nature of his employment relationship with the VA and his twenty years of service created such an understanding. See Stretten v. Wadsworth Veterans Hospital, 537 F.2d at 361, 367 (9th Cir.1976). The VA argues that because Orloff worked past the initial expiration date of his appointment, October 15, 1978, any property interest in that appointment expired and Orloff had no legitimate expectation of a continued appointment sufficient to amount to a property interest. We reject this contention. Despite the apparent expiration date of Orloff's contract there may have arisen an understanding of continued employment based on prior treatment of Orloff or other VA employees sufficient to constitute a de facto property interest under Perry v. Sindermann, 408 U.S. at 593, 92 S.Ct. at 2694. Furthermore, after the VA initially terminated Orloff on July 3, 1978, it twice postponed his termination, and the final termination occurred after the VA had extended his appointment. A property interest may have been created by: (1) the appointment initially terminated in July, despite the fact that the VA did not implement the termination decision until November; or (2) the indefinite extension of Orloff's appointment after the initial termination decision. There remain material factual disputes concerning whether a "mutually explicit" understanding arose. That question must be resolved by the district court on remand.
2. Liberty Interest
14
Orloff also argues that the public disclosure of the VA's charges against him infringed a constitutionally protected liberty interest. The Supreme Court has recognized that a liberty interest is implicated where "a person's good name, reputation, honor or integrity is at stake." Board of Regents v. Roth, 408 U.S. at 573, 92 S.Ct. at 2707. This court has stated:
15
In the context of Roth -type cases, a charge which infringes one's liberty can be characterized as an accusation or label given the individual by his employer which belittles his worth and dignity as an individual and, as a consequence is likely to have severe repercussions outside of professional life.
16
Stretten v. Wadsworth Veterans Hospital, 537 F.2d at 366. Thus, when the government dismisses an individual for reasons that might seriously damage his standing in the community, he may be entitled to notice and a hearing. Board of Regents v. Roth, 408 U.S. at 573 n. 12, 92 S.Ct. at 2707 n. 12. The accusations, however, must be publicized. See Bollow v. Federal Reserve Bank, 650 F.2d 1093, 1101 (9th Cir.1981), cert. denied, 455 U.S. 948, 102 S.Ct. 1449, 71 L.Ed.2d 662 (1982). Moreover, the accuracy of the charges must be contested. Vanelli v. Reynolds School District No. 7, 667 F.2d 773, 777 (9th Cir.1982).
17
Charges of "moral turpitude" such as dishonesty or immorality are sufficient to implicate a liberty interest. See id.; Stretten v. Wadsworth Veterans Hospital, 537 F.2d at 365-66; Gray v. Union County Intermediate Education District, 520 F.2d 803, 806 (9th Cir.1975). See also Board of Regents v. Roth, 408 U.S. at 573, 92 S.Ct. at 2707. The charges made by the VA against Orloff rise to this level. Orloff implicitly and explicitly disputes these charges of wrongdoing levelled at him by the VA. Material issues of fact remain concerning whether the VA publicized the reasons for Orloff's discharge.6 On the record before us, it is not possible to affirm the grant of summary judgment on this issue.
3. Property Interest in Salary
18
Orloff also contends that the VA's unilateral deduction of money from his final paycheck, without any hearing, apparently based on the VA's belief that Orloff did not earn the money, violated procedural due process. It is obvious that Orloff had a property interest in his salary. See Sniadach v. Family Finance Corp., 395 U.S. 337, 342, 89 S.Ct. 1820, 1823, 23 L.Ed.2d 349 (1969).
III
19
We next consider whether, if Orloff had a liberty or property interest at stake, he received procedural due process in the manner of his termination. The district court found that Orloff received notice of his imminent discharge, he had an opportunity to respond, the VA postponed the initial termination date twice to permit further investigation into his case, and he received notice of the adverse decision. The district court held that this sequence of events substantially fulfilled the requirements of due process. We disagree.
20
Due process is a flexible concept and its procedural requirements vary depending upon the particular deprivation. See Morrissey v. Brewer, 408 U.S. 471, 481, 92 S.Ct. 2593, 2600, 33 L.Ed.2d 484 (1972). The determination of what procedures satisfy due process depends upon an analysis of the particular case in accordance with the three-part balancing test outlined in Mathews v. Eldridge, 424 U.S. 319, 96 S.Ct. 893, 47 L.Ed.2d 18 (1976). The factors that must be considered are: (1) the private interest that will be affected; (2) the risk of an erroneous deprivation of that interest through the procedure used; (3) the fiscal and administrative burdens that any additional procedural requirements would entail. Id. at 335, 96 S.Ct. at 903. On the record before us, application of these principles to Orloff's situation does not compel the conclusion that the procedures employed by the VA to terminate Orloff comported with due process.
21
First, there is a strong presumption that a public employee is entitled to notice and an opportunity to be heard before being deprived of a liberty or property interest. Vanelli v. Reynolds School District No. 7, 667 F.2d at 778. There is no allegation or indication in the record that Orloff's continued presence at the Veterans Hospital constituted a threat to the welfare of patients or the smooth operation of the hospital. Cf. Stretten v. Wadsworth Hospital, 537 F.2d 361, 368-69 (9th Cir.1976) (charge of incompetence and inability to cooperate with other personnel). Moreover, the risk of an erroneous deprivation is substantial if Orloff is not given an opportunity to respond to the charges and confront the evidence before the termination. The balance between the fiscal burden on the government of continuing Orloff's employment pending a hearing and Orloff's monetary loss and potential damage to his reputation may weigh in favor of a pretermination hearing. See Mathews v. Eldridge, 424 U.S. 319, 96 S.Ct. 893, 47 L.Ed.2d 18. On the record before us, we cannot agree that a post-termination hearing is clearly sufficient.
22
Even were we to assume that a post-termination hearing would suffice, there remain factual disputes concerning whether the VA accorded Orloff any hearing at all. We note that the initial notice of termination stated specifically that he had no appeal within the VA. It is unclear, even after the VA extended the termination date, whether the VA actually reviewed the merits of the termination decision or merely assured itself that its own procedural requirements, if any, had been followed. There is no indication in the record that Orloff was invited to submit evidence, even in the form of affidavits, on his behalf or to examine the evidence against him. Cf. Ong v. Tovey, 552 F.2d 305, 308 (9th Cir.1977) (meetings held by the Public Health Service satisfied due process requirement that the decision-maker have enough data before him that his decision to terminate is not arbitrary, capricious, or unfair). Moreover, although due process does not always require a full adversary hearing, see Heath v. Redbud Hospital District, 620 F.2d 207, 212 (9th Cir.1980), it is unclear without first determining the nature of Orloff's property or liberty interest whether such a hearing would be warranted in these circumstances, or to what extent various procedural safeguards, e.g., the right to confront and cross-examine witnesses, should be sacrificed.
23
The central meaning of procedural due process is that parties whose rights are to be affected are entitled to be heard at a meaningful time and in a meaningful manner. Vanelli, 667 F.2d at 779-80; Fuentes v. Shevin, 407 U.S. 67, 92 S.Ct. 1983, 32 L.Ed.2d 556 (1972). On the record before this court, it is impossible to determine whether the VA afforded Orloff a meaningful opportunity to be heard in response to the charges made against him.
24
With regard to the deductions from Orloff's salary made by the VA, the district court must also balance the relevant interests to determine the appropriate procedural protections that Orloff should be afforded. See Sniadach v. Family Finance Corp., 395 U.S. 337, 89 S.Ct. 1820, 23 L.Ed.2d 349; Mathews v. Eldridge, 424 U.S. 319, 96 S.Ct. 893, 47 L.Ed.2d 18; Elliott v. Weinberger, 564 F.2d 1219, 1230 (9th Cir.1977), aff'd in part and rev'd in part on other grounds sub nom. Califano v. Yamasaki, 442 U.S. 682, 99 S.Ct. 2545, 61 L.Ed.2d 176 (1979). The VA has unilaterally determined that Orloff breached his employment agreement and awarded itself judgment. From the record, it does not appear that the VA provided Orloff with either a prior or a post-termination hearing on this issue.
25
We hold that if Orloff did have a liberty or property interest in his continued appointment, material issues of fact remain concerning whether the procedures employed in this case to terminate him comported with due process. On remand, the district court must (a) determine what procedures the VA used to review the termination decision; and (b) apply the three-part balancing test of Mathews to determine whether the procedures were sufficient in this context. Because Orloff did have a property interest in his wages, the district court must determine the procedural protections that the VA is required to afford, in order that Orloff have an opportunity to protect that interest.
CONCLUSION
26
Material issues of fact exist as to whether: (1) Orloff had a property interest in his appointment; (2) the manner of Orloff's termination implicated a liberty interest; and (3) if, he had a protectible interest, the VA accorded Orloff procedural due process upon his termination. The grant of summary judgment is REVERSED and the case is REMANDED to the district court for further proceedings consistent with this opinion.
*
Honorable Gus J. Solomon, United States District Judge for the District of Oregon, sitting by designation
1
At the time of his discharge, these protections included at least thirty days advance written notice stating the reasons for the proposed personnel action, a reasonable time for answering the notice and for furnishing affidavits in support of the answer, and notice of an adverse decision. 5 U.S.C. Sec. 7512(a). The Civil Service Reform Act of 1978, Pub.L.No. 95-454, Title II, Sec. 204(a), 92 Stat. 1136, became effective January 13, 1979, and it modified the procedural protections of a preference eligible employee. See 5 U.S.C. Sec. 7513
2
The adverse action procedure for the Department of Medicine and Surgery is set forth in 38 U.S.C. Sec. 4110. These procedural rights are applicable only to physicians appointed under the authority of 38 U.S.C. Sec. 4104(1). They do not apply to part-time appointments, such as Orloff's, under Sec. 4114(a)(1). See Stretten v. Wadsworth Veterans Hospital, 537 F.2d 361, 363-65 (9th Cir.1976)
3
In 1946, when Congress established the Department of Medicine and Surgery in the VA, the statute authorized the appointment of part-time physicians "without regard to the Classification Act of 1949." Congress amended the statute in 1962 to provide that part-time physicians could be employed "without regard to civil service or classification laws." 38 U.S.C. Sec. 4114
4
Orloff also argues that the use of both terms is inconsistent. He begins with the premise that "civil service" laws are all those laws codified in Title 5. He then argues that it was redundant for Congress to include the phrase "classification laws," in Sec. 4114 because it is also codified in Title 5. Moreover, he argues that several statutes codified in Title 5 have been applied to persons appointed pursuant to 38 U.S.C. Sec. 4114(a)
It is not necessary, however, for us to decide the exact definition and scope of the term "civil service laws." It may be that all laws codified in Title 5 are not included in this definition, whether by the express language of particular statutes or because their history, purpose, and design indicate an intent not to include them in Sec. 4114(a)'s definition of "civil service" laws. We hold only that the Veteran's Preference Act is encompassed within the definition.
5
The Civil Service Commission formerly had authority to prescribe and enforce regulations for the administration of the Veterans' Preference Act. This authority is now vested in the Office of Personnel Management, see 5 U.S.C. Sec. 1302, which also has the authority to prescribe regulations pertaining to the adverse action procedures applicable to preference eligibles. See 5 U.S.C. Sec. 7504
6
The deposition of one hospital administrator, submitted on the motion for summary judgment, indicates that he did speak with the press about Orloff's termination. It is unclear what he actually told the press. This evidence, together with the submission of newspaper articles reporting the circumstances of the discharge and charges of wrongdoing, is sufficient to create a material factual dispute concerning whether the VA publicized the reasons for the discharge
We reject the VA's argument that we may not consider the newspaper articles because they are not properly authenticated. Newspaper articles are self-authenticating. Fed.R.Evid. 902(6). | 01-03-2023 | 08-23-2011 |
https://www.courtlistener.com/api/rest/v3/opinions/1535218/ | 5 B.R. 164 (1980)
In re William A. JACKSON, d/b/a Jackson Jewelers, Bankrupt.
Sam J. McALLESTER, III, Trustee, Plaintiff,
v.
William A. JACKSON and First American National Bank of Nashville, Defendants.
Bankruptcy No. 79-30477.
United States Bankruptcy Court, M.D. Tennessee.
June 30, 1980.
*165 Sam J. McAllester, III, Nashville, Tenn., for plaintiff.
Sterling Minor, Nashville, Tenn., for defendant William A. Jackson.
Keith B. Simmons, Nashville, Tenn., for defendant First American National Bank.
MEMORANDUM
RUSSELL H. HIPPE, Jr., Bankruptcy Judge.
This adversary proceeding between the trustee and a bank, which asserts perfected security interests in the bankrupt's inventory, equipment, and fixtures, presents what appears to be a question of first impression regarding the assignment of security interests under the Uniform Commercial Code (hereinafter referred to as the Code). The bank made three loans to the bankrupt, the sole proprietor of a small retail jewelry store. The initial loan was guaranteed by the Small Business Administration (hereinafter referred to as SBA). At the closing of that loan, the bankrupt executed a promissory note and two security agreements, one granting a security interest in inventory and the other in equipment and fixtures. Both security agreements contained future-advance clauses. A financing statement was filed with the secretary of state accurately describing the types of collateral and listing the bankrupt as the debtor and the bank as the secured party. Subsequent to making the SBA-guaranteed loan, the bank made two additional loans to the bankrupt which were evidenced by separate notes. Neither of these loans was guaranteed by SBA. Pursuant to the future-advance clauses in the security agreements, these loans also were secured by the bankrupt's inventory, equipment, and fixtures. The trustee readily concedes that as long as the bank held the notes and the security agreements it had valid and properly perfected security interests in the collateral securing repayment of all three loans.
When the bankrupt defaulted on his obligations, the bank called upon SBA to honor its guaranty. At the request of SBA, the bank transferred to it the first note and the security agreements. The bank also executed an SBA assignment form by which it transferred and assigned to SBA "all of its right, title and interest" in those instruments. The bank also executed a statement which was filed with the secretary of state containing a block captioned "Assignment," which was checked and included the following printed language:
The Secured Party certifies that the Secured Party has assigned to the Assignee whose name and address is shown below. [sic] Secured Party's rights under the financing statement bearing the file number shown above in the following property:
The name and local address of SBA were entered. No property was described. Accurate reference to the original financing statement apparently was made. Shortly after this statement was filed, the bankrupt filed his voluntary petition.
By agreement between the parties, the inventory, equipment, and fixtures have been sold. The proceeds were applied to pay in full the SBA-guaranteed loan. The bank insists that the balance should be applied toward payment of the two non-SBA notes which it holds. The trustee insists that his interest in these funds is superior to that of the bank.
*166 It is the position of the trustee either that the bank transferred all of its security interests to SBA or that the bank's security interests became unperfected by virtue of the filing of the statement of assignment. The bank insists that it had no intention of adversely affecting the non-SBA loans by the transaction with SBA and asserts that in assigning to SBA its rights under the security agreements and financing statement it neither disposed of nor lost its perfected status with respect to the security interests in the collateral securing payment of the two non-SBA notes which it continued to hold.
The parties have not cited and this court has been unable to locate a reported decision under the Code which deals with this particular situation.
The basic position of the bank, as viewed by the court, is that an absolute, unqualified assignment of a security agreement and financing statement does not of itself divest a creditor of security interests in the collateral described in those instruments. The decision which is most supportive of the bank's position is Abrams v. Brown, 122 N.J.Eq. 563, 195 A. 810 (1937), a pre-Code case involving a chattel mortgage which secured payment of more than two hundred separate notes. The mortgage and some of the notes were transferred to Brown by an absolute, unqualified assignment. Abrams became the holder of the balance of the notes. The New Jersey court noted the general rule that the assignment of a secured note carries with it the security but held that when the entire legal interest in a chattel mortgage is assigned to the holder of one or more of the notes secured thereby the assignee holds the mortgage primarily for his benefit but the other notes continue to be secured thereby, although in a secondary position. Thus the court concluded that it was incumbent upon the assignee to give to the holder of the other notes notice of any proposed disposition of the collateral.
Tennessee courts have recognized the general rule that the assignment of a secured note carries with it the security for its payment. Hamilton v. Fowler, 99 F. 18 (6th Cir. 1899); Neely v. Clarence Saunders Co., 169 Tenn. 30, 81 S.W.2d 390 (1935); Clark v. Jones, 93 Tenn. 639, 27 S.W. 1009 (1894); McCallum v. Jobe, 68 Tenn. (9 Baxter) 168 (1877); Cleveland v. Martin, 39 Tenn. (2 Head) 128 (1858); Hudson v. Evans, 21 Tenn.App. 535, 113 S.W.2d 407 (1938); Jackson Bros. v. Harpeth Nat'l Bank, 12 Tenn.App. 464, cert. denied (1931). Although there does not appear to be any reported Tennessee decision which addresses the issue before the court in Abrams, this court is of the opinion that Tennessee courts would have reached the same result prior to the advent of the Code. The Code became effective in this state on July 1, 1964, and is codified as § 47-1-101 et seq. of the Tennessee Code. Does its adoption require a different result? In addition, in Abrams the court did not consider the rights in the collateral of the original debtor's general unsecured creditors. Thus this court also must determine whether the interests of such creditors as represented by the trustee affect the result.
In addressing these issues the court has turned initially to a law review article by David G. Epstein, now Dean of the Arkansas University School of Law. Epstein, Security Transfers by Secured Parties, 4 Ga.L. Rev. 527 (1970). This is not the first court to benefit from this article. See Empire Machinery Co. v. Union Rock & Materials Corp., 24 U.C.C. Rep. Serv. (West) 232 (Ariz.App. 1978). Although Dean Epstein addresses only the situation in which payment of a single debt is secured by a security interest evidenced by a single security agreement, he nevertheless reaches two general conclusions which are pertinent to resolving the issues before this court.
First, Dean Epstein concludes that the pre-Code general rule that the transfer of a secured note alone effected a transfer of both the note and its security is not altered by the Code. 4 Ga.L.Rev. at 540. Second, having noted that under pre-Code law the transfer of the security agreement alone was of no effect, he concludes that this result is not altered by the Code (with the exception of the repledge of pledged collateral *167 pursuant to § 9-207, which is not pertinent to this proceeding). 4 Ga.L.Rev. at 538, 540.
The application of these principles to the situation in which the same collateral secures payment of more than one obligation leads to the conclusion that the transfer of a security agreement would be of no effect unless and then only to the extent that the secured obligations were also transferred. As under pre-Code law, secured notes retained by the assignor continue to be secured by the collateral.
The Code makes a distinction between the security interest and the security agreement. The latter is defined in Code § 9-105(h) as "an agreement which creates or provides for a security interest," which in turn is given the basic definition in § 1-201(37) of "an interest in personal property and fixtures which secures payment or performance of an obligation." Thus by definition a security interest is inseparably linked to an obligation. The transfer of a security agreement by which security interests are created does not result in the transfer of any security interest. The security interest is transferred with the obligation. In this proceeding the security interest transferred to SBA was the interest in the collateral which secured payment of the SBA note. There was no transfer of the interests in the collateral which secured payment of the non-SBA notes which the bank continued to hold.
The court concludes therefore that the adoption of the Code does not change the result in Abrams v. Brown.
This conclusion does not dispose of the interest in the collateral asserted by the trustee. Even if the bank retained its security interests, the trustee will prevail under bankruptcy law and the Code if the security interests are not perfected.
The only mention in the Code of the assignment of security interests is in connection with the notice filing requirements. Section 9-302(2) provides that
[i]f a secured party assigns a perfected security interest, no filing under this chapter is required in order to continue the perfected status of the security interest against creditors of and transferees from the original debtor.
Thus, if the bank had transferred only the note to SBA, there would be no question but that payment of all three notes continued to be secured by perfected security interests in the collateral.
Section 9-405 basically provides that a "financing statement may disclose an assignment of a security interest in the collateral described in the statement" or a "secured party may assign of record all or a part of his rights under a [previously filed] financing statement" and after such disclosure "the assignee is the secured party of record." The official comments indicate that this provides a "permissive device whereby a secured party who has assigned all or part of his interest may have the assignment noted of record" and suggest that the assignor might wish to have this done in order that inquiries be directed to the assignee. Not surprisingly, Professor Gilmore agrees. 1 G. Gilmore, Security Interests in Personal Property § 15.3 (1965). It is the assignee, however, who receives the more substantial benefits from such a filing, particularly since it provides the assignee with protection against creditors of the assignor. In addition, by becoming the secured party of record, the assignee may file a continuation statement under § 9-403, a termination statement under § 9-404, and a statement of release under § 9-406. Since the assignee has the dominant interest in the filing of such statement and because § 9-405(1) expressly provides that statements of assignment may be executed by the assignee alone, it appears to this court that such statements are not intended to affect the rights of the assignor in the collateral.
Although the court has been unable to locate any reported opinions directly on point, there are two that discuss the effect of the filing of statements reflecting an assignment which are helpful.
*168 In Mills Morris Co. v. Scanlon (In re King-Porter Co.), 446 F.2d 722 (5th Cir. 1971), the court was concerned with the effect of noting an assignee on the original financing statement in addition to the secured party. The secured party subsequently assigned to the designated assignee a few security interests in certain specified items of collateral. In a contest with the debtor's bankruptcy trustee, the secured party asserted that it had a perfected security interest in the balance of the collateral. The court held that the effect of the filing of a financing statement with an assignee designated was that the assignee became the secured party of record only. 446 F.2d at 728. The court indicated that the filing of such a notice did not constitute a substantive assignment, a result obviously consistent with this court's view that there can be no substantive assignment of a security interest without a transfer of the secured obligation. That court noted pertinently:
In this instance no creditor could have been misled by the inclusion in the financing statement that the bank was the secured party of record. Indeed, under the Code's system of "notice" filing, the recorded statements indicate merely that the secured party of record may have a security interest in the collateral described. Further inquiry is necessary to disclose the complete state of affairs. U.C.C. § 9-402, Comment 2.
446 F.2d at 729.
In King-Porter, inquiry of the assignee would not have revealed any pertinent information about what security interests the assignor might have. Such an inquiry would only have revealed the extent to which security interests had been transferred to the assignee. Thus that case must stand for the general proposition that when there is notice of an assignment, third parties must inquire both of the assignor and of the assignee as to the status of their security interests. If there can be no assignment of a security interest without transfer of the obligation secured thereby, third parties must make inquiry as to the status of the secured obligations themselves and should not be satisfied with an assignment of the security agreement as evidencing that the assignor no longer has any security interests in the collateral.
While King-Porter involved a designation of assignee in the original financing statement, in the case of Kreling v. First National Bank & Trust Co. (In re Webster), 20 U.C.C. Rep. Serv. (West) 802 (Bankr.Ct.W.D.Mich. 1976), a bankruptcy court considered the effect of the subsequent filing of a statement of assignment. The statement indicated that the assignor had transferred all of its interest under the previous financing statement. The assignor did not transfer its security interest in a particular item of collateral. Noting that once there has been perfection by filing a security interest remains perfected even though there are such significant changes in circumstances as change in the use of the collateral or change in the name of the debtor, that court indicated that the effect of King-Porter was to "put all inquiring parties on notice that inquiry of the assignee alone is not sufficient." 20 U.C.C. Rep. Serv. (West) at 806.
In Empire Machinery Co. v. Union Rock & Materials Corp., 24 U.C.C. Rep. Serv. (West) 232 (Ariz.App.1978), the court cited Dean Epstein's law review article for this proposition:
[b]oth logic and the basic framework of the Code seem to indicate that transfer by a secured party of both the note and security agreement terminates all his rights, duties and interests thereunder.
24 UCC Rep.Serv. at 240. That statement and the result reached in that case are consistent with the views expressed herein. In Empire Machinery the secured creditor had assigned an installment sales contract to a bank and had filed a statement of assignment. The installment sales contract included both the security agreement and the obligation to pay. Thus the security interest was transferred to the assignee. Since there were no other security interests in this collateral, the assignor retained no security interest in it. The court in Empire Machinery concluded that when the assignor acquired a subsequent security interest *169 in the same collateral it was necessary to file again to perfect that security interest. This court agrees.
For the foregoing reasons it is the opinion of the court that the bank retained perfected security interests in the collateral to secure payment of the two non-SBA notes.
An appropriate order will be entered awarding the proceeds at issue to the bank for application to the two non-SBA notes. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1532130/ | 305 B.R. 356 (2003)
In re PRO GREENS, INC., A Nevada Corporation, Debtor.
Syndicate Exchange Corporation, as successor in interest to the rights of Tracy Strickland, the Chapter 7 Trustee, Plaintiff,
v.
Betty R. Bussey, William C. Dreager, Supage Emergency Physicians, Ltd., Profit Sharing Plan FBO, Florida Radiology Specialist, P.A., et al., Defendants.
Bankruptcy No. 02-02422-8P7, Adversary No. 02-505.
United States Bankruptcy Court, M.D. Florida, Tampa Division.
October 24, 2003.
*357 Angela Stathopoulos, Esquire, Dunedin, FL, for trustee.
Traci K. Strickland, Madeira Beach, FL, Chapter 7 Trustee.
ORDER ON (1) SYNDICATE EXCHANGE CORPORATION'S MOTION FOR SUMMARY JUDGMENT AS TO COUNT VII, COUNT IX, AND COUNT XIII OF PLAINTIFF'S AMENDED COMPLAINT; (2) SUNTRUST BANK'S CROSS MOTION FOR SUMMARY JUDGMENT ON COUNT XIII OF PLAINTIFF'S AMENDED COMPLAINT; AND (3) DIANE K. AND GERRY D. MINEAR'S MOTION FOR SUMMARY JUDGMENT ON COUNT IX OF PLAINTIFF'S AMENDED COMPLAINT
ALEXANDER L. PASKAY, Bankruptcy Judge.
THE MATTERS under consideration are (1) Partial Motion for Summary Judgment as to Count VII, Count IX, and Count XIII of Plaintiff's Amended Complaint (Doc. No. 88), filed by Syndicate Exchange Corporation (Syndicate); (2) Cross Motion for Summary Judgment on Count XIII of Plaintiff's Amended Complaint (Doc. No. 94), filed by SunTrust Bank, Nature Coast as Trustee of Randall Jenkins' IRA (SunTrust); and (3) Motion for Summary Judgment on Count IX of Plaintiff's Amended Complaint (Doc. No. 100), filed by Diane K. and Gerry D. Minear (Minears).
The above captioned adversary proceeding was commenced by Tracy Strickland, the Chapter 7 Trustee (Trustee), on June 25, 2002. The Trustee amended the Complaint on February 20, 2003. The nineteen count Amended Complaint seeks declaratory *358 relief and to avoid fraudulent transfers and names the following as Defendants: (1) Betty R. Bussey, (2) William C. Dreager, (3) Dupage Emergency Physicians, Ltd., Profit Sharing Plan fbo, (4) Florida Radiology Specialist, P.A., (5) Martin R. Hall, M.D., Employees' Retirement Plain fbo, (6) Dorothy M. Howell, (7) John T. Howell, (8) Claire G. Jenkins, (9) Thomas E. Mack (Mack), (10) Diane K. Minear, (11) Gerry D. Minear, (12) Thomas Mullin, Jr., (13) Wilbur Resienweaver, Trust, (14) Anne Ross, (15) Al Ross, (16) SunTrust Bank, (17) David F. Tulsiak, M.D., Trustee, Emma, P.A., Retirement Plan -007, U/A 12/31/91 fbo, (18) J. Mark Zachary, and (19) Janet Zachary. Thereafter, the Trustee assigned to Syndicate "AS IS," with Court approval, whatever rights the Chapter 7 estate had against the Defendants named in the Amended Complaint, and on April 21, 2003 Syndicate was substituted as Plaintiff in this Adversary Proceeding.
On July 21, 2003, Syndicate filed its Motion for Partial Summary Judgment seeking a declaration that certain promissory notes executed by Professional Greens Turf and Aerification, Inc. (PGTA), the predecessor in interest of Pro Greens, Inc. (Debtor), in favor of Mack, the Minears, and SunTrust were not debt instruments and did not represent a valid and legally enforceable obligation of PGTA, and in turn of the Debtor, but in fact represented a sale and purchase by the Defendants of equity and was a risk capital investment in PGTA. Syndicate contends that the pleadings in this case show there are no genuine issues of material fact as to the allegations set forth in the Amended Complaint and that the Plaintiff is entitled to Summary Judgment as a matter of law.
The Minears filed their Response to Plaintiff's Motion for Partial Summary Judgment and also filed their own Motion for Summary Judgment on Count IX of Plaintiff's Amended Complaint. Defendant, SunTrust, filed a Cross-Motion for Summary Judgment on Count XIII of the Amended Complaint and a Response in Opposition to Syndicate's Motion for Summary Judgment with Supporting Memorandum. Defendant Mack did not file either an answer to the Complaint nor a response to Syndicate's Motion.
While not clearly articulated, the threshold question is whether Syndicate has standing to pursue these causes of action and whether this Court has jurisdiction to entertain the declaratory relief counts against the three remaining Defendants. This is so because if this Court concludes that Syndicate does not have standing to pursue these claims or that this Court does not have jurisdiction to review these claims, then it is not necessary to consider the ultimate merits of the controversy involving the true legal character of the transactions in which these three Defendants were involved.
To place the initial question in proper focus, it should be helpful to briefly summarize the facts and circumstances that gave rise to the matter before this Court.
PGTA was incorporated under the laws of the State of Florida in October 1993 and in an effort to raise capital to expand its operation, PGTA sought funds from individuals and business entities. In return for the funds, PGTA issued what were denominated as subscription agreements through the purchase of convertible promissory notes (Notes). The Notes were executed in four different versions: the 1993 series (the 1993 Note), the 1994 series (the 1994 Note), the 1995 series (the 1995 Note), and the 1996 Series (the 1996 Note).
On July 29, 1995, Mack entered into the 1995 Note and a Subscription Agreement of 8% Convertible Subscription Agreement (the Mack Note) in the amount of $20,000. *359 Mack has not sought reimbursement of the Mack Note from the estate and he has not filed a proof of claim with respect to the Mack Note in the main bankruptcy case. The bar date for filing proofs of claim was August 13, 2002.
On May 1, 1995, while Mr. Minear was the President of PGTA, the Minears entered into the 1995 Note and a Subscription Agreement of 8% Convertible Subscription Agreement (the Minear Note) in the amount of $20,000. The Minears have not sought reimbursement of the Minear Note from the estate and they have not filed a proof of claim with respect to the Minear Note in the main bankruptcy case. The Debtor paid off the principal and interest owed on the Minear Note in May of 1998, over five (5) years ago and more than four (4) years before the original adversary Complaint was filed.
Finally, SunTrust entered into the 1996 Note in the amount of $50,000. SunTrust has not sought reimbursement of the 1996 Note from the estate and it has not filed a proof of claim with respect to the 1996 Note in the main bankruptcy case. The Debtor repaid both the principal and interest to SunTrust on May 12, 1998.
The first threshold question is whether or not Syndicate has standing to pursue these declaratory actions. On March 25, 2003, this Court entered an Order in the main bankruptcy case authorizing the sale and assignment of choses of action against entities that are the subject of several complaints filed by the Trustee to Syndicate with the proviso that the sales were "AS IS" with no guarantee, contingencies of recovery, warranties of any kind express, implied, or otherwise and preserved all defenses of the Defendants. Because this Court authorized the sale and assignment of the choses of action to Syndicate, this Court is satisfied that Syndicate, as successor in interest to the rights of the trustee, has standing to pursue these declaratory relief actions. This leaves for consideration the second threshold question, which is whether or not this Court has subject matter jurisdiction to review Syndicate's claims for declaratory relief.
Although federal courts have the jurisdiction to grant declaratory judgments in cases of actual controversies, 28 U.S.C. § 2201, courts are not authorized to give advisory opinions. In re Murray, 122 B.R. 135, 137 (Bankr.M.D.Fla.1990) (citing Cutaiar v. Marshall, 590 F.2d 523 (3d Cir.1979)). There must be "a live dispute between the parties, and there must be a `substantial controversy' between parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment." In re Murray, 122 B.R. at 137 (citing Powell v. McCormack, 395 U.S. 486, 517-18, 89 S.Ct. 1944, 23 L.Ed.2d 491 (1969); Zwickler v. Koota, 389 U.S. 241, 244 n. 3, 88 S.Ct. 391, 19 L.Ed.2d 444 (1967)). An actual controversy is one "which is definite and concrete, and which touches the legal relations of the parties with adverse legal interests." In re Murray, 122 B.R. at 137 (citing Aetna Life Insurance Co. of Hartford, Conn. v. Haworth, 300 U.S. 227, 240, 57 S.Ct. 461, 81 L.Ed. 617 (1937)).
It is the contention of Syndicate that this Court has jurisdiction over its claims. In support of this contention, Syndicate maintains: (1) that the filing of a proof of claim is not necessary to provide this Court with subject matter jurisdiction to hear a cause of action to recharacterize debt as equity; (2) that bankruptcy courts have subject matter jurisdiction to determine whether a capital contribution should be characterized as equity or debt; (3) that characterizing a contribution as equity or debt is indeed a core matter; (4) that filing and/or pursuing a proof of claim is *360 not determinative of subject matter jurisdiction; and (5) that recharacterizing these three Defendants' contributions affects the bankruptcy estate.
In opposition, the Minears assert that this Court lacks jurisdiction to review Syndicate's claims for declaratory relief. In support of this assertion, the Minears claim (1) that because the Debtor already repaid the entire amount owed on the Minear Note, there is no bona fide need for a declaration, and thus there is no present controversy; (2) that there is no bona fide need for a declaration and there is no present controversy over any of the other PGTA Notes because none of the PGTA noteholders have filed proofs of claim as to their notes in this case; and (3) that this Court lacks subject matter jurisdiction over these declaratory judgment actions because, as a dispute between two non-debtors, the outcome of the actions will have no conceivable effect on the administration of the Debtor's estate. Lastly, the Minears contend that the statute of limitations has expired on Syndicate's declaratory judgment action concerning the Minear Note.
To obtain a judgment for declaratory relief, a party must prove (1) that the plaintiff has a present bona fide need for a declaration; (2) that the plaintiff is in doubt as to his rights; (3) that all parties necessary to the resolution of these issues are presently before the court; and (4) that the plaintiff is not merely seeking legal advice, but is rather seeking a resolution of his rights regarding a present controversy. In re Murray Industries, Inc., 122 B.R. at 137.
Upon consideration of Syndicate's contention that recharacterizing the contributions would affect the bankruptcy estate, the question of recharacterizing the Defendants' transactions is academic. The record leaves no doubt that there is no present case or controversy between Syndicate and the three Defendants for the following reasons.
It is without dispute that both SunTrust and the Minears received full payment in satisfaction of their Notes and that none of the three Defendants filed a proof of claim in the main bankruptcy case. It is further without dispute that the bar date to file such proofs of claim has passed and that the Defendants no longer desire to participate in the distribution of this estate, even if there is a distribution. Therefore, proper characterization of these three Defendants' transactions is unnecessary simply because it is obvious that recharacterizing the transactions will have no effect on the administration of the estate.
It is clear that Syndicate seeks declaratory relief as a predicate to set aside the repayments of these Notes as fraudulent transfers. This Court is satisfied that there is no case or controversy raised by the Amended Complaint. Thus, Syndicate seeks what would be akin to an advisory opinion.
As this Court lacks subject matter jurisdiction to consider Syndicate's Motion, this Court is satisfied that it is unnecessary to rule on Syndicate's contention that characterizing a contribution as debt or equity is a core matter and the Minears' contention that the statute of limitations has expired on Syndicate's declaratory judgment action concerning the Minear Note.
To be consistent with the foregoing that this Court lacks subject matter jurisdiction to consider these claims, Syndicate's Partial Motion for Summary Judgment is denied and the Amended Complaint shall be dismissed with prejudice. Furthermore, the Minears' Motion for Summary Judgment as to Count IX of the Amended Complaint is denied as moot and SunTrust's Cross Motion for Summary Judgment *361 as to Count XIII of the Amended Complaint is denied as moot.
Accordingly, it is
ORDERED, ADJUDGED, AND DECREED that the Amended Complaint be, and is hereby, DISMISSED with prejudice. A separate final judgment shall be entered in accordance with the foregoing. It is further,
ORDERED, ADJUDGED, AND DECREED that Syndicate's Partial Motion for Summary Judgment as to Counts VII, IX, and XIII of the Amended Complaint be, and the same is hereby, DENIED. It is further,
ORDERED, ADJUDGED, AND DECREED that the Minears' Motion for Summary Judgment on Count IX of Plaintiff's Amended Complaint be, and the same is hereby, DENIED as moot. It is further,
ORDERED, ADJUDGED, AND DECREED that SunTrust's Cross Motion for Summary Judgment on Count XIII of Plaintiff's Amended Complaint be, and the same is hereby, DENIED as moot. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1532280/ | 872 A.2d 611 (2005)
WAL-MART STORES, INC., and Wachovia Bank of Georgia, N.A., in its capacity as Trustee of the Wal-Mart Stores, Inc. Corporation Grantor Trust, Plaintiffs,
v.
AIG LIFE INSURANCE COMPANY; Hartford Life Insurance Company; Westport Management Services, Inc.; International Corporate Marketing Group, LLC; National Benefits Group, Inc., d/b/a Marsh Financial Services; Seabury & Smith, Inc., Marsh, Inc., and Marsh & McLennan National Marketing Corporation, now known as J & H Marsh & McLennan Private Client Services, Inc., Defendants.
C.A. No. 19875.
Court of Chancery of Delaware, New Castle County.
Submitted: February 24, 2005.
Decided: April 1, 2005.
*614 Robert K. Payson, Gregory A. Inskip, Potter Anderson & Corroon, L.L.P., Wilmington, *615 DE; Michael Y. Horton, David S. Cox, Morgan Lewis & Bockius, L.L.P., Los Angeles, CA; Paul A. Zevnik, Morgan Lewis & Bockius, L.L.P., Washington, DC, for Plaintiffs.
Richard D. Heins, Carolyn Hake, Ashby & Geddes, Wilmington, DE; James F. Jorden, Paul A. Fischer, Kristin A. Shepard, Jorden Burt, L.L.P., Washington, DC, for Defendant AIG Life Insurance Co.
Harry Tashjian, IV, Richards Layton & Finger, Wilmington, DE; Barry A. Chasnoff, John Gillard, Akin Gump Strauss Hauer & Feld, L.L.P., San Antonio, TX; Michael Quigley, Jeffrey P. Kehne, Akin Gump Strauss Hauer & Feld, L.L.P., Washington, D.C., Michael Small, Esquire, Akin Gump Strauss Hauer & Feld LLP, Los Angeles, CA, for Hartford Life Insurance Company and International Corporate Marketing Group.
Elizabeth A. Wilburn, Blank Rome, L.L.P., Wilmington, DE; Ian M. Comisky, Roger F. Cox, Blank Rome, L.L.P., Philadelphia, PA, for Defendant National Benefits Group, Inc.
Edward P. Welch, Seth M. Beausang, Skadden Arps Slate Meagher & Flom, L.L.P., Wilmington, DE; Marco E. Schnabl, Michael S. Davi, Skadden Arps Slate Meagher & Flom, L.L.P., New York City, for Defendants Marsh Financial Services, Seabury & Smith, Inc., Marsh, Inc., and Marsh & McLennan National Marketing Corporation, formerly known as J & H Marsh & McLennan Private Client Services, Inc.
OPINION AND ORDER
LAMB, Vice Chancellor.
I.
In the early 1990s, a large national retailer embarked on a plan to acquire corporate-owned life insurance ("COLI") policies covering an enormous number of its employees. The principal purpose of this plan was to generate substantial federal income tax benefits for the retailer. Working with a number of insurance brokers and insurers, the retailer began purchasing blocks of policies in 1993 and continued these purchases until 1995. By then, the retailer owned life insurance policies covering hundreds of thousands of its employees.
In 1996, Congress enacted legislation that effectively eliminated the future tax benefits associated with all but a few of the retailer's COLI policies. Soon thereafter, the Internal Revenue Service (the "IRS") began to bring enforcement actions claiming that employers participating in COLI plans, including the retailer, underpaid past taxes. Moreover, employees and the estates of deceased employees filed litigation claiming that the proceeds of any policies should be paid to them, rather than to the retailer. In the face of these developments, the retailer began to unwind its insurance policies in 1996. In 2002, it settled with the IRS.
In September of 2002, nearly a decade after making its first COLI investment, the retailer brought suit against all the parties involved in its purchase of these policies. Its complaint alleges a broad range of legal and equitable claims against the insurance brokers and providersall seeking to recover from them the losses it incurred in connection with this risky tax avoidance scheme. On consolidated motions to dismiss brought by the insurers and brokers, the court concludes that the retailer has failed to state a claim upon which relief can be granted. The court, therefore, grants the defendants' motions to dismiss.
II.
A. The Parties
Plaintiff Wal-Mart Stores, Inc. ("Wal-Mart Stores"), a Delaware corporation, is a *616 "large and sophisticated" retail sales company with over 1 million employees.[1] Plaintiff Wachovia Bank of Georgia, N.A. is the trustee of the Wal-Mart Stores, Inc. Corporation Grantor's Trust (the "Wal-Mart Trust").[2] The Wal-Mart Trust was set up in December of 1993 for the sole purpose of facilitating the COLI plans that are at the heart of this case. Starting in December of 1993, Wal-Mart purchased COLI policies from defendants AIG Life Insurance Company ("AIG") and Hartford Life Insurance Company ("Hartford") (collectively, the "Insurers").
Defendant Westport Management Services, Inc. ("Westport"), a Delaware corporation, and defendant International Corporate Marketing Group, LLC ("ICMG"), a Delaware limited liability company acted, respectively, as representatives of AIG and Hartford in connection with the COLI policies that are the subject of this action.
Defendants Seabury & Smith, Inc., Marsh Financial Services, Marsh, Inc., and Marsh & McLennan National Marketing Corporation[3] (collectively, the "Marsh Entities") and National Benefits Group, Inc. ("NBG," together with the Marsh Entities, the "broker-defendants") are insurance brokers who worked with Wal-Mart in soliciting and evaluating COLI proposals from a number of insurance companies.[4]
B. The COLI Policies
In the early 1990s, Wal-Mart Stores, like other large employers at that time, began considering the acquisition of broad-based COLI plans. Broad-based COLI plans are life insurance policies purchased by a corporate employer covering the lives of a large number of employees.[5] The fundamental purposes of the COLI plans, according to Wal-Mart, were: (i) to provide certain free death benefits to classes of employees at Wal-Mart; (ii) to provide financial benefits to Wal-Mart in order to compensate the company for costs related to the death of employees; and (iii) to provide tax benefits to the company in connection with funding the premiums and other costs of the policies.[6] Under the COLI plans, the corporate employer secures loans from the insurers to fund the insurance premiums and then deducts the interest paid on those loans from its income taxes, thereby enjoying the investment return on these policies tax-free.
In mid-1993, Wal-Mart hired the broker-defendants to advise the company in connection with the purchase of the COLI policies. Specifically, Wal-Mart alleges that it hired the broker-defendants to "oversee[] the design and structure of an appropriate broad-based COLI plan for Wal-Mart, prepare[] questions for, and *617 solicit[ ] proposals from, insurance companies involved in such COLI plans, select[ ] the appropriate insurance company or companies to underwrite the COLI plans, and negotiate[ ] the best available terms and conditions for Wal-Mart."[7] Wal-Mart eventually entered into written agreements with the broker-defendants "to administer and service the [COLI plans] and provide certain other [s]ervices."[8]
On December 28, 1993, after working with the defendant-brokers for several months, Wal-Mart purchased a block of more than 20,000 COLI policies from Hartford[9] and a block of nearly 200,000 COLI policies from AIG. The initial premium payments for these two blocks of COLI policies exceeded $800 million. Wal-Mart made five subsequent purchases from AIG, from June of 1994 through July of 1995, adding approximately 135,000 policies and approximately $300 million in initial premium payments. In total, Wal-Mart acquired approximately 350,000 COLI policies. Wal-Mart acquired these policies through the Wal-Mart Trust, a Georgia entity that was created specifically to take advantage of Georgia law that recognize employers' "insurable interests" in the lives of corporate employees.[10]
C. Congress Changes The Law And The IRS Acts
In August 1996, Congress enacted the Health Insurance Portability and Accountability Act ("HIPAA") which, among other things, eliminated interest deductions (as of January 1, 1996) on COLI loans and on borrowings to fund COLI plans adopted after June 20, 1986, with transitional relief provided for 1997 and 1998 for up to 20,000 policies.[11] Within a few months, Wal-Mart began unwinding the COLI plans and, by January of 2000, its last COLI policies were canceled.
In 1997, the IRS initiated enforcement actions against a number of employers who had claimed tax deductions for interest on loans under COLI plans for tax periods before 1996.[12] Additionally, in 1998 and 1999, the IRS issued Technical Advisory Memoranda presenting its legal opinion on COLI plans and declaring that the interest deductions should be disallowed because they lack economic substance.[13] The IRS challenged the Wal-Mart COLI program, and Wal-Mart settled with the IRS in August of 2002.[14]
Also, starting in 2001, employees and estates of deceased employees began challenging the COLI plans, arguing that employers do not have "insurable interests" *618 in their lives under applicable state law.[15] Several actions were filed challenging the notion that Wal-Mart has an "insurable interest" in the lives of its deceased employees and demanding that courts impose a constructive trust on death benefits that Wal-Mart may have received under the COLI policies. In at least one action, a federal court in Texas applied Texas law instead of Georgia law in holding that Wal-Mart did not have an "insurable interest" in the lives of its Texas employees.[16]
D. Wal-Mart's Claims
On September 3, 2002, nearly nine years after it began purchasing COLI policies, Wal-Mart filed this action to recover its losses resulting from the failed COLI program. Wal-Mart claims that since the COLI policies "failed in their fundamental purpose," namely, to secure substantial financial benefits for Wal-Mart, the parties involved in Wal-Mart's purchase of the COLI policies should share in the loss. Wal-Mart does not argue that the failure of its COLI program is due to the 1996 change in the tax code. Instead, Wal-Mart alleges that the failure of the COLI program is:
[T]he product of risks never contemplated by the parties, i.e.: (i) the disallowance of interest deductions under pre-HIPAA federal tax law and (ii) attacks on the COLI plans mounted by the estates of insured that have been predicated on Wal-Mart's alleged lack of "insurable interest" in the lives of its employees....[17]
Wal-Mart asserts that the defendants owed it the "highest duties of care, including a duty of good faith, a duty of full disclosure, a duty of loyalty, and a duty to meet the exacting standards of their respective professions."[18] Wal-Mart alleges that the defendants breached their fiduciary duties in "developing, promoting, recommending, advising, selling, and administering" the COLI plans.[19] Furthermore, Wal-Mart argues that had certain disclosures been made it would not have entered into the COLI plans. Predictably, Wal-Mart alleges that the defendants did not disclose the "full range and magnitude" of the risks involved in the COLI plans.[20] Wal-Mart complains that it relied to its detriment on the defendants in their alleged roles as fiduciaries, experts, advisors, agents, and providers of the COLI plans.
The Amended Complaint is set out in seven counts. Count 1 alleges unjust enrichment and restitution against all the defendants. Count 2 alleges breach of fiduciary duty against all the defendants. Count 3 alleges equitable fraud against all the defendants. Count 4 alleges breach of contract against all the defendants. Count 5 alleges negligence against the broker-defendants. Count 6 alleges violation of the Delaware Consumer Fraud Act against all the defendants. Finally, Count 7 seeks a declaration against all the defendants requiring the defendants to compensate Wal-Mart for any future losses incurred due to the failed COLI plans, including the *619 costs that may be incurred from the "insurable interest" litigation.
In November of 2003, the defendants moved to dismiss the Amended Complaint based on (i) failure to state a claim upon which relief can be granted, and (ii) that the claims were untimely. This court dismissed all claims in the Amended Complaint as time-barred, without addressing the remaining arguments.[21] On November 4, 2004, the Delaware Supreme Court reversed and remanded.[22] The defendants have now renewed their motion to dismiss for failure to state a claim. On February 24, 2004, the court heard oral arguments.
III.
The standard for dismissal pursuant to Court of Chancery Rule 12(b)(6) for failure to state a claim upon which relief can be granted is well established. The motion will be granted if it appears with reasonable certainty that the plaintiff could not prevail on any set of facts that can be inferred from the pleading.[23] In considering a motion to dismiss under Rule 12(b)(6), the court is required to assume the truthfulness of all well-pleaded allegations of fact in the complaint.[24] All facts of the pleadings and inferences that can reasonably be drawn therefrom are accepted as true.[25] However, neither inferences nor conclusions of fact unsupported by allegations of specific fact are accepted as true.[26] That is, a trial court need not blindly accept as true all allegations, nor must it draw all inferences from them in the plaintiffs' favor unless they are reasonable inferences.[27]
IV.
A. Unjust Enrichment
Wal-Mart's first claim is based in quasi-contract for unjust enrichment and restitution. Wal-Mart claims that the COLI plans failed in their fundamental purpose and that, as a result, Wal-Mart suffered substantial losses. Wal-Mart also contends that the defendants made substantial profits from the premiums and service fees Wal-Mart paid, and that it would be "unjust and unconscionable for the defendants to continue to retain the benefits conferred on them by Wal-Mart."[28] In other words, because the 2002 IRS settlement caused Wal-Mart to lose the benefit of most of the tax deductions it took in the early years of its COLI program, it now seeks to shift to the defendants its COLI-related lossesat least to the extent of the defendants' profits from the COLI contracts. The question presented is whether theories of unjust enrichment or quasi-contract are available to Wal-Mart to reallocate the risk among parties to the COLI contracts. Because Wal-Mart's failure to gain the advantages it sought when it entered into the COLI contracts was the result of obvious risks, plainly known to the parties at the time of contracting, Wal-Mart's complaint does *620 not state a claim for relief under those theories. Instead, the risk of loss must remain where it began, with Wal-Mart.
Wal-Mart, in the alternative, pleads both a claim for breach of contract and a claim for unjust enrichment. In some circumstances, alternative pleading allows a party to seek recovery under theories of contract or quasi-contract. This is generally so, however, only when there is doubt surrounding the enforceability or the existence of the contract. Courts generally dismiss claims for quantum meruit on the pleadings when it is clear from the face of the complaint that there exists an express contract that clearly controls.[29] It is undisputed that a written contract existed between Wal-Mart and the Insurers to provide the COLI policies. The COLI policies, like all insurance policies, were reduced to written documents. Furthermore, the case for dismissing Wal-Mart's unjust enrichment claim is bolstered by the fact that the written contract contains a merger clause, expressly disavowing that any additional promises or agreements exist between the parties.[30]
Notwithstanding the existence of these contractual relationships, Wal-Mart attempts to plead facts sufficient to show that, in light of the doctrine of commercial frustration, no valid or enforceable contracts govern its relations with the defendants. Under that doctrine, after a contract is made, if a party's principal purpose is substantially frustrated (without its fault) by the occurrence of an event, the non-occurrence of which was a basic assumption on which the contract was made, then the party's remaining duties to render performance are discharged, unless the language or the circumstances indicate the contrary.[31] Wal-Mart pleads that the primary purpose of the COLI contract was to provide tax benefits to Wal-Mart through, inter alia, the deductibility of "interest payments made by Wal-Mart on policy-based loans from the insurer defendants[.]"[32] Wal-Mart also pleads that this purpose was frustrated by the IRS's disallowance of the deductions associated with the COLI plans.[33]
1. Commercial Frustration
The Delaware Supreme Court has adopted the doctrine of commercial frustration, but has not clearly defined its contours.[34] From a review of cases from other jurisdictions, however, several broad generalizations can be made. First, the defense of commercial frustration is very difficult to invoke, as courts have been extremely reluctant to allow parties to disavow obligations that they have agreed to.[35] Second, commercial frustration is a *621 question of law that is to be determined by the court.[36] Third, the party's main purpose must be completely, or nearly completely, frustrated.[37] Fourth, the doctrine of commercial frustration operates to excuse the performance of a contract, not to compel performance by another party; i.e. the doctrine can only be used as a shield, and not as a sword.[38] Fifth, the doctrine of commercial frustration does not apply if at the time of contracting the supervening event was reasonably foreseeable, and could (and should) have been anticipated by the parties and provided for in the contract.[39]
The court concludes that the doctrine of commercial frustration does not apply in this case. First, Wal-Mart does not plead sufficient facts from which the court may reasonably infer that the main purpose of the COLI plans has been substantially frustrated. Wal-Mart alleges that there were three fundamental purposes of the COLI plans: (i) to provide *622 certain free death benefits to classes of employees of Wal-Mart; (ii) to provide financial benefits to Wal-Mart in order to compensate the company for costs related to the death of employees; and (iii) to provide tax benefits to the company in connection with funding the premiums and other costs of the plans.[40] Wal-Mart alleges that that the second and third purposes, providing Wal-Mart with financial benefits and with tax breaks, failed. However, Wal-Mart does not allege that the first purpose failed. In fact, Wal-Mart specifically alleges that due to the COLI plans, Wal-Mart's employees have received substantial death benefits.[41] Therefore, the invalidation of the tax deductions was not a "cataclysmic" event that rendered the policies "valueless" and the doctrine of commercial frustration does not apply.
Second, Wal-Mart is not attempting to use the doctrine of commercial frustration to excuse its non-performance. Wal-Mart is either attempting to compel some different performance or, more exactly, avoid the contract all together, due to commercial frustration. In either instance, the doctrine is inapplicable. It only applies to excuse future non-performance.
Third, both the invalidation of the tax deduction by the IRS and the invalidation of Wal-Mart's claim to having an insurable interest were both decidedly foreseeable events. Although the COLI plans were not prohibited by the Internal Revenue Code as it existed at the time the plans were created, there were well-known concerns about potential legal objections by the IRS to such plans under federal tax law.[42] For decades the IRS has had the power to look beyond the form of a transaction to its economic or business purpose. When a transaction exploits a feature of the tax code without the attendant economic risk, the IRS may label the transaction a sham and disallow the tax benefits claimed by the taxpayer.[43] All taxpayers considering the use of a tax shelter to avoid tax liability are in a position to foresee that the IRS might determine that the desired tax benefits are unavailable. This is especially true when the taxpayer is one of the largest, most sophisticated companies in the world and is trying to avoid hundreds of millions of dollars in taxes.
There was also an obvious and known risk that Wal-Mart would be found to lack an insurable interest in the lives of its rank-and-file employees. Wal-Mart used a Georgia trust to purchase the policies specifically to take advantage of Georgia law that allowed it to have an insurable interest in its employees.[44] To make such a decision, Wal-Mart must have been aware that other states (such as Texas) do not allow employers to have an insurable interest in their employees. Given that knowledge, the risk of a court in such a *623 state applying its own law and finding that Wal-Mart did not have an insurable interest in its employees was eminently foreseeable.
Wal-Mart's awareness of, and concern about, these risks is reflected in the very application it filed for the AIG policies. Wal-Mart and AIG executed a Letter of Understanding as part of that application process that specifically addresses Wal-Mart's concerns with "the tax consequences of loans and/or withdrawals from the Policies and the deductibility thereof."[45] An exhibit to this letter deals with the possibility that Wal-Mart might be found to lack an "insurable interest" in the lives of its employees.[46]
To avoid this outcome, Wal-Mart cites two Ninth Circuit Court of Appeals decisions allowing rescission of a tax shelter contract because the tax avoidance purpose of the transaction was frustrated.[47] However, the Ninth Circuit based both decisions on the fact that the contracts involved in those cases allocated the risk of an adverse tax ruling to the defendants. In Mayer, based on Oregon's doctrine of commercial frustration, stockholders were excused from performance of an agreed-upon stock transfer after an IRS ruling which rejected the tax premise upon which the stock transfer was based.[48] The Ninth Circuit stated:
The [District C]ourt credited testimony that [the taxpayer] did not accept the default provisions as adequate protection against an adverse tax ruling but requested assurances that the property would be returned if the tax assumptions underlying the transaction were challenged, and that he was given such assurances by representatives of the Institute. In the light of these circumstances, it would be untenable to conclude that the parties intended that the [taxpayers] should assume the risk of an adverse tax ruling. . . .[49]
In Walker, the court sustained the rescission of certain annuity loan transactions on the ground of commercial frustration after a Supreme Court decision eliminated the tax benefits of the contract. The court in Walker recognized that no claim for frustration exists when there is risk allocation in the contract, but did not reach the issue because the insurer did not raise it at trial. "[T]he general rule is that this Court will not reverse the trial court on a contention that was never presented to it."[50]
In contrast, Wal-Mart does not allege facts from which this court could reasonably infer that the parties to the COLI contracts ever agreed to shift the risk of an adverse tax ruling, or an adverse ruling as to Wal-Mart's insurable interest in its employees, onto the defendants. In fact, the opposite is true. As discussed above, the Letter of Understanding clearly places the risk of loss, vis-à-vis the insurable interest, on Wal-Mart. Furthermore, the contract is silent as to the risk of loss with respect to an adverse tax ruling. Absent a contractual provision shifting the risk of *624 loss, the risk clearly remained where it beganwith the taxpayer, Wal-Mart.[51]
Moreover, to the extent that these Ninth Circuit cases can stand for the broader proposition that commercial frustration allows a party to rescind a contract, they are of doubtful continuing vitality. The doctrine of commercial frustration has developed relatively recently, as an offshoot of the more established doctrine of impossibility. The decisions in Mayer and Walker are early decisions, and contradict the overwhelming weight of modern authority that restricts commercial frustration to excusing failure of future performance.[52] These cases also contradict more modern cases from the same jurisdiction.[53]
In addition, allowing rescission of contracts due to commercial frustration would interfere with the valid expectations of parties to commercial transactions. The proper way to allocate risks in a contract is through bargaining between parties. It is not the court's role to rewrite the contract between sophisticated market participants, allocating the risk of an agreement after the fact, to suit the court's sense of equity or fairness. Given the additional fact that, even as a defense, the doctrine is disfavored, the court holds that the doctrine of commercial frustration in Delaware only functions to excuse future performance of a contract, at least among sophisticated parties, and cannot serve as a basis to reallocate known, or obviously foreseeable, risk of loss post-contractually.
The court finds that the doctrine of commercial frustration is inapplicable and the written contracts govern the dispute between the parties. The court must therefore dismiss Wal-Mart's claim for unjust enrichment.
B. Breach Of Fiduciary Duty
Wal-Mart's second claim is for breach of fiduciary duty. Fiduciary relationships have often been described as "special relationships," for good reason. Generally, "[a] fiduciary relationship is a situation where one person reposes special trust in another or where a special duty exists on the part of one person to protect the interests of another."[54] A fiduciary relationship implies a dependence, and a condition of superiority, of one party to another.[55] A fiduciary relationship exists where one party places a special trust in another and relies on that trust, or where a special duty exists for one party to protect *625 the interests of another.[56] It generally requires "confidence reposed by one side and domination and influence exercised by the other."[57]
The Delaware courts have been reluctant to extend too broadly the applicability of fiduciary duties. As Justice (then-Vice Chancellor) Jacobs stated:
Our courts have been cautious when evaluating entreaties to expand the number and kinds of relationships that are denominated as "fiduciary" . . .. [A] special relationship must exist between the parties, but the term "special relationship" cannot "be thought to describe too broadly chancery's concerns with relationships where an element of trust, as commonly understood, is present. One may place trust in a workman of any sort and does place trust in one's physician, but it would hardly be contended that such trust would warrant chancery's assuming jurisdiction over a claim that a workman or physician caused injury by want of due care."[58]
Furthermore, while some cases in Delaware have found certain aspects of a commercial relationship to implicate fiduciary duties, these cases should not be read so broadly as to engulf in fiduciary duties ordinary commercial relationships. For instance, in O'Malley v. Boris, the Delaware Supreme Court held that a stockbroker was liable to his client for breach of fiduciary duties when the broker had engaged in self-dealing with the client's money.[59] The Court relied upon NYSE v. Pickard & Co.,[60] in which former Chancellor Duffy stated that a stockbroker/client relationship is often a principal/agent relationship, thereby giving rise to certain particularized fiduciary duties. As Chancellor Duffy said:
Speaking generally, the position of a stockbroker is often twofold:
(a) when he buys or sells a security upon the order of a customer he is the agent of that customer in that transaction; (b) when he provides his own money to complete the order by paying for the security he is a principal vis-a-vis the customer in that phase of the transaction. As an agent he owes a fiduciary duty to his customer; as a principal he is a creditor of the customer, holding the security purchased as collateral for the debt (i.e., with a lien thereon) and the relationship is thus that of pledgor and pledgee. The pledge relationship applies equally to securities deposited by a customer with a broker as part of a marginal transaction, or to secure purchase of other securities on margin.[61]
Instructively, the former Chancellor looked at the particular circumstances of the stockbroker/client relationship in determining whether, and to what extent, a fiduciary relationship existed.
This court is similarly mindful that, in examining whether (and to what extent) a relationship may be alleged to have involved fiduciary relations, the reliance on *626 labels is inappropriate. Because the alleged factual circumstances of Wal-Mart's dealing with the Insurers and the broker-defendants are different, the court addresses them separately.
1. Fiduciary Duty Claims Against The Insurers
It is settled law that an insurer does not generally owe a fiduciary duty to its insured because this relationship is usually an arm's-length contractual relationship.[62] In Crosse, the Delaware Supreme Court held that even the additional fact that the insurer was a not-for-profit organization that operated for the benefit of its policyholders did not give rise to fiduciary duties.[63] The Supreme Court stated: "the concept of a fiduciary relationship, which derives from the law of trusts, is more aptly applied in legal relationships where the interests of the fiduciary and the beneficiary incline toward a common goal in which the fiduciary is required to pursue solely the interests of the beneficiary in the property."[64] It next explained that an insurance policy does not give rise to fiduciary duties "because the interests of the plan participants and those of [the insurer] are not perfectly aligned."[65]
Wal-Mart argues that, in this case, the COLI "relationship" is a "partnership" or "joint venture," thereby giving rise to fiduciary duties. In support of this proposition, Wal-Mart cites only American Electric,[66] which merely quotes an insurance broker as describing COLI policies as a "partnership." However, the court in American Electric does not hold that COLI plans are a partnership and Wal-Mart cites no cases holding that COLI plans are some super-contractual "partnership" arrangement. Instead, the law is clear that the insurer/insured relationship is one of contract that does not give rise to a fiduciary relationship.[67] Here, as in most cases between insurer and insured, the relationship between Wal-Mart and the Insurers is a straightforward commercial relationship arising from contract. It is in all of its aspects an arm's-length relationship. It involves no element of confidentiality, joint undertaking, or trust and dependence.
Since Wal-Mart alleges no facts from which the court could infer that the relationship between it and the Insurers was anything but an arm's-length business relationship, the court must dismiss the fiduciary duty claim against the Insurers.
2. Fiduciary Duty Claims Against The Broker-Defendants
Wal-Mart alleges that it hired the broker-defendants to advise it in the potential purchase of COLI policies based on their self-professed expertise and experience in the COLI field.[68] It alleges that the broker-defendants designed the COLI policies for Wal-Mart, solicited proposals from insurance companies involved in COLI plans, selected the insurance companies to underwrite the COLI plans, and negotiated the terms and conditions of the *627 insurance policies for Wal-Mart.[69] Wal-Mart also alleges that it relied upon the assurances and expertise of the broker-defendants. It does not allege, however, that the broker-defendants were empowered to purchase the policies on Wal-Mart's behalf or otherwise engaged in self-dealing with Wal-Mart's property.
The question presented on this motion to dismiss is whether these allegations of fact are sufficient to support an inference that a fiduciary relationship arose between Wal-Mart, one of the nation's largest, most successful corporations, and the defendant insurance brokers. The court is mindful of the fact that normal business dealings (such as that of an insurance broker and its client) can sometimes take on certain aspects of a fiduciary relationship, as, for example, where the broker agrees to act as agent for the customer with power to bind the customer contractually.[70] At the same time, however, for the reasons described by Justice Jacobs in Bird's Construction,[71] it is vitally important that the exacting standards of fiduciary duties not be extended to quotidian commercial relationships. This is true both to protect participants in such normal market activities from unexpected sources of liability against which they were unable to protect themselves and, perhaps more important, to prevent an erosion of the exacting standards applied by courts of equity to persons found to stand in a fiduciary relationship to others.
In this light, while Wal-Mart alleges that it placed trust in the broker-defendants, it does not allege sufficient facts that, if proven to be true, demonstrate that its relationship with the broker-defendants went beyond that occurring in normal commercial transactions, or otherwise justify imposing on the broker-defendants the scrupulous obligations of fiduciaries. On the contrary, the facts that are apparent from the face of the Amended Complaint show that Wal-Mart's relationship with the broker-defendants was an ordinary commercial relationship and not a fiduciary relationship.
First, there is no alignment of interests between Wal-Mart and the broker-defendants as there was no "common goal" of the COLI plans.[72] Wal-Mart was trying to avoid paying the taxes it owed, while the broker-defendants were trying to make money by brokering the sale of the COLI policies to Wal-Mart and entering into contracts with Wal-Mart to service those contracts.
Second, Wal-Mart does not allege any facts from which the court could reasonably infer that the broker-defendants exerted control or domination over Wal-Mart.[73] Wal-Mart does not allege that it was coerced by the broker-defendants to purchase the COLI policies. On the contrary, it is evident from the Amended Complaint that Wal-Mart made the decision to purchase the COLI policies on its own, and sought out the broker-defendants to facilitate those purchases.[74] Moreover, *628 as counsel for Wal-Mart candidly admitted at oral argument, Wal-Mart sought the advice of its own legal and financial advisors before purchasing the COLI policies. In addition, the broker-defendants acted only as advisors to Wal-Mart; they had no power to purchase COLI policies on Wal-Mart's behalf.[75] In light of these circumstances, the court is unwilling to infer for the purposes of this motion to dismiss that Wal-Mart, one of the largest, most sophisticated companies in the world, advised by its own professionals, so "depended" on the broker-defendants as to invoke this court's equitable powers to regulate relationships between fiduciaries and their cestui que trusts.
Third, Wal-Mart does not allege facts from which the court could infer self-dealing.[76] The broker-defendants did not have the power to engage in self-dealing. Again, Wal-Mart does not allege that the broker-defendants could do anything except advise Wal-Mart on the purchase of the COLI policies.
In sum, the relationship that is alleged to have existed between Wal-Mart and the broker-defendants was merely a normal, arm's-length business relationship. The facts that there were hundreds of millions of dollars at stake and that there were substantial known risks posed by principles of both tax and insurance law do not transform this commercial relationship into one based on fiduciary duties. In the end, Wal-Mart cannot show the existence of a fiduciary relationship by alleging simply that it relied on or "trusted in" the assurances and expertise of the broker-defendants. To rule otherwise would threaten to interject the law of fiduciary duty into a wide range of ordinary commercial relationships generally understood to be governed by the norms of the marketplace, not the scrupulous concerns of equity for persons in special relationships of trust and confidence.
For these reasons, the court dismisses Wal-Mart's claim for breach of fiduciary duty against the broker-defendants.
C. Equitable Fraud
Wal-Mart's third claim is for equitable fraud. Wal-Mart alleges that an agent of Hartford provided Wal-Mart with detailed cash flow and earnings illustrations depicting annual tax savings and annual positive cash flows.[77] Wal-Mart also alleges that the Insurers made specific assurances that the COLI plans were compliant with the Internal Revenue Code.[78] In addition, Wal-Mart alleges that all the defendants failed to disclose material information regarding the COLI plans, even though they had a duty to disclose this information.[79]
Common law fraud in Delaware requires that: (1) a false representation, usually one of fact, made by the defendant, exists; (2) the defendant had knowledge or belief that the representation was false, or made the representation with requisite indifference to the truth; (3) the defendant had the intent to induce the plaintiff to act or refrain from acting; (4) the plaintiff acted or did not act in justifiable reliance on the representation; and (5) the plaintiff suffered damages as a result of such reliance.[80] In addition to *629 overt representations, fraud may also occur through deliberate concealment of material facts, or by silence in the face of a duty to speak.[81] To state a claim for equitable fraud under Delaware law, a plaintiff must satisfy all the elements of common law fraud with the exception that the plaintiff need not demonstrate that the misstatement or omission was made knowingly or recklessly.[82] However, equitable fraud does not swallow common law fraud because it can only be applied in those cases in which one of the two fundamental sources of equity jurisdiction exists: (1) an equitable right founded upon a special relationship over which equity takes jurisdiction, or (2) where equity affords a special remedy (e.g. rescission or cancellation).[83]
Wal-Mart's allegation that the Insurers assured it that the COLI plans were compliant with the Internal Revenue Code does not state a claim upon which relief can be granted. It is an opinion as to a matter of law. A misrepresentation as to a matter of law is a statement of opinion only and cannot afford a basis for a charge of fraud or deceit in the making of the contract.[84] This is because all persons are presumed to know the law and therefore cannot be deceived by erroneous statements of law.[85]
With respect to Wal-Mart's allegations that the illustrations of cash flow were false, this is not a "fact" actionable for fraud. The law has always been skeptical about grounding fraud claims in projections of future events for the obvious reason that the fact that a prediction might not come true does not mean the projection was not made in good faith and also because it is unreasonable to place much weight on such statements.[86] Moreover, the cash flow projections alleged in Wal-Mart's complaint were made on the assumption, held by all parties at the time, that the loans payments on the COLI polices would be tax deductible. This assumption proved false. But the Amended Complaint does not allege, and it is not reasonable to infer, that the Insurers knew their projections were incorrect or acted to deceive Wal-Mart. Therefore, the cash flow projections cannot be the basis for a claim of fraud.
Wal-Mart's allegation that the defendants committed fraud through silence is only viable if the defendants had a duty to speak. As discussed, supra, the Insurers and the broker-defendants did not owe fiduciary duties to Wal-Mart. They, therefore, had no duty to speak and this claim should be dismissed.
D. Breach Of Contract
Wal-Mart's fourth claim is for breach of contract. Wal-Mart alleges that all defendants breached the express terms of the COLI policies and breached the duty of fair dealing implicit in every contract. Wal-Mart asserts that the agreement *630 placed the risk on the defendants that the contract's basic objective would be achieved. In addition, Wal-Mart claims that the defendants acted in bad faith by making both misrepresentations and material omissions in connection with the purchase of the COLI policies.
None of these claims is legally sufficient. First, Wal-Mart does not cite a specific provision of the contract that places the risk of loss on the defendants. In fact, Wal-Mart makes scant reference to any actual contract provision in support of its "breach of contract" claim. This is for good reasonthe contract specifically places the risk of loss, at least for the lack of an insurable interest in its employees, on Wal-Mart. The Letter of Understanding states that:
As part of its application for coverage... Wachovia Bank of Georgia, N.A., as Trustee of the Wal-Mart Stores Inc. Corporation Grantor Trust ("Client"), a trust established in Georgia for the benefit of Wal-Mart Stores, Inc., hereby certifies the following: ... Client has an insurable interest in each of the employees named on the final list census listing... Client understands and agrees that [the Insurer] neither warrants nor represents that insurable interest exists. (Emphasis added).
Similarly, there is no express provision alleged in any contract shifting the risk of loss on the tax issues from Wal-Mart (the taxpayer) to any of the defendants.
Second, "to state a claim for breach of an implied covenant of good faith and fair dealing, a plaintiff must identify a specific implied contractual obligation."[87] Wal-Mart fails to do so. In addition, at the time the alleged misrepresentations and omissions were made, there was no contractual relationship between the parties. Therefore, the court must dismiss Wal-Mart's claim that the alleged misrepresentations or omissions made in connection with the sale of the COLI policies violated a contractually based "implied covenant."[88]
E. Professional Negligence
Wal-Mart's fifth claim is for professional negligence against the broker-defendants. To state a claim for negligence, a plaintiff must allege: (1) that the defendant owed the plaintiff a duty of care; (2) that the defendant breached that duty; and (3) that the defendant's breach was the proximate cause of the plaintiff's injury.[89]
At root, Wal-Mart's claim for professional negligence is dependent on its claim that a fiduciary relationship existed between *631 it and the broker-defendants and fails for that reason. In the Amended Complaint, Wal-Mart alleges that "[t]he broker-defendants owed Wal-Mart the highest duties of care, including a duty of good faith, a duty of full disclosure, a duty of loyalty, and a duty to meet the exacting standards of their respective professions."[90] These allegations do not state a claim for mere negligence. The Amended Complaint alleges that the broker-defendants negligently failed to disclose material information regarding the COLI plans, even though they had a duty to disclose this information.[91] However, generally, there is no duty to speak and, as discussed supra, the broker-defendants did not owe Wal-Mart fiduciary duties. Therefore, Wal-Mart's negligence claims must fail as a matter of law.
F. The Delaware Consumer Fraud Act
Wal-Mart's sixth claim is for violation of the Delaware Consumer Fraud Act, 6 Del. C. §§ 2511-2526. In most respects, the Consumer Fraud Act must be interpreted in light of established common law definitions and concepts of fraud and deceit.[92] Therefore, the discussion of Wal-Mart's equitable fraud claim, supra, is equally applicable here. However, claims under the Delaware Consumer Fraud Act do differ in several ways from the traditional legal and equitable actions sounding in fraud. Most important, relief can only be granted under the Consumer Fraud Act for unlawful practices occurring or performed partly or wholly within Delaware.[93] Wal-Mart does not allege any facts which, if true, could constitute unfair or deceptive conduct occurring within Delaware. There are no allegations that any misrepresentations were made in Delaware or that the COLI policies were contracted in Delaware. In fact, the Amended Complaint specifically states that the policies were purchased in Georgia, by a trust Wal-Mart organized under Georgia law.[94] Because no transaction occurred in Delaware, the Delaware Consumer Fraud Act cannot apply. Therefore, Wal-Mart's claims based on the Delaware Consumer Fraud Act must be dismissed.
G. Declaratory Relief
Wal-Mart's seventh claim is for a declaratory judgment that the defendants are responsible for future losses incurred through the failure of the COLI plans. The purpose of the statute on declaratory judgments is to afford relief from uncertainty with respect to rights.[95] A court will, however, exercise its discretion to grant declaratory relief when the benefit outweighs the risk of premature judgment.[96] Declaratory judgment is appropriate only if there is an actual controversy between the parties.[97] One of the determining factors is the dispute's ripeness for adjudication.[98] If future events may obviate the need for declaratory relief, then *632 the dispute is not ripe, and declaratory relief should not be granted.[99]
This dispute is not ripe for adjudication. Wal-Mart, in essence, seeks indemnification in the event it has to pay the death benefits it received under the COLI policies over to the estates of its deceased employees. This is not a proper claim for declaratory relief. "Courts have declined to enter a declaratory judgment with respect to indemnity until there is a judgment against the party seeking it."[100] As such, Wal-Mart's claim for declaratory relief should be dismissed.
V.
For the above reasons, the defendants' motion to dismiss is GRANTED. IT IS SO ORDERED.
NOTES
[1] Am. Compl. ¶¶ 1, 29. For the purposes of the pending motions to dismiss, the court takes the well-pleaded factual allegations of the complaint as true.
[2] For simplicity, the court refers to plaintiffs Wal-Mart Stores and the Wal-Mart Trust collectively as "Wal-Mart."
[3] On September 20, 2002, J & H Marsh & McLennan Private Client Services, formerly known as Marsh & McLennan National Marketing Corporation, was dissolved.
[4] The Marsh Entities are Delaware corporations with their principal places of business in New York, New York. NBG is a Minnesota corporation with its principal place of business in Minneapolis, Minnesota.
[5] The COLI plans are modeled on "key man" life insurance policies used by corporations for decades to lessen the costs incurred when key employees died. The broad-based COLI plans extend the practice to insure broader classes of corporate employees. Am. Compl. ¶ 21.
[6] Id. ¶ 3.
[7] Id. ¶ 29.
[8] Id. ¶¶ 39, 43.
[9] These policies covered the "managerial group" and provided higher policy limits than the policies purchased from AIG. Id. ¶ 42(a).
[10] Id. ¶ 37.
[11] Am. Compl. ¶ 46.
[12] See Am. Elec. Power Co., Inc. v. United States, 136 F. Supp. 2d 762 (S.D.Ohio 2001), aff'd, 326 F.3d 737 (6th Cir.2003) (upholding IRS disallowance of interest deductions on loans made against COLI policies); In re CM Holdings, Inc., 254 B.R. 578 (D.Del.2000), aff'd, 301 F.3d 96 (3d Cir.2002) (upholding bankruptcy claim for unpaid taxes); Winn-Dixie Stores, Inc. v. Comm. of Internal Revenue, 113 T.C. 254, 1999 WL 907566 (1999), aff'd, 254 F.3d 1313 (11th Cir.2001) (upholding disallowance of interest and administrative expense deductions).
[13] Tech. Adv. Mem. 9812005 (Mar. 20, 1998) (available without pagination at 1998 WL 123675); Tech. Adv. Mem. XXXXXXXXX (Jan. 8, 1999) (available without pagination at 1999 WL 5679).
[14] Wal-Mart claims that it is not seeking recovery for the "substantial unanticipated tax liability" from its settlement with the IRS. Am. Compl. ¶ 49.
[15] Id. ¶ 7.
[16] Mayo v. Hartford Life Ins. Co., 220 F. Supp. 2d 794 (S.D.Tex. Aug.8, 2002), aff'd, 354 F.3d 400, 2004 WL 14654 (5th Cir. Jan. 5, 2004).
[17] Answering Br. of Wal-Mart Stores, Inc. in Opp'n to AIG's and Hartford's Mot. to Dismiss the Am. Compl. ¶ 11.
[18] Am. Compl. ¶ 54.
[19] Id.
[20] Id. ¶¶ 80(a)-(c).
[21] Wal-Mart Stores, Inc. v. AIG Life Ins. Co., 2004 WL 405913, at *7, 2004 Del. Ch. Lexis 19, at *3-4 (Del.Ch. Mar. 2, 2004).
[22] Wal-Mart Stores, Inc. v. AIG Life Ins. Co., 860 A.2d 312, 314 (Del.2004) (per curiam).
[23] Kohls v. Kenetech Corp., 791 A.2d 763, 767 (Del.Ch.2000).
[24] Grobow v. Perot, 539 A.2d 180, 188 n. 6 (Del.1988).
[25] Id.
[26] Id.
[27] In re Lukens Inc. S'holders Litig., 757 A.2d 720, 727 (Del.Ch.1999).
[28] Am. Compl. ¶ 85.
[29] Rossdeutscher v. Viacom, Inc., 768 A.2d 8, 24 (Del.2001) (applying New York law); ID Biomedical Corp. v. TM Technologies, Inc., 1995 WL 130743, at *15 (Del.Ch. Mar. 16, 1995) (applying Delaware law).
[30] See Letter of Understanding at 2, Ex. 1 to Def.'s Joint Supplemental Br. The complaint makes reference to the Letter of Understanding, Am. Compl. ¶ 80(e), so this document is properly before the court on a motion to dismiss.
[31] Williams Nat. Gas Co. v. Amoco Prod. Co., 1991 WL 58387, at *13, 1991 Del. Ch. Lexis 73, at *40-*41 (Del.Ch. Apr. 16, 1991) (applying Kansas law and quoting Columbian Nat'l Title Ins. Co. v. Township Title Serv., Inc., 659 F. Supp. 796, 804 (D.Kan.1987)).
[32] Am. Compl. ¶¶ 3-4.
[33] Am. Compl. ¶ 7.
[34] Martin v. Star Pub'g Co., 126 A.2d 238, 242 (Del.1956).
[35] See, e.g., Sage Realty Corp. v. Jugobanka, D.D., 1997 WL 370786, at *2, 1997 U.S. Dist. Lexis 9301, at *6 (S.D.N.Y. July 2, 1997) ("Application of the commercial frustration doctrine has been limited to instances where a virtually cataclysmic, wholly unforeseeable event renders the contract valueless to one party.") (applying New York Law) (quotations omitted); Bartlett Commons Shopping Ctr. v. Schultz Sav-O-Stores, Inc., 1992 WL 345052, at *1, 1992 U.S. Dist. Lexis 17334, at *2 (D.Ill. Nov. 12, 1992) ("[T]he doctrine of `commercial frustration' or `commercial impracticability' as an extension of the contract defense of impossibility of performance ... is not to be applied liberally....").
[36] See Peoplesoft U.S.A., Inc. v. Softeck, Inc., 227 F. Supp. 2d 1116, 1119 (N.D.Cal.2002) ("The excuse of commercial frustration is a question of law, to be determined by the court from the facts of the case."); Scottsdale v. Plitt Theatres, Inc., 1999 WL 281085, at *3, 1999 U.S. Dist. Lexis 7785, at *9-*10 (N.D.Ill. Mar. 31, 1999) ("The foreseeability of the frustrating event is a question of law to be resolved by the court.... The court must also determine whether the value of counter-performance has been destroyed by the frustrating event."); Voyager Communications V, Inc. v. HMW Communications, 1996 U.S. Dist. Lexis 14447, at *6-*7 (E.D.N.C. Aug. 21, 1996) (dismissing a claim for restitution based on commercial frustration on the pleadings).
[37] Peoplesoft, 227 F.Supp.2d at 1119 ("In applying the frustration excuse, courts look first to see whether the fundamental reason of both parties for entering into the contract has been frustrated by an unanticipated supervening circumstance....") (emphasis added); Scottsdale, 1999 WL 281085, at *3, 1999 U.S. Dist. Lexis 7785, at *9 ("To successfully plead commercial frustration, a defendant must allege that ... the value of counter-performance had been totally or nearly totally destroyed by the frustrating cause."); Sage Realty, 1997 WL 370786, at *2, 1997 U.S. Dist. Lexis 9301, at *6 ("Application of the commercial frustration doctrine has been limited to instances where a virtually cataclysmic, wholly unforeseeable event renders the contract valueless to one party.") (quotations omitted).
[38] See Voyager, 1996 U.S. Dist. Lexis 14447, at *5; see also RESTATEMENT (2D) OF CONTRACTS, § 265 ("Where, after a contract is made, a party's principal purpose is substantially frustrated without his fault by the occurrence of an event the non-occurrence of which was a basic assumption on which the contract was made, his remaining duties to render performance are discharged, unless the language or the circumstances indicate the contrary.") (emphasis added).
[39] Williams Nat. Gas, 1991 WL 58387, at *13, 1991 Del. Ch. Lexis 73, at *43 (citations omitted); see also Peoplesoft, 227 F.Supp.2d at 1119 ("To excuse nonperformance of a contract on the ground of commercial frustration... the event must be of a nature not reasonably to have been foreseen...."); Scottsdale, 1999 WL 281085, at *3, 1999 U.S. Dist. Lexis 7785, at *9 ("To successfully plead commercial frustration, a defendant must allege that the frustrating event was not reasonably foreseeable and that the value of counter-performance had been totally or nearly totally destroyed by the frustrating cause."); Sage Realty, 1997 WL 370786, at *2, 1997 U.S. Dist. Lexis 9301, at *6 ("If a contingency is reasonably foreseeable and the agreement nonetheless fails to provide protection in the event of its occurrence, the defense of commercial frustration is not available.").
[40] Am. Compl. ¶ 3.
[41] Id. ¶ 7.
[42] "From the beginning of its exploration of COLI plans, Wal-Mart recognized that continued favorable tax treatment was essential to the viability of the plans." Am. Compl. ¶ 40.
[43] Neonatology Assocs., P.A. v. Comm'r, 299 F.3d 221, 231 n. 12 (3d Cir.2002) (citing Horn v. Comm'r, 968 F.2d 1229, 1236 n. 8 (D.C.Cir. 1992)); see also Higgins v. Smith, 308 U.S. 473, 477-78, 60 S. Ct. 355, 84 L. Ed. 406 (1940) ("The Government may look at actualities and upon determination that the form employed for doing business or carrying out the challenged tax event is unreal or a sham may sustain or disregard the effect of the fiction as best serves the purposes of the tax statute. To hold otherwise would permit the schemes of taxpayers to supersede legislation in the determination of the time and manner of taxation.").
[44] Id. ¶ 37.
[45] Letter of Understanding at 2, Ex. 1 to Def.'s Joint Supplemental Br.
[46] Id.
[47] Walker v. Cont'l Life & Accident Co., 445 F.2d 1072 (9th Cir.1971); W. L.A. Inst. for Cancer Research v. Mayer, 366 F.2d 220 (9th Cir.1966).
[48] Id. at 225-26.
[49] Id.
[50] Walker, 445 F.2d at 1074 (citations omitted).
[51] The court made essentially the same point in its earlier opinion. Wal-Mart, 2004 WL 405913, at *6 n. 53, 2004 Del. Ch. Lexis 19, at *27 n. 53. The Delaware Supreme Court expressly acknowledged and left undisturbed this finding. See Wal-Mart, 860 A.2d at 318 n. 13.
[52] See, e.g., Voyager, 1996 U.S. Dist. Lexis 14447, at *5 ("Here, Voyager is not using the doctrine of frustration of purpose to excuse performance. Rather, Voyager is attempting to use the doctrine to compel HMW to pay an additional $250,000 for the radio stations. The doctrine, however, is a shield, not a sword,"); Plitt Theatres, 1999 WL 281085, at *3, 1999 U.S. Dist. Lexis 7785, at *9 (characterizing commercial frustration as a viable defense, albeit a disfavored one, to a breach of contract claim); Sage Realty, 1997 WL 370786, at *2, 1997 U.S. Dist. Lexis 9301, at *6 (stating that commercial frustration operates to discharge duties under a contract).
[53] See FDIC v. Sahni, 1997 WL 51454, 1997 U.S.App. Lexis 2058, at *7 (9th Cir. Feb. 5, 1997) (characterizing commercial frustration as a defense to a breach of contract claim); Peoplesoft, 227 F.Supp.2d at 1119 (same).
[54] Cheese Shop Int'l, Inc. v. Steele, 303 A.2d 689, 690 (Del.Ch.1973), rev'd on other grounds, 311 A.2d 870 (1973).
[55] Lank v. Steiner, 213 A.2d 848, 852 (Del.Ch. 1965); Peyton v. William C. Peyton Corp., 7 A.2d 737, 747 (Del.1939).
[56] Goodrich v. E.F. Hutton Group, Inc., 1991 WL 101367, at *1, 1991 Del. Ch. Lexis 93, at *3 (Del.Ch.1991); Cheese Shop, 303 A.2d at 690.
[57] BAE Sys. N. Am. Inc. v. Lockheed Martin Corp., 2004 WL 1739522, at *8, 2004 Del. Ch. Lexis 119, at *39 (Del.Ch. Aug. 3, 2004) (quoting Gross v. Univ. of Chi., 14 Ill.App.3d 326, 302 N.E.2d 444, 453-54 (1973)).
[58] Bird's Constr. v. Milton Equestrian Ctr., 2001 WL 1528956, at *4, 2001 Del. Ch. Lexis 140, at *13-*14 (Del.Ch. Nov. 16, 2001) (quoting McMahon v. New Castle Assocs., 532 A.2d 601, 604 (Del.Ch.1987)).
[59] 742 A.2d 845, 849 (Del.1999).
[60] 274 A.2d 148, 150 (Del.Ch.1971).
[61] Id.
[62] Crosse v. BCBSD, Inc., 836 A.2d 492, 497 (Del.2003); see also Corrado Bros. v. Twin City Fire Ins. Co., 562 A.2d 1188, 1192 (Del. 1989).
[63] 836 A.2d at 497.
[64] Id. at 495 (quoting Corrado Bros., 562 A.2d at 1192).
[65] Crosse, 836 A.2d at 495.
[66] 136 F.Supp.2d at 777.
[67] Corrado Bros., 562 A.2d at 1192; Abex Inc. v. Koll Real Estate Group, Inc., 1994 WL 728827, at *16, 1994 Del. Ch. Lexis 213, at *46-*47 (Del.Ch. Dec. 22, 1994).
[68] Am. Compl. ¶ 30.
[69] Id.
[70] See, e.g., Pickard, 274 A.2d at 150.
[71] 2001 WL 1528956, at *4, 2001 Del. Ch. Lexis 140, at *13-*14.
[72] Crosse, 836 A.2d at 495.
[73] Lank, 213 A.2d at 852.
[74] Am. Compl. ¶ 29 ("Like many companies in the early 1990s, Wal-Mart began exploring ways to adapt to changes in accounting for and funding health and death benefits for its associates.... Accordingly, in or about August 1993, Wal-Mart's director of benefits design, Thomas Emerick, selected the broker defendants ... to advise Wal-Mart in connection with the potential purchase of broad based COLI plans ....") (emphasis added).
[75] Am. Compl. ¶ 29.
[76] See O'Malley, 742 A.2d at 849 (holding that a stockbroker violated his fiduciary duties to his client by engaging in self-dealing).
[77] Am. Compl. ¶ 35.
[78] Am. Compl. ¶¶ 40-41.
[79] Am. Compl. ¶ 80.
[80] Stephenson v. Capano Dev., Inc., 462 A.2d 1069, 1074 (Del.1983).
[81] Id.
[82] Id.
[83] U.S. WEST, Inc. v. Time Warner Inc., 1996 WL 307445, at *26, 1996 Del. Ch. Lexis 55, at *83 (Del.Ch. June 6, 1996).
[84] Lakeside Invs. Group, Inc. v. Allen, 253 Ga.App. 448, 559 S.E.2d 491, 493 (2002); Great Lakes Chem. Corp. v. Pharmacia Corp., 788 A.2d 544, 554 (Del.Ch.2001) ("Predictions about the future cannot give rise to actionable common law fraud. Nor can expressions of opinion.") (citations omitted).
[85] Lakeside, 559 S.E.2d at 493.
[86] See Consol. Fisheries Co. v. Consol. Solubles Co., 112 A.2d 30, 37 (Del.1955) ("[M]ere expressions of opinion as to probable future events, when clearly made as such, cannot be deemed fraud or misrepresentations."); Great Lakes, 788 A.2d at 554.
[87] Moore Bus. Forms v. Cordant Holdings Corp., 1995 WL 662685, at *8, 1995 Del. Ch. Lexis 134, at *23 (Del.Ch. Nov. 2, 1995).
[88] See Sanders v. Devine, 1997 WL 599539, at *6, 1997 Del. Ch. Lexis 131, at *19 (Del. Ch. Sept. 24, 1997) (holding that since there was no contractual relationship between the plaintiff and any of the defendants, allegations that the alleged misrepresentations or omissions made in connection with the formation of the contract violate the covenant of good faith "does not bear analysis.").
[89] New Haverford P'ship v. Stroot, 772 A.2d 792, 798 (Del.2001). Delaware case law is silent as to whether insurance brokers are "professionals" for malpractice purposes and other States are divided on this issue. See, e.g., Chase Sci. Research, Inc. v. NIA Group, Inc., 96 N.Y.2d 20, 725 N.Y.S.2d 592, 749 N.E.2d 161, 167 (2001) (stating that New York does not recognize suits for professional misconduct against insurance agents and brokers); Flemens v. Harris, 323 Ark. 421, 915 S.W.2d 685, 688 (1996) (applying the statute of limitations for professional malpractice to an insurance agent). This issue is relevant because "professionals" are held to a higher standard of care, and expert testimony is required in a malpractice case.
[90] Am. Compl. ¶ 105.
[91] Am. Compl. ¶ 80.
[92] Stephenson, 462 A.2d at 1074.
[93] Goodrich v. E.F. Hutton Group, Inc., 542 A.2d 1200, 1203 (Del.Ch.1988).
[94] Am. Compl. ¶¶ 37-38.
[95] 10 Del. C. § 6512; Dana Corp. v. LTV Corp., 668 A.2d 752, 755 (Del.Ch.1995).
[96] Id.
[97] Stroud v. Milliken Enter., Inc., 552 A.2d 476, 479 (Del.1989).
[98] Schick Inc. v. ACTWU, 533 A.2d 1235, 1238 (Del.Ch.1987).
[99] See, e.g., General DataComm Indus. v. Wisconsin Inv. Bd., 731 A.2d 818, 822 (Del.Ch. 1999) (citing Stroud, 552 A.2d at 479 and stating that the Declaratory Judgment Act should not to be used as a means of obtaining advisory rulings from Delaware courts).
[100] Dana Corp., 668 A.2d at 756 (citing Cunningham Bros., Inc. v. Bail, 407 F.2d 1165 (7th Cir.1969)). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/3345482/ | [EDITOR'S NOTE: This case is unpublished as indicated by the issuing court.] MEMORANDUM OF DECISION RE: DEFENDANT'S MOTION TO DISMISS
CT Page 12273
The defendant, Zoning Commission of the Town of Roxbury, moved the Court to dismiss this administrative appeal for the reason that the named plaintiffs failed to provide a bond or recognizance with surety to prosecute as required by Section 8-8
(h) of the General Statutes. Thereafter, the plaintiff, Mary Tinley, filed a request for leave to file amended recognizance, an amended recognizance, and a memorandum in objection to the defendant's motion to dismiss arguing that the amendment to the recognizance cures the defect upon which the defendant seeks dismissal.
General Statutes § 8-8 (h) states: "The authority issuing a citation in the appeal shall take from the appellant, unless the appellant is an official of the municipality, a bond or recognizance to the board, with surety to prosecute the appeal to effect and comply with the orders and decrees of the court." The recognizance, with Mary Tinley as principal and Sheila Fiordelisi as surety, states that the plaintiffs will prosecute the appeal and pay costs of judgment. The language of the statute and of Fuller's comments are singular not plural, indicating that only one bond or recognizance is necessary. See General Statutes §8-8 (h); R. Fuller, 9 Connecticut Practice Series, Land Use Law and Practice (1998 Pocket Part) § 25.7, p. 462-63. In addition, there appears to be an absence of any precedent in the case law regarding this issue. The Court finds that the amended recognizance is sufficient as to all plaintiffs. Each plaintiff need not submit his or her own bond or recognizance.
The recognizance cures the defect upon which the defendant's motion is based. See Sheehan v. Zoning Commission, 173 Conn. 408,410-11, 378 A.2d 519 (1977) (failure to provide a proper bond or recognizance may be cured by filing an amendment); Paige v. TownPlan and Zoning Commission, Superior Court, judicial district of Fairfield at Bridgeport, Docket No. 289197 (March 23, 1992, Lewis, J.); Tamm v. Greenwich Planning Zoning Board of Appeals, Superior Court, judicial district of Stamford/Norwalk at Stamford, Docket No. 113655 (October 3, 1991, Ryan, J.); R. Fuller, 9 Connecticut Practice Series, Land Use and Practice (1998 Pocket Part) § 25.7, p. 463.
For the foregoing reasons, the defendant's motion to dismiss is hereby denied. CT Page 12274
By the Court,
DOHERTY, J. | 01-03-2023 | 07-05-2016 |
https://www.courtlistener.com/api/rest/v3/opinions/1532089/ | 370 S.W.2d 100 (1963)
AETNA INSURANCE COMPANY et al., Appellants,
v.
Hugh WEATHERFORD et al., Appellees.
No. 14130.
Court of Civil Appeals of Texas, San Antonio.
June 19, 1963.
Rehearing Denied July 17, 1963.
*101 Clemens, Knight, Weiss & Spencer, San Antonio, for appellants.
Green, Green & Wiley, Perry R. Smith, San Antonio, for appellees.
BARROW, Justice.
This is a suit for declaratory judgment that Leonard P. Smith is an additional insured under the terms of a garage liability policy issued by Aetna Insurance Company to Bailey & Carpenter, Inc., a Texas corporation doing business as an automobile dealership. On August 2, 1957, Smith was operating a 1947 Chrysler automobile which was involved in a collision at the intersection of San Saba and Martin Streets in the City of San Antonio, with a vehicle occupied by appellees. Subsequently appellees secured a default judgment against Smith for sums within the coverage afforded under the policy issued to Bailey & Carpenter, Inc. Following a jury trial, the trial court overruled appellants' motions for judgment and for judgment non obstante veredicto and rendered judgment for appellees against appellant Aetna Insurance Company for the amount of the default judgment against Smith plus accrued interest. No affirmative relief was sought against appellant Bailey & Carpenter, Inc. Five questions were submitted to the jury and these jury findings are set forth with the evidence pertaining to each.
The primary question presented is, was Smith an "additional insured" under the policy at the time of the accident? The garage liability policy issued by appellant to Bailey & Carpenter, Inc., contains the following provisions pertinent to this appeal:
"III. Definition of Insured. With respect to the insurance under coverages A.B. and D., the unqualified word `insured' includes the named insured and also includes * * * (2) any person while using an automobile covered by this policy, * * * provided the actual use of the automobile is by the named insured or with his permission."
To determine this question, it is necessary to review a rather complex series of events which began on July 31, 1957.
Mrs. Donnell, mother of Smith, managed an apartment house at 814 Camden Street, San Antonio. Smith lived in this house and there operated a radio and television repair shop. A few days before July 31, 1957, Robert Duty and wife moved into this house. Duty had another job during the day, but at night assisted Smith in delivering the repaired units. Smith did not have a car, and deliveries were made by use of Mrs. Donnell's car. This arrangement was not satisfactory to her and Smith agreed to help Duty secure a car which would be used some in Smith's business. Mrs. Donnell had previously purchased two cars from Bailey & Carpenter, Inc., and she and Smith were both known to its members. About noon on July 31st, Mrs. Donnell and Duty visited the dealer's lot located at 1006 South Flores Street and Duty became interested in the 1947 Chrysler involved herein. They returned to the apartment house and Smith later telephoned R. L. Harrell, the sales manager of Bailey & Carpenter, Inc. Harrell agreed to sell the car to Smith for $100.00, of which sum $50.00 was to be paid down and a thirty-day note executed for the remaining $50.00. About 6:00 p. m. that day, Smith and Duty went to the lot to close the deal. Harrell had gone home *102 and it was necessary for the salesman to telephone Harrell and get authority to close the deal on those terms, and to place the title in the name of Duty. Smith gave Bailey & Carpenter, Inc., his check for $50.00 and signed the note. Duty signed forms for the application for certificate of title and the required purchaser's affidavit. The certificate of title remained in the possession of Bailey & Carpenter, Inc. The evidence showed that a dealer has ten days in which to file these papers. The possession of the car was given to Duty and Smith, and they left in the car. The jury, in answer to Questions Nos. 1 and 2, found substantially:
No. 1. That on the evening of July 31, 1957, when the 1947 Chrysler was placed in the possession of Duty and Smith, Bailey & Carpenter, Inc., through its agents, servants, or employees, agreed to sell said automobile to Duty and Smith or either of them.
No. 2. That on the evening of July 31, 1957, when the 1947 Chrysler was placed in possession of Duty and Smith, the said Duty and Smith, jointly or either of them individually, agreed to buy said automobile.
Smith and Duty both testified that the sales agreement was that the check would not be sent to the bank, but would be held until Smith could bring the money to Bailey & Carpenter, Inc., and pick up the check. This testimony was contradicted by both Harrell and the salesman who closed the deal, and the jury, in answer to Question No. 5, found that the agreement to sell was conditioned upon the payment of the $50.00 check by the bank when presented.
On the morning of August 1st, the bookkeeper of Bailey & Carpenter, Inc., took the check to the bank upon which it was drawn and there learned that Smith had no account. Upon learning this fact, Bailey & Carpenter, Inc., began a series of telephone and personal calls to Smith at the apartment house. These calls and visits began shortly after the dealer learned the check was not valid, and continued through August 2, 1957. The exact conversations are somewhat disputed, however, the testimony is clear that Bailey & Carpenter, Inc. was very displeased and indignant with Smith and demanded immediate action. The jury found upon sufficient evidence, in answer to Question No. 3, that Bailey & Carpenter, Inc., through its agents, servants or employees, cancelled its agreement to sell and demanded the immediate return of the automobile prior to the time of the collision.
The whereabouts of Duty and the car during the evening and night of August 1st is not determined by the record. Duty testified he was at the apartment that night, but Smith said he did not see Duty on August 1st. Smith and Duty both testified that Duty returned from work about 5:30 p. m. on August 2d. About 8:00 p. m. Smith advised Duty of the "hot" check and Bailey & Carpenter's demand for return of the car. Duty then delivered the keys to Smith. Smith did not immediately return the car as demanded, and made no attempt to contact Bailey & Carpenter, Inc., in any way. He testified that he had previous arrangements for a date at 10:00 that night with a waitress employed in a night club located in the 300 block of South Zarzamora Street. He determined that he would go by the club and then have his date follow him in her car to the lot of Bailey & Carpenter, Inc. After securing the keys from Duty, Smith took a nap until about 8:30 or 9:00 p. m. and then drove the 1947 Chrysler out to the night club. His proposed date was sick and not at work, so he drank two bottles of beer with a friend, and was retracing his route to the night club when the wreck occurred. He subsequently pleaded guilty to a charge of driving while intoxicated. He testified that he was going to return the car to Bailey & Carpenter, Inc., and take a taxicab to the apartment house.
Camden and Martin Streets run generally in an east-west direction, and Flores and Zarzamora Streets run generally in a north-south direction. The apartment house is about five or six blocks north of the intersection of Martin and Flores *103 Streets, and the premises of Bailey & Carpenter, Inc., are about fifteen blocks south of this intersection. Zarzamora Street is west of Flores Street. The jury, in answer to Question No. 4, found that Smith was returning the 1947 Chrysler to the possession of Bailey & Carpenter, Inc., pursuant to its cancellation of sale and demand to return it, when the collision occurred.
Appellant asserts that Smith was not an additional insured at the time of the accident, as he was operating the vehicle as a conditional vendee, and, in any event, it was not being used with the permission of Bailey & Carpenter, Inc. Although there are relatively few cases on this point, the rule appears to be well settled that a conditional vendee does not use the insured vehicle with the consent or permission of the conditional vendor, and therefore is not within the coverage of an omnibus clause of an automobile liability insurance policy as involved in this case. See 36 A.L.R. 2d 673; 5A Am.Jur., Automobile Insurance, p. 94. The reason for this rule is that the automobile is no longer owned by the insured in such a sense as will, legally speaking, enable the insured to give or withhold his permission or consent to the use of the automobile by the conditional vendee, since the vendor, though retaining title to the car until fully paid for, does so for security reasons only and has no control over the car and no right to its use.
In Rush v. Smitherman, Tex.Civ.App., 294 S.W.2d 873, writ ref., this Court discussed the relationship between seller and purchaser where the formal legal title had not been transferred in accordance with the Texas Certificate of Title Act. The contract to sell was recognized as between the parties and it was held that when the accident occurred, the conditional vendee was not driving the vehicle by force of authority or permission from the seller. See also World Fire and Marine Insurance Co. v. Puckett, Tex.Civ.App., 265 S.W.2d 641.
Appellees do not question this rule, but say that it has no application here, since the jury found the sale was conditioned upon the validity of the check, and when the check failed the sale failed. In our opinion, it is immaterial whether payment of the check was a condition precedent or condition subsequent, in that in any event the possession of Smith and Duty was by virtue of this sales agreement and not by virtue of any consent or permission of Bailey & Carpenter, Inc. Furthermore, the jury found that Bailey & Carpenter cancelled the sales agreement and demanded the immediate return of the car. It is seen also that this right to rescind upon discovery of the "hot" check was recognized by Smith and Duty.
The Supreme Court in Guinn v. Lokey, 151 Tex. 260, 249 S.W.2d 185, approved the rule that a vendor who has been induced by fraud to part with his property is entitled to rescind the sale if he so elects. See also Raby v. Sweetzer, 12 Tex. Civ. App. 380, 34 S.W. 779. Upon this rescission, title in the automobile vested in Bailey & Carpenter, Inc., and it was entitled to possession. Flatte v. Kossman Buick Co., Tex. Civ.App., 265 S.W.2d 643; Deahl v. Thomas, Tex.Civ.App., 224 S.W.2d 293.
This was the relationship of the parties when Smith secured the keys to the automobile from Duty. Appellees urge that Smith became a bailee for benefit of Bailey & Carpenter, Inc. Such a contention ignores the basic fact that possession of the car had been obtained by Smith and Duty through the fraud of Smith in giving a worthless check. This contention further ignores the fact that in order to effectuate the rescission, it was necessary that the car be restored to Bailey & Carpenter, Inc. 77 C.J.S. Sales § 107. Any permission given Smith must be found in this relationship and the jury's finding that Bailey & Carpenter, Inc., "demanded the immediate return of the 1947 Chrysler." Unquestionably, Smith did not do this. Appellees urge, however, that any deviation was only a slight or minor one and would not nullify Smith's initial permission.
The construction of the omnibus clause of liability insurance policies as here involved *104 has been the source of considerable litigation. The constructions placed upon this clause by the various courts have been generally classified under three rules. These are: a liberal rule, by which any use after initial permission is granted is said to be with the permission of the named insured; a strict rule, whereby not only the initial permission is required, but also the particular use being made of the insured vehicle at the time involved, must have been with the express or implied permission of the named insured; and a rule that a minor deviation from the purpose for which the insured granted permission to use the vehicle will not be sufficient to defeat the coverage. Olgin v. Employers Mut. Cas. Co., Tex.Civ.App., 228 S.W.2d 552; 5 A.L.R. 2d 600; Appleman, Insurance Law and Practice, §§ 4366-4368.
It appears that Texas does not follow either the liberal or strict rule. Rather, it is our opinion that the cases in this state have applied a rule that the vehicle must be used for a purpose reasonably within the purpose and limits intended by the parties. This rule does not exclude coverage for an immaterial deviation, but requires the use to be reasonably within the intention of the parties at the time consent was given. In Salitrero v. Maryland Cas. Co., Tex.Civ.App., 109 S.W.2d 260, writ ref., it was said that it is not the court's function to attach greater scope to the bailment than was attached to it by the parties. In Olgin v. Employers Mut. Cas. Co., supra, coverage was denied where the truck, although in custody of an employee, was used in violation of instructions of the employer. The relationship of the parties and the scope of the permission given is very important. Obviously, the same construction could not be applied to the permission given a regular employee operating a company vehicle, or a social friend, as that applied to the permission given a stranger to take a vehicle to a specific location. The relationship of Smith with Bailey & Carpenter, Inc., upon rescission of the sales agreement, because of the "hot" check, requires a narrow construction of the permission given.
When we review the actions of Smith in the light of his relationship with Bailey & Carpenter, Inc., it cannot be said that he was operating the 1947 Chrysler with its permission at the time of the accident, under the terms of the insurance policy. (1) Smith was not within the "time" intended by the parties: Bailey & Carpenter, Inc., had been trying to get the car back since the morning of August 1st. Duty returned to the apartment house with the car about 5:30 p. m. on August 2d; Smith obtained the car keys about 8:00 p. m.; the accident occurred between 10:00 p. m. and 10:30 p. m. During this interim, Smith became under the influence of intoxicants. (2) Smith was not carrying out the express or implied "purpose" of his permission: he was given permission for one explicit purpose, the immediate return of the car; it cannot be said that this is any implied authority to combine a date, which was unknown to Bailey & Carpenter, Inc., with the return of the car. (3) Smith was not on the direct "route" as required by the "immediate return of the vehicle": he had turned off South Flores Street and the direct route, when he turned to the west onto Martin Street and went out to the night club; he was on his return to South Flores Street when the accident occurred. It has been held that the return from a deviation is a part of the deviation. Southwest Dairy Products Co. v. De Frates, 132 Tex. 556, 125 S.W.2d 282, 122 A.L.R. 854; Olgin v. Employers Mut. Cas. Co., supra. This rule is not changed by the jury's finding of Smith's intention to return the car. Mosqueda v. Albright Transfer & Storage Co., Tex.Civ.App., 320 S.W.2d 867. Under all these factors, it cannot be said that this was an immaterial deviation.
In view of our holding that Smith was not an additional insured under the policy, it is not necessary to discuss appellants' other points which complain of procedural errors.
The judgment of the trial court is reversed and judgment here rendered that appellees take nothing by this suit and that appellants recover their costs. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1532093/ | 370 S.W.2d 929 (1963)
Johnny DAVENPORT, Plaintiff in Error,
v.
Charles ROBBINS and Wife, Defendants in Error.
Court of Appeals of Tennessee, Eastern Section.
April 24, 1963.
Certiorari Denied September 11, 1963.
Phillips & Hale, Rogersville, for plaintiff in error.
Henry R. Price and Thomas H. Rogan, Rogersville, for defendants in error.
Certiorari Denied by Supreme Court September 11, 1963.
McAMIS, Presiding Judge.
Charles Robbins and wife brought this action against Johnny Davenport to recover for the death of their son James *930 Robbins who was killed at the age of five years as the result of a collision between the automobile of Davenport, operated by him, and a sled on which James Robbins was sleigh riding.
There was a verdict and judgment in favor of the plaintiffs for $12,500 from which defendant Davenport prosecutes the present appeal. The first assignment makes the insistence that there is no material evidence of negligence in the operation of the car and that the court should have directed a verdict for defendant because the mother was guilty of proximate contributory negligence as a matter of law in allowing her son to sleigh ride on a public street. This assignment requires an outline of the proof.
The factual background is accurately stated in defendant's brief from which we quote:
"The plaintiffs reside in Rogersville, where Mr. Robbins is employed by the Holston Electric Cooperative. They are the parents of three children, Donna age 9, Chuck age 7, and Jimmy age 5.
"Their residence house is on Douglas Drive in Rogersville, which runs generally east and west, and parallel and to the south of McKinney Avenue. Douglas Drive and McKinney Avenue are connected by Ayers Street, which runs down hill from Douglas Drive into McKinney Avenue, where it dead ends. The home of Mr. and Mrs. Robbins is one door to the east of the intersection of Ayers Street with Douglas Drive.
"On the morning in question, Mr. and Mrs. Robbins had entertained house guests who had been with them over the week end.
"Their children had spent the night with their grandmother, and the next morning, Mr. Robbins left for work at about 8:00 o'clock. When he left for work, both Douglas Drive, the street upon which he lived, and McKinney Avenue, the parallel street to the north and below Douglas Drive, were both clear of ice and snow. However, the intersecting street, Ayers Street, which was the nearest down-hill slope to his home upon which any sledding could be done, was virtually covered with ice and snow.
"When Mrs. Robbins left the home at a later hour, so as to go to a restaurant for breakfast with their house guests, she travelled westerly on Douglas Drive to a street called Colonial Road, using that means to get away from their residence house, and avoiding Ayers Street because it was covered with snow and ice.
"About 9:00 o'clock, Mrs. Robbins picked up her three children from the home of their grandmother and took them on up to their own home, where the youngest, James, and the oldest, Donna, watched television, while Chuck, age 7, went out for sled-riding. This was a Monday, but school had not taken up that day, because of the condition of the country and county roads.
"James Robbins stayed in the house a little over an hour, and then decided he wanted to go out and play with his brother and a friend of the brother's named Larry Carroll. Mrs. Robbins dressed him in a red carcoat which came almost to his knees, and red boots which also almost came to his knees, and let him out of the house. Mrs. Robbins had seen her oldest son with the Carroll boy out in her back yard, sled riding. A few moments after letting Jimmy out of the house he came back to the front door of the home, complaining of the fact that the two older boys would not let him ride on the sled.
"At that time, the two older boys were using Ayers Street as their sled run, and had made at least five trips down Ayers Street toward McKinney Avenue, running the sled off into a ditch, before reaching McKinney Avenue.
"They were terminating their sled runs in the yard of neighbors who lived on the northwest corner of the intersection of Ayers Street with McKinney Avenue.
"When little James Robbins went to the house, he rang the front door bell, and this signal was answered by Mrs. Robbins.
*931 "When Jimmy complained of the fact that the older boys would not let him ride the sled, Mrs. Robbins told him that he could do so, and to tell his seven year old brother to let Jimmy ride.
"When Mrs. Robbins first let Jimmy out of the house, he was let out of the front of the house, rather than the rear, and when he returned to the home to make his complaint, he returned to the front door. And during all that time, Mrs. Robbins had sure and certain knowledge that Ayers Street, where the older boys were then sled riding, was covered with snow and ice.
"After telling Jimmy he could ride on the sled, and without ascertaining where the riding was to be done, Mrs. Robbins went on about her housework, and was informed a short time later of the accident in which her child was involved.
"In the meantime, when little Jimmy got instructions from his mother, to relay to his brother, to the effect that he could ride the sled, he went back to the crest of Ayers Street, and told his brother and the little Carroll boy that his mother had said he could ride the sled. He was then allowed to get on the sled, and to go down Ayers Street toward McKinney Avenue, where the accident occurred, and by reason of Ayers Street being down hill all the way from the top down to McKinney Avenue, and by reason of its being mostly covered with ice, Jimmy, riding the sled on his stomach with his head to the front, was going at a fast speed by the time he got to the bottom of Ayers Street at the intersection of McKinney Avenue."
Defendant testified that he approached the intersection on McKinney Avenue at a speed of 20 to 25 miles per hour; that he never saw the Robbins child before the accident and that the first he knew that an accident had occurred was when he heard a thump against the side of his car. He had seen no children sledding on Ayers Street but admitted having seen children sleigh riding on other streets in Rogersville. He says the sled on which the deceased boy was riding was painted red and that after the accident he found some red paint about two and one-half feet above ground near the center of the right front door of his car which he later pointed out to plaintiffs.
Larry Carroll who had been riding the sled testified that he saw the sled going northwardly toward the intersection at a point 51.5 feet south of the intersection and that defendant's car was then west of the intersection at a point shown by other proof to be 239 feet from the intersection. According to this witness the right front wheel of the car struck the guider of the sled and knocked the sled eastwardly on McKinney Avenue but toward the south side of McKinney Avenue.
It appears from photographs in the record that McKinney Avenue is practically level and that there is nothing to obstruct the view of a driver approaching the intersection from the west except the Martin residence which is located well back from both streets.
If the jury believed the testimony of Larry Carroll it could have found that the sled was in front of the car when struck. If so, in view of the clear and unobstructed view of the intersection from the west, the jury could reasonably conclude that if defendant had been upon the lookout he could and should have seen the sled before it became an obstruction and, in view of his slow speed, could have checked the speed of his car to allow the sled to pass in front of it. Thus, the questions of negligence and proximate cause were for the jury.
In Hadley v. Morris et al., 35 Tenn.App. 534, 249 S.W.2d 295, the defendant driver failed to observe a boy running across the highway until he stepped on the pavement just before being struck by the car. The reason offered for not sooner observing the child was the presence of two road graders which distracted the defendant's attention. The Court cited and quoted *932 from Harris v. Miller, 24 Tenn.App. 332, 144 S.W.2d 7, as follows:
"It is the duty of the driver of an automobile to keep a diligent lookout ahead and to see all that comes within the radius of his line of vision, both in front and to the side. He is not required to turn his head at every private driveway as he passes upon a public thoroughfare, in anticipation that some person or loose horse will run out upon a city street. It is sufficient if the driver sees what falls within his side view of his lookout ahead."
The Court then said:
"We think it was for the jury to say whether Mr. Morris was negligent in paying such close attention to the road grader he was in the act of meeting and passing that his attention was momentarily distracted from the view straight ahead; how far away he was from the point of impact when he should have seen the boy; how far the boy was from the road when he should have been seen by the lateral vision of Morris; when he should have anticipated the boy was going to run upon the road, etc.
"It is a matter of common observation that children play and run on and about an unfenced lawn abutting on a road or a street without necessarily getting on the road proper. A motorist must be on guard for such situations, but he is only required to exercise ordinary care under the circumstances to discover the peril and to strive to avoid injuring a child or an animal which does run on to the road."
In this case there was nothing to obstruct the driver's view of the intersection and the approach of Ayers Street from the south. In contrast to the Hadley case, there were no other vehicles distracting the driver's attention. And in that case the driver, despite the distraction of two road graders, saw the child before he was struck though not soon enough to avoid the accident. Even under those circumstances the question of the driver's negligence was held to be a question for the jury. In this case defendant admits that he did not see the child at all and we think whether he was negligent in failing to maintain a proper lookout and whether that was the proximate cause of the accident were properly submitted to the jury.
In Hale v. Rayburn, 37 Tenn.App. 413, 264 S.W.2d 230, the failure of the driver to see a pedestrian soon enough to enable him to check his car and avoid the accident was held to make the driver's negligence a question for the jury, despite evidence of other vehicles on the highway. Other cases of similar import could be cited as sustaining the action of the Court in this case in not directing a verdict for defendant on the issues of negligence and proximate cause.
We are also of opinion the court was correct in not directing the jury to find for defendant because of the mother's alleged contributory negligence. Mrs. Robbins testified that she had seen Chuck Robbins and Larry Carroll riding the sled in her back yard and that when she told the deceased boy he could ride she was not aware that the other boys had moved the sled to Ayers Street. Even though she knew, as she admits, that Ayers Street was covered with ice and snow whether she should have anticipated that the sled would be moved there presented a question for the jury.
"Where the evidence is in conflict, or, as here, where different conclusions might reasonably be drawn therefrom, questions of negligence and contributory negligence are for the jury. McBroom v. S.E. Greyhound Lines, 29 Tenn.App. 13, 193 S.W.2d 92; Campbell v. Campbell, 29 Tenn.App. 651, 199 S.W.2d 931. Likewise, questions of ordinary care and proximate cause are for the jury. Southeastern Greyhound Lines v. Groves, 175 Tenn. 584, 136 S.W.2d 512, 127 A.L.R. 1378; Campbell v. Campbell, supra; Fields v. Gordon, 30 Tenn.App. 110, 203 S.W.2d 934." Hale v. Rayburn, 37 Tenn.App. 413, 264 S.W.2d 230.
The second assignment is that the Court erred in charging the jury that the *933 principal question for determination was whether the defendant saw the boy on the sled. Looking to the charge it appears that the Court coupled this charge with the charge on other questions such as whether the defendant exercising reasonable care could have seen the boy, whether he was keeping a proper lookout and had his car under such control that it could have been stopped. Taken in context we can not say this portion of the charge was erroneous.
Under the third assignment of error it is insisted the Court erred in charging that the sled on which the deceased was riding is a vehicle within the meaning of T.C.A. § 59-828(b) providing:
"When two (2) vehicles enter an intersection from different highways at approximately the same time, the driver of the vehicle on the left shall yield the right-of-way to the vehicle on the right."
In support of this insistence defendant relies upon T.C.A. § 59-801 defining a vehicle as:
"Every device in, upon or by which any person or property is or may be transported or drawn upon a highway, excepting devices moved by human power or used exclusively upon stationary rails or tracks."
Webster's Dictionary defines "vehicle" as:
"Any device on wheels or runners for conveying persons or objects, as a cart, sled, automobile, etc. Any means of carrying, conveying, or communication." (Italics ours)
Thus a sled is a vehicle controlled by T.C.A. § 59-828(b) unless it falls within the statutory exclusion of "devices moved by human power or used exclusively upon stationary rails or tracks." A sled is not used exclusively, if at all, on stationary rails or tracks and, while the question is not free from doubt, we are of opinion it is not to be classified as a device moved by human power while sliding by force of gravity on snow and ice and not being pulled by a person.
The Legislature will not be held to have intended to depart from the generally accepted meaning of a term used in a statute in the absence of a contrary showing. Nashville Elec. Service v. Luna, 185 Tenn. 175, 204 S.W.2d 529; Nashville Gas & Heating Co. v. Nashville, 177 Tenn. 590, 152 S.W.2d 229. Unless to do so seems to violate settled rules of construction, leads to an absurdity or defeats the apparent overall purpose of the statute, words selected by the legislature are generally to be given their ordinary and natural meaning. Roberts v. Cahill Forge, etc., Co., 181 Tenn. 688, 184 S.W.2d 29; Moto-Pep, Inc. v. McGoldrick, 202 Tenn. 119, 303 S.W.2d 326.
If the construction of the statute, contrary to what has been said, was erroneous it does not affirmatively appear that it was prejudicial, especially in view of the Court's charge that the principal questions were whether defendant saw the child and whether he had his car under proper control. T.C.A. § 27-117.
Defendant's final insistence is that the Court erred in admitting over his objections two photographs of the intersection taped together end to end to give a composite view of the intersection. There is evidence that some inaccuracy may have resulted from taking them without moving the camera and taping them together in the manner shown. However, there is other evidence that the two pictures so combined fairly portrayed the situation at the intersection. We think the objection went to the weight of this evidence rather than to its admissibility.
We find no error and it results that all assignments are overruled and the judgment affirmed.
AVERY and COOPER, J., concur. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1532134/ | 872 A.2d 269 (2005)
Elliott B. WEISS, Appellant,
v.
WILLIAMSPORT AREA SCHOOL DISTRICT.
Commonwealth Court of Pennsylvania.
Submitted on Briefs January 7, 2005.
Decided April 19, 2005.
*270 Elliott B. Weiss, Williamsport, appellant, pro se.
Fred A. Holland, Williamsport, for appellee.
BEFORE: FRIEDMAN, J., LEAVITT, J., and FLAHERTY, Senior Judge.
OPINION BY Senior Judge FLAHERTY.
Elliott B. Weiss (Weiss) appeals from three orders of the Court of Common Pleas of Lycoming County (trial court). The first order sustained the preliminary objections of the Williamsport Area School District (School District) and dismissed Count I of Weiss' complaint; and the second order found Count II of Weiss' complaint `absurd' and dismissed Count II of Weiss' complaint. The third order directed a transcript be made of the non-jury trial and directed the record be transmitted to the Superior Court. We affirm the first decision regarding Count I on other grounds and also affirm the second decision regarding Count II.[1]
On September 25, 2003, Weiss requested certain documents from the School District under the Act commonly known as the Right to Know Act (Act), Act of June 21, 1957, P.L. 390, as amended 65 P.S. §§ 66.1-66.9. The School District provided some of the documents and denied Weiss' request for a letter to the School District Superintendent and the Superintendent's response. The District maintained that the letters were not public documents required to be produced under the Act. The School District charged Weiss twenty-five cents per page to copy the documents that were provided.
On October 28, 2003, Weiss filed a petition for review with the trial court claiming in Count I that the documents he was denied were public records under the Act. Weiss further claimed in Count II that the copying charges imposed were excessive and exceeded the prevailing fee for comparable duplication services charged by local business entities.
On November 18, 2003, the School District filed preliminary objections in the nature of a demurrer to Count I of the petition for review. On April 5, 2004, after a hearing and in camera review of the letters requested on Count I, the trial court sustained the preliminary objections and Count I of the petition was dismissed.
On April 13, 2004, an amended petition for review was filed that was substantially the same as the original petition for review. On May 7, 2004, the trial court entered an order authorizing the filing of a further amended petition within twenty days and required Weiss to advise the trial *271 court and counsel how Count I of the amended petition differed from Count I of the original petition. The May 7, 2004 order did not strike the amended petition for review. On June 22, 2004, the trial court ordered a hearing on August 11, 2004. On July 11, 2004, as no further amended petition was filed, the School District filed preliminary objections to the amended petition for review asking that it be stricken.
On August 11, 2004, the trial court heard arguments regarding the preliminary objections to the amended petition for review and ordered that the amended petition was not permissible. The trial court further heard arguments regarding Count II of the original complaint, after which, the trial court held that the twenty-five cents per page fee was reasonable and dismissed Count II.
On September 27, 2004, the trial court issued another order which directed the court reporter to transcribe the non-jury trial upon pre-payment of all costs and directed the prothonotary to transmit the record to the Superior Court without waiting for the transcript. Weiss appealed all three decisions to our Court.
Weiss contends that the trial court erred in applying the wrong legal standards in its determination to dismiss the petition for review, in its determination that the documents sought were not public documents and in determining that the costs charged to Weiss were appropriate under the Act.
The School District filed preliminary objections to Count I of Weiss' petition under Pa.R.C.P. No. 1028(a)(4) which provides that: "preliminary objections may be filed by any party to any pleading and are limited to the following grounds... legal insufficiency of a pleading (demurrer)."
In Knopsnider v. Derry Township Board of Supervisors and Eugene Matteo, 725 A.2d 245 (Pa.Cmwlth.1999), our Court found that the trial court erred in granting preliminary objections in a statutory appeal involving the Act. We found in pertinent part as follows:
The rules of civil procedure only apply to actions brought by a praecipe for a writ of summons or a complaint. See Pa.R.C.P. Nos. 101; 1007. Because a Right-to-Know Act cause of action is begun by the filing of a notice of appeal, we have previously held that the rules of civil procedure do not apply to matters under the Right-to-Know Act. See Morning Call, Inc. v. Lower Saucon Township, 156 Pa.Cmwlth. 397, 627 A.2d 297, n. 8 (Pa.Cmwlth.1993); Shultz v. Board of Supervisors of Jackson Township, 95 Pa.Cmwlth. 550, 505 A.2d 1127 (Pa.Cmwlth.1986). Because the rules of civil procedure do not apply, the Board cannot challenge the filing of Knopsnider's appeal by filing preliminary objections pursuant to Pa. R.C.P. No. 1017.... However, because an action challenging a local agency decision is captioned a "notice of appeal," fact pleading is not required; but at the very most, all that an appellant must plead is that an appeal is being taken and the reasons for the appeal in order to put the governmental entity on notice of why the appeal is being taken.
Id. 725 A.2d at 247.
In the present controversy, Weiss filed a notice to defend with a petition for review divided into two Counts. Count I addressed the School District's failure to produce documents that it alleged are public records under the Act. Count II addressed the School District's failure to provide duplication services at a reasonable rate in accordance with the Act. The School District filed preliminary objections *272 to Count I of Weiss' petition. Although the rules of civil procedure do not apply to a statutory appeal involving the Act, the trial court's grant of the preliminary objections to Count I was harmless error. The trial court examined the documents requested in camera at the hearing on the preliminary objections and after such review found the documents were not public records under the Act. As the trial court did reach the merits of the case during the hearing, a remand for a hearing on the merits would be redundant. Therefore, in the interest of judicial economy, we affirm as to Count I.
Next, Weiss contends that the trial court erred in determining that the costs charged for copies by the School District were appropriate under the Act.[2] The Section 7 of the Act provides in pertinent part as follows:
Fees for duplication by photocopying, printing from electronic media or microfilm, copying onto electronic media, transmission by facsimile or other electronic means and other means of duplication must be reasonable and based on prevailing fees for comparable duplication services provided by local business entities.
...
Except as otherwise provided by statute, no other fees may be imposed unless the agency necessarily incurs costs for complying with the request, and such fees must be reasonable. No fee may be imposed for an agency's review of a record to determine whether the record is a public record subject to access in accordance with this act.
65 P.S. § 66.7(b) and (g).
Weiss presented evidence of fees for duplication services provided by Mailboxes, Etc., the Print Shoppe, Staples and Yoas. The School District presented evidence of fees for duplication services provided by Lycoming County, Lycoming College, the Pennsylvania College of Technology, and Northwest Savings Bank. Weiss argued that the School District's examples were colleges, counties and government entities and not examples of local business entities. Weiss presented local businesses that provide duplication services for the public's use. However, the businesses did not have to retrieve any of the documents copied. The trial court found that the School District provided more accurately comparable businesses, in that a school is more similar to a county or government office or college than a business supply-type store.
The trial court was correct in determining that a college, and a county or government office may be considered a local business for the purposes of the Act. There is nothing in the Act that precludes them from consideration. The School District did not impose any charge for retrieval of the documents. It merely imposed a twenty-five cent per page flat fee charge, which had been the charge designated by the School District for all copies made previously under the Act. Our Court has found that twenty-five cents a page is a reasonable charge. See Baravordeh v. Borough Council of Prospect Park, 699 A.2d 789 (Pa.Cmwlth.1997) and York Newspapers, Inc. v. City of York, 826 A.2d 41 (Pa.Cmwlth.2003). Thus, the trial court was correct in finding that the twenty-five cent fee was reasonable.
Accordingly, we affirm the trial court's first decision regarding Count I of Weiss' complaint on other grounds and also affirm *273 the trial court's second decision regarding Count II of Weiss' complaint.
ORDER
AND NOW, this 19th day of April, 2005 the order of the Court of Common Pleas of Lycoming County (trial court) which sustained the preliminary objections of the Williamsport Area School District and dismissed Count I of Elliott B. Weiss' complaint is affirmed on other grounds; and the order of the trial court which dismissed Count II of Weiss' complaint is also affirmed.
NOTES
[1] The third order does not affect Weiss in any manner as it merely orders a transcript and transmission of the record to the Superior Court. Therefore, we need not address this order in our opinion.
[2] Our review of a question of law as to the propriety of a fee charged by a school district under the Act is plenary. Smith v. Manson, 806 A.2d 518 (Pa.Cmwlth.2002). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1532152/ | 831 S.W.2d 646 (1992)
STATE of Missouri, Respondent,
v.
Vincent P. ELBERT, Appellant.
No. WD 44226.
Missouri Court of Appeals, Western District.
April 7, 1992.
Motion for Rehearing and/or Transfer Denied June 2, 1992.
Application to Transfer Denied July 21, 1992.
*647 Susan L. Hogan, Asst. Appellate Defender, Kansas City, for appellant.
Philip M. Koppe, Asst. Atty. Gen., Kansas City, for respondent.
Before TURNAGE, P.J., and KENNEDY and BERREY, JJ.
Motion for Rehearing and/or Transfer to Supreme Court Denied June 2, 1992.
PER CURIAM.
Appellant was convicted of sodomy, § 566.060, RSMo 1986, and sexual abuse in the first degree, § 566.100, RSMo 1986. He received concurrent sentences of ten years and five years, respectively. He now appeals, claiming that the trial court erred in precluding testimony that appellant did not fit the psychological profile of a sex offender.
The judgment of the trial court is affirmed.
Appellant and his wife provided baby-sitting services for the four-year-old victim, A.B., and a number of other children. A.B.'s mother suspected that A.B. may have been sexually abused by appellant, and on April 26, 1989 she took A.B. to the Independence, Missouri Police Department to be interviewed by Detective Raymond Rast. Using anatomically correct dolls, A.B. was able to describe what happened to her, and indicated that "Vince" had placed his mouth on her vaginal area.
When questioned by Detective Rast, appellant initially denied any contact with the victim. Then, he stated that he had accidentally touched A.B.'s vagina three or four times while playing with her. He also admitted to kissing A.B. on the mouth and on the stomach, and to biting her on the buttocks. Appellant told Detective Rast that A.B. would "kind of come on to him," and that he had fantasized about having oral sex with her.
At appellant's trial, A.B.who was then nearly six years oldtestified that a baby-sitter named "Vince" would touch her private parts with his mouth and his hands. In his defense, appellant sought to introduce the testimony of Dr. Robert L. McKinney, a psychologist who had given appellant the Minnesota Multiphasic Personality Inventory (MMPI), a standardized psychological test which is graded by a computer. Dr. McKinney was prepared to testify that appellant's test scores did not fit the profile of a sex offender. Dr. McKinney's testimony was excluded by the trial court.
As his sole point on appeal, appellant claims that the trial court erred by refusing to allow Dr. McKinney's testimony that appellant did not fit the psychological profile of a sex offender.
Appellant argues that the MMPI scores are admissible because the MMPI is a test which has gained general acceptance in the scientific community, and that Dr. McKinney's expert testimony was required to make the test results understandable to the jury.
As noted by the court in People v. Berrios, 150 Misc. 2d 229, 568 N.Y.S.2d 512, 514 (Sup.Ct.1991), profile-type testimony has been almost universally rejected in the jurisdictions in which it has been offered for consideration by the courts.[1] One rationale for refusing to admit such evidence is that it inevitably leads to a "battle of experts" which diverts the jury's attention from the central issue of the guilt or innocence of *648 the defendant. This point of view is well expressed in State v. Cavallo, 88 N.J. 508, 443 A.2d 1020, 1025 (1982), which observed that:
if defendants are permitted to introduce psychiatric testimony on their character, "the State will not stand idly by without producing psychiatrists favorable to its cause." ... The result must necessarily be a "battle of experts"
concerning the validity of the expert evidence. This would consume substantial court time and cost both parties much time and expense. Much of the trial would focus on the tangential issue of the reliability of the expert evidence rather than the central issue of what the defendants did or did not do.
Another rationale for refusing to admit profile-type testimony has been that such evidence has not been shown to have gained the necessary acceptance in the scientific community. United States v. St. Pierre, 812 F.2d 417, 420 (8th Cir.1987); State v. Person, 20 Conn.App. 115, 564 A.2d 626, 632 (1989), cert. denied, ___ U.S. ___, 111 S. Ct. 756, 112 L. Ed. 2d 776 (1991); State v. Cavallo, supra, 443 A.2d at 1024-29. This rationale is consistent with the often-cited case of Frye v. United States, 293 F. 1013 (D.C.Cir.1923) which holds that, to be admissible, expert testimony must be sufficiently established to have gained general acceptance in the particular field in which it belongs.
As recently as 1985, the Missouri Supreme Court has held that the Frye doctrine still applies to the admission of new scientific techniques in the courts of this State. Alsbach v. Bader, 700 S.W.2d 823, 828 (Mo. banc 1985). The Missouri Court of Appeals, Western District has re-affirmed the viability of the Frye doctrine in Turner v. Fuqua Homes, Inc., 742 S.W.2d 603, 612 (Mo.App.1987), as has the Eastern District in State v. Foote, 791 S.W.2d 879, 883 (Mo.App.1990).
The question of whether the MMPI is generally accepted as a tool to be used by an expert witness to show whether a defendant fits within the profile of a "typical" child sexual abuser is discussed in Myers, Bays, Becker, Berliner, Corwin & Saywitz, Expert Testimony in Child Sexual Abuse Litigation, 68 Nebraska Law Review 1 (1989). This article, which was written by an inter-disciplinary panel of experts from the fields of psychology, psychiatry, social work, and law, states that the MMPI has been found to be plagued by methodological problems and inconsistent findings. The authors stress that, while psychological tests like the MMPI are useful aids to diagnosis and treatment, "there is no psychological test or combination of tests that can determine whether a person has engaged or will engage in deviant sexual activity." 68 Neb.L.Rev. at 133-35 (emphasis in the original).
In his brief, appellant points out the Dr. McKinney testified that the MMPI is accepted in the scientific community and is widely used both nationally and internationally. He argues that this testimony establishes the general acceptance of the MMPI for the purposes of a Frye doctrine analysis. However, there is a world of difference between whether a psychological test is generally accepted for the purpose of diagnosis and treatment, and whether the test is generally accepted for the purpose of determining whether a criminal defendant fits the psychological profile of a sex offender. In light of the case law and scholarly literature which suggests that the MMPI has not achieved general acceptance for this latter purpose, we cannot conclude that the trial court erred in excluding Dr. McKinney's testimony.
Accordingly, the judgment of the trial court is affirmed.
All concur.
NOTES
[1] The Berrios court cited seventeen other states and four federal circuits which have precluded profile-type testimony. It also noted that, while California allows psychological testimony to demonstrate that a defendant displays no signs of "deviance or abnormality," such testimony is admissible as character evidence by specific statutory provision. In contrast, the recent case of Byrd v. State, 579 N.E.2d 457 (Ind.App.1991) held that the trial court erred by refusing to allow a defense psychiatrist to testify that the defendant's MMPI profile was inconsistent with the "knowing" element of the crime of murder. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1532158/ | 831 S.W.2d 829 (1992)
Joel Anthony MITCHELL, Jr., Appellant,
v.
The STATE of Texas, Appellee.
Nos. 01-90-01097-CR, 01-90-00103-CR.
Court of Appeals of Texas, Houston (1st Dist.).
April 9, 1992.
Rehearing Denied July 9, 1992.
*830 James M. Sims, Constance Y. Singleton, Houston, for appellant.
John B. Holmes, Jr., Dist. Atty., Mary Lou Keel, Asst. Dist. Atty., James Buchanan, Asst. Dist. Atty., for appellee.
Before OLIVER-PARROTT, C.J., and MIRABAL and PRICE,[1] JJ.
OPINION
OLIVER-PARROTT, Chief Justice.
Appellant, Joel Anthony Mitchell, Jr., was indicted for possession of marijuana and possession of cocaine with intent to deliver. He pled not guilty to both offenses. The trial court found appellant guilty of both charges and assessed punishment at five-years confinement for possession of marijuana, and 20-years confinement and a $20,000 fine for possession of cocaine with intent to deliver. In three points of error, appellant argues the trial court erred in denying his motion to suppress. We reverse.
Background
On May 12, 1990, B.E. Corley, David Wall, and Officer Moran, all undercover narcotics officers with the Houston police department, were assigned to monitor the Greyhound bus station in Houston to identify and intercept narcotic couriers. The officers were not operating on information from an informant or law enforcement agency. They were just scanning passengers for suspicious conduct. Corley testified that he was standing in the front lobby of the bus station when he saw appellant get out of a car in the front of the station. Corley testified that his attention was drawn to appellant because the driver of the car had already entered the station about one minute before and was "standing around scanning the lobby area." The driver was not carrying any luggage.
Appellant walked into the lobby, stopped and briefly spoke to the driver, and then proceeded to the gate for departing buses. Corley testified that the driver followed appellant to the gate and watched him board the bus, but they did not wave or signal to each other in any way.
After appellant was seated in the back of the bus, all three officers boarded the bus. Corley and Moran approached appellant, and Wall was positioned in the front of the bus. Corley, who was seated on the arm rest of the seat immediately in front of *831 appellant, showed him his identification, told him he was a police officer, and asked if he could talk to him. Moran also showed appellant his identification and then stood directly behind Corley. Appellant agreed to talk with Corley and when asked about his destination, he responded that he was going to Shreveport. When Corley asked to see appellant's bus ticket, he handed it to Corley and said he was actually going to Chattanooga for a three-week visit. Corley then handed appellant his ticket and asked if the black bag on the floor was his. Appellant stated that it was. When Corley asked if he could look through the bag, appellant replied by asking, "Do I have a right to privacy?" Corley told appellant yes, he had a right to privacy, and if appellant preferred, he (Corley) could have a narcotics dog check the bag instead. Appellant told Corley that it was not necessary to bring in the dog and that he could look in the bag. Corley testified that appellant unzipped the bag and began to pull out several pieces of clothing. As appellant did this, Corley saw some beer and a brown paper bag. Corley testified that it was at this point when he began to search the bag himself and asked appellant if he was carrying food. Appellant replied that he was not, and that the paper bag had a pair of shoes in it. As Corley looked through the paper bag, he found packages of cocaine wrapped in foil. The paper bag was later searched again in the supervisor's office at the bus station, where officers also found marijuana.
In three points of error, appellant argues the trial court erred in denying his motion to suppress the drugs seized because the evidence was (1) seized through an illegal detention not supported by reasonable suspicion; (2) obtained through an illegal arrest, made without probable cause; and (3) obtained through an illegal, warrantless search and seizure made without probable cause.
Standard of review
The standard of review for reviewing a trial court's decision denying a defendant's motion to suppress evidence is that the evidence should be viewed in the light most favorable to the trial court's ruling. See Sawyers v. State, 724 S.W.2d 24, 35 (Tex.Crim.App.1986); Kite v. State, 788 S.W.2d 403, 406 (Tex.App. Houston [1st Dist.] 1990, no pet.). At a suppression hearing, the trial judge is the sole judge of the credibility of the witnesses and of the weight to be given their testimony. Meek v. State, 790 S.W.2d 618, 620 (Tex.Crim. App.1990); Cannon v. State, 691 S.W.2d 664, 673 (Tex.Crim.App.), cert, denied, 474 U.S. 1110, 106 S. Ct. 897, 88 L. Ed. 2d 931 (1986). The judge may believe or disbelieve all or any part of the witness's testimony. Meek, 790 S.W.2d at 620; Cannon, 691 S.W.2d at 664. His findings should not be disturbed absent clear abuse of discretion. Meek, 790 S.W.2d at 620; Dancy v. State, 728 S.W.2d 772, 777 (Tex.Crim.App.), cert, denied, 484 U.S. 975, 108 S. Ct. 485, 98 L. Ed. 2d 484 (1987). If the findings are supported by the record, the only question on appeal is whether the trial court improperly applied the law to the facts. Romero v. State, 800 S.W.2d 539, 543 (Tex.Crim. App.1990); Johnson v. State, 698 S.W.2d 154, 159 (Tex.Crim.App.), cert, denied, 479 U.S. 871, 107 S. Ct. 239, 93 L. Ed. 2d 164 (1986).
Illegal detention
In his first point of error, appellant argues the trial court erred in denying his motion to suppress because the drugs were seized through an illegal detention not supported by reasonable suspicion. Appellant contends that when Corley identified himself as a police officer and asked him if he could search his bag, that was the functional equivalent of telling him he was detained. Appellant argues this was a "display of official authority such that a reasonable person would have believed he was not free to leave." United States v. Mendenhall, 446 U.S. 544, 554, 100 S. Ct. 1870, 1877, 64 L. Ed. 2d 497 (1980). Because he was detained, appellant argues that the search of his bag violated his fourth amendment rights because the detention was not supported by reasonable suspicion. United States v. Berry, 670 F.2d 583, 593 *832 (5th Cir.1982); Johnson v. State, 658 S.W.2d 623, 623 (Tex.Crim.App.1983).[2]
Not all encounters between police and citizens invoke the protection of the fourth amendment. Florida v. Royer, 460 U.S. 491, 497-98, 103 S. Ct. 1319, 1324, 75 L. Ed. 2d 229 (1983); Terry v. Ohio, 392 U.S. 1. 19 n. 16, 88 S. Ct. 1868, 1879 n. 16, 20 L. Ed. 2d 889 (1968); Holladay v. State, 805 S.W.2d 464, 467 (Tex.Crim.App.1991). A seizure does not occur simply because a police officer approaches an individual and asks a few questions. So long as a reasonable person would feel free "to disregard the police and go about his business," California v. Hodari D., ___ U.S. ___, 111 S. Ct. 1547, 1551, 113 L. Ed. 2d 690 (1991), the encounter is consensual and no reasonable suspicion is required. Florida v. Bostick, ___ U.S. ___, 111 S. Ct. 2382, 2386, 115 L. Ed. 2d 389 (1991). It is only when police questioning of a citizen becomes a detention that it must be supported by reasonable suspicion. Terry, 392 U.S. at 19 n. 16, 88 S.Ct. at 1879 n. 16; Holladay, 805 S.W.2d at 467. This reasonable suspicion is something more than an unparticularized suspicion or hunch, but it is considerably less than proof of wrongdoing by a preponderance of the evidence. United States v. Sokolow, 490 U.S. 1, 109 S. Ct. 1581, 1585, 104 L. Ed. 2d 1 (1989); Holladay, 805 S.W.2d at 496.
We must first determine when and if appellant was detained. Appellant asserts he was detained when Corley identified himself as a police officer and asked him if he could search his bag because a reasonable person would have believed he was not free to leave. Appellant asserts that "this conclusion is all the more compelling because appellant was seated at the back of a bus whose aisle and only exit was blocked by Corley and Moran." However, where the encounter takes place is one factor, but is not the only one. Bostick, 111 S.Ct. at 2387.
In Bostick, the issue presented was whether a police encounter on a bus necessarily constitutes a "seizure" within the meaning of the fourth amendment. The Court held that in a situation where officers approach a passenger on a bus, the "free to leave" analysis is inapplicable. Bostick, 111 S.Ct. at 2387. The Court stated:
[T]he mere fact that Bostick did not feel free to leave the bus does not mean the police seized him. Bostick was a passenger on a bus that was scheduled to depart. He would not have felt free to leave the bus even if the police had not been present. Bostick's movements were "confined" in a sense, but this was the natural result of his decision to take the bus; it says nothing about whether or not the police conduct at issue was coercive.
Id.
The appropriate inquiry is whether a reasonable person would feel free to decline the officer's requests or otherwise terminate the encounter. Bostick, 111 S.Ct. at 2387. The crucial test is whether, taking into account all of the circumstances surrounding the encounter, the police conduct would have communicated to a reasonable person that he was not at liberty to ignore the police presence and go about his business.[3]Id.
As detailed above, Corley and Moran boarded the bus and approached appellant who was seated in the back. After identifying themselves as police officers, *833 appellant agreed to talk with Corley. When Corley asked if he could search appellant's bag, appellant responded by asking if he had a right to privacy. Corley said that he did and told him that he could bring in a narcotics dog instead. Under the totality of the circumstances, we find that a reasonable person would not have believed that he was free to ignore Corley's request to search the bag or terminate the encounter. See Holladay, 805 S.W.2d at 472 (officer's request for permission to search defendant's luggage converted initial encounter into an investigative one, implicating fourth amendment protection); Daniels v. State, 718 S.W.2d 702, 706 (Tex. Crim.App.), cert, denied, 479 U.S. 885, 107 S. Ct. 277, 93 L. Ed. 2d 252 (1986) (defendant detained when officer discovered discrepancy between name on his driver's license and plane ticket, told defendant he was a narcotics officer conducting an investigation, and asked to search his suitcase).
In order for this detention to be justified, Corley needed reasonable suspicion to support the detention. Daniels, 718 S.W.2d at 704. To justify a brief investigative detention, the officer must know specific articulable facts, which, in light of his experience and personal knowledge, together with reasonable inferences, would warrant detaining the suspect. Meeks v. State, 653 S.W.2d 6, 12 (Tex.Crim.App.1983). Reasonable suspicion cannot be based on a mere hunch or suspicion. Id. Even a temporary detention is not permissible unless the circumstances objectively support a reasonable suspicion that the person detained actually is, has been, or soon will be engaged in criminal activity. Crockett v. State, 803 S.W.2d 308, 311 (Tex.Crim.App. 1991). Circumstances raising suspicion of illegal conduct need not be criminal. Id. The issue is not whether the particular conduct is innocent or criminal, but, rather the degree of suspicion that attaches to particular noncriminal acts. Holladay, 805 S.W.2d at 471. At a minimum, however, the suspicious conduct must differ sufficiently from that of innocent people under the same circumstances so as to clearly set the suspect apart from them. Crockett, 803 S.W.2d at 311.
Before boarding the bus and talking with appellant, Corley was aware of the following facts:
1. Appellant arrived at the bus station in a vehicle driven by another man.
2. The car was parked at the curb and the driver entered the bus station, followed approximately one minute later, by appellant, who carried a single travel bag.
3. Appellant walked through the station a few steps ahead of the driver.
4. Appellant boarded the bus with the bag and placed it at his feet.
5. The driver followed appellant through the station but did not board the bus.
6. The two men looked around the lobby and did not look directly at each other as they talked.
When Corley asked appellant about his destination he responded that he was going to Shreveport. When Corley asked appellant for his ticket, however, appellant said that he was actually going to Chattanooga as he handed Corley his ticket. The State argues that this constitutes a lie giving rise to articulable facts supporting a reasonable suspicion to support the detention. However, Corley also testified that he knew that the bus, in fact, was going to Shreveport, and points northeast, and therefore, had no reason to be suspicious of appellant because of that answer. Corley testified that he knew that the final destination of the bus was Chattanooga.
The "facts" described by the officers could easily describe anyone who has been given a ride to the bus station and enters the lobby with the driver. There was no testimony of any specific articulable facts that would have warranted a detention in this case. We hold that Corley had no grounds for reasonable suspicion. The detention was illegal. See Daniels, 718 S.W.2d at 705.
Consent
After Corley told appellant that a narcotics dog could be brought in to check the bag, appellant allowed Corley to search his bag. The State argues that appellant's consent was voluntary. We disagree.
*834 Whether consent is voluntarily or knowingly given is a question of fact which must be determined by considering the totality of the circumstances. Brem v. State, 571 S.W.2d 314, 319 (Tex.Crim.App. 1978). The State must prove by clear and convincing evidence that the consent was voluntary. Juarez v. State, 758 S.W.2d 772, 775 (Tex.Crim.App.1988). Consent cannot be established by showing no more than acquiescence to a claim of lawful authority. Johnson v. State, 803 S.W.2d 272, 287 (Tex.Crim.App.), cert, denied, ___ U.S. ___, 111 S. Ct. 2914, 115 L. Ed. 2d 1078 (1991).
Appellant was a passenger on a bus that was to depart in 10 minutes. He was approached by two police officers, with whom he agreed to speak. Corley's request to search the bag or bring in a narcotics dog left appellant the following choices: (1) he could consent to the search; (2) he could forfeit his ticket, get off the bus, and allow the officers to bring in the narcotics dog; or (3) he could stay on the bus and allow Corley to keep his bag. There was no testimony that appellant was informed that the narcotics dog was on the premises or how much time it would take to have the dog board the bus and check his bag. Corley testified that he would have detained the bag regardless of appellant's consent, and it is uncertain whether appellant would have been allowed to leave at all. The search was inevitable. Under the totality of the circumstances, we find that appellant's consent was not voluntary.
The drugs seized in this case should have been suppressed.
Appellant's first point of error is sustained. We need not address the remaining points.
The judgment of the trial court is reversed and the cause is remanded to the trial court.
NOTES
[1] Honorable Frank C. Price, former justice, Court of Appeals, First District of Texas at Houston, participating by assignment.
[2] The detention of a person is a "seizure" within the meaning of the fourth amendment. Henry v. United States, 361 U.S. 98, 102, 80 S. Ct. 168, 171, 4 L. Ed. 2d 134 (1959).
[3] In Bostick, the Court refrained from deciding whether Bostick had in fact been detained because the Florida Supreme Court decision, that a seizure had occurred, was based on the sole fact that the encounter took place on a bus. The Court stated that the facts before it left some doubt whether a seizure occurred: two officers walked up to Bostick on the bus, asked him a few questions, and asked if they could search his bags. The Court noted that no seizure occurs when police ask questions of an individual, ask to examine the individual's identification, and request consent to search his or her luggage so long as the officers do not convey a message that compliance with their request is required. Bostick, 111 S.Ct. at 2388 (emphasis added). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1532250/ | 872 A.2d 1216 (2005)
Neil ATWELL, t/d/b/a Ben-Hal Mining Company, and Janine A. Atwell, Appellees
v.
BECKWITH MACHINERY COMPANY, Appellant
Neil Atwell, t/d/b/a Ben-Hal Mining Company, and Janine A. Atwell, Appellants
v.
Beckwith Machinery Company, Appellee
Superior Court of Pennsylvania.
Argued December 8, 2004.
Filed April 12, 2005.
*1218 Kirby L. Boring, Pittsburgh, for Beckwith.
Jack W. Cline, Mercer, for Atwell.
Before: HUDOCK, MUSMANNO and
TAMILIA, JJ.
¶ 1 Beckwith Machinery Company appeals from the January 29, 2004 judgment of $175,000 entered on the jury's verdict in favor of Neil Atwell t/d/b/a/ Ben-Hal Mining Company and Janine Atwell (Atwell). Atwell filed a cross-appeal from the January 30, 2004 counterclaim judgment of $32,484.94 entered on the jury's verdict in Beckwith's favor.[1]
¶ 2 The underlying cause of action arose out of Atwell's purchase of a D-11N Caterpillar Tractor from Beckwith. Atwell maintains that it contracted to purchase for approximately $775,000, a "Caterpillar Certified Rebuild" tractor from Beckwith, *1219 but instead received a "Beckwith Rebuild." Beckwith maintains Atwell agreed to purchase a Beckwith Rebuild. According to Beckwith, a Caterpillar Certified Rebuild is one that has had every part on a specific list of parts rebuilt, whereas a Beckwith Certified Rebuild is one that has had only those parts that are unusable replaced. Atwell also alleged that many of the parts on the machine delivered were defective and so it was often out of service and never worked to capacity.
¶ 3 Atwell filed suit against Beckwith seeking damages for delivery of a defective Beckwith Rebuild in breach of the parties' agreement. Beckwith filed a counterclaim for unpaid repairs to the tractor that extended beyond the warranty. The trial was bifurcated on issues of liability and damages. The jury found Atwell contracted to purchase a Caterpillar Certified Rebuild Tractor but instead received and accepted a Beckwith Rebuild. Based upon these findings, the court ruled that as a matter of law Beckwith materially breached the contract. Beckwith took no exception to this ruling. The court found that pursuant to the Uniform Commercial Code (UCC),[2] Section 2714(b), the measure of damages in this case was the difference at the time and place Atwell accepted the tractor, between the value of the tractor accepted and the value it would have had, had it been as warranted. See 13 Pa. C.S.A. § 2714(b).
¶ 4 During the damages phase of the case, the trial court precluded the testimony of Atwell's expert appraiser, but admitted the testimony of Neil Atwell, as it found he was qualified to render an opinion as to the value of the machine he received in contrast to that for which he had contracted. A witness for Beckwith testified on the same issue. The jury awarded Atwell $175,000 and awarded Beckwith $32,484.94 for repairs not covered by warranty. Beckwith filed a post-trial motion for judgment notwithstanding the verdict (JNOV), or in the alternative, a new trial on damages or as to all issues. The motion ultimately was denied.
¶ 5 The verdict was not molded or setoff nevertheless, on December 1, 2003, Atwell entered judgment for $142,515.06. On December 22, 2003, the court struck that judgment. It subsequently denied Beckwith's post-trial motions. Atwell then entered judgment on January 29, 2004, and Beckwith entered judgment the following day. Beckwith appealed, and Atwell filed a cross-appeal. We begin our review by addressing each party's respective argument that the other party's appeal should be quashed for lack of jurisdiction.
¶ 6 Beckwith cites Lenhart v. Cigna Cos., 824 A.2d 1193, 1196 (Pa.Super.2003) for the principle that any issue not raised in a post-trial motion is waived for purposes of appeal. Since Atwell did not file a post-trial motion, Beckwith argues that Atwell has not preserved any issues for our review.
¶ 7 Atwell argued one issue in its statement filed pursuant to Pa.R.A.P.1925(b): that the trial court erred in entering the December 22, 2003 Order striking the December 1, 2003 judgment, because judgments entered pursuant to Pa.R.C.P. 227.4, Entry of Judgment upon Praecipe of a Party, (1)(b), are not subject to reconsideration or any other motion to strike, open, or vacate. In this appeal, Atwell again argues that entry of the December 22, 2003 Order violates Pa.R.C.P. 227.4(1)(b), and contends that Beckwith's appeal is untimely since it was not filed within 30 days of the December 1, 2003 Order.[3] Relying *1220 on the same argument, Atwell also filed with this Court a motion pursuant to Pa.R.A.P. 123, Application for Relief, to quash Beckwith's appeal. On April 23, 2004, we denied the motion without prejudice to renew it at the time of argument.
¶ 8 Atwell contends their appeal should not be quashed for failing to file a post-trial motion because the reason for their cross appeal is simply to quash Beckwith's appeal as untimely and that they never intended to appeal the counter-claim judgment. Atwell essentially claims the basis for its appeal could not have been the subject of a post-trial motion. We agree.
¶ 9 Pa.R.C.P. 227.1, Post Trial Relief, (c)(1), provides that post-trial motions must be filed within ten days after entry of a verdict. Here, the verdict was entered on February 11, 2003. Pa.R.C.P. 227.4(1)(b) provides in pertinent part:
the prothonotary shall, upon praecipe of a party:
(1) enter judgment upon the verdict of a jury..., if
. . . . .
(b) one or more timely post-trial motions are filed and the court does not enter an order disposing of all motions within one hundred twenty days after the filing of the first motion. A judgment entered pursuant to this subparagraph shall be final as to all parties and all issues and shall not be subject to reconsideration[.]
Id. Beckwith filed a motion for post-trial relief on February 18, 2003. A hearing on the motion was scheduled for October 15, 2003, and later rescheduled to November 24, 2003. More than 120 days elapsed and the trial court had not entered an Order disposing of the motion. Pursuant to Rule 227.4(1)(b), on December 1, 2003, Atwell filed a praecipe to enter judgment on the verdict in which they requested judgment of $142,515.06, "said amount being the molded verdict of the jury." Record No. 27. The prothonotary entered judgment accordingly.
¶ 10 Beckwith filed a motion to strike the judgment and a hearing was scheduled for December 22, 2003. After the hearing, and on that same day, the court entered an Order which struck the December 1, 2003 judgment because it was in the wrong amount. Trial Court Order, 12/22/03, at 1. The Order further explained that the parties had requested a delay in ruling on the post-trial motion while the parties attempted to amicably settle the matter, and also that both parties were aware there was a lengthy delay in the ruling on the motion due to a problem obtaining the trial transcripts.[4] Record No. 28, Trial Court Order, 12/22/03, at 1-2; see also Trial Court Opinion, Lutty, J., 4/13/04, at 9.
¶ 11 As previously indicated, the court entered an Order denying Beckwith's post-trial motions on January 23, 2003, and on January 29th judgment was entered upon Atwell's second praecipe, this time in the amount of $175,000. On January 30, 2004, judgment was entered for Beckwith on its praecipe for judgment on the $32,484.94 counterclaim verdict in its favor.
¶ 12 It is clear that in this appeal, Atwell challenges the court's December 22, 2003 Order. A recitation of the above facts makes it apparent Atwell could not possibly have entered a post-trial motion challenging this issue within 10 days of the February 2003 verdict. Accordingly, we reject Beckwith's claim that Atwell waived all issues on appeal for failure to file a post-trial motion.
*1221 ¶ 13 We turn now to Atwell's claim that Beckwith's appeal should be quashed as untimely filed from the court's December 1, 2003 judgment. It is true that judgments entered pursuant to Pa.R.C.P. 227.4 are not susceptible to motions to reconsider, strike, open, or vacate. Morningstar v. Hoban, 819 A.2d 1191, 1194 (Pa.Super.2003), appeal denied, 577 Pa. 690, 844 A.2d 553 (2004). Although at first blush it appears the court erred in striking the December 1, 2003 judgment, we need not make a determination on this matter. Even if it was in error, we would not quash Beckwith's appeal as being untimely filed from that judgment because to do so would penalize Beckwith for a breakdown in the court's operation. Accordingly, Atwell's Pa.R.A.P. 123 application for relief is denied.
¶ 14 We now address the merits of Beckwith's remaining issues on appeal.
I. Does the failure of the trial court to charge the jury on any aspect of the applicable law constitute reversible error?
II. Is the trial court's refusal to limit the remedy of the plaintiff, pursuant to terms of the contract between the parties reversible error?
III. Where the Uniform Commercial Code provides a formula for calculation of damages in a particular contractual situation, and the evidence introduced and proven by the plaintiff does not meet the requirements of that calculation, is the verdict entered by the jury and the court's refusal to grant a nonsuit and/or judgment notwithstanding the verdict an error as a matter of law or an abuse of discretion?
IV. Was the trial court's determination that Neil Atwell was a competent witness to testify on damages, based solely upon his ownership of the Caterpillar Tractor, which is the subject of litigation an error of law or abuse of discretion which allowed the jury to speculate on the issue of damages?
Appellant's brief at 4.
In reviewing a trial court's decision to grant or deny a motion for a new trial, it is well-established law that, absent a clear abuse of discretion by the trial court, appellate courts must not interfere with the trial court's authority to grant or deny a new trial. Moreover, a new trial is not warranted merely because some irregularity occurred during the trial or another trial judge would have ruled differently; the moving party must demonstrate to the trial court that he or she has suffered prejudice from the mistake.
... we must first determine whether we agree with the trial court that a factual, legal or discretionary mistake was, or was not, made. If we agree with the trial court's determination that there were no prejudicial mistakes at trial, then the decision to deny a new trial must stand. If we discern that a mistake was made at trial, however, we must then determine whether the trial court abused its discretion in ruling on the motion for a new trial. A trial court abuses its discretion by rendering a judgment that is manifestly unreasonable, arbitrary or capricious, or has failed to apply the law, or was motivated by partiality, prejudice, bias or ill will.
Boucher v. Pa. Hosp., 831 A.2d 623, 627 (Pa.Super.2003), appeal denied, 577 Pa. 705, 847 A.2d 1276 (2004) (citations and quotations omitted).
¶ 15 As for Beckwith's motion for JNOV, we note that "the entry of a judgment notwithstanding the verdict ... is a drastic remedy. A court cannot lightly ignore the findings of a duly selected jury." Education Resources Institute, Inc. v. Cole, 827 A.2d 493, 497 (Pa.Super.2003), appeal denied, 577 Pa. 721, 847 *1222 A.2d 1286 (2004), quoting Neal by Neal v. Lu, 365 Pa.Super. 464, 530 A.2d 103, 110 (1987).
[T]he proper standard of review for an appellate court when examining the lower court's refusal to grant a judgment n.o.v. is whether, when reading the record in the light most favorable to the verdict winner and granting that party every favorable inference therefrom, there was sufficient competent evidence to sustain the verdict. Questions of credibility and conflicts in the evidence are for the trial court to resolve and the reviewing court should not reweigh the evidence. Absent an abuse of discretion, the trial court's determination will not be disturbed.
Ferrer v. Trustees of the University of Pennsylvania, 573 Pa. 310, 317-318, 825 A.2d 591, 595 (2002) (citations omitted).
¶ 16 Beckwith first complains that the trial court erred in failing "to charge on the law of express contract under the [UCC]." Beckwith's brief at 15. Beckwith complains that the court failed to instruct the jury as to express warranty, acceptance, and revocation of acceptance under the UCC. Id., at 15-16.
We review the trial court's jury instructions for an abuse of discretion or legal error controlling the outcome of the case. A jury charge will be found to be adequate unless, when read in its entirety, the charge confused the jury, misled the jury, or contained an omission tantamount to fundamental error. It must appear that the erroneous instruction may have affected the jury's verdict. Consequently, the trial court has great discretion in forming jury instructions.
Meyer v. Union R.R. Co., 865 A.2d 857, 862 (Pa.Super.2004) (citations omitted).
¶ 17 Pursuant to Pennsylvania's UCC Section 2313, "any description of the goods which is made part of the basis of the bargain creates an express warranty that the goods shall conform to the description." 13 Pa.C.S.A. 2313(2). In general, all statements of the seller become part of the basis of the bargain "unless good reason is shown to the contrary." Section 2313, Comment 8.
¶ 18 The parties do not dispute that there was a contract between them pursuant to which Beckwith sold Atwell a tractor. The parties only dispute the type of tractor that was subject of the agreement, i.e., either a Caterpillar Rebuild or a Beckwith Rebuild. Beckwith defines a Caterpillar Rebuild as a machine that has had every part on a specific list of parts replaced.[5] Beckwith's brief at 5. Beckwith also explains to this Court that because each of those parts has been replaced, a Caterpillar Rebuild costs more than a Beckwith Rebuild, on which parts are replaced only if they are worn. Id., at 5-6. There can be no doubt that if Beckwith agreed to sell a Caterpillar Rebuild, it was making an express warranty that every part on that specific list of parts would be replaced, and there can be no doubt such a promise would have formed the basis of the bargain. Accordingly, the jury needed only make a determination as to what type of machine Beckwith agreed to sell Atwell. This determination was within the province of the jury, as fact-finder. Accordingly, *1223 we find it perfectly appropriate that the court, rather than unnecessarily instructing the jury on commercial law, provided the jury with a special interrogatory directing it to make the requisite factual determination.
¶ 19 As for Beckwith's contention that the court erred by failing to instruct the jury as to acceptance and revocation of acceptance under the UCC, it appears this alleged omission caused Beckwith no prejudice. See Raskin v. Ford Motor Co., 837 A.2d 518, 521 (Pa.Super.2003) (stating that a reviewing court will not grant relief on the ground of inadequacy of the charge unless there is a prejudicial omission of something basic or fundamental). The jury indicated in its verdict slip that Atwell, "after finding out that the bulldozer delivered was a Beckwith Rebuild, agreed to accept a Beckwith Rebuild bulldozer[.]" Record No. 19, Jury Verdict Slip, at 1 (emphasis in original). Beckwith does not appear to dispute that Atwell accepted the Beckwith Rebuild. See N.T., at 638. Further, the jury found Atwell did not revoke their acceptance within a reasonable time after the bulldozer was delivered and accepted, id., at 2, and Beckwith does not appear to dispute that Atwell did not revoke its acceptance within a reasonable time after delivery and acceptance. See N.T., at 638. Accordingly, we find that any alleged omission of these instructions caused Beckwith no prejudice. We have reviewed the jury charge as well as the special interrogatory and find no error of law or abuse of discretion.
¶ 20 Beckwith next argues that pursuant to the parties' agreement, Atwell's exclusive remedy for breach of warranty is the repair or replacement of defective parts. The trial court found that such a remedy limitation is applicable if the seller can repair or replace defective goods sold, but not where the seller has delivered a non-conforming machine of lesser value and quality than the seller had agreed to sell. Trial Court Opinion, at 3-4. The court further stated that express warranties cannot be disclaimed.
¶ 21 We also note that, at the start of the damages phase, Beckwith raised the issue of the limitation of remedy clause. At that time, the court distinguished between the delivery of defective versus non-conforming goods, and found that at issue in this case was the delivery of non-conforming goods, for which the only cure would have been to have the machine certified as a Caterpillar Rebuild. N.T., at 644-645.
¶ 22 Also in its Opinion, the court explained that it found the remedy limitation was inoperable in any event because it was not sufficiently conspicuous. Trial Court Opinion, at 4. Beckwith contends the court erred in these determinations.
¶ 23 The jury found Atwell knowingly accepted the Beckwith Rebuild.[6] Accordingly, both parties initially agreed that Atwell's damages were properly ascertained using UCC § 2714, Damages of buyer for breach in regard to accepted goods, (b), Measure of Damages for breach of warranty, which provides:
The measure of damages for breach of warranty is the difference at the time and place of acceptance between the value of the goods accepted and the value they would have had if they had been as warranted, unless special circumstances show proximate damages of a different amount.
*1224 Id.; See also N.T., 638-642. Beckwith then raised the issue of contractual limitation of remedy, pursuant to the parties' agreement and UCC Section 2719. See N.T., 642-647. There is no dispute that the parties' agreement includes an exclusive remedy provision for breach of warranty, limiting the remedy to repair or replacement of defective parts. See Record No. 3, First Amended Complaint, Plaintiff Exhibit A. UCC Section 2719, Contractual modification or limitation of remedy, (a) General rule, (1), provides "[t]he agreement ... may limit or alter the measure of damages recoverable under this division, as by limiting the remedies of the buyer ... to repair and replacement of nonconforming goods or parts." 13 Pa. C.S.A. § 2719(a)(1). This section is subject to Section 2719(b), Exclusive remedy failing in purpose, which provides "[w]here circumstances cause an exclusive or limited remedy to fail of its essential purpose, remedy may be had as provided in this title." Id., § 2719(b). "Where an apparently reasonable clause because of circumstances fails in its purpose or operates to deprive either party of the substantial value of the bargain, it must give way to the general remedy provisions of this Article." Section 2719, Comment 1 (emphasis supplied).
¶ 24 We find that under the circumstances, the exclusive remedy clause operates to deprive Atwell of the substantial value of its bargain since repair or replacement of only those parts that are defective essentially provides Atwell with a Beckwith Rebuild and not the Caterpillar Rebuild the jury found Atwell agreed to purchase. It is therefore proper to resort to the UCC remedy of awarding Atwell the difference at the time and place of acceptance between the value of the goods accepted and the value they would have had if they had been as warranted. See 13 Pa.C.S.A. § 2714(b). Accordingly, we affirm the trial court's determination that this is the proper measure of damages in this case.
¶ 25 Next, Beckwith essentially argues the evidence was insufficient to prove the damages under the UCC. In disposing of this argument, we also address Beckwith's argument that the court erred in allowing Neil Atwell to testify on the issue of damages, as we find that these two issues are interrelated.
¶ 26 We already have concluded that Atwell is entitled to the difference at the time and place of acceptance between the value of the goods accepted and the value they would have had if they had been as warranted. Accordingly, Atwell was required to proffer evidence from which the jury could determine the difference between the value of the Beckwith Rebuild as delivered, and the value of a Certified Caterpillar Rebuild, as of January 1997.
¶ 27 We note that while purchase price is prima facie evidence of the value of the goods had they been as warranted, Atwell was required to present evidence of the actual value at the time of delivery of the tractor as delivered. See Price v. Chevrolet Motor Div. of GMC, 765 A.2d 800, 811 (Pa.Super.2000).
¶ 28 Atwell offered an expert report which calculated the current replacement cost of the tractor delivered to Atwell. The court granted Beckwith's objection and excluded the witness's testimony. The court allowed Neil Atwell to testify on the issue of damages because it found that as the owner of the property, i.e., the Beckwith Rebuild, he was qualified to testify as to the value of that property. N.T., at 649-666. As an offer of proof, Atwell stated:
Mr. Atwell will testify that he took delivery of the D-11 dozer that he purchased from Beckwith in January 199[7], that he is very familiar with dozers and, *1225 in particular, CAT dozers with regard to their price, new and used.
He has purchased in his 11 or 12 years in this business a number of bulldozers, two D10-L's, two D10-N's, two D9-H's.
He can list 10 or 12 dozers that he's purchased that are comparable to the dozer that he bought from Beckwith as far as what they do, what type of work they do and how much he'd be willing to pay for them.
He's also purchased a number of other CAT machines, totaling somewhere near 50 machines that he's purchased in his lifetime, over 50 machines.
He goes to the auctions in Florida. They have heavy equipment auctions. He looks at the equipment being auctioned off. He listens to the prices they are sold for and he is very attune to the equipment, value of equipment, new and used.
.....
[H]e inspected very closely the dozer that he received from Beckwith.
He familiarized himself with the machine. He ran the machine. He used the machine.
Our position is that as the owner of this machine and as a knowledgeable person in dealing with equipment and heavy equipment of this nature and being attuned to the prices of this equipment, that he has more than enough knowledge to testify as to its value.
N.T., at 656-657; see also, N.T., 676-681. Atwell also relied upon Sweitzer v. Whitehead, 404 Pa. 506, 173 A.2d 116 (1961) in which our Supreme Court found that Sweitzer, as the owner of the foundry equipment at issue, and having 21 years experience buying and selling foundry equipment, was competent to testify as to its value. The Court likewise relied upon Sweitzer in allowing Atwell to testify. Trial Court Opinion, at 4.
¶ 29 We agree that Neil Atwell was competent to testify on this issue. We find further support for this conclusion in J.W.S. Delavau v. E. Am. Transp. & Warehousing, 810 A.2d 672 (Pa.Super.2002), appeal denied, 573 Pa. 704, 827 A.2d 430 (2003). In Delavau, we found the owner and bailee of calcium carbonate who had been involved in the manufacture and sale of calcium product for many years was competent to testify as to the value of his damaged goods. In Delavau, we relied upon Silver v. Television City, Inc., 207 Pa.Super. 150, 215 A.2d 335 (1965) for the principle that "[w]here a party is particularly familiar with its property, it is competent to approximate the value of the property." Id., at, 686. In Silver, this Court stated:
Generally, an owner of property, real or personal, is competent to testify as to its value. It is only when it plainly appears that the owner has no knowledge of the value he expresses an opinion about that the presumption arising from ownership is overcome and his opinion is inadmissible.
Id., at 339 (citations omitted). Here, we find that Atwell, as the property owner and one particularly familiar with this property, is well-situated to render his opinion as to the property's value. The weight to attach to his testimony is within the province of the jury.
¶ 30 Beckwith alleges the court erred in allowing Atwell to testify because he was not qualified as an expert, and because in the commercial context the proposition that the owner of property is qualified to testify as to the value of his property does not apply "as fully or automatically as in the noncommercial context." Beckwith's brief at 36. In Delavau and Silver the property owners were permitted to testify as to the value of their property without qualification as an expert. Further, we *1226 find no basis upon which to conclude this commercial/noncommercial distinction is valid. We note that recent law of our sister states, while not binding, supports our rejection of this distinction. For example, in Mayberry v. Volkswagen of Am., Inc., 2005 Wisc. LEXIS 12, the Supreme Court of Wisconsin was faced with a UCC breach of warranty case brought by the purchaser of an automobile. The purchaser of the car was permitted to testify as to its value at the time and place of acceptance. The Court reiterated that Wisconsin case law is clear that an owner of property may testify as to its value and that such testimony may properly support a jury verdict for damages, even though the opinion is not corroborated or based on independent factual data. The Court noted that while such testimony was sufficient to survive summary judgment, it may not be persuasive to the jury. Id. Similarly, in Monroe v. Hyundai Motor Am., Inc., 270 Ga.App. 477, 606 S.E.2d 894 (2004), the Georgia Court of Appeals was faced with a UCC breach of warranty case brought by the purchaser of an automobile. The Court found that the automobile purchaser's testimony as to value at delivery was insufficient; it reiterated, however, that generally an owner of property can be qualified to state an opinion as to value, but in order to have probative value such opinion evidence must be based upon a foundation that the witness has some knowledge, experience or familiarity with the value of the property or similar property and he must give reasons for the value assessed and also must have had an opportunity for forming a correct opinion. We conclude the court did not err in allowing Neil Atwell to testify on the issue of damages.
¶ 31 Neil Atwell testified that the value of the tractor as delivered was $250,000. N.T., at 681. The purchase price, exclusive of the trade-in and financing charges, was approximately $700,000.[7] N.T., at 711-712. We find this is sufficient evidence as to the value of the tractor as warranted, i.e. of a Caterpillar Rebuild, in January 1997. Atwell's testimony therefore indicates a $450,000 difference in value. Id., at 683. Jay Capristo, a regional manager for Beckwith testified that as of January 1997, the difference in sales price between a Certified Caterpillar Rebuild and a Beckwith Rebuild was between $35,000 and $50,000. Id., at 714-715, 720. We note that "[i]t is only required that the proof afford a reasonable basis from which the fact-finder can calculate the plaintiff's loss." Delavau, supra at 686. We find this testimony was sufficient for the jury to determine the difference in value between the Beckwith Rebuild delivered and a Caterpillar Rebuild at the time and place of acceptance.
¶ 32 The testimony above presented a discrepancy between Atwell's testimony that the difference in value between the Beckwith Rebuild as delivered and a Caterpillar Rebuild as warranted was $450,000, and Beckwith witnesses' testimony that the difference between the two was between $35,000 and $50,000. It is axiomatic that it is within the province of the jury to decide the weight to afford a witness's testimony. The jury returned a verdict of $175,000 for Atwell on this issue, which appears to be a compromise between *1227 the two opinions presented. We find the jury had a reasonable basis for this calculation.
¶ 33 Judgments affirmed.
NOTES
[1] On May 18, 2004, this Court sua sponte consolidated these appeals.
[2] 13 Pa.C.S.A. §§ 1101 et seq.
[3] All other issues discussed in Atwell's brief are responsive to the issues raised by Beckwith in its appeal.
[4] The docket indicates that two of the three volumes of trial transcript were filed on May 16, 2003, and the remaining volume was filed on May 19, 2003. All therefore were filed approximately three months after Beckwith filed its post-trial motion.
[5] Beckwith's witness testified that in the Caterpillar Certified Rebuild program, all product upgrades or changes are required to be made whereas Beckwith "takes some liberties in the form of upgrades" and makes those which it deems to be essential, but may not make those it deems to be optional. N.T., at 457-458. Neil Atwell testified that 7,000 parts are replaced on a Caterpillar Rebuild and a new serial number is assigned to a Caterpillar Rebuild; accordingly, "it's just like a brand-new machine." Id. at 50; see also Id., at 456-457.
[6] We note that "[k]nowing acceptance of non-conforming goods merely prevents a buyer's subsequent rejection of the goods; it does not impair any other remedy provided by the code." Beaver Valley Alloy Foundry, Co. v. Therma-Fab, Inc., 814 A.2d 217, 220 (Pa.Super.2002); see also 13 Pa.C.S.A. § 2607(b).
[7] Beckwith repeatedly insists that the $700,000 purchase price was for a Beckwith Rebuild, since it had always intended to sell Atwell a Beckwith Rebuild. Beckwith's brief, at 30. The jury found that Beckwith agreed to sell Atwell a Caterpillar Rebuild. Accordingly, the $700,000 purchase price must have been for the Caterpillar Rebuild. As stated above, pursuant to See Price v. Chevrolet Motor Div. of GMC, 765 A.2d 800, 811 (Pa.Super.2000), the $700,000 purchase price is prima facie evidence of the value of the tractor as warranted. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1111567/ | 512 So. 2d 702 (1987)
In the MATTER OF the ADOPTION OF R.M.P.C., a Minor Child.
No. 56955.
Supreme Court of Mississippi.
September 9, 1987.
Rehearing Denied September 30, 1987.
*703 Nova Carroll, Ray M. Stewart, J. Edmand Pace, Stewart, Burks, Pace & Carroll, Picayune, for appellant.
Richard C. Fitzpatrick, David R. Smith, Smith, Smith, Tate & Cruthird, Poplarville, for appellee.
Before HAWKINS, P.J., and ROBERTSON and ANDERSON, JJ.
ROBERTSON, Justice, for the Court:
I.
Today we are concerned that the labyrinthian course of proceedings below not obscure that this case is about the adoption and support of a now thirteen-year-old female child. The child's mother is now living *704 in Louisiana. The child's admitted natural father defends by attacking a two year old decree under which he adopted his own child. In the end we hold that the Chancery Court quite adeptly traversed the labyrinth before it. We affirm.
II.
In 1971 Albert M. Mars (a/k/a Joseph Morris Mars a/k/a Joe Mars) began dating Judith Ellen Pasentine in Pearl River County, Mississippi. On December 6, 1973, R.M.P.C., a female child, was born to Judith Pasentine in Picayune, Mississippi. Within the community Mars was generally considered to be the father, a fact he does not deny. Mars and Pasentine continued their on again, off again relationship until late 1976 or early 1977.
On January 3, 1978, Judith Pasentine married Sam Parker Cooper, Jr., an attorney. On April 10, 1978, Sam and Judith filed a petition in the Chancery Court of Pearl River County seeking to adopt R.M.P.C. On April 21, 1978, a decree was entered granting the adoption and changing the child's name.
On December 4, 1978, Sam Cooper filed a petition, jointly signed by himself and Judith Ellen Cooper, in Adoption Cause No. 594 asking the Chancery Court to have R.M.C. adopted solely by the child's natural mother, Judith Ellen Cooper. The Chancery Court dismissed this petition in an order on December 21, 1978.
On May 24, 1979, also before the divorce of the Coopers on May 30, the procedure disputed before this Court, Adoption Case No. 611, was commenced in the Chancery Court. The petition for adoption of R.M.P.C. was signed by Albert M. Mars, Judith Ellen Cooper and Sam Parker Cooper, Jr. On May 28, 1979, the Chancery Court entered a decree of adoption, which provides that R.M.P.C. becomes the adopted child of Albert M. Mars and Judith Cooper. What makes this unusual proceeding bizarre is that on May 28, 1979, the date of the adoption decree, Mars and Judith were each married to someone else.
On August 4, 1980, Judith Cooper signed a petition for support under Louisiana's Uniform Reciprocal Enforcement of Child Support Act seeking financial assistance in raising R.M.P.C. This petition was filed by the Pearl River County, County Attorney on October 1, 1980, in Cause No. 18,071 and demanded support of and from Mars upon the decree for adoption in Cause No. 611. Mars contends that this was the first time that he had been notified that an "alleged" adoption had taken place on May 28, 1979, in Cause No. 611.
After Mars was served with the U.R.E.S.A. petition, he filed, on November 14, 1980, an answer, affirmative defenses, and cross bill of complaint in Cause No. 18,071 in which he protested the adoption alleged in Cause No. 611.
On September 16, 1981, Sam P. Cooper, Jr. filed a motion to set aside the former decree obtained in Adoption Cause No. 568, wherein he and Judith Allen Cooper had adopted R.M.P. and had her name legally changed to R.M.C. On March 9, 1982, the guardian ad litem filed a response to Cooper's motion and on July 7, 1983, the Chancery Court denied Cooper's motion to set aside the adoption decree in Number 568. During trial of this matter Cooper admitted that if the alleged adoption of Mars in No. 611 were set aside, then Cooper's adoption of R.M.C. in No. 568 would be in full effect and force.
After lengthy proceedings the Chancery Court on October 30, 1984, released its memorandum opinion upholding the unorthodox proceeding of Cause No. 611. The Court began:
The pleadings are voluminous, the positions and counterpositions are numerous and convoluted, some of the assertions by various parties are quite serious and some are almost ludicrous indeed, the entire matter might be aptly characterized as a "veritable can or worms". Except for the fact that the whole affair bears potential for great damage to a child, innocent of any wrong, it might be called a "comedy of errors" but because of the effect upon the child, it occurs to this Court that it is more correctly as a "tragedy of errors".
*705 The main thrusts of the action center first around the proceeding in Adoption Cause No. 611 wherein a Final Decree was entered under date of May 28, 1979, which, on its face, effected an adoption of R.M.P.C. to Albert M. Mars, and second around the deposit of slightly more than $100,000.00 by Albert M. Mars in an account in Bankers Trust Savings and Loan styled "Joe M. Mars, Trustee for R.M.P.C... ."
The Court then proceeded to deny Mars' request to set aside the adoption decree in Case No. 611. The Court further held that the questioned bank account belongs to Mars and is not subject to any trust nor was it an inter vivos gift; that Mars must contribute to the support and maintenance of R.M.P.C. at $400.00 per month; that Mars pay Cooper's attorneys fees in the amount of $1,750.00; that Mars pay the sum of $2,000.00 to David M. Smith for his services as guardian ad litem and attorney for the minor; and that all costs of these proceedings be taxed to Mars.
Importantly, the Court held that Mars was "factually and legally" the father of R.M.P.C. This memorandum opinion was carried into effect by final judgment entered November 16, 1984. Following a plethora of post-trial motions and cost motions, Mars has perfected the instant appeal.
III.
A.
The core question presented on this appeal is whether the Chancery Court was correct when it refused to disturb the decree of adoption entered May 28, 1979. To be sure, that decree is an unusual one. It begins by finding as a fact that Albert M. Mars is the natural father of the child a fact nowhere disputed in this record by anyone. It goes on to declare that the child is adopted by Albert M. Mars and Judith Ellen Cooper. Again, what is odd is that on the date of this decree, May 28, 1979, Mars and Cooper were not married to each other but each was married to another person. Mars was married to Mona Liesa Ladner Mars, that marriage having been perfected on May 4, 1979. Cooper was married to Sam P. Cooper, Jr., although she became divorced from him by Chancery Court decree entered two days later, May 30, 1979. Insofar as the record appears, Albert M. Mars and Judith Ellen Cooper have never been married to each other. In any event, the final decree of May 28, 1979, provides that R.M.P.C. is adopted by Albert M. Mars and Judith Ellen Cooper.
The May 28, 1979, decree became final. No appeal was taken therefrom. Insofar as the record reflects, there were simply no further proceedings in the matter.
The present problem begins over two years later. On June 8, 1981, Mars moved the Chancery Court for entry of an order vacating the May 28, 1979, decree for adoption. The Chancery Court denied that motion. On this appeal Mars charges that there were four defects in the May, 1979, petition which he labels jurisdictional in the sense that Mars claims the Chancery Court was absolutely without authority to enter the May 28 decree. These defects are: (1) that Mars' wife did not join in the May 23, 1979, petition, (2) that Sam P. Cooper, Jr. was the only one of the three petitioners who actually appeared before the notary public, (3) that there is no doctor's certificate attached to the petition, (4) that there is no sworn statement of the property owned by the child.
In making these complaints, Mars relies upon the provisions of Miss. Code Ann. § 93-17-3 (Supp. 1986) which in relevant part in 1979 read as follows:
Any person may be adopted in accordance with the provisions of this chapter ... by a married person whose spouse joins in the petition, ... . Such adoption shall be by sworn petition filed in the Chancery Court... . The petition shall be accompanied by a doctor's certificate showing the physical and mental condition of the child to be adopted and a sworn statement of all property, if any, owned by the child ... [Emphasis added]
Assuming arguendo that these several provisions of the statute were not complied with, our question becomes whether Mars *706 may raise the point(s) more than two years after the adoption decree has been entered. Seen in this light, the question necessitates our consideration of two further statutory provisions. Miss. Code Ann. § 93-17-15 (1972) provides that no action shall be brought to set aside a final decree of adoption after six months have passed following the entry thereof. Miss. Code Ann. § 93-17-17 (1972) then provides that no decree of adoption shall be set aside period, "except for jurisdiction and for failure to file and prosecute the same under the provisions of this chapter."
Read together, these statutes are susceptible of the construction that not even jurisdictional defects may be raised after six months. We have held to the contrary, however, in Naveda v. Ahumada, 381 So. 2d 147 (Miss. 1980) and quite correctly so. If the court entering the decree was without subject matter jurisdiction or if the child's natural mother had not been subjected to the in personam jurisdiction of the court, the adoption decree would, of course, be subject to post-judgment attack.
The four problem areas asserted by Mars, however, are not jurisdictional in the above sense. To make this point clear, we need to consider the nature of the concept of jurisdiction. Subject matter jurisdiction has reference to the power and authority of a court to entertain a case at all. American Fidelity Fire Insurance Co. v. Athens Stove Works, Inc., 481 So. 2d 292, 296 (Miss. 1985); Luckett v. Mississippi Wood, Inc., 481 So. 2d 288, 290 (Miss. 1985). Ordinarily, the existence of that authority turns on the nature of the case, either by reference to the primary right asserted or the remedy or relief demanded. Dye v. State Ex Rel. Hale, 507 So. 2d 332, 337 (Miss. 1987). Subject matter jurisdiction, of course, cannot be waived. Goodman v. Rhodes, 375 So. 2d 991, 993 (Miss. 1979); McMillan v. Tate, 260 So. 2d 832, 833 (Miss. 1972). Here, that matter is of no concern to us for adoption cases are well within the jurisdiction of the Chancery Court. Welch v. Welch, 208 Miss. 726, 732, 45 So. 2d 353, 354 (1950).
We have the unfortunate habit of using the term jurisdictional when referring to functionally different requisites to suit, matters of pleading and practice. Whether the label is apt, however, we need not decide. What is important is that matters of this sort may aid a party only if timely raised or noticed by the Court. I refer here to matters which may be waived and which, once the judgment becomes final and the time for appeal has expired, are surely lost forever.
B.
The first such defect Mars identifies in the May 23, 1979, petition is that his wife did not join in. He certainly appears to be correct as a matter of fact, for the three signatures on the petition are Judith Ellen Cooper, Sam P. Cooper, Jr., and Albert M. Mars. Mona Liesa Ladner Mars' name nor signature appears. The statutory language quoted above provides that the adoption petition may be filed "by a married person whose spouse joins in."
Last year we held that this provision means what it says. In Re Adoption of Baby Boy B, 487 So. 2d 841, 842 (Miss. 1986). In Baby Boy B, however, objection was timely made, and, at the original adoption hearing, the Chancery Court had denied adoption. We affirmed. Nothing in Baby Boy B stands for the proposition that this is the sort of deficiency in the adoption petition that may be raised more than two years after a final decree of adoption was entered.
We do not regard the requirement that the spouse join in as jurisdictional in the sense that it may be raised at any time and never waived. It is the sort of requisite to an adoption petition which will be honored if timely asserted and is certainly one of which the Court may timely take notice even where no party complains. But where a decree of adoption becomes final, and no appeal is taken, and where the six month time period contemplated by Section 93-17-15 has expired, the point is lost forever.
*707 There is an additional reason why Mars fails. Even if it were not so late in the day, Mars would not be allowed to complain. By his signature on the petition, he is one of the individuals who induced the court to act in the absence of his wife's presence in court. We have no pleading before us from Mona Liesa Ladner Mars suggesting that she desires relief.
C.
Mars next claims that he did not appear before the notary public. The petition for adoption contains the signatures of Judith Ellen Cooper, Sam P. Cooper, Jr., and Albert M. Mars. Mars does not deny that his signature appears on the petition. Following the signatures we have a conventional verification which reads as follows:
STATE OF MISSISSIPPI COUNTY OF PEARL RIVER
Personally came and appeared before me, the undersigned authority in and for the aforesaid jurisdiction, the within named, Judith Ellen Cooper, Albert M. Mars and Sam P. Cooper, Jr., next friend of R.M.P.C., and each being duly sworn and say that they voluntarily signed the foregoing petition for adoption and that all the matters and things stated in the petition are true and correct wherein stated of their own knowledge and that any matters stated upon information and belief they each verily believe the same to be true.
WITNESS our signatures, this the 23rd day of May, A.D., 1979.
/s/ Judith Ellen Cooper
JUDITH ELLEN COOPER
/s/ Albert M. Mars
ALBERT M. MARS
/s/ Sam Parker Cooper, Jr.
SAM PARKER COOPER, JR.
Next Friend of minor
SWORN TO AND SUBSCRIBED before me, on this the 23rd day of May, A.D., 1979.
JUDITH ANN BENNETT
NOTARY PUBLIC
MY COMMISSION EXPIRES: September 12, 1982
Mars now says that he did not in fact appear before Notary Public Bennett. The answer is simple. This is not a point he may raise two plus years after the fact. Miss. Code Ann. § 93-17-15 (1972). The verification is regular on its face. We will not disturb the Chancery Court's decision which granted Mars no relief on this ground.
D.
Third, Mars complains that the petition has affixed to it no doctor's certificate. As indicated above, Section 93-17-3 requires that the petition for adoption be accompanied by a doctor's certificate "showing the physical and mental condition of the child to be adopted." We considered this provision in Matter of Adoption of F.N.M., 459 So. 2d 254, 257 (Miss. 1984). In that case timely objection was made to the petition for adoption by a party with standing to offer the objection. We held that the court should not have proceeded with the adoption in the absence of the doctor's certificate.
To be sure, the F.N.M. opinion uses the word "jurisdictional" in describing the requirement of a doctor's certificate. Labels notwithstanding, the requirement of a doctor's certificate is certainly not the sort of requisite to an adoption proceeding failure of which may be asserted two years after the fact. Miss. Code Ann. § 93-17-15 (1972). To hold otherwise would do violence to the strong public policy declaration regarding the finality of adoption decrees found in Section 93-17-17. As with the requirement that the spouse join in, we express no opinion on the question of whether this defect can be raised within the six month period allowed by Section 93-17-15. Those facts are simply not before us, for today's application for vacation of decree of adoption was filed two years and eleven days after the fact.
E.
Fourth, we again take as true the fact that the statement of the child's property was missing from the petition. This *708 also is the sort of requisite to an adoption proceeding which may be sufficient to deny adoption if timely asserted. As with the others considered above, the final decree of adoption coupled with the lapse of more than two years time with no action being taken is sufficient to insulate the decree of adoption from attack on these grounds.
Mars presents numerous additional assignments of error none of which contain merit or need discussion. The judgment Mars appeals from is affirmed.
IV.
The Cross-Appeal
On cross-appeal Appellees R.M.P.C. and Judith Pasentine Cooper claim that the trial court erred in refusing "to award a judgment and/or an amended judgment in favor of R.M.M. against Albert M. Mars for the interest earned on trust account styled "Joe M. Mars, Trustee, For Rena M. Pasentine." Surely their assignment of error should be specifically that the judge denied their motion to amend judgment. In this motion the Appellees request that they receive the interest, plus further interest earned on the original interest, accrued on the trust account opened for Rena M. Pasentine in 1974.
We have reviewed the cross-appeal with care and need say only that the Chancery Court's findings of fact are supported by substantial evidence and that his ultimate decision thereon was well within his authority.
AFFIRMED ON DIRECT APPEAL; AFFIRMED ON CROSS-APPEAL.
WALKER, C.J., ROY NOBLE LEE and HAWKINS, P.JJ., and DAN M. LEE, PRATHER, ANDERSON and GRIFFIN, JJ., concur.
SULLIVAN, J., not participating. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1532145/ | 872 A.2d 87 (2005)
386 Md. 249
Steven Terry COTTON
v.
STATE of Maryland.
No. 29, September Term, 2004.
Court of Appeals of Maryland.
April 11, 2005.
*88 Eve L. Brensike, Asst. Public Defender (Nancy S. Forster, Public Defender, Michael R. Braudes, Asst. Public Defender, on brief), for petitioner.
Devy Patterson Russell, Asst. Atty. Gen. (J. Joseph Curran, Jr., Atty. Gen., on brief), for respondent.
Argued before BELL, C.J., RAKER, WILNER, CATHELL, HARRELL, BATTAGLIA and GREENE, JJ.
WILNER, J.
On an agreed statement of facts, petitioner, Steven Cotton, was convicted in the Circuit Court for Caroline County of possession of marijuana, for which, as a repeat offender, he was sentenced to two years in prison. That judgment was affirmed by the Court of Special Appeals. The marijuana that formed the basis of his conviction was taken from him by Caroline County Detective James Henning when Cotton, after receiving Miranda warnings, admitted to Henning that he had the drug in his possession. Cotton's only complaint is that, at the time of this encounter with Detective Henning, he was under an unlawful arrest and that both his admission and the ensuing search, as the fruit of that unlawful arrest, were inadmissible in evidence. We find no merit in that argument and shall therefore affirm the judgment of the Court of Special Appeals.
BACKGROUND
An extensive four-year investigation by the Caroline County Sheriff's Office established that Don Antonio Jones, his grandfather, Calvin Edgar Bolden, and his mother, Calvileen Bolden, were operating an open-air drug market from and around their home at 329 Brooklyn Avenue, in Federalsburg. The investigation revealed that (1) significant quantities of drugs were brought into the house by Jones, (2) the drugs were being sold not only in the house but around it as well, from the front porch and within what we would regard as the curtilage, (3) many of the individuals observed in the trafficking, including Jones and Calvin Bolden, had extensive drug-crime records, and some of them had a record of violent crimes, and (4) Jones, in particular, (i) associated with individuals who had extensive backgrounds in assaults, attempted murders, and handgun violations, (ii) had established an elaborate counter-surveillance network around the vicinity of the house, and (iii) had threatened that "a member of the police department is going to get `shot' if the police do not back off with patrols in the Brooklyn, Federalsburg area."
Based on this and a great deal more, all carefully set forth in a 68-page verified application, a District Court judge found probable cause to believe that violations of the controlled dangerous substance laws were occurring "in and upon" 329 Brooklyn *89 Avenuenot just the residence but outbuildings and motor vehicles on the property as well. Upon that finding, the court issued a warrant that authorized the police to enter and search, without the need for a knock or announcement of police presence, the residence and any outbuildings and motor vehicles located "on said property." The warrant empowered the police to search the persons and clothing of Jones, Calvileen and Calvin Bolden, and "any other persons found in or upon said premises who may be participating in violations of [those statutes] and who may be concealing evidence, paraphernalia, and Controlled Dangerous Substances," to seize all evidence "found in or upon said premises," and to arrest "all persons found in or upon said premises ... who are participating in violations of [those statutes]."
Although only three persons were named in the warrantJones and the two Boldensthe affidavit established that several other people with a history of criminal and violent conduct were involved, and the warrant clearly anticipated that some of them may be on or about the property when the warrant was executed. Hence, the authorization to enter the house without knocking or announcing the police presence and to arrest "all persons" found in or upon the premises who may be participating in violations of the drug laws.[1]
Given that they were dealing with an open-air drug market, that an unknown number of people might be present when the warrant was executed, and that some of those people might be violent and likely to resist or flee, the police understandably arrived in force. Some twenty to twenty-five officers participated.[2] When the police arrived, they found at least four people, including Jones and Cotton, in the front yard near the porchan area in which much of the drug activity described in the application for the warrant had taken place. Jones immediately fled, requiring two officers to pursue and ultimately capture him. The other people were handcuffed and detained under guard. There was no evidence that they were held at gunpoint. Cotton was allowed to sit on a bucket or log. Detective Henning explained:
"That is standard procedure based on being in an open air drug market and doing this type of no knock warrant, we hadeveryone is detained, placed on the ground for our safety and detained at that position where they're at while the rest of the place is secured, and securing a residence doesn't just take two minutes, three minutes, it probably would take about ten to fifteen minutes to make sure that all the rooms, attics, crawl spaces, everything is secured before anyone does anything else."
The detective added that it was not just a matter of securing the house itself:
*90 "Basically we set up a perimeter as they are securing the house, we're setting up a perimeter, making sure no one doubles back around on us or anything to that effect, so yes, after I would say [ten to fifteen] minutes. However long it took to get the house totally secured is when I start making my rounds to people."
The detective explained that, once the house was secured, which took about ten to fifteen minutes, he began to interview the people who had previously been detained. He began with Steven Aldredge, who was on or near the porch with Cotton and Jones when the police arrived. Henning had what he said was a "brief conversation" with Aldredge. As Henning was talking to him, a police dog alerted to Aldredge's car. Henning requested and obtained permission to search both Aldredge and the car, and, when no contraband was found, Aldredge was promptly released. Henning then turned immediately to Cotton. He testified:
"I approached the Defendant, I told him what was going on, a search and seizure warrant was being executed. I immediately advised him of his Miranda rights, I asked him if he had anything on him, he said, `All I've got is a bag of weed, that's all I got.' At that point I said okay, that's fine. I got all the pertinent information, he was subsequently searched behind the residence further, to determine if he had anything else and he just remained in the scene until we were able to get a transport unit there."
Henning said that he asked the question, after giving the Miranda warnings, to determine whether Cotton had any weapons or needles that might jeopardize Henning's safety, and that he patted Cotton down after Cotton's admission that he was in possession of marijuana. Henning regarded the pat-down as a Terry v. Ohio frisk. The marijuana that was found on Cotton is what led to his conviction for possession of the substance.
Cotton looks on this procedure as transgressing his Constitutional rights. He urges that so far as the police were concerned, he was a mere bystander who happened to be on the scene when they came to execute the warrant for the BoldenJones home, that they had no probable cause to believe that he had committed any crime or had any contraband in his possession, and that they therefore had no lawful authority to detain him. The detention, he avers, constituted an unlawful arrest, and the interrogation and search that followed it were, as a result, equally unlawful. The de facto arrest, he says, arose from the fact that he was detained for upwards of twenty minutes, during which time he was handcuffed, kept under guard, and given the Miranda warnings.
DISCUSSION
The Fourth Amendment does not prohibit all searches and seizures, but only those that are unreasonable. United States v. Sharpe, 470 U.S. 675, 682, 105 S. Ct. 1568, 1573, 84 L. Ed. 2d 605, 613 (1985); Maryland v. Buie, 494 U.S. 325, 331, 110 S.Ct. 1093,1096, 108 L. Ed. 2d 276, 284 (1990). The starting point for a proper analysis of reasonableness is Michigan v. Summers, 452 U.S. 692, 101 S. Ct. 2587, 69 L. Ed. 2d 340 (1981).
As the police were about to execute a warrant to search a house for narcotics, they observed Summers coming down the front steps. The police detained him while they searched the house and, after finding narcotics in the basement and learning that Summers owned the house, they arrested and searched him, finding heroin in his coat pocket. Clearly at that point they had probable cause to make the arrest, but the question before the Courtjust like the question before us in this casewas *91 the legality of the initial detention: was it an arrest that required probable cause or was it an investigative seizure that could be justified on less than probable cause?
Examining earlier cases, in particular Terry v. Ohio, 392 U.S. 1, 88 S. Ct. 1868, 20 L. Ed. 2d 889 (1968) and its extensive progeny, the Court confirmed that "some seizures admittedly covered by the Fourth Amendment constitute such limited intrusions on the personal security of those detained and are justified by such substantial law enforcement interests that they may be made on less than probable cause, so long as the police have an articulable basis for suspecting criminal activity" and that "the exception for limited intrusions that may be justified by special law enforcement interests is not confined to the momentary, on-the-street detention accompanied by a frisk for weapons involved in Terry and Adams [v. Williams, 407 U.S. 143, 92 S. Ct. 1921, 32 L. Ed. 2d 612 (1972)]."
Of particular importance in Summers was the fact that the police had obtained a warrant to search the house. The Court observed that, although the detention of Summers admittedly constituted a significant restraint on his liberty, justification for that detention also had to consider the law enforcement interest, and, in that regard, it made and emphasized the point seemingly lost on both Cotton and the Dissent in this case:
"Most obvious is the legitimate law enforcement interest in preventing flight in the event that incriminating evidence is found. Less obvious, but sometimes of greater importance, is the interest in minimizing the risk of harm to the officers. Although no special danger to the police is suggested by the evidence in this record, the execution of a warrant to search for narcotics is the kind of transaction that may give rise to sudden violence or frantic efforts to conceal or destroy evidence. The risk of harm to both the police and the occupants is minimized if the officers routinely exercise unquestioned command of the situation."
Michigan v. Summers, supra, 452 U.S. at 702-03, 101 S.Ct. at 2594, 69 L.Ed.2d at 349-50. (Emphasis added).
Although there were a number of people found in the home and detained by the police, the Summers case involved only Summers himself, who was a resident. In analyzing the issue before it and ultimately holding that a limited detention of Summers was permissible, the Court sometimes used the word "resident" and sometimes the word "occupant" to describe who may properly be detained, and that has engendered considerable debate over whether anyone other than an actual resident of the home may be detained in the absence of independent probable cause or articulable suspicion. Most recently, the Supreme Court has characterized Summers as dealing with `occupants.'" See Muehler v. Mena, 544 U.S. ___, 125 S. Ct. 1465, 161 L. Ed. 2d 299 (2005).
In Stanford v. State, 353 Md. 527, 727 A.2d 938 (1999), we noted that three lines of cases had developed: those flatly holding that only actual residents of the home may be detained while the search proceeds; those adopting that view generally but allowing the detention of non-residents if the police "can point to reasonably articulable facts that associate the visitor with the residence or the criminal activity being investigated in the search warrant"; and those that "broadly define `occupants' to include those visiting the residence to be searched." Id. at 535-38, 727 A.2d at 942-44. We pointed out that the cases in that third category tend to resolve the validity of the detention of visitors by "comparing the nature of the police intrusion with any valid law enforcement interests in the detention." *92 Id. at 537-38, 727 A.2d at 943-44. Because we concluded that the detention of Mr. Stanford was unlawful under any of those approaches, we did not need to decide which of them was the most appropriate.
Since Stanford, it appears that at least three Federal appellate courts and one State Supreme Court have adopted approaches broader than the first and closer to the second or third. See United States v. Photogrammetric Data Services, Inc., 259 F.3d 229 (4th Cir.2001), cert. denied, 535 U.S. 926, 122 S. Ct. 1295, 152 L. Ed. 2d 208 (2002), abrogated on other grounds by Crawford v. Washington, 541 U.S. 36, 124 S. Ct. 1354, 158 L. Ed. 2d 177 (2004) (detention of employees while business office searched pursuant to warrant permissible under Summers); Ganwich v. Knapp, 319 F.3d 1115 (9th Cir.2003) (same); United States v. Cavazos, 288 F.3d 706 (5th Cir. 2002), cert. denied, 537 U.S. 910, 123 S. Ct. 253, 154 L. Ed. 2d 189 (2002); State v. Vorburger, 255 Wis. 2d 537, 648 N.W.2d 829 (2002).
Subject to further instruction from the Supreme Court, we think that the second two approaches, or some synthesis of them, are more consistent with recent jurisprudence and represent a more reasoned and practical solution, in that they focus on the actual circumstances surrounding the issuance and execution of the warrant. Although Summers itself dealt only with a resident, the validity of the detention rested on precepts derived from Terry and its progeny. If, to minimize the risk of harm to both police and occupants, the police are authorized to "routinely exercise unquestioned command of the situation," persons, other than just residents, who are found in or about the premises are likely to be temporarily detained as well, at least until the police can find out who they are and whether they are involved in any of the illegal activities taking place at the home.
That authority was at least implicitly confirmed in Maryland v. Buie, supra, where, in executing an arrest warrant for Buie, police entered his home, immediately fanned out through the home looking not just for Buie but anyone else who might be there, and continued that sweep even after Buie had been located and arrested. Reversing a contrary decision by this Court, the Supreme Court concluded that the officers had an interest "in taking steps to assure themselves that the house in which a suspect is being, or has just been, arrested is not harboring other persons who are dangerous and who could unexpectedly launch an attack." Maryland v. Buie, supra, 494 U.S. at 333, 110 S.Ct. at 1098, 108 L.Ed.2d at 285. (Emphasis added). The Court continued that "the arresting officers are permitted in such circumstances to take reasonable steps to ensure their safety after, and while making the arrest" and that "[t]hat interest is sufficient to outweigh the intrusion such procedures may entail." Id. at 334, 110 S.Ct. at 1098, 108 L.Ed.2d at 286.
It follows, from Summers and Buie, that, in executing a warrant such as that issued here, for a premises known to be an open-air drug market where the police are likely to encounter people who may well be dangerous, they are entitled, for their own safety and that of other persons, to take command of the situation and, except for persons who clearly are unconnected with any criminal activity and who clearly present no potential danger, essentially immobilize everyone until, acting with reasonable expedition, they know what they are confronting. It really cannot be otherwise. The police do not know who may be at the scene when they arrive. The people they find there, in or on the property to be searched, are not wearing *93 identifying labelssupplier, customer, processor, bodyguard, innocent bystander. It would be decidedly unreasonable to expect the police simply to give a friendly greeting to the folks there and proceed to search the house without another thought as to who those people are or what they may do. Indeed, the Supreme Court has specifically warned against the very kind of "unrealistic second-guessing" of police officers that Cotton and the Dissent insist be done in assessing investigative detentions. See United States v. Sharpe, supra, 470 U.S. at 686, 105 S.Ct. at 1575, 84 L.Ed.2d at 616.
The question then becomes how long that detention may last. That answer was supplied in Sharpe, which involved the stop of a vehicle and the detention of its driver, and more recently in Muehler v. Mena, supra, 544 U.S. at ___, 125 S.Ct. at ___, 161 L.Ed.2d at ___. In Sharpe, the police had some reasonable suspicion that Sharpe and Savage, driving different vehicles in tandem, were transporting marijuana. Sharpe was stopped first while another officer pursued and eventually stopped Savage. Savage was detained until the first officer arrivedabout fifteen minutes laterwhereupon his truck was searched and marijuana found in it. The issue before the Court was not the validity of the initial detention but rather its length. The Court concluded:
"In assessing whether a detention is too long in duration to be justified as an investigative stop, we consider it appropriate to examine whether the police diligently pursued a means of investigation that was likely to confirm or dispel their suspicions quickly, during which time it was necessary to detain the defendant.... A court making this assessment should take care to consider whether the police are acting in a swiftly developing situation, and in such cases the court should not indulge in unrealistic second-guessing .... A creative judge engaged in post hoc evaluation of police conduct can almost always imagine some alternative means by which the objectives of the police might have been accomplished. But `[t]he fact that the protection of the public might, in the abstract, have been accomplished by "less intrusive" means does not, itself, render the search unreasonable'.... The question is not simply whether some other alternative was available, but whether the police acted unreasonably in failing to recognize or pursue it."
Id. at 686, 105 S.Ct. at 1575-76, 84 L.Ed.2d at 615-16. (Citations omitted and emphasis added).
In Muehler, the police, pursuant to a warrant, raided a house in which at least one member of a violent gang was thought to live. Ms. Mena, an occupant of the house, was found asleep in her bed. She was placed in handcuffs at gunpoint and, along with three other persons found in trailers behind the house, taken to a converted garage and detained under guard for two-to-three hours. When the search of the house was completed, she was released. She then sued two of the officers under 42 U.S.C. § 1983, complaining, among other things, that her detention in handcuffs violated her Fourth Amendment rights. Reversing a contrary decision by the U.S. Court of Appeals for the Ninth Circuit, the Supreme Court, relying largely on Summers, held that, even though the detention of Ms. Mena was more instrusive than that of Mr. Summers, "[t]he officers' use of force in the form of handcuffs to effectuate Mena's detention in the garage, as well as the detention of the three other occupants, was reasonable because the governmental interests outweigh the marginal intrusion." Id. at ___, 125 S.Ct. at ___, 161 L.Ed.2d at ___. The Court *94 held further that the fact that the detention lasted two-to-three hours was not, itself, unreasonable, if it did not last longer than the search of the house required.[3]
Cotton places some weightthe Dissent even moreon one aspect of Baker v. Monroe Township, 50 F.3d 1186 (3rd Cir. 1995), a split decision, without taking account of everything that the Third Circuit court said and did. Baker is actually instructive. Like Muehler, it was a § 1983 action stemming from the rough treatment of the Baker family during a search of the home of Mrs. Baker's son, Clementh. At about 8:30 on a June evening, Mrs. Baker, along with two of her teenage daughters and a teenage son, were approaching the home to have dinner with Clementh just as police from three jurisdictions arrived to execute a "no knock" drug raid. Some of the officers ran past them into the house, but others pointed guns at them and ordered them to the ground.
Initially, the Bakers named in their complaint only one officer, Armstrong, and the municipality that employed him, but, after the court found that Armstrong had not been involved in any wrongful conduct and entered summary judgment against them, they sought to amend their complaint to add the names of the other officers, who actually committed the allegedly wrongful conduct, which the trial court denied on limitations grounds. The principal issue on appeal was the propriety of the summary judgment in favor of Armstrong.[4]
Armstrong, one of the first officers to arrive, did order the Bakers to "get down" as he rushed into the house. The appellate court found no Fourth Amendment violation in that order. It observed that Armstrong, who was executing a "no knock" warrant, did not know who they were or whether they were entering or leaving the house but, because they were at or near the porch and he therefore suspected that they had some relationship to the house he had a warrant to search, he considered it necessary to get them on the ground to protect them from stray gunshots. Armstrong added that the presence of citizens standing in the middle of the raid could prevent the police from defending themselves, as they could not return fire in the middle of a crowd.
The court noted that "[t]he dangerousness of chaos is quite pronounced in a drug raid, where the occupants are likely to be armed, where the police are certainly armed, and the nature of the suspected drug operation would involve a great deal of coming and going by drug customers" and, citing both Michigan v. Summers and Terry v. Ohio, concluded that "the need to ascertain the Bakers' identity, the need to protect them from stray gunfire, and the need to clear the area of approach for the police to be able to operate efficiently all made it reasonable to get the Bakers down on the ground for a few crucial minutes." Id. at 1191-92.
While the Bakers were outside, handcuffed and held at gunpoint by at least two officers, Mrs. Baker's purse was snatched and emptied on to the street. After about ten minutes, Armstrong ordered that the Bakers be brought inside, where they were detained, still handcuffed and at gunpoint, for another fifteen minutes. Citing United States v. Sharpe, supra, the court found no *95 Constitutional violation simply because of that extended detention: "We cannot say that a detention of fifteen minutes time to identify and release a fairly large group of people during a drug raid is unreasonable." Baker, supra, 50 F.3d at 1192.
The problem lay in the fact that, during this entire 25-minute period, Armstrong was aware that the Bakers had been handcuffed and held at gunpoint and that Mrs. Baker's purse had been seized and emptied. The court concluded that "adding up the use of guns and handcuffs and, indeed, the length of the detention, shows a very substantial invasion of the Bakers' personal security," that the police used those methods "without any reason to feel threatened by the Bakers, or to fear that the Bakers would escape," and that "the appearances were those of a family paying a social visit, and while it may have been a visit to a wayward son, there is simply no evidence of anything that should have caused the officers to use the kind of force they [were] alleged to have used." Id. at 1193. If Armstrong acquiesced in that behavior, he would have violated the Bakers' Fourth Amendment rights.
Apart from whether the limited remand in Baker would be warranted under Muehler, the distinctions between Baker and this case are obvious. Cotton, an adult found standing next to Jones at the porch where numerous drug transactions had been observed, could not have been mistaken for an innocent family member waiting for dinner to be served. Jones, who was known to associate with violent persons, fled and had to be chased. Not knowing Cotton, there was, indeed, reason for the police to feel threatened. Although Cotton was handcuffed until Detective Henning could speak with him, he was not held at gunpoint and he was not searched, as was Mrs. Baker, until after he admitted possessing marijuana. In short, the conduct that led the Baker court to conclude that summary judgment was inappropriate in the § 1983 action did not occur here. Indeed, the Baker court actually concluded that the kind of conduct that did occur here was not unlawfulnot the initial detention, not the fifteen minute duration of it.
A case in point is United States v. Maddox, 388 F.3d 1356 (10th Cir.2004). Two Federal marshals and a deputy sheriff went to a mobile home to serve an arrest warrant on Rachel Page, a fugitive wanted for narcotics trafficking. When they arrived, they found Buhrle, the adult son of the owner of the home, in the driveway. They directed him to wait with the sheriff in the carport while the marshals went inside to arrest Page. While the marshals were inside, a truck carrying three people, including Maddox, appeared. The sheriff noticed Maddox reach under the seat but was unsure what he was doing. The sheriff had the three exit the truck and wait in the carport. Although Maddox began walking in circles in the carport, he made no attempt to escape. Eventually, three more people arrived and were held in the carport, although the sheriff then called for backup assistance. Before the backup arrived, the marshals escorted Page from the house but were required by local protocol to wait until a female officer arrived before escorting her from the area.
Upon arrival of the backup summoned by the sheriff, Maddox was separated from the others. When asked by a deputy whether he had any weapons or guns, Maddox replied that he had a concealed gun, some methamphetamine, and a scale. The deputy took possession of those items and arrested Maddox. This took place about a half hour after Maddox first arrived and was detained. Maddox, like Cotton here, moved to suppress the incriminating evidence on the ground that *96 his detention and questioning were unlawful.
Relying largely on Maryland v. Buie, the Tenth Circuit Court of Appeals found no Fourth Amendment violation. Although Buie itself involved only a protective sweep of the house, the Maddox court concluded that the reasoning articulated by the Supreme Court applied as well to protective detentions immediately outside the home: "Because the ability to search for dangerous individuals provides little protection for officers unless it is accompanied by the ability to temporarily seize any dangerous individuals that are located during the search, we conclude that detaining potentially dangerous persons for the duration of the arrest qualifies as a `reasonable step [ ] to ensure the [officers'] safety.'" Maddox, supra, 388 F.3d at 1362, quoting in part from Buie.
The court noted that the sweep permitted in Buie was of the "arrest scene," which, in the Maddox case, included the area immediately adjacent to the home. Like Cotton, Maddox, invoking Ybarra v. Illinois, 444 U.S. 85, 100 S. Ct. 338, 62 L. Ed. 2d 238 (1979), urged that he was a mere bystander and that the sheriff should have simply sent him on his way. The court rejected that argument. In Ybarra, the police, in the course of executing an arrest warrant for the bartender of a tavern, proceeded to search all of the patrons of the tavern, which the Court held was impermissiblethat "a person's mere propinquity to others independently suspected of criminal activity does not, without more, give rise to probable cause to search that person." Ybarra, supra, 444 U.S. at 91, 100 S.Ct. at 342, 62 L.Ed.2d at 245. (Emphasis added). The circumstances in the case before it led the Maddox court to conclude that there was more therethat Buie was the more relevant caseand it concluded that the sheriff had a reasonable articulable suspicion that Maddox posed a potential danger to the officers and that suspicion supported the temporary protective detention. See also United States v. Vite-Espinoza, 342 F.3d 462, 467 (6th Cir. 2003); United States v. Guadarrama, 128 F. Supp. 2d 1202, 1217 (E.D.Wis.2001).
This Court has recognized that society has become more violent, that attacks against law enforcement officers have become more prevalent, that there is a greater need for police to take protective measures to ensure their safety and that of the community that might have been unacceptable in earlier times, and that Terry has been expanded to accommodate those concerns. In In re David S., 367 Md. 523, 534, 789 A.2d 607, 613 (2002), we quoted with approval this passage from United States v. Tilmon, 19 F.3d 1221, 1224-25 (7th Cir.1994):
"The last decade has witnessed a multifaceted expansion of Terry, including the trend granting officers greater latitude in using force in order to neutralize potentially dangerous suspects during an investigatory detention. For better or worse, the trend has led to the permitting of the use of handcuffs, for the placing of suspects in police cruisers, the drawing of weapons and other measures of force more traditionally associated with arrest than with investigatory detention."
Our approval of "hard takedowns" in David S. and in Lee v. State, 311 Md. 642, 537 A.2d 235 (1988), as permissible Terry detentions rather than as arrests, confirms our acceptance of that observation. See also Dashiell v. State, 374 Md. 85, 821 A.2d 372 (2003).
Cotton's reliance on Detective Henning's recitation of the Miranda warnings before questioning him as evidence that an arrest had already occurred also finds little support either in logic or in the *97 case law. The prophylactic requirement of Miranda warnings is designed to safeguard important Fifth Amendment protections. See Dickerson v. United States, 530 U.S. 428, 120 S. Ct. 2326, 147 L. Ed. 2d 405 (2000). Although the giving of those warnings may be considered along with more relevant factors as part of all that occurred, it should have no special significance in determining whether a temporary detention constitutes an arrest for Fourth Amendment purposes because it may well be required even when there is clearly no arrest.
Miranda warnings need to be given whenever there is a custodial interrogation, and a custodial interrogation can arise from a pure Terry stop that never crosses into an arrest. See United States v. Smith, 3 F.3d 1088 (7th Cir.1993), cert. denied, 510 U.S. 1061, 114 S. Ct. 733, 126 L. Ed. 2d 696 (1994); United States v. Perdue, 8 F.3d 1455 (10th Cir.1993); United States v. Clemons, 201 F. Supp. 2d 142 (D.D.C.2002); United States v. Calloway, 298 F. Supp. 2d 39 (D.D.C.2003). Understanding that, courts have made clear that a cautious or gratuitous recitation of Miranda warnings is irrelevant to whether there has been an arrest, or even a custodial interrogation. Cummings v. State, 27 Md.App. 361, 341 A.2d 294 (1975); Sydnor v. State, 39 Md.App. 459, 387 A.2d 297 (1978); Com. v. Alicea, 376 Mass. 506, 381 N.E.2d 144, 149-50 (1978); People v. Wipfler, 68 Ill. 2d 158, 11 Ill. Dec. 262, 368 N.E.2d 870 (1977); People v. Dozier, 67 Ill.App.3d 611, 24 Ill. Dec. 388, 385 N.E.2d 155, 158 (1979); and cf. United States v. Diaz-Lizaraza, 981 F.2d 1216, 1222 (11th Cir.1993).[5] Indeed, if the police proceed to interrogate a person seized and temporarily detained pursuant to Terry and do not give Miranda warnings, any incriminating evidence revealed by that interrogation may, depending on the circumstances, be held inadmissible as the product of a custodial interrogation and thereby doom the validity of an ensuing arrest based on that evidence. The law should encourage police to give those warnings when questioning a suspect, not discourage them by regarding the warnings as converting a good Terry stop into a bad arrest.
In summary, Cotton's reliance on the facts that he was handcuffed, placed under guard, and given Miranda warnings as establishing that he was de facto arrested either upon his initial detention or after fifteen to twenty minutes of it finds no substantial support in either Federal or this Court's current jurisprudence. Acceptance of that view would place both police officers and innocent bystanders at considerable risk.
*98 JUDGMENT OF COURT OF SPECIAL APPEALS AFFIRMED, WITH COSTS.
BELL, C.J., BATTAGLIA, and GREENE, JJ., dissent.
Dissenting Opinion by BATTAGLIA, J. which BELL, C.J. and GREENE, J., join.
I dissent. This case involves the detention and search of a nonresident who was outside of a dwelling during the execution of a "no-knock" warrant. The Majority is, despite its protestations to the contrary, adopting an overly broad interpretation of Michigan v. Summers, 452 U.S. 692, 101 S. Ct. 2587, 69 L. Ed. 2d 340 (1981), so that a person present anywhere outside on property where a search warrant is executed may be detained in the absence of independent probable cause or individualized reasonable articulable suspicion. I would find, however, that because the police could not enumerate any articulable facts creating individualized reasonable suspicion to support their detention, Cotton was subject to an unlawful de facto arrest, under the totality of the circumstances presented in this case.
On February 21, 2002, at approximately 4:00 p.m., the Caroline County Drug Task Force [hereinafter "Drug Task Force"], in conjunction with the Maryland State Police Tactical Unit [hereinafter "Tactical Unit"], executed a "no-knock" warrant at 329 Brooklyn Avenue in Federalsburg, Maryland. The issuance of the warrant was based upon surveillance by Detective James Henning of the Caroline Drug Task Force, who concluded that the residence was being used as an open air drug market and that three individuals resided there: Don Antonio Jones, Calvileen Denise Bolden, and Calvin Edgar Bolden, all of whom were named in the affidavit.
When the Drug Task Force and Tactical Unit arrived at 329 Brooklyn Avenue, police observed four people, two of whom were Jones and Cotton, standing together outside the home within two or three feet of the front porch. When the twenty to twenty-five police officers approached the home, Jones fled on foot, while the others, including Cotton, remained. The police detained everyone present, placed them in handcuffs, and entered the residence with guns drawn.
Detective Henning did not interview Cotton until the property was secured, at least ten to twenty minutes after Henning's arrival. During that time, Cotton was guarded by at least one officer while seated on a log or a bucket. Detective Henning advised Cotton of his rights pursuant to Miranda v. Arizona, 384 U.S. 436, 86 S. Ct. 1602, 16 L. Ed. 2d 694 (1966), and asked whether he had any weapons or other objects that "would hurt [Detective Henning] or anything else that he wasn't supposed to have." Cotton stated that he was carrying a bag of marijuana. Detective Henning frisked Cotton for weapons and found none; however, he did recover a bag of marijuana from Cotton's pocket. At that time, Cotton was formally arrested.
I.
The Fourth Amendment, applicable to the States through the Fourteenth Amendment, provides that "the right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures shall not be violated...." U.S. CONST. amend. IV. The Fourth Amendment is not, however, a guarantee against all searches and seizures, only those that are unreasonable. United States v. Sharpe, 470 U.S. 675, 682, 105 S. Ct. 1568, 1573, 84 L. Ed. 2d 605, 613 (1985). "Generally, any seizure of a person, whether by arrest or detention, must *99 be supported by probable cause." Stanford v. State, 353 Md. 527, 532, 727 A.2d 938, 941 (1999), citing Summers, 452 U.S. at 700, 101 S.Ct. at 2593, 69 L.Ed.2d at 348; Dunaway v. New York, 442 U.S. 200, 208, 99 S. Ct. 2248, 2254, 60 L. Ed. 2d 824, 832-33 (1979). The Supreme Court, however, has created "certain exceptions to the probable cause requirement." Stanford, 353 Md. at 532, 727 A.2d at 941. These include a "stop and frisk" under Terry v. Ohio, 392 U.S. 1, 30-31, 88 S. Ct. 1868, 1884-85, 20 L. Ed. 2d 889, 911 (1968), where the police have "reasonable suspicion that the suspect is engaged in criminal activity and presently armed and dangerous." Stanford, 353 Md. at 532, 727 A.2d at 941; see also United States v. Brignoni-Ponce, 422 U.S. 873, 881, 95 S. Ct. 2574, 2580, 45 L. Ed. 2d 607, 616 (1975) (holding that Border Patrol agents may lawfully stop persons they reasonably suspect of being illegal immigrants and question them about their citizenship); Adams v. Williams, 407 U.S. 143, 146, 92 S. Ct. 1921, 1923, 32 L. Ed. 2d 612, 617 (1972) (extending the holding of Terry to a stop based on a reliable informant's tip that the defendant might be armed and carrying illegal drugs).
The Supreme Court also created an exception in Michigan v. Summers, 452 U.S. 692, 101 S. Ct. 2587, 69 L. Ed. 2d 340 (1981), where the Court found that "a warrant to search for contraband founded on probable cause implicitly carries with it the limited authority to detain the occupants of the premises while a proper search is being conducted." Id. at 705, 101 S.Ct. at 2595, 69 L.Ed.2d at 351. In so doing, the Court noted three law enforcement justifications for such a detention: (1) preventing the suspect from fleeing should contraband be found; (2) "minimizing the risk of harm to the officers"; and (3) gaining the assistance of the "occupants" to facilitate an orderly and quick search, for example by opening locked doors or containers. Id. at 702-03, 101 S.Ct. at 2594, 69 L.Ed.2d at 349-50. The Court, however, left open the question of who can properly be characterized as an "occupant," and, as we noted in Stanford, there now exists a split of authority in many jurisdictions as to the scope of Summers. Stanford, 353 Md. at 535, 727 A.2d at 942.
In Stanford, we noted that there are three different approaches to applying Summers. Id. First, some jurisdictions limit Summers solely to the actual residents of the premises being searched. See, e.g., United States v. Reid, 997 F.2d 1576, 1579 (D.C.Cir.1993), cert. denied, 510 U.S. 1132, 114 S. Ct. 1105, 127 L. Ed. 2d 417 (1994); State v. Carrasco, 147 Ariz. 558, 711 P.2d 1231, 1234 (1985); State v. Williams, 665 So. 2d 112, 115 (La.Ct.App. 1995); People v. Burbank, 137 Mich.App. 266, 358 N.W.2d 348, 349 (1984), cert. denied, 469 U.S. 1190, 105 S. Ct. 962, 83 L. Ed. 2d 967 (1985); Lippert v. State, 664 S.W.2d 712, 720 (Tex.Crim.App.1984). Another group of jurisdictions has held that a visitor to the property may not be detained under Summers unless "the police can point to reasonably articulable facts that associate the visitor with the residence or the criminal activity being investigated in the warrant." Stanford, 353 Md. at 536, 727 A.2d at 943. To determine whether such a connection exists, these cases have recognized "that police must make a minimal intrusion to ascertain the visitor's identity." Id.; see, e.g., Baker v. Monroe Township, 50 F.3d 1186, 1192 (3d Cir. 1995); United States v. McEaddy, 780 F. Supp. 464, 471 (E.D.Mich.1991), aff'd sub nom. United States v. Fountain, 2 F.3d 656 (6th Cir.), cert. denied, 510 U.S. 1014, 114 S. Ct. 608, 126 L. Ed. 2d 573 (1993); People v. Glaser, 11 Cal. 4th 354, 45 Cal. Rptr. 2d 425, 902 P.2d 729, 734 (1995); Claffey v. State, 209 Ga.App. 455, 433 *100 S.E.2d 441, 442 (1993), aff'd, 211 Ga.App. 335, 439 S.E.2d 516 (1993); State v. Graves, 119 N.M. 89, 888 P.2d 971, 974 (1994); State v. Schultz, 23 Ohio App. 3d 130, 491 N.E.2d 735, 739 (1985); State v. Curtis, 964 S.W.2d 604, 612-14 (Tenn. Crim.App.1997); State v. Broadnax, 98 Wash.2d 289, 654 P.2d 96, 103 (1982). Finally, a third group of jurisdictions defines "occupant" most broadly to include all visitors within a dwelling, or viewed leaving it, provided that the law enforcement interests at stake outweigh the level of the police intrusion. See, e.g., United States v. Pace, 898 F.2d 1218, 1239 (7th Cir.1990), cert. denied, 497 U.S. 1030, 110 S. Ct. 3286, 111 L. Ed. 2d 795 (1990) (noting that Pace was detained within the building subject to the warrant); United States v. Taylor, 716 F.2d 701, 707 (9th Cir.1983) (permitting the detention of the visitor who was observed leaving the dwelling); State v. Phipps, 528 N.W.2d 665, 668 (Iowa Ct. App.1995) (same).
The Majority claims to be adopting a "synthesis" of the latter two approaches: one requiring "reasonably articulable facts that associate the visitor with the residence or criminal activity being investigated in the search warrant," Stanford, at 536-37, 727 A.2d at 943, and the other permitting any visitor to the premises to be searched if the "valid law enforcement interests" outweigh "the nature of the police intrusion." Id. at 538, 727 A.2d at 944. Ultimately, after applying this test, the Majority concludes that the inherent threat to police safety during the execution of this warrant permitted the police to detain Cotton during the search. This conclusion, however, mischaracterizes the circumstances surrounding Cotton's detention.
I agree with the Majority that the appropriate standard should require reasonable articulable suspicion.[1] The Majority, in support of its conclusion that reasonable articulable suspicion existed and that the threat to police safety was so great as to justify detaining everyone inside the dwelling and outside on the property, states:
[I]n executing a warrant such as that issued here, for a premises known to be an open-air drug market where the police are likely to encounter people who may well be dangerous, they are entitled, for their own safety and that of other persons, to take command of the situation and, except for persons who are clearly unconnected with any criminal activity and who clearly present no potential danger, essentially immobilize *101 everyone until, acting with reasonable expedition, they know what they are confronting.
Maj. op. at 258-59, 872 A.2d at 92. Although the Majority pays lip service to the standards of reasonable articulable suspicion and the use of a balancing test for comparing the law enforcement interests against those of the individual, it is actually creating a standard by which all individuals present are presumed suspicious, and in which the person being detained bears the burden of proving a lack of wrongdoing. Cotton, who was outside the house, did not give the police any reason to suspect that he posed a danger to them, that he was involved in criminal activities when police arrived at the property, did not flee, and cooperated fully with instructions from the officers who handcuffed him and sat him on the ground. Under these circumstances, would, then, a person with a diaper bag and toddler in tow, or a teenager with a book bag curious about the scene have been suspected of posing a danger to police or possibly being involved in criminal activity? There was no indication from his conduct or appearance that Cotton possessed weapons or contraband. One would be hard pressed to imagine other conduct by which Cotton could have proven that he posed no danger to the police.
It is disingenuous to assert that the danger posed to police under such circumstances was of such magnitude as to warrant the detention of all persons merely present in some capacity on the premises. Surely, the overwhelming number of officers on the small property dispelled any such need to engage in a wholesale detention. In light of the overwhelming number of officers at the scene and the diminutive size of the property, the Majority cannot in good faith argue that the threat to police outweighed Cotton's interest in being free from a warrantless seizure. Moreover, apart from the characterization of the premises as an "open-air drug market," and Cotton's presence thereon, the Majority can point to no facts specific to Cotton that would give rise to reasonable articulable suspicion that Cotton posed a danger to them. As the Supreme Court stated in Ybarra v. Illinois, 444 U.S. 85, 100 S. Ct. 338, 62 L. Ed. 2d 238 (1979), "a person's mere propinquity to others independently suspected of criminal activity does not, without more, give rise to probable cause to search that person." Id. at 91, 100 S.Ct. at 342, 62 L.Ed.2d at 245. Therefore, I can find no justification under the Majority's so-called "hybrid" test under Summers.
Furthermore, the Majority's position is troubling in that it provides no guidance as to the spatial boundaries beyond which Summers no longer applies. In the present case, Cotton was detained outside of the building, but still on the property. Although Cotton was only a few feet from the front door, the Majority provides no guidance as to whether the result would have been the same if Cotton had been standing on the sidewalk in front of the residence, on public property, or if he had been a common carrier merely delivering a package or food to the house and had the misfortune of being present when the warrant was executed. Under the Majority's reasoning there is no apparent check on the power of police to detain anyone, regardless of their obvious lack of any meaningful connection to the property and the persons upon whom the warrant is being executed. Although it claims to be relying on reasonable articulable suspicion and a balancing test, the Majority has not pointed to a single fact beyond Cotton's presence to justify its conclusion.
In Maryland v. Pringle, 540 U.S. 366, 124 S. Ct. 795, 157 L. Ed. 2d 769 (2003), the Supreme Court recognized the important *102 distinction between a confined space and one that is incrementally larger with respect to the existence of probable cause: "[A] car passengerunlike the unwitting tavern patron in Ybarrawill often be engaged in a common enterprise with the driver, and have the same interest in concealing the fruits or the evidence of their wrongdoing." Id. at 373, 124 S.Ct. at 801, 157 L.Ed.2d at 776-77. The same difference operates in the facts of the case sub judice. Absent an indication that Cotton was in possession of contraband or weapons prior to his detention, his mere presence is not sufficient to create a nexus with the underlying reasons of the warrant so as to justify his detention when he is neither an occupant of a vehicle or a dwelling.[2] To hold otherwise would effectively render the reasonable articulable suspicion requirement for a lawful Terry stop a nullity.
In support of its conclusion, the Majority cites the recent Supreme Court case of Muehler v. Mena, 544 U.S. ___, 125 S. Ct. 1465, 161 L.Ed.2d ___ (2005), as so analogous to the case at bar as to mandate the conclusion that Cotton's detention was lawful. There is, however, a significant difference between the circumstances in Muehler and those in the present case. The facts in Muehler are as follows:
At 7 a.m. on February 3, 1998, [the officers whom Ms. Mena sued], along with the SWAT team and other officers, executed a warrant. Mena was asleep in her bed when the SWAT team, clad in helmets and black vests adorned with badges and the word "POLICE," entered her bedroom and placed her in handcuffs at gunpoint. The SWAT team also handcuffed three other individuals found on the property. The SWAT team then took those individuals and Mena into a converted garage, which contained several beds and some other bedroom furniture. While the search proceeded, one or two officers guarded the four detainees, who were allowed to move around the garage but remained in handcuffs.
Muehler, 544 U.S. at ___, 125 S.Ct. at 1468, 161 L.Ed.2d at ___. Ms. Mena was discovered asleep in a bedroom at 7 a.m. in a home owned by her family. The fact that she was in the house creates a significant connection between her and the property, unlike Mr. Cotton.
Conversely, in the case sub judice, Cotton was apprehended outside the dwelling on the premises, and police had never observed him there during their years of surveillance. There was absolutely no fact other than Cotton's presence at the location during the time of the execution of the warrant connecting him to the home or the wrongdoing that allegedly occurred there. Under the circumstances in Muehler, Ms. Mena was clearly more than a passing visitor to the home, the residence of a gang member suspected of being involved in a drive-by shooting, so that the level of force used by police and the length of the detention could reasonably be justified as necessary for police safety. Those same connections do not exist in the present case and as such, a similar level of force cannot be supported on these facts.
II.
The United States Supreme Court in Michigan v. Chesternut, 486 U.S. 567, 108 S. Ct. 1975, 100 L. Ed. 2d 565 (1988), set forth the test used to determine whether a person has been "seized" within the meaning of the Fourth Amendment. Id. at 573, 108 S.Ct. at 1979, 100 L.Ed.2d at 571-72. *103 That test establishes that "the police can be said to have seized an individual `only if, in view of all of the circumstances surrounding the incident, a reasonable person would have believed that he was not free to leave.'" Id., quoting United States v. Mendenhall, 446 U.S. 544, 554, 100 S. Ct. 1870, 1877, 64 L. Ed. 2d 497, 509 (1980). Whether a seizure is a de facto arrest turns on whether there was a " `restraint on freedom of movement' of the degree associated with a formal arrest." Stansbury v. California, 511 U.S. 318, 322, 114 S. Ct. 1526, 1529, 128 L. Ed. 2d 293, 298 (1994), quoting California v. Beheler, 463 U.S. 1121, 1125, 103 S. Ct. 3517, 3520, 77 L. Ed. 2d 1275, 1279 (1983), quoting in turn Oregon v. Mathiason, 429 U.S. 492, 495, 97 S. Ct. 711, 714, 50 L. Ed. 2d 714, 719 (1977).
In Dunaway v. New York, 442 U.S. 200, 99 S. Ct. 2248, 60 L. Ed. 2d 824 (1979), the Supreme Court applied its test for seizure and arrest under the Fourth Amendment and found that Dunaway's seizure constituted a de facto arrest because, "although he was not told he was under arrest, he would have been physically restrained if he had attempted to leave." Id. at 203, 99 S.Ct. at 2252, 60 L.Ed.2d at 830. Dunaway was taken to the police station in a police car, was not aware that he was "free to go," and would have been physically restrained had he attempted to leave. Id. According to the Court, these circumstances clearly indicated that Dunaway was not being detained as envisioned in Terry, but rather, was subject to an arrest. Id. Moreover, the Court stated that "differences in form [of a de facto arrest] must not be exalted over substance." Id. at 215, 99 S.Ct. at 2258, 60 L.Ed.2d at 827.
Generally, this Court has defined an arrest as "the taking, seizing or detaining of the person of another, inter alia, by an act that indicates an intention to take him into custody and that subjects him to the actual control and will of the person making the arrest." Barnhard v. State, 325 Md. 602, 611, 602 A.2d 701, 705 (1992), quoting Little v. State, 300 Md. 485, 510, 479 A.2d 903, 915 (1984), quoting in turn Morton v. State, 284 Md. 526, 530, 397 A.2d 1385, 1388 (1979). The action indicating an intention to take into custody includes the "touching or putting hands on [the suspect]." Bouldin v. State, 276 Md. 511, 515-16, 350 A.2d 130, 133 (1976). In determining whether an investigatory detention is actually an arrest requiring probable cause, courts must consider the "totality of the circumstances." See In re David S., 367 Md. 523, 535, 789 A.2d 607, 614 (2002); Ferris v. State, 355 Md. 356, 376, 735 A.2d 491, 501 (1999). Under the totality of the circumstances, we have recognized that no single factor is dispositive. See In re David S., 367 Md. at 535, 789 A.2d at 614; Ferris, 355 Md. at 376, 735 A.2d at 501.
Recently, in In re David S., this Court was asked to determine whether "the seizure of David S. was tantamount to an arrest requiring probable cause," or whether it amounted to a Terry stop. Id. at 528, 789 A.2d at 609. In that case, police were conducting surveillance and observed David S. come from behind a building, show an object to his companion, who was believed to be a drug dealer, and stuff the object into his waistband. Id. at 530, 789 A.2d at 611. Police believed the object to be a weapon, and therefore, stopped David S. and his companion, forced them to lie face down on the ground, and handcuffed them. Id. With guns drawn, the officers searched David S. Id. After one officer felt what was believed to be a gun, he removed the object from David S.'s waistband. Id. Upon opening a bag containing the object, the police found cocaine. Id.
*104 On appeal, this Court determined that the police had reasonable suspicion, supported by articulable facts, to believe that David S. had committed, or was attempting to commit, a crime, and that he had a gun in his waistband. Id. at 539, 789 A.2d at 616. Moreover, we held that the stop was not tantamount to a formal arrest because the police reasonably believed David S. posed a threat to their safety so as to justify the use of force under Terry. Id. Therefore, under the totality of the circumstances, we determined that although the intrusion was severe, it did not convert the investigatory stop into the equivalent of a formal arrest under the Fourth Amendment. Id. at 539-40, 789 A.2d at 611.
Similarly, the facts in Lee v. State, 311 Md. 642, 537 A.2d 235 (1988), are also instructive as to those circumstances found insufficient to convert an investigatory stop into an arrest. In Lee, police, responding to an anonymous tip providing specific information about the presence of weapons and the suspects' involvement in a violent crime, conducted surveillance of a group of men playing basketball. Id. at 651, 537 A.2d at 239. Police, some of whom were armed, swarmed the basketball court and ordered the men to "lie face down on the ground." Id. The officers frisked the young men, and one of the officers found a gun in a gym bag that had been described by the anonymous informant. Id. Lee and two other men were arrested. Id. at 652, 537 A.2d at 239.
After analyzing the reliability of the information provided by the anonymous informant, this Court determined that the informant's information provided the police with a "high degree of reasonable and articulable suspicion that the [suspects] were the robbers and were carrying a handgun in the gym bag." Id. at 657, 537 A.2d at 242. Ultimately, we held that because the police had reliable information that the suspects were armed, and the detention lasted no more than two minutes, the use of guns and a hard take down were justified. Id. at 667, 537 A.2d at 247. Therefore, we determined that the detention was proper under Terry and did not rise to the level of a de facto arrest. Id.
In State v. Evans, 352 Md. 496, 723 A.2d 423 (1999), we concluded that under the totality of the circumstances, the detention at issue was a de facto arrest. Officer Rowell, as part of a police operation, purchased a dime-bag of cocaine from Evans using traceable currency. Id. at 501, 723 A.2d at 425. The two then parted ways, and Officer Rowell called other officers in the vicinity to stop Evans. Id. The officers searched Evans and recovered the marked bill from Officer Rowell and nine vials of cocaine. Id. at 502, 723 A.2d at 425. The police did not take Evans to the police station nor did they formally charge him. Id., 723 A.2d at 426. When Evans was eventually formally arrested, he was charged and convicted of distribution of cocaine and possession of cocaine with an intent to distribute. Id. at 503, 723 A.2d at 426.
After considering the totality of the circumstances, we determined that Evans's detention was tantamount to a formal arrest. Id. at 515, 723 A.2d at 432. To support our conclusion, we emphasized that Evans was physically restrained, subject to police custody and control, detained for a significant period of time until his identity could be verified, and searched and photographed. Id. at 515, 723 A.2d at 432. Based on those facts, we stated that "the initial [detention] of [Evans] by the police constituted [an arrest]." Id. We did not, however, find that arrest to be illegal because we determined that the arrest, although not formal, was supported by *105 probable cause. Id. at 515-16, 723 A.2d at 432.
Like our conclusion in Evans and distinguishable from our decisions in David S. and Lee, in the case at bar, I believe that under the totality of the circumstances the "investigatory detention" of Cotton was tantamount to an arrest because the restraints on his freedom and the conduct of the police were consistent with a formal arrest.
Specifically, twenty to twenty-five officers descended upon 329 Brooklyn Avenue, a dwelling and surrounding property which "was not very big." Cotton was standing two to three feet from the front door, where in accordance with police procedure, officers were entering with their weapons drawn. Cotton was handcuffed and sat on a log or bucket near the front porch of the residence, while being guarded by at least one officer. When Detective Henning approached Cotton, he read him his Miranda rights. Detective Henning testified that Cotton was cooperative and that there was nothing from Cotton's appearance to indicate that he possessed contraband or weapons of any sort. Considering the totality of the circumstances, as they appeared to the officers at the time, handcuffing Cotton, placing him under police guard, and Mirandizing him, in the presence of an overwhelming number of officers, without reasonable articulable suspicion that Cotton was in possession of contraband or weapons, was tantamount to an arrest.
The Majority relies upon the Supreme Court's decision in United States v. Sharpe, 470 U.S. 675, 105 S. Ct. 1568, 84 L. Ed. 2d 605 (1985), for the proposition that a twenty-minute stop is not a de facto arrest. This reliance is misplaced. When the Supreme Court in Sharpe determined that the twenty-minute stop at issue was not unreasonable, it was not announcing a per se rule, as the Court's opinion emphasized. In Sharpe, police were following a suspicious car and truck on the highway. Id. at 678, 105 S.Ct. at 1571, 84 L.Ed.2d at 610. When the police indicated to the driver of the car to pull over onto the shoulder, the truck fled the scene, narrowly missing a patrol car. Id. On appeal, Sharpe challenged the length of the Terry stop as indicative of a de facto arrest. Id. at 683, 105 S.Ct. at 1574, 84 L.Ed.2d at 613. The Supreme Court stated that in making its determination, it was "appropriate to examine whether the police diligently pursued a means of investigation that was likely to confirm or dispel their suspicions quickly, during the time it was necessary to detain the defendant." Id. at 686, 105 S.Ct. at 1575, 84 L.Ed.2d at 615-16. The question, as stated by the Court, was "whether the police acted unreasonably in failing to recognize or pursue [an alternate, less intrusive means]." Id. at 687, 105 S.Ct. at 1576, 84 L.Ed.2d at 616. Ultimately, the Supreme Court concluded that the delay in the detention was the result of the actions of Sharpe and his co-defendant rather than an unreasonable failure to recognize any alternate, less intrusive means. Id. at 687-88, 105 S.Ct. at 1576, 84 L.Ed.2d at 616. In the present case, the twenty-minute delay is one more indicia, in a host of factors, that collectively yield the conclusion that Cotton was under arrest.
In a case factually similar to the one at bar, Baker v. Monroe Township, 50 F.3d 1186 (3d Cir.1995), an action brought under 42 U.S.C. § 1983 (2000), the United States Court of Appeals for the Third Circuit concluded that the detention at issue was also a de facto arrest. In that case, the Bakers were outside the home of Clementh Griffin, Mrs. Baker's son, when police descended upon the property to execute a "no-knock" search warrant. Id. at 1188. As the Bakers approached the front *106 door, police officers ran in front of them with guns drawn, shouting, "Get down." Id. at 1189. The Bakers were then forced to the ground and remained there, handcuffed, for twenty-five minutes. Id. Members of the Baker family were then subjected to a search. Id.
Examining the totality of the circumstances, the Third Circuit determined that "the use of guns and handcuffs and, indeed, the length of the detention, shows a very substantial invasion of the Bakers' personal security." Id. at 1193. Moreover, the court held that "there [was] simply no evidence of anything that should have caused the officers to use the kind of force they are alleged to have used." Id. Therefore, the court determined that the facts of the case would support a finding that the Bakers' Fourth Amendment rights were violated.
The Majority, in its analysis concerning the circumstances surrounding Cotton's detention, is particularly persuaded by the Court of Appeals for the Tenth Circuit's reasoning in United States v. Maddox, 388 F.3d 1356 (10th Cir.2004). See Maj. Op. at 15-16. The facts before the Tenth Circuit in Maddox are easily distinguishable from those in the case at bar. Maddox exhibited erratic and potentially violent behavior both prior to and during his detention, leading an officer at the scene to consider him "a critical and deadly threat" to the officers' safety. Id. Conversely, here, Cotton was compliant with the officer's demands, was not behaving abnormally, and the officers on the scene had no specific reason to believe that he posed any danger to their safety beyond his mere presence at the scene. Moreover, Maddox was not handcuffed or Mirandized, whereas Cotton was in this case.
The Majority attempts to characterize various courts, including the Court of Special Appeals, as stating, unambiguously, that "a cautious or gratuitous recitation of Miranda warnings is irrelevant to whether there has been an arrest," and cites Sydnor v. State, 39 Md.App. 459, 387 A.2d 297 (1978); Cummings v. State, 27 Md.App. 361, 341 A.2d 294 (1975); Com. v. Alicea, 376 Mass. 506, 381 N.E.2d 144, 149-50 (1978); People v. Wipfler, 68 Ill. 2d 158, 11 Ill. Dec. 262, 368 N.E.2d 870 (1977); People v. Dozier, 67 Ill.App.3d 611, 24 Ill. Dec. 388, 385 N.E.2d 155, 158 (1979); and cf. United States v. Diaz-Lizaraza, 981 F.2d 1216, 1222 (11th Cir.1993). See Maj. Op. at 19. This assertion, however, grossly distorts the actual reasoning contained in the opinions cited therein. The cases cited by the Majority merely support the proposition that Miranda alone is not sufficient to transform a non-custodial interrogation into a custodial interrogation or a lawful detention into a de facto arrest, see Sydnor, 39 Md.App. at 463-64, 387 A.2d at 301 (stating that "Miranda warnings ... [do not] operate to convert an otherwise non-custodial situation into a custodial one"); Cummings, 27 Md.App. at 376, 341 A.2d at 304 (determining " `[A] custodial situation cannot be created by the mere giving of modified Miranda warnings'"), quoting United States v. Akin, 435 F.2d 1011, 1013 (5th Cir.1970); Alicea, 381 N.E.2d at 149-50 (providing that "[t]he imparting of Miranda warnings was not tantamount to or suggestive of an arrest" under the circumstances of that case); Wipfler, 11 Ill. Dec. 262, 368 N.E.2d at 875 (holding that "[a] custodial situation cannot be created by the mere giving of Miranda warnings"); Dozier, 24 Ill. Dec. 388, 385 N.E.2d at 158 (stating that "[t]he fact that Miranda warnings were given is only indicative of the cautiousness of the officers and not determinative of whether the interrogation was custodial"); Diaz-Lizaraza, 981 F.2d at 1222 holding that "mirandizing a detainee does not convert a Terry stop into an arrest . . .", rather than the proposition *107 that Miranda is "irrelevant" as to whether an individual is arrested. Although Miranda is not dispositive as to the existence of an arrest, and nor should it be, it must be considered with the rest of the circumstances surrounding a detention and interrogation under the totality of the circumstances standard.
Because I would find that Cotton's detention resulted in a de facto arrest, I would address whether the arrest was justified under the provisions of the "no-knock" warrant, and if not, whether there was independent probable cause for the arrest.
The "no-knock" warrant executed in the instant case named three individuals who the police were empowered to arrest, and also permitted them to "[a]rrest all persons found in or upon said premises and vehicles who are participating in violations of the statutes hereinbefore cited." This Court has interpreted the meaning of this language in the past. In our opinion in Griffin v. State, 232 Md. 389, 194 A.2d 80 (1963), we determined that the above-stated provision is
[N]o more than a directive to the police to perform duties that they should perform in the absence of any command in the warrant to that effect; namely, that in the execution of a search warrant they should arrest all person committing misdemeanors in their presence, and, after a valid arrest, they may search the arrestee as an incident thereto and seize any relevant evidence that pertains to the criminal activities of said arrestee.
Id. at 393, 194 A.2d at 82-83. In the present case, the police did not know until after Cotton's de facto arrest that he was committing a crime in their presence. The State cannot rely on the directive in the warrant to justify Cotton's arrest.[3] Therefore, I would find that this provision of the warrant does not provide justification independent of probable cause for Cotton's arrest.
For a warrantless arrest to be legal it must be based on probable cause. See Pringle, 540 U.S. at 369, 124 S.Ct. at 799, 157 L.Ed.2d at 774 (describing the probable cause standard as "long-prevailing" to protect "citizens from rash and unfounded interferences with privacy and from unfounded charges of crime."); Dunaway, 442 U.S. at 207-08, 99 S.Ct. at 2254, 60 L.Ed.2d at 832-33 (observing that prior to the limited exception carved out in Terry, probable cause was the standard for all seizures under the Fourth Amendment). We have held that a police officer can arrest an accused without a warrant if the officer has probable cause to believe that a crime has been or is being committed by an individual in the officer's presence. State v. Wallace, 372 Md. 137, 147, 812 A.2d 291, 297 (2002); Woods v. State, 315 Md. 591, 611-12, 556 A.2d 236, 246 (1989); Nilson v. State, 272 Md. 179, 184, 321 A.2d 301, 304 (1974).[4]
*108 "Probable cause, we have frequently stated, is a nontechnical conception of a reasonable ground for belief of guilt." Wallace, 372 Md. at 148, 812 A.2d at 297-98, quoting Doering v. State, 313 Md. 384, 403, 545 A.2d 1281, 1290 (1988); Pringle, 540 U.S. at 370, 124 S.Ct. at 799, 157 L.Ed.2d at 775; Edwardsen v. State, 243 Md. 131, 136, 220 A.2d 547, 551 (1966). A finding of probable cause requires less evidence than is necessary to sustain a conviction, but more evidence than would merely arouse suspicion. Wallace, 372 Md. at 148, 812 A.2d at 298; Woods, 315 Md. at 611, 556 A.2d at 246; Sterling v. State, 248 Md. 240, 245, 235 A.2d 711, 714 (1967); Edwardsen, 243 Md. at 136, 220 A.2d at 550. Our determination of whether probable cause exists requires a nontechnical common sense evaluation of the totality of the circumstances in a given situation in light of the facts found to be credible by the trial judge. Doering, 313 Md. at 403-04, 545 A.2d at 1290-91. Probable cause exists where the facts and circumstances taken as a whole would lead a reasonably cautious person to believe that a felony had been or is being committed by the person arrested. Pringle, 540 U.S. at 370-71, 124 S.Ct. at 800, 157 L.Ed.2d at 775; Wallace, 372 Md. at 148, 812 A.2d at 298; Woods, 315 Md. at 611, 556 A.2d at 246; Duffy v. State, 243 Md. 425, 432, 221 A.2d 653, 657 (1966). Therefore, to justify a warrantless arrest the police must point to specific articulable facts which, taken together with rational inferences from those facts, reasonably warranted the intrusion. Wallace, 372 Md. at 148, 812 A.2d at 298; Collins, 322 Md. at 680, 589 A.2d at 481. To determine whether an officer had probable cause in a specific case, here probable cause to arrest, "the reviewing court necessarily must relate the information known to the officer to the elements of the offense that the officer believed was being or had been committed." Wallace, 372 Md. at 148-49, 812 A.2d at 298; DiPino v. Davis, 354 Md. 18, 32, 729 A.2d 354, 361 (1999).
In the case at bar, in order for Cotton's warrantless arrest to be valid, the officer must have had probable cause at the time of the arrest to believe Cotton was in possession of a controlled dangerous substance or concealed weapon. Section 5-101(u) of the Criminal Law Article defines "possession" as "exercis[ing] actual or constructive dominion or control over a thing by one or more persons." Md.Code (2001, 2003 Supp.), § 5-101(u) of the Criminal Law Article.
In Collins v. State, 322 Md. 675, 589 A.2d 479 (1991), we addressed a situation involving a warrantless arrest for possession of drugs and subsequent challenge to probable cause for that arrest. In that case, at 3:00 a.m. on September 20, 1988, Officer Holmes of the Salisbury Police Department observed five men standing by a grey Ford Mustang parked at the entrance to a car dealership. Id. at 677, 589 A.2d at 479-80. A second officer, Officer Ewing, arrived at the scene and, on the back seat of the Mustang, saw a 35mm film canister, which he believed contained controlled dangerous substances. Id. Officer Ewing asked one of the men to retrieve the canister *109 from the car for him. Id. When the man stated that the canister was not his, Officer Ewing told him to open it and show him the contents, which turned out to be over twenty cellophane packets of a white powdered substance that the officer believed to be cocaine. Id. at 678, 589 A.2d at 480. All five men then were arrested for the possession of suspected cocaine. Id.
At his suppression hearing and on appeal, Collins maintained that there was no probable cause for his arrest because the mere proximity of an accused to an offender, or to incriminating evidence, would be insufficient to find the existence of probable cause. Id. He argued that there must be some factual basis to believe that a suspect committed a crime before that suspect may be arrested legally, and that mere suspicion, without more, would not establish probable cause. Id.
In our determination that the police lacked probable cause to arrest Collins, we discussed the Supreme Court case of United States v. Di Re, 332 U.S. 581, 68 S. Ct. 222, 92 L. Ed. 210 (1948). Id. at 682-83, 589 A.2d at 481-82. In Di Re, the Court held that "we are not convinced that a person, by mere presence in a suspected car, loses immunities from the search of his person to which he would otherwise be entitled." Id. at 587, 589 A.2d 479, 68 S.Ct. at 225, 92 L.Ed. at 216. The Court explained:
There is no evidence that it is a fact or that the officers had any information indicating that Di Re was in the car when Reed obtained ration coupons from Buttitta, and none that he heard or took part in any conversation on the subject.... An inference of participation in conspiracy does not seem to be sustained by the facts particular to this case. The argument that one who "accompanies a criminal to a crime rendevous" cannot be assumed to be a bystander, forceful enough in some circumstances, is farfetched when the meeting is not secretive or in a suspicious hide-out but in broad daylight, in plain sight of passers by, in a public street of a large city, and where the alleged substantive crime is one which does not necessarily involve any act visibly criminal. If Di Re had witnessed the passing of papers from hand to hand, it would not follow that he knew they were ration coupons, and if he saw that they were ration coupons, it would not follow that he would know them to be counterfeit.
Indeed it appeared at the trial to require an expert to establish that fact....
Di Re, 332 U.S. at 593, 68 S.Ct. at 228, 92 L.Ed. at 219-20.
In the present case, relying upon our holding in Collins and the Supreme Court's holding in Di Re, I would hold that probable cause to arrest Cotton did not exist at the time of the de facto arrest. During their four years of surveillance on the residence at 329 Brooklyn Avenue, police never observed Cotton at the property. When police executed the "no-knock" warrant, they did not know Cotton's identity. As in Di Re, Cotton was arrested in broad daylight, in the yard, by a public street, in plain sight of passers by. Police did not observe him engaged in any illegal conduct, and the sole basis for detaining Cotton derives from information known about Jones, who was standing near him when police arrived. There was no evidence criminally linking Cotton to the home or to the persons named in the warrant. As the Supreme Court noted in Di Re, "[p]resumptions of guilt are not lightly to be indulged from mere meetings." Di Re, 332 U.S. at 593, 68 S.Ct. at 228, 92 L.Ed. at 220. Probable cause did not arise until *110 after the de facto arrest and the search incident to arrest revealed marijuana on Cotton's person.
Therefore, because I would find that, under the totality of the circumstances, the facts surrounding Cotton's detention constituted a de facto arrest, which was not permitted under the warrant and was not supported by probable cause, I would suppress the admission of Cotton's statement and the drugs recovered during Detective Henning's search of Cotton's person as fruit of the poisonous tree, and reverse the decision of the Court of Special Appeals.
Chief Judge BELL and Judge GREENE authorize me to state that they join in this opinion.
NOTES
[1] Although we have recently held that there is no statutory authority for a judge, in advance, to authorize the police to enter a residence without knocking or announcing their presence, see Davis v. State, 383 Md. 394, 859 A.2d 1112 (2004) and State v. Carroll, 383 Md. 438, 859 A.2d 1138 (2004), the validity of the warrant issued in this case was not challenged by Cotton, and, as he was neither a resident nor found inside the house, it is not likely that he could challenge the "no-knock" aspect of it.
[2] This was part of a larger operation. Jones maintained three residencesa mobile home in which he processed the drugs, the house in question on Brooklyn Avenue from which he sold the drugs, and a nearby apartment in which the police believed he actually lived. Three separate warrants for those locations were executed simultaneously, and about 50 officers were involved in the entire operation.
[3] Mena also asserted that the detention did, in fact, extend beyond the time necessary to complete the search. Because the Ninth Circuit court had omitted to address that issue, the Supreme Court remanded the case for further proceedings on that claim.
[4] When it surfaced that at least one of the Bakers was a minor at the time the complaint was filed, the appellate court remanded the case to determine whether she should be granted leave to amend her complaint.
[5] Diaz-Lizaraza is particularly instructive. Federal agents made a good Terry stop and asked Diaz for identification. When he responded, one of the agents recognized his voice as that of someone who had previously identified himself as "George," and whom the agent knew had been intimately involved in the drug transaction they were investigating. At that point, the agents gave Diaz Miranda warnings, searched his truck, discovered a beeper that had the same number as "George's" beeper, and then formally arrested him. The court found that the Terry stop became an arrest once Diaz was voice-recognized as "George," because at that point the agents had no intention of releasing him. In addressing the relevance of the Miranda warnings on that point, the court noted that "Mirandizing a detainee does not convert a Terry stop into an arrest, but in this case it is evidence that the nature of the detention had grown more serious and that the agents did not intend to release Diaz from their custody." Diaz-Lizaraza, supra, 981 F.2d at 1222. (Emphasis added). Here, of course, the Miranda warnings were given before Detective Henning questioned Cotton, and the evidence was that, at that point, but for Cotton's voluntary admission that he was carrying contraband, he would have been released, as was Aldredge.
[1] In State v. Nieves, 383 Md. 573, 589-91, 861 A.2d 62, 72-73 (2004), we said of "reasonable articulable suspicion," it is:
being more than a "`mere hunch' but is a less demanding standard than probable cause and requires a showing considerably less than preponderance of the evidence. In discussing the concept of reasonable suspicion, the United States Supreme Court has opined that, `[a]rticulating precisely what "reasonable suspicion" and "probable cause" mean is not possible,' but such terms are `commonsense, nontechnical conceptions that deal with "the factual and practical considerations of everyday life on which reasonable and prudent men, not legal technicians act."'" A determination of whether reasonable suspicion exists to justify a search is made by looking at the totality of the circumstances. In this regard, the Court stated:
When discussing how reviewing courts should make reasonable-suspicion determinations, we have said repeatedly that they must look at the "totality of the circumstances" of each case to see whether the detaining officer has a "particularized and objective basis" for suspecting wrongdoing. This process allows officers to draw on their own experience and specialized training to make inferences from and deductions about the cumulative information available to them that "might well elude an untrained person."
(Internal citations omitted).
[2] The spatial aspect of arrests of individuals in vehicles continues to pose significant questions, even after Pringle. 540 U.S. 366, 124 S. Ct. 795, 157 L. Ed. 2d 769 (2003).
[3] Any argument based on good faith reliance on the provisions in the warrant must also fail because the Griffin opinion has been controlling since 1963, and pursuant to Benik v. Hatcher, 358 Md. 507, 531-32, 750 A.2d 10, 23-24 (2000), the police officers are presumed to know the limitations of the warrant.
[4] Md.Code (2001), § 2-202 of the Criminal Procedure Article states:
§ 2-202 Warrantless arrestsIn general
(a) Crime committed in presence of police officer.A police officer may arrest without a warrant a person who commits or attempts to commit a felony or misdemeanor in the presence or within the view of the police officer.
(b) Probable cause to believe a crime committed in presence of officer.A police officer who has probable cause to believe that a felony or misdemeanor is being committed in the presence or within the view of the police officer may arrest without a warrant any person whom the police officer reasonably believes to have committed the crime.
(c) Probable cause to believe felony committed.A police officer without a warrant may arrest a person if the police officer has probable cause to believe that a felony has been committed or attempted and the person has committed or attempted to commit the felony whether or not in the presence or within the view of the police officer.
This section is declarative of the Maryland common law governing warrantless arrests. Collins v. State, 322 Md. 675, 679, 589 A.2d 479, 481 (1991); Woods, 315 Md. at 611, 556 A.2d at 246. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1532192/ | 305 B.R. 656 (2004)
In re Sharon Michaelene TOLLISON.
Sharon Michaelene Tollison, Plaintiff,
v.
Suntech, Inc., Defendant.
Bankruptcy No. 03-15168. Adversry No. 03-1253.
United States Bankruptcy Court, N.D. Mississippi.
March 8, 2004.
*657 Jim Arnold, Durant, MS, for Sharon Michaelene Tollison.
*658 W. McCollum Halcomb, Halcomb & Wertheim, P.C., Birmingham, AL, for Suntech, Inc.
OPINION
DAVID W. HOUSTON, III, Bankruptcy Judge.
On consideration before the court is a motion for summary judgment filed by Educational Credit Management Corporation (hereinafter "ECMC" or "defendant"), the successor in interest to Suntech, Inc.; no response to said motion having been filed by the plaintiff/debtor, Sharon Michaelene Tollison (hereinafter "debtor"); and the court, having reviewed the motion, as well as, the affidavit and memorandum attached thereto, finds as follows, to-wit:
I.
The court has jurisdiction of the subject matter of and the parties to this proceeding pursuant to 28 U.S.C. § 1334 and 28 U.S.C. § 157. This is a core proceeding as defined in 28 U.S.C. § 157(b)(2)(I).
II.
The following material facts, set forth in ECMC's motion and memorandum, are undisputed by the debtor, and, therefore are adopted by the court as its findings of fact:
1. Sharon Michaelene Tollison, debtor in the above-styled proceeding, executed fifteen Stafford Loan Application and Promissory Notes (the Notes) in favor of the Mississippi Higher Education Assistance Corporation ("MHEAC"). (Affidavit of Amy Schreiner, an employee of ECMC.)
2. The Notes were executed for educational purposes. (Affidavit of Amy Schreiner.)
3. The Notes were guaranteed by United Student Aid Funds, Inc. ("USAF"). (Affidavit of Amy Schreiner.)
4. Debtor used the funds disbursed to attend the University of Southern Mississippi and William Carey College. (Responses to Interrogatories, Number 15).
5. After Debtor defaulted on the Notes, MHEAC assigned the Notes to USAF. (Affidavit of Amy Schreiner.)
6. On August 15, 2003, Debtor filed for Chapter 7 bankruptcy protection.
7. On August 19, 2003, Debtor filed the instant adversary proceeding seeking discharge of her student loans.
8. On October 10, 2003, USAF assigned ECMC all rights, title, and interest of the student loans executed by Debtor. ECMC is the current holder of the Notes. (Affidavit of Amy Schreiner.)
9. ECMC is a private nonprofit corporation and guaranty agency under the FFELP and their loans are reinsured by the United States Department of Education. (Affidavit of Amy Schreiner.)
10. The balance due and owing on the Notes as of January 6, 2003, including principle and interest is $53,246.00. (Affidavit of Amy Schreiner.)
11. Debtor has no dependents and lives alone. (Responses to Interrogatories, Number 7.)
12. Debtor is 49 years old. (Responses to Interrogatories, Number 1.)
13. According to Schedule I, Debtor's monthly income is $533.94, and her monthly expenses are $625.00.
14. Included in her expenses are $25.00 per month for cable, $50.00 for miscellaneous expenses, $100.00 per month for transportation, and *659 $50.00 per month for recreation. (Schedule J.)
15. Debtor has never attempted to consolidate her loans under the William D. Ford program. (Responses to Interrogatories, Number 17.)
16. Debtor works part-time as a librarian for Vaiden Public Library. She works about 20-26 hours per week. She has been employed there since June 2003. (Responses to Interrogatories, Number 4.)
17. From November 2002 until June 2003, Debtor worked part-time at Wal-Mart as a clerk/cashier. There she was paid $5.50 per hour. (Responses to Interrogatories, Number 4.)
18. For the year 2003, the poverty threshold was $8,980.00. (Department of Health and Human Services Poverty Guidelines.)
19. Debtor anticipates her income for the next 12 months to be $11,402.00. (Responses to Interrogatories, Number 23.)
20. Debtor is not physically or mentally handicapped. (Responses to Interrogatories, Number 9.)
21. Under the Income Contingent Repayment Program, Debtor's payments would be $40.37 per month. (Affidavit of Amy Schreiner.)
22. Debtor has made no payments on the Notes. (Responses to Interrogatories, Number 16.)
III.
The debtor seeks to discharge her student loans pursuant to 11 U.S.C. § 523(a)(8), which provides that a discharge does not discharge an individual debtor from any debt . . .
(8) For an educational benefit overpayment or loan made, insured, or guaranteed by a governmental unit, or made under any program funded in whole or in part by a governmental unit or nonprofit institution, or for an obligation to repay funds received as an educational benefit, scholarship, or stipend, unless excepting such debt from discharge under this paragraph will impose an undue hardship on the debtor and the debtor's dependants.
In a § 523(a)(8) cause of action, both the creditor and the debtor have respective burdens of proof. The creditor has the initial burden of establishing the following: (1) the existence of a debt; (2) made for an educational loan; (3) made, insured, or guaranteed by a governmental unit, or made under any program funded in whole or in part by a governmental unit or nonprofit institution. If the creditor meets this burden, the debtor must then prove that excepting the debt from discharge will impose an undue hardship.
From a consideration of the aforementioned recitation of facts, the court concludes that ECMC has met its initial burden. The debtor owes a debt in the sum of $53,246.00, as of January 6, 2003, for an educational loan that was guaranteed by a governmental unit.
If this adversary proceeding were being tried in open court, the burden of proof would now shift to the debtor to show that the payment of the debt would cause an undue hardship. However, because this matter is before the court on a motion for summary judgment, a second burden of proof must be met by ECMC. "[T]he creditor must prove that there is an absence of evidence to support the defendant's claim of undue hardship or, alternatively, the creditor must present affirmative evidence demonstrating that the debtor will be unable to prove an undue hardship claim at trial." White v. United States Department of Education (In re *660 White), 243 B.R. 498, 506 (Bankr.N.D.Ala., 1999).
IV.
The Fifth Circuit Court of Appeals recently adopted the Brunner test for purposes of evaluating a § 523(a)(8) "undue hardship" cause of action. This is a three pronged test that must be met by a debtor to justify the discharge of a student loan obligation, to-wit:
(1) That the debtor cannot maintain, based on current income and expenses, a "minimal" standard of living for herself and her dependants if forced to repay the loans;
(2) that additional circumstances exist indicating that this state of affairs is likely to persist for a significant portion of the repayment period of the student loans;
(3) that the debtor has made good faith efforts to repay the loans.
United States Department of Education v. Gerhardt (In re Gerhardt), 348 F.3d 89, 91 (5th Cir.2003). (Citing, Brunner v. New York State Higher Educ. Serv. Corp., 831 F.2d 395, 396 (2nd Cir.1987)).
The first prong of the Brunner test requires the debtor to show that she cannot maintain a minimal standard of living if forced to repay her student loan. In the Gerhardt decision, cited above, the bankruptcy court found that the debtor earned $1,680.47 per month and had monthly expenses of $1,829.39, thus concluding that the debtor could not maintain a minimal standard of living if forced to repay his student loans. The Fifth Circuit commented as follows:
The bankruptcy court's factual findings are not clearly erroneous. Consequently, we agree with the bankruptcy court's conclusion of law, which we reviewed de novo, that flows from these factual findings. Given that Gerhardt's monthly expenses exceed his monthly income, he has no ability at the present time to maintain a minimal standard of living if forced to repay his loans.
Id. at 92.
In the current proceeding, the debtor has listed her monthly income on Schedule I as $533.94 and her monthly expenses as $625.00. As in Gerhardt, the debtor's monthly expenses exceed her monthly income. Therefore, this court concludes that she has no ability at the present time to maintain a minimal standard of living if forced to repay her student loans.
The second prong of the Brunner test requires a finding that "additional circumstances exist" which indicate that the state of the debtor's financial affairs is likely to persist for a significant period of time. These "additional circumstances" include "circumstances that impacted on the debtor's future earning potential which [were] either not present when the debtor applied for the loans or [have] since been exacerbated." In re Roach, 288 B.R. 437, 445 (Bankr.E.D.La.2003). In Gerhardt, the Fifth Circuit concluded that the debtor had not established a persistent undue hardship entitling him to discharge his student loans. Gerhardt held a master's degree in music from the New England Conservatory of Music. Even though he was well educated, he made only a meager salary as a cello player with the Louisiana Philharmonic Orchestra. Testimony at trial showed, however, that Gerhardt could obtain additional steady employment in a number of areas such as teaching full-time, or working as a music store clerk. The court found that no reasons existed which would perpetuate Gerhardt's inability to repay his student loans.
In the matter presently before this court, ECMC has produced no evidence to support a finding that the debtor will be *661 able to repay her student loans in the future. To the contrary, there is also no evidence to show that the debtor's circumstances will not improve in the foreseeable future. When deciding whether a fact issue has been created for summary judgment purposes, all inferences drawn from the evidence must be viewed in a light most favorable to the non-moving party. Terrebonne Parish School Bd. v. Columbia Gulf Transmission Co., 290 F.3d 303 (5th Cir.2002). As such, ECMC has not established "that there is an absence of evidence to support the defendant's claim of undue hardship," or, alternatively, ECMC has not presented "evidence demonstrating that the debtor will be unable to prove an undue hardship claim at trial." Therefore, the motion for summary judgment must be overruled.
The third prong of the Brunner test requires the debtor to make a good faith effort to repay her debts. The debtor has admitted that she made no payments on the student loans (response to Interrogatory Number 16), and that she has never attempted to consolidate her loans under the William D. Ford Program (response to Interrogatory Number 17). Because of the conclusion set out in the preceding paragraph, the court will determine after evidence is presented at trial whether these facts, which are clearly damaging to the debtor's position, conclusively established that the debtor failed to make a good faith effort to repay her loans.
V.
Based on the foregoing analysis, the court finds that ECMC has met its initial burden of proof pursuant to the undisputed affidavit testimony of Amy Schreiner. However, the court finds that ECMC has not proven that there is an absence of evidence to support the debtor's claim of undue hardship, nor has ECMC shown through affirmative evidence that the debtor will be unable to prove undue hardship at trial. Accordingly, summary judgment is granted, in part, to the effect that the debtor owes a debt to ECMC in the sum of $53,246.00, for an educational loan which was guaranteed by a governmental unit. However, the motion for summary judgment as it relates to the debtor's assertion of "undue hardship" is denied at this time.
An order will be entered contemporaneously with this opinion. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1532210/ | 831 S.W.2d 607 (1992)
309 Ark. 385
In re ADOPTION OF Andrew William REEVES, a Minor.
No. 91-358.
Supreme Court of Arkansas.
May 18, 1992.
Judith C. Strother, Mt. Home, for appellant.
Roger Morgan, Mt. Home, for appellee.
GLAZE, Justice.
This is an appeal of the probate court's denial of Tom Watson's petition to set aside the adoption of minor, Andrew Reeves, by Todd Reeves. Andrew's mother, Lynne Watson, and Tom Watson were married for two years, and had one child, Dustin. The Watsons divorced in 1985, but during a reconciliation attempt, Lynne became pregnant. Andrew was born, but the couple had never remarried. Andrew used Watson as his last name. Although Tom Watson was not named as the father on the child's birth certificate, both Lynne and Tom acknowledged that he was the father.
Todd Reeves married Lynne on November 28, 1988, and one year later, petitioned the court to allow Todd to adopt Andrew. In the petition, Todd and Lynne swore that the natural father of the child was unknown. On November 2, 1989, the probate judge entered a final order allowing Todd to adopt Andrew. Tom learned of the adoption, and on February 25, 1991, filed his petition to set aside the court's order of adoption. Tom's petition alleged that (1) he was the father of Andrew, (2) he had significant contacts with Andrew since birth, and (3) he had not received notice of the adoption proceedings. While the trial court found that Tom had established a substantial relationship with the child, it held that Tom was not entitled to notice of the adoption proceeding under Ark.Code Ann. § 9-9-212 (Repl.1991) or, because he was not registered in the state's putative father registry, under Act 496 of 1989 (codified as *608 Ark.Code Ann. §§ 9-9-207, -210, -224 and §§ 20-18-701 to XX-XX-XXX (Repl.1991)).
Tom raises three issues why the probate court erred in refusing to set aside the adoption decree, but the crucial issue to be decided is whether the probate court erred in finding Tom was not entitled to notice because he had failed to register with Arkansas' putative father registry. We affirm the trial court's decision.
Tom's argument largely rests upon his belief that the trial court misinterpreted the Supreme Court's decision in Lehr v. Robertson, 463 U.S. 248, 103 S. Ct. 2985, 77 L. Ed. 2d 614 (1983). He argues the trial court wrongfully determined that, under the rationale of Lehr, Tom was not entitled to notice of Andrew's adoption proceedings even though Tom had established a significant relationship with his son, Andrew. We do not read the trial court's holding so narrowly.
The Lehr case involved New York's statutory scheme which protected the unmarried father's interest in assuming a responsible role in the future of his child. New York's legislature enacted a law that automatically provided notice to seven categories of putative fathers that the legislature believed would include fathers who likely would have assumed some responsibility for the care of their natural children.[1] Under the law, putative fathers could guarantee they would receive notice of any adoption proceedings regarding their children if they merely registered with New York's putative father registry.
The father in Lehr did not fit within any of New York's seven categories, nor did he otherwise show that he had established a significant relationship with his son. After reviewing the cases of Stanley v. Illinois, 405 U.S. 645, 92 S. Ct. 1208, 31 L. Ed. 2d 551 (1972); Quilloin v. Walcott, 434 U.S. 246, 98 S. Ct. 549, 54 L. Ed. 2d 511 (1978); Caban v. Mohammed, 441 U.S. 380, 99 S. Ct. 1760, 60 L. Ed. 2d 297 (1979); and Smith v. Organization of Foster Families for Equality and Reform, 431 U.S. 816, 97 S. Ct. 2094, 53 L. Ed. 2d 14 (1977), the Lehr court concluded as follows:
The significance of the biological connection is that it offers the natural father an opportunity that no other male possesses to develop a relationship with his offspring. If he grasps that opportunity and accepts some measure of responsibility for the child's future, he may enjoy the blessings of the parent-child relationship and make uniquely valuable contributions to the child's development. If he fails to do so, the Federal Constitution will not automatically compel a State to listen to his opinion of where the child's best interests lie.
The court in Lehr concluded that New York's statutory scheme had adequately protected the putative father's constitutional right or opportunity to develop a relationship with his offspring. The court further held that the possibility the father may have failed to register because of his ignorance of the law was not a sufficient reason for criticizing the law itself. *609 Tom is correct in arguing that the Court in Lehr did not assess the constitutional adequacy of New York's procedures for terminating a developed relationship. As already discussed, the father in Lehr did not fall within any of the categories that purportedly presumed some responsibility on his part towards his child; nor did he show he had developed any such responsible relationship.
In the present case, the trial court determined Tom had established a significant relationship with Andrew because he had visited with Andrew on the same occasions he exercised visitation rights with his older son, Dustin.[2] Because Tom developed this relationship, he argues he was entitled to notice of Andrew's pending adoption proceeding even though he had failed to comply with Arkansas's putative father registry law. In making this argument, Tom does not question, below or in this appeal, the constitutional adequacy of Arkansas's registry law, Act 496 of 1989, as it pertains to terminating a developed relationship.[3]
Arkansas law allows any man, who is not legally presumed or adjudicated to be the biological father of a child, but who claims or is alleged to be the father of the child, the right to file with the state's putative father registry. See §§ 20-18-701, -702. Upon filing, the father is entitled to a copy of any adoption petition filed naming or involving his child. § 9-9-224(a). Under these provisions, and the facts of this case as determined by the trial judge, Tom clearly would have been entitled to notice of Todd Reeves' petition to adopt Andrew, if Tom had complied with Arkansas' registry law.
In sum, while Tom argues the trial court's decision violated his due process rights because it deprived him of notice of the pending adoption of Andrew, Arkansas law, in fact, provided notice to Tom in these circumstances. Of course, whether Arkansas' notice requirement is constitutionally sufficient is, like in Lehr, not raised here.
Also relevant but not constitutionally challenged here is Ark.Code Ann. §§ 9-9-206(a)(2) and 9-9-207(b) (Repl.1991). These statutory provisions basically require the consent to adoption of fathers who have legally legitimated their relationship with their children, and those fathers, as well as the ones who have filed with the state's putative father registry, are entitled to notice of a hearing on any petition seeking the adoption of their children. Of course, fathers who have legitimate children are automatically entitled to notice of such a hearing, and putative fathers must register to receive notice. But, again, Act 496 and the adequacy of its notice provisions has not been constitutionally questioned, and these provisions have a presumption of constitutionality. Wells v. Clinton, 282 Ark. 20, 666 S.W.2d 684 (1984). If and when these adoption provisions are challenged, the attorney general is required notice under most circumstances. See Olmstead v. Logan, 298 Ark. 421, 768 S.W.2d 26 (1989). Because Arkansas's existing statutory scheme does provide notice to putative fathers who have registered, we affirm the trial court's decision denying Tom's request to set aside Andrew's adoption decree.
Tom Watson makes two other arguments for setting aside the adoption decree, viz., (1) the mother committed perjury by falsely swearing in the petition for adoption that the natural father was unknown and (2) the adoption was not in the best interest of the child. Our resolution of the notice issue disposes of these remaining issues. As was pointed out by the trial court, Tom failed to comply with Arkansas's registry law so as to trigger its notice provisions. As a consequence, he was not entitled to notice regardless of the improp *610 actions of Andrew's mother. By our holding, we certainly do not condone her actions and merely state that sanctions are available when a party or witness offers perjured testimony. As to the issue pertaining to the child's best interest, Tom Watson simply has no standing to raise it under the circumstances of this case.
For the reasons stated above, we affirm.
HOLT, C.J., and BROWN, J., dissent.
BROWN, Justice, dissenting.
I respectfully dissent.
The chancellor here found that Tom Watson had developed a significant personal relationship with his son, Andrew Reeves. Moreover, the natural mother, Lynn Watson, while acknowledging that Andrew was Tom Watson's child, swore as part of the adoption petition filed with her new husband that the natural father was unknown. Knowing that the child was Tom Watson's, she purposely did not notify him of the adoption. Under these circumstances I would hold that Watson's due process rights were violated.
The majority states that the Putative Father Registry Act satisfies notice requirements. It further concludes that if a putative father fails to register, he is not entitled to notice of an adoption, regardless of his personal relationship with his son or the mother's calculated acts to deny him notice. That cannot be the law.
The Putative Father Registry Act certainly provides a procedural mechanism for notifying putative fathers. I cannot agree, however, that it provides an exclusive means for notice or that failure to register deprives a putative father of his right to notice under these circumstances.
Notice in addition to that afforded by Arkansas' Putative Father Registry Act is guaranteed by the due process clauses of the state and federal constitutions when the father has developed a significant personal relationship with the son. The U.S. Supreme Court has stated in this vein:
When an unwed father demonstrates a full commitment to the responsibilities of parenthood by "com[ing] forward to participate in the rearing of his child," Caban, 441 US, at 392, 60 L. Ed. 2d 297, 99 S. Ct. 1760, [1768], his interest in personal contact with his child acquires substantial protection under the Due Process Clause. At that point it may be said that he "act[s] as a father toward his children." Id., at 389, n. 7, 60 L. Ed. 2d 297, 99 S. Ct. 1760, 11767 n. 7]. But the mere existence of a biological link does not merit equivalent constitutional protection.
Lehr v. Robertson, 463 U.S. 248, 261, 103 S. Ct. 2985, 2993, 77 L. Ed. 2d 614 (1983). In Lehr, that relationship between father and son was lacking. Here, the significant personal relationship is a given, and the chancery court so found.
But since Watson does not attack the Putative Father Registry Act on constitutional grounds, the majority is reluctant to delve into whether Watson had due process rights in addition to the statutory rights. The focus, however, should not be on whether a constitutional question relating to the statute was raised, but on whether Watson was entitled to notice in this case as part of procedural due process. I believe that he was. Any other conclusion violates fundamental fairness.
The fact that the natural mother attempted to thwart notice to Watson enhances this position. Under the majority opinion, a putative father could have the best of relationships with his son but fail to register. Then when the natural mother hides the fact of an adoption from him, he has no recourse.
I would reverse.
HOLT, C.J., joins.
NOTES
[1] Persons entitled to notice under the New York law included the following:
(a) any person adjudicated by a court in this state to be the father of the child;
(b) any person adjudicated by a court of another state or territory of the United States to be the father of the child, when a certified copy of the court order has been filed with the putative father registry, pursuant to section three hundred seventy-two-c of the social services law;
(c) any person who has timely filed an unrevoked notice of intent to claim paternity of the child, pursuant to section three hundred seventy-two of the social services law;
(d) any person who is recorded on the child's birth certificate as the child's father;
(e) any person who is openly living with the child and the child's mother at the time the proceeding is initiated and who is holding himself out to be the child's father;
(f) any person who has been identified as the child's father by the mother in written, sworn statement; and
(g) any person who was married to the child's mother within six months subsequent to the birth of the child and prior to the execution of a surrender instrument or the initiation of a proceeding pursuant to section three hundred eighty-four-b of the social services law.
463 U.S. at 251-2, 103 S.Ct. at 2988.
[2] Tom neither financially supported Andrew nor attempted to legitimate him. Tom did offer to marry Lynne, but she refused.
[3] We note Tom Watson's pleadings never raised the constitutionality of Act 469 of 1989 or other adoption statutes, and nothing in the record reflects such arguments were otherwise raised. At pages 61 through 76 of the record, the trial court made general reference to a statute (presumably § 9-9-224) not requiring notice to Tom Watson in the circumstances of this case, but such statute and the sufficiency or adequacy of notice it provides putative fathers was never mentioned. | 01-03-2023 | 10-30-2013 |
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