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525 S.W.2d 288 (1975)
MUNZENRIEDER & ASSOCIATES, INC., d/b/a United Freight Sales, Appellant,
v.
Robert DAIGLE and Glenn W. Broussard, Appellees.
No. 7702.
Court of Civil Appeals of Texas, Beaumont.
July 10, 1975.
*289 Terry L. Belt, Austin, for appellant.
Barry K. Bishop, Austin, for appellees.
DIES, Chief Justice.
Plaintiff below, Munzenrieder & Associates, Inc., d/b/a United Freight Sales (appellant), sought injunction against Robert Daigle and Glenn W. Broussard, defendants (appellees), to prohibit them from engaging in a competitive business. Trial was to the court without a jury who denied the injunction, from which plaintiff perfects this appeal. We affirm the trial court's judgment.
Plaintiff, a national retail chain selling furniture, sewing machines and stereo equipment, operates a store in Austin, Texas, under the name of "United Freight Sales." Both defendants worked at this outlet and signed agreements with plaintiff not to engage in a competitive business for two years after termination of employment with plaintiff in Travis, Bastrop, Hays, and Williamson counties. Within this period, defendants opened a store under the name of "Texas Furniture Outlet" at a location in Austin previously used by plaintiff.
The court filed Findings of Fact and Conclusions of law among which were the following:
"10. The only store presently being operated by Plaintiff in the state of Texas is located at 6535 North Lamar, Austin, *290 Travis County, Texas. While employed by Plaintiff, Defendant, ROBERT DAIGLE, acted as a salesman and received training in techniques of selling sewing machines. Specifically, said Defendant was trained to damage an advertised machine so it would have a shoddy appearance; to maladjust an advertised machine so that the tension, stitch length, and material feed would appear faulty; and to represent to Plaintiff's customers that its stock was freight goods, that is, unclaimed freight, damaged freight, or freight overshipments. Said Defendant placed no orders for goods for Plaintiff, had no contact with Plaintiff's suppliers, placed no advertising, and received no training in inventory control.
"11. Plaintiff actively represents that its merchandise is freight goods, such as unclaimed freight, damaged freight, and freight overshipments. None of Plaintiff's merchandise is of such category and Plaintiff receives its merchandise from regular suppliers.
"12. Plaintiff regularly makes alluring but insincere offers to sell a particular product which Plaintiff in truth does not intend or want to sell. Its purpose is to switch consumers from buying the advertised merchandise, in order to sell something else, usually at a higher price or on a basis more advantageous to the Plaintiff. Plaintiff fails to make a bona fide effort to sell the advertised product.
"13. Plaintiff regularly engages in the practice of discouraging the purchase of advertised merchandise as part of a bait scheme to sell other merchandise. Among such acts or practices which Plaintiff engages in are the following:
"(a) Plaintiff disparages by acts or words the advertised product or disparages the guarantee, in connection with it.
"(b) Plaintiff regularly shows or demonstrates an advertised product which is defective, unusable, or impractical for the purpose represented or implied in the advertisement, and in some instances, materially damages such merchandise so that it will be defective.
"(c) Plaintiff intentionally causes confusion as to the source of its merchandise and the reason for its pricing."
Defendant Daigle testified plaintiff would frequently advertise "leaders" when they didn't have the merchandise to back up the ads. That while at plaintiff's store they engaged in "bait and switch" operations. That is, they would advertise a leader sewing machine and then damage it (with a hammer) in a backroom of the plaintiff's store so it appeared faulty. This machine was advertised at about cost price. When it was demonstrated to a customer its damaged condition produced dissatisfaction, and the customer was then "switched" to another machine. Defendant Broussard was trained to tell customers the merchandise was "freight surplus, unclaimed freight or factory surplus."
Jacob Williams, employed by plaintiff at the time he testified, said during the eight months he had worked there he had sold only one "leader" and this (the sale of a leader) was really a joke. When the customer comes in to see the leader (a Singer) he generally states there is no warranty or guarantee on the Singer, no accessory kit with it, no portable case or cabinet, and that it is designed primarily to sew on just lightweight materials. While at the Waco store they would take the top off the Singer and "just messed up the inside gears so it wouldn't work properly." They really never tried to sell the Singer (leader) but, another brand. He tells customers the reason for low cost is the merchandise is "unclaimed freight." When the Domestic machines (the ones they push) come in he uncrates them, removes the factory warranty, and replaces it with plaintiff's warranty.
Daigle was shown by plaintiff's manager how to damage a leader. First they threw *291 away the accessory kit and the guarantee card, and then, with a claw hammer, damaged the outside of the machine "to make it appear as freight damaged." The "feed dog" was "adjusted" so that "one feed dog would move it through at a different pace than the other ... causing the stitch not to be straight...." The "thread take-up lever" was beat "where it would rub and when it goes up and down very rapidly, it would make a noise and no one was interested at all in a sewing machine that did not operate quietly...." An officer of plaintiff told him their name "`Freight Sales is our gimmick ... that we use to sell customers and that it's a white lie.'"
Broussard's bait and switch training was essentially the same as Daigle's. To get the customer away from the leader he was told it would not sew on heavyweight materials. It carried no warranty. "[M]ake it look like it really wouldn't be exactly a sound purchase."
While a vice president of plaintiff company denied "bait and switch" training or tactics, this testimony certainly supports the court's findings. And, of course, it is so well-settled as to need no recitation of authority, when these findings are so supported they are binding on this court.
Defendants urge that the above conduct precludes the equitable relief plaintiff seeks under the doctrine of "unclean hands." This doctrine simply stated requires those coming into a court of equity to come with "clean hands." 30 C.J.S. Equity § 93 (1965) at p. 1006 and cases cited therein. But this general principle of equity is not absolute, and limitations have been placed upon its application. It does not operate to repel all sinners from a court of equity. Kirkland v. Handrick, 173 S.W.2d 735 (Tex.Civ.App.San Antonio 1943, writ ref'd w.o.m.). It is also firmly entrenched in this jurisdiction that the conduct complained of must arise directly out of the transaction in issue. Pacific Mutual Life Insur. Co. v. Westglen Park, Inc., 160 Tex. 1, 325 S.W.2d 113 (1959). The party relying upon this doctrine must show that he himself has been injured by the conduct in order to justify application of the principle, and the wrong must have been done to the party himself rather than to some third person. Omohundro v. Matthews, 161 Tex. 367, 341 S.W.2d 401 (1960). See also Vaughan v. Kizer, 400 S.W.2d 586 (Tex.Civ.App. Waco 1966, writ ref'd n.r.e.) and Professional Beauty Products, Inc. v. Schmid, 497 S.W.2d 597 [Tex.Civ.App.El Paso 1973, aff'd in part sub nom., Professional Beauty Products, Inc. v. Derington, 513 S.W.2d 236 (Tex.Civ.App.El Paso 1974, writ ref'd n.r. e.)]. However for the reasons to be stated below we do not feel compelled to rely upon this particular contention by the defendants.
As in all cases of this nature, we are governed by the pronouncements made by the Supreme Court in Weatherford Oil Tool Company v. Campbell, 161 Tex. 310, 340 S.W.2d 950 (1960). In Weatherford, the Court enunciated the applicable test:
"[T]he test usually stated for determining the validity of the covenant as written is whether it imposes upon the employee any greater restraint than is reasonably necessary to protect the business and good will of the employer. According to the Restatement [§§ 515, 516] a restraint of trade is unreasonable, in the absence of statutory authorization or dominant social or economic justification, if it is greater than is required for the protection of the person for whose benefit the restraint is imposed or imposes undue hardship upon the person restricted." Id., at 951.
The burden is on the former employer to show that the covenant not-to-compete is no "greater restraint than is reasonably *292 necessary to protect the business and good will of the employer." Carpenter v. Southern Properties, 299 S.W. 440 (Tex.Civ.App. Dallas, 1927, writ ref'd).
The trial court found that the restrictive covenant was not reasonable because "such provisions impose a greater restraint than is reasonably necessary to protect the business and good will and are not essential to the protection of the business and good will of Plaintiff," that "[t]he gross sales of Plaintiff are now substantially the same as before Texas Furniture Outlet began business and have not declined as a result of the conduct of the business of Texas Furniture Outlet" and that "Texas Furniture Outlet's store at 1006 South Lamar and Plaintiff's store at 6535 North Lamar are in substantially different trade areas." Plaintiff attacks these findings with a no evidence point of error to the effect that the trial court erred in not finding the restrictive covenant reasonable.
In attempting to uphold their burden of proof, plaintiff tried to show that the financial position of their store had declined as a result of defendants' alleged competition. But upon cross-examination, plaintiff's own witnesses stated that profits had not necessarily decreased, that gross sales had not necessarily decreased, and that some of the fluctuation in sales was somewhat in relation to the general state of the depressed economy. In response to a question as to plaintiff's financial information, plaintiff's comptroller stated that:
"I am testifying what the financial data shows, increased cost. Since sales have held constant it seems like there wasn't really much problem in the sales' area but the cost of operating the store increased and the markup on the merchandise decreased which caused a decline in profits."
This testimony shows that the decline, if any, of plaintiff's profits was due to factors unrelated to defendants' activities. We thus fail to see how plaintiff's alleged claim of financial loss can be supported by the evidence of its own witnesses. The no evidence point is without merit and overruled.
Plaintiff also attempted to show that the defendants were using plaintiff's advertising techniques and methods which they learned and acquired from the plaintiff. But the use of plaintiff's methods which proves no threat to plaintiff are not sufficient grounds to uphold a covenant not-to-compete. Electronic Data Systems Corporation v. Kinder, 360 F. Supp. 1044 (N.D.Tex.1973) aff'd in 497 F.2d 222 (5th Cir. 1974). Further, the mere training of the defendant by the plaintiff will not, in and of itself, support the enforcement of such a restrictive covenant. Kidde Sales & Service, Inc. v. Peairson, 493 S.W.2d 326 (Tex.Civ.App.Houston [1st Dist.] 1973, no writ). Other jurisdictions have supported this conclusion. See for example Clark Paper & Mfg. Co. v. Stenacher, 236 N.Y. 312, 140 N.E. 708 (1923).
Beyond the above summarized evidence, plaintiff made no other attempt to show that its business was being harmed in any way by the defendants alleged competitive activities. We do not think it necessary, nor would such an effort be expedient, for us to attempt a summarization or outline of the type of evidence required to show what is "reasonably necessary for the protection of an employer's business" in a case of this nature. Obviously, this would necessarily vary with the circumstances of each case. To do otherwise would, in our opinion, be to proceed beyond our judicial function. We hold that plaintiff's evidence, or lack thereof, was insufficient under the test as announced in Weatherford Oil Tool Company v. Campbell, supra, and that plaintiff failed to sustain its burden of proof in demonstrating that the covenant in question was reasonably necessary to the protection of its business and good will. *293 Plaintiff's evidence was weak, at best, and the trial court was justified in concluding that the covenant under question was not reasonably necessary for the protection of its business. As was said in Security Services, Inc. v. Priest, 507 S.W.2d 592 (Tex.Civ. App.Dallas 1974, no writ):
"We conclude that plaintiff has not established a clear right to enforcement of the covenant against competition. Such covenants are not favored by the courts because of the public policy against restraints of trade and the hardship resulting from interference with a man's means of livelihood. [citations omitted]... The burden is on the former employer to go beyond the terms of the employment contract and establish by satisfactory evidence both the necessity for and the reasonableness of the restraint on competition which he seeks to enforce. [citations omitted]." Id., at 594, 595.
And in concurring with the majority in Priest, Chief Justice Williams used the following language which we think pertinent to the case at bar:
"In my opinion the judgment should be affirmed on the sole ground that plaintiff has failed to present sufficient evidence that defendant's admitted competitive endeavours have damaged plaintiff's business so as to justify the issuance of an injunction. Such being true the court did not abuse its discretion in denying equitable relief." Id., at 596.
We cannot say as a matter of law that the trial court was in error in reaching its conclusions. See Thames v. Rotary Engineering Company, 315 S.W.2d 589 (Tex.Civ. App.El Paso 1958, writ ref'd n.r.e.) which reaffirmed the principle that a trial court has wide discretionary powers as to the enforceability of matters in equity.
Finding no error, the judgment of the trial court is in all things affirmed.
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87 N.J. 467 (1981)
435 A.2d 556
WILLIAM EDEN, PLAINTIFF-RESPONDENT,
v.
CONRAIL AND ROBERT DORRMAN, DEFENDANTS-APPELLANTS.
The Supreme Court of New Jersey.
Argued January 26, 1981.
Decided September 28, 1981.
*469 John VR. Strong, Jr. argued the cause for appellants (Strong & Strong, attorneys).
Sanford E. Chernin argued the cause for respondent (Chernin & Freeman, attorneys).
The opinion of the Court was delivered by HANDLER, J.
This case is the companion case to Renz v. Penn Central Corp., 87 N.J. 437 (1981). In this case the plaintiff, William Eden, fell onto Conrail's railroad tracks while suffering from a grand mal epileptic seizure. Plaintiff brought a negligence action seeking damages for personal injuries caused when he was struck by a train operated by defendant Dorrman and owned by defendant Conrail. The complaint against Conrail was dismissed at the end of plaintiff's case on the theory that the railroad immunity act, N.J.S.A. 48:12-152, precluded liability to anyone negligently injured while on railroad tracks without authority. The jury found Dorrman not negligent. The Appellate Division reversed and remanded as to both defendants. 175 N.J. Super. 263 (1980). However, a dissent was filed disagreeing with the majority as to several issues. The plaintiff filed an appeal as of right pursuant to R. 2:2-2(a).
The plaintiff was 31 years of age. He had suffered from grand mal and petit mal epileptic seizures since he was eight years old. As long as he was on medication, he was capable of functioning while experiencing a petit mal seizure, being able to talk with people, maintain his balance and generally be aware of his surroundings. When he was in the midst of a grand mal seizure, however, he would become unconscious, fall down and lose memory. Plaintiff suffered petit mal seizures approximately once a week before the accident in question. His last uncontrolled grand mal seizure occurred while he was a passenger on a train in Canada in 1971.
*470 At the time of the accident on April 22, 1977, plaintiff was employed in Paterson, New Jersey. Each workday, he walked from his place of employment at the Irving Trust Building to the railroad station in Paterson. The actual waiting area consists of a blacktop platform extending more than 1,000 feet between the eastbound and westbound tracks. The platform is only inches above the rails. There is a white line two feet from the edge of the tracks, but there are no physical barriers between the platform and the tracks. While waiting for the train, plaintiff put down his briefcase and began walking around the platform. He was aware of the white line and knew that people on the platform were not to cross the line for their own safety.
Plaintiff then fell onto the tracks as a result of a grand mal seizure and was struck by an approaching Conrail train. All that he recalls of the entire accident is looking around while standing on the platform, seeing a signal device overhead, and thereafter being awakened while on his back as he was being removed from the scene. The train that struck plaintiff was operated by Robert Dorrman, an engineer for Conrail. The train was heading in a westerly direction toward Paterson. Approaching the Paterson station the tracks curve to the right (north) for approximately 200 feet and then straighten out between 600 and 900 feet from the eastern end of the platform area. When Dorrman reached the end of this curve he made a general observation down the tracks toward the station but saw nothing out of the ordinary. At this point, as it approached the station, the train was going approximately 30 m.p.h., or 40 feet per second. When approximately 300 feet from the platform Dorrman next looked down the tracks at which point he noticed what appeared to be a cardboard, boxlike object, light brown in color. The object appeared to be approximately five to six feet long, two feet wide and three to four inches thick, but Dorrman did not view the object as an obstruction and, because he did not think the object was a human being, he decided not to apply his brakes at that point.
*471 When the engine was approximately thirty feet from the object, Dorrman blew the train's whistle and noticed the object move, at which point he realized for the first time that it was a human being. He then applied his brakes, but it was too late to avoid striking the plaintiff who was making a futile effort to scramble off of the tracks and onto the platform. The injuries suffered from the accident gave rise to this action.
I
We have decided today in Renz v. Penn Central that the railroad immunity act, N.J.S.A. 48:12-152, does not, as viewed by the courts below, codify common law principles of duty and trespass. Rather the act incorporates as its legal underpinning principles of fault and contributory negligence. This is evinced by the clear wording of the statutory enactment which holds that persons engaging in certain conduct described in the statute "shall be deemed to have contributed to the injury sustained and shall not recover therefor any damages."
We have further held, as a matter of statutory interpretation, that the statute incorporated the legislative determination to create railroad immunity based upon the underlying common law doctrine of contributory negligence for so long as that doctrine in its essential elements endured.
Consistent with the notion that this railroad immunity statute, like all immunity enactments, must be strictly construed, Potter v. Finch & Sons, 76 N.J. 499, 502 (1978), we have lastly determined that the Legislature would not have intended its rule of railroad immunity from liability, enacted in 1869, to remain without modification at this time over a century later when the underlying legal theory of contributory negligence was no longer a part of New Jersey or American common law having been rendered an obsolete historical relic by its modern heir, the doctrine of comparative negligence.
For these reasons we have prospectively held, subject of course to legislative intervention and modification, that the *472 railroad immunity act is deemed to be predicated on the contemporary principles of comparative negligence. This means that the conduct of a person walking, playing or running on or along the railroad or its tracks or jumping on or off moving railroad cars now constitutes minimal or threshold comparative negligence under the statute. Such a person is not barred from recovery for resulting injuries except if his negligence on a comparative basis is greater than that of the railroad.
Given this redefinition and reapplication of the statutory enactment, we must assess the applicability of the statute as construed to the situation present in this appeal a person on the tracks as a result of an epileptic seizure. Judge Fritz, writing for the Appellate Division, although understandably applying the underlying doctrine of trespass rather than contributory negligence, held the statute was inapplicable to the plaintiff in this case because he was on railroad property without volition.
We believe that this same result obtains even under our interpretation of the enactment in Renz as one based upon comparative negligence. It is undisputed that Eden fell upon the railroad tracks as a result of an unconscious state. The reasons that persuaded Judge Fritz below to conclude that this factual circumstance precluded the application of the trespass doctrine, 175 N.J. Super. at 274-275, apply even more cogently in fending off the imposition of negligence under the doctrine of comparative negligence. We do not believe that non-cognitive action brings a person within the purview of the railroad immunity act or is sufficient to trigger comparative negligence principles as incorporated by the statute. We are thus satisfied that the railroad immunity statute does not in this setting serve to impute negligence to the plaintiff as a matter of law. The statute does not apply and its provisions cannot be invoked to bar or reduce any recovery to which plaintiff may otherwise be entitled.
*473 Nonetheless, in the present posture of the case, there has been no consideration of the issue of plaintiff's negligence independent of the railroad immunity act. While plaintiff's unconscious falling upon the railroad tracks, considered in isolation, cannot fairly be viewed as faulty or negligent conduct, it is unclear from the record whether circumstances other than plaintiff's non-volitional presence on the tracks, such as plaintiff's awareness of his condition and the likelihood of danger to himself, or the reasonable foreseeability of the potential for an epileptic seizure under circumstances creating a risk of personal injury, might be sufficient to render his conduct on the platform negligent. Because of the previous construction of the statute, it does not appear that any of the parties focused on or addressed these other factual aspects of plaintiff's conduct as they bear upon comparative negligence. These factors are appropriately a concern for a jury and consequently we deem it proper to remand this case for the trial judge and jury to assess these matters under the Comparative Negligence Act, N.J.S.A. 2A:15-5.1, -5.2.
II
Plaintiff has raised additional grounds which he contends constitute reversible error in this case, namely, the inadequacy of the jury charge, the invalid use of answers to interrogatories at trial and the failure to transcribe portions of testimony read to the jury. In view of our disposition today, we need not decide whether these assertions, if sustainable, constitute reversible error. The Appellate Division, however, addressed these contentions in order to guide the trial court on remand. We view the determination by Judge Fritz below as to the interrogatories, the transcription of the testimony read to the jury and the confusion inherent in the jury charge to be substantially correct. 175 N.J. Super. at 278-283.
The majority and dissent in the court below also addressed the question of whether plaintiff Eden should be considered a trespasser *474 within the framework of the railroad immunity act and, if so, what duty, if any, was owed by the railroad. Although we have determined in the companion case of Renz v. Penn Central Corp. that the railroad immunity act is based upon principles of comparative negligence, the defendant railroad on remand is, of course, free to argue that the plaintiff in this case was a trespasser. We caution, however, that plaintiff, under the facts in the present record, could very well be considered as one authorized to be on railroad property. Because Eden was clearly an invitee in terms of his presence in the train station and on the platform, the defendant railroad was required "to use reasonable care to make the premises safe." E.g., Handleman v. Cox, 39 N.J. 95, 111 (1963). Plaintiff surely did not cognitively desire to leave the authorized area, but did so involuntarily. Accordingly, if the railroad inadequately protected against an individual's inadvertent entrance onto a dangerous area, the plaintiff may very well have remained an invitee, or as noted by Judge Fritz, have become a licensee or a "tolerated intruder," rather than a trespasser, even though he was not expressly invited into the area where the harm occurred. The Appellate Division also opined that a person not on another's property pursuant to conscious choice is not a trespasser. 175 N.J. Super. at 276. However, neither the parties nor the appellate court had the benefit of addressing that particular issue unencumbered by the railroad immunity act, N.J.S.A. 48:12-152, and therefore we do not here pass upon it.
Although all the factors in the present record strongly indicate that the plaintiff was not a trespasser and that the railroad had a requisite duty of care, we cannot prognosticate that upon remand there will not exist genuinely disputed issues of material fact that may directly or inferentially support a finding that the plaintiff was a trespasser. In that posture of the proofs, the parties and trial court should consider our decision in the companion case of Renz v. Penn Central Corp. as to the appropriate duty of care that would be owed by the defendant railroad to the plaintiff.
*475 Lastly, we must consider the application of our determination today to the railroad engineer, Dorrman. Under our decision in Potter v. Finch & Sons, supra, the railroad immunity act, even as previously interpreted, did not bar an action against a railroad employee. Accordingly, the issue of the engineer's liability was submitted to the jury by the trial judge. In the trial judge's charge, the jury was told that Eden was a trespasser, a charge which, in view of our discussion above, was correctly criticized by the court below. Potentially affected by the unavailability of recourse to the corporate defendant and by the notion that Eden was initially deemed to be a trespasser, the jury found no negligence on the part of Dorrman. The Appellate Division found these influences upon the jury to be sufficient to justify a remand as to liability of the individual defendant. We agree. See Potter v. Finch & Sons, supra, 76 N.J. at 509 (Pashman, J., dissenting, noting that, equitably, individual defendant and defendant railroad should be treated similarly).
Accordingly, the judgment below is modified and, as modified, is affirmed.
SCHREIBER, J., concurring.
I agree with the majority that the complaint against Conrail should not have been dismissed at the end of plaintiff's case. The Railroad Immunity Act, N.J.S.A. 48:12-152, did not preclude recovery since plaintiff was not injured while walking, standing or playing on the railroad or by jumping on or off a car while in motion. See Renz v. Penn Central, 87 N.J. 437, 463 (1981) (Schreiber, J., concurring).
At the trial the statutory immunity was properly held to be inapplicable to the engineer. Potter v. Finch & Sons, 76 N.J. 499 (1978). However, a question existed as to the nature of the duty owed. Since the charge incorrectly described that duty and the cause is being remanded for a new trial, it is necessary to delineate guidelines for the trial court to follow which will be *476 applicable to the engineer and the railroad. Traditionally, the scope of the duty owed depends upon the plaintiff's status, be it as trespasser, licensee or invitee.
The duty owed to a trespasser depends in the first instance on whether the plaintiff's injury is due to a natural condition of the land or an activity which has been or is being carried on by the property owner. In the former situation, the property owner generally is only under an obligation to warn a known trespasser of a concealed dangerous condition. Morril v. Morril, 104 N.J.L. 557 (E. & A. 1928). In the latter, the property owner should refrain from intentionally injuring the trespasser. Sohn v. Katz, 112 N.J.L. 106 (E. & A. 1934).
Some exceptions have developed with respect to dangerous activities in railroad cases. One requires the defendant to exercise reasonable care for the safety of trespassers where their presence is to be anticipated and the activity carried on involves a high degree of danger. Cleveland-Cliffs Iron Co. v. Metzner, 150 F.2d 206 (6 Cir.1945). It is not essential that the trespasser be perceived, but it is sufficient if the information would lead a reasonable man to conclude that a person might be there. The Second Restatement of Torts gives this illustration:
The engineer of the X & Y Railroad Company sees lying upon the track a pile of clothing such as would give a reasonable man cause to suspect that it might contain a human being. Under these circumstances the engineer is not entitled to assume that it is not a human being but is required to keep the engine under control until he is certain that it is not. [Restatement, Torts 2d, § 336 at 191, illus. 1 (1965)]
See also F. James, "Tort Liability of Occupiers of Land: Duties Owed to Trespassers," 53 Yale L.J. 144, 177-79 (1953), advocating elimination of determining duty on the basis of classification and deciding instead whether the property owner's activities constitute an unreasonable danger under all the circumstances.
The duty owed to a licensee with respect to dangerous activities differs from that owed to a trespasser. The general rule is that there is an obligation to exercise reasonable care for the *477 protection of the licensee.[1] See Berger v. Shapiro, 30 N.J. 89, 97 (1959). The property owner must act with due regard for the possibility that the licensee may be present. Dean Prosser has observed:
The obligation is higher than that owed to a trespasser, because the possessor may be required to look out for licensees before their presence is discovered.... [Prosser, Law of Torts (4 ed. 1971), at 380]
The duty owed to a business invitee is not only to protect the invitee against dangers which the owner knows or with reasonable care might discover, Bohn v. Hudson & Manhattan R. Co., 16 N.J. 180, 185 (1954), but also to carry on its activities in a reasonably prudent manner.
An inadvertent involuntary deviation from the area of invitation does not necessarily destroy the status as an invitee. It has been held that some intrusions upon the lands of others do not transform the individual into a trespasser. For example, a pedestrian on a public highway may detour onto adjoining land to avoid an obstruction, Sawicki v. Conn. Ry. & Lighting Co., 129 Conn. 626, 30 A.2d 556 (1943); or an inadvertent slip into adjoining land does not affect invitee status, Puchlopek v. Portsmouth Power Co., 82 N.H. 440, 136 A. 259 (1926); Prosser, Law of Torts (4 ed. 1971), at 353. Restatement, Torts 2d, § 368, comment e at 269-70 (1965), projects a similar proposition:
The public right to use the highway carries with it the right to protection by reasonable care against harm suffered in the course of deviations which may be regarded as the normal incidents of travel. This is true particularly where the deviation is inadvertent, as where one walking on the highway slips and falls into an excavation next to it, or misses his way in the dark, strays a foot or two to one side, and falls into the pit.
The facts in this case fall within the same pattern. The plaintiff was a business invitee on the common carrier's platform, a place to which the public was invited, and involuntarily fell upon the tracks due to an unexpected grand mal seizure. He had not experienced an attack of this nature for at least six *478 years. On these facts, the burden being on the defendant to establish contributory negligence, I would hold that the plaintiff continued to be an invitee and was in a position comparable to the user of a public highway who inadvertently fell into an adjacent area. The engineer and the railroad owed him a duty to operate its dangerous instrumentality with reasonable care so as to avoid causing the plaintiff injury.
The jury charge contained numerous prejudicially erroneous instructions in which the trial court assumed the plaintiff was a trespasser. A few illustrations demonstrate the point. The trial court stated a railroad's engineer is "not responsible for the safety of a person who trespasses on the railroad track"; the railroad "employees have a duty to exercise reasonable care to avoid injuring a trespasser when the victim is actually discovered in a position of peril" (emphasis supplied); the engineer has a "right to assume that a person on a track will leave it in time to avoid a collision"; "the engineer owes no duty to a trespasser until his peril is discovered"; the engineer is bound "to only exercise reasonable and ordinary care to avoid injuring trespassers after he has discovered them to be imperiled" (emphasis supplied); the engineer is not liable if "after becoming aware" (emphasis supplied) of the physical condition of the injured person, he uses all reasonable efforts to prevent an injury; the engineer is not required to slacken speed or stop after having given a signal to a person on the track; when a person is discovered on the track, the engineer is under a duty to exercise due care, but it is not negligence if the engineer fails to take precaution where it is impossible to do so after the person's peril has been discovered; where a person has been discovered in a position of peril on the tracks, the engineer must use all reasonable means to avoid an accident. These references made it clear to the jury that the engineer's duty did not arise until after he discovered the plaintiff on the track.
Putting aside the question whether the plaintiff was an invitee or licensee and assuming his status was that of a trespasser, the trial court's charge conflicted with the principle *479 that a possessor of land who has reason to be aware of a trespasser's presence should carry on activities with reasonable care for the trespasser's safety. Thus, the engineer was not entitled to assume that the obstruction on the track was not a human being and the trial court erred in stating that his duty of due care did not arise until after he was aware that a person was on the track. The charge also conflicted with the principle, which I believe was appropriate, that the defendant was obligated to operate the train with reasonable care, including the exercise of reasonable care to discover his presence on the track. So, irrespective of plaintiff's status, the jury instructions were erroneous on a crucial issue.
I also agree with the majority that the plaintiff should have been permitted under the circumstances to use the defendant's interrogatory answers against both defendants and that the trial court should have consulted counsel before reading portions of the transcript to the jury.
Justice PASHMAN joins in this opinion.
PASHMAN and SCHREIBER, JJ., concurring in the result.
For modification and affirmance Chief Justice WILENTZ and Justices SULLIVAN, PASHMAN, CLIFFORD, SCHREIBER and HANDLER 6.
For reversal None.
NOTES
[1] This assumes that the licensee is not fully aware of the activity. Restatement, Torts 2d, § 341 at 207-08.
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367 A.2d 119 (1976)
ORDER OF AHEPA, a/k/a American Hellenic Educational Progressive Association, Inc., Appellant,
v.
TRAVEL CONSULTANTS, INC., Appellee.
No. 9386.
District of Columbia Court of Appeals.
Argued June 22, 1976.
Decided December 20, 1976.
Amended Petition for Rehearing Denied February 9, 1977.
*120 Joseph J. Lyman, Washington, D.C., for appellant.
John Ellsworth Stein, Washington, D.C., with whom Stuart D. Halpart, Washington, D.C., was on the brief, for appellee.
Before FICKLING, KERN and YEAGLEY, Associate Judges.
YEAGLEY, Associate Judge:
Travel Consultants, Inc. (TCI), appellee, sued the Order of American Hellenic Educational Progressive Association, Inc. (AHEPA), appellant, for breach of contract seeking $100,000 in liquidated damages. Following a jury determination of breach, the trial court entered judgment for the amount sought. We affirm.
Appellant, AHEPA, is a nonprofit, ethnic fraternal organization composed primarily of Americans of Greek descent, with a membership of approximately 22,000.
Appellee, TCI, is a travel agency engaged in the business of conducting travel services for various organizations holding *121 conventions and other group affairs. Its principal office is in the District of Columbia and it employs approximately 100 persons. The agency charges no fee to the organizations it services but rather works on a commission basis, receiving commissions primarily from the various airlines and hotels used by its clients.
In late 1968, AHEPA contacted TCI regarding travel arrangements for the AHEPA convention to be held in Greece in 1970.
The initial arrangements between the two, for TCI to handle travel arrangements to the 1970 convention, were cancelled and another travel agency was selected. However, not long thereafter, in December 1969, AHEPA changed its mind and again called upon TCI to perform the travel services for its 1970 convention since the agency previously chosen was not performing satisfactorily. At TCI's insistence, AHEPA provided TCI with written authority to make the necessary travel arrangements. After TCI had begun to act on this authorization, AHEPA instructed TCI to cease any further efforts on its behalf. In 1970, TCI filed suit for breach of this agreement in the local federal district court.[1]
On August 4 and 5, 1972, Sam Nakis, the president of AHEPA, David Randall, the president of TCI, and Richard Kendall, counsel for TCI, met to negotiate a settlement of the 1970 lawsuit. These negotiations culminated in the contract in issue. The pertinent provisions of this contract are as follows:
(1) The contract specified that to become effective, it would have to be ratified by the Supreme Lodge of AHEPA.
(2) TCI agreed to dismiss its 1970 lawsuit pending against AHEPA within a reasonable time after ratification by the Supreme Lodge.
(3) AHEPA appointed TCI as its exclusive agent to arrange and provide all travel services for AHEPA and its members for a term of five years, from January 1, 1973 to December 31, 1978. The provision of travel services was to include the "creation" and "design" of travel programs by TCI. AHEPA also granted TCI the exclusive right to make the travel arrangements for any Supreme Convention to be held by AHEPA before December 31, 1980. AHEPA was bound to accept only such programs as its officers believed could be successfully marketed, but was barred from allowing any other person or organization to perform any travel services for AHEPA without the consent of TCI.
(4) TCI was permitted to advertise its programs by purchasing space in the AHEPA magazine periodically distributed to the membership. TCI agreed that it would pay the same rates charged other advertisers by AHEPA. The parties, however, set a ceiling on advertising billings of three per cent of the gross amount of airplane tickets purchased by the participants in the travel programs arranged by TCI.
(5) AHEPA agreed to assist TCI in "promoting and permitting the promotion" of travel programs created by TCI.
(6) In the event of a breach, TCI could recover $100,000 as liquidated damages.
On August 20, the contract was ratified by the Supreme Lodge. On September 8, the newly-elected president of AHEPA, Dr. M. N. Spirtos, sent the following letter to TCI instructing it not to act pursuant to the agreement on behalf of AHEPA:
Gentlemen:
You are hereby notified that the contract allegedly executed by Mr. Sam Nakis with your company regarding travel arrangements for and on behalf of the Order of Ahepa is being further examined *122 by the attorney of our fraternity, as to whether or not same was executed with proper authority. Accordingly, you are not to act on behalf of the Order of Ahepa until further notice.
Very truly yours,
/s/
M. N. SPIRTOS, M.D.
Supreme President,
Order of Ahepa
David Randall, TCI's president, responded by a letter dated September 15 in which he expressed surprise at AHEPA's action and noted that any impasse should be resolved soon in order to allow TCI adequate time to plan travel programs for the following year. Randall stated also that he already had made plans to go to Greece to begin work on a travel program for AHEPA's membership.
On September 25, Dr. Spirtos and other AHEPA leaders met with Mr. Randall at TCI's offices in Washington. At this meeting, Dr. Spirtos indicated his concern that Mr. Nakis, AHEPA's former president, did not have the authority to make a contract for more than one year.[2] He advised TCI that it wanted a reduction in the term of the contract from five years to one year. There was also testimony that AHEPA's leaders pressed for alterations in the contract which would give the organization remuneration for travel advertisements in its magazine in an amount greater than that which it would receive under the contract.[3] The parties failed to agree to any modification in the contract and AHEPA did not rescind its order directing TCI not to proceed further under the contract.
On November 3, TCI dismissed the 1970 lawsuit as required by the contract. Two weeks later, Mr. Randall sent a letter stating:
Dear Dr. Spirtos:
Following up your letter of September 8, on which you told me not to proceed with our contract signed by Mr. Nakis and other AHEPA officials, we have had several conversations including conversations between your attorney and ours.
As I explained to you during our personal meeting, the contract for the yearly business of AHEPA is becoming less and less valuable as each day goes by in fact, at this point the value of it for this year has been almost eliminated, since we are virtually too late to organize an effective program for 1973.
As you know, we have dismissed our law suit in accordance with our contract, and thus we feel that we have performed in accordance with our contract with AHEPA. Thus, unless we have your full authority to proceed in accordance with the signed contract or an acceptable alternate in writing by December 11, 1972, we will have no choice but to consider that the contract has been breached *123 by AHEPA and will have to proceed through whatever legal means are available to us to seek satisfaction.
Kindest regards,
TRAVEL CONSULTANTS, INC.
/s/
DAVID A. RANDALL
President
Appellant admits in its brief that it did not respond to this letter.
On December 22, 1972, TCI filed this suit in the United States District Court for this jurisdiction for breach of contract. Pursuant to the provisions of the Court Reorganization Act,[4] the case was certified to the Superior Court.[5]
The issue of whether or not AHEPA had breached the contract was tried before a jury. At the close of the appellee's evidence and again at the close of all the evidence, appellant moved for a directed verdict. Both motions were denied. Appellant also made a motion for leave to amend its answer to include the defense of illegality. This too was denied. The trial court determined as a matter of law that the contract was valid and submitted only one question of fact to the jury: whether the appellant breached the contract. The jury found that a breach had occurred. The court concluded as a matter of law that the liquidated damages clause was valid and entered a judgment for $100,000 with interest from January 1, 1973, for appellee. After the entry of judgment, appellant moved for judgment notwithstanding the verdict, or, in the alternative, for a new trial. Both motions were denied and this appeal followed.
Appellant presents the following issues for our consideration: (1) whether the trial court abused its discretion in denying appellant leave to file an amended answer to interpose a defense of illegality of the contract; (2) whether there was insufficient evidence of a breach to permit the question to go to the jury; (3) whether the agreement is invalid for lack of consideration; (4) whether appellee waived the alleged breach; and (5) whether the liquidated damages clause is valid and enforceable.
I.
Appellant contends first that the trial court improperly denied its motion for leave to file a "Fourth Amended" answer under Rule 15 of the Civil Rules of the Superior Court in order to raise the defense that the contract was illegal as against public policy. The court previously had granted appellant three motions to amend. The challenged motion was first made orally at the close of the plaintiff-appellee's evidence. Appellant's defense, which Rule 8(c) requires to be pleaded affirmatively, is that the contract is tainted with illegality by paragraph 4(c) which provides that fees for advertising in AHEPA's magazine "shall be paid by TCI at the time it receives its commission payments for the travel program * * * up to three per cent (3%) of the gross amount of air transportation tickets paid for by participants in the travel programs * * *." Such payments, appellant urges, would constitute an illegal rebate of air transportation fares in violation of federal statutory provisions and regulations. Federal Aviation Act of 1958, 49 U.S.C. §§ 1373(b), 1472(d) (1970); 14 C.F.R. §§ 207.43(c), 208.213(c), 212.43(c), and 214.33(c) (1975). In ruling on the motion, the trial judge remarked: "There has been nothing but one amendment after another. *124 It has to come to an end. You cannot prejudice the plaintiff. He has had no time to prepare." The judge noted also that appellant's counsel had little reason for delay in raising the defense of illegality since he had reviewed the contract for appellant prior to its signing and ratification in August of 1972. After the verdict, appellant made the same motion in writing. It again was denied.
Leave to amend is not granted automatically under Rule 15(a) but only where "justice so requires." The Supreme Court in Foman v. Davis, 371 U.S. 178, 182, 83 S.Ct. 227, 230, 9 L.Ed.2d 222 (1962), indicated that a court might properly refuse to allow an amendment to a pleading where it was evident that the amendment was accompanied by "undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments previously allowed, [or] undue prejudice to the opposing party". See also 3 J. Moore, Federal Practice ¶ 15.08[4] (2d ed. 1974).[6]
We conclude that the trial court did not abuse its discretion in denying the motion on the grounds that appellant previously had been given ample opportunity to cure any deficiency in its answer and that injecting the defense of illegality into the trial after the plaintiff-appellee had closed its case would be prejudicial.
Appellant's further reliance on Rule 15(b) is also without merit. That rule states in pertinent part that leave to amend should be granted "to reflect issues tried by the express consent of the parties". The record shows, however, that appellee vigorously objected to appellant's efforts to inject the issue of illegality into the proceedings. These objections are sufficient to dispel any notion that TCI consented to the belated introduction of this issue. See Gaines W. Harrison & Sons, Inc. v. J. I. Case Co., 180 F.Supp. 243, 248 (E.D.S.C.1960).
In addition to arguing that the court abused its discretion in not permitting defendant to amend its answer, defendant also argued that the contract (paragraph 4(c)) having been made in violation of a statutory prohibition is void and therefore unenforceable, citing Hartman v. Lubar, 77 U.S.App.D.C. 95, 96, 133 F.2d 44, 45 (1942). Appellant also raised this issue in its motion for a new trial. Rather than to leave a cloud over this decision as permitting the enforcement of an asserted illegal contract on a technicality that the defense had not been specially pleaded as required, we treat briefly with the merits of the issue.
It is abundantly clear from a reading of the contract that it does not call for a rebate of air fares. Paragraph 4(c) provides that the cost to TCI of advertisements it places in AHEPA's magazine shall be billed to TCI "in accordance with the magazine's normal rates to other advertisers". The amounts billed "shall be paid by TCI at the time TCI received commission payments for the travel programs and in an amount equal to up to three percent (3%) of the gross amount of air transportation tickets paid for by participants in the travel program, which amount shall in no event exceed the total amount of the bills submitted by AHEPA." It is not a promise to pay a percentage rebate but rather a promise to pay for advertising at regular rates not to exceed three percent of the cost of the tickets purchased in the program.
II.
Appellant next challenges the trial court's denial of its motions for directed verdict and judgment notwithstanding the verdict on the ground that there was insufficient *125 evidence of a breach of contract to permit that issue to go to the jury. In reviewing these rulings, we must look at the evidence in the light most favorable to appellee, the nonmoving party, and determine whether a reasonable juror could find in favor of appellee. See, e. g., Seganish v. District of Columbia Safeway Stores, Inc., 132 U.S.App.D.C. 117, 118, 406 F.2d 653, 654 (1968).
The evidence shows that Dr. Spirtos' letter of September 8, 1972, ordered appellee "not to act on behalf of the Order of Ahepa until further notice". It was shown also that subsequently appellant bargained for changes in the contract, specifically, a reduction in the duration of the contract from five years to one year and greater remuneration than would have been received from the advertising rates set by the contract. However, no modifications were agreed to. The evidence demonstrates also that until the filing of this suit, Mr. Randall repeatedly stressed to appellant that its refusal to permit TCI to begin planning travel programs was seriously undermining its ability to meet its contractual obligation to create and arrange a travel program for 1973. Also placed in evidence was a letter dated November 17, written by Mr. Randall to Dr. Spirtos requesting appellant to give TCI "full authority to proceed" under the original contract. Yet, AHEPA never lifted its order not to act.
Appellant argues that this evidence is capable of only one interpretation: that appellant sought only to discuss the possible modification of the contract. The evidence reveals nothing, it contends, which reasonably could be construed as an act of repudiation of the contract. We disagree.
For a repudiation of a contract by one party to be sufficient to give the other party the right to recover for breach, the repudiating party must have communicated, by word or conduct, unequivocally and positively its intention not to perform. See, e. g., Cooper v. Cooper, D.C.Mun. App., 35 A.2d 921, 924 (1944). The evidence shows that on September 8, appellant ordered appellee not to act under the contract on behalf of appellant. The evidence demonstrates also that during the following months, appellant pressed appellee to agree to changes in the terms of the contract. Moreover, the record reveals that although appellee stressed its need to get preparations underway for a travel program for 1973, appellant steadfastly refused to lift its order directing appellee not to so act. On the basis of this evidence, we believe that a juror reasonably could find that appellant breached the contract by repudiation. Therefore the issue of breach properly was submitted to the jury.
Appellant's third contention is that the agreement was flawed by lack of consideration or "mutuality of obligation" and that therefore the trial court erred in ruling as a matter of law that the agreement was a valid contract. Since in its view there was never a valid contract capable of being breached it contends the court should have directed a verdict in its favor or granted it a new trial. We disagree.
It is elementary that a promise either to do something a party otherwise is under no legal obligation to do, or to refrain from doing something a party has a legal right to do, is sufficient consideration for another such promise. See generally 1 Williston on Contracts, § 103 (3d ed. 1957). Appellant promised to appoint appellee as its exclusive travel agent for a period of five years including the right to handle the arrangements for the Supreme Convention, if held before the end of 1980. In exchange for this promise, appellee promised to dismiss with prejudice its pending 1970 lawsuit. Clearly, this exchange of bargained-for promises constitutes sufficient consideration.
Appellant contends fourthly that appellee waived appellant's breach of contract and that therefore the trial court improperly denied its motions for a directed verdict, *126 judgment notwithstanding the verdict, and new trial. The waivers occurred, it argues, (1) when appellee dismissed the 1970 lawsuit in November 1972 as contemplated by the contract; or (2) when Mr. Randall discussed prospective trips to Greece over the telephone with AHEPA's executive secretary sometime after receipt of the September 8th letter, or both. The record shows, however, that appellant did not present either of these issues to the court below in its answer or in any of the motions the disposition of which it challenges on appeal.[7] Nor did appellant request any jury instruction on the issue of waiver. Consequently, the issue is not properly before us and we decline to consider it on appeal. See, e. g., Germaine v. Cramer, D.C.Mun.App., 65 A.2d 573, 574 (1949); Brown v. Collins, 131 U.S.App.D. C. 68, 72, 402 F.2d 209, 213 (1968); Miller v. Avirom, 127 U.S.App.D.C. 367, 369, 384 F.2d 319, 321 (1967).
Finally, appellant contends the trial court erred in ruling that the liquidated damages clause[8] did not constitute a penalty and was therefore valid and enforceable. It argues that at the time the contract was made, there was no consideration by the parties of the reasonableness of the damages provision but that due to prior difficulties between the parties, the sum of $100,000 which it now claims to be excessive was stipulated solely as an in terrorem clause.
It is well-settled that parties to a contract may agree in advance to a sum certain to be forfeited as liquidated damages for breach of contract but that such agreement is void if it constitutes a penalty. See, e. g., Simms v. Bovee, D.C.Mun. App., 68 A.2d 800, 802 (1949); Davy v. Crawford, 79 U.S.App.D.C. 375, 376, 147 F.2d 574, 575 (1945); 5 Williston on Contracts § 776 (3d ed. 1961). The standard in this jurisdiction for determining whether a provision for damages should be construed as a penalty is set forth in Davy v. Crawford, supra.
In order to determine whether or not the provision should be construed as a penalty the contract must be construed as a whole as of the date of its execution. If under the circumstances and expectations of the parties existing at the time of execution it appears that the provision is a reasonable protection against uncertain future litigation the provision will be enforced even though no actual damages were proved as of the date of the breach. If, on the other hand, it appears that the stipulation is designed to make the default of the party against whom it runs more profitable to the other party than performance would be, it will be void as a penalty. Thus, damages stipulated in advance should not be more than those which at the time of the execution of the contract can be reasonably expected from its future breach, and agreements to pay fixed sums plainly without reasonable relation to any probable damage which may follow a breach will not be enforced. [79 U.S.App.D.C. at 376, 147 F.2d at 575 (footnotes omitted).]
*127 Having considered the evidence in light of this standard, we conclude that the trial court did not err in ruling that the provision is valid and enforceable. The evidence shows that at the time the parties contracted, it was difficult to establish precisely the amount of damages TCI would suffer in the event that AHEPA breached. Mr. Randall illustrated the difficulty by testifying that, for example, it was impossible to know with any certainty what air fares would be, how many members of AHEPA would participate in the various travel programs, or what level of commission the airlines would allow travel agents, over the term of the contract.
The evidence demonstrated also that the sum of $100,000 represented a reasonable estimate of the net profit which TCI could have expected to make under the contract at the time it was signed. Mr. Kendall, counsel for TCI at the time, testified that at the meetings between the parties on August 4 and 5, 1972, the liquidated damages provision was discussed and that the "figure of $100,000 was selected as a minimum amount and it seemed reasonable to all the people in the room." Mr. Randall and James A. White, an expert witness on group travel, testified regarding the profit which TCI could have made as exclusive agent to handle: (1) various travel programs for AHEPA over a five-year period, and (2) the Supreme Convention in Greece if one should be held prior to December 31, 1980. The uncontradicted testimony of Messrs. Randall and White showed that TCI would have been able to generate at least 35 flights to various destinations for the membership over the course of five years. Mr. Randall estimated on the basis of his experience in the travel business that the net profit from these flights would have been about $100,240. He testified further that an additional profit of approximately $300,000 to $400,000 could have been earned by TCI if a Supreme Convention had been held in Greece before the end of 1980.[9]
In sum, "the amount of the damages specified in the [contract] does not appear disproportionate, viewing the transaction as a whole, and certainly not more than what could have been expected from its future breach." Frishman v. Stonebraker, 295 F.Supp. 974, 977, aff'd per curiam, 133 U.S.App.D.C. 66, 408 F.2d 1269 (1969). Accordingly, we conclude that there was ample evidence to support the decision of the trial court that the provision was not a penalty.
For the foregoing reasons the judgment is
Affirmed.
NOTES
[1] Travel Consultants, Inc. v. Order of Ahepa, Inc., Civil No. 2512-70 (D.D.C., filed Aug. 12, 1970).
[2] Appellant raises no questions regarding the effectiveness of the ratification of the contract by the Supreme Lodge.
[3] In his testimony regarding the September 25 meeting, Dr. Spirtos equivocated about whether AHEPA sought greater remuneration. Mr. Randall, in contrast, testified that: "The thrust of Dr. Spirtos' conversation with me was that the present contract was unsatisfactory to him and his administration in that there was not enough financial benefit to AHEPA." Moreover, Louis Manesiotis, an official of the organization, testified that greater remuneration was AHEPA's "main concern" at the September 25 meeting. Mr. Kendall, counsel to TCI, testified that after TCI's receipt of the AHEPA's letter of September 8, he telephoned Joseph Lyman, counsel to AHEPA, to inquire about any problems AHEPA might have with the contract. According to Mr. Kendall, Mr. Lyman responded that "the problem was that the new officers of the AHEPA had determined that there was not enough remuneration in the arrangement for them."
[4] D.C.Code 1973, § 11-922(b), District of Columbia Court Reform and Criminal Procedure Act of 1970, Pub.L.No.91-358, § 111 (b) (July 29, 1970) (effective Feb. 1, 1971).
[5] In April 1975 appellant made a motion for summary reversal before this court on the grounds that the case improperly was certified to the Superior Court. We denied that motion on June 4, 1975.
[6] Superior Court rules are to be interpreted in light of the federal rules where the corresponding provisions are literally or substantially identical. See Campbell v. United States, D.C.App., 295 A.2d 498, 501 (1972).
[7] In these motions, appellant did raise the defense of waiver but premised the defense on a different set of facts than those relied on here. It argued below that AHEPA's agreement, after this suit commenced in 1973, to arrange a trip to Greece for a group of students connected with AHEPA constituted a waiver of AHEPA's breach of the contract in issue. The court rejected this argument and appellant does not raise it on appeal.
[8] The contract states in pertinent part:
No. 8 Liquidated Damages. AHEPA understands that this Agreement is in settlement of the above-mentioned lawsuit and further understands that under this Agreement TCI is undertaking to perform considerable services and activities at a substantial cost to TCI which can only be recovered out of its profits, if any; and, accordingly, AHEPA agrees that in the event it revokes the agency created hereby or in the event of a breach of this Agreement by AHEPA, AHEPA shall pay TCI the amount of $100,000 for loss of a bargain and not as a penalty.
[9] Mr. Randall based this estimate on the following facts: (1) TCI carried 6,100 members of the American Psychological Association to its convention in Hawaii in 1972 and made a net profit of nearly $250,000; (2) a larger net profit per passenger would be made of a trip to Greece than to Hawaii, and (3) at the time the contract was signed, TCI knew that in 1970 approximately 7,000 members of AHEPA had journeyed to Greece for the Supreme Convention.
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525 S.W.2d 222 (1975)
Esther Ritz LIPSHY, Appellant,
v.
Ben and Udys LIPSHY et al., Appellees.
No. 18596.
Court of Civil Appeals of Texas, Dallas.
June 12, 1975.
Rehearing Denied July 7, 1975.
*223 John E. Agnew, Carter, Jones, Magee, Rudberg, Moss & Mayes, Dallas, for appellant.
Elgar L. Robertson, John L. Hauer, Akin, Gump, Strauss, Hauer & Feld, Dallas, for appellees.
CLAUDE WILLIAMS, Chief Judge.
Esther Ritz Lipshy brought this action against her husband Bruce Arlen Lipshy, seeking a divorce, division of community property, and the appointment as managing conservator of their three minor children. Bruce Arlen Lipshy responded with a general denial and later filed a cross-action in which he sought to be appointed managing conservator of the children. Subsequently, Ben and Udys Lipshy, the paternal grandparents of the children, intervened and sought to be appointed managing conservators. In her notice of appeal, Esther Ritz Lipshy specifically limits the scope of her appeal to the jury's verdict and entry of judgment by the court concerning custody of the minor children.[1] In her first two points of error, petitioner contends that the trial court erred in allowing the intervenors and respondent six peremptory challenges each. Before considering these points of error brought forward by petitioner, it is necessary to resolve a preliminary matter presented by the intervenors. Intervenors now take the position that petitioner is estopped from attacking the "composition or integrity of the jury as she has attempted to do so in her points one, two and three of her brief, for the reason that she has accepted the benefits of all portions of the verdict and the judgment based thereon other than special issues nine and ten of such verdict [regarding custody of the children]." We cannot agree with intervenors and overrule their contention.
It is well settled that when a judgment is severable a litigant may accept the benefits which an adverse party concedes, or is bound to concede under the *224 judgment, and is not estopped to prosecute an appeal which involves only his right to further recovery. Carle v. Carle, 149 Tex. 469, 234 S.W.2d 1002, 1004 (1950). Issues relating to custody of children are severable from issues relating to the decree of divorce, division of property, and other matters. Esparza v. Esparza, 382 S.W.2d 162, 168 (Tex.Civ.App.Corpus Christi 1964, no writ); Phelps v. Phelps, 307 S.W.2d 956, 958 (Tex.Civ.App.San Antonio 1957, no writ, J. Pope); Powell v. Powell, 199 S.W.2d 285, 288 (Tex.Civ.App.Beaumont 1946, no writ); accord, Texas Employment Commission v. Brasuell, 235 S.W.2d 950, 952 (Tex. Civ.App.Eastland 1950, writ dism'd); Pritzen v. Pritzen, 197 S.W.2d 363, 366 (Tex. Civ.App.Beaumont 1946, no writ). A reversal of the judgment regarding managing conservator ship cannot affect her right to benefits already secured under the judgment. Although petitioner's points of error regarding the number of peremptory challenges allowed could affect the entire judgment rendered, she is not estopped from appealing a severable portion thereof. By electing to appeal from only the child custody judgment, it does not necessarily follow that petitioner is treating the entire judgment as both right and wrong. She could be dissatisfied with portions of the judgment and yet a not desire to appeal from these portions.
We now turn to a consideration of petitioner's points of error. As previously indicated, petitioner contends in points of error one and two that the trial court committed reversible error by allowing six peremptory challenges each to the respondent husband and intervening grandparents, while allowing petitioner only six peremptory challenges. We sustain these points.
Tex.R.Civ.P. 233 provides that "[e]ach party to a civil suit shall be entitled to six peremptory challenges in a case tried in the district court ...." This rule was supplemented by the enactment of Tex. Rev.Civ.Stat.Ann. art. 2151a (Vernon's Supp. 1974) which provides:
After proper alignment of parties, it shall be the duty of the court to equalize the number of peremptory challenges provided under Rule 233, Texas Rules of Civil Procedure, Annotated, in accordance with the ends of justice so that no party is given an unequal advantage because of the number of peremptory challenges allowed that party.
The Supreme Court has definitely held that whether a litigant is a party within the meaning of rule 233, so as to entitle him to separate peremptory challenges, depends upon whether his interests are, at least in part, antagonistic to other litigants in a matter with which the jury is to be concerned. Perkins v. Freeman, 518 S.W.2d 532, 533 (Tex.1974); Tamburello v. Welch, 392 S.W.2d 114, 116 (Tex.1965). The Supreme Court in Perkins, supra, pointed out that the existence of this antagonism is to be resolved not only on the basis of the pleadings of the parties but also from a determination of the interest of the parties from information which has been called to the attention of the trial court during pretrial procedures. The question of antagonism must be resolved in the light of the information which was presented to the trial court prior to the time of the exercise of the peremptory challenges and not by circumstances or events which may have transpired following that occasion. City of Amarillo v. Reid, 510 S.W.2d 624, 629 (Tex. Civ.App.Amarillo 1974, writ ref'd); accord, Perkins v. Freeman, 518 S.W.2d 532, 533 (Tex.1974). Petitioner argues that at the time the trial court made the decision to allow both respondent husband and intervening grandparents six peremptory challenges each, and only six peremptory challenges to her, that the interests of respondent and intervenors were not antagonistic to one another, at least in part, in matters that the jury was to be concerned with and, therefore, the trial court committed prejudicial error requiring reversal.
*225 While it is true that intervenors' pleadings indicate antagonism,[2] the pre-trial evidence presented to the trial court reveals clearly that there was no substantial antagonism between the intervenors and respondent. This conclusion is based primarily on several points.
(1) Intervenor Udys Lipshy, in her deposition, stated:
If Bruce [respondent] can't get custody then I want custody .... Because if I have custody, it's like Bruce having custody. He will be there day and night with those children, and you know it as well as I do .... Oh, I would love for their father to have custody of them, and if he can't, I want it, because he would have custody.
This testimony clearly reveals that intervenors primarily sought to have custody of the minor children awarded to the respondent, or, in the alternative, with the intervenors which would result in respondent having effective custody. Following the jury verdict, intervenor Udys Lipshy attempted to clarify her statement that "if I have custody, it's like Bruce having custody." However, as said in City of Amarillo v. Reid, supra, the issue as to the allowance of peremptory challenges is not to be determined by hindsight, and even if this particular statement had been clarified during pre-trial, it fails to negate the intervenors' primary concern which was the appointment of respondent as managing conservator.
(2) Respondent husband testified that he wanted custody of the children, but that if this were not possible then he hoped his parents would be appointed managing conservators. His primary concern was that the children should be raised in a "Lipshy environment" rather than under the influence of the petitioner and her family.
(3) At the time respondent filed his original answer to petitioner's action for divorce, he was represented by both attorneys Hauer and Robertson. Subsequently, when the intervenors decided to enter the suit, attorney Robertson withdrew as attorney for respondent and filed a petition for intervention on behalf of the grandparents. In the pre-trial testimony, it was revealed that respondent recommended and approved the intervenors' retention of Robertson as their attorney because the attorney was familiar and intrinsically involved with the lawsuit. This recommendation was made after respondent discussed with his father and mother their intervention in the case.
(4) After the trial court ruled that respondent and intervenors would each be allowed six peremptory challenges, petitioner asked the court that respondent and intervenors be instructed not to confer with each other regarding challenges which they were to exercise. During a discussion of this matter, respondent's attorney stated that "although we are antagonistic to one another, we have ... on common opponent, and that would be Mr. Carter [petitioner's attorney]. In other words, there is a three-party lawsuit, and it's to both our advantages to cut people [who] might favor Mr. Carter." This statement, in addition to the evidence previously set forth, clearly reveals that the respondent and intervenors were united in a common cause of action against the petitioner on the issue of custody of the children. Each sought to prevent petitioner from being awarded custody of the children. Once this intention was achieved, then the intervenors favored the appointment of respondent as managing conservator and, although respondent undoubtedly wanted to be appointed managing conservator, he would have been satisfied by the appointment of his parents.
*226 From the evidence that was before the court during pre-trial procedures, it is apparent to us that the relationship between intervenors and respondent, insofar as managing conservatorship is concerned, was not antagonistic and hostile to the extent that each of the parties was entitled to six peremptory challenges.
As stated by the Supreme Court in Perkins v. Freeman, 518 S.W.2d 532 (Tex. 1974), an award to the respondent and intervenors of double the number of peremptory challenges to which they were entitled is so materially unfair that a judgment cannot be upheld. Id. at 534. The right to strike a prospective juror for any reason that seems adequate to counsel is the very essence of the peremptory challenge. Jurors who are not prejudiced in a legal sense are frequently challenged because of their background, associations, appearance or demeanor. A litigant who is denied the right to challenge on that basis is deprived of a valuable means of "insuring that the controversy is decided by a jury those members are not predisposed by reason of temperament or prior experience to look with disfavor upon his side of the case." Tamburello v. Welch, 392 S.W.2d 114, 117 (Tex. 1965). This right can be especially important in divorce and child custody litigation where moral, cultural and religious Mores are often the basis for interpreting evidence and determining the issues presented. We hold that the action on the part of the trial court in awarding intervenors and respondent twice the number of jury challenges as that awarded to petitioner was so materially unfair that petitioner was denied a fair trial. Accordingly, we sustain petitioner's points one and two and reverse and remand the case to the trial court on the issues of conservatorship.
In view of our action, it becomes unnecessary to pass upon or consider the remaining points presented by petitioner.
Respondent presents four cross-points of error. Two of these points attack the appointment of intervenors as managing conservators and the remaining two points contest the award of attorney's fees to petitioner. Petitioner argues that we should not consider respondent's cross-points for the reason that respondent failed to timely file his motion for new trial, notice of appeal or in any manner to effectively apprise the trial court of any objection or complaint he had with the judgment rendered. Without passing upon the merits of petitioner's contention,[3] we hold that respondent's cross-points three and four cannot be sustained. The first two points become immaterial in the light of our action in sustaining petitioner's first two points of error and reversing judgment on the issues of conservatorship.
In cross-points three and four, respondent asserts that the award of $45,000 to the petitioner for attorney's fees is violative of the Texas Equal Rights Amendment. We cannot agree.
It is well settled that in a divorce case, the trial court is clothed with wide *227 discretion in disposing of the community property of the parties, and such division will not be disturbed on appeal unless it is shown that the trial court abused its discretion by making an a unjust settlement between the parties. Allen v. Allen, 363 S.W.2d 312, 316 (Tex.Civ.App.Houston 1962, no writ); Eaton v. Eaton, 226 S.W.2d 644, 645 (Tex.Civ.App.Galveston 1950, no writ). The attorney's fee is but a factor to be considered by the court in making an equitable division of the estate, considering the conditions and needs of the parties and all attendant circumstances. Carle v. Carle, 149 Tex. 469, 234 S.W.2d 1002, 1005 (1950). Respondent has completely failed to demonstrate that the trial court's award of attorney's fee to petitioner was something other than a factor which the court considered in its division of the parties' community property. The fact that the $45,000 granted petitioner was listed separately from the division of the community asserts does not compel the conclusion that the award was based on the sex of the litigants. Although the practical effect of a decree that the husband pay all the wife's attorney's fees may be to award him less of the community estate than that awarded to the wife, this property division may be necessitated by such factors as disparate earning capacities, business opportunities and ability. Moreover, pursuant to the Texas Equal Rights Amendment, the Constitution of Texas, article I, § 3a, Vernon's Ann.St., these a factors may justify the recovery of an attorney's fee by the husband rather than by the wife. The amendment does not simply preclude recovery by a woman. Since respondent has not demonstrated that the attorney's fee awarded to petitioner was based on her sex, we find no merit in respondent's counterpoints.
The judgment of the trial court, insofar as it relates to the conservatorship of the three minor children involved, is reversed and remanded to the trial court for further proceeding.
Reversed and remanded.
NOTES
[1] Although petitioner has effectively limited the matters she may assert on appeal, her failure to serve notice upon respondent Bruce Arlen Lipshy within the fifteen-day period provided by Texas Rules of Civil Procedure 353(c) does not preclude respondent husband from presenting cross-points of error pertaining to matters not within the limitation imposed by petitioner. This right, of course, may be denied if respondent husband failed to properly preserve his error or errors in the trial court.
[2] Intervenors' pleadings provide,
Intervenors pray that ... it would be in the best interest of the children of the marriage of petition and respondent that the intervenors be appointed the managing conservators, and, in the alternative ... that they be appointed possessory conservators.
[3] Respondent's cross-assignments are based on the judgment rendered in compliance with the jury's answers to various special issues. Respondent did not file a motion for new trial or a timely notice of appeal but did generally except to the court's judgment. Tex.R.Civ.P. 324 provides that "[a] motion for new trial shall not be necessary in behalf of appellee where he does not complain of the judgment or a part thereof." If a litigent, however, is complaining of a portion of the judgment, which does not come within any of the provisions of rule 324 alleging the necessity for filing a motion for new trial, then he was waived the asserted errors. Nixon v. Nixon, 348 S.W.2d 438, 441 (Tex. Civ.App.Houston 1961, writ dism'd); Furrh v. Furrh, 251 S.W.2d 927, 934 (Tex. Civ.App.Texarkana 1952, writ ref'd n. r. e.); Edgar v. Schmidt, 243 S.W.2d 414, 417 (Tex.Civ.App.Austin 1951, no writ); Long v. Mooring, 183 S.W.2d 232, 233-34 (Tex. Civ.App.Austin 1944, no writ); WalkerSmith Co. v. Coker, 176 S.W.2d 1002, 1009 (Tex.Civ.App.Eastland 1943, writ ref'd w. o. m.). A general exception to the verdict would certainly not be an effective substitute for a required timely motion for new trial.
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525 S.W.2d 271 (1975)
Jo Carol McCLELLAND, Appellant,
v.
UNITED SERVICES AUTOMOBILE ASSOCIATION, Appellee.
No. 7711.
Court of Civil Appeals of Texas, Beaumont.
June 19, 1975.
Rehearing Denied July 24, 1975.
Mark Z. Levbarg, Levbarg & Weeks, Austin, for appellant.
Michael A. Wash, McKay & Wash, Austin, for appellee.
STEPHENSON, Justice.
This is an appeal from a take nothing judgment in an action by a minor child against her mother's automobile insurance carrier. Other plaintiffs are the minor's mother and stepfather, also a named insured in the policy sued upon. The plaintiffs will be referred to here by name, and the defendant, United Services Automobile Association, as U.S.A.A. Trial was before the court upon stipulations.
The stipulations are, in substance, as follows:
1. Plaintiff, Jo Carol McClelland, was injured while riding as a passenger in the Charles Coulter automobile.
2. The Coulter automobile was in collision with an automobile driven by an uninsured motorist, whose negligence was a proximate cause of the collision.
3. All plaintiffs were damaged in the amount of $19,000.
4. The Coulter automobile was covered by a policy of insurance containing an uninsured motorist provision and written by Allstate Insurance Company.
5. All plaintiffs settled their claims with Allstate for $9,000 and gave full releases.
6. Such settlement was made without written consent from U.S.A.A.
7. Jo Carol McClelland's mother was one of the named insureds in an automobile policy written by U.S.A.A. containing an uninsured motorist provision.
8. Both the Allstate and U.S.A.A. polices had coverage referred to as the standard uninsured motorist coverage in the amount of $10,000/$20,000.
9. Jo Carol McClelland was insured under the uninsured motorist clause of both policies of insurance.
*272 Plaintiffs' two points of error are that uninsured motorist coverage under the two policies of insurance is joint and several to the extent of plaintiffs' actual damages and that the policy provision in question is unauthorized by statute. These points are overruled.
U.S.A.A.'s defense in the trial court and here is that this claim is excluded by the provision in the policy sued upon, that the policy did not cover losses where a settlement had been made without its written consent. The statutory provision [Vernon's Tex.Ins.Code Ann. art. 5.06-1(3)] is as follows:
"In the event of payment to any person under the coverage required by this Section and subject to the terms and conditions of such coverage, the insurer making such payment shall, to the extent thereof, be entitled to the proceeds of any settlement or judgment resulting from the exercise of any rights of recovery of such person against any person or organization legally responsible for the bodily injury, sickness or disease, or death for which such payment is made."
The provision in the policy reads as follows:
"Exclusions. This policy does not apply under Part IV:
"(b) [T]o bodily injury to an insured with respect to which such insured, his legal representative or any person entitled to payment under this coverage shall, without written consent of the company, make any settlement with any person or organization who may be legally liable therefor."
This case is controlled by Grissom v. Southern Farm Bureau Casualty Ins. Co., 476 S.W.2d 448 (Tex.Civ.App.Waco 1972, writ ref'd n. r. e.). In the Girssom case, as in the case before us, the plaintiff was a passenger in an automobile which was in a collision with an uninsured motorist. There, also, plaintiff settled with the driver and the driver's insurance carrier, without the written consent of the carrier of the insurance upon plaintiff's own automobile. In Grissom, the trial court entered judgment for the insurance carrier, and on appeal the identical questions were raised as those facing this court. In a well-reasoned opinion, the appellate court held these provisions in the policy are plain and unambiguous and must be enforced as written.
In the case before us plaintiff made a settlement, without U.S.A.A.'s consent, with the driver of the automobile in which she was riding and his insurance carrier. Such settlement was with a "person or organization who may be legally liable."
The stipulation in the case before us was to the effect that the negligence of the driver of the uninsured motorist was a proximate cause of this collision. However, there is no stipulation that the driver of the car in which plaintiff was riding was not also negligent and his negligence a proximate cause of this collision. U.S.A.A. lost the right of subrogation against such driver, and we cannot say that was not a valuable right. See also Jessie v. Security Mutual Casualty Company, 488 S.W.2d 140 (Tex. Civ.App.Ft. Worth 1972, writ ref'd n. r. e.).
Plaintiffs cite Stephens v. State Farm Mut. Auto Ins. Co., 508 F.2d 1363 (5th Cir. 1975), in support of their position. In that case a similar situation existed as in the case before us, except an issue of waiver was before that court. That court turned its case solely on the issue of waiver, as indicated as follows:
"It is his [plaintiff's] contention (1) that his [plaintiff's] settlement with Royal at the full recovery limit of its policy did nothing to impair the subrogation rights of State Farm and therefore cannot be considered a settlement within the meaning of the clause as interpreted by the Texas courts and (2) that, at any rate, State Farm waived the consent requirement *273 by denying liability prior to his settlement with Royal. Since we are of the opinion that the consent requirement was waived, we do not pass upon the alternate ground."
Affirmed.
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525 S.W.2d 811 (1975)
Marie BOYLE, Appellant,
v.
COLONIAL LIFE INSURANCE COMPANY OF AMERICA et al., Respondents.
No. KCD 26563.
Missouri Court of Appeals, Kansas City District.
July 7, 1975.
Motion for Rehearing and/or Transfer Denied August 5, 1975.
Application to Transfer Denied September 8, 1975.
*813 Donald E. Raymond, Kansas City, for appellant.
Lawrence M. Berkowitz, Kansas City, for respondent Colonial; Stinson, Mag, Thomson, McEvers & Fizzell, Kansas City, of counsel.
Don B. Roberson, Kansas City, for respondents Davis; Shugart, Thomson & Kilroy, Kansas City, of counsel.
Before PRITCHARD, P. J., and SWOFORD and SOMERVILLE, JJ.
SWOFFORD, Judge.
This is an action brought by the widow of one Ernest Boyle, in three counts, in each of which she claims the proceeds of certain life insurance policies issued by the respondent Colonial Life Insurance Company of America (hereinafter called "Colonial") insuring the life of the said Ernest Boyle and in which the appellant was named beneficiary. She alleges that such policies were in full force and effect at the time of her husband's death on July 24, 1969.
These counts on the insurance policies were joined with a fourth count wherein the appellant, pleading in the alternative, sought damages in the amount of the insurance policies against the Herb Davis Insurance Agency, Inc. and Herb Davis individually (herein referred to collectively as "Davis"). Basically, this fourth count was bottomed upon allegations of negligence in failing to keep such life insurance in force in accordance with an agreement between Davis and the Boyles.
Colonial filed its answer to the petition, wherein it admitted the issuance of said insurance contracts, but set up as a defense the alleged fact that each of said insurance contracts "was lapsed and forfeited for nonpayment of premiums at the time of the death of Ernest W. Boyle."
Davis filed a joint and separate answer to the petition, admitting that Herb Davis is a "duly licensed insurance agent" of Colonial and the issuance of the insurance contracts, but generally denying the allegations of Count IV of the petition and further alleging that if the policies sued on "were not in force and effect" then Colonial "is estopped to deny their issuance and the coverage" thereunder. Coupled with this answer, Davis filed a cross-claim against Colonial in two counts. This cross-claim asserts that if Davis is held liable to appellant, Davis is entitled to indemnity for such loss and recovery from Colonial because of Colonial's wrongful conduct in several particulars by reason of its handling of such policies and its failure to notify either Davis or the insured of any lapse.
Colonial filed its answer to the Davis cross-claim, in the nature of a general denial. Coupled with this answer, it in turn filed its cross-claim against Davis admitting that at all times mentioned, "Davis and The Agency were the duly authorized agents of Colonial Life". Liability on the insurance contracts was again denied, but if such was found to exist, Colonial asserted it was entitled to indemnification from Davis because in arranging financing of the insurance premiums and in accepting premium payments on the insurance, Davis acted outside the scope and contrary to his authority as agent of Colonial and negligently failed to pay the premiums due on said policies in September, 1968.
The Davis reply to Colonial's cross-claim was in the nature of a general denial.
The appellant filed a reply to Colonial's answer, in which she set forth the whole legal and factual theory of her action on the policies. These allegations need not be set out in detail but may be thus summarized: first, by reason of Colonial's lapsing the policies prior to its insured's death for alleged failure to pay the premiums due for *814 the period from September, 1967 to September, 1968 (which premiums had in fact been paid), the insured was relieved and excused from any obligation to pay further premiums, and since Colonial had asserted the same reason for its denial of the death claims, it is estopped to refuse payment for the asserted failure to pay any subsequent premiums; second, that the original wrongful lapse of the policies by Colonial caused appellant to expend time and attorneys' fees to prove that the action of lapsing the policies was wrongful and Colonial is estopped to assert any other or different defenses to appellant's claims; third, that Davis was clothed with the actual and apparent authority as agent for Colonial to make arrangements for the financing of the premiums with the insured, to accept premium payments on behalf of Colonial, and that it was the custom and practice of Colonial to give its soliciting agent and its insured notices of premiums due and lapse notices, which it had failed to do, and is thus estopped and precluded by such failure; fourth, that the premiums due for the period of September, 1968 to September, 1969, had in fact been paid to Colonial by the execution of the financing papers (invoice contract) in July, 1968; fifth, that the premiums for the period from September, 1969 to September, 1970, had been paid to Colonial, acting through its agent Davis, and Colonial is therefore estopped to assert nonliability because of nonpayment of premiums due prior to September, 1969.
With the issues thus drawn, the cause proceeded to trial, and at the conclusion of appellant's evidence the trial court sustained motions for directed verdicts as to both Colonial and Davis. The trial court, so far as the record shows, stated no reasons for this action. After an unavailing motion for a new trial, appellant perfected this appeal.
The action of the trial court in granting the motions for directed verdicts at the close of the plaintiff's evidence is a drastic one and "should be done only when all of the evidence and the reasonable inferences to be drawn therefrom are so strongly against plaintiff that there is no room for reasonable minds to differ." McCarthy v. Wulff, 452 S.W.2d 164, 168[3] (Mo.1970); Smith v. Prudential Insurance Company of America, 300 S.W.2d 435, 440[3] (Mo.1957); Baumle v. Smith, 420 S.W.2d 341, 344[3] (Mo.1967); Wehrkamp v. Watkins Motor Lines, Inc., 436 S.W.2d 698, 700[1] (Mo. 1969).
Another principle of law firmly implanted in this state is, that in a suit to collect the proceeds of a life insurance contract, the plaintiff makes a prima facie case by proving the issuance of the policy by defendant, payment of one premium, beneficiary designation, death of insured, demand for payment, and refusal thereof. Connor v. United Insurance Co., 313 S.W.2d 222, 224[5] (Mo.App.1958); Saunders v. Crusader Life Insurance Company, 421 S.W.2d 563, 567[5] (Mo.App.1967).
Equally well defined in law is the fact that affirmative defenses to suits upon insurance contracts, including the defense of lapse and forfeiture for nonpayment of premiums, as is asserted in the case at bar, must be pleaded, Connor v. United Insurance Company, 313 S.W.2d 222, 225[6] (Mo. App.1958), and the burden of proof on such issue is on the defendant, Stout v. Independent Order of Foresters, 115 S.W.2d 32, 35[3] (Mo.App.1938); Clair v. American Bankers Ins. Co., 137 S.W.2d 969, 973[7] (Mo.App.1940); Saunders v. Crusader Life Insurance Company, supra, and such burden remains with the defendant throughout the case, Gennari v. Prudential Insurance Company of America, 335 S.W.2d 55, 60[2] (Mo. 1960).
Once the plaintiff has established his prima facie case, it is the ancient and general rule that his case cannot be taken from the the jury "for he has the right to have the jury pass on the credibility of the defendant's witnesses and the weight of their testimony", Peterson v. Chicago & A. Ry. Co., 265 Mo. 462, 178 S.W. 182, 187-188[3] (1915); Smith v. Prudential Insurance Company *815 of America, 300 S.W.2d 435, 440[3] (Mo.1957). In Smith, the court notes an exception to this general rule and states it in these terms (l.c. 440):
"* * * When the proof is documentary, or the defendant relies on the plaintiff's own evidential showing (or evidence which the plaintiff admits to be true), and the reasonable inferences therefrom all point one way, there is no issue of fact to be submitted to the jury. * * *" (Emphasis supplied)
In the case of Thrower v. Life and Casualty Ins. Co. of Tennessee, 141 S.W.2d 192 (Mo.App.1940), the court declared, l.c. 195[4, 5]:
"The burden of proving the affirmative defense pleaded by defendant was upon defendant. * * * It is the established rule in this State that, where plaintiff has made out a prima facie case, it is beyond the power of the trial court to direct a verdict in favor of defendant where defendant has the burden of establishing an affirmative defense, unless such defense is conclusively established by evidence which is conceded by plaintiff to be true, or is established by documentary evidence which is of such a character as to be binding upon plaintiff and thereby to estop him from denying it." (Emphasis supplied)
In reviewing the action of a trial court in ruling on defendant's motion for a directed verdict (whether ruled at the close of plaintiff's evidence or at the close of all the evidence, and whether sustained or overruled) the reviewing court must determine whether plaintiff made a submissible case, and in so doing, the plaintiff is entitled to the most favorable view of all the evidence and must be given the benefit of all favorable inferences to be drawn therefrom. Duke v. Missouri Pacific Railroad Company, 303 S.W.2d 613, 616[1] (Mo.1957); Willis v. Wabash Railroad Company, 377 S.W.2d 489, 492[1] (Mo.App.1964); Hale v. Kansas City Southern Railway Co., 363 S.W.2d 542, 543[1] (Mo.1963); Grissom v. Handley, 410 S.W.2d 681, 684-685[2] (Mo. App.1966).
An important corollary of this principle is that where a trial court has directed a verdict for the defendant at the close of plaintiff's evidence, the "plaintiff may urge any and all possible theories of liability, and, of course, if any one of them is valid the court erred in not submitting the case to the jury." Arbogast v. Terminal Railroad Association of St. Louis, 452 S.W.2d 81, 83[1] (Mo.1970).
It is under the searchlight of these guiding principles and within the restrictions that they impose, that the evidence in the trial court must be reviewed and tested.
There can be no doubt that the appellant made a prima facie case against Colonial. The three policies of life insurance sued on were offered and received in evidence as part of appellant's case. They show that they were all issued on September 1, 1967, based upon applications dated August 30, 1967, secured by Davis as agent for Colonial, and that the appellant was named as sole beneficiary. The fact that the insured died July 24, 1969 is not disputed nor the further fact that through Davis proper proof of death and claims thereon were submitted to Colonial and payment thereon refused under date of August 7, 1969 (P. Exh. No. 7) for the stated reason:
"Policies numbered 421696 and 421698 lapsed without value for non-payment of the premium due October 1, 1967. Policy number 421697 lapsed without value for non-payment of the premium due December 1, 1967."
Since Colonial's answer did not specify which premiums were not paid and resulted in the lapse and forfeiture by the appellant, in order to meet the burden placed upon her to make a prima facie case, appellant testified as to her initial dealings with Davis. She stated that she and her husband met with Davis in August, 1967, with reference to fire insurance on a building owned by them and from which her husband operated a TV and appliance business. In the course *816 of the preliminary dealings with Davis, it was agreed that he, Davis, would handle all of the Boyles' insurance in connection with Boyle's business, the residences owned by the Boyles, and various motor vehicles. It was also decided that Ernest Boyle would apply for the three life insurance contracts to protect the mortgages outstanding on three properties. Mrs. Boyle testified that she handled all of this kind of business detail for both herself and her husband. She had expressed her desire to Davis that the premiums on all of the policies under his stewardship be set up so that she could make one monthly payment rather than numerous payments throughout the policy periods, and that she would not receive premium notices. Davis stated that he "could arrange financing" and this was initially done by the appellant, giving Davis a check dated August 26, 1967 in the amount of $209.30 as a down payment to cover a month's finance payment on the various commercial policies and life insurance.
When the life insurance policies were received, two of them were set up on a monthly premium and one on a quarterly premium basis. Shortly thereafter, appellant began receiving premium notices on the life insurance, and she asked Davis the reason, since she understood that the financing was to be for all premiums and called for one monthly payment. Davis advised her that he would "take care of it" but that new forms would have to be signed. Accordingly, a new document was executed by Ernest Boyle on October 17, 1967, which was denominated "Invoice Contract" and which included annual premiums on the three Colonial Life insurance policies. On the same day this document was assigned by Davis to the City National Bank and Trust Company, and he received the proceeds therefrom. Thereafter, the Boyles received a monthly payment book from the bank and appellant made such payments to the bank totalling $1,146.73, and the "Invoice Contract" was marked "Paid" by the bank on July 12, 1968 and returned to the Boyles.
However, the appellant testified that in November or December, 1967, she began to get "lapse" notices from Colonial. Upon inquiry of Davis, he advised the appellant that the company (Colonial) probably had not gotten the papers "all straightened up yet" and that she should "Disregard it. It's all right, Marie; don't worry." Upon receiving such notices again in the first part of 1968, and again making inquiry of Davis, he told appellant that "They're still fouled up. Don't worry about it, Marie, I have taken care of it." He stated that he had "sent his check in" and had cancelled checks to show payment from the funds the Boyles had provided from the banking arrangement.
There is a complete absence of evidence, documentary or otherwise, that Davis did not receive the proceeds of the "Invoice Contract" from the bank to cover the annual premiums on the life insurance and other policies therein involved. The life insurance premiums were to cover the annual premiums from September 1, 1967 to September 1, 1968. Each of these policies contains the provision:
"PAYMENT OF PREMIUMS.All premiums are payable either at the company's home office or at any of its branch offices or to an agent of the company * * *" (Emphasis supplied)
Thus, it is apparent that Davis had specific authority to accept premium payments on behalf of Colonial. The appellant therefore met the burden placed upon her to establish the payment of the first premium. She, therefore, made a prima facie case against Colonial, as defined in Connor v. United Insurance Co., supra, and Saunders v. Crusader Life Insurance Company, supra, and the burden was upon Colonial to prove the claimed lapse and forfeiture for nonpayment of premiums under Stout v. Independent Order of Foresters, supra; Clair v. American Bankers Insurance Co., supra, and Gennari v. Prudential Insurance Company of America, supra.
*817 But Colonial strongly argues that the presumption that the policies were in force was not relied upon by appellant since she undertook to prove that the premiums due for the period of September 1, 1968 to September 1, 1969, had, in fact, been paid. Considering all the evidence and reasonable inferences to be drawn therefrom, this position cannot be accepted.
As above noted, the appellant in her alternative pleading of her cause of action in Count IV against Davis, basically takes the position that she and her husband had an agreement with Davis to handle all of the insurance involved and to arrange financing so that she could make one monthly payment and be relieved of all other details. She "checked the entire thing to Davis". It was her understanding that he was to keep the policies here involved in force by this means. She testified that Davis initiated the financing arrangements for the years 1968 and 1969, and it was her understanding that such were to be the same as the 1967 arrangements.
She stated that in July, 1968, at Davis' request, she signed a new financing form, "Invoice Contract", in blank. She assumed that the Colonial policies were included, although there was no specific discussion of them at that time. She was fortified in this belief by reason of the fact that she never received any premium or lapse notices on the Colonial policies after September 1, 1968, and learned nothing of the position of the company that the same had lapsed until after her husband's death in the communication of August 7, 1969, when her claims on the policies were denied. In this connection, it is of importance to again note that the basis for such declination was the failure to pay premiums due in 1967, which counsel for Colonial admitted in his opening statement had in fact been paid. Of further significance in this regard was the deposition testimony of Louis La Salle, Assistant Vice President in charge of Policy Accounting for Colonial, wherein he stated that the procedure of Colonial with reference to premiums was that first the regular premium notices are mailed to the insured. Twenty-one days after such premium is due, a reminder notice is mailed to the insured. Thirty-one days after the due date, a lapse notice is mailed to the insured, with a copy to the resident office. Between sixty and ninety days a form No. 362 and notification of lapse is sent to the resident office. Ninety days after the premium is due, a reinstatement form No. 250 RL is sent to the insured. These are the ordinary conservation procedures and the general policy of the company with reference to all policies as routine, and the three policies here involved would ordinarily be subject to the same conservation procedure. Appellant testified that the Boyles did not receive any of these communications.
Davis collected the down payment on the premiums for September, 1968 to September, 1969, in the amount of $214.60; on July 27, 1968, she received a payment book from the bank and had no knowledge that the Colonial policies had not been included on the "Invoice Contract" until she received the document marked "Paid" from the bank.
Davis assured her that these Colonial premiums had been paid, and of further significance as to the alternate cause of action against Davis is the statement in the letter dated August 19, 1969, from Colonial to counsel for appellant, that the records of the company showed that the policies had lapsed as of September, 1968 because the 1968 premium had not been received, and further stating:
"Mr. Davis, the broker under these policies, wrote to us in August indicating that the premiums were financed for the year 1967 and 1968. There was no question that our insured paid the annual premium due in 1967, but Colonial Life never received payment due in 1968. We were informed that our insured had taken a loan to pay these premiums, and while we have not received the moneys, we have asked Mr. Davis to forward us a copy of the loan agreement or the check *818 payable to Colonial. We requested this information yesterday and to date have not heard from Mr. Davis. On the basis of our records we have no alternative but to deny payment at this time. * * *"
It should be further noted that at the time the above letter was written, Davis had made premium financing arrangements with the Boyles on July 17 and 18, 1969 for the financing of the premiums, including the three Colonial policies, for the year September 1, 1969 to September 1, 1970, and the appellant had made a payment thereon to the Commerce Trust Company at Kansas City.
The appellant stated that in the light of her transactions with Davis, and his assurances to her that the September, 1968 premiums had been paid, she "assumed" that such was the case. It is clear that this evidence was directed to Davis in support of appellant's alternate cause of action against him. It was proof that Davis either violated his agreement with the Boyles to keep the three Colonial policies in force by the financing arrangements by not including them, or that he did in fact receive the 1968 premiums from a financing source, or paid them by other means, such as adjustment of his agent's accounts with Colonial. It was entirely outside either appellant's competency or obligation to establish any of these latter facts, and she did not attempt to do so and thus assume the burden sought to be imposed upon her by Colonial and lose the benefit of the presumption which arose as to her cause of action against Colonial. The case of LePage v. Metropolitan Life Insurance Company, 314 S.W.2d 735 (Mo.1958), relied upon by Colonial, is not persuasive toward any other conclusion.
Another factor worthy of note is that the pleaded defense that Davis acted outside the scope of his authority is not shown by the record. He was admittedly an agent of Colonial who took the applications for the life insurance on Colonial forms, he was specifically clothed with the authority to receive premium payments under the terms of the policies, and nothing appears that he lacked at least apparent authority to arrange financing of premiums, change the periods when the premiums would be due, transmit at least the net premiums to the company, or do any other acts necessary to maintain the policies in force, including extension of credit. In the absence of fraud on the part of the agent and the insured, the company was bound by his acts, contracts or representations which are within his real or apparent authority. When limitations upon such authority "are unknown to the other contracting party, `apparent authority is equal to real authority'". Baker v. St. Paul Fire and Marine Insurance Company, 427 S.W.2d 281, 285-286[2, 3] (Mo.App.1968); Chailland v. MFA Mutual Insurance Company, 375 S.W.2d 78, 82[7] (Mo. banc 1964); Travelers Indemnity Company v. Beaty and Missouri State Highway Commission, 523 S.W.2d 534 (Mo.App. 1975).
The able briefs of counsel suggest other complicated areas of fact and law which cannot be determined and need not be discussed here, and thus extend the already burdensome length of this opinion. The conclusion reached is that the court erred in sustaining the defendants' motions for directed verdicts at the close of appellant's evidence; that she made a submissible case against Colonial on Counts I, II and III, and against Davis on her alternative cause of action in Count IV; and that justice can be done to the parties only by a full exposition of the relevant testimony, documents and records, and a determination of the fact issues by a jury under applicable legal principles.
Accordingly, the judgment herein is reversed and the cause remanded for a new trial.
All concur.
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102 N.J. Super. 419 (1968)
246 A.2d 130
STATE OF NEW JERSEY, PLAINTIFF-RESPONDENT,
v.
FLEMING WOODARD, DEFENDANT-APPELLANT.
Superior Court of New Jersey, Appellate Division.
Argued June 17, 1968.
Decided July 8, 1968.
*421 Before Judges CONFORD, LABRECQUE and HALPERN.
Miss Susan T. Sinins, Assistant Deputy Public Defender, argued the cause for appellant (Mr. Peter Murray, Public Defender, attorney).
Mr. Alan Silber, Assistant County Prosecutor, argued the cause for respondent (Mr. Joseph P. Lordi, Essex County Prosecutor, attorney).
*422 HALPERN, A.J.S.C. (temporarily assigned).
Defendant appeals from a judgment of conviction for armed robbery. He bases his appeal on four grounds: (1) the court erred in allowing testimony by the State's witnesses identifying defendant before and at trial, the circumstances attending the out-of-court identification being such as to deprive him of a fair trial and a denial of due process; (2) the court erred in refusing to permit defendant to call an alibi witness; (3) the court erred in its supplementary instructions to the jury, and (4) his assigned counsel (not the present counsel on appeal) was so incompetent as to deprive him of the effective assistance of counsel.
The State's proofs indicate that about 3 P.M. on April 27, 1967 an armed robber entered the offices of the Atlantic Manufacturing Company in Newark, New Jersey, held up and robbed its executive vice-president, Joseph Skopaz, and an employee, Minerva Almodovar, and escaped with the sum of $716. The robber was not masked and stood five or six feet from the victims. Skopaz testified he was close enough to the robber so that he could count the bullets in the gun. In addition there was a short exchange of conversation between the victims and the robber. The victims furnished the police with the license number and make of the get-away car and a description of the robber.
Identification of Defendant
The day following the robbery the police showed the victims four photographs of different persons, but they were unable to identify the robber. That same day, the police paraded two men about an hour apart, on the sidewalk some seven feet in front of the Atlantic offices, while the victims peered through the slats of venetian blinds. They were unable to identify the first man. They did immediately identify defendant as the second man. Mrs. Almodovar said defendant was handcuffed to a policeman. Skopaz did not remember whether he was handcuffed. A detective testified he *423 thought the defendant was handcuffed but not to another policeman, and that the handcuffing was concealed. For purposes of this opinion we assume defendant was handcuffed in a manner apparent to the identifying witnesses.
Both victims made positive identifications of the defendant at the trial. Skopaz further testified that his identification was based on what he remembered from the robbery and was not influenced by the out-of-court identification.
Defendant objected to the State's identification testimony on the ground that the circumstances attending the out-of-court identification were such as to violate his right to counsel, both under the rule of Miranda v. State of Arizona, 384 U.S. 436, 86 S.Ct. 1602, 16 L.Ed.2d 694 (1966), and that of Wade v. United States, 388 U.S. 218, 87 S.Ct. 1926, 18 L.Ed.2d 1149 (1967). In the course of the colloquy between court and counsel it was clear defendant had in mind, in addition to the absence of counsel at the time of the identification, that the circumstances surrounding the identification were so unfair as to taint the in-court identification. This was based on the reasoning in Wade, supra, that an out-of-court identification made under circumstances suggestive to the witnesses of the belief of the police that the suspect being exhibited is the guilty party has a tendency to cause the witnesses to rely upon that identification rather than the observation made at the time of the criminal occurrence, when identifying the defendant in court (388 U.S., at pp. 232-237, 87 S.Ct. 1926).
The trial court apparently did not recognize the thrust of the latter feature of the defendant's objections. It did not rule on it. It did rule that the Miranda objection was not applicable because the focus of the investigation had not yet sufficiently concentrated on defendant (defendant has not relied upon Miranda on this appeal and we do not discuss the point any further). It further held that the right of a defendant to counsel at a lineup was not applicable in this case because the out-of-court identification had occurred prior to the decision of the Wade case on June 12, 1967. See Stovall v. Denno, 388 U.S. 293, 87 S.Ct. 1967, 18 *424 L.Ed.2d 1199 (1967). However, it did rule that there was sufficient indication of possible unfairness in the circumstances surrounding the out-of-court identification as to warrant the excluding of the out-of-court identification on the basis of Rule 4 of the Rules of Evidence (1957) (prejudicial danger outweighing value of the evidence from a probative standpoint). Defendant declined to accept this offer, feeling that he ought to have the evidence of the out-of-court identification in the record in order to attempt to convince the jury that the circumstances attending it were such as to taint the reliability of the in-court identification.
Notwithstanding the waiver of the court's offer, aforementioned, defendant never abandoned his position that the in-court identification by the victims should be barred because tainted by the circumstances surrounding the out-of-court identification. As already noted, this particular objection was never ruled upon by the trial judge. We construe Wade to hold that in such a situation the trial judge should make his own determination as to whether, given an unfair prior confrontation for identification, the State can "establish by clear and convincing evidence that the in-court identifications were based upon observations of the suspect other than the [out-of-court] identification" (388 U.S., at p. 240, 87 S.Ct., at p. 1939); People v. Ballott, 20 N.Y.2d 600, 286 N.Y.S.2d 1, 233 N.E.2d 103 (Ct. App. 1967).
Undoubtedly the parading of defendant before the two victims, whether handcuffed to a detective or handcuffed and accompanied by a detective, constituted a confrontation violative of elementary principles of fairness in out-of court identification. See Wade, supra, 388 U.S., at page 234, 87 S.Ct., at page 1936, referring to the method of identification employed in Stovall v. Denno, supra, where the suspect was presented to the witness alone, handcuffed to police officers, as representing "a situation * * * clearly conveying the suggestion to the witness that the one presented is believed guilty by the police."
*425 In these circumstances we would ordinarily be inclined to remand the matter to the trial judge for a determination of the issue as to whether the totality of the circumstances establishes clearly and convincingly that the in-court identification was the independent product of the observation of defendant by the witnesses at the time of the robbery and not substantially contributed to by the circumstances of the out-of-court identification. In the present instance, however, the trial judge has passed away, and there is no opportunity to do this. Under the circumstances, we think it entirely consonant with the interests of justice for this court to consider whether the proof of record is sufficiently clear to enable us to make that fact determination, and we have decided that it is.
The closeness of the robber to the victim witnesses at the time of the robbery, and the added opportunity for carefulness of identification by the circumstance of some conversation between the robber and the witnesses, plus the positiveness with which Skopaz testified at the trial on cross-examination that the out-of-court identification did not contribute to his in-court identification but that the latter was derived entirely from his observations at the time of the robbery, satisfy us that it is clearly and convincingly established that the in-court identifications are not tainted by the circumstances of the out-of-court confrontation and identification. See also State v. Matlack, 49 N.J. 491 (1967) and Simmons v. United States, 390 U.S. 377, 88 S.Ct. 967, 19 L.Ed.2d 1247 (1968), where the United States Supreme Court was satisfied that notwithstanding a less than ideal pretrial identification of defendant from various photographs, the identification of defendant by the witnesses at the trial was such as to warrant a conclusion that there was no taint from the prior out-of-court identifications. The court stated that the in-court identification would be set aside only if the improper out-of-court identification was "so impermissibly suggestive as to give rise to a very substantial likelihood of irreparable misidentification." The court further concluded that in the circumstances of the case *426 before it there was little chance that the procedure utilized led to misidentification of defendant. The court noted that the robbery took place in the afternoon in a well-lighted bank and that the robbers wore no masks. This is closely comparable to the present facts.
The fact that the victims were shown four photographs with negative results and that prior to their out-of-court identification of defendant another individual was shown to them does not bear particularly on the issue we have to decide here one way or the other.
We thus conclude that on the record before us we are justified in finding as a fact that defendant was not prejudiced by being permitted to be identified in court by the victims of this robbery.
The Alibi Witness
Defendant contends the court erred in not permitting him to call an alibi witness, thereby depriving him of due process of law. The issue arose thusly: During the cross-examination of the State's last witness counsel conferred with the court out of the jury's presence. The discussion dealt with whether defendant would testify in his own defense in view of his prior criminal record. Defense counsel at that point, for the first time, indicated that if defendant decided to testify he wanted to call an alibi witness, even though defendant had failed to comply with R.R. 3:5-9 in not furnishing the data called for in the rule. Ultimately, defendant decided not to testify, so that his conditional request to offer an alibi witness was inferentially withdrawn.
In any event, R.R. 3:5-9 makes it discretionary with the court as to whether a noncompliance with its provisions will be waived. Considering the lateness of the application, the failure of defendant to indicate who the alleged alibi witness was or that he was even available, the court's refusal to waive the provisions of the rule was a sound exercise of his discretion. To have waived the provisions of the rule, at that point in the trial, would have been highly unfair *427 and prejudicial to the State and an adjournment to allow the State to investigate the witness, and the information furnished, would not have cured this eleventh hour application. State v. Baldwin, 47 N.J. 379 (1966); State v. Garvin, 44 N.J. 268 (1965).
Supplementary Instructions to Jury
Defendant urges two issues of alleged error which occurred after the jury had retired to consider its verdict. They will be dealt with separately.
About an hour after the jury retired it asked to see the notes used by Detective Farley to refresh his recollection. The court denied the request telling the jury the notes had not been marked in evidence but only for identification, and therefore the jury could not have them. Defendant objected to this supplemental charge. He contends it may have misled the jurors to disregard any discrepancies they may have found to exist between the notes and Farley's testimony. This is a very nebulous objection and presupposes that the jury, when it made its request, had decided there was or might be some discrepancy. We should not be called upon to speculate. The supplemental instruction given was legally correct and, when considered in the light of the original charge, informed the jurors that they were the sole judges of the facts, and that "any views of mine are totally irrelevant, and it is your recollection of the evidence and your determination of the issues of the facts which will control." Reading the original and supplemental charges as a whole, the jury could not have been misled. If it was error not to charge as requested by defendant, it was harmless error.
The jury returned a second time and posed the following question:
"Agreement has been reached that a witness was 100 percent sure in his/her own mind when identifying a defendant. Does it follow that the jurors are bound to accept the identification as correct?"
*428 The court immediately gave the following supplemental charge to the jury:
"Now, the court cannot specifically help you in the determination of who to believe and where the truth lies. It is up to you to decide that.
If a witness testifies that he or she made this identification, it is up to you to decide whether or not to believe that witness and whether that is enough evidence to convict or acquit this defendant I should say not acquit, but convict. You must decide after weighing the evidence, after weighing the credibility of each witness, whether or not you feel that the State has sustained its burden of proving this defendant guilty beyond a reasonable doubt.
In the search for the truth, you will consider what the witnesses said on the stand, and the impression they made upon you in the giving of their testimony as to truthfulness. You will consider the interest that they may have in the outcome of the case, and, in general, use your good common sense and experience in reaching a conclusion as to where the truth lies in this prosecution.
So, therefore to specifically answer this question, you are not bound to accept the testimony of anybody if you don't want to; but, if you are satisfied that they are telling the truth, and after weighing it and deciding that they are telling the truth and you are satisfied that the State has proven the defendant guilty beyond a reasonable doubt, then you must, of course, convict.
On the other hand, if after you have heard the testimony, and even though there is this 100 percent identification as is characterized by you in this note, you still feel this man is not guilty beyond a reasonable doubt, then you must acquit him.
Now, you may return to your deliberations."
No objection was made by defendant to this supplemental charge. He now contends it was inadequate in that the jurors "might have retired with the impression that if they believed the witness was telling the truth as he or she knew it that they were bound to accept the testimony."
We are again asked to speculate on what the jury might have done. Considering the original charge and this supplemental charge made in response to the last question, it is highly improbable that the jury retired under the impression that it necessarily had to believe a witness who was "100 percent sure" of the identification made. Counsel for defendant must have come to the same conclusion since he did not object to the supplemental charge. Having failed *429 to object, we should not reverse unless we find plain error to exist. State v. Hipplewith, 33 N.J. 300, 315 (1960). No such plain error exists here.
Ineffective Assistance of Counsel
Defendant contends he was ineffectively represented in that trial counsel did not move, before trial, to suppress evidence of the out-of-court identification; failed to properly argue the law on the admissibility of the identification testimony; failed to adequately explain to defendant the consequences of his waiving the court's contemplated ruling on the exclusion of the out-of-court identification, and failed to supply the State with the data called for under the alibi rule, all to defendant's prejudice.
A conviction, otherwise valid, will be reversed on appeal because of the ineffectiveness or inadequacy of counsel only if what he did, or failed to do, is of such magnitude as to thwart the fundamental guaranty of a fair trial. State v. Dennis, 43 N.J. 418 (1964). Putting it another way, to warrant reversal, defense counsel must have been so incompetent as to make the trial a farce or mockery of justice. Rivera v. United States, 318 F.2d 606 (9 Cir. 1963); State v. Bentley, 46 N.J. Super. 193 (App. Div. 1957).
We have examined and considered the entire record and find no justification or basis for the charges of ineffective representation. Defense counsel has been an active practitioner for about 40 years and his efforts on behalf of defendant indicate good trial preparation and technique. When experienced trial counsel adopts certain strategy in the trial of a case, and it turns out to be fruitless, such cannot be the basis for a reversal. State v. Williams, 39 N.J. 471, 489 (1963).
The conviction is affirmed.
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525 S.W.2d 431 (1975)
STATE of Missouri, Respondent,
v.
Melvin JACKS, Appellant.
No. KCD 27084.
Missouri Court of Appeals, Kansas City District.
March 31, 1975.
Motion for Rehearing and/or Transfer Denied May 6, 1975.
*432 Willard B. Bunch, Public Defender Sixteenth Judicial Circuit, Henri J. Watson, Asst. Public Defender, Kansas City, for appellant.
John C. Danforth, Atty. Gen., K. Preston Dean, II, Asst. Atty. Gen., Jefferson City, for respondent.
Before SOMERVILLE, P. J., PRICHARD, C. J., and TURNAGE, J.
SOMERVILLE, Presiding Judge.
This appeal stems from defendant's conviction by a jury of robbery in the first degree and imposition of a three year sentence.
No claim as to the sufficiency of the evidence having been raised, and no insufficiency appearing, a brief statement of facts will suffice. At approximately 6:30 P.M. on the evening of January 5, 1973, an off-duty detective employed by the Kansas City Police Department was walking to his car parked in a lot behind a tavern. The area was well illuminated by an "arc lamp" affixed to the top of a twenty foot pole. En route thereto the detective was approached by a man of the Negro race carrying a "sawed-off rifle" who demanded his money. Someone standing behind the detective removed his wallet, while the man carrying the "sawed-off rifle" seized his Smith and Wesson revolver. At defendant's trial the detective postively identified defendant as the man carrying the "sawed-off rifle".
Defendant impugns his conviction and sentence on the basis that the trial court *433 erred (1) in denying him a hearing on his motion to declare a mistrial and discharge the petit jury finally selected to try the case and (2) in not permitting him to introduce testimony at the trial that he agreed to and did submit to a polygraph examination.
After the petit jury was selected, but prior to the time it was sworn to try the case, defendant filed a motion to discharge the petit jury. Defendant alleged therein that the state used its peremptory challenges to strike all Negroes on the venire panel, thus excluding all Negroes from the petit jury, and that the state "systematically did so in case after case", thereby denying defendant equal protection of the law as guaranteed by the Fourteenth Amendment of the Constitution of the United States. The failure of the trial court to grant defendant an evidentiary hearing on his motion is the gravamen of his claim of error on appeal. Defendant relies on Swain v. Alabama, 380 U.S. 202, 85 S. Ct. 824, 13 L. Ed. 2d 759 (1965), as the embarkation point for his position. The venire, from which the petit jury which tried defendant was selected, contained four members of the Negro race. It stands undisputed that the state expended four of its peremptory challenges to strike them and that no member of the Negro race sat on the petit jury which tried and convicted defendant. Their removal by the state in this particular case, standing alone, was not constitutionally impermissible. Swain v. Alabama, supra, (1. c. 837, 85 S. Ct.). However, a systematic exclusion by the state, via peremptory challenges, "in case after case" of members of the Negro race who have been selected as qualified jurors and who have survived challenges for cause, with the result that no Negroes "over a period of time" ever serve on petit juries, presents a Fourteenth Amendment question that takes on "added significance". Swain v. Alabama, supra (1. c. 837, 85 S.Ct). The burden rested upon defendant to prove that selection of the petit jury in the instant case fell within the foregoing admonition. Swain v. Alabama, supra (1. c. 839, 85 S.Ct.). This reaches the crux of defendant's contention since, for all practical purposes, he claims that if afforded a hearing he could have met the burden of proof imposed by Swain. The record surrounding defendant's motion does not bear out his claim.
Mr. J. D. Williamson, Assistant Prosecuting Attorney of Jackson County, tried the case for the state. Defendant was present in court at all times hereinafter mentioned. After the twelve petit jurors were selected, but prior to the time they were sworn, defendant, through counsel, filed his motion to discharge the jury and requested a hearing thereon. The trial court responded as follows to defense counsel's request for a hearing: "[W]hen you say a `hearing', I assume the only person you could hear from would be Mr. Williamson." Defense counsel replied he had no desire to question Mr. Williamson as to reasons for striking any particular jurors from the panel, but, instead, would limit his questioning of Mr. Williamson to whether or not he had, in fact, employed part of the state's peremptory challenges to strike all members of the Negro race from the panel in question and whether or not he had done likewise in "case after case" respecting other criminal cases he had tried. Defense counsel then concluded by advising the court "that would be the limit of my questioning". At this juncture, Mr. Williamson stated on the record that in trying criminal cases for the state he had never systematically employed peremptory challenges to strike Negroes or any other classification of individuals, and that "many times" he "had Negroes on juries in criminal cases." Immediately thereafter defense counsel stated "Well, Your Honor, obviously Mr. Williamson is an Officer of the Court and I don't doubt what he just said." The trial judge also made the following statement which appears of record: "I've had a number of jurors, black jurors, serving in cases where there was a black *434 defendant." Defense counsel further stated on the record that his allegation was that the state "through Mr. Williamson, has engaged in the practice of systematically excluding members of the Black race from sitting as jurors in criminal cases merely because of the race." With the record in the foregoing posture, the trial court overruled defendant's motion to discharge the jury without an evidentiary hearing.
It is explicit throughout the record, as evidenced above, that defendant intended to rely solely on questions directed to and answers elicited from Mr. Williamson to meet the burden of proof imposed upon him by Swain. The above statements made on the record by Mr. Williamson, if given under oath in response to questions by defense counsel, would have failed to bring the selection of the petit jury which tried and convicted defendant within the constitutionally proscribed area drawn in Swain. Defense counsel's statement of record, "I don't doubt what he just said", with reference to Mr. Williamson's statements, can be fairly ascribed as a judicial admission by defense counsel, binding upon defendant, as to the nature and veracity of Mr. Williamson's testimony if questioned under oath by defense counsel. In State v. Levy, 262 Mo. 181, 170 S.W. 1114, 1117 (1914), the court quoted with approval and applied the following principle announced in Pratt v. Conway, 148 Mo. 291, 49 S.W. 1028, 1030 (1899): "`Courts are warranted in acting upon the admissions of counsel in the trial of a cause. They are officers of the court, and represent their clients, and their admissions thus made bind their principals.'" See also State v. McIntosh, 500 S.W.2d 45 (Mo.App.1973). Basic logic is even more persuasive for binding a defendant as to admissions of counsel in collateral proceedings where neither the proceedings nor the admissions directly relate to the merits of the charge for which a defendant stands accused. While refusal of an evidentiary hearing on a motion such as involved here is not condoned, and the state's attorney is not clothed with any immunity from being questioned in the limited area prescribed by defense counsel, the latter's admission of record as to the nature and veracity of the statements of record made by the state's attorney precludes denial of an evidentiary hearing in this particular case from constituting reversible error.
Defendant's final assertion of error, that the trial court erred in not permitting him to introduce testimony at the trial that he agreed to and did submit to a polygraph examination, is also ruled adversely to him. This assertion is silhouetted by the following facts. Prior to trial defendant and the state jointly executed a written "stipulation" providing that defendant would submit to a polygraph examination to be administered by Corporal Merle Buesing of the Missouri State Highway Patrol. The "stipulation", inter alia, provided as follows: "It is further agreed and stipulated that the results of the polygraph examination, in the form of an opinion, may be offered in evidence on behalf of the defendant, or on behalf of the prosecution without objection by either, provided that if the polygraphist determines that the results of said examination are indefinite and/or inconclusive then the polygraphist will not be required to testify nor will the examination results be introduced by either the prosecution or the defendant." Pursuant to the "stipulation", and after being given a Miranda warning, defendant submitted to a polygraph examination conducted by Corporal Buesing, the results of which were "inconclusive". The conditions under which defendant took the polygraph examination, his voluntary submission thereto, the Miranda warning given, and the "inconclusive" result of the examination, were all disclosed by interrogation of Corporal Buesing under oath outside the presence of the jury. On the basis of the facts disclosed the trial court ruled that both the results of the polygraph examination and the fact that defendant submitted thereto were inadmissible. Defense counsel then *435 made an offer of proofthat Corporal Buesing and defendant would both testify, if permitted to do so, that defendant, after being given a Miranda warning, voluntarily agreed to and did submit to a polygraph examinationwhich was denied on the state's objection.
In State v. Cole, 354 Mo. 181, 188 S.W.2d 43 (1945) this state firmly committed itself to the proposition that results of polygraph examinations are inadmissible in evidence because they lack scientific support for their reliability. This commitment has been consistently adhered to: State v. Stidham, 305 S.W.2d 7 (Mo. 1957); and State v. Weindorf, 361 S.W.2d 806 (Mo.1962). State v. Bibee, 496 S.W.2d 305, 316 (Mo.App.1973), constitutes well reasoned authority for the proposition that an accused's offer or professed willingness to submit to a polygraph examination is, likewise, inadmissible because it is "merely a self-serving act or declaration which obviously could be made without any possible risk, since, if the offer were accepted and the test given, the result, whether favorable or unfavorable to the accused, could not be be given in evidence." In State v. Fields, 434 S.W.2d 507 (Mo.1968) the court, absent consideration of whether the results of polygraph examinations have any scientific support for their reliability, held that if an accused stipulates to submit to such an examination and agrees that the result, favorable or unfavorable, is admissible at trial, then he has effectively waived all objections as to admissibility. In view of the stipulation in the instant case, and the holding in State v. Fields, supra, the results of the polygraph examination which defendant submitted to, if conclusive, would have been admissible whether favorable or unfavorable to defendant. For this reason defendant contends his actual submission to the examination transcends the holding in State v. Bibee, supra, excluding admissibility of a mere offer or proffered willingness to submit to such an examination, because he took all attendant risks, and, figuratively speaking, should be entitled to reap a reward for having done so. While innovative, to say the least, defendant's argument does not "score" for the basic and fundamental reason that to date the case law of this state still remains committed to the proposition that the results of polygraph examinations are inadmissible because they lack scientific support for their reliability. Expressed in conventional legalese, results of polygraph examinations have no probative value because they lack scientific reliability. If the results lack probative value, then mere submission to a polygraph examination, with the result kept from the jury, has even less probative value. Perforce, the trial court did not err when it refused to permit defendant to introduce evidence that he agreed to and did submit to a polygraph examination.
Judgment affirmed.
All concur.
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525 S.W.2d 351 (1975)
Harold E. WAECKERLE et al., Relators-Respondents,
v.
BOARD OF ZONING ADJUSTMENT et al., Respondents,
Richard L. Eaton, Intervenor-Appellant.
No. KCD 27085.
Missouri Court of Appeals, Kansas City District.
June 2, 1975.
Motion for Rehearing and/or Transfer Denied July 7, 1975.
Application to Transfer Denied September 8, 1975.
*352 Herbert C. Hoffman, Kansas City, for intervenor-appellant.
Aaron A. Wilson, City Atty., James C. Bowers, Jr., Asst. City Atty., Kansas City, for respondents.
Don M. Jackson, Jackson & Sherman, Kansas City, for relators-respondents.
Before SWOFFORD, P. J., and WEBORN and HIGGINS, Special Judges.
ANDREW JACKSON HIGGINS, Special Judge.
Appeal by Richard L. Eaton[1] from judgment quashing order of Board of Zoning *353 Adjustment of Kansas City, Missouri, approving application of Richard L. Eaton for a conditional use permit for construction of a funeral home in a residential area.
On November 3, 1972, Richard L. Eaton filed an application under the Zoning Ordinance, Chapter 65, Revised Ordinances of Kansas City, Missouri, with the Board of Zoning Adjustment of Kansas City for a conditional use permit for an unlimited time to construct and operate a funeral home on a tract in Zoning District R-la located at the southeast corner of Bannister Road and State Line Road in Kansas City, Missouri.
Section 65.040, supra, provides:
"A district R-1 is composed of areas developed for single-family residences and areas of open land that might reasonably be developed similarly. Uses in the district include churches, schools, community centers, and other structures and lands used for appropriate public and semipublic community facilities, and also utility substations, and other essential public uses of land whose role in the residential neighborhood and community require their location within it."
Section 65.041, supra, specifies the "authorized uses" in R-1 districts. It also provides for "conditional uses" in R-1 districts, together with the requirements and standards for the granting of permits for conditional uses, viz.:
"V. Conditional uses of land authorized by the Board of Zoning Adjustment on report and recommendation by the Director of the City Planning Department, subject to the conditions and restrictions of this subsection.
"A. Board hearing after report and recommendation of the Director of the City Planning Department.
"The uses of land permitted in this subsection may be authorized by the Board after a public hearing and only after receiving the report and recommendations of the Director of the City Planning Department. The Director shall report as to whether or not any use to be permitted under this subsection is compatible with the plan for the development of the City used as a guide by the commission in all such matters referred to it. After a review of the plans, the Director may make recommendations for additional conditions on the period of the permit and the method of operations. * * *
"B. Conditions applicable.
"The Board shall find that any use permitted under this subsection meets all of the conditions and requirements as follows:
"1. The use does not materially damage or curtail the appropriate use of neighboring property;
"2. The use conforms to the applicable district regulations;
"3. The use is compatible with the general character of the district;
"4. The use does not jeopardize the public health, safety or welfare; and
"5. The use does not violate the general spirit and intent of the Zoning Ordinance and this section.
"C. Uses conditionally authorized:
* * * * * *
"2. Uses permitted for an unlimited time.
* * * * * *
"i. Funeral homes or mortuaries, subject to meeting all of the additional conditions, as follows:
"(1) The property shall consist of not less than five (5) acres of land in a single tract *354 OR parcel not intersected or divided by any street, alley or property belonging to any other owners. The property shall have at least a 500-foot frontage on a major thoroughfare.
"(2) The entrance and exit to the parkway shall be directly to and from a major thoroughfare or parkway.
"(3) Parking space shall be provided as set forth for funeral homes under Section 65.280.
"(4) Definite and detailed plans for shrubbery and landscaping shall be presented to the Board and made part of the permit. Such landscape plan shall provide for boundary screen planting of a minimum width of 20 feet and a height adequate to provide a protective screen for the adjoining residential uses.
"(5) No principal building or accessory building shall be within one hundred (100) feet of the boundary of an adjoining property which is located in an R-1 to C-1 district, inclusive. No driveway or parking area shall be within twenty-five (25) feet of the boundary of an adjoining property which is located in an R-1 to R-5 district, inclusive."
Section 65.210, supra, provides identically in dealing generally with conditional uses in the various zoning districts of the city.
The application was heard by the Board of Zoning Adjustment November 28, 1972, at which time the applicable provisions of law and various exhibits were made a part of the record.
The application was made originally by Richard L. Eaton who had acquired an option to purchase the land in question on behalf of Kansas City Railroad Restaurant Corporation which had an agreement with the Mellody-McGilley-Eylar Funeral Home for an exchange of property to it for use as a funeral home conditioned upon approval by the Board of Zoning Adjustment for conditional use of the property for construction and operation of a funeral home.
The "report and recommendation" required of the Director of the City Planning Department by Section 65.041 V, supra, was made by letter of November 24, 1972, by Donald R. Woodward. It recited: "The principal difficulty in this application is that the area is about an acre less than the five acre minimum." Mr. Richard E. Duncan, Chief of Current Planning, testified also to this deficiency.
Upon question from the acting chairman of the board, counsel for the applicant admitted that applicant's own computations, including portions of the tract in the street, showed approximately 4.47 acres, and agreed also that the requirement is of a net of five acres. Applicant, by letter of December 1, 1972, further stated: "The usable area, not in streets is well over 4 acres and is more than adequate for use for which the permit is sought even with 8/10ths of an acre less than 5 acres." This concession was carried forward in his petition to intervene in that "Intervenor admits said tracts of land, considered as a unit, are less than five acres, and affirmatively state[s] that the area of land involved and required to be conveyed to Intervenor is approximately 4.68075 acres * * *."
In this state of the record counsel for applicant and the applicant asserted that the Board could grant a "variance" from the five-acre minimum on the theory of hardship in locating a tract which met the requirements for a conditional use permit for a funeral home. No such petition was before the Board at the public hearing.
The power of the Board of Zoning Adjustment to vary or modify application of requirements regarding use of land is, as recognized in intervenor's answer, infra, contained in Section 89.090, V.A.M.S.:
"1. The board of adjustment shall have the following powers:
"(1) To hear and decide appeals where it is alleged there is error in any order, requirement, decision, or determination made by an administrative official in the enforcement *355 of these sections or of any ordinance adopted pursuant thereto;
"(2) To hear and decide all matters referred to it or upon which it is required to pass under such ordinance;
"(3) In passing upon appeals, where there are practical difficulties or unnecessary hardship in the way of carrying out the strict letter of such ordinance, to vary or modify the application of any of the regulations or provisions of such ordinance relating to the use, construction or alteration of buildings or structures or the use of land so that the spirit of the ordinance shall be observed, public safety and welfare secured and substantial justice done."
The City of Kansas City has accepted this delegation of authority by providing in Article XIV, Section 403, of its charter for a Board of Zoning Adjustment and providing further:
"Subject to the provisions of state statute relating thereto, said Board shall have power to determine and vary the application of the regulations, restrictions, prohibitions and limitations contained in any zoning ordinance * * *."
The city has specifically delineated this power in the language of Section 89.090, V.A.M.S., supra, by enactment of Section 65.300 of its zoning ordinance to provide:
"1. The board of zoning adjustment shall have the following powers:
"a. To hear and decide all matters referred to it or upon which it is required to pass under this chapter.
"b. To hear and decide appeals where it is alleged there is error in any order, requirement, decision or determination made by the commissioner of buildings and inspections in the enforcement of this chapter."
"c. In passing upon appeals from decisions of the commissioner of buildings and inspections, whenever in any specific case, the board shall find and determine that the application of a general rule or regulation governing the use, construction or alteration of buildings or structures or the use of land, to the particular case under consideration, will, by reason of exceptional circumstances or surroundings, constitute a practical difficulty or unnecessary hardship * * *, the board may make an order varying or modifying such rule or regulation."
The remainder of applicant's evidence at the hearing was devoted to design, construction, and use of the property, traffic conditions in the area, and the difficulty of Mr. McGilley on behalf of his funeral home in locating a tract which would meet the requirements of the ordinance.
A number of area residents appeared in opposition to the application.
The matter was taken under advisement and, on February 13, 1973, the Board of Zoning Adjustment, without reference to the failure to meet the 5-acre minimum requirement of the ordinance, either by statement of computation or by grant of variance, approved the application in question.
On March 14, 1973, relators, as aggrieved parties owning property abutting or in the immediate vicinity of subject premises, petitioned for a writ of certiorari, pursuant to Section 89.110, V.A.M.S., alleging that the order of the Board of Zoning Adjustment approving the application of Richard L. Eaton for the conditional use in question was illegal "for the reason that it is in direct contravention and violation of the mandatory and minimum requirements for such conditional uses set forth in subsection VC2(i) of Section 65.041, Revised Ordinances of Kansas City * * * in that the undisputed evidence presented in said hearing conclusively established that the total area of the property included within said application was less that [sic] five (5) acres; that the Board is and was totally without power and authority to grant approval for such conditional use in any circumstances when *356 said property was established as containing less than said minimum of five (5) acres * * * that the action of the Board cannot be supported or sustained on the ground either of hardship or as another discretionary finding or determination, for the reason that the terms and provisions of subsection VC2(i) of Section 65.041 are mandatory and do not authorize, justify or support the approval of this application, when the undisputed evidence established that the total area of the property included therein was and is less than the mandatory minimum of five (5) acres."
On March 14, 1973, relator's petition was sustained, and a writ of certiorari issued to the Board of Zoning Adjustment returnable April 13, 1974.
On April 12, 1973, Richard L. Eaton moved to intervene, and on April 13, 1973, his motion was sustained to permit him to intervene as a party defendant.
On April 13, 1973, intervenor filed answer admitting the tract in question was less than five acres, and alleging the Board's order was sustainable as a variance granted pursuant to Section 89.090, V.A.M.S., on the ground of hardship.
The Board of Zoning Adjustment filed answer in the nature of a general denial. The Board did not support its approval of the application for conditional use permit as a variance.
The court reviewed the transcript of proceedings before the Board of Zoning Adjustment and found:
"(a) Intervenor Richard L. Eaton applied to the Board of Zoning Adjustment for a permit for a conditional use of a tract of land on the southeast corner of Bannister Road (95th Street) and State Line Road in Kansas City, Jackson County, Missouri, for the purpose of erecting a funeral home thereon.
"(b) The area in question was and is a residential area with a zoning designation of R-1 for single family dwellings.
"(c) Application for the conditional use was made under the provisions of Section 65.210 of Chapter 65, Zoning Ordinances of the City of Kansas City, Missouri and, particularly, under the provisions of Section 65.210 II-B(2)(d) specifically relating to funeral homes or mortuaries in R-1 Districts.
"(d) A similar conditional use is also provided under Section 65.041 of the Revised Ordinances of Kansas City, Missouri.
"(e) The provisions of each of the aforesaid Sections of the Zoning Ordinances of Kansas City, Missouri, provide, as the first condition, that the property to be affected shall consist of `not less than five (5) acres of land in a single tract'.
"(f) The tract in question, by all of the evidence in the record, is substantially less that [sic] five (5) acres."
The court concluded as a matter of law:
"(a) There has been no compliance with the primary conditional use imposed by each of the ordinance sections cited in the record and herein.
"(b) The Board of Zoning Adjustment, Respondent herein, neither had nor has discretion to waive, modify or vary the specific requirements of the Zoning Ordinances regarding the size of the tract for which the permit issued herein was sought.
"(c) The action of the Board of Zoning Adjustment in granting a permit for the conditional use of establishing a funeral home or mortuary on the tract of land mentioned in evidence was in excess of the authority of said Board of Zoning Adjustment and was and is unlawful and arbitrary."
Pursuant to these findings, the court quashed the order of the board approving application of Richard L. Eaton for the conditional use permit in question.
Intervenor-appellant asserts the court erred in failing to affirm the order of the Board of Zoning Adjustment.
*357 Appellant contends (I) that the Kansas City Zoning Ordinance, in harmony with the Zoning Enabling Act and the City Charter, authorized the Board to make an area variance upon proof of a practical difficulty or an unnecessary hardship by way of enforcing the strict 5-acre condition for a funeral home use in an R-1 residential district. In support of this contention, he asserts that the Board may make an area variance in the requirements of any Kansas City ordinance including Sections 65.041, 65.210, and 65.300, Revised Ordinances of Kansas City; that Section 65.300 complies with and adopts and embodies all provisions of Section 89.090, V.A.M.S., giving the Board full power to vary an ordinance, whether on direct application or in passing upon appeals; that the Board's discretionary power to vary any ordinance is also recognized by Kansas City's Charter, particularly in its Article XIV, Section 403; that the court disregarded the law in declaring as a matter of law that in issuing the conditional funeral home use permit, the Board's action was in excess of its authority and unlawful and arbitrary without determining if such action was supported by competent and substantial evidence under Article V, Section 22, Constitution of Missouri, V.A.M.S.
Appellant contends (II) that the Board acted within its authority and that its action was reasonable and supported by competent and substantial evidence on the record. In support, he asserts that an area variance in this case was supported by such evidence; that the question of hardship is a question of fact within the discretion of the Board and its resolution of such question is reasonable and supported by competent and substantial evidence; that the action of the Board is conclusive because it is not contrary to the overwhelming weight of the evidence, is reasonable and required substantial compliance.
Appellant contends (III) that the court erred in declaring the Board exceeded its authority, and its action was arbitrary and capricious and should be reversed to affirm the order of the Board.
Appellant's contentions and assertions of their support have been stated in detail because they demonstrate that he seeks to sustain the action of the Board of Zoning Adjustment on the theory that the Board granted him a variance in approving his application for a conditional use permit; that the competent and substantial evidence on the record supports a grant of variance in relief from practical hardship, and that the court, therefore, erred in quashing the order of the Board.
Appellant's theory fails because it is contrary to the record in this case. By his own admission, "appellant sought a conditional use permit for the operation of a funeral home in an R-la, single family residential district upon the assumption that the tract he had assembled consisted of five acres." His application to the Board of Zoning Adjustment is consistent with the foregoing admission, and the public hearing was accorded on such application. The first mention of "variance" came from counsel for applicant when confronted with applicant's admission that the tract contained less than five acres. Counsel stated only "that the Board has the power to vary this and modify it * * *," and neither he nor the applicant made any move to change the application for purposes of seeking a variance. Applicant's letter of December 1, 1972, stated that "Under my interpretation, there is no need for a variance * * *. If the granting of a variance is deemed necessary, then our request should be granted on grounds of hardship because I have searched for a site that would qualify for many months * * *." The date of this letter shows that it was not before the Board at the public hearing November 28, 1972. Neither does it purport to be a request for a variance. It is, rather, an assertion of a ground for granting the original and only request in this case. Finally, the Board of Zoning Adjustment made no findings *358 with respect to hardship upon which to base a variance, or of variance generally, or variance of the five-acre minimum in particular. It simply terminated the matter by saying "application approved."
Since there was no application for a variance, no presentation of a variance at the public hearing, and no finding or decision granting a variance, it may not be said that the court erred in failing to affirm the order of the Board of Zoning Adjustment on the theory of a requested, proved, and authorized variance. Tustin Heights Assn. v. Board of Supervisors, 170 Cal. App. 2d 619, 339 P.2d 914 (1959).
Assuming the presence of a requested, supported and approved variance, appellant's theory is in equal difficulty under the applicable provisions of law.
Sections 65.041 and 65.210, supra, both provide, among other restrictions, that in order to obtain a conditional use permit for construction and operation of a funeral home in an R-1 single-family residential district, the land upon which it would be located "shall consist of not less than five (5) acres of land in a single tract or parcel not intersected or divided by any street, alley or property belonging to any others." Application for such conditional use permit must be presented directly to the Board of Zoning Adjustment, and the Board is authorized to grant the application only after a public hearing and upon a showing which permits a finding that the proposed use "meets all of the conditions and requirements" including the minimum size of the tract of five acres. The use of "shall" makes the requirement mandatory as opposed to discretionary or permissive. Sho-Me Power Corp. v. City of Mountain Grove, 467 S.W.2d 109, 112 (Mo.App.1971); Black's Law Dictionary, 4th Edition.
The use of "shall" in these circumstances excludes any idea of discretion; and it is only where the Board of Zoning Adjustment has exercised discretionary power conferred upon it by other enabling statutes or provisions of the Zoning Ordinance that a circuit court is powerless to interfere with the exercise of a discretionary power which is supported by competent and substantial evidence. Since the Board had no discretion to vary or modify the mandatory requirement that the tract contain a minimum of five acres, the Board's action which was contrary to such requirement was illegal, and the court had the power and duty to set such a ruling aside. § 89.110, V.A. M.S.; Phillips v. Board of Adjustment, 308 S.W.2d 765, 767 (Mo.App.1958); McKinney v. Board of Zoning Adjust. of Kansas City, 308 S.W.2d 320, 322 (Mo.App.1957); State v. Kansas City, 325 Mo. 95, 27 S.W.2d 1030 (banc 1930).
Appellant's contention that the Board of Zoning Adjustment has the discretionary power to grant a variance in relief from the mandatory minimum acreage requirement under Article XIV, Section 40, Charter of Kansas City, Section 89.090, V.A. M.S., and Section 65.300, Revised Ordinance of Kansas City, confuses the limitations placed upon the powers of the Board of Zoning Adjustment when passing on an application for a conditional use permit and its powers in passing on appeals from subordinate zoning officials, and is contrary to those provisions.
Section 89.090, V.A.M.S., as the enabling act, authorizes a board of zoning adjustment to hear and decide appeals from decisions of subordinate administrative zoning officials, to hear and decide in the first instance matters referred to it by a zoning ordinance, and provides that when it acts in its appellate capacity, it may vary or modify applications of regulations in relief of practical difficulties or unnecessary hardship.
Article XIV, Section 403, supra, is a charter enactment by which the City of Kansas City accepted the delegation of authority granted it by Section 89.090, V.A.M.S., and *359 it provides generally, "subject to the provisions of the state statute relating thereto," that the Board of Zoning Adjustment shall have the power to determine and vary applications of regulations, restriction, prohibition, and limitation in the City's zoning ordinance.
Section 65.300, supra, gives definition to the charter power, and, in so doing, uses the language and specificity of Section 89.090, V.A.M.S.
In this scheme, the application for a conditional use permit to construct and operate a funeral home in a residential district goes at the outset to the Board of Zoning Adjustment rather than to any subordinate zoning enforcement officer. § 89.090, subd. 1(2), V.A.M.S., supra; § 65.300.1(a), supra. There can be no decision by a subordinate zoning enforcement officer referable by appeal to the Board of Zoning Adjustment under Sections 89.090, subd. 1(1), V.A.M.S., and 65.300.1(b), supra. As a consequence, the Board could not have exercised its discretionary power of variance in this matter under Section 89.090, subd. 1(3), V.A.M.S., and 65.300.1(c), supra. See Lake George Corp. v. Standing, 211 Va. 733, 180 S.E.2d 522 (1971), where a code section similar to Section 89.090, V.A.M.S., and Section 65.-300, supra, giving board of zoning appeals power to authorize "upon appeal in specific cases" variance from terms of ordinance as would not be contrary to public interest on basis of hardship, gave board jurisdiction to grant variance only on appeal from prior decision of zoning officer and did not confer upon board original jurisdiction to entertain appeal from terms of zoning ordinance.
Interwoven in this scheme is the distinction between a conditional use and a variance. Conditional uses are exceptions to provisions for general use of properties within a particular classification. Hardship is not a prerequisite to issuance of a conditional use permit, while the essential requirement of a variance is a showing of hardship. They are not one and the same, and provisions for each of them are not to be construed together as reciprocal parts of an integrated ordinance unless the particular act in question specifically and unequivocally so provides. Tustin Heights Assn. v. Board of Supervisors, supra, 339 P.2d l.c. 919; Schultz v. Board of Adjustment of Pottawattamie Co., 258 Iowa 804, 139 N.W.2d 448, 450 (1966). As previously demonstrated, the applicable provisions of charter, statute, and ordinance do not recognize conditional use and variance reciprocally. To permit the Board of Zoning Adjustment to engraft a variance upon a mandatory requirement for a conditional use without specific and unequivocal authority to do so would amount to permitting the Board to exercise legislative power. Such power was expressly denied in State v. Kansas City, supra, 27 S.W.2d l.c. 1032, viz.: "The board of zoning appeals is intrusted with the duty of enforcing the provisions of the ordinance; it is an administrative body, without a vestige of legislative power. It cannot therefore modify, amend, or repeal what the ordinance itself designates as its `general rules and regulations'; the power to do that is conferred upon the common council of Kansas City, and it can delegate no part of that power."
Appellant's citations may be generally distinguished as involving situations in which there was an appeal to the board of zoning adjustment from the action of the building commissioner in refusing a permit. In such situations the court properly recognized the discretionary power to grant variances under statutory and ordinance provisions similar to Sections 89.090, subd. 1(3), V.A.M.S., and 65.300.1(b) and (c), supra. An exception is Conner v. Herd, 452 S.W.2d 272 (Mo.App.1970), but the board of zoning adjustment there was acting under a specific section which empowered a variance unrelated to any conditional use. Rosedale-Skinker Imp. Assn. v. Board of Adjustment, 425 S.W.2d 929 (Mo. banc 1968), involved an appeal from the refusal of the building commissioner to issue a permit and the *360 board had the express power to order a variance in language following Section 89.-090, V.A.M.S., supra. Summers v. Board of Zoning Adjustment, 299 S.W.2d 883 (Mo. App.1957), involved the issuance by the board of a permit to use land owned by a church as a parking lot for churchgoers, and the ordinance provided that the board could exercise variance power with respect to offstreet parking. In Carlyle-Lowell, Inc. v. Ennis, 330 S.W.2d 164 (Mo.App.1959), there was no question that the board was relying upon its appeal powers in treating an appeal from the refusal of the building commissioner to issue a permit, and the landowner was seeking to use the property "for the very purpose * * * for which it [was] already zoned."
Judgment affirmed.
All concur.
NOTES
[1] Respondents Board of Adjustment et al., have filed a brief by which they seek reversal of the judgment. The brief is thus an appellants' brief; and the Board has no standing to file such brief because it took no appeal and time has long since passed for it to do so. Leave to file such brief as a brief of amicus curiae has been previously denied by order of the court. Relators-respondents' motion to quash said brief is sustained. Rule 81.04, V.A.M.R.
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525 S.W.2d 846 (1975)
Margie Faye PRATER, Administratrix of the Estate of Orlando Byron Prater, Deceased, Appellant,
v.
Michael BURNS and Jennel Jackson Burns, Appellees.
Court of Appeals of Tennessee, Western Section.
January 21, 1975.
Certiorari Denied July 21, 1975.
*848 Warren Miller, Memphis, for appellant.
J. Harold Ellis, Memphis, Joe H. Walker, Jr., Ripley, for appellees.
Certiorari Denied by Supreme Court July 21, 1975.
MATHERNE, Judge.
This lawsuit grows out of a tragic incident, wherein a .410 gauge shotgun in the hands of thirteen-year-old Michael Burns discharged and killed fourteen-year-old Orlando Byron Prater. The administratrix sues Michael Burns, and his mother Jennel Jackson Burns for damages due to the wrongful death of her son Orlando Byron Prater.
The trial judge directed a verdict in favor of the defendant mother, and the jury found in favor of Michael Burns, the minor defendant. The plaintiff appeals on the following issues: (1) The trial judge erred in granting a directed verdict for the defendant mother; (2) There is no material evidence upon which to base the verdict in favor of the defendant Michael Burns; (3) The trial judge erred in certain charges given the jury.
The defendant Michael Burns and his brother David Burns, age fifteen years, were good friends with the deceased Byron Prater. These boys were together almost daily, walking in the woods, playing, and on a few occasions they hunted together. On October 25, 1972, when Michael Burns and his brother David arrived home from school, Michael called out to his mother that they were going hunting. The boys then each obtained his respective single shot .410 gauge shotgun, and ammunition. Michael states he loaded his shotgun in the house, he thinks he unloaded it when walking out the door, and he does not remember reloading the weapon. When the two Burns boys left the house and while they were in their yard, Byron Prater rode into the yard on his pony. There is no proof that Byron Prater had a shotgun, and apparently he was not going hunting with the Burns boys on this occasion. The three boys talked a few minutes, whereupon Michael Burns, with this.410 gauge shotgun being held in a position across both his shoulders and behind his neck, turned to go to the woods. When Michael Burns turned, the shotgun he was holding discharged and the load hit Byron Prater in the face, killing him instantly.
There is no explanation of what caused the shotgun to discharge. The proof shows it was in good condition, with no defects. No defect in the ammunition was proven. The weapon was a single barrel single shot .410 gauge shotgun with an outside pull back hammer.
The administratrix, mother of the deceased boy, testified the boys were close friends, and the families have remained friendly since the incident being considered. She stated her son Byron went to the Burns home on that occasion for the sole purpose of visiting with the Burns boys. Her son had on a few occasions hunted with the Burns boys.
The defendant Jennel Jackson Burns testified that she, her son Michael and five other children made up the household, her son David being the oldest child. This defendant stated Michael had owned the shotgun in question for about two months prior to the accident. This mother stated she had hunted with Michael; had shown him how to carry a shotgun, and had told him not to carry it across both his shoulders behind his neck. Mrs. Burns stated there were three shotguns in the home, hers, Michael's and David's. She stated she bought the ammunition for the weapons, and it was available to Michael and David. Mrs. Burns said she expected the boys to tell her when they were going hunting, but she had no objection to their hunting at any available time. She stated she was talking on the telephone when her boys came home from school on the day in question, and she did not hear Michael call to her that they were going *849 hunting. Mrs. Burns did not see the accident, and did not know at that time the Prater boy was in her yard.
Michael Burns stated he had hunted with the shotgun about twelve or thirteen times. He had been hunting considerably before obtaining the shotgun in question. Michael said he thought the shotgun was unloaded while he held it across his shoulders and behind his neck on the occasion when it discharged and killed Byron Prater. The evidence establishes there was no ill feeling between the boys. There is no proof of horseplay, pointing or waving of the shotguns during the few minutes the Burns boys talked with young Prater.
As to the defendant mother, Jennel Jackson Burns, the plaintiff alleges her negligence was the direct and proximate cause of the death of Byron Prater wherein she allowed her minor son to have and use a shotgun; failed to properly instruct her son in the use of a shotgun; and failed to supervise her son when he used the shotgun.
The plaintiff charged Michael Burns with negligence wherein he handled a shotgun in a careless and negligent manner; failed to check the shotgun to see if it was loaded; in placing the shotgun on his shoulders behind his neck; and in pointing the shotgun at Byron Prater, all of which constituted the direct and proximate cause of the death of Byron Prater.
The defendants denied all acts of negligence and averred the deceased Byron Prater "was a social guest at the home of the defendants and that his death was the result of a freakish accident and not due to any negligence on the part of these defendants."
The trial judge directed a verdict for the defendant Mrs. Burns on the ground the deceased child was a social guest on the premises of that defendant. The corresponding duty or degree of care thus imposed by the trial judge upon the defendant Mrs. Burns is that which she owed to a licensee, which is no duty except to refrain from willfully injuring the person or from committing negligence so gross as to amount to willfulness, or from leading him into a trap. Walker v. Williams (1964) 215 Tenn. 195, 384 S.W.2d 447; Hall v. Duke (Tenn. 1974) 513 S.W.2d 776.
In the case of Smith v. Salvaggio (1914) 4 Tenn.Civ.App. (Hig.) 727, the Court in discussing the liability of a parent who permits his or her minor child to have possession of a deadly weapon, stated the rule:
"... the parent is chargeable with negligence in such cases, if, from all the facts and circumstances, he should have known of the probable danger and injury that might result to others from permitting the child to have the weapon in his possession (citations).
"The rule for such liability upon the part of the parent is not founded upon the relation of parent, but upon the ground of the negligence of the parent in permitting the child to have possession of the dangerous and deadly weapon, when, from his youth and inexperience, it might be reasonably anticipated, that in the use of such weapon the child would inflict injury upon others."
We adopt the rule stated in Smith and we hold the duty owing by the defendant Mrs. Burns to the deceased Byron Prater was to not entrust the possession of the .410 gauge shotgun in her minor son Michael Burns, if it might be reasonably anticipated that due to his youth and inexperience he would inflict injury upon others in the use of the weapon.
There is respectable authority for the proposition that under certain circumstances a parent is entitled to a directed verdict in a lawsuit charging the parent with the negligent entrustment of a firearm in a minor child who injures another in the use thereof. These cases seem to hold the parent free of liability as a matter of law where the facts disclose the minor was thoroughly familiar with the use of firearms and had a history of considerable experience *850 in handling same. See and compare: Herndobler v. Rippen (1915) 75 Or. 22, 146 P. 140; Klop v. Vanden Bos (1933) 263 Mich. 27, 248 N.W. 538; Palm v. Ivorson (1905) 117 Ill. App. 535, as cited at 68 A.L.R. 2d 791.
In this respect we note the Court in Smith v. Salvaggio, supra, stated "The question of the parent's negligence in such cases is always for the jury." Without belaboring the import of the words, "always for the jury," we realize the issues of negligence and contributory negligence are normally for the jury. More importantly, however, the facts of this lawsuit made the negligence of Mrs. Burns an issue for the jury. Even though Michael Burns had some experience in hunting and Mrs. Burns had trained him in the handling of firearms, the record reveals Michael Burns was so inexperienced, untrained and irresponsible as to not know the shotgun was loaded. From the testimony of Michael Burns describing his action of loading the shotgun in the house, thinking he had unloaded, not remembering whether he reloaded, material evidence was before the jury upon which Mrs. Burns could be found negligent in the entrustment of the shotgun in Michael because of his exhibited total incompetence on the occasion of the injury. The jury could find that due to Michael's incompetence, Mrs. Burns might have reasonably anticipated injury would result to others by his use of the shotgun.
We hold the trial judge erred in directing a verdict for the defendant Mrs. Burns, and the plaintiff is granted a new trial as to that defendant. The parent's liability is not based upon the alleged negligent act of the minor in the use of the weapon. The parent's liability rests alone upon whether there was a negligent entrustment of the weapon to the minor. Where there is a negligent entrustment of a weapon to a minor, the subsequent discharge of the weapon by the minor which injures another is not such an independent intervening act as will break the chain of causation between the parent's negligence and the injury which occurred.
We would further note, however, there may arise many situations wherein a minor negligently used a firearm which resulted in injury to another, yet the parent would not necessarily be negligent in permitting the minor to use the weapon. In this regard we hold the proof of the minor's acts, demeanor and conduct at the time of the injury to another is material evidence on the minor's experience, training and judgment in the use of the firearm, and is therefore admissible on the issue of the parent's negligence in permitting the minor to use the weapon. It thus appears most of these lawsuits will present a jury question on the issue of the negligence of the party who permitted the minor to use the weapon.
Considering the position of the minor Michael Burns we have a jury verdict, approved by the trial judge, finding him free of negligence. If there is any material evidence to sustain the verdict it must be approved by this Court, unless the record reveals other reversible error. Wilburn v. Vernon (1969) 60 Tenn. App. 436, 447 S.W.2d 382.
If a person is injured as result of the discharge of a firearm by another, the test of liability is not whether the injury was accidentally or unintentionally inflicted, but whether the defendant is free of negligence, or that the injury was unavoidable. Tally v. Ayres (1856) 35 Tenn. 677; Knott v. Wagner (1886) 84 Tenn. 481, 1 S.W. 155; 94 C.J.S. Weapons § 28, p. 525.
The main thrust of the plaintiff's appeal as relates to the liability of young Burns is that the thirteen-year-old minor should, as a matter of law, be held to adult standards when he is using a dangerous weapon, and the trial judge erred in not so holding; and the Judge erred in his charge to the jury as to the standard of care to be imposed upon the minor defendant. The plaintiff insists the situation is comparable to that of a *851 minor driving an automobile wherein he is held to the same degree of care as an adult. Powell v. Hartford Accid. & Indem. Co. (1966) 217 Tenn. 503, 398 S.W.2d 727.
In the Powell case the Court found the defendant minor, age 14 years, was issued a special restricted license, or permit under T.C.A. § 59-704(g) to operate a motor driven cycle. When the license was so obtained the minor demonstrated his "ability to exercise ordinary and reasonable control" of the motor driven cycle as required by Section 59-704(g); and, he also took an examination including "a test of the applicant's eyesight, his ability to read and understand highway signs regulating, warning, and directing traffic, his knowledge of the traffic laws of this state, and shall include an actual demonstration of ability to exercise ordinary and reasonable control in the operation of a motor vehicle," as required by T.C.A. § 59-707. The minor also had to produce positive proof of his age. We also note certain persons are not eligible for a license to operate a motor vehicle, T.C.A. § 59-705. The Court thus very properly held all persons who operate motor vehicles on the public highways of Tennessee are under the same duty of care.
Looking to the statutes governing the possession and use of a gun for hunting we find a very different situation. In Tennessee children under the age of 16 years are required to pay $3.00 for a resident's hunting license, T.C.A. § 51-202 and 51-203. Under T.C.A. § 51-207, the owners and tenants of farm lands, and their dependent children, may hunt on their lands, or the lands under their control with the permission of the owner, without a hunting license. There is no statutory requirement that a person display any degree of skill, judgment, knowledge or experience in the use of firearms, or be of a certain age, in order to obtain a hunting license. We also note a minor under the age of 16 years is not required to have a federal migratory waterfowl stamp while hunting that type game, T.C.A. § 51-201; a similar exemption being recognized by the federal government, 16 U.S.C.A., Migratory Birds, § 718, p. 467.
We note another legislative declaration on the subject in the Criminal Code of this state, wherein it is a crime to sell, loan or give to any minor a pistol, bowie knife, dirk, hunter's knife, or like dangerous weapon, except a gun for hunting, T.C.A. § 39-4905.
We conclude the established public policy of this state is that a child of any age may possess, own, use and employ a gun for hunting [subject to laws governing license, seasons, bag limits, etc.] without meeting any requirement as to age, ability, experience, knowledge or judgment in the use of the weapon. Our statutes on the subject basically adhere to the accepted custom of an earlier day, when a child of sufficient size and strength to hold and aim a hunting weapon, not only usually did so in the pursuit of game, but normally was expected to do so. We hold the.410 gauge shotgun in question was, under the facts, possessed by Michael burns as a "gun for hunting." We therefore conclude the ruling in Powell is not applicable to the present lawsuit, and Michael Burns is not, as a matter of law, to be held to adult standards of care in his use of the weapon.
Regardless of the lawfulness of the possession and use of the weapon by Michael Burns, the gist of this lawsuit against him is his failure to exercise such ordinary care as, under the circumstances, he should have exercised so as to avoid the injury. This brings into focus the standard of care expected of thirteen-year-old Michael Burns.
In this regard the trial judge charged the jury:
"This suit is based on negligence which may be defined as a failure to use ordinary care; that is, that degree of care and prudence that an ordinary prudent person would use under like conditions and circumstances. Now, gentlemen, in this case you have to consider the fact that you are dealing with a young man here
*852 "Gentlemen, I don't want to be incorrect. I believe it was fourteen at the time of this accident?
"MR. ELLIS: Thirteen.
"THE COURT: Thirteen at the time of this accident. Consider what a young man might do under those circumstances at that time; how he would act. That is what you've got to consider in this case."
After some deliberation, the jury returned into the courtroom and the following transpired:
"THE COURT: Gentlemen of the Jury, I understand you have a question for the Court, something you didn't understand or something.
"THE FOREMAN: Your Honor, we seem to have a difference of opinion in there as to just exactly what we're voting on. Some say we're voting the negligence of the boy itself of The way we understood Some of us understood you to charge us that Are we voting on did he do anything that any other normal 13-year-old boy would have done in the same situation?
"Could you go over the What constitutes negligence in the Court's because we're supposed to decide that and we can't do it. That's the facts. Do you understand?
"THE COURT: Yes, sir.
"Gentlemen, before you can find for the plaintiff in this case you must first find that there is negligence on the part of the defendant. Now, in considering the question of negligence I'll charge you, or recharge you, on this question of negligence.
"This suit is based on negligence which may be defined as a failure to use ordinary care; that is, that degree of care and prudence that an ordinary prudent person would use under like conditions and circumstances. By that I mean what would a young man thirteen or fourteen years old do? What would be his actions? You're going to have to consider whether he was negligent as a thirteen- or fourteen-year-old minor in his actions out there that day."
The presumption is that a child between the ages of seven and fourteen years is incapable of negligence, but the presumption is not conclusive and may be rebutted by evidence of his capacity for negligence. Bailey v. Williams (1960) 48 Tenn. App. 320, 346 S.W.2d 285, and the authorities therein cited. This question is normally one of fact for the jury. Bailey v. Williams, supra.
The question therefore is reduced to the minor's capacity for negligence. In other words is the minor, in the light of the circumstances by which he injured another, of such age, ability, intelligence, training and experience that he is capable of being negligent in his acts or failure to act in that particular circumstance out of which the other party was injured.
The charge as given by the trial judge mentioned only the age of the defendant Michael Burns as a factor to be considered by the jury in passing on his capacity for negligence under the circumstances. What "a young man might do under those circumstances at that time; how he would act," as originally charged; and "By that I mean what would a young man thirteen or fourteen years old do? What would be his actions?" as later charged in answer to an inquiry by the jury on the subject, do not properly state the law, and do not properly define to the jury the factors to consider in determining if Michael Burns, under the circumstances, is to be held capable of negligence. We would here note, as did then Presiding Judge McAmis in the Bailey case, supra, the charge as given by the trial judge in that lawsuit fully and correctly sets forth the law on this subject.
There was evidence of the grades Michael Burns made in school, his experience in hunting, the training his mother had given him in the handling of firearms, as well as his acts and failure to act on the occasion of the death of young Prater. It is *853 of paramount importance that the jury be correctly charged on the issue of young Burns capacity for negligence. The failure to so charge is reversible error.
It results the judgment of the trial court is reversed and this lawsuit is remanded for a new trial. The cost of this appeal is adjudged against the defendant-appellees, the costs in the trial court to be there adjudged on the new trial.
The Honorable W.E. Quick, by appointment of the Chief Justice of the Supreme Court of Tennessee, sat on this lawsuit in the place of Presiding Judge C.S. Carney.
NEARN, J., and QUICK, Special Judge, concur.
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525 S.W.2d 500 (1975)
COUNTY OF DALLAS, Relator,
v.
Dan GIBBS, Judge et al., Respondents.
No. B-5221.
Supreme Court of Texas.
July 7, 1975.
Henry Wade, Dist. Atty., Edward R. Blackstone, Asst. Dist. Atty., Dallas, for relator.
Russell M. Manning, Lindsey Enderby, Dallas, for respondents.
STEAKLEY, Justice.
The County of Dallas seeks relief by this Original Mandamus Proceeding from an order by Honorable Dan Gibbs directing payment from the funds of Dallas County of Guardian Ad Litem fees assessed as costs in domestic relations causes in which the County was not a party. We hold that the order is without statutory authority and direct that it be vacated.
The background facts are these. It appears that on February 15, 1974, Mr. and Mrs. Frank Fowler filed suit in the Domestic Relations Court No. Three of Dallas County, Honorable Dan Gibbs presiding, to gain reasonable visitation rights to their grandchildren, Francis Marion Fowler, III and Travis Lynn Fowler, by the former marriage of their son, Francis Marion Fowler, Jr. The trial court appointed Russell Manning, a local attorney, as Guardian Ad Litem to represent the interests of the children. Less than a month later, Kay Francis Thomas, the mother of the children, sued in the Juvenile Court of Dallas County to terminate the parent-child relationship then existing between the children and Francis Marion Fowler, Jr., her former husband. The Juvenile Court appointed Lindsey Enderby, also a local attorney, as Guardian Ad Litem for the children in this proceeding. Both attorneys performed investigative and study functions for the Courts. Later, the two cases were consolidated under the docket number of the original suit.
On November 20, 1974, Judge Tate McCain, sitting for Judge Gibbs, denied the request for termination of the parent-child relationship; authorized visitation rights for the grandparents and their son; directed that the Guardians Ad Litem, Manning and Enderby, be paid attorney's fees of $750.00 and $1,000.00, respectively, for their services; and ordered that one-third of the costs be paid, respectively, by Kay Francis Thomas, Francis Marion Fowler, Jr., and Frank Fowler, Sr. On December 18, 1974, Judge Gibbs entered an order styled "Order Authorizing Payment of Guardian Ad Litems" that directed payment of the ad litem fees "from the funds of Dallas County." This is the order under attack here.
*501 Costs are not taxable against one not a party to the suit. 20 Am.Jur.2d, Costs § 26; 20 C.J.S. Costs § 120; and see Allen v. First Guaranty State Bank, 269 S.W. 1073 (Tex.Civ.App.1925, no writ). Respondents urge, however, that statutory authority to charge the County with the Guardian Ad Litem costs in question may be found in the following provisions of the Vernon's Tex. Family Code Ann. §§ 11.10(a), (c), 11.12(c) and 11.18(a):
§ 11.10. Guardian Ad Litem
(a) In any suit in which termination of the parent-child relationship is sought, the court shall appoint a guardian ad litem to represent the interests of the child, unless the child is a petitioner. In any other suit under this subtitle, the court may appoint a guardian ad litem. The managing conservator may be appointed guardian ad litem if he is not a parent of the child or a person petitioning for adoption of the child and if he has no personal interest in the suit.
* * * * * *
(c) The court may appoint an attorney to represent the interests of a minor child in any suit under this subtitle in which a guardian ad litem has not been appointed.
§ 11.12. Social Study
* * * * * *
(c) The social study may be made by any state agency, including the State Department of Public Welfare, or any private agency, or any person appointed by the court. If an authorized agency is the managing conservator, the social study shall be made by the authorized agency. The social study shall be made according to criteria established by the court.
§ 11.18. Costs
(a) In any proceeding under this subtitle, the court may award costs as in other civil cases. Reasonable attorney's fees may be taxed as costs, and may be ordered paid directly to the attorney, who may enforce the order for fees in his own name.
Ad litem fees are generally taxed as costs and Sec. 11.18 does no more than authorize the award of costs as in other civil cases. While it very well may be that the judicial process was served by the investigations and studies of Messrs. Manning and Enderby, the language of the statutes may not be extended to authorize the assessment of their ad litem fees against the County of Dallas. The order of Judge McCain in adjudging the costs to the parties, including the ad litem fees in question, was therefore in order. The subsequent order of Judge Gibbs directing payment of the ad litem fees from the funds of Dallas County, neither an actual nor a nominal party, was unauthorized. Cf. Tex.Family Code Ann. § 51.10(i) where it is expressly provided that an attorney who is appointed to represent the interests of a child in a delinquency proceeding shall be paid from the general fund of the county in which the proceedings were instituted.
We assume that Judge Gibbs will vacate the order; otherwise the writ of mandamus will issue.
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525 S.W.2d 677 (1974)
Jimmy L. PRACTY, Plaintiff-in-Error,
v.
STATE of Tennessee, Defendant-in-Error.
Court of Criminal Appeals of Tennessee.
November 7, 1974.
Certiorari Denied June 9, 1975.
*678 Walker Gwinn, Asst. Public Defender, Memphis (Court-appointed), for plaintiff-in-error.
David M. Pack, Atty. Gen., Alex B. Shipley, Jr., Asst. Atty. Gen., Nashville, James G. Hall, Asst. Dist. Atty. Gen., Memphis, for defendant-in-error.
Certiorari Denied by Supreme Court June 9, 1975.
OPINION
OLIVER, Judge.
Jimmy L. Practy's sentence to imprisonment in the Shelby County workhouse for *679 11 months and 29 days adjudged on 9 April 1973 upon his guilty-plea conviction of petit larceny, was suspended the same day by the court and he was placed on probation for 18 months.
In a T.C.A. § 40-2907 petition filed September 11, 1973 seeking revocation of Practy's sentence suspension and probation, the Shelby County District Attorney General charged that on 17 July 1973 the Shelby County Grand Jury indicted him for third degree burglary and for receiving and concealing stolen property, and that on 3 August 1973 he entered a plea of guilty to the offense of attempting to commit a felony and was sentenced to 11 months and 29 days in the Shelby County Penal Farm and to pay a one dollar fine. The trial judge entered an order on September 11, 1973 directing the clerk to have a copy of the petition served upon Practy, requiring him to answer the petition and to appear at 9:30 a.m. on 8 October 1973 "to show cause if any he should have, why his suspension of sentence should not be revoked for his alleged failure and refusal to abide by the conditions of the probation order heretofore rendered in this cause."
Represented by the Shelby County Public Defender's office, Practy responded to that petition on September 20, 1973 by filing a pleading designated as a plea in abatement (erroneously so designated because it did not meet the requirements of such a plea) in which he admitted the petition correctly stated he was granted a suspended sentence and placed on probation after his plea of guilty to petit larceny, and acknowledged that the petition "was duly served in the Shelby County Jail, where he is serving eleven (11) months and twenty-nine (29) days for a subsequent charge." He then charged that he was never given a preliminary or final revocation hearing as required by Gagnon v. Scarpelli, 411 U.S. 778, 93 S. Ct. 1756, 36 L. Ed. 2d 656 (1973), and moved the court to dismiss the revocation petition for that reason and to order the State to give him a revocation hearing. After a hearing on the petition the trial judge entered judgment dismissing Practy's plea and revoking the suspension of his sentence and ordering it executed, from which he was granted and has duly perfected an appeal to this Court and urges here the same insistence advanced in his plea in the trial court.
In Gagnon v. Scarpelli, supra, Scarpelli pleaded guilty to a charge of armed robbery in Wisconsin. The trial judge sentenced him to imprisonment for 15 years, but suspended the sentence and placed him on probation for seven years in the custody of the Wisconsin Department of Public Welfare. The order placing him on probation provided, among other things, that "[i]n the event of his failure to meet the conditions of his probation he will stand committed under the sentence all ready [sic] imposed." Under an agreement signed by him setting out the terms of his probation he agreed to make a sincere attempt to avoid violation of law, and under a Travel Permit And Agreement To Return he was allowed to reside in Illinois pursuant to an interstate compact and was accepted for supervision by the Adult Probation Department of Cook County, Illinois. The very next day Illinois police caught him and another in the act of burglarizing a house. Without a hearing of any kind, the Wisconsin Department of Public Welfare revoked his probation upon the grounds that (1) he had associated with known criminals in violation of his probation regulations and his supervisor's instructions, and that (2) he had, while associating with the other named burglar, been involved in and arrested for a burglary in Deerfield, Illinois, and he was incarcerated in the Wisconsin State Reformatory to begin serving his 15-year sentence. Three years later he filed a federal habeas corpus petition in which he claimed that his admission of participation in the burglary was made under duress and was false and charged that the revocation of his probation without a hearing and the assistance of counsel was a denial of due process.
*680 Perceiving no "difference relevant to the guarantee of due process between the revocation of parole and the revocation of probation" in the total context of the case, the Supreme Court affirmed the holding of the District Court and the Seventh Circuit Court of Appeals (454 F.2d 416) that Scarpelli was entitled to the writ of habeas corpus because administrative revocation of his probation without a hearing was a denial of due process, and remanded the case to the District Court to re-examine the failure of the Wisconsin Welfare Department to provide him with the assistance of counsel. In so holding, the Court relied upon Morrissey v. Brewer, 408 U.S. 471, 92 S. Ct. 2593, 33 L. Ed. 2d 484 (1972), in which the Court considered revocation of the habeas petitioners' parole without a hearing because, upon their theory, they were thus deprived of their Fourteenth Amendment right to due process.
In Gagnon the Court summarized the pertinent holding of Morrissey:
"Specifically, we held that a parolee is entitled to two hearings, one a preliminary hearing at the time of his arrest and detention to determine whether there is probable cause to believe that he has committed a violation of his parole and the other a somewhat more comprehensive hearing prior to the making of the final revocation decision.
* * * * * *
"... At the preliminary hearing, a probationer or parolee is entitled to notice of the alleged violations of probation or parole, an opportunity to appear and to present evidence in his own behalf, a conditional right to confront adverse witnesses, an independent decisionmaker, and a written report of the hearing. [Morrissey v. Brewer, supra], 408 U.S., at 487, 92 S. Ct. 2603. The final hearing is a less summary one because the decision under consideration is the ultimate decision to revoke rather than a mere determination of probable cause, but the `minimum requirements of due process' include very similar elements:
`(a) written notice of the claimed violations of [probation or] parole; (b) disclosure to the [probationer or] parolee of evidence against him; (c) opportunity to be heard in person and to present witnesses and documentary evidence; (d) the right to confront and cross-examine adverse witnesses (unless the hearing officer specifically finds good cause for not allowing confrontation); (e) a "neutral and detached" hearing body such as a traditional parole board, members of which need not be judicial officers or lawyers; and (f) a written statement by the factfinders as to the evidence relied on and reasons for revoking [probation or] parole.' Morrissey v. Brewer, supra [408 U.S.], at 489, 92 S.Ct. at 2604."
Morrissey's parole was revoked, he said without any prior hearing, upon review of the parole officer's written report one week after he was arrested by that officer as a parole violator. The State asserted in its brief that the petitioners (Morrissey and Booher) were granted hearings by the Board of Parole shortly after they were returned to the penitentiary, on the basis of the parole officer's written reports of alleged parole violations, and that at their hearings both admitted those violations. The Court concluded:
"In the peculiar posture of this case, given the absence of an adequate record, we conclude the ends of justice will be best served by remanding the case to the Court of Appeals for its return of the two consolidated cases to the District Court with directions to make findings on the procedures actually followed by the Parole Board in these two revocations. If it is determined that petitioners admitted parole violations to the Parole Board, as [Iowa] contends, and if those violations are found to be reasonable grounds for revoking parole under state standards, that would end the matter. If the procedures *681 followed by the Parole Board are found to meet the standards laid down in this opinion that, too, would dispose of the due process claims for these cases." (Emphasis supplied).
See T.C.A. §§ 40-3617 and 40-3618 and 40-3619, with respect to parole violations by prisoners released from the penitentiary on parole, preliminary hearings for such alleged violators before a hearing officer, and Board hearings on parole violations.
On the other hand, the Legislature of this State has vested the trial judge with sole authority and discretion to grant suspension of sentence and probation to all convicted misdemeanants and to those convicted of a felony for which the maximum punishment does not exceed confinement in the penitentiary for 10 years. T.C.A. §§ 40-2901 40-2904. The trial judge is also entrusted with the sole power to revoke suspension of sentences and probation. T.C.A. § 40-2906.
The procedure for revoking suspension of sentences and probation is provided in T.C.A. § 40-2907 as follows:
"Procedure to revoke suspension or probation. Whenever it shall come to the attention of the trial judge that any defendant who has been released upon suspension of sentence has been guilty of any breach of the laws of this state or who has violated the conditions of his probation, the trial judge shall have the power in his discretion to cause to be issued under his hand a warrant for the arrest of such defendant as in any other criminal case. Said warrant may be executed by a probation and paroles officer or any peace officer of the county in which the probationer is found. Any probation and paroles officer for cause may arrest a probationer without a warrant. Whenever any person is arrested for the violation of probation and suspension of sentence, the trial judge granting such probation and suspension of sentence, or his successor, shall, at the earliest practicable time, inquire into the charges and determine whether or not a violation has occurred and at such inquiry, the defendant must be present and shall be entitled to be represented by counsel and shall have the right to introduce testimony in his behalf thereon. The trial judge may enter such judgment upon the question of such charges as he may deem right and proper under the evidence adduced before him. If the trial judge should find that the defendant has violated the conditions of his probation and suspension, the trial judge shall have the right by order duly entered upon the minutes of his court, to revoke the probation and suspension of sentence and cause the defendant to commence the execution of the judgment as originally entered, or otherwise in accordance with § 40-2906, provided, however, that in case of such revocation of probation and suspension, the defendant shall have the right to appeal therefrom to the Supreme Court of this state as in other criminal cases."
In granting or suspending probation, the question is always whether or not the court is satisfied that its action will subserve the ends of justice and the best interests of both the public and the defendant, and such action rests in the court's sound discretion. Hooper v. State, 201 Tenn. 156, 297 S.W.2d 78.
Examination of all the foregoing statutes makes it clear that the Legislature intended to and did create two separate and distinct systems relating to the conditional release of persons convicted of crime, the one dealing with suspension of sentence and release on probation by the trial judge, and the other with release of prisoners from the penitentiary by the Board of Pardons and Paroles.
In the case before us the order of the trial judge suspending Practy's sentence *682 and placing him on probation contained, among other things, the following condition:
"He shall not violate any of the laws of the United States, or the State of Tennessee, or of any state where he may be, or any ordinance of any municipality, but he shall conduct himself as a law abiding citizen."
As already noted, by his plea Practy admitted his original guilty plea conviction of petit larceny and that the trial judge suspended his sentence and placed him on probation, and that when served with the revocation petition he was in the Shelby County jail serving a sentence of 11 months and 29 days "for a subsequent charge." Nor does the record show that he made any effort to question that subsequent conviction, or its effect on his previously granted sentence suspension and probation, when he appeared with his appointed attorney at his parole revocation hearing before the trial judge. Thus, since there is no question whatever about the validity of his subsequent guilty plea conviction of attempting to commit a felony, his admitted violation clearly constituted sufficient ground for revoking his suspended sentence and probation under the standards of this State and, as said by the United States Supreme Court in Morrissey, supra, that should "end the matter."
Moreover, we agree with the State that the procedural requirements delineated in Morrissey and recited in the above quotation from Gagnon, were substantially and adequately observed in the revocation of Practy's suspended sentence and probation. The revocation petition, which he admitted was factually correct and which was served on him, at once provided him with written notice of the claimed violation of his probation and disclosed the nature of the evidence against him; the hearing before the trial judge, where he was represented by counsel and had the right to testify and call witnesses and present evidence and to confront and cross-examine adverse witnesses, effectively preserved those rights designated (c), (d) and (e) by the Supreme Court as minimal requirements; and the order entered by the trial judge revoking Practy's earlier sentence suspension and probation furnished him essentially the information contemplated by (f) in the Court's list.
Beyond that, the probationer's rights are further protected by his right to have any adverse decision reviewed by this Court and the Supreme Court of Tennessee. Thus, the statutorily mandated proceedings in this State for revocation of a probationer's suspended sentence and probation unquestionably more than comply with the mere minimal requirements stated in Morrissey and Gagnon on which plaintiff in error Practy relies. In Morrissey the Court said termination of the conditional liberty of a parolee "calls for some orderly process, however informal." (92 S. Ct. 2601). This State's procedure for revocation of sentence suspension and probation is an orderly one affording a probationer full protection of his constitutional right to due process.
Finally, the argument that a preliminary hearing upon a charge of probation violation could be had in a General Sessions Court to determine probable cause, with an appeal therefrom to "another division of the Criminal Court other than that imposing the suspended sentence" is wholly untenable for the simple reason, as pointed out, that our probation-revocation statute confers no authority or power upon General Sessions Courts in such matters, and, instead vests the trial judge with exclusive jurisdiction in these cases.
Affirmed.
WALKER, P.J., and RUSSELL, J., concur.
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615 F. Supp. 2d 867 (2009)
EQUAL EMPLOYMENT OPPORTUNITY COMMISSION, Plaintiff, and
Janet Boot, Barbara Grant, Cindy Moffett, Remcey Jeunenne Peeples, Monika Starke, Latesha Thomas and Nicole Ann Cinquemano, Plaintiffs-Interveners,
v.
CRST VAN EXPEDITED, INC., Defendant.
No. 07-CV-95-LRR.
United States District Court, N.D. Iowa, Cedar Rapids Division.
May 11, 2009.
*869 Ann Marie Henry, Jean P. Kamp, Jeanne Bowman Szromba, U.S. Equal Employment Opportunity Commission, Chicago, IL, Brian C. Tyndall, Eeoc Milwaukee District Office, Milwaukee, WI, Nicholas J. Pladson, EEOC, Minneapolis, MN, for Plaintiff.
Jeffrey R. Tronvold, Eells & Tronvold Law Offices, PLC, Matthew James Reilly, Eells & Tronvold, Cedar Rapids, IA, for Plaintiffs-Interveners.
Carla J. Rozycki, Emma J. Sullivan, J. Andrew Hirth, John H. Mathias, Jr., John P. Wolfsmith, Robert T. Markowski, Sally K. Sears Coder, Jenner and Block LLP, Chicago, IL, Kevin J. Visser, Simmons Perrine Moyer Bergman PLC, Thomas D. Wolle, Moyer & Bergman, PLC, Cedar Rapids, IA, for Defendant.
ORDER
LINDA R. READE, Chief District Judge.
TABLE OF CONTENTS
I. INTRODUCTION ......................................................... 870
II. RELEVANT PRIOR PROCEEDINGS .......................................... 870
A. Administrative Proceedings ....................................... 870
1. Ms. Starke's Charge of Discrimination ......................... 870
2. Ms. Starke's limitations period ............................... 871
B. The EEOC's Complaint ............................................. 872
C. Answer ........................................................... 872
D. Motion ........................................................... 872
III. STANDARD FOR SUMMARY JUDGMENT ....................................... 873
*870
IV. THE MERITS ........................................................... 873
A. Arguments ......................................................... 873
1. Motion ......................................................... 873
2. Resistance ..................................................... 874
3. Reply .......................................................... 875
4. Surreply ....................................................... 875
B. Analysis .......................................................... 876
1. Holding ........................................................ 876
2. Alternate holding .............................................. 877
a. The EEOC generally may not resurrect dead claims ............ 877
b. The continuing violation doctrine is largely inapplicable ... 879
i. Ms. Carney .............................................. 880
ii. Ms. Shadden ............................................. 881
iii. Ms. Skaggs .............................................. 881
C. Disposition as to the Twelve Women ................................ 882
V. MS. BEDFORD .......................................................... 882
A. Arguments ......................................................... 882
B. Analysis .......................................................... 883
VI. CONCLUSION .......................................................... 884
I. INTRODUCTION
The matter before the court is Defendant CRST Van Expedited, Inc.'s Motion for Summary Judgment Based on Statute of Limitations and Other Grounds ("Motion") (docket no. 147).
II. RELEVANT PRIOR PROCEEDINGS[1]
A. Administrative Proceedings
1. Ms. Starke's Charge of Discrimination
On December 1, 2005, Plaintiff-Intervener Monika Starke ("Ms.Starke") presented a Charge of Discrimination ("Charge") to Plaintiff Equal Employment Opportunity Commission ("EEOC"). Ms. Starke alleged that her employer, Defendant CRST Van Expedited, Inc. ("CRST"), "discriminated against [her] on the basis of... sex ..., in violation of Title VII of the Civil Rights Act of 1964, [42 U.S.C. § 2000e et seq.,] as amended" ("Title VII"). Def.'s App'x at 2998. Ms. Starke alleged the following "particulars" in her Charge:
I was hired by [CRST] on June 22, 2005 in the position of Truck Driver. Since my employment began with [CRST,] I have been subjected to sexual harassment on two occasions by my Lead Trainers. On July 7, 2005, Bob Smith, Lead Trainer[,] began to make sexual remarks to me whenever he gave me instructions. .... On July 14, 2005, I contacted the dispatcher and was told that I could not get off the truck until the next day. On July 18, 2005 through August 3, 2005, David Goodman, Lead Trainer, forced me to have unwanted sex with him on several occasions while we were traveling in order to get a passing grade.
Id. Further, Ms. Starke alleged that CRST "did not state why I was subjected to sexual harassment[,] which created a hostile work environment." Id.
*871 Ms. Starke asked the EEOC to file her Charge and cross-file it with the Iowa Civil Rights Commission ("ICRC"). Pursuant to a work-sharing agreement,[2] the EEOC formally received the Charge on behalf of both agencies and deemed the Charge to be "initially instituted" with the ICRC. (In the work-sharing agreement, the EEOC and ICRC reciprocally designated each other as agents for receiving charges of unlawful employment practices.) The EEOC sent a copy of the Charge to the ICRC, notified the ICRC that the Charge "is to be initially investigated by the EEOC," id. at 3000, and began its investigation. The ICRC had waived its right to exclusive jurisdiction over charges initially instituted with it. Here, the ICRC filed the Charge on December 5, 2005 but apparently stayed its own investigation pending the EEOC proceedings.
2. Ms. Starke's limitations period
Because the EEOC deemed the Charge to be "initially instituted" with the ICRC, Ms. Starke's Charge was timely filed as to any alleged unlawful employment practice occurring on or after February 4, 2005, i.e., any such practice occurring within 300 days of the filing of the Charge. In relevant part, Title VII's statute of limitations provides:
A charge under this section shall be filed within one hundred and eighty days after the alleged unlawful employment practice occurred ..., except that in a case of an unlawful employment practice with respect to which the person aggrieved has initially instituted proceedings with a State ... with authority to grant or seek relief from such practice..., such charge shall be filed by or on behalf of the person aggrieved within three hundred days after the alleged unlawful employment practice occurred....
42 U.S.C. § 2000e-5(e)(1); see, e.g., Occidental Life Ins. Co. of Cal. v. EEOC, 432 U.S. 355, 359-60 n. 8, 97 S. Ct. 2447, 53 L. Ed. 2d 402 (1977) ("If a charge has been initially filed with or referred to a state... agency, it must be filed with the EEOC within 300 days after the practice occurred...."). An influential treatise explains
there is a dual aspect to the Title VII limitations periods; they have a retrospective, as well as a prospective, aspect. In other words, not only must charges be filed within 180 (or 300) days after a discriminatory event, but also, as a general rule, the aggrieved party can only achieve redress for discriminatory acts which occurred 180 (or 300) days prior to the filing of charges.
4 Lex K. Larson, Employment Discrimination § 72.02, at 72-5 (2d ed. July 2008); see, e.g., Nat'l R.R. Passenger Corp. v. Morgan, 536 U.S. 101, 109, 122 S. Ct. 2061, 153 L. Ed. 2d 106 (2002) ("An individual must file a charge within the statutory time period and serve notice upon the person against whom the charge is made. In a State that has an entity with the authority to grant or seek relief with respect to the alleged unlawful practice, an employee who initially filed a grievance with that agency must file the charge with the EEOC within 300 days of the employment practice."); Millage v. City of Sioux City, 258 F. Supp. 2d 976, 984-86 (N.D.Iowa 2003) (Bennett, C.J.) (discussing the ICRC and concluding that in Iowa an administrative charge is timely so long as it is filed within 300 days).
*872 B. The EEOC's Complaint
On September 27, 2007, the EEOC filed the instant lawsuit on behalf of Ms. Starke "and a class of similarly situated female employees of [CRST]...." Complaint (docket no. 2), at 1. Pursuant to 42 U.S.C. § 2000e-5(f)(1) and (3) and 42 U.S.C. § 1981a, the EEOC brings suit in its own name "to correct [CRST's] unlawful employment practices on the basis of sex, and to provide appropriate relief to [Ms.] Starke and a class of similarly situated female employees of [CRST] who were adversely affected by such practices." First Amended Complaint ("EEOC's Complaint") (docket no. 8), at 1.[3] The EEOC generally alleges that Ms. Starke and the other similarly situated women "were adversely affected ... when their lead drivers or team drivers subjected them to sexual harassment and to a sexually hostile working environment based on their gender, and CRST failed to prevent, correct, and protect them...." Id. Notably, the EEOC did not allege that CRST was engaged in "a pattern or practice" of illegal sex-based discrimination or otherwise plead a violation of 42 U.S.C. § 2000e-6.
At present, the EEOC seeks monetary and equitable relief on behalf of approximately 150 allegedly aggrieved persons at the trial of this matter. The court refers to the "similarly situated female employees" who are referenced in the EEOC's Complaint as "allegedly aggrieved persons" and not as "class members." See Order (docket no. 197), at 9-10 (citing in part 42 U.S.C. § 2000e-5(f)(1) (referring to "[t]he person or persons aggrieved" and "the person aggrieved")). The phrase "allegedly aggrieved persons" comports with the language of § 2000e-5 and reflects the fact that the EEOC "may seek specific relief for a group of aggrieved individuals without first obtaining class certification pursuant to Federal Rule of Civil Procedure 23." Gen. Tel. Co. of Nw., Inc. v. EEOC, 446 U.S. 318, 333-34, 100 S. Ct. 1698, 64 L. Ed. 2d 319 (1980) (footnote omitted). For example, the EEOC may pursue relief on behalf of a group of allegedly aggrieved persons "even though competing interests are involved," id. at 331, 100 S. Ct. 1698, or even if there is "a huge variance in the nature and extent of the injuries suffered" within such group, In re Bemis Co., 279 F.3d 419, 421 (7th Cir.2002) (Posner, J.). The EEOC is "the master of its own case" and possesses statutory authority to proceed on behalf of allegedly aggrieved persons without their consent. EEOC v. Waffle House, Inc., 534 U.S. 279, 291-92, 122 S. Ct. 754, 151 L. Ed. 2d 755 (2002). Any limitation upon the EEOC to sue only on behalf of "similarly situated female employees" in this case was self-imposed.
C. Answer
On November 30, 2007, CRST filed an Answer and Affirmative Defenses (docket no. 11). On May 1, 2008, CRST filed an Amended Answer and Affirmative Defenses ("Answer") (docket no. 36) to assert an additional affirmative defense. CRST denies the substance of the EEOC's Complaint and asserts seven affirmative defenses, including waiver or release, failure to exhaust administrative remedies and "untimel[iness]." Answer at 2.
D. Motion
On February 13, 2009, CRST filed the Motion. On March 16, 2009, the EEOC filed a Resistance (docket no. 165). On March 31, 2009, CRST filed a Reply (docket no. 180). On April 14, 2009, the EEOC filed a Surreply (docket no. 192).
*873 CRST requests oral argument on the Motion, but the court finds oral argument is not appropriate. The Motion is fully submitted and ready for decision.
III. STANDARD FOR SUMMARY JUDGMENT
Summary judgment is appropriate if the record shows that "there is no genuine issue as to any material fact and that the movant is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). "An issue of fact is genuine when `a reasonable jury could return a verdict for the nonmoving party' on the question." Woods v. DaimlerChrysler Corp., 409 F.3d 984, 990 (8th Cir.2005) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S. Ct. 2505, 91 L. Ed. 2d 202 (1986)). A fact is material when it "might affect the outcome of the suit under the governing law." Anderson, 477 U.S. at 248, 106 S. Ct. 2505. The court must view the record in the light most favorable to the nonmoving party and afford it all reasonable inferences. Baer Gallery, Inc. v. Citizen's Scholarship Found. of Am., 450 F.3d 816, 820 (8th Cir.2006) (citing Drake ex rel. Cotton v. Koss, 445 F.3d 1038, 1042 (8th Cir.2006)).
Procedurally, the moving party bears "the initial responsibility of informing the district court of the basis for its motion and identifying those portions of the record which show a lack of a genuine issue." Hartnagel v. Norman, 953 F.2d 394, 395 (8th Cir.1992) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S. Ct. 2548, 91 L. Ed. 2d 265 (1986)). Once the moving party has successfully carried its burden under Rule 56(c), the nonmoving party has an affirmative burden to go beyond the pleadings and by depositions, affidavits, or otherwise, "set out specific facts showing a genuine issue for trial." Fed.R.Civ.P. 56(e)(2); see, e.g., Baum v. Helget Gas Prods., Inc., 440 F.3d 1019, 1022 (8th Cir. 2006) ("Summary judgment is not appropriate if the non-moving party can set forth specific facts, by affidavit, deposition, or other evidence, showing a genuine issue for trial."). The nonmoving party must offer proof "such that a reasonable jury could return a verdict for the nonmoving party." Anderson, 477 U.S. at 248, 106 S. Ct. 2505. "`Evidence, not contentions, avoids summary judgment.'" Reasonover v. St. Louis County, Mo., 447 F.3d 569, 578 (8th Cir.2006) (quoting Mayer v. Nextel W. Corp., 318 F.3d 803, 809 (8th Cir.2003)).
IV. THE MERITS
A. Arguments
1. Motion
In the Motion, CRST asks the court to bar the EEOC from seeking monetary and equitable relief on behalf of twelve women insofar as they allege they were sexually harassed before February 4, 2005, i.e., more than 300 days prior to the filing of Ms. Starke's Charge on December 1, 2005. Specifically, CRST asks the court to dismiss the "claims" the EEOC is pursuing on behalf of (1) Ms. Antonia Aguilar, (2) Ms. Linda Austin, (3) Ms. Kelli Carney (in part), (4) Ms. Patrice Cohen, (5) Ms. Catherine Howard, (6) Ms. Geraldine Leach, (7) Ms. Margaret McCain, (8) Ms. Karen McCall, (9) Ms. Rachel Perhealth, (10) Ms. Faith Shadden (in part), (11) Ms. Linda Skaggs (in part) and (12) Ms. Priscilla Stephenson (collectively, "the twelve women"). Motion (docket no. 147-5), at 8. CRST asserts the "claims" of the twelve women fall outside of § 2000e-5's relevant 300-day statute of limitations. CRST concedes that all the other women the EEOC disclosed in this case generally may "piggyback" on Ms. Starke's timely charge, because they allege they were sexually harassed on or after February 4, 2005 and the EEOC has asserted a pattern or practice claim in this litigation. Brief in Support of Motion (docket no. 147-6), at 9 (citations omitted); cf. Gen. Tel., 446 U.S. *874 at 331 ("Any violations that the EEOC ascertains in the course of a reasonable investigation of the charging party's complaint are actionable."); EEOC v. Gen. Elec. Co., 532 F.2d 359, 364 (4th Cir.1976) (permitting the EEOC to use a timely filed charge of discrimination as a "jurisdictional springboard").
In the alternative, CRST asks the court to bar the EEOC from seeking relief on behalf of the twelve women under its inherent power to impose discovery sanctions. CRST argues:
The parties have focused virtually all of their discovery on the period from January 1, 2005 to October 15, 2008.[The] EEOC should not be permitted, after discovery is closed, to attempt to extend the period in suit by several years. Moreover, the claims of only 13[sic] of the 153 [allegedly aggrieved women] arose in whole or in part prior to February 4, 2005, and such a small number of sporadic claims over several years provides no basis at this late stage for EEOC to [seek relief] as far as 1997, when the earliest of the [women's] claims arose. Id. at 10.
Finally, CRST presents the court with a number of independent reasons why the court should bar the EEOC from seeking relief on behalf of Mss. Austin, Aguilar, Cohen, Leach, McCain, Shadden and Skaggs. Among other things, CRST argues (1) Mss. Aguilar, Leach, McCain, Shadden and Skaggs did not suffer severe or pervasive sexual harassment; (2) Mss. Cohen, Leach and McCain did not promptly report their allegations of sexual harassment to CRST; (3) CRST took prompt remedial action with respect to Ms. Shadden's allegation of sexual harassment; and (4) Mss. Austin, McCall and Cohen filed timely charges of discrimination with the EEOC but failed to file suit within ninety days after the EEOC issued them right-to-sue letters.
2. Resistance
The EEOC claims it is not bound by any statute of limitation. The EEOC opines that "[t]his is a case brought by the [EEOC] alleging a pattern or practice of tolerating a hostile work environment based on sexual harassment" that CRST wrongly construes "as if it were a single claim of discrimination brought by a private individual." Resistance at 4. The EEOC maintains it is immune from § 2000e-5's statute of limitations and may seek relief for victims of a pattern or practice of employment discrimination "as far back as the evidence warrants." Id. at 6.
The EEOC "expects to prove that the pattern or practice [of tolerating sexual harassment] extended at least back to 1997 when ... [Ms.] Janet Boot was sexually harassed in the same manner as were later victims." Id. The EEOC characterizes the pattern or practice of sexual harassment at CRST as forming a "continuing violation" as contemplated in Morgan. The EEOC thus concludes no limitations period may be enforced "so long as one incident included in the hostile work environment occurred within the statutory period." Id. at 7.
The EEOC concedes that a number of district courts "have refused to include claimants beyond the 300 days" because of (1) "the language of [§ 2000e-5]" and (2) "the policies supporting repose." Id. The EEOC maintains these district courts were wrong. The EEOC avers that any distinction between § 2000e-6 and § 2000e-5 "is not useful" because, in its view, both statutes authorize pattern or practice cases and require "identical" elements of proof. Id. Without citing any controlling legal authority, the EEOC concludes that "there is no difference between pleading either statute." Id. at 11. The EEOC maintains that the Lilly Ledbetter *875 Fair Pay Act of 2009, Pub.L. No. 111-2 (S 181), 123 Stat. 5 (Jan. 29, 2009) ("Ledbetter Act") evinces a generalized Congressional intent that "Title VII is to be broadly interpreted to reach systems of discrimination ... without artificial reliance on the charge filing periods to exclude victims of those systems of discrimination." Id. at 11.
The EEOC resists CRST's alternative argument that the court impose a discovery sanction upon the EEOC and bar the EEOC from seeking relief for the twelve women. The EEOC states: "CRST's claim that [the] EEOC has added these early claims at a `late stage,' because it agreed to focus discovery on the period after January 1, 2005, is simply false." Id. at 6. The EEOC represents to the court that it "always told" CRST that it intended to pursue claims as far back into the past as possible. Id. The EEOC concludes its "tactical decision that it did not have the resources to attempt to locate all of the potential victims of CRST's conduct does not preclude it from proving that the discriminatory environment existed and that identified victims are entitled to compensation." Id. (footnote omitted).
Finally, the EEOC resists all of CRST's independent reasons why the claims of Mss. Aguilar, Cohen, Leach, McCain, Shadden and Skaggs fail on their merits. The EEOC variously argues (1) the twelve women suffered severe and pervasive sexual harassment; (2) the twelve women promptly reported the harassment they suffered; (3) CRST failed to take prompt remedial action with respect to Ms. Shadden's allegation of sexual harassment; and (4) the failure of any "class member" to file her own lawsuit after receiving a right-to-sue letter from the EEOC does not bar the EEOC from seeking relief on her behalf at a later date.
3. Reply
In Reply, CRST reasserts many of the arguments in its Motion. CRST maintains that the EEOC's construction of § 2000e-5(e)(1) is absurd, because it would permit the EEOC to revive stale claims with impunity. Further, CRST argues the EEOC's arguments are misplaced. Drawing upon arguments in its contemporaneously filed "Motion for Summary Judgment on EEOC's Pattern or Practice Claim" (docket no. 150) ("Pattern or Practice Motion"), CRST maintains the EEOC has failed to present sufficient evidence to establish that CRST has engaged in "a pattern or practice [of tolerating sexual harassment]much less one that extends back earlier than February 4, 2005." Reply at 6. Absent proof of a pattern or practice of tolerating sexual harassment, the entire foundation of the EEOC's Resistance collapses.
Even if the court were to deny the Pattern or Practice Motion, CRST insists that the EEOC is "cavalierly dismiss[ing]" important distinctions between § 2000e-5 and § 2000e-6. CRST points out that, by its very terms, § 2000e-5 contains a limitations period. CRST maintains there is no textual support within § 2000e-5 for the EEOC's attempt to seek relief beyond the 300-day limitations period. CRST maintains Morgan is largely inapplicable to the case at bar, because each of the twelve women alleges different harassment by different harassers at different workplaces. CRST argues, however, that "given [the] EEOC's inability to muster any proof of a pattern or practice predating February 4, 2005, there is no need for the Court to address th[ese] [alternative] legal issue[s]." Id. at 9.
4. Surreply
The EEOC's arguments in its Surreply solely concern its ability to pursue monetary *876 and other relief at trial on behalf of a thirteenth woman, Ms. Belinda Bedford. The court presents these arguments in Part V infra.
B. Analysis
1. Holding
On April 30, 2009, the court granted the Pattern or Practice Motion. See Order (docket no. 197), passim. After pointing out ambiguities in the EEOC's Complaint, the court "assume[d] without deciding that at least one of two legal principles is true: either (1) § [2000e-5] somehow permits the EEOC to pursue a pattern or practice claim and thereby render § [2000e-6] a mere redundancy in the law or (2) the EEOC has constructively amended its complaint to assert a § [2000e-6] claim against CRST in this lawsuit in addition to its § [2000e-5] claim." Id. at 26. "In other words, the court assume[d] without deciding that this is a sexual harassment pattern or practice case." Id. The court canvassed the summary judgment record and held, as a matter of law, that the EEOC had presented the court with insufficient admissible evidence for a reasonable jury to find that CRST has engaged in a pattern or practice of tolerating sexual harassment.
The pivotal issue before the court, then, is whether Title VII's statute of limitations, 42 U.S.C. § 2000e-5(e)(1), applies when the EEOC brings suit in its own name on behalf of a group of allegedly aggrieved persons under 42 U.S.C. § 2000e-5 and there is insufficient evidence of a pattern or practice of unlawful employment discrimination. The EEOC's entire Resistance is premised upon the proposition that it is immune from § 2000e-5's statute of limitations in this case because it has a viable pattern or practice claim against CRST. In other words, the EEOC assumes that its pattern or practice allegations provide the requisite legal justification to revive these otherwise stale claims; the EEOC apparently assumes that, absent a showing of a pattern or practice of employment discrimination, § 2000e-5 bars the EEOC from seeking relief on behalf of the twelve women.
In light of the court's ruling on the Pattern or Practice Motion, the EEOC's fundamental premise that it has a viable pattern or practice claim against CRST is false. For this reason, the court shall grant the Motion as to the twelve women as unresisted. The EEOC has not cited any controlling legal authority that indicates it is not bound by any statute of limitations when pursuing relief on behalf of a group of allegedly aggrieved persons under § 2000e-5 absent a showing of a pattern or practice of unlawful employment discrimination. The Ledbetter Act has no relevance here. Congress enacted the Ledbetter Act "to clarify that a discriminatory compensation decision or other practice .... occurs each time compensation is paid to the discriminatory compensation decision or other practice[.]" 123 Stat. at 5. There is no indication Congress intended the Ledbetter Act to serve as a trump card that the EEOC might use to supersede all statutes of limitations in our nation's various civil rights acts.
In sum, the court holds that the EEOC is barred from seeking relief at trial on behalf of the twelve women insofar as they allege that they were sexually harassed before February 4, 2005.[4] The court need not reach CRST's argument concerning the appropriateness of a discovery sanction. *877 Although CRST presents the court with legal reasons to bar the EEOC from seeking relief at trial on behalf of Mss. Shadden and Skaggs insofar as they allege that they were sexually harassed on or after February 4, 2005, the court shall deny this portion of the Motion without prejudice. The court finds it more appropriate to consider this portion of the Motion in conjunction with CRST's pending motions for summary judgment on the merits of the various allegedly aggrieved persons' claims. Accordingly, the court shall grant in part and deny in part the Motion.
2. Alternate holding
Even if the court did not deem the Motion to be unresisted, the court would nonetheless bar the EEOC from seeking relief at trial on behalf of the twelve women insofar as they allege that they were sexually harassed before February 4, 2005. It is the opinion of the court that (1) the EEOC generally may not resurrect dead claims and (2) the continuing violation doctrine largely does not apply in this case.
a. The EEOC generally may not resurrect dead claims
The Supreme Court has not directly addressed whether Title VII's statute of limitations binds the EEOC, and the circuit courts of appeals are silent.[5] Matters are messy at the district court level. Other district courts have "blurred the line between class-wide claims brought pursuant to § [2000e-5] and pattern-or-practice claims brought pursuant to § [2000e-6]." EEOC v. Scolari Warehouse Mkts., Inc., 488 F. Supp. 2d 1117, 1143 (D.Nev.2007). As a consequence, such district courts offer widely divergent analyses that are impossible to reconcile or even tidily summarize. All that may be said is that, whereas some district courts appear to indicate the EEOC may be subject to a statute of limitations, see, e.g., EEOC v. Burlington Med. Supplies, Inc., 536 F. Supp. 2d 647, 659-60 (E.D.Va.2008); EEOC v. Wyndham Worldwide Corp., No. C07-1531RSM, 2008 WL 4527974, *6-8 (W.D.Wash. Oct. 3, 2008); EEOC v. KCD Constr., Inc., No. 05-2122(DSD/SRN), 2007 WL 1129220, *4, 2007 U.S. Dist. LEXIS 28061, *10 (D.Minn. Apr. 16, 2007); EEOC v. GLC Rests., Inc., No. CV-05-0618-PCT-DGC, 2006 WL 3052224, *2-3 (D.Ariz. Oct. 26, 2006); EEOC v. Custom Cos., Nos. 02-C-3768 & 03-C-2293, 2004 WL 765891, *2-11 (N.D.Ill. Apr. 7, 2004); EEOC v. Optical Cable Corp., 169 F. Supp. 2d 539, 544-50 (W.D.Va.2001); EEOC v. Harvey L. Walner & Assocs., No. 95-1355, 1995 WL 470233, *3-6 (N.D.Ill. Aug. 7, 1995), aff'd on other grounds, 91 F.3d 963 (7th Cir. 1996); EEOC v. Sears, Roebuck & Co., 490 F. Supp. 1245, 1258-62 (M.D.Ala.1980), other district courts appear to grant the EEOC the power to resurrect stale claims, see, e.g., EEOC v. Ceisel Masonry, Inc., 594 F. Supp. 2d 1018, 1022 (N.D.Ill.2009); EEOC v. Worthington, Moore & Jacobs, Inc., 582 F. Supp. 2d 731, 737-38 (D.Md. 2008); EEOC v. Scolari Warehouse Markets, Inc., 488 F. Supp. 2d 1117, 1136 (D.Nev.2007); EEOC v. L.A. Weight Loss, 509 F. Supp. 2d 527, 534-36 (D.Md.2007); EEOC v. Dial Corp., 156 F. Supp. 2d 926, 966-69 (N.D.Ill.2001); EEOC v. Mitsubishi *878 Motor Mfg. of Am., Inc., 990 F. Supp. 1059, 1083-88 (C.D.Ill.1998).
After surveying these district court cases, the court finds the better reasoned authority holds that Title VII generally does not grant the EEOC the power to resurrect otherwise stale claims of unlawful employment discrimination.[6] The plain language of § 2000e-5 contemplates that the "charge shall be filed by or on behalf of the person aggrieved within three hundred days after the alleged unlawful employment practice occurred[.]" 42 U.S.C. § 2000e-5(e)(1) (emphasis added). Section 2000e-5 makes no exception for the EEOC, even though it clearly contemplates EEOC enforcement actions. Any ambiguity in the statute is the consequence of early judicial decisions, which granted the EEOC the ability to use an individual charge of discrimination as "a jurisdictional springboard" but failed to discuss the statute of limitations problems that might arise if courts were to allow the EEOC to recover for non-charging parties with stale claims. See, e.g., Gen. Elec., 532 F.2d at 364 (cited with approval in Gen. Tel., 446 U.S. at 331, 100 S. Ct. 1698 ("Any violations that the EEOC ascertains in the course of a reasonable investigation of the charging party's complaint are actionable.")).
The EEOC's proposed construction of its powers is inconsistent with its statutory mandate. The district court in Burlington aptly observed:
The EEOC's special statutory mandate does not entitle it to "expand substantive rights, such as reviving stale claims" that would not otherwise be actionable under Title VII. On the contrary, the EEOC's ability to secure enforcement of Title VII on behalf of the public is primarily served through its ability to secure injunctive relief, not bootstrapping individual damage claims into the EEOC's enforcement action.
536 F.Supp.2d at 659 (citation omitted); see also Bemis, 279 F.3d at 421 ("The EEOC's primary role is that of a law enforcement agency and it is merely a detail that it pays over any monetary relief obtained to the victims of the defendant's violation rather than pocketing the money itself and putting them to the bother of suing separately.")
To adopt the EEOC's construction of Title VII would permit the EEOC to destroy all principles of repose and force employers to defend against zombie-like claims from the distant past. As the district court in Sears recognized, the Supreme Court counseled against any such construction of § 2000e-5 in Occidental Life:
The [Supreme] Court implied in dicta that, unlike the 180-day period of [§ ] 2000e-5(f)(1), the 180-day period of [§] 2000e-5(e) is intended to be a limitations period. [T]he Court went on to state: "Congress did express concern for the need of time limitations in the fair operation of the Act, but that concern was directed entirely to the initial filing of a charge with the EEOC and prompt notification thereafter to the alleged violator. The bills passed in both the House and the Senate contained short time periods within which charges were to be filed with the EEOC and notice given to the employer. And the debates and reports in both Houses made evident that the statute of limitations problem was *879 perceived in terms of these provisions, rather than in terms of a later limitation on the EEOC's power to sue. That perception was reflected in the final version of the 1972 Act, which requires that a charge must be filed with the EEOC within 180 days of the alleged violation of Title VII...."
"The fact that the only statute of limitations discussions in Congress were directed to the period preceding the filing of an initial charge is wholly consistent with the Act's overall enforcement structure a sequential series of steps beginning with the filing of a charge with the EEOC. Within this procedural framework, the benchmark, for purposes of a statute of limitations, is not the last phase of the multistage scheme, but the commencement of the proceeding before the administrative body."
While this Court is mindful of the fact that the Court possibly had in mind only a limitations period for charges filed by individuals, the message is clear that in Occidental Life the majority of the Court in dicta recognized the congressional intent that [§] 2000e-5(e) is an example of a statute of limitations period applicable to suits filed under [§] 2000e-5. This Court is of the opinion that said period is also applicable to suits initiated by the EEOC....
Sears, 490 F.Supp. at 1260 (footnote omitted) (quoting Occidental Life, 432 U.S. at 371-72, 97 S. Ct. 2447); see, e.g., Wyndham Worldwide, 2008 WL 4527974, at *6-8 (applying statute of limitations to the EEOC and holding that the EEOC may not "resurrect[] stale claims" in absence of pattern or practice claim); GLC Rests., 2006 WL 3052224, at *2-3 (similar).
b. The continuing violation doctrine is largely inapplicable
Morgan is largely inapplicable to the case at bar, because the EEOC has not presented evidence to show that "all acts which constitute [a] claim are part of the same unlawful employment practice and at least one act falls within the time period." 536 U.S. at 122, 122 S. Ct. 2061. As previously indicated, "there is nothing in the record which a reasonable jury might cobble together to show [CRST's] failures were part of a pattern or a practice of tolerating sexual harassment instead of merely isolated or sporadic failures over the course of four (or perhaps twelve) years." Order (docket no. 197), at 62 (emphasis in original). At most, Morgan only applies in a limited respect as to the individual "claims" of harassment that the EEOC presses in this action. Morgan does not permit the EEOC to "use some [allegedly aggrieved persons'] timely charges to support other [allegedly aggrieved persons'] entirely untimely claims." GLC Rests., 2006 WL 3052224, at *2.
Therefore, Morgan certainly does not apply to the ability of the EEOC to seek relief at trial on behalf of nine women, Mss. Aguilar, Austin, Cohen, Howard, Leach, McCain, McCall, Perhealth, and Stephenson. None of these women allege any harassment on or after February 4, 2005. Ms. Aguilar alleges sexual harassment in 2004; Ms. Austin in 2001; Ms. McCain in 2003; Ms. Cohen in 2003 and 2004; Ms. Howard in 2004; Ms. Leach in 2004 and January of 2005; Ms. McCall in 2004; Ms. Perhealth in January of 2005; and Ms. Stephenson in 1999. Accordingly, the court must grant the Motion as to these nine women.
Matters are somewhat more complicated with respect to the remaining three women, Mss. Carney, Shadden and Skaggs. Each of these three women alleges she was sexually harassed before and after February 4, 2005. CRST asks the court to bar the EEOC from resurrecting that portion of each woman's "claim" occurring *880 before such date; CRST does not move for summary judgment on limitations grounds for any conduct occurring on or after February 4, 2005. The court discusses each woman's allegations, in turn, and analyzes them under Morgan separately.
i. Ms. Carney
Ms. Carney worked for CRST from September of 2004 to April of 2005, when she quit and went to work for Swift, Inc. She returned to CRST from June 15, 2005 to June 30, 2005. She left CRST on June 30, 2005 after entering a hospital for "pregnancy related issues." Def.'s Statement of Undisputed Material Facts at 114. Ms. Carney alleges she was sexually harassed by three men while she worked for CRST during these two stints: Messrs. Joe McCarthy, Raymond Coplan and Chris Evans.
Ms. Carney alleges her trainer Mr. McCarthy harassed her in late 2004 by promising to promote her to co-driver status and pay for many of her expenses if she had sexual relations with him. Ms. Carney and Mr. McCarthy had sexual relations on a daily basis in the cab of the semi-truck they shared. Ms. Carney also spent a week with Mr. McCarthy at his home in Boston, Massachusetts and repeatedly had sex and dinner with him.
Ms. Carney alleges Mr. Evans harassed her in late 2004. Mr. Evans was paired with her as a co-driver. He did not offer her money for sex. He would rub her shoulders, ask her why she would not have sex with an older man and told her he could "rock [her] world." Def.'s App'x at 627.
Ms. Carney alleges Mr. Coplan harassed her for a period of a month, apparently before and after February 4, 2005. When Mr. Coplan first boarded the truck, he told Ms. Carney: "Watch, I'm going to fuck you." Id. at 623. On their second night in the truck, he insisted that she sleep in his bed and, if she did not, he would leave her on the side of the road. That night and every night thereafter for the next month Mr. Coplan held Ms. Carney down and raped her. He threatened to kill her if she told CRST about his behavior.
CRST only moves for summary judgment with respect to Ms. Carney's allegations of sexual harassment against Messrs. McCarthy and Evans. CRST does not move for summary judgment with respect to Ms. Carney's allegations of sexual harassment against Mr. Coplan, because she alleges he continuously sexually harassed her before and after February 4, 2005.
Applying Morgan, the court agrees with CRST's analysis. There is no discernible connection between the harassment of Ms. Carney by Messrs. McCarthy and Evans, on the one hand, and the harassment of Ms. Carney by Mr. Coplan, on the other. In other words, there is no evidence the actions of the three men were all "part of the same unlawful employment practice." 536 U.S. at 122, 122 S. Ct. 2061. Each of the three sets of allegations by Ms. Carney involves different alleged harassers, different workplaces and different circumstances. At most, the EEOC has shown anecdotal, isolated discriminatory events. Cf. Tademe v. St. Cloud State Univ., 328 F.3d 982, 988-89 & n. 4 (8th Cir.2003) (applying Morgan and concluding that allegations were "entirely anecdotal and at best shows isolated discriminatory events" not a pattern or practice of discrimination or anything else that might fall within the ambit of the continuing violation doctrine) (citing in part EEOC v. McDonnell Douglas Corp., 191 F.3d 948, 952-53 (8th Cir. 1999) (affirming dismissal of a pattern or practice claim under the federal age discrimination act because the EEOC proved nothing more than anecdotal discriminatory acts)); Wyndham Worldwide, 2008 WL *881 4527974, at *6-8 (declining to apply Morgan across allegedly aggrieved persons); GLC Rests., 2006 WL 3052224, at *2-3 (similar).
Accordingly, the court shall grant the Motion as to Ms. Carney. The EEOC may seek relief for Ms. Carney only insofar as she alleges she was sexually harassed by Mr. Coplan. The court expresses no view as to whether harassment by Messrs. McCarthy and Evans is admissible at trial.
ii. Ms. Shadden
Ms. Shadden worked for CRST from October of 2004 through December of 2004. She was rehired in May of 2006 and presently works for CRST. Ms. Shadden worked for a number of other companies before CRST rehired her.
Ms. Shadden claims an unnamed co-driver sexually harassed her in 2004. He "was very abusive in a sexual way," engaged in "sex talk," asked her if she "had... ever experienced a sexual relationship or any other type of relationship with a black man," put his hand on her thigh and touched her in her "bra area." Def.'s App'x at 2596-97.
Ms. Shadden also alleges that, after she returned to CRST in 2006, she endured repeated sexual advances. Three other drivers "hit on [her] once." Id. at 2602. Ms. Shadden also claims Mr. Carl Bowling, a student driver whom she was training, sexually harassed her in late April and early May of 2007. She alleges Mr. Bowling asked her to pretend to be his girlfriend around other men, asked her if she would get into bed with him and, on one occasion, jumped into her bed and refused to leave. Mr. Bowling frightened Ms. Shadden because of his persistence and his laughter. Also, his conduct grew more aggressive over time.
CRST does not move for summary judgment on limitations grounds with respect to the post-February 4, 2005 conduct of Mr. Bowling and the three other men. CRST only moves for summary judgment with respect to Ms. Shadden's allegations of sexual harassment against the unnamed co-driver in 2004.
Applying Morgan, the court agrees with CRST's analysis. There is no discernible connection between the harassment of Ms. Shadden by the unnamed co-driver, on the one hand, and the harassment of Ms. Shadden by Mr. Bowling and the other three men on the other. In other words, there is no evidence the actions were all "part of the same unlawful employment practice." Morgan, 536 U.S. at 122, 122 S. Ct. 2061. Each of the two sets of allegations by Ms. Carney involves different alleged harassers, different workplaces and different circumstances. At most, the EEOC has shown anecdotal, isolated discriminatory events. Cf. Tademe, 328 F.3d at 988-89 & n. 4; Wyndham Worldwide, 2008 WL 4527974, at *6-8 (declining to apply Morgan across allegedly aggrieved persons); GLC Rests., 2006 WL 3052224, at *2-3 (similar).
Accordingly, the court shall grant the Motion in part as to Ms. Shadden. The EEOC may seek relief for Ms. Shadden only insofar as she alleges she was sexually harassed by Mr. Bowling and the three other men. The court expresses no view as to whether harassment by the unnamed co-driver is inadmissible at trial.
iii. Ms. Skaggs
Ms. Skaggs worked at CRST from February of 2003 through May of 2005. Ms. Skaggs alleges her first trainer, Mr. Dartmouth Robinson, and her last co-driver, Mr. Eules "J" Baker, Jr., sexually harassed her.
Ms. Skaggs drove with Mr. Robinson on one day on February 21, 2003. She claims Mr. Robinson told Ms. Skaggs she could *882 sleep in the nude if she wanted or could sit with him up front nude if she liked. He mentioned that other female drivers would take their shirts off and flash other drivers.
Ms. Skaggs rode with Mr. Baker for three weeks between March 31, 2005 and April 17, 2005. Mr. Baker bragged about his sexual prowess and experiences, made perverted comments on a daily basis and he propositioned her for sex five times. He bragged he could "fuck [her] brains out" and "make [her] have more than one orgasms [sic], more than anybody else [she had] ever known." Def.'s App'x at 2868. He also offered to pay her for $100 to have sex with him in Reno, Nevada.
CRST only moves for summary judgment with respect to Ms. Skaggs's allegations of sexual harassment against Mr. Robinson. CRST does not move for summary judgment on limitations grounds with respect to Ms. Skaggs's allegations of sexual harassment against Mr. Baker, because she alleges he sexually harassed her after February 4, 2005.
Applying Morgan, the court agrees with CRST's analysis. There is no discernible connection between the harassment of Ms. Skaggs by Mr. Robinson, on the one hand, and the harassment of Ms. Skaggs by Mr. Baker, on the other. In other words, there is no evidence the actions of the two men were all "part of the same unlawful employment practice." 536 U.S. at 122, 122 S. Ct. 2061. The two instances of sexual harassment involve different alleged harassers, different workplaces and different circumstances. At most, the EEOC has shown anecdotal, isolated discriminatory events. Cf. Tademe, 328 F.3d at 988-89 & n. 4; Wyndham Worldwide, 2008 WL 4527974, at *6-8 (declining to apply Morgan across allegedly aggrieved persons); GLC Rests., 2006 WL 3052224, at *2-3 (similar).
Accordingly, the court shall grant the Motion in part as to Ms. Skaggs. The EEOC may seek relief for Ms. Skaggs only insofar as she alleges she was sexually harassed by Mr. Baker. The court expresses no view as to whether harassment by Mr. Robinson is inadmissible evidence at trial.
C. Disposition as to the Twelve Women
In sum, the court shall bar the EEOC from seeking any legal relief at trial on behalf of Mss. Aguilar, Austin, Cohen, Howard, Leach, McCain, McCall, Perhealth and Stephenson. Furthermore, the court shall bar the EEOC from seeking relief at trial on behalf of Mss. Carney, Shadden and Skaggs insofar as they allege they were sexually harassed before February 4, 2005, except that the EEOC may seek relief at trial on behalf of Ms. Carney for any alleged sexual harassment suffered at the hands of Mr. Coplan.
The court shall deny the Motion in all other respects. The court shall consider CRST's alternative arguments for dismissal with respect to Mss. Shadden and Skaggs in conjunction with CRST's pending motions for summary judgment on the merits of the allegedly aggrieved persons' allegations of sexual harassment.
V. MS. BEDFORD
A. Arguments
In its Motion, CRST also asks the court to bar the EEOC from seeking relief for a thirteenth woman, Ms. Belinda Bedford. Ms. Bedford is not similarly situated to the other twelve women in the Motion, however, because all of her allegations of sexual harassment occurred after February 4, 2005. Ms. Bedford worked for CRST from July 19, 2007 through August 11, 2007. She alleges Mr. Steve Hall, a fellow driver, sexually harassed her for approximately *883 one week. On August 12, 2007, Ms. Bedford filed a timely charge of discrimination with the EEOC. The EEOC dismissed the charge and issued her a right-to-sue letter on December 27, 2007.
In the Motion, CRST claims that Ms. Bedford did not file suit within ninety days of the issuance of her right-to-sue letter or intervene in the instant lawsuit. CRST concludes the EEOC is barred from seeking relief for her. In the alternative, CRST claims Ms. Bedford's claim must fail on its merits because she did not promptly report the alleged sexual harassment to CRST.
In its Resistance, EEOC points out Ms. Bedford's "claim was apparently included in this motion in error" because she clearly alleges she was sexually harassed after February 4, 2005. Resistance at 14. The EEOC also claims CRST is wrong about the facts; the EEOC presents evidence to show Ms. Bedford filed a Title VII suit against CRST in the United States District Court for the Western District of Oklahoma on March 26, 2008 ("the Oklahoma suit"). The EEOC notes Ms. Bedford voluntarily dismissed the Oklahoma suit on July 23, 2008 with intent to proceed in the instant action as a "class member." Addressing CRST's alternative argument, the EEOC argues Ms. Bedford was not required to report her harassment sooner than she did.
In Reply, CRST repeats the arguments in its Motion but admits the EEOC's factual allegations about the Oklahoma suit. CRST maintains the EEOC may not seek relief on behalf of Ms. Bedford at trial. CRST opines Ms. Bedford should have asked for leave to intervene in the instant lawsuit instead of voluntarily dismissing the Oklahoma suit without prejudice.
In Surreply, the EEOC presents the court with an affidavit from Ms. Bedford's attorney in the Oklahoma suit, Attorney Amanda Farahany. Attorney Farahany states she advised Ms. Bedford to voluntarily dismiss her case because the EEOC could seek relief on her behalf in the instant case. Attorney Farahany maintains the voluntary dismissal of the Oklahoma suit was not intended as a waiver of Ms. Bedford's rights.
B. Analysis
Neither party cites any cases precisely on point. CRST cites four cases in support of its position that Ms. Bedford's actions bar the EEOC from seeking relief on her behalf in this case. All four cases are distinguishable, however, and have nothing to do with the issue before the court. See, e.g., S.D. ex rel. Barnett v. U.S. Dep't of the Interior, 317 F.3d 783, 785 (8th Cir.2003) (generally discussing rules of intervention); Price v. Digital Equip. Co., 846 F.2d 1026, 1027 (5th Cir. 1988) (generally discussing the effect of a voluntary dismissal); Brown v. Hartshorne Pub. Sch. Dist. # 1, 926 F.2d 959, 961 (10th Cir.1991) (same). Indeed, the closest governing authority on point would appear to run counter to CRST's position. Cf. Anderson v. Unisys Corp., 47 F.3d 302, 308 (8th Cir.1995) (holding that any claimant who files an administrative charge and obtains a right-to-sue letter from the EEOC must file a timely lawsuit to preserve her cause of action). Absent citation to legal authority on point, the court declines to bar the EEOC from seeking relief for Ms. Bedford because she filed a lawsuit and dismissed it voluntarily to allow the EEOC to seek relief on her behalf. See LR 56.b; LR 7.e; LR 1.f.
Accordingly, the court shall deny the motion in part with respect to Ms. Bedford. The court shall consider CRST's alternative arguments for dismissal with respect to Ms. Bedford in conjunction with CRST's pending motions for summary judgment on the merits of the allegedly *884 aggrieved persons' allegations of sexual harassment.
VI. CONCLUSION
The Motion (docket no. 147) is GRANTED IN PART AND DENIED IN PART. The court BARS the EEOC from seeking relief at trial on behalf of (1) Ms. Antonia Aguilar, (2) Ms. Linda Austin, (3) Ms. Patrice Cohen, (4) Ms. Catherine Howard, (5) Ms. Geraldine Leach, (6) Ms. Margaret McCain, (7) Ms. Karen McCall, (8) Ms. Rachel Perhealth, and (9) Ms. Priscilla Stephenson. Furthermore, the court BARS the EEOC from seeking relief at trial on behalf of (1) Ms. Kelli Carney, (2) Ms. Faith Shadden and (3) Ms. Linda Skaggs insofar as they allege they were sexually harassed before February 4, 2005, except that the EEOC may seek relief at trial on behalf of Ms. Carney for any alleged sexual harassment suffered at the hands of Mr. Coplan. The court shall rule on CRST's alternative arguments to bar the EEOC from seeking relief at trial on behalf of Mss. Bedford, Shadden and Skaggs when it rules on CRST's pending motions for summary judgment on the merits of the allegedly aggrieved persons' allegations of sexual harassment. The EEOC is ordered to file an updated list of allegedly aggrieved persons for which it intends to seek relief at trial on or before May 12, 2009, at 5 p.m. See Order (docket no. 66), passim.
IT IS SO ORDERED.
NOTES
[1] A more complete recitation of the prior proceedings is set forth in the court's Order (docket no. 197). Once again, the claims of Plaintiffs-Interveners Monika Starke, Janet Boot, Barbara Grant, Cindy Moffett, Remcey Jeunenne Peeples, Latesha Thomas and Nicole Ann Cinquemano are not at issue.
[2] For further explanation of the work-sharing agreement between the EEOC and the ICRC, see Millage v. City of Sioux City, 258 F. Supp. 2d 976, 985-86 (N.D.Iowa 2003) (Bennett, C.J.).
[3] The EEOC's Complaint, filed on November 16, 2007, corrected a typographical error in the Complaint. Ruling (docket no. 31), at 1 n. 1.
[4] There is one exception to this bright-line ruling. As explained in Part IV.B.2.b.i infra, CRST does not ask the court to bar the EEOC from seeking relief on Ms. Carney's behalf for her allegation that Mr. Raymond Coplan sexually harassed her in early 2005. CRST assumes Morgan's continuing violation doctrine saves this portion of Ms. Carney's claim.
[5] The Supreme Court reserved ruling on a related issue. See Morgan, 536 U.S. at 115 n. 9, 122 S. Ct. 2061 ("We have no occasion here to consider the timely filing question with respect to `pattern-or-practice' claims brought by private litigants as none are at issue here."); see also Jenson v. Eveleth Taconite Co., 824 F. Supp. 847, 878 (D.Minn. 1993) ("If Plaintiffs establish that Eveleth Mines maintained a company-wide pattern or practice of sexual harassment both before and after December 30, 1983, Eveleth Mines will be liable for acts of sexual harassment reaching back to the commencement of the policy."), aff'd on other grounds, 130 F.3d 1287, 1291-93 (8th Cir. 1997).
[6] For example, Ceisel reasoned EEOC v. Sidley Austin LLP, 437 F.3d 695 (7th Cir.2006) called into question Custom and Walner. Ceisel reads too much into Sidley, which simply applied Waffle House and held that an individual's failure to file a timely charge of discrimination does not, by itself, prevent the EEOC from seeking monetary relief on her behalf. 437 F.3d at 696. Sidley did not address the limitations issue presented here.
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https://www.courtlistener.com/api/rest/v3/opinions/1514685/
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615 F. Supp. 186 (1985)
Emanuel M. GLAROS, Plaintiff,
v.
H.H. ROBERTSON COMPANY, a Pennsylvania corporation, and Inryco, Inc., a Delaware corporation, Defendants.
No. 79 C 1803.
United States District Court, N.D. Illinois, E.D.
June 28, 1985.
*187 William J. Harte, Lawrence Stanner and Glenn E. Schreiber; George P. McAndrews, Allegretti, Newitt, Witcoff & McAndrews, Chicago, Ill., for plaintiff.
William Marshall and Nate Scarpelli, Merriam, Marshall & Bicknell; William M. Lee and William M. Lee, Jr., Lee & Smith, Chicago, Ill., for defendants.
OPINION, ORDER AND DECREE
WILLIAM T. HART, District Judge.
This matter is before the Court after a jury trial for consideration of proposed conclusions by the Court with respect to the issues of obviousness, claim interpretation and prosecution history estoppel and on the motions of the defendants for a judgment *188 notwithstanding the verdict or for a new trial, with respect to which the Court rules as follows.
I. VALIDITY
Plaintiff, Emanuel M. Glaros is the owner of United States Letters Patent No. 3,535,844 (the "Glaros patent"), issued on October 27, 1970, for an invention entitled "Structural Panels" in the name of Emanuel Michael Glaros, on application No. 744,901, filed July 15, 1968. Defendant, H.H. Robertson Company ("Robertson"), is a corporation organized and existing under the laws of the State of Pennsylvania. Defendant, Inryco, Inc. ("Inryco"), is a corporation organized and existing under the laws of the State of Delaware.
Claim 2 of the Glaros patent is a dependent claim, incorporating by reference all the provisions of Claim 1. Nonetheless, its patentability must be determined independently of the patentability of Claim 1. Claim 2 of the Glaros patent is presumed to be valid. At trial, the defendants had the burden of proving by clear and convincing evidence that the Glaros invention, as defined by Claim 2, would have been obvious.
The jury's findings in Interrogatory No. 7, that the differences between the subject matter sought to be patented by Claim 2 of the Glaros patent and the prior art are such that the subject matter as a whole would not have been obvious at the time the invention was made to a person having ordinary skill in the art to which the subject matter pertains, are supported by the credible evidence. (The answers to the Interrogatories are attached hereto as Appendix "A").
The legal conclusion of nonobviousness must be based on factual considerations including: (1) the scope and content of the prior art; (2) the differences between the prior art and the claimed invention; (3) the level of ordinary skill in the pertinent art at the time the invention was made; and (4) whatever objective evidence may be present as indicia of obviousness or nonobviousness. Graham v. John Deere, 383 U.S. 1, 86 S. Ct. 684, 15 L. Ed. 2d 545 (1966).
(1) Scope and Content of the Prior Art
In response to Interrogatory No. 1A the jury found that the Kautz panel of Robertson was not a prior invention which was not abandoned or concealed. In response to Interrogatory No. 1B the jury found that Disclosure 606 of the Robertson was not a prior invention which was not abandoned or concealed. These findings are supported by the credible evidence to the effect that Robertson abandoned and either concealed or suppressed, as those terms are used in 35 U.S.C. § 102(g), both the Kautz and Disclosure 606 panels.
In response to Interrogatory Nos. 2a.-i., the jury found that the references listed where not more pertinent to Claim 2 of the Glaros patent than the references cited in the Patent and Trademark Office during the prosecution of the Glaros patent application. These findings are supported by credible evidence.
Particular attention was given to the Pimsner Patent No. 3,047,154 in granting summary judgment on Claims 1 and 3 (Memorandum Opinion November 14, 1984). However, as noted in footnote 2 of the opinion, the parties did not center on the question of whether a wall panel for an oven can be prior art for structural wall panels. Slip op. at 7, n. 2.
The evidence at trial disclosed that structural panels pose problems of attachment quite unlike those faced by an oven wall. See, e.g., Stratoflex Inc. v. Aeroquip Corp., 713 F.2d 1530, 1535 (Fed.Cir.1983) (inventor's acknowledgement of what he considered relevant and nonrelevant prior art as evidence of the scope of the prior art). In addition, the Pimsner panel was not designed to be foamed or made to contain an insulant which adheres securely to the inner surfaces of the skins. There was also credible evidence introduced at trial that the Glaros panel was also designed to avoid delamination of the skins. The preferred embodiment of Claim 2 protrudes the tongue forward of the groove. *189 The tongue is designed to grip the insulant providing a mechanical interlock to prevent removal of the skin from the insulant even if delamination should occur. Pimsner's single thickness tongue design would not provide a mechanical interlock with insulant. These factors illustrate the different problems faced in the design of oven/refrigerator and exterior wall panels.
The jury was instructed that prior art included only those references "in the same field as the invention" or "in other fields ... if a person of ordinary skill seeking a solution to a problem in one art would seek the solution by referring to that other art" or if "the problem presented and overcome by the invention is the same as that overcome by the prior art." See Shatterproof Glass Corp. v. Libbey-Owens Ford Co., 758 F.2d 613, 620 (Fed.Cir.1985); Union Carbide Corp. v. American Can Co., 724 F.2d 1567, 1572 (Fed.Cir.1984) (and cases cited therein). Having heard the evidence, the Court concludes that the jury was entirely correct in rejecting Pimsner as pertinent prior art governing Claim 2. There is also credible evidence in the record to support the jury's findings that prior art references 2b.-i. were each not more pertinent as that word was described in the instructions than the references cited to the Patent and Trademark Office during the prosecution of the Glaros patent application.
Contrary to Inryco's assertion, the jury's responses to Interrogatory No. 2 do not display any "lack of comprehension of the issues." Quaker City Gear Works, Inc. v. Skil Corp., 747 F.2d 1446, 1452 (Fed.Cir. 1984). Rather, they reveal an appreciation of one aspect of the issue (ignored by the defendants in their post-trial papers) which, although not pursued by Glaros to preclude summary judgment as to Claims 1 and 3, was presented to the jury at trial.
(2) Differences Between the Prior Art and the Claimed Invention
In response to Interrogatory Nos. 3A and 3B, the jury responded that the following features of Claim 2 were not found in the prior art:
a double tongue and groove side edge where the tongue of one panel member is spaced from the groove of the other panel member forming an offset portion a fastening means inserted between the spaced first and second side edges and passing through the offset portion.
The defendants offer only Pimsner as disclosing these features. The Court has found the jury properly determined that Pimsner is not within the relevant prior art. The same may be said of Kautz and Disclosure 606; they simply were not in the relevant prior art. Snyder (and its commercial embodiment, the Butler F103 panel) does not disclose either of these elements. Nor does the Fenestra type C panel disclose an offset tongue and grove interlock.
(3) Level of Skill
The parties have stipulated that the level of skill of a person of ordinary skill in the art at the time Glaros designed his insulated building panel was either (1) a person with 5 to 7 years experience in the design, development, manufacture and erection of insulated building panels, or (2) a graduate engineer having 3 to 5 years of such experience. The jury's findings of fact are all consistent with this stipulation. This stipulation was also a relevant factor in the jury's determination of the credibility of the testimony of the witnesses.
(4) Objective Evidence of Nonobviousness
(a) Commercial Success
In response to Interrogatory No. 4, the jury found that the panels of Glaros enjoyed commercial success and that this success was due to the elements of Glaros' patent Claim 2. There is credible evidence to support a finding of commercial success (albeit modest). Inryco itself chose Glaros' design to market before "developing" the accused panel. Further, there is no evidence that the commercial acceptance of Glaros' device resulted from other than his design. The jury also found, in response to Interrogatory No. 5, that the Inryco and Robertson panels enjoyed commercial success; and that such success was due to the *190 elements of the Glaros patent Claim 2. There is credible evidence to support these findings. Changes made by Robertson in its panels brought those panels progressively closer to the subject matter of Glaros' Claim 2. The jury was instructed that it could find the success of those defendants' panels to be relevant only if their panels so embodied the Glaros design that these panels infringed the Glaros patent.
Further, the factors identified by Robertson as the basis for the success of its Formawall 1000 panels are generic to each and every one of the products Robertson markets. A poorly designed product marketed by Robertson would presumably fail in the marketplace despite these "advantages," so that these marketing factors are not sufficient (but may be necessary) conditions for commercial success in the structural panel market. The required nexus between the success of Robertson's panel and Glaros' design, Simmons Fastener Corp. v. Illinois Tool Works, Inc., 739 F.2d 1573, 1575 (Fed.Cir.1984), cert denied, ___ U.S. ___, 105 S. Ct. 2138, 85 L. Ed. 2d 496 (1985), which the jury found Robertson's panel embodied, is sufficiently established.
(b) Failure of Others
In response to Interrogatory Nos. 6A and 6B, the jury found that others in the art, acting independently of Glaros and attempting to solve the problem addressed by Claim 2 of the Glaros patent, contemporaneously or previously did not make the same invention as described in Claim 2 of the Glaros patent and failed to solve the problem he addressed. These findings are supported by credible evidence.
Neither Inryco nor Robertson invented a structural panel contemporaneously with or previous to the invention of Glaros which functioned as did the Glaros invention. Robertson redesigned its panel after observing and obtaining a copy of Glaros' literature on the Glaros panel at a trade show in Chicago, Illinois, on or about October 19, 1968. Inryco failed in its early attempt prior to the Glaros panel to create or invent a panel.
In response to Interrogatory No. 6C, the jury found that prior to and at the time Glaros developed his invention, others in the art approached the problem addressed by Claim 2 of the Glaros patent in a different manner unrelated to the approach taken by Glaros. This finding is supported by credible evidence. Prior to Glaros, no structural panel design addressed the problem of heat transfer through a unitized panel with an offset like that of Glaros which physically separated the inner and outer skins. Although the defendants attempted to characterize several prior panels as containing an offset (e.g., Kautz, Fenestra), there is no real offset in these panels as that term is described in the Glaros patent. Further, each of the panel designs presented by the defendants addresses the heat transfer problem by inserting some non-conducting material between the inner and outer sheets, while Glaros needs no such additional member due to his offset.
(c) Copying
In response to Interrogatory Nos. 6D and 6E, the jury found that defendants Robertson and Inryco copied plaintiff's panel as defined by Claim 2. These findings are supported by credible evidence, and in light of the defendants' failure to design a similar panel, is strong evidence of nonobviousness. See Vandenberg v. Dairy Equipment Co., 740 F.2d 1560, 1567 (Fed.Cir.1984).
A Robertson representative saw the Glaros panel at a trade show in Chicago, Illinois, on or about February 19, 1968, and returned with Glaros' literature which illustrated the Glaros panel. One of Robertson's inexperienced engineers assigned the task of designing a foam panel, was given the Glaros brochure. He testified that he immediately saw fundamental concepts that were lacking in the Robertson panel which Robertson then intended to produce. He quickly developed a prototype panel using concepts from the Glaros panel as defined by Claim 2. The Robertson team began with this prototype and in modifications progressively moved closer to the Glaros *191 preferred embodiment. The witness' testimony of copying could not have been clearer. Robertson's attempt to impeach the witness for bias, because he was discharged, was a question of credibility which the jury resolved against Robertson. The Court has no basis to alter the jury's determination. See Railroad Dynamics, Inc. v. Stucki Co., 727 F.2d 1506, 1514 (Fed.Cir.1984).
The evidence also supports the conclusion that Inryco copied plaintiff's panel as defined by Claim 2. The engineer assigned to the design of panels by Inryco was not a person of ordinary skill in the art, having had no experience with foam panels. Before designing Inryco's panel, he viewed and studied both Glaros' preferred panel and the Robertson panel, which embodied Glaros' invention. The jury was not required to accept his denial that he copied.
II. INFRINGEMENT
(a) Literal Infringement
In response to Interrogatory Nos. 8A and 8C, the jury found that the Robertson and Inryco panels literally infringe Claim 2 of the Glaros patent. These findings are supported by the credible evidence. The first inquiry in determining infringement is a determination of the scope of the claims. Patent claims are directed to persons of ordinary skill in the art. Fromson v. Advance Offset Plate, Inc., 720 F.2d 1565, 1571 (Fed.Cir.1983). Where expert testimony is given as to the meaning of certain terms and phrases to one of ordinary skill in the art, such testimony may form a proper basis for determining the scope of the claim. McGill, Inc. v. John Zink Co., 736 F.2d 666, 675 (Fed. Cir.), cert. denied, ___ U.S. ___, 105 S. Ct. 514, 83 L. Ed. 2d 404 (1984). Hence, although determining the scope of the claim is a question of law, Fromson, 720 F.2d at 1569, the resolution of the conflicting expert testimony presented by the parties was a question properly submitted to the jury. McGill, 736 F.2d at 672.
Both defendants contend that their panels do not literally infringe Claim 2 of the Glaros patent because they lack elements set forth in Claim 2. Robertson argues that its Formawall 1000 product lacks: (i) a fastener "inserted between the spaced first and second side edges," and (ii) a fourth face or flange of the tongue which is "inwardly parallel to the outer face" of the tongue. Inryco essentially adopts Robertson's fastener argument and also maintains that its panel has "bullet shaped tongues with sloping or tapered tongue sides" rather than the "parallel" tongue sides assertedly specified in Claim 2. Neither defendant maintains that any other elements of Claim 2 are absent from their accused products.
Although Claim 2 refers to a "fastening means," the invention defined by Claim 2 is not a "fastening invention." It is a structural panel. The structural panel has a particular configuration, the offsetting of the skins relative to one another, that along with other functions of the offset, permits fastening not visible from the exterior. The phrase "offset portion" is not recited in the patent specification. However, the meaning of the term is clear. It is formed by offsetting or sliding one skin relative to the other skin as stated in the Court's opinion of November 14, 1984. The first and second side edges are those portions of the outer and inner skins, respectively, needed to form the groove and tongue, respectively, of the side joint.
Both Inryco and Robertson argue that Claim 2 requires the fastener to pass through the thermal barrier created by the offset. Yet both Inryco and Robertson utilize a clip or spacer as part of its fastening means. The clip or spacer passes through the thermal barrier between the two skins. Thus, even under the defendants' overly narrow reading of Claim 2, the claim reads on their fasteners.
Further, the screw of the Inryco and Robertson fastening means secures the outer panel skin of their panels to the underlying girts by passing through a piece of metal added to the outer sheet of the Glaros design. This additional piece of *192 metal is part of the fastening system and not part of the first side edge as defined by Claim 2. "An accused device cannot escape infringement by merely adding features, if it has otherwise adopted the basic features of the patent," even if the additional feature "performs an additional function it does not perform in the patented device." Radio Steel & Mfg. Co. v. MTD Products, Inc., 731 F.2d 840, 848 (Fed.Cir.) (quoting A.B. Dick Co. v. Burroughs Corp., 713 F.2d 700, 703 (Fed.Cir. 1983)), cert. denied, ___ U.S. ___, 105 S. Ct. 119, 83 L. Ed. 2d 62 (1984). Although the Inryco and Robertson "fasteners" perform the function of attaching the outer skin directly to the girt, a function not found in Glaros (although the Glaros design indirectly fastens the outer skin to the girt, as described above, at p. 188), the fastener does pass between the first and second side edges. This result obtains whether the "fastener" is defined as the screw alone, the screw plus the clip or (as this Court finds) the screw, plus the clip, plus the added flange of the outer skin.[1] Thus, the Inryco and Robertson fastener fit squarely within the language of Claim 2.
Claim 2 does not designate particular faces that form the tongue or the groove nor does the word "parallel," as used in the claim serve as an adjective modifying such an unnamed face. The word "parallel" modifies "being bent," the bending that is performed parallel to the outer face. A face resulting from a bending force in a direction parallel to the outer face may result in a sloping face. Hence, the "sloping or tapered tongue sides" of Inryco's panel literally infringe Claim 2. Robertson's two-sided tongue also literally infringes Claim 2. A tongue formed from the three recited bending motions (outwardly, downwardly and inwardly) may result in a two-sided tongue, the second side of which is bent both downwardly and inwardly.[2] Thus, a reasonable jury could find, (as this Court finds) that both the tongue and the fastener of the accused panels fall within the scope of Claim 2, and that the Inryco and Robertson panels literally infringe Claim 2.
The defendants claim that file wrapper estoppel applies. File wrapper estoppel is only applicable where infringement is found under the doctrine of equivalents. Graver Tank & Mfg. Co. v. Linde Air Products Co., 339 U.S. 605, 609, 70 S. Ct. 854, 856, 94 L. Ed. 1097 (1959); Hughes Aircraft Co. v. United States, 717 F.2d 1351, 1361 (Fed.Cir.1983). Accordingly, it is not a defense to literal infringement. Fromson, 720 F.2d at 1571. Nonetheless, the file wrapper, or prosecution history is properly considered in evaluating the scope of Claim 2 for the purposes of determining literal infringement, and so has been considered by this Court. McGill, 736 F.2d at 673 ("Prosecution history may be used not only in an estoppel context but also as a claim interpretation tool").
(b) Infringement Under the Doctrine of Equivalents
In response to Interrogatory Nos. 8B and 8D the jury found that the Inryco and Robertson panels as a whole perform substantially *193 the same function in substantially the same way and accomplish substantially the same result as the structure defined by Claim 2 of the Glaros patent. The findings are supported by credible evidence and support a finding of infringement by equivalents.
Thus, even if Claim 2 was not literally infringed, the accused panels of Inryco and Robertson infringe Glaros' Claim 2 under the doctrine of equivalents. Nonetheless, the jury's finding of equivalence is "subservient" to this Court's finding on the issue of estoppel. Hughes Aircraft Co., 717 F.2d at 1363 (quoting Autogiro Co. of America v. United States, 383 F.2d 391, 400-1 (Ct.Cl.1967)).
Robertson appears to argue that the prosecution history of the Glaros patent application limits Glaros to the letter of Claim 2. Inryco asserts that the file history restricts Claim 2 to the embodiment shown in Figure 2. Even if an estoppel arises from the file history, the doctrine of equivalents is not completely eliminated.
Depending on the nature and purpose of an amendment, it may have a limiting effect ranging from great to small to zero. The effect may or may not be fatal to application of a range of equivalents broad enough to encompass a particular accused product. It is not fatal to application of the doctrine [of equivalents] itself.
Hughes Aircraft Co., 717 F.2d at 1363 (emphasis added).
[W]henever the doctrine of file history estoppel is invoked, a close examination must be made as to, not only what was surrendered, but also the reason for such a surrender. The fact that claims were narrowed does not always mean that the doctrine of file history estoppel completely prohibits a patentee from recapturing some of what was originally claimed.
Bayer Aktiengesellschaft v. Duphar International Research B.V., 738 F.2d 1237, 1243 (Fed.Cir.1984) (emphasis added).
Each of the portions of the prosecution history to which Inryco and Robertson refer are most accurately portrayed as an attempt to overcome the dove-tail joint disclosed in the Sohns patent (U.S. Patent No. 3,397,496 issued in August, 1968). Glaros' patent attorneys argued that the dovetail side edges of the structure disclosed in Sohns could not be mated by sliding two panels together at the side-joint. Rather, the Sohns panels must be mated at their end-edges by sliding one side edge along the entire length of the side edge of the other panel; a process not feasible for twenty to thirty foot long panels. None of the amendments or arguments cited by the defendants are inconsistent with the application of a narrow range of equivalents to cover the tongues of their panels. The Inryco and Robertson tongued design allow their panels to be mated just as the Glaros panel is mated, without the difficulty posed by the Sohns design.
The defendants' estoppel argument regarding the fastener utilized by Glaros is equally unavailing. Glaros' attorney did emphasize in his arguments to the patent examiner the utility of a fastener which did not bridge the "thermal gap." However, as noted previously, any bridging of the thermal gap that results from Inryco or Robertson fasteners is insubstantial. Their fasteners are not inconsistent with the language of Claim 2 or the file history. Hence, the jury's finding of equivalence is not precluded by that portion of the file history dealing with Glaros' fastening means.
Assuming Claim 2 of the Glaros patent does not literally read on defendants' panels because of the sloping tongue and groove of Inryco or the two-sided tongue of Robertson, the range of equivalents needed to encompass the sloping tongue and groove and the two-sided tongue is small. Also, assuming Claim 2 of the Glaros patent does not literally read on defendants' panels because their fastening system connects the outer skin directly to the screw fastener, the range of equivalents needed to encompass the direct connection is also small. Application of the doctrine of equivalents *194 into either small area violates neither the prior art nor the doctrine of prosecution history estoppel. The defendants' panels are not based on the prior art, obvious modifications thereof or subject matter surrendered during prosecution of the Glaros application. There was no surrender of territory which would prevent application of the doctrine of equivalents to the defendants' panels. Arguments and amendments made during prosecution of the Glaros patent application, with respect to the Sohns Patent No. 3,397,496, would preclude a range of equivalents to an extent which would recapture the surrendered territory of the dove-tailed joint construction. However, such a range of equivalents is not involved. The range of equivalents sought is small and certainly does not seek to recapture the dove-tailed joint construction. Hence, the jury's finding of equivalence is not barred by any file wrapper estoppel.
III. ROBERTSON'S WILLFULNESS
The jury's finding in response to Interrogatory No. 9 that the infringement of Robertson in this case was willful is supported by the credible evidence. The evidence of copying and infringement was clear and convincing. Robertson's denial was not convincing.
The credibility of defendants' technical expert was repeatedly impeached with inconsistent statements in prior sworn testimony and with inconsistent testimony while testifying at trial. Nor does the prosecution history justify a competing manufacturer's belief that a slight change in the slope of the surfaces of the tongue and groove or a removal of a third side of the tongue or the connection of the outer skin to the screw fastener would allow the manufacturer to escape liability while at the same time permit the manufacturer's taking the full equivalent of the invention.
IV. MOTIONS FOR JUDGMENT NOTWITHSTANDING VERDICT OR FOR A NEW TRIAL
Based on the foregoing discussion of the evidence the defendants' motion for judgment notwithstanding the verdict must be denied. There is substantial credible evidence to support the jury's findings.
Both parties also ask for a new trial based on alleged errors in evidentiary rulings. The various arguments are without merit. Inryco's argument that it was prejudiced by the joint trial of Glaros' claims against itself and Robertson is equally meritless. The jury was repeatedly instructed to assess each defendant independently. See, e.g., Instruction 4, ("Each [defendant] is entitled to a fair consideration of its own defense and should not be prejudiced by the fact, if it should become a fact, that you find against the other"); Instruction 27 ("You should consider separately [for the purpose of determining infringement] the panels of Robertson and Inryco"). Further, each interrogatory inquired separately into the activities of Inryco and Robertson. The jury's responses to Interrogatory No. 9 indicate that it did not tar both defendants with a single broad brush, but instead was able to weigh each defendant's case separately. Thus, the alternative motion for a new trial must also be denied.
V. CONCLUSIONS
The Court therefore finds and concludes as follows:
1. Plaintiff has established by a clear preponderance of the evidence that Claim 2 of the patent is valid. Defendants have failed to meet their burden of showing by clear and convincing evidence that the Glaros invention, as defined by Claim 2, was obvious, or that Claim 2 is vague, indefinite or otherwise invalid. Claim 2 is not invalid because it was obvious.
2. Plaintiff has established by a clear preponderance of the evidence that defendant Robertson and defendant Inryco have each literally infringed Claim 2 of the Glaros patent.
3. Alternatively, plaintiff has established by a clear preponderance of the evidence that both the Robertson panel Formawall 1000 and the Inryco panel infringe *195 Glaros' Claim 2 under the doctrine of equivalents.
4. The defendants have failed to establish file wrapper estoppel or prosecution history estoppel with respect to Claim 2 of the Glaros patent as applied to their respective panels.
5. The plaintiff has established by a preponderance of the evidence that Robertson willfully infringed Claim 2 of the Glaros patent.
6. Defendants' motions for judgment notwithstanding the verdict or for a new trial must be denied.
7. This is an appropriate case for the exercise of this Court's equity jurisdiction under 35 U.S.C. § 282 for injunctive relief.
IT IS THEREFORE ORDERED, ADJUDGED AND DECREED as follows:
1. The motions for judgment notwithstanding the verdict or in the alternative for a new trial are denied.
2. Judgment is hereby entered in favor of plaintiff and against the defendant H.H. Robertson on the plaintiff's claim that Robertson has infringed Claim 2 of U.S. Letters Patent No. 3,535,844.
3. Judgment is hereby entered in favor of plaintiff and against the defendant Inryco, Inc. on the plaintiff's claim that Inryco has infringed Claim 2 of U.S. Letters Patent No. 3,535,844.
4. The defendants, their agents, employees and representatives are permanently enjoined from further infringement upon Glaros Claim 2.
5. All questions of damages, including costs and attorneys' fees, are reserved until the accounting, pursuant to 35 U.S.C. §§ 284 and 285.
6. The parties are ordered to complete damage discovery within 60 days of the date of this order.
7. The case is set for a report on status on July 16, 1985 at 9:15 a.m.
APPENDIX A
*196
*197
*198
*199
*200
NOTES
[1] Inryco and Robertson attach unwarranted importance to the fact that their screw breaks the thermal barrier formed by the offset in construing the requirements of Claim 2. In a panel twenty to thirty feet in length, any break in the thermal barrier occasioned by the two or three screws would be insignificant.
[2] The Glaros Claim 2 is not indefinite simply because it may include a process limitation which defines the structure of the tongue and groove in terms of the result of a bending of the material of the skins in directions parallel and transverse to the outer surface of the panel forming members. The wrapper and file history of the Glaros patent define the tongue as being adapted to fit within the groove. The tongue and a groove structure permit edgewise mating and not the mating structure of a dovetail tongue and groove in which the parts cannot mate edge-wise but must be slid endwise along one another in order to be fitted together.
In addition, the term "end edges" is recited in the patent specification and is shown, for example, in the original patent drawings Fig. 32. The meaning of the term "end edges" is clear and neither party's experts disagreed as to its meaning. Claim 2 is not vague and indefinite within the meaning of 35 U.S.C. § 112.
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203 B.R. 117 (1996)
In re William E. HARRIS, Debtor.
CITIBANK (S. DAKOTA), N.A., Plaintiff,
v.
William E. HARRIS, Defendant.
Bankruptcy No. 95 B 20597, Adversary No. 96 A 00058.
United States Bankruptcy Court, N.D. Illinois, Eastern Division.
December 11, 1996.
*118 Michael J. Coleman, Riordan, Larson, Bruckert & Moore, Chicago, IL, for Plaintiff.
Linda Spak, Chicago, IL, for Defendant.
MEMORANDUM OPINION
RONALD BARLIANT, Bankruptcy Judge.
This proceeding is before the Court after a trial on the dischargeability of a debt William E. Harris (the "Debtor") owes to Citibank, F.S.B. ("Citibank").[1] Citibank has also moved to amend the pleadings to conform to the evidence presented at trial. For the reasons stated herein, the Court hereby grants Citibank's motion to amend the pleadings, and finds that the debt owed to Citibank is non-dischargeable pursuant to 11 U.S.C. § 523(a)(2)(B).
FINDINGS OF FACT
On May 5, 1995, the Debtor applied for a $10,000 loan from Citibank. On that date, the Debtor gave financial data to a loan officer at the bank, who then prepared the application. The Debtor represented to Citibank that the purpose of the loan was debt consolidation. The loan application notes *119 that the loan was to "close" three other debts: one to "Household Finance," a second to "Nationwide," and a third to "Sears." Citibank approved the loan for $6,000 and issued a check for that amount payable to the Debtor on May 5, 1995.
The Debtor, however, failed to inform the loan officer of other outstanding debts. The Debtor at that time owed the Central Credit Union of Illinois ("Credit Union") on two loans one for about $3,500 incurred on December 21, 1994 and a car loan for over $18,000 incurred on May 4, 1995.[2] These two loans were paid with monthly payroll deductions from the Debtor's paycheck, deposited into the Debtor's account at the Central Credit ("Credit Union Account") and then automatically deducted from that account and credited to the loan balance. At all times, the Debtor maintained a $200 balance in the Credit Union Account.
At trial, the Debtor did not deny that he owed these two debts at the time he applied for the Citibank loan and that he failed to tell the loan officer about these loans. Instead, the Debtor testified that the loan officer never asked him whether he owned a car or owed any money toward the purchase of a car. Furthermore, the Debtor testified that he did not disclose the Credit Union Account because he did not consider the Credit Union a "banking institution" and that he did not think it qualified as a checking or savings account as contemplated by the application.
Upon receipt of the loan from Citibank, the Debtor did not completely pay down the three debts specified on the loan application, although the Debtor testified that he used the majority of the Citibank loan to pay prior existing debts. He testified that he paid Nationwide approximately $1,500. The Debtor also testified that he paid Household Finance approximately $2,000,[3] Sears about $400, and J.C. Penney about $100.[4]
The Debtor made two payments on the loan to Citibank and then defaulted. On October 2, 1995 the Debtor filed for relief under Chapter 7 of the Bankruptcy Code. As of the date of the filing, the Debtor scheduled unsecured, non-priority debts owed to Household Finance, Nationwide, and Sears with balances of $6,000, $2,000, and $2,728.03, respectively. The Debtor did not schedule any unsecured, non-priority claim owed to the Credit Union, although the Debtor subsequently made a statement of intent to keep his automobile and has continued making payments through automatic payroll deductions for the car loan.
Citibank asserts that the Debtor made a false, implied representation that he intended to repay the loan when he, in fact, never so intended. Citibank likewise asserts that the Debtor made a false, implied representation that he intended to use the loan to completely pay off the debts owed to Household Finance, Nationwide, and Sears. Citibank therefore concludes that the debts owed to Citibank are non-dischargeable pursuant to 11 U.S.C. § 523(a)(2)(A).
In his defense, the Debtor testified that he did, initially, intend to re the Citibank loan and points to the fact that he made two payments on the loan before defaulting. The Debtor further testified that a change in circumstances caused his financial difficulties and led to both his default on the loan and his subsequent bankruptcy filing. He testified that shortly after he received the loan from Citibank, he was demoted from the position of "Team Leader" to "Line Operator" with a salary reduction of just over $2.00 *120 per hour and a reduction in guaranteed overtime. Furthermore, the Debtor testified that he separated from his wife shortly after the loan was made, thereby requiring him to spread his income over two households.[5]
To refute the Debtor's "change in circumstance" defense, Citibank presented to the Court the Debtor's 1994 income tax return and his 1995 W-4 income tax withholding form, which indicate that the Debtor made more money in 1995 than in 1994. Furthermore, Citibank presented evidence, corroborated by testimony of the Debtor, that he did not, in fact, pay off the debts to Household Finance, Nationwide, and Sears.
Citibank alternatively argues that the Debtor intentionally omitted information on his loan application that would have affected Citibank's decision to lend him money. Citibank argues that these omissions, as reflected in the application, constitute written misrepresentations about his financial condition and that the debt owed Citibank is, therefore, non-dischargeable under 11 U.S.C. § 523(a)(2)(B). Citibank has moved to amend the pleadings to conform with the evidence presented at trial, which Citibank asserts proves that the debtor intentionally misrepresented his financial condition and that Citibank reasonably relied on these misrepresentations when it lent the money to the Debtor.
The Debtor has objected to this motion and submits that the omissions were not intentional.
DISCUSSION
I. Amendment of the Pleadings
Fed.R.Civ.P. 15(b), made applicable to proceedings under the Bankruptcy Code by Fed. R. Bankr.P. 7015, provides for amendments to pleadings to conform to the evidence presented. Fed R. Civ. P. 15(b) specifically provides that:
When issues not raised by the pleadings are tried by express or implied consent of the parties, they shall be treated in all respects as if they had been raised in the pleadings. Such amendment of the pleadings as may be necessary to cause them to conform to the evidence and to raise these issues may be made upon motion of any party at any time, even after judgment; but failure so to amend does not affect the result of the trial of these issues.
If a party fails to object to the evidence presented with respect to the claim not pled, the failure to so object demonstrates that the issue was tried by implied consent. Winger v. Winger, 82 F.3d 140, 144 (7th Cir.1996); In re Prescott, 805 F.2d 719, 725 (7th Cir.1986). "The critical inquiry under Rule 15(b) is whether the opposing party had notice of the issue and consented to its trial." Anand v. National Republic Bank (In re Anand), 1996 WL 596399 (N.D.Ill. Oct.10, 1996) (affirming in part and vacating and remanding in part this Court's decision not to allow amendment of the pleadings). The determinative question is "whether the opposing party had a fair opportunity to defend and whether he could have presented additional evidence had he known sooner the substance of the amendment." Rivinius, Inc. v. Cross Manufacturing, Inc. (In re Rivinius, Inc.), 977 F.2d 1171, 1175 (7th Cir.1992) (quoting Prescott, 805 F.2d at 725).
In the case at bar, the Debtor had the requisite "fair opportunity to defend" the section 523(a)(2)(B) issues. The Debtor, although he objected to Citibank's motion to amend, testified in defense of the omissions on the financial statement and explained at trial why those omissions occurred. There is no other evidence that he could have presented.
The Debtor will not be prejudiced by the amendment to the pleadings in this case. The Debtor presented evidence that resulted in a defense of a cause of action under section 523(a)(2)(B) and has not, therefore, lost the opportunity to do so if the pleadings are amended. See Rivinius, 977 F.2d at 1175. The Debtor had a fair opportunity to defend the omissions and in fact did so in his trial testimony. Furthermore, the Debtor had notice *121 that Citibank was presenting the omissions as actionable misrepresentations from Citibank's Motion for Summary Judgment, served on the Debtor's attorney several days before the trial and on which Citibank rested at trial. See Anand, 1996 WL 596399 (N.D.Ill. Oct. 10, 1996). Therefore, the Court grants Citibank's motion to amend and will consider a claim under section 523(a)(2)(B) in addition to the claim under section 523(a)(2)(A) included in the complaint.
II. Dischargeability of the Debt
The party seeking to establish an exception to the discharge of a debt bears the burden of proof. Goldberg Securities, Inc. v. Scarlata (In re Scarlata), 979 F.2d 521, 524 (7th Cir.1992); First Federated Life Ins. Co. v. Martin (In re Martin), 698 F.2d 883, 887 (7th Cir.1983). The burden of proof required for establishing an exception to discharge is a preponderance of the evidence. Grogan v. Garner, 498 U.S. 279, 286-87, 111 S. Ct. 654, 659-60, 112 L. Ed. 2d 755 (1991); In re Sheridan, 57 F.3d 627, 633 (7th Cir.1995). To further the policy of providing the debtor a fresh start in bankruptcy, exceptions to discharge are construed strictly against the creditor and liberally in favor of the debtor. Meyer v. Rigdon, 36 F.3d 1375, 1385 (7th Cir.1994); Scarlata, 979 F.2d at 524.
A. 11 U.S.C. § 523(a)(2)(A)
Section 523(a)(2)(A) provides in relevant part:
(a) A discharge under section 727 . . . of this title does not discharge an individual debtor from any debt
(2) for money, property, services, or an extension, renewal, or refinancing of credit, to the extent obtained by
(A) false pretenses, a false representation, or actual fraud, other than a statement respecting the debtor's . . . financial condition[.]
11 U.S.C. § 523(a)(2)(A).
In this case, Citibank has failed to show that the Debtor made any false representations, other than statements respecting the Debtor's financial condition. Citibank must show that the Debtor obtained the loan from Citibank through representations the debtor either knew to be false or made with such a reckless disregard for the truth as to constitute a willful misrepresentation. See First National Bank v. Kimzey (In re Kimzey), 761 F.2d 421, 423 (7th Cir.1985). An omission or failure to disclose can constitute a misrepresentation if the omission or failure to disclose creates a false impression that is known by the debtor. Peterson v. Bozzano (In re Bozzano), 173 B.R. 990, 993 (Bankr. M.D.N.C.1994). However, Citibank's assertions that the Debtor failed to disclose the Credit Union Account and the two loans paid through that Account are not grounds for non-dischargeability under § 523(a)(2)(A) because these are matters "respecting the debtor's . . . financial condition."
Furthermore, Citibank has failed to prove that the Debtor's statement that he intended to pay off the loans listed on the loan application was a false statement of his intent at that time. Subsequent acts do not establish that the debtor had the requisite intent at the time the representations were made. Standard Bank & Trust Co. v. Iaquinta (In re Iaquinta), 95 B.R. 576, 578 (Bankr.N.D.Ill.1989). This is because the Debtor may have had the intention to pay the loan and close the three accounts listed on the loan application at the time he took out the loan, but failed to do so due to a change in the Debtor's circumstances. See Id.
Thus, Citibank has failed to show the false statements required for relief under section 523(a)(2)(A) of the Bankruptcy Code.
B. Dischargeability under 11 U.S.C. § 523(a)(2)(B)
Section 523(a)(2)(B) provides in relevant part:
(a) A discharge under section 727 . . . of this title does not discharge an individual debtor from any debt
(2) for money, property, services, or an extension, renewal, or refinancing of credit, to the extent obtained by
(B) use of a statement in writing
(i) that is materially false;
*122 (ii) respecting the debtor's . . . financial condition;
(iii) on which the creditor to whom the debtor is liable for such money, property, services, or credit reasonably relied; and
(iv) that the debtor caused to be made or published with an intent to deceive[.]
11 U.S.C. § 523(a)(2)(B).
In this case, the Debtor clearly made statements in writing respecting his financial condition that were materially false. The Debtor failed to disclose on the loan application over $20,000 in loans owed to the Credit Union. These loans were issued or reissued to the Debtor within six months to one day prior to the date the Debtor signed the Citibank loan application. Such an omission is considered a materially false statement under section 523(a)(2)(B). See Selfreliance Federal Credit Union v. Harasymiw (In re Harasymiw), 895 F.2d 1170, 1170-71 (7th Cir.1990) (affirming nondischargeability of debt under section 523(a)(2)(B) where debtor failed to disclose $128,000 mortgage on subsequent secured loan application).
The Debtor's explanation that the loan officer never asked him about an automobile or whether he had financed an automobile is unconvincing and insufficient to relieve him of his obligation to accurately report his financial information on a credit application. The application clearly requests information about other credit extended to the Debtor, including original amount of the loans, unpaid balances, and monthly payments due. The Debtor signed the application with the knowledge that he had failed to include these loans on the application.
Furthermore, Citibank also showed that it reasonably relied on those statement when it issued the loan to the Debtor. The Debtor applied for a $10,000 loan, which Citibank approved for only $6,000. Based on the information disclosed by the Debtor, Citibank did not believe the Debtor was a sound enough credit risk to receive a $10,000 loan. It is likely, if not certain, that if the Debtor had revealed that it owed an additional $20,000 in loans on the date of the application that Citibank would not have thought the Debtor a sound credit risk to lend him any money, let alone $6,000.
Finally, the evidence submitted in relation to the omissions indicate, by a preponderance of the evidence, that the Debtor made these statements with an intent to deceive Citibank. The Court may find an intent to deceive if the evidence presented indicates, either directly or through logical inference, that the Debtor knew or should have known that the representation or omission would induce Citibank to extend credit. See Sheridan, 57 F.3d at 633; Banner Oil Co. v. Bryson (In re Bryson), 187 B.R. 939, 961 (Bankr.N.D.Ill.1995). Citibank may show an intent to deceive by demonstrating that the Debtor had a reckless indifference to or reckless disregard for the accuracy of the information on the financial statement. Westbank v. Grossman (In re Grossman), 174 B.R. 972, 984 (Bankr.N.D.Ill.1994); Bryson, 187 B.R. at 961. That showing has been made here. Such a reckless indifference and disregard is the most generous explanation of the Debtor's failure to disclose such recent and clearly material transactions from his loan application.
CONCLUSION
For the reasons stated herein, Citibank's Motion to Amend the Pleadings is granted. The pleadings are hereby amended to conform to the evidence presented at trial and to state a claim under 11 U.S.C. § 523(a)(2)(B) and the debt the Debtor owes to Citibank is non-dischargeable under section 523(a)(2)(B).
NOTES
[1] Citibank filed a motion for summary judgment on the day of the trial. Having ordered that the trial go forward absent a motion for a continuance, the Court, with the Debtor's consent, accepted the motion as Citibank's case in chief. Because the Court is making its decision based on both the motion for summary judgment and on the Debtor's defense as presented at trial and in his post trial motions, the Court hereby denies the motion for summary judgment and treats this judgment as one after a trial on the merits.
[2] The Debtor asserts that the origin date of May 4, 1995 is misleading because an existing loan was merely refinanced on that date.
[3] The Debtor's testimony was not clear on this point:
"Q: Can you tell . . . how much you paid to Household Finance approximately?"
"A: I don't recall."
"Q: Was it more than a thousand dollars?"
"A: I believe it was."
"Q: Was it more than $2,000?"
"A: It had to be around there somewhere because it was enough to get my drop my credit down. I paid enough on it to drop my credit down. And then they brought down my interest rates, you know, raised my credit line, so I know it's around somewhere in there."
Transcript of Proceedings, October 22, 1996 at 20-21.
[4] This testimony somewhat contradicted the Debtor's deposition testimony, which indicated that he paid only $320 to Household Finance and $110 to Sears.
[5] Although there was conflicting evidence at trial as to when this separation took place, there was no actual proof of the date the Debtor moved out of his marital home. It was never established whether the Debtor and his spouse separated before or after the Debtor received the loan.
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Mr. Chief Justice Green
delivered the opinion of the Court.
The question presented on this appeal is whether chapter 84 of the Acts of 1923, amending chapter 123 of the Acts of 1919, the Workmen’s Compensation Act, so amends the earlier act as to entitle the widow of a deceased employee to fifty per cent, of the average weekly wages of her husband, instead of thirty per cent, of his average weekly wages, as provided in the original statute.
*171This question was before us in Caruthers v. Lake County Mfg. Co., Inc., 150 Tenn., 269, 263 S. W., 793, and was answered in the negative. We are now asked to reconsider onr former holding.
The opinion in Caruthers v. Lake County Mfg. Co., Inc., supra, was rested largely on the proposition that if the Act of 1923 should he construed to amend the Act of 1919 as contended, it would he unconstitutional as containing matter not within the scope of its caption. Constitution, article 2, section 17.
The caption of chapter 123 of the Acts of 1919 is as follows:
“An act to provide an elective system of workmen’s compensation for industrial accidents; to prescribe the manner of election and the rights and liabilities of employers, employees, and third parties; to define and regulate the liability of employers to employees for injuries sustained by such employees in the course of their employment resulting in disability or death; to provide medical and surgical care for such injured employees; to provide compensation for injured employees; or in case' of death, for the dependents of such employees; to make claims payable hereunder preferred claims, and to make all sums paid as compensation under this act exempt from the claims of creditors; to provide methods for insuring and securing the payment of such compensation; to make minors sui juris for certain purposes; to prescribe a method for the execution of this act and for thq determination of liability of employers to employees for compensation, and to regulate the procedure in such cases; to provide revenue for the administration of this *172act; to provide for and regulate the business of insurance companies writing workmen’s compensation insurance under this act, and to impose fees upon such insurance companies and upon employers and employees who are subject to this act; to provide penalties for violations of this act; and to make appropriations out of the revenue of the State for the purpose of executing and administering this act.”
The caption of chapter 84 of the Acts of 1923 is in these words:
“An act to amend chapter 123 of the Published Acts of 1919, passed April 12, 1919, and approved April 15, 1919, being an act entitled ‘An act to provide an elective system of workmen’s compensation for industrial accidents ; to prescribe the manner of election and the rights and liabilities of employers, employees and third parties ; to define and regulate the liability of employers and employees for injuries sustained by such employees in the course of their employment resulting in disability or death; to provide medical and surgical care for such injured employees; to provide compensation for injured employees, or in case of death for the dependents of such employees, to make claims payable hereunder preferred claims, and to make all sums paid as compensation under this act exempt from the claims of creditors; to provide methods for insuring and securing the payment of such compensation; to make minors sui juris for certain purposes; to prescribe a method for the execution of this, act and for the determination of liability of employers to employees for compensation, and to regulate the procedure in such cases; to provide revenue for *173the administration of this act; to provide for and regulate the business of insurance companies writing workmen’s compensation insurance under this act and to impose fees upon such insurance companies and upon employers who are subject to this act; to provide penalties for the violation of this act; and to make appropriations out of the revenue of the State for the purpose of executing and administering this act, so as to provide that said act shall apply to employers engaged in the operation of coal mines and to employees thereof; to increase the maximum compensation from eleven ($11) dollars per week to twelve ($12) dollars per week and up to fifteen ($15) dollars per week in certain cases; to reduce the waiting period from fourteen days to seven days, to change the definition of the word ‘employer’ to those using the services of not less than five persons for pay instead of ten persons; to provide that coal operators in certain cases may make certain the payment of compensation by the establishment of a ‘coal operators’ protective fund,’ and more clearly to define the powers and duties of the commissioner of insurance and banking with respect to the rate charged by insurance carriers writing workmen’s compensation insurance, to provide for a tax on premiums and define the duties of insurance carriers in certain cases, and to give the Governor, the secretary of state, and the commissioner of insurance and banking the power to approve or withhold approval of rates charged by insurance carriers for workmen’s compensation. ’ ’
It will be observed that the only portion of the caption of the amendatory act, which in any way tends to *174cover the amendatory provision said to have been enacted, is that portion of the caption “to increase the maximum compensation from eleven ($11) dollars per week to twelve ($12) dollars per week and np to fifteen ($15) dollars per week in certain cases.”
For the reasons stated in Caruthers v. Lake County Mfg. Co., Inc., supra, we are satisfied that such a caption is inadequate to indicate such legislation. We see no reasonable connection between such a caption and such legislation.
It is insisted, however, that the caption of the original act is amply sufficient, and that if the amendment be germane to the original act, and embraced in the title of the original act, the particulars of the amending act need not be shown in its title. The rule has been so stated in many cases, among which may be mentioned. Henderson Co. v. Breeden Bros., 148 Tenn., 278, 255 S. W., 359; Railroad v. Transportation Co., 128 Tenn., 277, 160 S. W., 522; Memphis Street Railway Co. v. State, 110 Tenn., 598, 75 S. W., 730; Ruohs v. Athens, 91 Tenn., 20, 18 S. W., 400, 30 Am. St. Rep., 858; State v. Algood, 87 Tenn., 166, 10 S. W., 310; Hyman v. State, 87 Tenn., 109, 9 S. W., 372, 1 L. R. A., 497.
An examination of the statutes considered in these cases shows that the captions of the amendatory acts before the court were general, and did not specify the amendments designed. Such statutes, therefore, differed from chapter 84 of the Acts of 1923. The caption of the Act of 1923 went into details, and enumerated the particulars in which it was proposed to amend the original act, after reciting the title of the original act.
*175While conceding that it is not necessary for the title of an amendatory act to set out the amendments proposed to be made, if such amendments fall within the title of the original act, we think, when the title of the amendatory act does specify the particulars in which the original act is to be amended, the body of the amending act should not contain other matters. Any other rule would be unsafe. If the title of an amending act merely indicates generally that amendments of the original act are to be made, then it rests upon all those affected by the original act to investigate, and see in what respects the original act is to be changed. If the title of the amending act, on the contrary, sets out the particular amendments that are to be made to the original act, it may be reasonably concluded that no amendments other than those stated are to be attempted. It would-promote deception, if, under a caption undertaking to specify amendments to be made, other and different amendments were included in the body of the act.
This precise question does not appear to have been considered in any of our cases heretofore, but the conclusion reached is well supported, by decisions from other States.
“Where the title of the amendatory act recites the title of the act to be amended and also specifies the amendments to be made, the legislature is limited to the amendments specified and anything outside of these is void.”. Lewis’ Sutherland, Statutory Const., section 140; Niles v. Steere, 102 Mich., 328, 60 N. W., 771; Daxey v. Ruffell, 162 Pa., 443, 29 A., 894; Abernathy v. Mitchell, 113 Ga., 127, 38 S. E., 303; State v. American Sugar Refining Co., 106 La., 553, 31 So.. 181.
*176We do not think it was intended in Goodbar v. Memphis, 113 Tenn., 20, 81 S. W., 1061, to announce a rule contrary to the foregoing.
It results that we must adhere to Caruthers v. Lake County Mfg. Co., Inc., and the judgment of tne trial court is affirmed.
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10-17-2022
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203 B.R. 599 (1996)
In re Brian S. CATHCART, Karen M. Cathcart, Debtors.
Bankruptcy No. 96-13962-SSM.
United States Bankruptcy Court, E.D. Virginia, Alexandria Division.
November 29, 1996.
*600 Robert R. Weed, Falls Church, Virginia, for debtors.
Robert G. Mayer, Trustee, Fairfax, Virginia.
MEMORANDUM OPINION
STEPHEN S. MITCHELL, Bankruptcy Judge.
Before the court is the objection of the chapter 7 trustee, Robert G. Mayer, to exemptions claimed by the debtors in two Individual Retirement Accounts (IRA's). The issues are (1) whether, under Virginia law, the wife as the named death beneficiary may claim a homestead exemption in her husband's IRA, and (2) whether the debtors' minor children may intervene to assert exemption interests in their father's IRA's.
Facts
Brian S. Cathcart and Karen M. Cathcart, who are husband and wife, filed a voluntary petition under chapter 7 of the Bankruptcy Code in this court on July 29, 1996. On their Schedule B ("Personal Property"), they listed as an asset "Retirement" (not otherwise described) valued at $40,500. On their Schedule C ("Property Claimed As Exempt"), they claimed the "retirement" as exempt, citing *601 "ERISA" as the basis of the exemption.[1] The chapter 7 trustee filed a timely objection to the claim of exemption, asserting that the retirement accounts were not in fact ERISA-qualified but were IRA's subject to the limits on exemption set forth in Va.Code Ann. § 34-34. An evidentiary hearing was held on the trustee's objection on November 19, 1996, at which time the court took the matter under advisement.
On the date the debtors filed their petition, they had interests in three IRA accounts with Merrill Lynch, titled as follows:
Brian S. Cathcart (Account 531-81W26) $31,691.75
Brian S. Cathcart (Account 531-81W27) $ 7,927.47
Karen M. Cathcart $ 4,784.17
On the 'W26 account, Karen Cathcart is listed as "primary beneficiary(ies) to receive payment of the balance of my account upon my death," and the debtors' children, Robert and Megan, are each listed as 50% contingent beneficiaries in the event "there is no primary beneficiary living at the time of my death." On the 'W27 account, Brian S. Cathcart (presumably meaning his estate) is listed as the primary beneficiary and Robert and Megan are each listed as 50% contingent beneficiaries. As the owner of the 'W26 and 'W27 accounts, Brian S. Cathcart has the unfettered right during his lifetime to withdraw the funds from the account and to change the beneficiary designations.
Brian S. Cathcart's date of birth is May 23, 1952. Karen M. Cathcart's date of birth is October 22, 1952. They have two children, Robert John Cathcart, whose date of birth is October 27, 1980, and Megan Jean Cathcart, whose date of birth is December 6, 1983. Eldon R. Linn, a professional actuary, valued Karen M. Cathcart's contingent interest in the 'W26 account at $4,297. He also valued Robert and Megan's contingent interests in the 'W26 account at $481 each and in the 'W27 account at $697 each. Karen M. Cathcart has filed a timely homestead deed claiming a $3,100.00 exemption in the 'W26 account.
Conclusions of Law and Discussion
I.
This court has jurisdiction over this controversy under 28 U.S.C. §§ 1334 and 157(a) and the general order of reference from the United States District Court for the Eastern District of Virginia dated August 15, 1984. This is a core proceeding under 28 U.S.C. § 157(b)(2)(B).
The debtors have abandoned their assertion that the funds in the IRA accounts are excluded from the bankruptcy estate under ERISA. Nevertheless, there is no dispute that the debtors are entitled under § 522(b), Bankruptcy Code, to claim those exemptions available to them under Virginia law. The trustee concedes that Mrs. Cathcart is entitled under Va.Code Ann. § 34-34 to exempt the full amount of the IRA account titled in her name.[2] Additionally, the trustee concedes *602 that under Va.Code Ann. 34-34, Mr. Cathcart is entitled to claim a total of $23,320.50 of his IRA accounts as exempt[3] and that Mr. Cathcart has properly exempted an additional $5,840.00 under his homestead exemption. The sole issues before the court involve the remaining $10,458.72 in the two IRA's titled in Mr. Cathcart's name. Specifically, the questions presented are whether Mrs. Cathcart may use her homestead exemption to claim an exemption in her husband's IRA beyond what he may claim under § 34-34, and whether the two minor children may claim an independent exemption in their father's accounts.[4]
II.
Under § 541, Bankruptcy Code, the filing of a bankruptcy petition creates an "estate" composed of all property interests of the debtor, legal or equitable. An individual debtor may, however, claim certain property as exempt. § 522(b), Bankruptcy Code. Once properly exempted, such property passes out of the bankruptcy estate. Because Virginia has "opted out" of the Federal exemption scheme in § 522(d), Bankruptcy Code, Virginia residents filing bankruptcy petitions may claim only those exemptions available under Virginia and general (non-bankruptcy) Federal law. § 522(b)(1), Bankruptcy Code; Va.Code Ann. § 34-3.1.
Relevant to the present controversy are two exemptions provided by Virginia law. The first, commonly termed the "homestead" exemption, allows a "householder" (defined as any resident of Virginia) to exempt up to $5,000 of real or personal property from creditor process by filing for record an instrument, known as a homestead deed, describing such property. Va.Code Ann. §§ 34-4, 34-6, 34-13, and 34-14. An additional $500 is allowed for each dependent supported by the householder, and a disabled veteran is allowed a further $2,000. Va.Code Ann. §§ 34-4 and 34-4.1. The homestead exemption is independent of, and may be claimed in addition to, other available exemptions.
Virginia law also provides a specific exemption for interests in a "retirement plan." Va.Code Ann. § 34-34. The term "retirement plan" is defined as a plan, account, or arrangement that "is intended" to satisfy certain specified provisions of the Internal Revenue Code.[5] Essentially, an individual may hold exempt in a retirement plan an amount that would pay a benefit of $17,500 per year for life beginning at age 65. For the purpose of computing that amount, the statute includes a table setting forth, by attained age, the cost of a $1.00 annual benefit. Va.Code Ann. § 34-34(C). As an example, the table shows that the cost of a $1.00 annual benefit for a person aged 60 is $5.1150. Accordingly, the amount required to fund an annual benefit of $17,500 is $89,512.50 ($17,500 times 5.1150). The exemption does not apply to funds contributed to the plan during the fiscal year in which the exemption is claimed and the two prior years, unless those funds were already exempt. Va.Code Ann. § 34-34(D). The exemption is available to "an individual . . . whether such individual has an interest in the retirement plan as a participant, beneficiary, contingent annuitant, alternate payee, or otherwise." Va.Code Ann. § 34-34(B) (emphasis added). This broad language, however, is subject to *603 the limitation set forth in Va.Code Ann. § 34-34(F):
F. If two individuals who are married or were married are entitled to claim the exemption provided under subsection B of an interest under the same retirement plan or plans and such individuals are jointly subject to creditor process as to the same debt or obligation and the debt or obligation arose during the marriage, then the exemption provided under subsection B as to such debts or obligations shall not exceed, in the aggregate, the amount that would provide an annual benefit of $17,500. The maximum amount that may be exempted shall be allocated among such persons in the same proportion as their respective interests in the retirement plan or plans.
The debts scheduled in this case include joint obligations. Were Mrs. Cathcart therefore relying on § 34-34 as defining an exemption for her benefit, the plain language of the statute would bar an additional exemption, since her husband has already claimed an exemption of an amount sufficient to provide an annual benefit of $17,500.[6] However, Mrs. Cathcart, as the court understands her position, is not relying on § 34-34 as the basis of the exemption, but solely as support for the proposition that someone other than the owner can have an interest that may be exempted in a retirement account. Here, Mrs. Cathcart has available $3,100 of her homestead exemption that she wishes to apply to her interest which she says is worth at least $4,297 in the 'W26 account. Since the homestead exemption is separate from the § 34-34 exemption, she argues that the § 34-34(F) limitation does not apply.
Conceptually, there is nothing remarkable about a debtor who has a legal interest in a retirement plan even someone else's retirement plan exempting that interest on a homestead deed. There is no apparent bar, moreover, to claiming a homestead exemption in addition to whatever amounts may be held exempt under § 34-34.[7] Indeed, the trustee has not objected to Mr. Cathcart "stacking" his homestead exemption on top of the § 34-34 exemption. The controversy before the court goes to a more fundamental issue: what is the value of Mrs. Cathcart's "interest" in the 'W27 account?
Mrs. Cathcart presented the stipulated testimony of an actuary who calculated the present value of her interest at $4,297.00. It is clear, however, that his calculation is based on the assumption (1) that there would be no withdrawals from the account other than the payouts from the account beginning when Mr. Cathcart attained the age of 65 and (2) that Mr. Cathcart would not exercise his right to change the beneficiary designation to someone other than Mrs. Cathcart. Neither of these assumptions is supported by the evidence. First, there is no legal restriction on Mr. Cathcart's right to withdraw sums from the IRA account prior to reaching retirement *604 age.[8] Mrs. Cathcart admitted, in fact, that sums have been withdrawn from the IRA accounts in the past to meet the family's financial needs. In addition, it is stipulated that there is no legal restriction on Mr. Cathcart's right to change the beneficiary designation. Based on these factors, the chapter 7 trustee argues that Mrs. Cathcart's interest in her husband's IRA has no or at most nominal value.
The court agrees with the trustee's position and finds that Mrs. Cathcart's interest has no value. The situation would obviously be very different if Mrs. Cathcart had a protected or vested interest (for example, as alternate payee under a Qualified Domestic Relations Order) in her husband's retirement plan. That is not the case here. At best Mrs. Cathcart has an expectancy. See, Smith v. Coleman, 184 Va. 259, 270, 35 S.E.2d 107 (1945) ("The beneficiary, during the life of the insured, had no vested interest in the policy. She had a mere expectancy quite similar to that of a legatee during the life of the testator.") Furthermore, as the trustee correctly points out, under § 541, Bankruptcy Code, he succeeds to all the debtor's property rights. With respect to the IRA, those rights include except with respect to those amounts that the debtor has properly exempted the right to withdraw the funds. Under Virginia law, it is clear that "whatever a debtor may voluntarily transfer . . . his creditors can reach." Jones v. Conwell, 227 Va. 176, 183, 314 S.E.2d 61, 65 (1984) (because a joint tenant with right of survivorship may dispose completely of his or her interest in the joint tenancy during his or her life, a judgment creditor may have joint tenant's interest applied to satisfaction of debt). Accordingly, the trustee's objection to Mrs. Cathcart's attempted exemption of a $3,100 exemption in her husband's IRA will be sustained.
III.
Most of what has been said with respect to Mrs. Cathcart applies with equal force to the claimed interest of the children as the contingent beneficiaries of the two IRA's owned by their father.[9] The $1,178 value of each child's interest, as computed by the actuary, assumes no premature withdrawals from the account and no change of beneficiaries. Since nothing prohibits Mr. Cathcart from doing either, their claimed interest is no more than an expectancy. More fundamentally, the children, unlike Mrs. Cathcart, are not debtors in this or any other bankruptcy case, nor are they liable for any of the debts of Mr. and Mrs. Cathcart. Section 522(b), Bankruptcy Code, permits a "debtor" to exempt property from property of the estate, but no provisions of the Bankruptcy Code provide standing for non-debtor third parties to claim exemptions in property of the estate.[10]Burman v. Homan (In re Homan), 112 B.R. 356 (9th Cir. BAP 1989), reh'g denied 112 B.R. 356 (1990) (Non-debtor spouse not entitled to assert her own state law homestead exemption against trustee of husband's bankruptcy estate); Joelson v. Tiffin Savings Bank (In re Everhart), 11 B.R. 770 (Bankr.N.D.Ohio 1981) (transferee of preferential payment lacked standing to assert debtor's entitlement to exemption of the transferred funds); Lynn v. Darke (In re Darke), 18 B.R. 510 (Bankr.E.D.Mich.1982) (same). Nor has counsel cited the court to any reported Virginia cases that have allowed a party other than the judgment debtor to claim an exemption in the judgment debtor's property.[11]
It is important here to distinguish between a third-party's exemption claim and an ownership claim. A party who claims an ownership interest, superior to the trustee's, in property that the trustee proposes to use or sell may of course object to any such sale *605 or use and may bring an adversary proceeding to determine title and recover possession. But that is a different issue altogether from attempting to assert an exemption. Where the third party's ownership interest is subordinate to that of the trustee's, then so is any potential exemption claim, and the trustee is free to administer the property. Accordingly, the court concludes that the children have no right, based solely on their status as contingent beneficiaries of their father's IRA's, to assert as against their father's creditors an exemption in his retirement accounts.
IV.
For the foregoing reasons, the trustee's objection will be sustained. A separate order will be entered consistent with this opinion (1) allowing the exemption of Mrs. Cathcart's IRA, (2) disallowing her claim of exemption in Mr. Cathcart's IRA's, (3) allowing Mr. Cathcart's exemption of $29,160.50 in his IRA's, (4) disallowing his exemption of any sums in excess of that amount, and (5) disallowing the claims of Robert and Megan Cathcart to an exemption in their father's IRA's.
NOTES
[1] "ERISA" is the common abbreviation for the Employee Retirement Income Security Act of 1974, codified at 29 U.S.C. § 1001 et seq. To qualify under ERISA, a retirement plan is required to include a restriction prohibiting assignment and alienation of pension benefits. In Patterson v. Shumate, 504 U.S. 753, 112 S. Ct. 2242, 119 L. Ed. 2d 519 (1992), the Supreme Court held that the anti-alienation provisions of an ERISA-qualified plan constituted an enforceable restriction on alienation under § 541(c)(2), Bankruptcy Code. The result is that a debtor's interest in an ERISA-qualified plan is not property of the bankruptcy estate. In re Hanes, 162 B.R. 733 (Bankr. E.D.Va.1994) (Bostetter, C.J.). ERISA is not strictly speaking an exemption statute, since exempt property is property of the estate which, once the exemption is allowed, passes out of the estate, whereas the debtor's interest in an ERISA-qualified plan never becomes property of the estate. The drafters of the official forms, however, did not provide any place to list property of the debtor that was excluded from property of the estate. For that reason, it is common for debtors to assert the ERISA exclusion on the Schedule of Property Claimed Exempt, since there is no other convenient place on the schedules to do so.
[2] As discussed below, Mrs. Cathcart may exempt a sum sufficient to fund an annuity paying $17,500 per year for life beginning at age 65. Va. Code Ann. § 34-34. Based on her attained age of 43 at the time the petition was filed, the cost of a $1.00 retirement benefit is $1.2304. The amount, therefore, necessary to fund a $17,500 benefit would be $21,532.00 ($17,500 times 1.2304). Since her IRA contains only $4,784.17, all of it is exempt.
[3] Mr. Cathcart's attained age at the time the petition was filed and the exemption claimed was 44. The cost at that age of a $1.00 annual retirement benefit is $1.3326. The amount that may be held exempt, therefore, is $23,320.50 ($17,500 times 1.3326).
[4] The children, by their parents as their next friends, have filed a motion to intervene. See, Fed.R.Civ.P. 24(a) ("Intervention of Right"). Rule 24 is expressly made applicable to adversary proceedings in bankruptcy cases by Fed. R.Bankr.P. 7024, but is not one of the Federal Rules of Civil Procedure made applicable to contested matters by Fed.R.Bankr.P. 9014. Nevertheless, since the children assert an interest in property that the trustee proposes to administer for the benefit of creditors, the court concludes that intervention should be allowed.
[5] Among these are 26 U.S.C. § 408, which governs the treatment of individual retirement accounts. The trustee does not dispute that the IRA's in this case are intended to satisfy the relevant requirements of the Internal Revenue Code with respect to such accounts.
[6] Since Mr. Cathcart is older than Mrs. Cathcart, and since the sum that can be exempted increases with age, there would be no advantage to allocating the $17,500 between them, since Mrs. Cathcart's lower attained age would result in a lower aggregate exemption.
[7] At the same time, the court recognizes that Virginia law does not expressly authorize such stacking. Indeed, it could be argued that Va. Code Ann. § 34-13, by negative implication, prohibits taking both exemptions. That statute specifically addresses the claiming of an homestead exemption in "personal estate" and provides as follows:
If the householder does not set apart any real estate as before provided [in Va.Code Ann. §§ 34-4 through 34-8], or if what he does or has so set apart is not of the total value which he is entitled to hold exempt, he may, in addition to the property or estate which he is entitled to hold exempt under §§ 34-26, 34-27, 34-29, and 64.1-151.3, in the first case select and set apart . . . so much of his personal estate as shall not exceed the total value which he is entitled to hold exempt. . . .
The lack of an explicit reference to § 34-34, when other exemption statutes are mentioned, could arguably be construed as reflective of a legislative intent to permit interests in retirement plans to be exempted only under § 34-34. It is well settled, however, that exemption statutes in Virginia are liberally construed in favor of the debtor. Tignor v. Parkinson (In re Tignor), 729 F.2d 977, 981 (4th Cir.1984), citing South Hill Production Credit Assn. v. Hudson, 174 Va. 284, 6 S.E.2d 668 (1940) and Atlantic Life Ins. Co. v. Ring, 167 Va. 121, 187 S.E. 449 (1936). Given that policy, and in the absence of any language in §§ 34-17 or 34-34 prohibiting a homestead exemption from being stacked on top of the § 34-34 exemption, the court concludes that a debtor is not prohibited from using a homestead deed to exempt funds in a retirement plan in addition to those protected by § 34-34.
[8] Such withdrawal might trigger a tax liability or a penalty, but that is a separate issue. See, 26 U.S.C. §§ 72(t)(1) and (2), 408(d), and 4974(c)(4).
[9] It is true that the children, unlike Mrs. Cathcart, are not subject to the limitation in Va.Code Ann. 34-34(F).
[10] This must be distinguished from the situation where a debtor has failed to claim the exemptions to which he or she is entitled. In that circumstance, a dependant of the debtor may claim the exemption "on behalf of the debtor." § 522(l), Bankruptcy Code; Fed.R.Bankr.P. 4003(a). The dependent in such a situation, however, is asserting the debtor's exemption (the allowance of which would presumably benefit the dependent) and not the dependent's own exemption.
[11] Virginia law provides a summary procedure by which a stranger to a judgment may, upon giving a suspending bond, assert an ownership interest in property that has been levied upon. Va.Code Ann. 8.01-365. Alternatively, a stranger to a judgment whose property is wrongly taken in satisfaction of the judgment may recover damages in an action for common law trespass. Barbuto v. Southern Bank, 231 Va. 63, 340 S.E.2d 813 (1986).
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615 F. Supp. 1205 (1985)
Robert FLYNN
v.
NEW ENGLAND TELEPHONE COMPANY.
Civ. A. No. 85-1379.
United States District Court, D. Massachusetts.
August 16, 1985.
*1206 Robert Glass, Eric I. Zucker, Deutsch, Williams, Glass, Brooks & DeRensis, Boston, Mass., for plaintiff.
Edward R. Lev, Alicia R. Lopez, Thomas M. Alpert, Sullivan & Worcester, Boston, Mass., for defendant.
MEMORANDUM AND ORDER
YOUNG, District Judge.
The plaintiff Robert Flynn brought this action against the defendant New England Telephone Company ("New England Telephone"), seeking damages and injunctive relief for the alleged violation of the Age Discrimination in Employment Act, 29 U.S.C. § 623(a) (Count I); violation of Mass.Gen.Laws ch. 149, § 24A and ch. 151B (Count II); intentional infliction of emotional distress (Count III); negligent infliction of emotional distress (Count IV); and breach of an implied covenant of good faith and fair dealing (Count V). Flynn asserts subject matter jurisdiction pursuant to 28 U.S.C. § 1331, 28 U.S.C. § 1337, 29 U.S.C. § 626(c)(1), and general principles of pendant jurisdiction. New England Telephone has moved to dismiss the state law counts for failure to state a claim upon which relief can be granted. For the reasons that follow, the motion is allowed.
I. Background
Flynn has alleged the following facts, which are accepted as true for purposes of this motion: Flynn was born on June 30, 1928. He was first employed by New England Telephone in May 1952, when he was hired as a salesman. Beginning in 1969, Flynn served in the position as attorney for New England Telephone and was responsible for overseeing litigation matters in which New England Telephone was involved.
According to Flynn, his employment was terminated by New England Telephone on July 1, 1983, without prior warning or notice. At no time prior to his firing was Flynn given any indication that his employment performance was in any way inadequate or unsatisfactory, nor did anyone from New England Telephone make any *1207 adverse comment upon his work or suggest that that work should be improved. Rather, Flynn had regularly been complimented and commenced with respect to the quality of his work, and had been told that his employment position with New England Telephone was secure. Flynn alleges that the decision to fire him was improperly and illegally motivated by age discrimination.
On March 26, 1984, Flynn filed a complaint of discrimination with the Massachusetts Commission Against Discrimination ("the Commission"). The Commission concluded its processing of Flynn's charge in April 1984.[1] On April 20, 1984, Flynn filed a charge of discrimination with the Equal Employment Opportunity Commission. Flynn filed the pending action in this Court on April 10, 1985.
II. Chapter 151B.
Flynn alleges in Count II that New England Telephone's conduct in firing Flynn violated Mass.Gen.Laws ch. 149, § 24A, and ch. 151B. Chapter 149, § 24A provides in relevant part that "Whoever dismisses from private sector employment any person over the age of forty or refuses to employ such person because of his age, ... shall be punished by a fine of not more than five hundred dollars." Because that prohibition does not provide a civil remedy, Johnson v. United States Steel Corp., 348 Mass. 168, 202 N.E.2d 816 (1964), Flynn must rely on Mass.Gen.Laws ch. 151B, which provides certain civil remedies for victims of age discrimination.
Chapter 151B provides a dual remedial process. Section 5 authorizes the bringing of discrimination complaints before the Commission, and requires that "[a]ny complaint filed pursuant to this section must be so filed within six months after the alleged act of discrimination." Mass.Gen.Laws ch. 151B, § 5. Section 9 establishes an alternate remedy whereby one who brings a timely complaint before the Commission may elect to bring a suit in court, so long as the court action is filed "no later than two years after the alleged unlawful practive occurred." An action under § 9 terminates any complaint pending before the Commission. Mass.Gen.Laws ch. 151B, § 9.[2]See Carter v. Supermarkets General Corp., 684 F.2d 187, 190-91 (1st Cir. 1982).
*1208 According to Flynn's allegations in this action, he was fired on July 1, 1983 and filed his discrimination complaint with the Commission on March 26, 1984.[3] Because he waited more than six months between the time he was fired and the time he filed his complaint with the Commission, Flynn's complaint was barred by the six-month limitations period prescribed by Mass.Gen. Laws ch. 151B, § 5. The question before this Court is whether Flynn's right to file suit under § 9 was preserved despite his failure to comply with § 5.
In Carter v. Supermarkets General Corp., 684 F.2d 187 (1st Cir.1982), the plaintiff filed her complaint with the Commission approximately nine months after the last alleged act of race discrimination against her. The Court of Appeals held that she was precluded from bringing a civil action under § 9:
[W]hen Carter filed her complaint with MCAD, more than six months had elapsed from the time of the last alleged act of discrimination.... Mass.Gen. Laws Ann. ch. 151B, § 5. The MCAD complaint with respect to this incident was therefore time-barred, and by the same token the incident could not be the proper subject of a separate state court proceeding allowed in § 9as, indeed, the subsequent dismissal of the MCAD complaint, presumably for untimeliness, clearly showed. The two-year period could be of arguable applicability only had the MCAD complaint itself been timely filed within six months.
Id. at 191.
Flynn argues that Carter is distinguishable since that case involved a race discrimination claim arising under 42 U.S.C. § 1981. The question before the court in Carter was whether the plaintiff's § 1981 claim was governed by the six-month period prescribed by Mass.Gen.Laws ch. 151B, § 5, or by some other limitations period.[4] The court held that § 1981 claims brought by private employees were not subject to Massachusetts' general contract and tort statutes of limitations, but instead were governed by the limitations periods of Mass.Gen.Laws ch. 151B. Because the plaintiff had failed to file a timely complaint with the Commission, as required by ch. 151B, § 5, the court held that a six-month limitations period applied. Although there is a question whether the holding of Carter remains good law after the Supreme Court's recent decision in Burnett v. Grattan, ___ U.S. ___, 104 S. Ct. 2924, 82 L. Ed. 2d 36 (1984),[5] the Burnett decision does not affect the analysis of Flynn's state law claim under Mass.Gen. Laws ch. 151B. That is, even if the court in Carter applied the wrong statute of limitations to the federal civil rights claim at issue in that case, the court's analysis of ch. 151B remains applicable to a state law claim brought pursuant that state statute. See Hester v. City of Lawrence, 602 F. Supp. 1420, 1421 (D.Mass.1985) ("an aggrieved *1209 person must also have filed an administrative complaint within six months in order to preserve his or her right to file suit in the courts under section 9"). Therefore, Flynn is barred from bringing a claim under Mass.Gen.Laws ch. 151B, § 9 because he failed to file a timely complaint with the Commission as required by ch. 151B, § 5.[6]
Flynn also argues that Carter is inapplicable because that case was decided on a motion for summary judgment. This Court recognizes that it should not dismiss this action for failure to state a claim "unless it appears beyond doubt that plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Walgren v. Howes, 482 F.2d 95, 99 (1st Cir. 1973) (quoting Conley v. Gibson, 355 U.S. 41, 45, 78 S. Ct. 99, 102, 2 L. Ed. 2d 80 (1957)). Nevertheless, viewing the complaint in the light most favorable to Flynn, the Court rules that an action under Mass. Gen.Laws ch. 151B, § 9 is barred. The motion to dismiss Count II is therefore allowed.
III. Infliction of Emotional Distress
Flynn alleges in Count III that, by terminating his employment, New England Telephone intentionally inflicted emotional distress upon him. Count IV alleges negligent infliction of emotional distress. In its motion to dismiss, New England Telephone argues that both claims are barred by the exclusivity provision of the Massachusetts Workers' Compensation Act, which states in relevant part:
An employee shall be held to have waived his right of action at common law or under the law of any other jurisdiction in respect to an injury therein occurring, to recover damages for personal injuries if he shall not have given his employer, at the time of his contract of hire, written notice that he claimed such right....
Mass.Gen.Laws ch. 152, § 24. Flynn has not alleged that he gave New England Telephone any such written notice of his right under the act.
Common law actions are barred under the exclusivity provision of Mass.Gen. Laws ch. 152, § 24 only where: (1) the plaintiff is shown to be an employee; (2) his condition is shown to be a "personal injury" within the meaning of the Workers' Compensation Act; and (3) the injury is shown to have arisen "out of and in the course of ... employment." Foley v. Polaroid Corp., 381 Mass. 545, 548-49, 413 N.E.2d 711 (1980). Each of these three conditions is satisfied in this case.
First, it is undisputed that Flynn was an employee of New England Telephone. Complaint, ¶ 10. Second, the Supreme Judicial Court in Foley made clear that "emotional distress arising out of employment" is a "personal injury" which is compensable under the Workers' Compensation Act. Id. at 550, 413 N.E.2d 711; see Albanese's Case, 378 Mass. 14, 389 N.E.2d 83 (1979). Finally, Flynn's own allegations establish that his claims for emotional distress arise out of and in the course of employment. Complaint, ¶¶ 19-20, 22-23 (Flynn's emotional distress was caused as a result of the "conduct of the defendant in terminating the employment of the plaintiff ... without just cause and in bad faith, in breach of the plaintiff's contract of employment"). See Bertrand v. Quincy Market Cold Storage & Warehouse, 728 F.2d 568, 572 (1st Cir. 1984) ("As the employer's conduct substantially took place while the plaintiff was still an employee, and it explicitly concerned his employment, the plaintiff suffered `a personal injury arising out of and in the *1210 course of his employment....' M.G.L. c. 152, § 26.").
Flynn argues that Foley is inapplicable because it was not a termination case, but instead involved acts arising during an ongoing employment relationship. The Court does not find this argument persuasive. In Simmons v. Merchants Mutual Ins. Co., 394 Mass. 1007, 476 N.E.2d 221 (1985), the plaintiff claimed that he suffered emotional injury as a result of the defendant's bad faith termination of his employment. The Superior Court granted the defendant's motion to dismiss, and the Supreme Judicial Court affirmed: "A majority of the court concludes that the defendant's motion to dismiss was properly granted because the plaintiff's claim for intentional infliction of emotional distress is barred by the exclusivity provision of our Worker' Compensation Act." Id. at 1007-08, 476 N.E.2d 221; see Crews v. Memorex Corp., 588 F. Supp. 27, 30 (D.Mass.1984) (granting motion to dismiss claim for intentional infliction of emotional distress brought by employee allegedly discharged because of his age).
For these reasons, the Court rules that Flynn's claims based on emotional distress are barred by the exclusivity provision of the Massachusetts Workers' Compensation Act.
IV. Breach of Implied Covenant
Count V alleges that, by firing Flynn, New England Telephone violated the public policy against age discrimination and thereby breached the implied covenant of good faith and fair dealing. The decision in Melley v. Gillette Corp., 19 Mass. App. 511, 475 N.E.2d 1227 (1985) is dispositive on this issue. The Appeals Court recognized that age discrimination violates public policy, but emphasized:
[A] finding that certain conduct contravenes public policy does not, in itself, warrant the creation of a new common law remedy for wrongful dismissal by an employer. The rationale for implying a private remedy under the `public policy exception' to the traditional rule governing at-will employment contracts is that, unless a remedy is recognized, there is no other way to vindicate such public policy.
In Massachusetts, however, the public policy against age discrimination is already protected by a comprehensive legislative scheme, G.L. c. 151B.
Id. at 511-12, 475 N.E.2d 1227 (citations omitted). Because of the comprehensive remedial scheme available under Mass.Gen. Laws ch. 151B, the court held that Massachusetts does not recognize a common law action for wrongful discharge on the ground of age discrimination. Id. at 514, 475 N.E.2d 1227; see Crews v. Memorex Corp., 588 F. Supp. 27, 28-30 (D.Mass. 1984).
Flynn argues that Melley held only that administrative remedies under Mass.Gen. Laws ch. 151B must be exhausted prior to seeking redress in the courts. However, Melley cannot be interpreted so narrowly. The Appeals Court held explicitly that there is only one state remedy against an employer for age discrimination the statutory remedy provided by Mass.Gen.Laws ch. 151B. There was never a common law remedy before the passage of Chapter 151B, and the court in Melley declined to create one. 19 Mass.App.Ct. at 513; see Crews, supra, 588 F.Supp. at 29 n. 2. Therefore, Flynn has failed to state a claim under Count V.
For the reasons stated, the defendant's motion to dismiss Counts II, III, IV, and V is ALLOWED. In fairness, however, the dismissal here ordered must, and shall, give Flynn leave to amend within thirty days of the date of this order.
On March 4, 1985, the Massachusetts Supreme Judicial Court interpreted the Massachusetts Civil Rights Act, Mass.Gen. Laws ch. 12, § 11I in a broad, remedial fashion. Bell v. Mazza, 394 Mass. 176, 181-83, 474 N.E.2d 1111 (1985). The Bell decision has led at least one justice of the Superior Court to conclude that "the broad, remedial view there expressed inclines one to believe that every violation of `law,' including the common law of the Commonwealth is, ipso facto, a [Massachusetts] civil rights violation if accomplished by *1211 threats, intimidation or coercion". Moran v. Angelo's Super Markets, Inc., Suffolk Superior Ct. 73697 (memorandum and order, April 29, 1985, at 4), 13 Mass.Lawyers Weekly 1133 (May 13, 1985). Various commentators have suggested that elements of intimidation might be found in virtually every case of alleged wrongful termination. In the present case, Flynn has characterized New England Telephone's conduct as "extreme" and "outrageous". It is wholly unclear whether these conclusory allegations are meant to convey some intimidating overtones. Nor has either party addressed the possibility of any claim being asserted under the Massachusetts Civil Rights Act. Accordingly, it is appropriate to dismiss, upon the grounds set forth above, the State claims which have been clearly asserted and give Flynn thirty days to determine whether he can appropriately amend and assert a Massachusetts civil rights claim supported by adequate factual allegations and the certificate of counsel that "to the best of his knowledge, information, and belief formed after reasonable inquiry [such claim] is well grounded in fact and is warranted by existing law or a good faith argument for the extension, modification, or reversal of existing law". Fed.R.Civ.P. 11.
NOTES
[1] Flynn's complaint in this action does not contain any allegation regarding the disposition of his claim before the Commission, except for the allegation that the Commission "concluded its processing of plaintiff's charge" in April 1984. Complaint ¶ 3. Moreover, Flynn's brief in opposition to the pending motion to dismiss studiously avoids any specific mention of the Commission's action. It is unnecessary for the Court to go beyond the complaint to decide this motion because Flynn has alleged a specific date on which he filed his claim before the Commission March 26, 1984. However, in the interest of clarity, it is useful to note that the Commission dismissed Flynn's filing for lack of jurisdiction on the ground that it was not filed within six months of the date of his termination, as required by Mass.Gen.Laws ch. 151B, § 5. The Commission's final disposition was included by New England Telephone in support of its motion to dismiss.
[2] Mass.Gen.Laws ch. 151B, § 9 provides in relevant part:
Any person claiming to be aggrieved by a practice made unlawful under this chapter or under chapter one hundred and fifty-one C, or by any other unlawful practice within the jurisdiction of the commission, may, at the expiration of ninety days after the filing of a complaint with the commission, or sooner if a commissioner assents in writing, bring a civil action for damages or injunctive relief or both in the superior or probate court for the county in which the alleged unlawful practice occurred or in the housing court within whose district the alleged unlawful practice occurred if the unlawful practice involves residential housing. The petitioner shall notify the commission of the filing of the action, and any complaint before the commission shall then be dismissed without prejudice, and the petitioner shall be barred from subsequently bringing a complaint on the same matter before the commission. An aggrieved person may also seek temporary injunctive relief in the superior, housing or probate court within such county at any time to prevent irreparable injury during the pendency of or prior to the filing of a complaint with the commission.
An action filed pursuant to this section shall be advanced for a speedy trial at the request of the petitioner.... No action under this section shall be filed later than two years after the alleged unlawful practice occurred.
[3] According to the Commission's final disposition of Flynn's complaint, the complaint was filed with the Commission on March 27, 1984 and in that complaint, Flynn alleged that he was fired on July 10, 1983. For purposes of this motion, those discrepancies are immaterial and need not be considered.
[4] Because 42 U.S.C. § 1981 does not contain a statute of limitations, the courts must apply the statute of limitations governing the most analogous state action. See Burnett v. Grattan, ___ U.S. ___, 104 S. Ct. 2924, 82 L. Ed. 2d 36 (1984).
[5] Burnett involved the applicability of a six-month statute of limitations borrowed from Maryland's administrative civil rights statute to federal civil rights claims. The Court held that is was error to apply Maryland's six-month limitations period to action brought under 42 U.S.C. §§ 1981, 1983, 1985, and 1986. Although the Court did not hold explicitly that a six-month time limitation can never be applied to claims under the federal civil rights statutes, it rejected the application of statutes of limitations which are applied to state administrative actions and not designed to serve the same goals as the federal actions. Burnett, 104 S.Ct. at 2930-31; see Hester v. City of Lawrence, 602 F. Supp. 1420, 1421 (D.Mass.1985). Because Mass.Gen.Laws ch. 151B shares many of the characteristics of the Maryland statute under consideration by the Court in Burnett, it is unlikely that the six-month statute of limitations period of ch. 151B, § 5 can properly be applied to federal civil rights actions brought in Massachusetts courts. See Hester, supra, 602 F.Supp. at 1422.
[6] Even if Flynn had filed a timely complaint with the Commission, it is not clear that he could proceed under Mass.Gen.Laws ch. 151B, § 9. "Once the MCAD makes a final decision, ... relief under § 9 is presumably foreclosed, and a party has recourse only under § 6." Carter, supra, 684 F.2d at 191. Section 6 provides that a person aggrieved by a final order of the Commission may obtain judicial review of that order, but only if the proceeding is "instituted within thirty days after the service of the order of the commission." In this case, the Commission finally disposed of Flynn's complaint in April 1984, and Flynn did not file this action until April 1985.
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615 F. Supp. 1477 (1985)
J. Robert ROBERTSON, Plaintiff,
v.
R.B.A. INC., a corporation, R.B.A. Inc., d/b/a Stauffer Seed, Inc., and Stauffer Chemical Co., a corporation, Defendants.
Civ. No. 82-3353.
United States District Court, C.D. Illinois, Springfield Division.
August 23, 1985.
*1478 Jerry Tice, Petersburg, Ill., for plaintiff.
William S. Hanley, Michael A. Myers, Springfield, Ill., Frank H. Czajkowski, Stauffer Chemical Co., Westport, Conn., for defendants.
MEMORANDUM AND ORDER
ALLEN SHARP, Chief Judge[*].
This cause is before the court on the motion for partial summary judgment of defendants, R.B.A. Inc., and Stauffer Chemical Co. (both Stauffer) filed March 15, 1985. Stauffer moves for summary judgment on Counts I, II, IV, V, VI, VII, VIII, IX, XI, XII, XIII and XIV of the Second Amended Complaint. For the reasons set forth below, defendants motion for partial summary judgment is granted with respect to Counts I, IV, V, VI, VIII, XI, XII, XIII; such motion is denied with respect to Counts II, VII, and IX and XIV.
I.
In the time period relevant to this motion, plaintiff, J. Robert Robertson (Robertson) was a Vice President of R.B.A. Inc., a Minnesota Seed Company in bankruptcy. On September 22, 1980, Stauffer Chemical Co. acquired R.B.A. Inc. and entered into a written employment contract retaining Robertson as Area Marketing Manager to serve at the pleasure of the board for a salary of Fifty-five thousand and no/100 Dollars ($55,000.00). In dispute in this action is the length of the fixed term of the contract. The original contract retained by Stauffer reads as follows:
2. Term: The term of this Agreement shall begin on the effective date hereof and shall continue for a period of two (2) years.
Robertson maintains that the term of the contract was for a period of three (3) years.[1]
Testimony varies as to the circumstances surrounding the execution of Robertson's employment contract. However, the parties agreed to the following changes: (1) the original salary term of Fifty Thousand *1479 and oo/100 Dollars ($50,000.00) was changed to Fifty-five thousand and oo/100 Dollars ($55,000.00); (2) the restrictive covenant was changed from two (2) to three (3) years; and (3) the title of the position was changed from Director of Marketing to Manager of Marketing.
Robertson was relieved of all his duties with Stauffer on or about October 5, 1981. Although he did not function in any capacity with Stauffer for the next year, Stauffer continued to pay him a salary until the expiration of the two (2) year contract term on or about September 22, 1982. Robertson commenced this action on November 8, 1982 in the Circuit Court for the County of Sagamon, Case No. 82-L-420, entitled J. Robert Robertson v. Stauffer Chemical Company. Soon thereafter on December 12, 1982, Stauffer removed this cause to this court pursuant to 28 U.S.C. § 1441. Stauffer filed its motion for partial summary judgment on March 15, 1985 and the accompanying brief on March 20, 1985. Robertson's response was docketed May 8, 1985. On May 28, 1985, this court heard oral argument on this motion in Springfield, Illinois and granted the parties leave to file supplemental authority. Subsequently, Stauffer filed a supplement to it original memorandum in support of its motion for partial summary judgment on May 24, 1985. Jurisdiction of this court is predicated upon 28 U.S.C. § 1332(a)(1).
II.
A.
A threshold issue that must be addressed by this court is the choice of law to be applied in this diversity action. Stauffer contends that Minnesota law applies here. It relies on the contract provision that specifies that the document be governed by the law of Minnesota. Robertson maintains that choice of law provision in the contract must yield to the law of the forum state (Illinois) where there is a fundamental public policy which would be violated if that law were not applied. In addition, plaintiff contends that the contract is an "adhesion contract" and the choice of law provision should be unenforceable on that basis.
In a diversity case, a federal court must follow the conflict of laws principle of the state in which it sits. Klaxon Co. v. Stentor Electric Mfg. Co., 313 U.S. 487, 61 S. Ct. 1020, 85 L. Ed. 1477 (1941). In Illinois, where the parties expressly choose another state's law to govern their contract, their expressed choice will be honored. Hofeld v. Nationwide Life Insurance Company, 59 Ill. 2d 522, 322 N.E.2d 454, 458 (1975); Swanberg v. Mutual Benefit Life Insurance Company, 79 Ill.App.3d 81, 34 Ill. Dec. 624, 627, 398 N.E.2d 299, 302 (1979); Tele-Controls, Inc. v. Ford Industries, Inc., 388 F.2d 48, 51 (7th Cir.1967); Carter v. Catamore Company, Inc., 571 F. Supp. 94, 95 (N.D.Ill.1983).
To circumvent this rule, Robertson argues that the "most significant contacts" test is applicable in this situation. He contends that the contract provision is but one factor to be considered by this court in determining which jurisdiction has the most significant contacts with the matter at issue. He concludes that in this case where the substantive law of Illinois and Minnesota are the same, Minnesota law will govern the issue. Where the law expresses a different policy between the two states, Illinois law will govern since Illinois is the state of performance and has the most interest in the action.
This court does not agree with Robertson's conclusions on the choice of law question. Initially, the court observes that the "most significant contacts" test has not be extended to contract actions in the state of Illinois. Charles O. Finley & Co. v. Kuhn, 569 F.2d 527, 547 (7th Cir.1978); International Paper Co. v. Grossman, 541 F. Supp. 1236, 1239-40 (N.D.Ill.1978). Robertson cites P.S. & E Inc. v. Selastomer Detroit, Inc., 470 F.2d 125 (7th Cir.1972) in support of his position that the "most significant contacts" test is the correct conflict of law principle to be applied here. The court finds P.S. & E. Inc. distinguishable from this action in several respects. First, the agreement in P.S. & E Inc. contained *1480 no express contract provision setting out the law to be applied in determining the validity of the contract and the rights created by the document. Second, the factual situation in P.S. & E Inc. was such that no existing Illinois authority would clearly govern the case. Under Illinois conflict of law principles, if more than one place of performance is involved, the place of the making of the contract governs its construction and obligations. Id. at 127. In P.S. & E. Inc., the performance of the contract was to occur in several states and the place of making of the contract could not be firmly determined, it being arguably in Michigan or Illinois. It was only under these circumstances that the court surmised that Illinois courts would utilize the "most significant contacts" test.
Nor does this court find merit in Robertson's arguments that the choice of law provision in the contract should be unenforceable because the contract itself is an adhesion contract. Robertson relies on American Food Management, Inc. v. Henson, 105 Ill.App.3d 141, 61 Ill. Dec. 122, 434 N.E.2d 59 (1982) to demonstrate that the contract in issue is an adhesion contract. In American Food Management, Inc., the court was called upon to construe an employment contract involving a covenant not to compete. The contract included a provision indicating that Missouri law was to control the enforcement of the contract. The plaintiff employer wished to have the contract provision on choice of law enforced while the defendant maintained that Illinois law controlled. The court found that the defendant had no more bargaining power with respect to the choice of law provision in the contract that he had with respect to the covenant not to compete and that the contract was an adhesion contract, 105 Ill.App.3d at 145, 434 N.E.2d at 62. However, the court determined that the result would be the same whether it applied Illinois law or Missouri law and ultimately, chose to apply Missouri law.
Also in American Food Management, Inc., the court adopted Professor Corbin's definition of adhesion contracts as "agreements in which one party's participation consists in his mere `adherence' unwilling and often unknowing, to a document drafted unilaterally and insisted upon by what is usually a powerful enterprise." Id. In this action, Robertson claims that he negotiated his title, the term of employment, the salary and the term of the restrictive covenant. Robertson was not forced to accept the contract and had, at all times, the option to forego employment with Stauffer. The fact that the entire acquisition of R.B.A. Inc. by Stauffer hinged upon Robertson's acceptance of employment may have enhanced Robertson's negotiating position rather than diminish it. In sum, the court does not find the contract in question to be an adhesion contract.
Assuming arguendo that the agreement was indeed an adhesion contract and the governing law provision is rendered unenforceable, under Illinois conflict rules, the law of Minnesota would still govern. Absent an agreement by the parties in Illinois, the law of the place of performance governs the construction and obligations of the contract where the place of making and the place of performance differ, if the agreement is to be wholly performed in one jurisdiction. If more than one place of performance is involved, the place of making of the contract governs its construction and obligations. International Paper Co. v. Grossman, 541 F.Supp. at 1239-40 citing Charles O. Finley & Co. v. Kuhn, 569 F.2d 527, 542 (7th Cir.1978).
Here, Robertson's sales responsibilities covered an eight state region, including Minnesota, as reflected in the restrictive covenant. He supervised six district sales managers located in states other than Illinois. (Deposition of J. Robert Robertson II, p. 18). He reported to and received directions from Connecticut. (Deposition of J. Robert Robertson I, p. 141; Deposition I, pp. 49-50, 53). He acknowledged having performed services in Colorado, Missouri and Iowa (Deposition of J. Robert Robertson, pp. 112-113; Dep. II, p. 68). Stauffer's principal offices were in Connecticut. Further, Robertson reported to Connecticut and was terminated upon a decision made in Connecticut. Moreover, it *1481 is undisputed that the contract was negotiated and executed in Minnesota and between parties in Minnesota. Based upon this record, the court finds that Minnesota law will be applied in this action.
B.
The court turns now to the merits of Stauffer's motion for partial summary judgment. The Second Amended Complaint consists of fourteen (14) counts; the first seven (7) are directed to R.B.A. Inc. and the second seven (7) repeat the first seven (7) but are directed to Stauffer Chemical. The court will address as a pair the similar counts against each employer. The motion is not directed to Counts III and X in which a claim for fraud is pleaded.
Summary judgment is appropriate where 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(c). The party moving for summary judgment has the burden of establishing the lack of a genuine issue of material fact. Big O Tire Dealers, Inc. v. Big O Warehouse, 741 F.2d 160, 163 (7th Cir.1984); Korf v. Ball State University, 726 F.2d 1222, 1226 (7th Cir.1984). In determining whether the moving party carried its burden, the court must view the evidence and all inferences to be drawn therefrom in the light most favorable to the opponent of the moving party. Landgrebe Motor Transport, Inc. et al v. District 72, International Association of Machinists & Aerospace Workers, AFL-CIO et al, 763 F.2d 241, 244 (7th Cir.1985). With these standards in mind, the court turns to an examination of the counts on which summary judgment is sought.
Counts I and VIII plead breach of a written employment agreement claiming that the defendants failed to employ Robertson for the third year of a three (3) year term. It is undisputed that the original copy of the September 22, 1980 contract provides for a term of two (2) years. Robertson has also admitted that he received a salary for the two (2) year term and that the contract had been fully performed during that period. (Deposition of J. Robert Robertson II, pp. 5, 87-88). Thus, there can be no legal claim under the document itself for a salary for an additional year unless the writing can be challenged by parol evidence.
In Minnesota, a "contract of employment is governed by the same rules applicable to other types of contracts." Smith v. Employers' Overload Co., 314 N.W.2d 220, 223 (Minn.1981). In the absence of fraud and mistake, the parol evidence rule bars proof of a prior oral agreement to vary the clear terms of the written contract. Montgomery v. American Hoist & Derrick, 350 N.W.2d 405, 408 (Minn.App. 1984). No allegations of mistake or fraud appear in Counts I and VIII. Thus, standing solely as a breach of contract counts, Counts I and VIII must fail since the contract clearly indicates Robertson's term of employment was to be for two (2) years and it is admitted that Stauffer performed the contract for that term. Therefore, Counts I and VIII are dismissed.
Counts II and IX seek reformation on the theory that the parties mutually understood that the contract was to be for a three (3) year term, but by mutual mistake they failed to correct the language of the document to reflect such a term. Stauffer contends that no mistake was made and that the contract recites the term correctly. Robertson claims that he saw that the draft read two (2) years, got Stauffer's agreement to three (3) years, observed the changes being made, signed the document without reading it and was given the copy of the agreement as signed. He contends these actions manifest a mutual mistake.
As to Counts II and IX, summary judgment must be denied. In its brief in support of its motion for summary judgment at p. 6, Stauffer contends that the issue of a three (3) year employment term was never raised by Robertson in negotiations. See also Deposition of Anthony Laos, pp. 63-64. It is Robertson's contention that such a change was not only discussed but also agreed upon. See Deposition of Robert L. Walston, p. 27. These conflicting positions raise issues of material fact as to whether Laos mistakenly forgot to change *1482 the term of the contract from two (2) to three (3) years or whether the term was ever intended to be changed.
Counts IV and XI allege that Stauffer had advised Robertson that his employment would be of a continuous nature and that because Stauffer had personnel policies and procedures with regard to terminations, the contract impliedly incorporated Stauffer's employment policies and procedures concerning termination. Counts VII and XIV, although stated separately and with more allegations of fact, are essentially identical to Counts IV and XI. Because of their similarity, these four counts will be treated together.
To the extent that Robertson contends that the contract is of a permanent nature, such allegations are barred by the parol evidence rule. Montgomery v. American Hoist and Derrick Co., 350 N.W.2d at 408. As in Montgomery, the contract here carefully delineates Robertson's salary, title, duties and term of employment. That document is controlling and the parol evidence rule bars any proof of an alleged prior oral agreement for permanent employment.[2]
In conjunction with the allegation of permanent employment, Robertson argues that there existed at Stauffer employee personnel policies concerning termination. He contends that such policies and procedures were not followed with respect to his alleged dismissal. Although the contract in issue is a term contract, presumably Robertson is contending that it was not the expiration of the contract that constituted the termination but rather the event of his being relieved of his duties before the contract had expired.
The alleged termination policy and procedure referred to by Robertson is taken from the EEO Guideline for Supervisors. That guideline was not implemented at R.B.A. until after Robertson had been relieved of his duties. Robertson acknowledged that he had never seen the termination policies until he was given a set of them by one of his former co-workers who had received them at a training session after Robertson had left. Deposition of J. Robert Robertson II, pp. 24-30. In order for Robertson to claim that the termination guidelines (which on their face do not apply to a withdrawal of duties), he must show, under Minnesota law, that they were, in fact, part of his contract.
Both parties rely on Pine River State Bank v. Mettille, 333 N.W.2d 622 (Minn. 1983) as supportive of their respective positions. In Pine River State Bank, the court considered the manner by which specific procedures in an employee handbook could create a binding unilateral contract. (It must be noted at this juncture that the Pine River State Bank court was dealing with an at will relationship and not a contract for a fixed term.) The court focused first on the need for offer and acceptance. It determined that in order to have an offer, there must be evidence that "the offer has been communicated by dissemination of the handbook to the employee." 333 N.W.2d at 626. Robertson admits that the handbook was never given to him and that the first dissemination of it was made only after the events of which he complains.
Robertson points to the fact that he was still under contract to Stauffer at the time the termination policy was disseminated in November 1981. He argues that under the rule set down in Pine River State Bank, the termination policy would automatically become part of his contract. While Robertson was still under contract to Stauffer receiving salary and benefits, he had been relieved of all duties and had been told to make himself available for reassignment. On this record, an issue of material fact *1483 exists with respect to whether these procedures and warnings did apply to an employee in Robertson's position.
Although Counts IV and XI and Counts VII and XIV are similar as noted above, because Counts IV and XI contain allegations of a contract of continuous nature which are barred by the parol evidence rule, Stauffer's motion for summary judgment with respect to those counts is granted and the court dismisses those counts. Stauffer's motion is denied, however, with respect to Counts VII and XIV because of the issue of material fact discussed above.
The court turns now to Counts V and VII. In those counts Robertson pleads that his contract contained an implied in law covenant that defendants would deal with him in his employment relationship with them in good faith and in a fair manner. Such a covenant is not generally recognized under Minnesota law. Wild v. Rarig, 302 Minn. 419, 234 N.W.2d 775, 790 (1975).
Even if this court would construe such a clause as an implied term of good cause before termination, Robertson is in no better position. First, implied terms of good cause come up only in the context of at will contracts. Again, Robertson did not have such a contract. Second, assuming arguendo that Robertson's contract could be construed as an at will contract, Minnesota courts have not imposed such an implied covenant upon at will contracts. Bakker v. Metropolitan Pediatric P.A., 355 N.W.2d 330, 331 (Minn.App.1984). Counts V and VII are, therefore dismissed.
Finally, in Counts VI and XIII, Robertson alleges a violation of the federal Age Discrimination in Employment Act (ADEA), 29 U.S.C. § 621 et seq. He contends that he, at age forty-six (46), was discharged and replaced with one or more younger men, less than forty (40) years of age, who performed his duties.
The ultimate burden on a plaintiff in an age discrimination case is to prove that he was discharged because of his age. La Montagne v. American Convenience Products, Inc., 750 F.2d 1405, 1409 (7th Cir.1984). Initially, the plaintiff must prove a prima facie case of age discrimination by showing (1) the employee is within the protected age group (40-70); (2) the employee was discharged; (3) the employee was qualified to do the job; and (4) the employee was replaced. Tice v. Lampert Yards, Inc., 761 F.2d 1210, 1212 (7th Cir. 1985).
Having carefully reviewed the record in this case, this court finds that Robertson does not establish a prima facie case under the ADEA in that there is no evidence of a discharge here. Although Robertson was relieved of his duties on October 5, 1981, he continued to receive full benefits and salary by Stauffer through September 22, 1982, the point at which his two year contract expired. Although Robertson seeks recovery for salary and benefits beyond the expired two (2) year term, the original contract evidencing a two (2) year term is controlling absent allegations of mistake or fraud. Thus, Counts VI and XIII are dismissed.
Accordingly, it is the order of this court that defendants' motion for partial summary judgment be, and is hereby, denied in part and granted in part. Defendants' motion is GRANTED with respect to Counts I, IV, V, VI, VIII, XI, XII, XIII and these counts are DISMISSED; defendants' motion with respect to Counts II, VII, IX and XIV is DENIED. SO ORDERED.
NOTES
[*] Sitting by designation pursuant to 28 U.S.C. § 292.
[1] As Exhibit A to his Second Amended Complaint, Robertson attached a document purporting to be the contract executed on September 20, 1980. There the term of employment appears as follows:
2. Term: The term of this Agreement shall begin on the effective date hereof and shall continue for a period of three (3) years.
At his deposition, Robertson acknowledged that the document appearing as Exhibit A to the Second Amended Complaint was a copy of the contract made immediately after signing. (Deposition of J. Robert Robertson I, pp. 96, 103-104). He had kept it in the file drawer of his desk since its execution and upon being relieved of his duties in October, 1981, he altered the copy by striking through the word "two" and inserting the word "three". Id. at 103-104. Thus, the only original is the Stauffer original which Robertson acknowledged that he signed. Id. at 101-102. Consequently, there is no dispute that in the single document signed by the parties on September 22, 1980, the contract term was for two years.
[2] Robertson's allegation of permanent employment is contradicted by his own deposition testimony:
Q. And is it your testimony that the agreement, as it is written, does not reflect that what you thought you and Mr. Laos had agreed to?
A. Not totally.
Q. In what respect, a three-year term?
A. That's correct.
Q. And in no other respect?
A. That's correct.
Deposition of J. Robert Robertson I, p. 133.
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367 A.2d 613 (1976)
Cecile C. GAGNE and Victoria A. Bouffard
v.
LEWISTON CRUSHED STONE COMPANY, INC., et al.
Supreme Judicial Court of Maine.
December 10, 1976.
*614 Rocheleau & Fournier, P.A. by Paul C. Fournier, Lewiston, for plaintiffs.
Isaacson & Isaacson by Robert S. Hark, Lewiston, for Lewiston Crushed Stone.
Paul R. Dionne, Lewiston, for the City of Lewiston and defendant Buteau.
Before WEATHERBEE,[*] POMEROY, WERNICK and ARCHIBALD, JJ.
WERNICK, Justice.
This case, a sequel to our decision in Gagne v. Inhabitants of City of Lewiston, Me., 281 A.2d 579 (1971), requires that, in light of our intervening decision in Keating v. Zoning Board of Appeals of the City of Saco, Me., 325 A.2d 521 (1974), we further develop principles governing the manner and scope of the judicial review of the decisions of administrative officials concerned with zoning.
Defendant Lewiston Crushed Stone Company, Inc. (defendant company) has appealed from a summary judgment in favor of plaintiffs Cecile C. Gagne and Victoria A. Bouffard. The judgment entered in the Superior Court (Androscoggin County) (1) revoked a building permit which was issued, on November 20, 1972, to defendant company by the Lewiston building inspector and (2) required defendant company to remove a portion of the building constructed pursuant to said permit.
Plaintiffs have filed a cross-appeal asserting that the remedy given them was too narrow because removal of the entire *615 building, rather than only part of it, should have been ordered.
We sustain the appeal of defendant company. We thus do not reach the cross-appeal of plaintiffs and dismiss it.
1.
On July 26, 1973 plaintiffs instituted a civil action in the Superior Court (Androscoggin County) invoking that Court's jurisdiction in equity. Sued as defendants were the defendant company, the Inhabitants of the City of Lewiston and the Lewiston building inspector, Charles Buteau. As ultimately amended,[1] the complaint of plaintiffs alleged that on November 20, 1972 the building inspector had issued defendant company a building permit pursuant to which, in 1973, construction was commenced. Plaintiffs claimed that these acts violated the Lewiston Zoning Ordinance, as in effect when the building permit was issued,[2] and sought declaratory and injunctive relief, including revocation of the allegedly illegal building permit and removal of any building constructed under it.
Defendant company answered by admitting issuance of the permit, and construction pursuant to it, but denied violation of the ordinance. Defendant company also raised several affirmative defenses, one of which we find basically dispositive of this appeal:that plaintiffs had failed to appeal the decision of the building inspector to the zoning board of appeals, as the initial step necessary to achieve a direct judicial review, first, in the Superior Court (under Rule 80B M.R.C.P.) and thereafter in this Court, and, therefore, plaintiffs are barred from collateral judicial review of the merits of their substantive claims of administrative violation of the Lewiston Zoning Ordinance.
2.
It has been factually established that plaintiffs failed to appeal to the zoning board of appeals from the building inspector's issuance of a building permit to defendant company. Plaintiffs contend that, despite this failure, they are entitled to the collateral judicial review they now seek because: (1) the Lewiston Zoning Ordinance, although mentioning a right of appeal to the zoning board of appeals, was silent concerning the time for such appeal and, hence, in practical terms, plaintiffs should not be held at fault for failing to resort to the direct course of administrative and judicial review; (2) even if direct appeal proceedings had been pragmatically available to them, plaintiffs were unable to "bifurcate" their claims into the appropriate administrative and judicial channels; (3) in any event, the zoning board of appeals lacked power to stop, pending appeal, the construction which had already been commenced by defendant company; (4) the building inspector's issuance of the building permit was void and, therefore, may be declared a nullity in a collateral judicial attack; and (5) general principles acknowledged by this Court, in particular in Stanton v. Trustees of St. Joseph's College, Me., 233 A.2d 718 (1967) and Summit Realty, Inc. v. Gipe, Me., 315 A.2d 428 (1974), authorize the full-scale collateral judicial review here sought.
The Superior Court Justice allowed plaintiffs collateral judicial review of the substantive merits of their claims on the grounds that: (1) here, plaintiffs had no timely notice that the building inspector had issued the permit to defendant company and thus were deprived of a practically meaningful opportunity to appeal to the zoning board of appeals as a preliminary to seeking, if necessary, a direct judicial review and (2) since it appears as a matter *616 of law that defendant company was not entitled to the building permit issued to it, the collateral judicial review sought by plaintiffs should be allowed.
We decide that, in so ruling, the presiding Justice committed error, and the appeal of defendant company must be sustained.
3.
To afford better understanding of the reasons for our decision we advert briefly to the facts of the controversy.
Still before us, as facts undisputed, are the events involved in our decision in Gagne v. Inhabitants of City of Lewiston, supra.
In 1969 defendant company had determined to replace its wood frame garage on a so-called "split lot" in the City of Lewiston. That lot, and the then existing garage, were bisected by the boundary between the "Residential A" and "Industrial" Zones.[3] Since the portion of the garage in the Industrial Zone constituted a "permitted use" in that zone, demolition and new construction as to it appeared to be matters of right, upon compliance with applicable set-back and building code provisions. The portion jutting into the Residential A Zone, however, because in existence on the effective date of the zoning ordinance, persisted as a "non-conforming use."
Since defendant company's project of complete replacement would have effects upon a non-conforming use, Section 10.b of the Lewiston Zoning Ordinance came into play. That section required the approval of the zoning board of appeals where a non-conforming use was to be "enlarged or altered." Accordingly, defendant company obtained the requisite approval.
On the appeal by abutting property owners to this Court, we held that the "demolition of an existing building and the erection of an entirely new one" was not authorized by the concepts, "enlarged", "altered" or "erection of additional buildings", as contained in Section 10.b of the Lewiston Zoning Ordinance. Gagne v. Inhabitants of City of Lewiston, supra, p. 582.
The parties do not fully agree as to the events transpiring after the Gagne decision.[4]
Undisputed are these facts. Defendant company made changes in its plans, limiting reconstruction to less than the entire building. It then obtained the November 20, 1972 building permit here at issue which authorized erection of a concrete garage in the Industrial Zone portion of its property extending 30 feet into the adjacent Residential Zone.[5]
Defendant company, through affidavits of its officers and answers to plaintiffs' interrogatories, claims that construction began on April 30, 1973, approximately five months after issuance of the permit. Plaintiffs, also through affidavits, dispute that date, asserting that renovation actively commenced later, in June, 1973.
Believing the proposed concrete replacement violative of the zoning ordinance, plaintiffs requested that defendant company discontinue its project. When defendant company refused to halt construction, plaintiffsat the end of July, 1973initiated the instant action in the Superior Court.
The parties agree that work continued during the summer of 1973, resulting in completion of the cement portion by autumn. They also agree that a portion of *617 the old frame garage remains in the residential part of defendant company's lot, forming part of the now partially renovated entirety.
However, the location of the renovated portion vis-a-vis the zone boundaries is disputed. Defendant company maintains that the cement section extends 30 feet into the Residential Zone in compliance with the November 20, 1972 permit and the ordinance. Plaintiffs contend that the new portion goes beyond that 30-foot limit.
Plaintiffs attack the validity of the issuance of the November 20, 1972 building permit primarily on the basis of Section 10(b) of the Lewiston Zoning Ordinance, the section we construed in the Gagne case. It provides:
"A building of nonconforming use may be enlarged or altered or additional buildings may be erected on the same or an adjacent parcel of land in the same single or joint ownership of record at the time it is placed in a zone for an extension of such use, provided the board of appeals shall rule that such addition or alteration is not substantially more detrimental or injurious to the neighborhood." (emphasis supplied)
Plaintiffs contend, and the presiding Justice ultimately agreed, that the now completed reconstruction of a portion of defendant company's garage constitutes an "enlargement" of a non-conforming use for purposes of Section 10(b). Since that section requires approval by the board of appeals for any such enlargement, the building inspector had no authority, plaintiffs argue, to issue the permit without resort to the board.[6] They, therefore, urge affirmance of the judgment below, at the same time seeking, through their cross-appeal, modification to require removal of the entire garage.
In addition to its affirmative defenses, defendant company contends on the merits that Section 10(b) of the zoning ordinance does not apply to its new cement garage. Arguing that the renovation did not constitute an "enlargement" subject to that section, defendant company cites Section 2(b) of the ordinance as supportive of its right to operate 30 feet into the Residential Zone as if it were in the Industrial Zone. Section 2(b) reads as follows:
"Where a zone boundary line divides a lot in a single or joint ownership of record at the time such line is adopted, the regulations for the less restricted portion of such lot shall extend not more than thirty (30) feet into the more restricted portion, provided the lot has frontage on a street in the less restricted zone."[7]
The contention of defendant company is that since it did no more than construct for permitted uses by limiting its renovation to the Industrial Zone plus 30 feet into the Residential Zone, defendant company needed nothing other than the November 20, 1972 building permit to proceed.[8] It therefore contends that the Superior Court judgment, upholding the contrary reading of the ordinance asserted by plaintiffs, erroneously dealt with the substantive merits of plaintiffs' claim.
4.
We conclude that in all the instant circumstances it is not open to plaintiffs to have a decision of the merits of the above-described substantive issues by the collateral judicial review here undertaken. *618 We arrive at this conclusion on the basis of general principles governing the judicial review of administrative action, principles which this Court previously had occasion to apply, specifically in relation to the Public Utilities Commission, in Stoddard v. Public Utilities Commission, 137 Me. 320, 19 A.2d 427 (1941). See: Lewiston, Greene and Monmouth Telephone Company v. New England Telephone and Telegraph Company, Me., 299 A.2d 895, 902-904 (1973).
In Stoddard, as here, plaintiff had failed to pursue procedures statutorily afforded to allow direct judicial review of administrative action and later sought a collateral judicial review sounding in equity. Acknowledging that a court of equity has the general power to enjoin an invalid administrative order, this Court nevertheless decided in Stoddard that such general equity power may not be utilized if a remedy prescribed by law, and to be deemed exclusive, is adequate in the circumstances.
We now decide that, as was the situation in Stoddard, the Legislature has here provided a remedy (at law), intended to be exclusive, which, under the rationale of Stoddard, bars the exercise of jurisdiction in equity if such remedy is adequate in the circumstances here involved. Specifically, 30 M.R.S.A. § 4963 and § 2411 (and the Lewiston Zoning Ordinance itself), as in effect on the date of issuance of the building permit here attacked, provide for an appeal from action (or non-action) of the building inspector to the zoning board of appeals, and from that board directly to the Superior Court (in accordance with procedures delineated in Rule 80B M.R.C. P.), the judgment of the Superior Court being further subject to this Court's direct review.
The critical question, then, is whether such remedy was in the instant circumstances adequate, thus to foreclose the availability of a collateral judicial review predicated upon the traditional jurisdiction of equity to prevent irreparable injury as arising from inadequacy of the remedy at law.
A complicating feature, here, is that in authorizing (as it must under statutory requirements) an appeal from the decision of the building inspector to the zoning board of appeals, the Lewiston Zoning Ordinance failed to designate a time limitation for the taking of the appeal. As to such situation, we decided in Keating v. Zoning Board of Appeals of the City of Saco, supra, that a time limitation of 60 days commencing to run from the date of the building inspector's decision, rather than notice of such decision, is read into the ordinance as if expressly stated in it, subject, however, to the restricted exception that "within a narrowly extended range" of time after expiration of such 60 day time for appeal, a Court of competent jurisdiction may reinstate the right of appeal to the board of zoning appeals if the Court
". . . finds special circumstances which would result in a flagrant miscarriage of justice." (p. 524 of 325 A.2d)
In arriving at this rule in Keating, we carefully analyzed, and reconciled, the competing interests of builder and nearby landowner. First, to avoid arbitrariness and provide uniformity, we elected a fixed period and rejected ad hoc determination of "reasonableness." Second, we settled upon 60 days as an appropriate length of time for striking a balance between the builder's interest in speed as exacerbated by the short building season of this climate, and the opponent's interest in sufficient time to know, or have notice, of issuance of the permit. Third, our decision to gear the appeal period to the time the official action is taken, rather than to notice of it, reflected the realities of the practices of building inspectors:they do not, and probably could not, notify all persons capable of being aggrieved by their action (or non-action). Finally, again recognizing, and to ameliorate, the predicament of potentially aggrieved persons who lack notice, *619 we carved out the narrow "flagrant miscarriage of justice" exception and left application of that exception to be decided judicially, rather than administratively, to prevent local arbitrariness.
These factors so carefully evaluated by us in formulating the Keating ruleand which specifically took account of the pragmatic difficulties which could confront potentially aggrieved persons lacking notice of building inspector action in time to meet the prescribed 60 day time limit for appeal to the zoning board of appeals as the first step to achieve direct judicial revieware highly relevant to the present question whether the avenue of direct judicial review, as it may have been here available to the plaintiffs, was a remedy to be deemed adequate as to them.
By adopting the Keating rule, we were necessarily concluding that, in ordinary course, the 60 day time limitation for appealing the decisions of a building inspector to a zoning board of appeals running from the date of the building inspector's decision (rather than notice of it), conjoined with the safety valve of the "flagrant miscarriage of justice" exception, is a remedy adequate to protect the interests of all concerned, notwithstanding that potentially aggrieved persons often will lack notice of the building inspector's action triggering the running of the time for appeal.
We, therefore, decide that the presiding Justice erred in holding that plaintiffs' lack of notice of the issuance of the building permit in time to take an appeal to the zoning board of appeals (as prescribed by Keating) was a fact sufficient without more rendering the avenue of direct judicial review an inadequate remedy for these plaintiffs and warranting their resort to the equity jurisdiction of the Superior Court to achieve, collaterally, a full-scale judicial review of the substantive merits of their claims.
Since the rule developed in Keating took into special account precisely this point that it was likely that persons potentially aggrieved by the decision of a building inspector would lack timely notice of it, it would denigrate the policy interests which Keating sought to further were such lack of notice by itself to be deemed sufficient to justify collateral judicial review of the merits of the administrative action taken.
In the instant circumstances, then,as would be the case in any situation governed by the Keating rulethat the plaintiffs lacked notice of the action of the building inspector before expiration of the 60 day period for taking an appeal to the zoning board of appeals did not per se warrant collateral judicial review on the merits of plaintiffs' claims that the building inspector had violated the zoning ordinance.[9] Rather, plaintiffs are entitled only to assert their lack of notice to a Court of competent jurisdiction as one possible factor to be evaluated by the Court to ascertain whether the restricted exception enunciated in Keating itself has application, i.e., whether the right to appeal to the zoning board of appeals should be reinstated in light of all the circumstances bearing on all the equities of the situation.[10]
*620 Plaintiffs have sought to avoid this outcome by adverting to a dictum in Summit Realty, Inc. v. Gipe, Me., 315 A.2d 428 (1974) based, in turn, on Stanton v. Trustees of St. Joseph's College, Me., 233 A.2d 718 (1967), as support for the approach here taken by the Superior Court.
Reference to these cases avails plaintiffs nothing. Stanton and Summit Realty are in full agreement with the legal principles upon which we have here relied. The decision in Stanton was an application to the particular circumstances there involved of precisely the Stoddard v. Public Utilities Commission, supra, approach. In Stanton the remedy established through the administrative forum and subsequent direct judicial review of the administrative action was held to be an inadequate remedy because the gravamen of the complaint in Stanton concerned matters which were "beyond the jurisdiction of the administrative agency to determine." (p. 724 of 233 A.2d) A collateral resort to equity jurisdiction was thus appropriate to have ". . . private rights protected against irreparable harm by injunctive process." (p. 725 of 233 A.2d) The dictum in Summit Realty is only a reiteration of this same principle.[11]
Here, it is manifest that the complaint fails to allege action by an administrative official beyond his powers and thus without "jurisdiction." Under Section 2(b) of the Lewiston Zoning Ordinance the building inspector was authorized to consider whether a building permit should be issued. Further, it was within the administrative province, through action by the zoning board of appeals under Section 13(g), to revoke an improperly issued building permit.
That the zoning board of appeals lacked power to afford injunctive relief pending a final order of revocation cannot justify the total by-passing of that body. Should the board of zoning appeals revoke the building permit as erroneously issued, the board would have power to order the removal of any interim construction, as the equities might dictate. Moreover, pending the administrative proceedings a party could seek interim injunctive relief from a court of equity if irreparable injury was imminent. See: State ex rel. Brennan v. R. D. Realty Corporation, Me., 349 A.2d 201, 207 (1975).
Two other cases relied upon by plaintiffs to justify the action of the Superior CourtFrost v. Lucey, Me., 231 A.2d 441 (1967) and Walsh v. City of Brewer, Me., 315 A.2d 200 (1974)are patently distinguishable.
In Frost v. Lucey the plaintiff sought to enjoin as a nuisance the operation of certain premises as a non-conforming use. That operation had come into being without official administrative action. Since there had been no administrative action to subject to direct judicial review, the principle of Stoddard v. Public Utilities Commission was inapplicable. There existed no statutory remedy, intended as exclusive, to *621 bar the independent resort to a Court of equity as the means of protecting against the irreparable damage being caused by a private person's allegedly illegal conduct. Similarly, in Walsh v. City of Brewer the collateral judicial attack was against a complex course of executive and legislative conduct by municipal officials as to which a remedy was impossible through an appeal to the zoning board of appeals and subsequent direct judicial review.
Thus, Frost v. Lucey and Walsh v. City of Brewer confirm, rather than contradict, the legal principle upon which our decision rests:a collateral review of the merits of administrative action will not be undertaken by a court of equity unless the route of direct administrative-judicial appeal is inadequate to prevent irreparable damage.
Decisions by courts of other jurisdictions support this approach as a sound policy of administrative-judicial relationship.
In Beam v. Erven, 133 Ill.App.2d 193, 272 N.E.2d 685 (1971), a nearby landowner sought injunctive relief to prevent construction pursuant to a variance granted by the zoning board after public notice and hearing. Plaintiff did not appear at the hearing and did not pursue the statutorily provided appeal from the board. Holding that statutory appeal "exclusive", the Court in Beam affirmed the trial Justice's dismissal of the complaint.
Even more analogous to the facts before us is the case of Bischoff v. Hennessy, Ky, 251 S.W.2d 582 (1952). There, as here, abutting property owners had failed to pursue within the provided time limit the statutory remedy of direct appeal from the zoning authorities to court. In Bischoff they sought equitable relief from the zoning commission decision they had failed timely to appeal. The Kentucky Court rejected their collateral attack, noting that the statutory remedy "afforded an adequate remedy at law." (p. 584 of 251 S. W.2d) That plaintiffs no longer had available the statutory remedy made no difference:the limited appeal period
"would be futile . . . if . . . other remedies . . . were available to a litigant at any time or in any circumstance." (p. 583 of 251 S.W.2d)
See also: Coffey v. Marietta, 212 Ga. 189, 91 S.E.2d 482 (1956); Washington Seminary, Inc. v. Bass, 192 Ga. 808, 16 S.E.2d 565 (1941); Dallas v. Halbert, Tex.Civ. App., 246 S.W.2d 686 (1952); Boyle v. Building Inspector of Malden, 327 Mass. 564, 99 N.E.2d 925 (1951); Clap v. Municipal Council of Attleboro, 310 Mass. 605, 39 N.E. 431 (1942); Curran v. Delano, 235 Pa. 478, 84 A. 452 (1912).
5.
Although application of the principles above delineated requires that we sustain the appeal of defendant company, we conclude that we should not instruct the Superior Court to dismiss the complaint of plaintiffs and enter judgment for defendant company.
When plaintiffs commenced this action, Keating v. Zoning Board of Appeals of the City of Saco, supra, had not been decided and, therefore, plaintiffs were then unaware that they might be able to avail themselves of the benefit of the narrow exception allowed in Keating to have their right of appeal to the board of zoning appeals reinstated. True, Keating had been decided before the entry of final judgment in the Superior Court. Yet, in light of the Superior Court's disposition of the caseawarding plaintiffs a judgment in their favor on the merits of their claims that the administrative action had violated the Lewiston Zoning Ordinance,it would be unreasonable to expect of plaintiffs that, in anticipation of the possibility of appellate reversal, they should have taken the precaution to move to amend their complaint to add an alternative claim for reinstatement of the right to appeal to the zoning board of appeals.
*622 In all the circumstances we deem it fair that plaintiffs now be allowed opportunity to make such claim for reinstatement under the Keating exception. Accordingly, we will remand the case to the Superior Court for further proceedings, with instructions that the Court allow plaintiffs, if they wish, to amend their complaint to claim that, within the "flagrant miscarriage of justice" exception of Keating, their right to appeal to the zoning board of appeals be reinstated.
Should plaintiffs not amend, or, having amended, fail to establish facts justifying reinstatement of their right of appeal to the zoning board of appeals, the complaint is to be dismissed and judgment entered for defendant company.
We take the precaution to add comments for the further guidance of the Superior Court in the event plaintiffs do amend and prove facts warranting reinstatement of their right of appeal to the zoning board of appeals. We do this because the record shows that the Justice who here presided in the Superior Courthaving erroneously seen fit to reach, and decide, the merits of plaintiffs' claims of administrative violation of the Lewiston Zoning Ordinance concluded that plaintiffs had established the alleged violation as a matter of law. Absent present comment by us concerning the correctness, or error, of this ruling, the Superior Court, on remand, if it found that plaintiffs were within the scope of the Keating exception, might believe that a case capable of being decided as a matter of law should be decided by the Court without need to remand the parties to the zoning board of appeals.
To avoid the possibility of such outcome we mention that the record before us discloses that the presiding Justice erred in concluding that plaintiffs should have summary judgment in their favor because they had established the merits of their substantive claims as a matter of law.
The validity of plaintiffs' contentions turns on whether defendant company's planned renovation represented an "enlargement" of a non-conforming use requiring resort to the zoning board of appeals under Section 10(b) of the ordinance. If the renovation merely affected permitted uses, approval of the building inspector was sufficient. We read plaintiffs' assertion of "enlargement" as twofold. They appear to regard the physical attachment of a permitted use (the renovated portion) to a non-conforming use as such an "enlargement." They also claim "enlargement" in that the improved section will prolong the existence of the older, non-conforming portion. We view either assertion as insufficient to support a ruling of "enlargement" as a matter of law.
The contention that physical attachment of permitted[12] renovation to the non-conforming use constitutes "enlargement" cannot withstand analysis. Such a conclusion would deny to owners of "split lots" uses normally permitted in the less restricted zone, and, in effect, extend the more restricted zone beyond its legislatively determined boundary. Courts in other jurisdictions have resisted similar arguments. Nusser v. Board of Adjustment of City of Newark, 134 N.J.L. 174, 46 A.2d 657 (1946); Anchor Steel and Conveyor Company v. City of Dearborn, 342 Mich. 361, 70 N.W.2d 753, 756 (1955); Kolodny v. Building Commissioner of Brookline, 346 Mass. 289, 292, 191 N.E.2d 691 (1963); Stoller v. Board of Zoning and Appeals of Town of North Hempstead, 40 App.Div.2d 867, 337 N.Y.S.2d 946 (1972).
The assertion that the mere prolongation of the life of a non-conforming structure represents "enlargement" is somewhat more persuasive in view of our *623 doctrine favoring extinction of non-conforming uses. Gagne v. Inhabitants of City of Lewiston, supra, at 581. Nevertheless, we reject a per se rule that prolongation alone, without consideration of any other circumstance, constitutes "enlargement" as a matter of lawat least when, as here, the ordinance itself purports to make no such provision. Normally, modernization of facilities connected with a non-conforming use is permissible. Endara v. City of Culver City, 140 Cal. App. 2d 33, 294 P.2d 1003 (1956); Horwitz v. Dearborn Tp., 332 Mich. 623, 52 N.W.2d 235 (1952); Annot. 87 A.L.R. 2d 4 at § 12, p. 64.
Further, we find no basis in the facts, here, upon which to conclude, beyond rational dispute, that defendant company's renovation will indeed prolong the existence of the remaining non-conforming portion. The questions of prolongation, and of additional factors which might show "enlargement", are thus in dispute or not fully developed. They are, moreover, questions peculiarly appropriate for administrative determination.[13]
The entry is:
Appeal sustained.
Case remanded to the Superior Court for further proceedings in accordance with the opinion herein.
DUFRESNE, C. J., and DELAHANTY. J., did not sit.
NOTES
[*] WEATHERBEE, J., sat at argument but died before the opinion was adopted.
[1] On July 26, 1973, before the filing of a responsive pleading, plaintiffs moved to amend without need for the Court's consent. Rule 15(a) M.R.C.P.
[2] The zoning restrictions here involved were superseded by the provisions of the new zoning ordinance which went into effect ten days after the instant building permit had been issued.
[3] That boundary is equally applicable to the present situation.
[4] The effect of their disagreement on the propriety of summary judgment is discussed infra.
[5] Although the permit does not appear in the record, the parties have agreed through their pleadings as to the date of its issuance and its content.
[6] Plaintiffs also alleged company's non-compliance with the permit in that (1) construction commenced more than six months after its issuance, and (2) the renovated portion extended more than 30 feet into the Residential Zone. The presiding Justice's revocation of the permit mooted these claims for his purposes; we also do not reach them.
[7] An affidavit of one of company's officers asserts, uncontradicted by plaintiffs, that company's lot fronts on a street in the Industrial Zone.
[8] Company denies the allegations of non-compliance with the building permit cited in n. 6, supra.
[9] We reject the claim that such application of the Keating rule, depriving an aggrieved person who lacked notice of the action of a building inspector of opportunity for judicial review, is a violation of due process of law. The Keating decision itself belies the validity of such contention.
[10] Such approach is within the spirit of the views we recently enunciated in State ex rel. Brennan v. R. D. Realty Corporation, Me., 349 A.2d 201 (1975) concerning the overall problem of appropriate judicial-administrative relationships.
The conclusion is likewise consonant with the general description of the interrelationship of administrative and judicial functioning in the area of zoning stated in Frost v. Lucey, Me., 231 A.2d 441, 448 (1967):
"Usually local boards of appeal are entrusted with the function of deciding, within prescribed limits and consistent with the exercise of a legal discretion, whether a regulation applies to a given situation, and the manner of its application. In discharging such responsibility, ordinarily local boards of appeal are endowed with a liberal discretion and their action is subject to review by the courts only to determine whether it was unreasonable, arbitrary or illegal."
As further stated in Frost v. Lucey, the public policy served by this usual administrative-judicial method of functioning is that it achieves the desirable objective that judicial review proceeds from
". . . the benefit of a preliminary determination by responsible municipal zoning authorities who may be better situated to apply the restrictive regulations of their zoning ordinance."
[11] We note, too, that Town of Windham v. LaPointe, Me., 308 A.2d 286 (1973) is a further confirmation of the legal principle underlying our present decision. In that case the resort to collateral judicial review was permitted because the claim was that the ordinance under which the administrative agency purported to act was unconstitutional on its face; if such contention was established, plainly the administrative action was beyond the authority lawfully reposed in it.
[12] We assume for our purposes, here, that the renovated section extends only 30 feet into the Residential A Zone. If it in fact goes beyond that limitation, plaintiffs have additional sources of complaint. The dispute of this material fact also raises questions as to the propriety of summary judgment.
[13] By this discussion showing that the instant record does not support a decision on the merits in favor of plaintiffs as a matter of law, thus to requireshould plaintiffs show themselves entitled to the benefit of the Keating exceptionthat plaintiffs pursue a reinstated appeal through the zoning board of appeals, we intimate no opinion whether or not such prior resort to the administrative forum would be necessary in a situation in which the merits of the substantive claims of the parties are capable of being settled strictly as a matter of law. Frequently, and even, for example, should the question of law relate only to the interpretation of the meaning of terms of the ordinance, the experience and expertise of the administrative forum may assist the Court in reaching an appropriate decision on the issue of law. It becomes arguable, therefore, that a sound policy to govern administrative judicial relationships should require a prior resort to the administrative forum.
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615 F. Supp. 2d 35 (2009)
Pamela OLSEN, Deirdre Ketcham, and Noreen Cribbin, Plaintiffs,
v.
The COUNTY OF NASSAU, Detective Lieutenant Vincent Robustelli, Sergeant Steven Zeth, Sergeant Robert Atchison, Detective Ken Catalani and Detective Ken Schmitt, (in their official and individual capacities), Defendants.
No. CV 05-3623 (ETB).
United States District Court, E.D. New York.
May 7, 2009.
*37 Rick Ostrove, Thomas Ricotta, Leeds Morelli & Brown P.C., Carle Place, NY, for Plaintiffs.
Donna A. Napolitano, Erica Michelle Haber, Karen Schmidt, Nancy Nicotra, Mineola, NY, for Defendants.
MEMORANDUM OPINION AND ORDER
E. THOMAS BOYLE, United States Magistrate Judge.
Before the Court is the defendants' motion for judgment as a matter of law, pursuant to Federal Rule of Civil Procedure 50(b), or in the alternative, for a new trial, pursuant to Federal Rule of Civil Procedure 59(a), with respect to some, but not all, of the findings made by the jury at the conclusion of the civil trial in this action. For the following reasons, defendants' motion is denied in its entirety.
BACKGROUND
Familiarity with the underlying facts of this action is assumed. Plaintiffs, Pamela Olsen ("Olsen"), Deirdre Ketcham ("Ketcham") and Noreen Cribbin ("Cribbin") (collectively referred to as "plaintiffs"), commenced *38 this action in 2005, alleging that defendants, The County of Nassau (the "County"), Detective Lieutenant Vincent Robustelli ("Robustelli"), Sergeant Steven Zeth ("Zeth"), Sergeant Robert Atchison ("Atchison"), Detective Ken Catalani ("Catalani") and Detective Ken Schmitt ("Schmitt") (collectively "defendants"), impermissibly discriminated against them in the terms and conditions of their employment with the Nassau County Police Department ("NCPD") on the basis of their gender. Plaintiffs asserted their discrimination claims pursuant to Title VII of the Civil Rights Act of 1964, 42 U.S.C. §§ 2000e et seq., 42 U.S.C. § 1983 and the New York State Human Rights Law, N.Y. Exec. Law §§ 290 et seq. Plaintiffs also asserted claims for First Amendment retaliation pursuant to Section 1983.
A jury trial was conducted in this action from October 6, 2008 to November 7, 2008. After all of the evidence was submitted, the Court granted judgment as a matter of law in favor of defendants, pursuant to Federal Rule of Civil Procedure 50(a), with respect to the following: (1) plaintiffs' New York State Human Rights claims; (2) plaintiffs' First Amendment retaliation claims; (3) the Section 1983 claims asserted against the individual defendants in their official capacities; and, (4) the Section 1983 claims asserted against defendants Catalani and Schmitt in their individual capacities. See Olsen v. County of Nassau, No. CV 05-3626, 2008 U.S. Dist. LEXIS 90426, at *20-21 (E.D.N.Y. Nov. 5, 2008). As a result of that decision, defendants Catalani and Schmitt were dismissed from the action entirely. Id. at *21.
The jury rendered its verdict on the remaining claims on November 14, 2008, finding in favor of plaintiffs with respect to the following: (1) plaintiffs' Title VII claims against the County for disparate treatment based on gender; (2) plaintiff Olsen's and plaintiff Ketcham's Title VII retaliation claims against the County; (3) plaintiff Olsen's and plaintiff Ketcham's Section 1983 claims for denial of equal protection against defendant Atchison; and, (4) plaintiffs' Section 1983 claims against the County for denial of equal protection. The jury awarded plaintiffs $1 million in compensatory damages with respect to their claims against the County and $3 in nominal damages with regard to their claims against defendant Atchison.[1] (Def. Ex. C.)
The jury found that plaintiffs did not prevail on the following claims: (1) plaintiffs' Title VII claims against the County for a hostile work environment based on sexual harassment; (2) plaintiff Cribbin's Title VII retaliation claim against the County; and, (3) plaintiff's Section 1983 claims against defendants Robustelli and Zeth for denial of equal protection. Accordingly, the only defendants that remain in this action are the County and defendant Atchison.
Defendants now move for judgment as a matter of law, or alternatively, for a new trial, with respect to the following jury findings: (1) that the County is liable for disparate treatment based on gender, pursuant to Title VII; (2) that defendant Atchison violated plaintiff Olsen's and plaintiff Ketcham's equal protection rights under Section 1983; and, (3) that plaintiffs be awarded $1 million in compensatory damages. Defendants base their motion on three grounds: (1) that a portion of the jury charge was erroneous; (2) that defendant Atchison is entitled to qualified immunity and therefore cannot be held liable for violating plaintiffs' equal protection rights; and, (3) that the damages awarded by the jury are excessive. Defendants *39 do not challenge the jury's findings with respect to the County's liability for violating plaintiffs' equal protection rights under Section 1983 and for retaliation pursuant to Title VII.
DISCUSSION
I. Legal Standard
Judgment as a matter of law, pursuant to Federal Rule of Civil Procedure 50(b), "is appropriately granted only when the court determines that `there is no legally sufficient evidentiary basis for a reasonable jury to find for a party.'" Ruhling v. Newsday, Inc., No. CV 04-2430, 2008 WL 2065811, at *3, 2008 U.S. Dist. LEXIS 38936, at *9 (E.D.N.Y. May 13, 2008) (quoting Merrill Lynch Interfunding, Inc. v. Argenti, 155 F.3d 113, 120 (2d Cir.1998)) (additional citations omitted). Accordingly, "[a] movant seeking to set aside a jury verdict faces a `high bar.'" Ruhling, 2008 WL 2065811, at *3, 2008 U.S. Dist. LEXIS 38936, at *10 (quoting Lavin-McEleney v. Marist Coll., 239 F.3d 476, 479 (2d Cir. 2001)).
Under Rule 50, a jury verdict should be set aside only where there is "such a complete absence of evidence supporting the verdict that the jury's findings could only have been the result of sheer surmise and conjecture," or where there exists "such an overwhelming amount of evidence in favor of the movant that reasonable and fair minded [jurors] could not arrive at a verdict against [it]." Ruhling, 2008 WL 2065811, at *3, 2008 U.S. Dist. LEXIS 38936, at *10 (quoting Kosmynka v. Polaris Indus., Inc., 462 F.3d 74, 79 (2d Cir.2006)) (alteration in original). When applying this standard, a court is required to view the evidence in the light most favorable to the non-moving party and must refrain from "assess[ing] the weight of conflicting evidence, pass[ing] on the credibility of the witnesses, or substitut[ing] its judgment for that of the jury." LeBlanc-Sternberg v. Fletcher, 67 F.3d 412, 429 (2d Cir.1995); see also Tolbert v. Queens Coll., 242 F.3d 58, 70 (2d Cir.2001).
Federal Rule of Civil Procedure 59, which supplies the standard for granting a new trial, is less stringent than Rule 50. See Manley v. AmBase Corp., 337 F.3d 237, 244-45 (2d Cir.2003). In contrast to a motion for judgment as a matter of law, "a new trial motion may be granted even if there is substantial evidence to support the verdict." DeWitt v. N.Y. State Housing Fin. Agency, No. 97 Civ. 4651, 1999 WL 672560, at *1, 1999 U.S. Dist. LEXIS 13057, at *3 n. 1 (S.D.N.Y. Aug. 24, 1999) (quoting Bevevino v. Saydjari, 574 F.2d 676, 683 (2d Cir.1978)); see also Ruhling, 2008 WL 2065811, at *4, 2008 U.S. Dist. LEXIS 38936, at *10 ("On a motion for new trial, the judge may grant a new trial even if there is substantial evidence to support the jury's verdict."). In addition, the court is not required to view the evidence in the light most favorable to the nonmoving party, but may weigh it independently. See Ruhling, 2008 WL 2065811, at *4, 2008 U.S. Dist. LEXIS 38936, at *11 (citing Manley, 337 F.3d at 244-45). However, a motion for a new trial may only be granted where "the court is convinced that the jury reached a seriously erroneous result, or that the verdict is against the weight of the evidence," Manley, 337 F.3d at 244-45, or "the trial was not fair to the moving party." DeWitt, 1999 WL 672560, at *1, 1999 U.S. Dist. LEXIS 13057, at *3 (quoting Mallis v. Bankers Trust Co., 717 F.2d 683, 691 (2d Cir.1983)). "In evaluating a Rule 59 motion, the trial judge's duty `is essentially to see that there is no miscarriage of justice.'" DeWitt, 1999 WL 672560, at *1, 1999 U.S. Dist. LEXIS 13057, at *3 (quoting Sharkey v. Lasmo (AUL Ltd.), 55 F. Supp. 2d 279, 283 (S.D.N.Y.1999)).
With respect to damages, if the court determines that the jury's award is *40 excessive, it may do one of three things: (1) order a new trial; (2) order a new trial limited to damages; or, (3) pursuant to the practice of remittitur, condition the denial of a motion for a new trial on the plaintiff's acceptance of a reduced amount of damages. See Ruhling, 2008 WL 2065811, at *4, 2008 U.S. Dist. LEXIS 38936, at *11 (citing Cross v. N.Y. City Transit Auth., 417 F.3d 241, 258 (2d Cir.2005)). The court may not, however, simply reduce the damages without affording the prevailing party the option of a new trial. See Ruhling, 2008 WL 2065811, at *4, 2008 U.S. Dist. LEXIS 38936, at *11 (citations omitted).
II. The Jury Charge was Not Erroneous
"A jury charge is erroneous if it misleads the jury as to the correct legal standard or does not adequately inform the jury on the law." Gordon v. N.Y. City Bd. of Educ., 232 F.3d 111, 116 (2d Cir. 2000) (quoting LNC Investments, Inc. v. First Fid. Bank, N.A., 173 F.3d 454, 460 (2d Cir.1999)). Put another way, when determining whether a jury charge is erroneous, the court need only "satisfy itself that [the] instructions, taken as a whole and viewed in light of the evidence, show no tendency to confuse or mislead the jury as to principles of law which are applicable." Hathaway v. Coughlin, 99 F.3d 550, 552-53 (2d Cir.1996) (alteration in original). As the Second Circuit has emphasized, "the particular words used in a jury instruction may (depending on the circumstances) be less important than the meaning or substance of the charge as a whole." Owen v. Thermatool Corp., 155 F.3d 137, 139 n. 1 (2d Cir.1998).
Where a jury instruction is found to be erroneous, a new trial is required unless the error is harmless. See Gordon, 232 F.3d at 116 ("An erroneous instruction requires a new trial unless the error is harmless ...."). "An error is harmless only if the court is convinced that the error did not influence the jury's verdict." Id. at 116 (citing LNC Investments, 173 F.3d at 462). Accordingly, an error in charging the jury "will not be grounds for reversal unless `taken as a whole the jury instructions gave a misleading impression or inadequate understanding of the law.'" Owen, 155 F.3d at 139 (quoting Luciano v. Olsten Corp., 110 F.3d 210, 218 (2d Cir.1997)).
Defendants' challenge the following jury instruction:
ADVERSE EMPLOYMENT ACTION
What is an adverse employment action? Under this section, adverse employment action is action by an employer that is material in nature. Not everything that makes an employee dissatisfied or displeased in the workplace is material. It must be something more than minor or trivial in nature. For example, a materially adverse employment action is when someone's pay or benefits are decreased. When an employee's job is changed in a way that significantly reduces the employee's career prospects, when a person is not promoted, when a person is terminated from employment. In the context of [the gender discriminationdisparate treatment] claim, the entry of an adverse training ledger entry, or an oral or written reprimand is not an adverse employment action. On the other hand, the initiation of disciplinary proceedings against an employee pursuant to Section 59, 209 or 210 [of the Nassau County Police Department Disciplinary Code], is an adverse employment action. Similarly, a transfer which involves a significant loss of responsibility, or the loss of overtime pay, constitutes an adverse employment action. The forced resignation of an employee, which is known as constructive discharge, *41 is an adverse employment action.
You are further instructed, however, that a combination of seemingly minor incidents, once they reach a certain critical mass, may form the basis for a violation, even though each minor act, considered in isolation, would not otherwise rise to the level of an adverse employment action, as I have just defined them. Thus, otherwise minor incidents that occur often over a long period of time may be actionable where you find that a reasonable person of plaintiff's gender would find that the total circumstances of her working environment changed due to gender motivated discrimination, to become unreasonably inferior and adverse when compared to a typical or normal, not an ideal or model workplace. A position may become unreasonably inferior if there are repeated and severe incidents of gender-motivated harassment. This is referred to on the verdict sheet, and I'll discuss the verdict sheet with you at the end of the charge in more detail. It's referred to on the verdict sheet as gender motivated harassment.[2]
(Trial Tr. 4160-61.)
Defendants contend that the jury instruction is erroneous for a number of legal and policy reasons, but the thrust of their argument is that such an instruction has only been applied in Title VII retaliation claims and not in Title VII disparate treatment claims. While it is true that the Second Circuit has never applied such a jury instruction in the context of a disparate treatment claim, several district courts within this circuit have indeed done so, as discussed below.
In Thomas v. New York City Health and Hospitals Corporation, No. 02 Civ. 5159, 2004 WL 1962074, at *16 (S.D.N.Y. Sept. 1, 2004), the court found that although plaintiffs had "not alleged any incidents... that [could], in isolation, be considered adverse employment actions" within the context of their discrimination claims, the "Second Circuit has recognized the possibility that `a combination of seemingly minor incidents' can satisfy [the adverse employment action] prong if they `reach a critical mass.'" Id. (quoting Phillips v. Bowen, 278 F.3d 103, 109 (2d Cir.2002)). The court went on to state that where a plaintiff alleges an adverse employment action "that is not among the actions judicially recognized as coming under this rubric," the plaintiff "`must show that (1) using an objective standard; (2) the total circumstances of her working environment changed to become unreasonably inferior and adverse when compared to a typical or normal, not ideal or model, workplace.'" Thomas, 2004 WL 1962074, at *16 (quoting Phillips, 278 F.3d at 109). Although the court in Thomas ultimately found that plaintiffs had failed to satisfy this standard, the court clearly applied the very same concept that the jury in the within action was instructed on in the context of a discrimination claim.[3]
*42 Similarly, in Joseph v. Thompson, No. 95 CV 4898, 2005 WL 3626778, at *9 (E.D.N.Y. Mar. 23, 2005), the court stated that "[l]esser actions or seemingly minor incidents can ... be considered adverse employment actions once they reach a critical mass of unreasonable inferiority" when determining whether plaintiff suffered an adverse employment action for purposes of his Title VII discrimination and retaliation claims. Id. (quoting Barry v. New York City Police Dep't, No. 01-CIV-10627, 2004 WL 758299, at *6-7 (S.D.N.Y. Apr. 7, 2004)). Specifically, the court examined a series of incidents that occurred over a period of months to determine whether they "collectively constitute[d] materially adverse changes in the terms and conditions of plaintiff's employment." Id. at *10. However, like Thomas, the court in Joseph found that plaintiff failed to establish an adverse employment action, stating that "[t]ogether, [the] incidents [did] not reach a critical mass of unreasonable inferiority" and that they did not "suggest discrimination against plaintiff based on his race." Id. (citing Phillips, 278 F.3d at 109). While the plaintiff in Joseph may not have ultimately been successful in proving an adverse employment action, the court specifically applied the concept espoused in the jury instruction in the within action when determining a Title VII discrimination claim.
Finally, in a very recent case, Early v. Wyeth Pharmaceuticals, Inc., 603 F. Supp. 2d 556, 574-75 (S.D.N.Y.2009), the court had to determine whether a series of actions collectively constituted an "atmosphere of adverse acts" with respect to plaintiff's Section 1981 disparate treatment claim. After first noting that employment discrimination claims brought pursuant to Section 1981 are "evaluated under the same standards that apply to Title VII cases," id. at 572, the court then addressed plaintiff's argument that even if the court were to find that plaintiff had not "suffered independently adverse employment actions, summary judgment should still be denied under the theory that such acts, combined, constitute an atmosphere of adverse acts." Id. at 574. The Court went on to state that "[t]he Second Circuit has held that `a combination of seemingly minor incidents' may form the basis for an adverse employment action once the incidents `reach a critical mass.'" Id. (quoting Phillips, 278 F.3d at 109). More importantly, the court stated that "[w]hile most frequently used in the First Amendment context, the atmosphere of adverse acts analysis has been used in Title VII cases in this circuit." Id. at 575 (citing cases). Moreover, and quite relevant to the within action, the court specifically rejected defendants' argument that the principles set forth in Phillips v. Bowen, 278 F.3d 103 (2d Cir.2002), should not govern a Title VII claim because that case dealt with First Amendment retaliation. Id. at 575 n. 14. Accordingly, there is ample case law to support the challenged jury instruction in the instant action.
Moreover, when the challenged jury instruction is considered as a whole, it clearly defines for the jury what is necessary to prove an adverse employment action under existing Second Circuit law. The jury was instructed that the actions taken by the defendants against plaintiffs must have been "material" in order to qualify as adverse. In addition, the jury was specifically instructed that not every action that dissatisfies or displeases an employee is material. Moreover, the jury was told that in order for an employment action to be adverse, it must be something more than minor or trivial in nature. Providing the jury with the further instruction that a "combination of seemingly minor incidents" may collectively form an adverse employment action did not lessen or detract from the first part of the instruction *43 that an adverse employment action must be material in order for plaintiffs to have satisfied their burden. Accordingly, the Court finds that the jurors were not misled or confused in any way with respect to what is an adverse employment action.
Since the Court finds that the jury instruction was not erroneous based on defendants' legal arguments, a discussion of the defendants' policy arguments is not necessary. That having been said, however, there are strong policy reasons that support the challenged instruction on the circumstances presented here, which otherwise may not have been actionable. Repeated acts of public ridicule, disparaging comments, minor disciplinary actions and unfavorable or undesirable work assignmentscarried out with discriminatory animus-may be just as damaging and, in many cases, more damaging to a person's work environment than a single material adverse employment action, such as a promotion or demotion. For that reason, these "otherwise minor incidents," if they "occur often and over a longer period of time," are "actionable" once "they attain [a] critical mass," as the jury herein found. Phillips, 278 F.3d at 109 (pertaining to a First Amendment retaliation claim).
Moreover, with respect to defendants' contention that the Court failed to instruct the jury with regard to the 300-day statute of limitations for Title VII claims, the Court finds that defendants waived such an objection by failing to raise it at the charging conference, after the jury was instructed or after the jury rendered its verdict. See Fed.R.Civ.P. 51(c)(2) (stating that objections to jury instructions are only timely if (A) they are made "at the opportunity provided under Rule 51(b)(2)," which requires that objections be made "on the record and out of the jury's hearing before the instructions... are delivered" or (B) if "a party was not informed of an instruction ... before that opportunity to object, and the party objects promptly after learning that the instruction ... will be, or has been, given...."). In their Reply Memorandum of Law, defendants argue that while they "could have raised the statute of limitations argument at the charging conference, it would have been fruitless" because the jurors had already heard testimony concerning events occurring between 1997 and the present. (Def. Reply Mem. of Law 6.) This argument is not persuasive. Plaintiffs and defendants agreed at the outset of the trial to limit testimony to the time period between 1997 and 2005 due to the fact that there were both Title VII claims and Section 1983 claims, which have a three-year statute of limitations. (Trial Tr. 21-24.) Defendants belated argument that they "may not have agreed to allow testimony outside the 300-day period" had they known of the jury instructions at that time is nothing more than speculative hindsight. The Court provided defendants with ample opportunity to raise their statute of limitations argument in objection to the jury instructions. Defendants chose not to take advantage of those opportunities. Accordingly, such an objection is deemed waived.
Based on the foregoing, the Court finds that the jury instruction was not erroneous and denies defendants' motion on those grounds.
III. Defendant Atchison is Not Entitled to Qualified Immunity
Qualified immunity shields a government official sued in his individual capacity from "liability for civil damages insofar as [his] conduct does not violate clearly established statutory and constitutional rights of which a reasonable person would have known." Frank v. Relin, 1 F.3d 1317, 1328 (2d Cir.1993) (quoting Harlow v. Fitzgerald, 457 U.S. 800, 818, *44 102 S. Ct. 2727, 73 L. Ed. 2d 396 (1982)). In order for a right to be clearly established, "[t]he contours of the right must be sufficiently clear that a reasonable official would understand that what he is doing violates that right." Anderson v. Creighton, 483 U.S. 635, 640, 107 S. Ct. 3034, 97 L. Ed. 2d 523 (1987). "[E]ven assuming a state official violates a plaintiff's constitutional rights, the official is protected nonetheless if he objectively and reasonably believed that he was acting lawfully." Back v. Hastings on Hudson Union Free Sch. Dist., 365 F.3d 107, 129 (2d Cir.2004) (citing Luna v. Pico, 356 F.3d 481, 490 (2d Cir.2004)); see also Loria v. Gorman, 306 F.3d 1271, 1282 (2d Cir.2002) ("If the officer reasonably believed that his actions did not violate the plaintiff's rights, he is entitled to qualified immunity even if that belief was mistaken."). If the official's belief was not objectively reasonable, however, "qualified immunity offers him no solace ...." Loria, 306 F.3d at 1282 (citing Harlow, 457 U.S. at 818-19, 102 S. Ct. 2727).
In assessing a qualified immunity claim, the court must consider:
(1) whether the right in question was defined with `reasonable specificity'; (2) whether the decisional law of the Supreme Court and the applicable circuit court support the existence of the right in question; and (3) whether under preexisting law a reasonable defendant official would have understood that his or her acts were unlawful.
Back, 365 F.3d at 129-30 (quoting Jermosen v. Smith, 945 F.2d 547, 550 (2d Cir. 1991)); Dawson v. County of Westchester, 351 F. Supp. 2d 176, 197 (S.D.N.Y.2004) (citations omitted); Wise v. N.Y. City Police Dep't, 928 F. Supp. 355, 370 (S.D.N.Y.1996) (quoting Shechter v. Comptroller of New York, 79 F.3d 265, 271 (2d Cir.1996)). Furthermore, the court's inquiry must be "viewed in the light most favorable to the injured party." Catletti v. Rampe, 334 F.3d 225, 228 (2d Cir.2003).
At the conclusion of the trial herein, the jury found defendant Atchison liable for "knowingly condoning Gender Based Disparate Treatment" with respect to plaintiffs Olsen and Ketcham, and awarded nominal damages of $1 to each. (Def. Ex. C.) The jury also found defendant Atchison liable for "participating in Gender Based Disparate Treatment" with respect to Ketcham, and identified Atchison's issuance of the "9/12/04 negative training ledger entry" as the basis for liability. (Def. Ex. C.) Defendants now contend that the jury's findings with respect to Atchison should be overturned on the grounds of qualified immunity. Specifically, defendants argue that, in performing his duties and responsibilities as a supervisor, defendant Atchison did not believe he was violating either Olsen's or Ketcham's constitutional rights and that it is objectively reasonable for Atchison to believe that his actions were lawful.
Applying the standards discussed above to the within action, the Court concludes that Atchison is not entitled to qualified immunity. "It is well-settled that the Fourteenth Amendment's protection extends to the right not to be discriminated against because of one's gender." Dawson, 351 F.Supp.2d at 198 (quoting Rucci v. Thoubboron, 68 F. Supp. 2d 311, 327 (S.D.N.Y.1999)) (additional citations omitted). In fact, "[t]he Supreme Court declared [thirty] years ago that individuals have a constitutional right under the equal protection clause to be free from sex discrimination in public employment." Annis v. County of Westchester, 36 F.3d 251, 254 (2nd Cir.1994) (citing Davis v. Passman, 442 U.S. 228, 234-35, 99 S. Ct. 2264, 60 L. Ed. 2d 846 (1979)). Moreover, "[i]t is well-established in this Circuit ... that a supervisor [such as Atchison] who is grossly *45 negligent in permitting his subordinates to engage in gender discrimination can be held liable under § 1983." Wise, 928 F.Supp. at 370 (citing cases). Accordingly, the right alleged by plaintiffs to have been violatedthe right to be free from gender discrimination in the workplaceis defined with "reasonable specificity" as well as supported by the decisional law of both the Supreme Court and the Second Circuit.
In addition, "given [the] state of mind requirement and the well known underlying general legal principle[s], it is evident that [Atchison] knew that tolerating or engaging in disparate treatment of plaintiffs in the workplace on the basis of their sex was a violation of plaintiffs' rights." Back, 365 F.3d at 130 (quotation omitted). The jury herein found Atchison liable for intentional discrimination as well as condoning or permitting intentional discrimination to occur. While Atchison may have believed that he was not discriminating against plaintiffs in taking the actions that he did, "such a belief can not serve as a refuge in the discrimination context, for it cannot be considered `objectively reasonable.'" Id. Indeed, as the Second Circuit has held, "it can never be objectively reasonable for a government official to act with the intent that is prohibited by law." Id. (quoting Locurto v. Safir, 264 F.3d 154, 169 (2d Cir.2001)).
Based on the foregoing, and "under the facts interpreted most favorably to plaintiff[s], it was not reasonable for [Atchison] to adversely treat [plaintiffs] because [they were women]." Kantha v. Blue, 262 F. Supp. 2d 90, 109 (S.D.N.Y.2003) (denying qualified immunity on plaintiff's § 1983 disparate treatment claim); see also Back, 365 F.3d at 130 (denying qualified immunity where it was possible that a jury could find that the individual defendants discriminated against plaintiff on the basis of sex in violation of § 1983); Dawson, 351 F.Supp.2d at 198 (denying qualified immunity with respect to plaintiff's § 1983 claim where the individual defendant was "the cause" of the alleged sex discrimination and "under preexisting law a reasonable defendant official would have understood that his acts were unlawful"). Defendants' motion on those grounds is accordingly denied.
IV. The Damages Awarded are Not Excessive
Remittitur is the "process by which a court compels a plaintiff to choose between reduction of an excessive verdict and a new trial." Earl v. Bouchard Transp. Co., 917 F.2d 1320, 1328 (2d Cir.1990) (quoting Shu-Tao Lin v. McDonnell Douglas Corp., 742 F.2d 45, 49 (2d Cir.1984)). "The decision as to whether remittitur is required is committed to [the] Court's discretion." Watson v. E.S. Sutton, Inc., No. 02 Civ. 2739, 2005 WL 2170659, at *14, 2005 U.S. Dist. LEXIS 31578, at *42 (S.D.N.Y. Sept. 6, 2005) (citing Rangolan v. County of Nassau, 370 F.3d 239, 245 (2d Cir.2004)) (additional citation omitted).
In determining whether a jury's award is excessive, courts take into account awards rendered in similar cases, "bearing in mind that any given judgment depends on a unique set of facts and circumstances." Scala v. Moore McCormack Lines, 985 F.2d 680, 684 (2d Cir.1993) (citing Nairn v. Nat'l R.R. Passenger Corp., 837 F.2d 565, 568 (2d Cir.1988)). A jury's award of damages "may not be overturned unless it is so excessive that it shocks the conscience of the court." McGrory v. City of New York, No. 99 Civ. 4062, 2004 WL 2290898, at *13, 2004 U.S. Dist. LEXIS 20425, at *42 (S.D.N.Y. Oct. 8, 2004) (citing Gasperini v. Ctr. for Humanities, Inc., 518 U.S. 415, 422-23, 116 S. Ct. 2211, 135 L. Ed. 2d 659 (1996)); see also Watson, 2005 WL 2170659, at *15, 2005 U.S. Dist. LEXIS 31578, at *42-43 *46 ("The Court must vacate an award under federal law when it is so excessive as to "shock the conscience."").
"To obtain emotional distress damages, a plaintiff must establish actual injury and the award must be `supported by competent evidence' in addition to a plaintiff's subjective testimony." Quinby v. WestLB AG, No. 04 Civ. 7406, 2008 WL 3826695, at *3, 2008 U.S. Dist. LEXIS 62366, at *7-8 (S.D.N.Y. Aug. 15, 2008) (quoting Patrolmen's Benevolent Ass'n of N.Y., Inc. v. City of New York, 310 F.3d 43, 55 (2d Cir.2002)). However, a plaintiff's recovery of emotional distress damages "is not preconditioned on whether she underwent treatment, psychiatric or otherwise." Jowers v. DME Interactive Holdings, Inc., No. 00 Civ. 4753, 2006 WL 1408671, at *3, 2006 U.S. Dist. LEXIS 32536, at *11 (S.D.N.Y. May 22, 2006) (citation omitted).
Emotional distress awards within the Second Circuit can "generally be grouped into three categories of claims: `garden-variety,' `significant' and `egregious.'" Khan v. HIP Centralized Lab Services, Inc., No. CV-03-2411, 2008 WL 4283348, at *10, 2008 U.S. Dist. LEXIS 76721, at *30 (E.D.N.Y. Sept. 17, 2008) (quoting Rainone v. Potter, 388 F. Supp. 2d 120, 122 (E.D.N.Y.2005)). In "garden variety" emotional distress claims, "the evidence of mental suffering is generally limited to the testimony of the plaintiff, who describes his or her injury in vague or conclusory terms, without relating either the severity or consequences of the injury." Khan, 2008 WL 4283348, at *11, 2008 U.S. Dist. LEXIS 76721, at *30-31 (quoting McGrory, 2004 WL 2290898, at *2, 2004 U.S. Dist. LEXIS 20425, at *6) (additional citations omitted). Such claims typically "lack[] extraordinary circumstances" and are not supported by any medical corroboration. Quinby, 2008 WL 3826695, at *3, 2008 U.S. Dist. LEXIS 62366, at *8 (citation omitted). "Garden variety" emotional distress claims "generally merit $30,000 to $125,000 awards."[4]Id. (awarding plaintiff $300,000 in emotional distress damages for a "garden variety" claim and noting that it was "at or above the upper range of reasonableness"); see also Lynch v. Town of Southampton, 492 F. Supp. 2d 197, 207 (E.D.N.Y.2007) (collecting cases); Watson, 2005 WL 2170659, at *16, 2005 U.S. Dist. LEXIS 31578, at *46-47 ("The range of acceptable damages for emotional distress in adverse employment action cases lacking extraordinary circumstances seems to be from around $30,000 to $125,000.").
"Significant" emotional distress claims "differ from the garden-variety claims in that they are based on more substantial harm or more offensive conduct, are sometimes supported by medical testimony and evidence, evidence of treatment by a healthcare professional and/or medication, and testimony from other, corroborating *47 witnesses." Khan, 2008 WL 4283348, at *11, 2008 U.S. Dist. LEXIS 76721, at *32 (quoting Rainone, 388 F.Supp.2d at 122-23) (additional citations omitted). Finally, "egregious" emotional distress claims "generally involve either `outrageous or shocking' discriminatory conduct or a significant impact on the physical health of the plaintiff." Khan, 2008 WL 4283348, at *12, 2008 U.S. Dist. LEXIS 76721, at *34-35 (quoting Rainone, 388 F.Supp.2d at 123) (additional citation omitted). In "significant" or "egregious" cases, where there is typically evidence of "debilitating and permanent alterations in lifestyle," larger damage awards may be warranted. Quinby, 2008 WL 3826695, at *3, 2008 U.S. Dist. LEXIS 62366, at *8 (citing Rainone, 388 F.Supp.2d at 125); see also McGrory, 2004 WL 2290898, at *15, 2004 U.S. Dist. LEXIS 20425, at *49 ("In other cases where the plaintiff's testimony has provided greater detail concerning the severity and duration of the emotional distress or the plaintiff has adduced expert testimony larger awards have been approved.").
The jury in the within action awarded emotional distress damages to plaintiffs as follows: (1) $500,000 to Olsen; (2) $400,000 to Ketcham; and (3) $100,000 to Cribbin. Defendants argue that these awards should be drastically reduced because "the damages suffered by Plaintiffs Ketcham and Cribbin rise to the level of mere `garden variety' emotional distress ... while the damages suffered by Plaintiff Olsen at best can be viewed as being slightly more `significant.'" (Def. Mem. of Law 20-21.) Defendants seek to reduce the damages awarded to between $5,000 and $35,000 for plaintiffs Ketcham and Cribbin and to less than $100,000 for plaintiff Olsen. (Id. 22-24.) In light of the testimony and evidence presented during the trial, as discussed below, the Court finds the damages awarded by the jury to be appropriate.
Plaintiff Ketcham testified that the discrimination she suffered affected her "immensely." (Trial Tr. 372.) Prior to the discrimination, Ketcham loved and enjoyed her job, but afterwards, she felt "disillusioned and very disappointed." (Trial Tr. 372.) Ketcham further testified that the discrimination she was subjected to caused her to become very "stressed" and "anxious" about what would happen next at work (i.e., would someone "play a ridiculous prank" or "say something offensive"), which carried over into her personal life. (Trial Tr. 373-74.) Ketcham began to have less patience for her husband and her children and would arrive home from work "very annoyed" and "aggravated." (Trial Tr. 374.) Physically, Ketcham suffered "pains running down her arm" as well as "pains in her chest," fatigue and sleeplessness that caused her to consult her physician out of fear that she was suffering a heart attack. (Trial Tr. 375, 1337-38.) Ketcham's physician performed an EKG, after which he concluded that Ketcham's pains were the result of stress and anxiety. (Trial Tr. 375.) Ketcham's physician recommended that she consult with a mental health professional to discuss her stress and anxiety. (Trial Tr. 375, 487.) In August 2005, Ketcham began seeing Deborah Mack ("Mack"), a clinical social worker and psychotherapist, whom she continued to seek treatment from on approximately a weekly basis until May 2008. (Trial Tr. 376-77, 1340, 1348.) With respect to whether the conduct she was subjected to still affects her, Ketcham testified that she still becomes upset every time she recalls what happened. (Trial Tr. 377.)
Mack testified that she diagnosed Ketcham with generalized anxiety disorder, stating that Ketcham met every criteria of that disorder, such that she was "extremely fatigued," had difficulties sleeping, was irritable, experienced "[m]uscle *48 pain," and suffered from a "feeling of worry or anxiety ... almost every day of her life" for a period of six months or more. (Trial Tr. 1341-42, 1355.) In addition, Ketcham suffered from migraine headaches, shingles, nightmares and feelings of powerlessness. (Trial Tr. 1374, 1389.) Mack testified that Ketcham attributed her anxiety to the discrimination she was being subjected to at work. (Trial Tr. 1343.) After hearing Ketcham describe her work environment, Mack concluded that it was the cause of Ketcham's stress and anxiety. (Trial Tr. 1346.) Although Mack found Ketcham to exhibit signs of depression, she concluded that Ketcham was not clinically depressed. (Tr. 1365.) Ketcham voluntarily decided to cease her therapy sessions in May 2008. (Trial Tr. 1376.) Mack testified that at the time Ketcham ended her therapy, her physical symptoms had dissipated and she was no longer suffering from generalized anxiety disorder, although she did stilland still doesexperience "anxious days." (Trial Tr. 1376.)
Similarly, plaintiff Cribbin testified that the conduct she was subjected to at work caused her to seek therapy on a weekly basis and ultimately begin taking antidepressants. (Trial Tr. 1224-26, 1450.) Cribbin began seeing a clinical social worker, Jill Balk ("Balk"), in August 2005 and still continued to seek treatment from Balk as of the time of the trial in this action. (Trial Tr. 1449-50, 1765-66, 1773, 2415.) Like Ketcham, Cribbin also began to have less patience, difficulty concentrating, and took her feelings of anger and frustration at her work situation out on her family. (Trial Tr. 1224, 1763-64.)
Balk testified that when Cribbin first came to see her, she was experiencing feelings of disappointment, depression, anger, frustration and stress. (Trial Tr. 1758-60.) Cribbin further suffered from feelings of anger and powerlessness, experienced difficulties sleeping and a lack of motivation,[5] was very short-tempered, cried often, and began to "avoid certain situations in which she would come into contact with people that had given her a hard time." (Trial Tr. 1767, 1769, 2426.) Cribbin also expressed to Balk that she felt very "empty" and "isolated" at work, as well as a "lack of support" from her coworkers. (Trial Tr. 1758-60, 1763.) As a result of these symptoms, Balk ultimately diagnosed Cribbin with adjustment disorder with mixed emotional features[6] as well as posttraumatic stress features.[7] (Trial Tr. 1761, 2431.) Balk attributed Cribbin's symptoms to the behavior she was being subjected to at work, and more specifically to Cribbin's feelings that she was being treated differently because she was female. (Trial Tr. 1764.) Balk testified that although Cribbin had improved somewhat as a result of treatment, as of the time of the trial, she was still experiencing emotional damage. (Trial Tr. 1767-68.)
*49 The emotional distress that plaintiff Olsen suffered was more severe than that of Ketcham and Cribbin. Olsen testified that the discrimination she was subjected to affected her eating and exercise habits, causing her weight to fluctuate. (Trial Tr. 791.) Olsen also testified that she avoided having friends and family over to her house, which affected her relationships. (Trial Tr. 791-92.) Olsen's sleeping patterns were also affected, causing her at times to sleep too much while at others to sleep too little. (Trial Tr. 792.) Olsen testified that she also experienced difficulty concentrating. (Trial Tr. 792.)
In August 2005, Olsen began treatment with a psychologist, Dr. Barry Butner. (Trial Tr. 1992-93.) Olsen met with Dr. Butner on a weekly basis and was still undergoing treatment as of the time of the trial in the within action. (Trial Tr. 1993-94.) Initially, Dr. Butner observed that Olsen was exhibiting "classic symptoms of depression and anxiety" due to the "circumstances in her life" at that time namely, the discrimination she was being subjected toand diagnosed Olsen as suffering from such. (Trial Tr. 1996.) Later, however, when Olsen's symptoms did not abate in any way, Dr. Butner changed his diagnosis to dysthymia, which he defined as a chronic "depressive neurosis." (Trial Tr. 1996.) Dr. Butner testified that his ultimate diagnosis of Olsen is that she suffers from adjustment disorder with mixed emotional features. (Trial Tr. 1996.)
Dr. Butner testified that Olsen's symptoms included palpitations and a rapid heart beat, for which she was taking the prescription medication Xanax. (Trial Tr. 2006.) Olsen also experienced problems sleeping, which included "early awakening, difficulty falling asleep and difficulty staying asleep," such that at times Olsen would sleep "long, long hours" and at other times she would not sleep at all. (Trial Tr. 2006.) Dr. Butner further testified that Olsen experienced similar problems with regard to her appetite in that at times she would be unable to eat and other times she would be unable to stop eating. (Trial Tr. 2006.) Olsen further suffered from "very bad headaches," similar to migraines or "tension headaches," that Dr. Butner described as "clearly related to nervousness." (Trial Tr. 2006.) Dr. Butner also stated that Olsen "experienced a diminished frustrating tolerance, and as a consequence found herself to be irritable." (Trial Tr. 2007.) Finally, Dr. Butner testified that Olsen's self-esteem was "diminished" and that her energy levels and ability to concentrate were impaired. (Trial Tr. 2007.) Dr. Butner attributed Olsen's symptoms to the conduct she was subjected to at work. (Trial Tr. 2005.)
Based on the evidence presented, the Court finds that the jury's determination of damages was appropriate. Accordingly, defendants' motion for remittitur is denied.
CONCLUSION
For the foregoing reasons, the defendants' motion for judgment as a matter of law, or, alternatively, for a new trial, is denied in its entirety.
A status conference is scheduled for May 28, 2009 at 11:00 a.m. to discuss the equitable relief sought in this action.
SO ORDERED.
NOTES
[1] The individual compensatory damage awards were as follows: (1) $500,000 to Olsen; (2) $400,000 to Ketcham; and (3) $100,000 to Cribbin. (Def. Ex. C.)
[2] While defendants only specifically challenge the second paragraph of this jury instruction, which they refer to as the "Atmosphere Jury Charge," for the sake of completion, the entire jury instruction has been included.
[3] The Court notes that the discrimination claims in Thomas were brought pursuant to 42 U.S.C. §§ 1981 and 1983 and not Title VII. However, discrimination and retaliation claims brought under Sections 1981 and 1983 are analyzed the same as those brought pursuant to Title VII. See Annis v. County of Westchester, 136 F.3d 239, 245 (2d Cir.1998) ("In analyzing whether conduct was unlawfully discriminatory for purposes of § 1983, we borrow the burden-shifting framework of Title VII claims."); McLee v. Chrysler Corp., 109 F.3d 130, 134 (2d Cir.1997) (applying Title VII framework to Section 1981 discrimination claim); Thomas, 2004 WL 1962074, at *16 n. 7 (collecting cases).
[4] Defendants argue that emotional distress damage awards for "garden variety" claims range from $5,000 to $35,000. (Def. Mem. of Law 19.) However, defendants rely on a 2005 case, Rainone v. Potter, 388 F. Supp. 2d 120 (E.D.N.Y.2005), as support for this statement. More recent cases find this range to be significantly higher, as discussed above. As one court pointed out when faced with a similar argument, "[defendant's] contention that `garden variety' emotional damage awards are in the range of $5000 to $30,000 is ... not persuasive, because those numbers appear to be at the low end of the range of damages ...." Watson, 2005 WL 2170659, at *15, 2005 U.S. Dist. LEXIS 31578, at *45. The Watson court went on to state that while it is "correct that many decisions `reduce awards to $30,000 or below,' ... others `uphold awards of more than $100,000 without discussion of protracted suffering, truly egregious conduct, or medical treatment.'" Id. at *15, 2005 U.S. Dist. LEXIS 31578 at *45-46 (citing Cross v. N.Y. City Transit Auth., 417 F.3d 241, 259 n. 4 (2d Cir.2005)).
[5] Balk explained that Cribbin experienced a lack of motivation in several ways: (1) to get up and go to work; (2) to take care of her house; and, (3) to "reach out to other people." (Trial Tr. 1770.)
[6] Balk defined adjustment disorder with mixed emotional features as "a significant response to stress or a series of stressors, with behavioral and emotional symptoms." (Trial Tr. 1762.)
[7] Balk described Cribbin's posttraumatic stress features as a "response to some kind of trauma." (Trial Tr. 1763.) Balk testified that she diagnosed Cribbin with posttraumatic stress features as opposed to posttraumatic stress disorder because a disorder would result in response to a more severe trauma than Cribbin had suffered, such as "death, a horrendous accident, a terminal illness, [or] a rape." (Trial Tr. 1763.)
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525 S.W.2d 27 (1975)
Donald Ray HERRIN, Appellant,
v.
The STATE of Texas, Appellee.
No. 50117.
Court of Criminal Appeals of Texas.
July 9, 1975.
Donald F. McNiel, II, Stephenville, for appellant.
Bob Glasgow, Dist. Atty., and Quay Parker, Asst. Dist. Atty., Stephenville, Jim D. Vollers, State's Atty., and David S. McAngus, Asst. State's Atty., Austin, for the State.
OPINION
ONION, Presiding Judge.
The appellant[1] was tried jointly with co-defendant Paul William Jordan for the offense of aggravated robbery. Following the return of a guilty verdict, the jury assessed punishment at confinement for thirty-six (36) years in the Texas Department of Corrections.
The sufficiency of the evidence to support the conviction is not challenged.
The evidence adduced at trial reveals that at approximately 8:40 a. m. on February 12, 1974, the appellant and Jordan entered the *28 Lawson Jewelry Store in Stephenville and robbed at gunpoint the owner, F. W. Trammell, of approximately $12,000 worth of watches and rings and $50 cash. Trammell testified that the exhibition of pistols by the appellant and Jordan placed him in fear of death. Trammell also testified that he did not give consent to either the appellant or Jordan to enter his store and at gunpoint take his jewelry and money. Charlotte Keese, a hairdresser at a beauty shop located next to the jewelry store, was an eyewitness to the robbery.
In his lone ground of error the appellant contends that the trial court committed reversible error in denying him the opportunity to consult with counsel outside the presence of his guards and jailers, thereby denying him effective assistance of counsel. In support of his contention, the appellant refers this court to his timely filed formal bill of exception No. 1, which reads:
"Be it remembered, that prior to the arraignment and trial of the above entitled and numbered cause and while the Defendant was in the custody of The United States Marshal in and for the Northern District of Texas, the Defendant was transported to Stephenville, Texas on or about the 7th day of May, 1974, and the undersigned by telephone was notified of his impending appointment as counsel for Defendant and instructed to communicate with the Defendant at the Sheriff's office in the Erath County Courthouse; that the Deputy United States Marshals were preparing to take the Defendant to Fort Worth within the quarter hour and that the undersigned, if he was to communicate with the Defendant should make all haste to see him;
"Be it further remembered that the undersigned communicated with the Defendant for a period of time not exceeding fifteen minutes in the office of the Sheriff of Erath County, Texas, the Defendant being handcuffed and shackled during the conversation and the conversation taking place in the presence of a Deputy Sheriff of Erath County; two Deputy Marshals and a clerk employed in the Sheriff's office.
"Be it further remembered the Defendant was immediately taken to Fort Worth and was not returned to Erath County until the afternoon of May 23, 1974, again in the custody of two Deputy United States Marshals. The undersigned was given only a short time to confer with the Defendant, again at the office of the Sheriff of Erath County, Texas, and in the presence of the Deputy Marshals and Sheriff's personnel (at no time there being less than two present). Immediately after arraignment the Defendant was transported to Forth Worth, Texas.
"Be it further remembered that the undersigned requested the Court to issue a bench warrant ordering the Defendant brought to Erath County on Thursday, June 6, 1974, at which time a pre-trial hearing was set for a co-defendant in order that counsel might fully prepare for trial. Be it further remembered that the undersigned requested that Defendant be lodged in the Erath County Jail prior to trial in order that counsel would have an opportunity to and place in which to confer with Defendant.
"Be it further remembered that the Court refused to grant the undersigned's request and suggested that counsel travel to Fort Worth, Texas, if necessary to confer with the Defendant, to which the Defendant excepts.
"It is respectfully requested that the foregoing bill of exception be approved.
"/s/ Donald F. McNeil, II
Donald F. McNeil, II
Attorney for Defendant
P. O. Box 532
Stephenville, Texas 76401"
An examination of the record discloses that the trial court took no action with respect to the bill of exception within 100 days after notice of appeal was given. *29 Therefore, it is deemed approved since the trial court did not refuse or qualify it. Article 40.09, subd. 6(a), Vernon's Ann.C.C.P.; Dickhaut v. State, 493 S.W.2d 223 (Tex.Cr. App.1973).
Assuming, without deciding, that a formal bill of exception can be utilized to cover all of the matters contained in appellant's bill of exception, see Articles 40.09, Sec. 6(a) and 36.20, Vernon's Ann.C.C.P.,[2] it must be remembered a bill of exception must be complete within itself and must stand or fall by its own allegations. 5 Tex.Jur.2d, Appeal and ErrorCriminal Cases, Sec. 195, p. 318. And every bill of exception must plainly show the error complained of. 5 Tex.Jur.2d, Appeal and Error Criminal Cases, Sec. 199, p. 327.
Even if all the things alleged in the bill of exception did in fact occur, these allegations do not in themselves show that the appellant was thereby deprived of effective assistance of counsel.
There is nothing in the bill or in the record before us to show that conferences on May 7 and 23, 1974, were the only conferences that counsel had with the appellant. There is no showing that counsel did not in fact travel to Fort Worth as suggested by the trial court,[3] and nothing to show how long counsel may have conferred with appellant after he was returned to Erath County for trial.[4]
Appellant announced "ready" for trial and filed no motion for continuance.
Appellant urges in his brief that he suffered injury because he was not granted an opportunity to plea bargain, discuss trial strategy or "investigative leads" with counsel and had to make a snap decision to plead "not guilty." These assertions are not supported by the bill of exception or the record. As noted earlier, assertions in an appellate brief not supported by the record will not be accepted as a fact. Devereaux v. State, 473 S.W.2d 525 (Tex.Cr.App.1971).
The judgment is affirmed.
NOTES
[1] At the punishment phase of trial, the State introduced Federal Prison records from Texarkana which show that the appellant's name is Donald Ray Letson, a.k.a. Donald Ray Herrin. A fingerprint expert identified the fingerprints on the prison record of Letson as being identical to those of the appellant.
[2] See and cf. McCall v. State, 512 S.W.2d 334, 335 (Tex.Cr.App.1974). It should be kept in mind that if the trial judge had qualified the bill he would not have been able to qualify it as to matters contained therein which were not within his knowledge. 5 Tex.Jur.2d, Appeal and Error Criminal Cases, Sec. 184, pp. 303-304.
[3] It appears that appellant was in custody of federal authorities and that the Erath County jail was not approved by federal authorities for confinement of federal prisoners and the closest approved jail was the Tarrant County jail in Fort Worth.
[4] Appellant asserts in his brief that upon return to Erath County on June 10, 1974, his trial began immediately. It is well settled that this court will not accept as fact allegations contained in appellant's brief not supported by the record. Washington v. State, 500 S.W.2d 485 (Tex.Cr.App.1974); Devereaux v. State, 473 S.W.2d 525 (Tex.Cr.App. 1971).
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525 S.W.2d 268 (1975)
Reba D. ROBERTS, Appellant,
v.
A. T. ROBERTS, Appellee.
No. 5462.
Court of Civil Appeals of Texas, Waco.
June 19, 1975.
Rehearing Denied July 24, 1975.
Wynne & Wynne, Gordon R. Wynne, Wills Point, for appellant.
Levin, Weinberg & Levin, Shirley R. Levin, Dallas, for appellee.
OPINION
McDONALD, Chief Justice.
This cause is before us on petition for writ of error to a default judgment for *269 divorce and property division rendered against petitioner.
Petitioner Reba Roberts filed suit for divorce and property division against A. T. Roberts on March 26, 1974. Mrs. Roberts' petition for divorce was signed by Honorable R. B. Pool of Terrell, Texas as attorney.
A. T. Roberts filed an answer on May 5, 1974. Mr. Roberts' answer was signed by Honorable Kurt Philipps of Kaufman as attorney.
On July 25, 1974, A. T. Roberts filed cross action against Reba Roberts for divorce and property division. Such cross action was signed by Honorable Kurt Philipps as Attorney for cross petitioner.
Service on such cross petition was issued by the District Clerk on July 25, 1974, to the Sheriff of Kaufman County. The Sheriff's return recites that service was executed at Terrell, Kaufman County "at 11:00 o'clock A.M. on the 6 day of August 1974, by delivering to the within named Reba D. Roberts, in person a true copy of the citation together with the accompaning copy of the petition".
The record before us further reflects that Reba D. Roberts paid a jury fee in the cause on August 9, 1974.
On August 27, 1974, the trial court rendered default judgment for A. T. Roberts for divorce and property division on his cross action, reciting that "no jury having been demanded by either of the parties", and further that "Reba D. Roberts * * * although duly cited by personal service, did not appear."
On August 29, 1974, Reba D. Roberts filed a motion to set aside such judgment alleging that the case had been placed on the jury docket with jury fee paid, and further that Mr. Kurt Philipps attorney for A. T. Roberts had agreed with counsel for Reba D. Roberts for trial of the case on October 7, 1974; and that counsel for Reba D. Roberts did not learn that the divorce had been granted until August 28, 1974. Such motion was sworn to by Reba Roberts and signed by Reba D. Roberts and also by Honorable W. H. Frank Barnes as attorney.
The above motion was never acted on by the trial court.
On February 3, 1975, Petitioner Reba D. Roberts filed petition for writ of error to the August 27, 1974, divorce judgment, alleging among other matters that A. T. Roberts died on November 16, 1974, "and left surviving as his sole and only surviving heir at law and by will, his daughter, Mrs. Willie (Donna) Esporza, 204 Sonett Drive, De Soto, Dallas County, Tex; that A. T. Roberts was represented by Honorable Kurt Philipps, who is one of the members of the firm of Morgan and Shumpert, whose address is Kaufman, Texas, 75142." Such petition further alleged that Honorable W. H. Barnes of Terrell, Texas was ill and incapacitated and had requested the firm of Wynne & Wynne, Wills Point, Texas to represent the petitioner. The petition for writ of error was signed by Honorable Gordon R. Wynne as attorney for petitioner.
Service on such petition for writ of error was perfected on both attorney Kurt Philipps at Kaufman, Texas, and Mrs. Willie Esporza at De Soto, Texas.
Petitioner asserts in her brief that the trial court erred in entering default judgment for divorce upon A. T. Roberts' cross action because: 1) The case was on the jury docket with jury fee paid by petitioners; 2) The record affirmatively showed that date of judgment was premature and prior to return date upon which petitioner was cited to appear and answer.
Mrs. Willie Esporza has filed motion to dismiss Petition for Writ of Error asserting 1) that Rule 360 Texas Rules of Civil Procedure requires that all parties adversely interested must be named in a Petition for Writ of Error; that her father A. T. Roberts is dead and left four surviving children and heirs; that only she Mrs. Esporza was cited; that the interest of all four heirs are adverse to petitioners; that Rule 360 is *270 mandatory and jurisdictional. 2) That petitioner participated in the trial.
We will first notice the motion to dismiss the Petition for Writ of Error. Such petition recites that divorce was granted to A. T. Roberts, that petitioner did not participate in the trial, that there is error in the judgment; that A. T. Roberts is dead; and that petitioner desires the judgment removed to the Court of Civil Appeals for revision and correction.
Rule 369a TRCP (effective December 31, 1943) provides that if a party in a cause dies after rendition of judgment, and before the cause has been finally disposed on appeal, that the appeal may be perfected to the Court of Civil Appeals or Supreme Court, and such Courts shall proceed to adjudicate such cause and render judgment as if all the parties were living, and such judgment shall have the same force and effect as if rendered in the lifetime of the parties thereto.
Smith v. Henger, 148 Tex. 456, 226 S.W.2d 425, 429 expressly holds that Rule 369a is applicable to petition for writ of error as well as appeals where a party to a suit has died.
Since Rule 369a was promulgated (December 31, 1943), and after Rule 360 (which was promulgated September 1, 1941, and was a carry forward unchanged of Article 2257, Vernon's Ann.Civ.St.),[1] if any conflict exists, Rule 369a must control.
The fact that petitioner in addition to stating that A. T. Roberts was dead; that there was error in the judgment; and she wanted the judgment corrected; only partially recited who A. T. Roberts' heirs were, does not in our view, require a dismissal of the petition.
Petitioner did not participate in the trial and the trial court's judgment so reflects.
Respondent Esporza's motion to dismiss is overruled.
We revert to petitioner's contention that the trial court erred in rendering the default judgment against her where the record affirmatively showed that the date of trial and judgment was premature and prior to the return date upon which petitioner was cited to appear and answer.
As noted the Sheriff's return reflects that petitioner was served on August 6, 1974. Such Citation required petitioner to appear and answer to the cross petition "on or before 10 o'clock A.M. on the Monday next after the expiration of 20 days after the date of service hereof."
Petitioner was thus not required to answer until September 2, 1974.
A judgment rendered before appearance day upon which a party is required to appear and answer is erroneous and voidable. O'Boyle v. Bevil, 5th Cir., 259 F.2d 506, 512; Sneed v. Box, Tex.Civ.App., 166 S.W.2d 951, 954; Andrus v. Andrus, Tex. Civ.App., 168 S.W.2d 891; Davenport v. Rutledge, Tex.Civ.App., 187 S.W. 988, 989; Oden v. Vaughn Grocery Co., 34 Tex.Civ. App. 115, 77 S.W. 967.
O'Boyle, supra, Sneed, supra, and Oden, supra hold such judgment void.
Petitioner not having been in default in appearing for answer could not have waived the right of trial by jury under Rule 220 TRCP. Rule 220 and Gallagher v. Joyce, Tex.Civ.App., 459 S.W.2d 221, 222 have no application where trial is held and judgment is rendered by default against a party, unknown to the party, and before appearance day upon which the party is required to answer.
Petitioner's points (and assertions) 1 and 2 are sustained.
Reversed and remanded.
NOTES
[1] See Files v. Buie, 131 Tex. 19, 112 S.W.2d 714; and Files v. Buie, Tex.Civ.App., 113 S.W.2d 698, for interpretation of Article 2257.
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525 S.W.2d 804 (1975)
STATE of Missouri, Respondent,
v.
Frederick J. MARTIN, Appellant.
No. KCD 27173.
Missouri Court of Appeals, Kansas City District.
July 7, 1975.
*805 Thomas J. Cox, Jr., Kansas City, for appellant.
John C. Danforth, Atty. Gen., Robert M. Sommers, Asst. Atty. Gen., Jefferson City, for respondent.
Before SWOFFORD, P. J., and WEBORN and HIGGINS, Special Judges.
ROBERT R. WELBORN, Special Judge.
Appeal from judgment of conviction and sentence of 25 years' imprisonment, imposed by court under Second Offender Act, after jury in Jackson County Circuit Court found Frederick J. Martin guilty of robbery, first degree.
At around 12:15 A.M., August 17, 1973, Paul Varsalona, general manager of Charlie's Liquors, and Harry Bell, an employee of the store, were preparing to close the store for the day. Varsalona had counted the money in the cash register, consisting of 58 one-dollar bills and a $5 bill. He put this money in a sack on a shelf below the register.
The appellant, Frederick J. Martin, entered the store and walked to the rack where cakes and potato chips were displayed, across an aisle from the cash register. Martin stood at the display for a few minutes, saying nothing and making no selection. Bell left the store sales room and went to the back room.
An unidentified man entered the store, with a gun in his right hand, and told Varsalona, "This is a hold up." The robber pulled his shirt over his face up to his nose and went behind the counter and put the gun at Varsalona's head. He asked Varsalona where the other man was and when Varsalona said he was in the back, the robber said, "Let's go get him." He walked Varsalona to the rear. Varsalona called for Bell and when Bell appeared the robber told the two to lie on the floor. The robber went through the pockets of the two men. A second unidentified man appeared and said to the robber, "Come on, man, you are taking a long time, let's get out of here."
*806 The robber ordered Varsalona into the cooler, about twenty feet from the cash register. When he entered the cooler, Varsalona set off a silent alarm which notified police that a holdup was in progress.
The robber then put his gun at the back of Bell's head and "marched" him to the cash register. Martin was standing a few feet from the register, with a gun in his left hand. The other robber said, "You take over from here" and left the store. Martin told Bell to empty the cash register. He did so and placed the money in a sack and handed it to Martin. As he was handing the sack to Martin a boy entered the store. Three police officers who had converged on the scene in response to the alarm set off by Varsalona entered the store shortly after the boy's arrival.
The police officers saw Martin at the cash register with a paper sack in his right hand. The sack contained $58 in one-dollar bills and one $5 bill. The cash register was empty. Next to the cash register the officers found a loaded revolver. Varsalona was freed from the cooler and told the officers that Martin was involved in the holdup. The officers placed him under arrest. The boy was not held when Varsalona indicated he was not involved in the holdup.
In addition to the $63, some $1100 to $1200 in "money order" money was missing from the store. The police saw no one leave the store as they approached it.
At Martin's trial on a charge of robbery in the first degree with a deadly weapon, the state's evidence was the testimony of Varsalona, Bell and the police officers to substantially the above facts. Martin testified in his own behalf, and stated that he was in the store only as a customer and took no part in the robbery. He denied ever having the sack of money in his hand and any knowledge of the revolver found by the police. He said there were two robbers who left just as the boy entered and that he started to leave, but the police arrived and ordered him to remain. He admitted on cross-examination that he was under the influence of heroin at the time in question.
A jury found Martin guilty of robbery in the first degree. The trial court, having found the Second Offender Act applicable, fixed his punishment at 25 years' imprisonment. After his motion for new trial was overruled, defendant was granted allocution and judgment entered in accordance with the verdict and the penalty assessed by the court.
The trial of the defendant was somewhat stormy, marked by frequent outbursts by the defendant, directed primarily at his appointed counsel and also the court. On this appeal, the first assignment of error, advanced by counsel appointed for the appeal after trial counsel requested to be relieved, is that the trial court erred in refusing appellant's request for a continuance to permit him to employ counsel of his own choosing.
The information was filed in the circuit court August 31, 1973. Mr. Paul Katz, an Assistant Public Defender, was appointed to represent the defendant. The date of his appointment does not appear, but he apparently represented Martin at the preliminary hearing and beginning in September had filed various motions in the circuit court on behalf of the defendant.
The case was set for trial November 14, 1973. A pretrial hearing was held to take up motions to suppress identification testimony and a statement by defendant to police. Defendant appeared with Mr. Katz. Mr. Gary Haggerty of the Public Defender office appeared with Katz to assist in the defense. Haggerty advised the court that the defendant "indicated just this morning that he desires to have us relieved as counsel * * *." The court permitted defendant to state his reasons for this request. He stated that he did not feel Katz was "putting forth his best effort to defend me." In a somewhat rambling discourse, with little specifics, the defendant advised the court that his studies in the law library and discussion of the case with "a few *807 dudes upstairs in the jail" led him to believe "there is a lot of things you should have got done that wasn't done." Katz advised the court that he had been to the scene of the crime, had interviewed Varsalona, and Staley, the boy who entered the store during the holdup; that he had perused the prosecution files and had all of the police reports; that he had seen the defendant on six to eight occasions and spent several hours with him and that he felt he was prepared to go forward with the trial and assist the defendant.
The court advised defendant that there was nothing which would justify the court in relieving defense counsel and ordered the trial to proceed. A hearing was held on the motion to suppress identification testimony and on the motion to suppress the statement to the police. Both motions were overruled. Voir dire of the jury panel was held and the jury selected.
At that stage of the proceedings, Mr. Haggerty advised the court that the defendant wanted to move for a continuance on the basis that he was employing a private attorney. The defendant stated:
"I was under the impression which I had been told in the counsel room by both of these attorneys that if I did hire a private attorney, it would be all right and I would like a private attorney because these two men are not trying to represent me and my wife went and talked with Mr. Anthony Renaldo and he has agreed to enter an appearance as my lawyer to handle this case for me. Now, the time it is going to take him to get here, I don't know, but I do not wish to go to Court with these two men because they are not representing me and I wish to hire a private attorney."
The court stated that the request was denied because it was too late.
On this appeal, appellant states his assignment of error as follows:
"THE REFUSAL OF THE TRIAL JUDGE TO GRANT A CONTINUANCE, WHERE NO PREVIOUS CONTINUANCE HAD BEEN GRANTED, FOR THE PURPOSE OF ALLOWING APPELLANT TO PROCURE EFFECTIVE COUNSEL WHERE HIS COUNSEL AT TRIAL WAS INEFFECTIVE, CONSTITUTED AN ABUSE OF DISCRETION."
His argument on this point combines the claim of error in failing to grant a continuance to permit the employment of private counsel with a complaint of ineffectiveness of appointed counsel. Inasmuch as the record before this court is inadequate to permit consideration of the question of inadequate assistance of counsel, that portion of the argument will be disregarded and the question of refusal of the continuance will be treated as the claim of error properly before this court. See State v. Hedrick, 499 S.W.2d 583, 586[8] (Mo.App.1973).
The appellant first voiced disapproval of the counsel appointed to defend him at the pretrial hearing on the date that the case was set for trial. The appellant asserted differences with appointed counsel about the action being taken in his behalf. The trial court found no substance to the differences and determined that appointed counsel was prepared and ready to try the case. No suggestion was made at that time that appellant sought or was able to procure counsel of his own choosing.
After the voir dire and selecting of the jury, a continuance was requested on the grounds that defendant through his wife had made arrangements with an attorney to represent him. The trial court overruled the request as untimely.
In these circumstances, no abuse of discretion on the part of the trial court appears. The trial court obviously considered the move of the defendant as an effort to delay the trial rather than a bona fide action on the part of defendant to employ counsel of his own. The alleged newly employed counsel did not appear and no assurance was given as to when he might do so. The trial court was not obliged at that stage of the proceedings to grant a continuance on the basis of the *808 defendant's statement. The request was directed to the court's discretion and the denial of the request was not error. See State v. Jefferies, 504 S.W.2d 6 (Mo.1974); State v. Lahmann, 460 S.W.2d 559 (Mo. 1970); United States v. Leach, 429 F.2d 956, 963[16, 17] (8th Cir. 1970), cert. den. 402 U.S. 986, 91 S. Ct. 1675, 29 L. Ed. 2d 151 (1971).
Appellant would distinguish Jefferies and Lahmann because of the different facts in those cases. Generally each case involving this problem presents a distinctive factual situation. The determination must be made on the facts of each case as to whether the trial court's refusal of a continuance was an abuse of discretion. On the facts here, no abuse has been demonstrated.
Appellant's second assignment of error also relates to the trial court's refusal to grant a continunce or delay in order to permit the production of a defense witness.
The state closed its case around noon on the second day of the trial. Out of the presence of the jury, defense counsel interrogated the defendant about his wish to testify in his own behalf. In the course of the interrogation defendant stated that he wanted Staley, the boy who came into the store during the robbery, as his first witness. Defense counsel stated that he thought Staley could be produced in an hour and a half. When court resumed following the noon recess, Staley was not present. Defense counsel stated that an investigator for his office was attempting to locate the witness. The trial judge said that the case must proceed and defendant took the stand and testified.
At the conclusion of defendant's testimony, Staley had not appeared. Defense counsel stated that a subpoena had been served on Staley and that he was in court on the first day of the trial, but had been excused by defense counsel with the understanding that he would come to counsel's office the next morning. He failed to do so and counsel was of the opinion that the witness was hiding. The court agreed to recess the proceedings until the following morning in order to permit the production of the witness.
When court resumed the following morning, the witness was not present. An investigator for defense counsel's office testified to his efforts to locate the witness. The judge concluded that every effort had been made to locate the witness and that the witness was trying to avoid the investigator. Without further request from defense counsel, the court inquired whether the defense had anything further and counsel replied negatively.
The respondent questions whether or not appellant properly presented his request to the trial court for a continuance because of the absence of the witness. Defense counsel did advise the court that he objected to proceeding further without the presence of the witness. The adequacy of this move is questionable, but the assignment will not be disposed of on the procedural grounds. Clearly., the trial court was aware of the defense position.
This is, however, again a matter of discretion for the trial court. Numerous factors might be pointed to as justifying the trial court's ruling here, such as the untimeliness of the request (State v. Martin, 515 S.W.2d 802 (Mo.App.1974)), or the form of the request (Rule 25.08(b), V.A.M.R.). Most significant here, however, is the failure of the defense to show the importance of the witness's testimony. Mr. Katz did not want to call Staley as a defense witness. Either Katz or Haggerty had interviewed the witness, but no statement had been taken from him. At the most, they informed the court that the witness would testify that he did not see Martin pull his shirt over his face, as Bell testified he had done. According to counsel, the witness had told them that he paid little attention to the defendant and did not know whether he held a gun or a sack. He would have placed Martin at the cash register in Bell's presence.
In his brief in this court., appellant says that he does not know what Staley would *809 have said but that appellant is entitled to the benefit of the doubt.
On this record, the trial court cannot be said to have abused its discretion. Defense counsel who had interrogated the witness were not anxious for his testimony. The defendant who insisted on it stated that he did not know what the witness would say. The trial court granted one request for a brief delay to permit production of the witness. He was properly patient with defense efforts to produce Staley, but when the efforts were unsuccessful and no convincing showing had been made of what material contribution the defense expected from the witness, the trial court was not required to protract this case further. The trial court's action was a proper exercise of discretion.
Appellant next complains of the trial court's refusal to grant a mistrial based upon an occurrence involving a bailiff and defendant's wife and also an occurrence in which defendant struck his trial attorney.
On the first occasion, when the trial resumed on the second day following the noon recess, the trial court directed the bailiff to remove a woman spectator "the next time she says anything in the courtroom." After the defendant had been sworn as a witness and had given his name and age, the following appears in the transcript:
"(Whereupon, the following proceedings were had in the back of the courtroom between the Bailiff for Div. 3 and a woman spectator:)
"THE BAILIFF: You will have to keep quiet or leave.
"THE WOMAN: I don't have to leave, he ain't getting no justice here.
"THE BAILIFF: You will have to leave or keep still.
"THE WOMAN: You get your hands off me.
"(Whereupon, the defendant left the witness stand and went to the back of the courtroom and was stopped by the Deputy Sheriff.)
"THE WOMAN: He's not getting no justice, you white prejudice bastard.
"THE COURT: Mr. Carl, take her out of the courtroom. Mr. Sheriff, tell the defendant to come back to the witness stand.
"(Whereupon, the defendant was escorted back to the witness stand by the Deputy Sheriff.)
"(Counsel approached the bench and the following proceedings were had:)
"MR. KATZ: Your Honor, under these circumstances, we move for a mistrial, I believe it prejudicial the disruption of Mr. Carl, the Court Bailiff, and a Court spectator, I believe Mrs. Martin
"(Proceedings returned to open Court.)
"MR. MARTIN: Yes, that's my wife, man, she's as tired as I am about how you all are messing over me and depriving me of all my rights down here in this courtroom.
"THE COURT: The request for mistrial is denied. I admonished the Bailiff to remove that person from the courtroom if she said anything further. She has been back there talking during this preliminary hearing out of the presence of the jury. Following the Court's direction, she was removed. Now proceed with the examination."
The second incident is described as follows:
"THE COURT: Members of the jury, we have heard all of the evidence in this case, there is nothing further and at this time, I am going to read to you the Instructions on the law, after which the attorneys will make their arguments.
"THE DEFENDANT: Your Honorget up there, man
"THE COURT: You have been given Instructions
"THE DEFENDANT: The defense has a more evidence they would like to put it on, my lawyer don't want to put it on and I want
*810 "THE COURT: Will you gentlemen come up here please?
"(Counsel approached the bench and the following proceedings took place: The defendant arose from his chair and approached his attorney from behind and struck him in the back of his head. The Defendant was then subdued by the Deputy Sheriffs present in the courtroom.)
"THE COURT: Take him out of the courtroom. Members of the jury, please go up
"THE DEFENDANT: What the (expletive omitted) is wrong with you?
"THE COURT: to the jury room.
"THE DEFENDANT: You (expletive omitted) wants somebody to plead for something they ain't never did. I ain't pleading guilty for nothing. You're not going to defend nobody, you get off my case, man, I told you a thousand times, you prejudice, he prejudice and the judge is too.
"(The following proceedings were had OUT OF THE PRESENCE AND HEAING OF THE JURY, in the courtroom:)
"THE COURT: All right, now, wait before you take him out. Let the record show that the defendant has just struck his court appointed attorney
"THE DEFENDANT: Because I want him off my case and put that in the record too and the Judge won't let him off because all of them are prejudice against me.
"THE BAILIFF: Will you shut up?
"THE COURT: Wait, Frank, let him talk. Now, Mr. Martin, I have advised you earlier your conduct was going to result in your removal from the courtroom if it continues
"THE DEFENDANT: Have I prevented in any way
"THE COURT: and it has just resulted in that. You will be removed from the argument. Take him outside.
"THE DEFENDANT: Let me get my papers before I go, can I get that?
"THE COURT: Take him outside.
"(Whereupon, the defendant was excluded from the courtroom.)
"MR. KATZ: Your Honor, I would move for a mistrial based upon the actions of the defendant having at least a scintilla of doubt as to whetherI myself don't have any doubt as to whether I could defend the defendant in closing argument after the assault but for the recordthe record may itself be jaded by this action of the defendant.
"THE COURT: Mr. Katz, the Court is very sorry that you are in the position you are in. I think, however, that the conduct that was just displayed was intentional and deliberate effort on the part of the defendant to provoke a mistrial. He was repeatedly admonished about his conduct during this trial and without any reason, he struck you in the back of the head. Now I recognize the difficult position you are in, but I am not going to grant a mistrial. I think this has been a sole effort of this defendant throughout this trial to provoke a mistrial and I think this was the last straw in his effort to do that. * * *"
The trial court did not err in refusing to grant the request for a mistrial in either of these instances. Whether or not an outburst by a spectator or the defendant requires the drastic remedy of a mistrial is a matter for the trial court's discretion. State v. Robertson, 480 S.W.2d 845, 847[5, 6] (Mo.1972); State v. Jackson, 506 S.W.2d 424, 427-429[4] (Mo.1974). "The trial court is charged with maintaining orderly procedure in the courtroom, and it may properly exercise discretion in determining the steps necessary to maintain order." State v. McGinnis, 441 S.W.2d 715, 717[1] (Mo.1969). The trial court's action with regard to the instance involving defendant's wife was a proper exercise of such authority. With respect to the defendant's striking his attorney, the trial court properly declined to put a premium upon the defendant's misconduct by granting the mistrial which he was so *811 obviously seeking. State v. McGinnis, supra.
During the voir dire examination of jurors, defendant moved for a mistrial "based on the fact some of the jurors saw him in handcuffs when he was out in the hall." The court summarily denied the motion. Under the ruling of this court in State v. Warriner, 506 S.W.2d 103, 104[1] (Mo.App.1974), this action by the trial court was not erroneous.
Appellant next contends that the trial court erred in failing to sustain his motion to suppress the in-court identification testimony of Varsalona and Bell. Appellant acknowledges that he can point to no out-of-court identification procedures which might have influenced the identification testimony. More significantly in this case defendant's identification was hardly an issue. He was apprehended at the scene of the crime. Bell and Varsalona saw him during the robbery and when he was arrested. There was no question that defendant was the person arrested, the sole question being the extent of his participation in the robbery. The trial court did not err in overruling the motion.
Appellant claims that the 25-year sentence imposed upon him is excessive, in the light of the facts of the case, and constitutes an abuse of discretion. The offense for which defendant was convicted is punishable by imprisonment for not less than five years, with no maximum specified. § 560.135, RSMo 1969, V.A.M.S. His prior conviction of robbery in the first degree made the length of the sentence a matter for the court. The 25-year sentence is within the limits prescribed by § 560.135, and the claim of abuse of discretion is without merit. State v. Grimm, 461 S.W.2d 746, 754[7, 8] (Mo.1971).
In a pro se brief, appellant attacks the principal instruction on the grounds that it permitted a finding of guilt if the defendant acted in concert with another. Appellant contends that this was erroneous because the information made no reference to his acting with another. No such allegation was required in the information in order to permit the instruction. State v. Scullin, 185 Mo. 709, 84 S.W. 862 (1905).
Judgment affirmed.
All concur.
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525 S.W.2d 82 (1975)
ARKANSAS NATIONAL BANK, Appellant,
v.
CLEBURNE COUNTY BANK, Appellee.
No. 75-19.
Supreme Court of Arkansas.
June 23, 1975.
*83 Reed & Blackburn, P. A., by C. E. Blackburn, Heber Springs, for appellant.
Olmstead & McSpadden by Stephen Choate, Heber Springs, for appellee.
FOGLEMAN, Justice.
Robert M. Edwards was formerly employed by Dr. Wayne H. Smith of Heber Springs, Arkansas, as a physician's assistant. In July and October, 1973, Edwards borrowed money from Cleburne County Bank and Arkansas National Bank, respectively, $2500 from each institution, executing a promissory note and security agreement as a part of each transaction. Each bank filed for record its financing statement or security agreement covering the same property of Edwards. Edwards failed *84 to make payments to either bank. This appeal is from the holding of the chancery court that the security interest of Cleburne County Bank had priority over that of Arkansas National Bank, entitling Cleburne County Bank to priority with respect to the proceeds of the sale of Edwards' property being held in the registry of the court.
The single point for reversal urged by Arkansas National Bank relates to its contention raised in the trial court that the security agreement with Cleburne County Bank had been materially altered and was therefore void, or, in the alternative, should be restricted to those items included when it was originally written. The evidence on behalf of appellant was circumstantial. In attempting to prove a circumstance supporting its contention, appellant called as a witness an attorney, Hoyt Thomas, whose client was Edwards' employer, Dr. Smith, who had previously been dismissed as a party defendant in the action. Thomas refused to give testimony with respect to information he had received from certain third parties (Mr. Johnson, president of Cleburne County Bank and Mr. Hensley, president of Arkansas National Bank) in the course of his representation of Dr. Smith; testimony that in December 1973, Thomas went to Cleburne County Bank and secured a copy of that bank's security agreement, which copy would be relevant to the alteration issue; and testimony concerning discussions Thomas had with appellant's attorney relative to the alteration issue. Thomas refused to testify on the ground that to do so would violate the attorney-client privilege, based on his relationship to Dr. Smith. The trial court sustained Thomas' refusal to testify, saying that Thomas could not be compelled to divulge anything from his files pertaining to the case without permission of Dr. Smith, which was refused. None of the subjects above mentioned fall within the ambit of the attorney-client privilege, and the trial court's ruling to the contrary was error.
The attorney-client privilege extends to any communication made to the attorney by his client in that relation, or his advice thereon. Ark.Stat.Ann. § 28-601 (Supp.1973). Put more succinctly, the privilege covers communications between attorney and client; that is, statements of each to the other. Norton v. Norton, 227 Ark. 799, 302 S.W.2d 78. The privilege is designed to secure subjective freedom of mind for the client in seeking legal advice, and has no concern with other persons' freedom of mind or with the attorney's desire for secrecy in the conduct of his client's business; therefore, it is not sufficient for the attorney, in invoking the privilege, to state that the information came somehow to him while acting for the client, nor that it came from some particular third person for the client's benefit. 8 Wigmore on Evidence (McHaughton Revision) 619, § 2317. The purpose of the rule and the necessity for its limitation have been clearly recognized in Arkansas and we have not extended the privilege to communications between the attorney and third parties in the course of the attorney's representation of his client. See Vittitow v. Burnett, 112 Ark. 277, 165 S.W. 625; Morgan v. Wells, 242 Ark. 499, 415 S.W.2d 323; Ehlers v. Rose, 182 Ark. 131, 30 S.W.2d 849; Kilgo v. Continental Casualty Co., 140 Ark. 336, 215 S.W. 689.
Neither information acquired by the attorney not communicated or confided to him by his client or by an agent of his client, nor acts done by the attorney, nor facts coming to his knowledge by being done in his presence, are covered by the privilege even though any of these take place during the course of his acting as attorney. United States v. Goldfarb, 328 F.2d 280 (6 Cir., 1964); King v. Ashley, 179 N.Y. 281, 72 N.E. 106 (1904); In Le Long v. Siebrect, 196 A.D. 74, 187 N.Y.S. 150 (1921); People v. Smith, 13 Cal. App. 3d 897, 91 Cal. Rptr. 786 (1970); State v. Olwell, 64 Wash.2d 828, 394 P.2d 681 (1964); 97 C.J.S. Witnesses § 283d, p. 800. An attorney may *85 be required to produce papers belonging to his client where the knowledge of their existence is accessible to others or to the public, or if, as here, the client might be compelled to produce them. Cranston v. Stewart, 184 Kan. 99, 334 P.2d 337 (1959); Pearson v. Roder, 39 Okl. 105, 134 P. 421 (1913).
It is probable that Mr. Thomas, the attorney-witness in this case, confused the attorney-client privilege with the rule applied in some jurisdictions that the attorney's work product is not subject to discovery. The two rules and the principles upon which they are based, while susceptible to confusion, are separate and distinct. See 8 Wigmore on Evidence (McNaughton Revision) 620, § 2318. It has been held, however, that an attorney's information, taken from witnesses while acting for his client in anticipation of litigation, as well as briefs, communications and other writings prepared by counsel for his own use in prosecuting his client's case, are not protected from discovery by the attorney-client privilege. Hickman v. Taylor, 329 U.S. 495, 67 S. Ct. 385, 91 L. Ed. 451 (1947); Dupree v. Better Way, 86 So. 2d 425 (Fla.1956); In re Dalton's Estate, 346 Mich. 613, 78 S.W.2d 266 (1956).
Ordinarily, we decide appealed chancery cases here on trial de novo when the record is fully developed and we can plainly see what the rights and equities of the parties are. Fulwider v. Woods, 249 Ark. 776, 461 S.W.2d 581. Rushton v. First National Bank, 244 Ark. 503, 426 S.W.2d 378. We do remand such cases when action in the chancery court has prevented the case from being fully developed. Fulwider v. Woods, supra. See also, Sears v. Scott, 210 Ark. 392, 197 S.W.2d 33. In this case, the testimony attempted to be elicited by appellant's counsel, and excluded by the chancellor, was especially critical, as appellant was forced to rely wholly on circumstantial evidence to sustain his position that the financing statement had been materially altered. The only indication we have of what the evidence on this issue would be is appellant's attorney's proffer, but much depends on the credibility to be given to the witnesses and the weight accorded their testimony, and the cold written record is not sufficient in this respect. In addition, we can only surmise what cross-examination might reveal and appellee might have evidence in rebuttal. For these reasons, we must vacate the decree and remand the case for further proceedings consistent with this opinion.
The decree is reversed and the case remanded.
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246 A.2d 781 (1968)
Irby MALLOY, Appellant,
v.
UNITED STATES, Appellee.
No. 4717.
District of Columbia Court of Appeals.
Argued September 9, 1968.
Decided October 24, 1968.
*782 Nicholas A. Addams, Washington, D. C., appointed by this court, for appellant.
David A. Clarke, Jr., Special Asst. U. S. Atty., for appellee. David G. Bress, U. S. Atty., Frank Q. Nebeker, Clarence A. Jacobson, Robert S. Bennett, and William G. Reynolds, Jr., Asst. U. S. Attys., were on the brief, for appellee.
Before MYERS, KELLY and FICKLING, Associate Judges.
MYERS, Associate Judge.
After a nonjury trial, appellant was convicted of unlawful possession of heroin in violation of D.C.Code, § 33-402 (1967). His appeal charges that the evidence was legally insufficient to support his conviction.
In our review of an appeal from a conviction in the trial court, we must consider the evidence presented at trial, including all inferences reasonably arising therefrom, in a manner most favorable to the Government. We will not upset a conviction on the facts as long as there is evidence which reasonably permits the finding of guilt. Curley v. United States, 81 U.S. App.D.C. 389, 160 F.2d 229, cert. denied, 331 U.S. 837, 67 S. Ct. 1511, 91 L. Ed. 1850 (1947). The Government, however, must have satisfied its burden of presenting evidence legally sufficient to support the conviction in the first instance, of proving every material element of the crime.
In the instant case, the Government was charged with proving appellant's possession of a substance and the identity of that substance as one proscribed by the narcotic drug statute. For us to affirm, we need only satisfy ourselves that there is evidence in the record which would reasonably *783 permit a finding of these elements. The evidence must go further than merely raising the possibility that the elements are present. A conviction cannot rest on mere possibilities.[1] "Inferential proof of an ultimate fact may not be based upon a mere possibility, speculation or conjecture." Jackson v. District of Columbia, D.C.Mun. App., 180 A.2d 885, 888 (1962).[2] Circumstantial evidence is adequate to prove an essential element, such as possession in this case, only when "the only possible inference to be derived from it is that of guilt." Maryland & Virginia Milk Producers Ass'n v. United States, 90 U.S.App.D.C. 14, 23, 193 F.2d 907, 917 (1951). The Government must negate reasonable inferences which are consistent with innocence.[3] The accused is not charged with explaining away suspicious inferences. Dowell v. United States, D.C.Mun.App., 87 A.2d 630 (1952). It is thus of no significance that appellant elected not to testify on his own behalf.
The Government's case was based on the testimony of two special police officers, a narcotics squad detective, and a chemist. The two officers testified that, while on duty at St. Elizabeths Hospital, they had occasion to check a report that someone was passing something to patients in the maximum security building. They observed appellant, who met the description of the suspected party, leave his car and begin walking toward the building. The officers called after him, and had approached to a distance of 25-30 feet from him when he turned around, making what one officer described as a "quick motion, as if he was throwing something away." Neither officer saw an object of any kind leave appellant's hand, or strike the ground. When the officers reached appellant, they began searching the immediate vicinity and questioning him about his presence in the area. He explained that he was en route to deliver cigarettes to a patient in the building and was allowed to proceed. The officers continued their search. When appellant returned, he was instructed to leave the grounds. When appellant reached the main gate of the hospital he was arrested pursuant to the instructions of the two officers who had found, just after appellant had left the area, a small "silver wrapper," comparable to a nickel in size, containing several white capsules.
At most, the Government created only a strong suspicion that appellant had ever had the "silver wrapper" in his possession. It was never seen in his hand, and it was never seen being thrown by him. In view of the difficulty the officers had in finding the wrapper and the fact that the area was open to all who visited the hospital and to all employees, the distinct possibility is raised that the wrapper had been dropped there by some one other than appellant. The Government's evidence fails to negate this reasonable inference. To uphold the conviction we would have to infer from the evidence, first, that appellant threw something, and, second, that that something was the wrapper which was later found. An inference built upon another inference to prove a material fact is too tenuous an evidentiary foundation to support a criminal conviction. We therefore conclude, as a matter of law, that the Government failed to meet its burden of proof with respect to appellant's possession. Under these circumstances, we do not deem it necessary to pass upon the question of whether the identified narcotic substance was present in such quantity as to be usable.[4]
Reversed with directions to enter a judgment of acquittal.
NOTES
[1] Davis v. United States, D.C.App., 230 A.2d 485 (1967); Peterson v. District of Columbia, D.C.Mun.App., 171 A.2d 95 (1961).
[2] See also, Baker v. District of Columbia, D.C.Mun.App., 184 A.2d 198 (1962).
[3] Borum v. United States, 127 U.S.App. D.C. 48, 380 F.2d 595 (1967); Townsley v. United States, D.C.App., 236 A.2d 63 (1967).
[4] Cf. Marshall v. United States, D.C.App., 229 A.2d 449 (1967); Edelin v. United States, D.C.App., 227 A.2d 395 (1967).
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525 S.W.2d 559 (1975)
Lauro BARRAGAN, d/b/a Del Norte Saddlery, Appellant,
v.
Juan MUNOZ, d/b/a Fisher Hotel, Appellee.
No. 6417.
Court of Civil Appeals of Texas, El Paso.
June 25, 1975.
*561 Scott, Hulse, Marshall & Feuille, Stephen B. Tatem, Jr., El Paso, for appellant.
Grambling, Mounce, Deffebach, Sims, Hardie & Galatzan, Malcolm Harris, El Paso, for appellee.
OPINION
WARD, Justice.
The tenant, Lauro Barragan, sued his landlord, Juan Munoz, for the damages sustained to a stock of merchandise occasioned by water coming from the premises which were under the control and possession of the landlord. At the conclusion of the plaintiff's case, the Court instructed the jury to return a verdict for the defendant. We affirm.
The tenant operates a western-wear store on the first floor of a three-story building known as the Fisher Hotel in El Paso. The landlord has retained the possession of the top two floors of the building where he conducts his business known as the Fisher Hotel. On the morning of October 13, 1969, a concealed water pipe located between the second and third floors and above a vacant room in the hotel developed a leak. The water seeped through the floor of the second story and flowed into the Appellant's premises, and the damages resulted. Appellant's claim for recovery for his loss is based on alternative theories of trespass, negligence and res ipsa loquitur.
The Appellant occupied his leased premises as a tenant since 1947. The most recent written lease covering the premises prior to the flooding was for the term of April 1, 1953, through March 31, 1955, and since the expiration of that lease the tenant has continued to occupy the same premises and paid the same rent of $175.00 a month as called for in the lease. The landlord urges that a hold harmless clause contained in Paragraph Ninth of this written lease controls the disposition of this case. Paragraph Ninth is to the effect that the landlord shall not be liable to the tenant for damages to property from latent or patent defects in the building, nor for damages to property "occasioned by or from plumbing, gas, water, steam and other pipes or apparatus being out of repair." Such exculpatory provisions are not contrary to public policy and are valid and enforceable. Mitterlehner v. Mercantile National Bank at Dallas, 378 S.W.2d 137 (Tex.Civ.App.Dallas 1964, writ ref'd n. r. e.). The question is then presented as to whether or not the tenant is bound by these terms of the expired lease by virtue of the "holdover doctrine." It is the rule that proof of holding over after the expiration of a term fixed in the lease gives rise to the presumption that the holdover tenant continues to be bound by the covenants which were binding upon him during the term, in the absence of evidence to the contrary. 49 A.L.R. 2d 483. The law implies an agreement on the part of the landlord that he will let and on the part of the tenant that he will hold on the terms of the expired lease. Overstreet v. Houston Oil Co., 64 S.W.2d 354 (Tex.Civ. App.Beaumont 1933, writ ref'd). The *562 holding over is normally a lease for a year binding on both parties in the absence of an express or implied agreement to the contrary. A second and subsequent holdover year can be created by holding over after the expiration of the first holdover year. Willeke v. Bailey, 144 Tex. 157, 189 S.W.2d 477 (1945); 35 Tex.Jur.2d Landlord and Tenant § 26, p. 510.
The Appellant relies upon Paragraph Eighth of the expired lease as being the necessary contrary evidence which keeps the tenant from being bound by the exculpatory clause. Paragraph Eighth provides that:
"It is agreed that this lease terminates at the time herein specified and should Lessee tender his monthly rental for the month next ensuing after the termination hereof or for any other month and same be accepted by lessor, same shall not renew his lease, but he shall be regarded as a tenant-at-will for such time as he may continue to remain in and upon the premises after the expiration hereof, * *."
Regardless of any such paragraph, all leases terminate by their own terms upon expiration, and where the tenant remains in possession and rent continues to be accepted the terms of the expired lease are presumed to continue, absent agreement to the contrary. The only change made in the present case was that the duration of the holdover was to be at will. Where a landlord and his tenant have agreed to a holding over but have made certain changes in the expired lease, the rule is that the tenant is still bound by the remaining covenants. 49 A.L.R. 2d 490. Whether a particular clause in an original lease is applicable to a holdover depends upon the nature of the clause, that is, whether it was consistent with the new situation. The exculpatory clause in this case is as consistent to the situation after the holding over as it was during the term of the original lease.
The parties had allocated the risk of possible loss by the terms of the written lease. The tenant, knowing that he could not look to the landlord for the damages, had protected himself with insurance coverage and was so covered on October 13, 1969. The tenant points this out by stating this is a subrogation case brought on behalf of the United States Fire Insurance Company of New York in the name of its insurer. In addition, the tenant testified he thought he was still operating under the written lease. We hold that the exculpatory clause remained in effect and barred recovery against the landlord for any negligence or unintentional trespass caused by the plumbing.
Additionally, we fail to see any evidence of a cause of action. The Appellant's points complain of the directed verdict and insist that there was legally sufficient evidence to support the submission of the Appellee's negligence in failing to properly maintain the plumbing in the building, in failing to discover the water leak prior to the damage, and in failing to provide adequate supervision for the detection of water leaks. This being an instructed verdict case, the evidence is to be considered in its most favorable light in support of the plaintiff's position. Seideneck v. Cal Bayreuther Associates, 451 S.W.2d 752 (Tex.1970). The rule means we must view only the evidence and all reasonable inferences to be drawn therefrom most favorable to the plaintiff's cause of action and disregard all contrary evidence and inferences.
In the case before us, there is no conflict in the evidence and it is very brief. As to liability, the plaintiff called only himself and the hotel manager, and both testified from depositions. The manager of the hotel said that he relieved his night clerk at 8:00 A.M. on the morning in question. Two hours later, a maid, while making her rounds in the hotel, reported that she had found water in Room 5, which had been *563 unoccupied. The manager saw that the leak was coming from the ceiling in that room and he cut a hole in the ceiling where he found the leaking pipe. He shut the water off and repaired the pipe by capping it. He then saw some water in the store on the first floor below the room in question and attempted to telephone the Appellant. He stated that this pipe had not leaked before, that it was a concealed pipe located between the second and third floor of the building, and that it could not have been inspected without tearing down the walls and the whole building. He estimated that the building was seventy years old, that repairs and replacements had been made to the plumbing while he was there, that there had been other leaks in the pipes and from overflow from fixtures, but that prior to the instant case there had been no indication of a leaking pipe in Room 5. Nothing was offered as to the time or method used in inspecting the premises or as to when the last inspection of the room was made before the discovery. There is no evidence as to the condition of the water pipe that broke other than a possible inference that it might be old. There is no evidence of the volume of water that had leaked out or of the size of the leak itself. There is nothing to use in estimating the time that the leak had existed. There is no evidence as to the condition of the exterior of the pipe around the break so that a determination could be made as to what a possible inspection might have shown regarding any visible defect.
The plaintiff testified that he had been a tenant on these same premises and with the same lessor since 1947, that he and his lessor were close friends, that lessor had told him when the written lease expired to continue on as before and that he didn't need to sign a new lease. He did not visit the premises until the day after the leak had been repaired and he offered nothing as to the quantity of water which had entered his premises. He was silent as to any possible previous water leaks in the premises during his twenty-two years of continuous occupancy.
Where the landlord retains possession and control of a portion of the leased premises, such as in this case, then the landlord is charged with the duty of ordinary care in maintaining the portion retained so as not to damage the tenant. He is not an insurer but he is responsible for his own negligence. Brown v. Frontier Theatres, Inc., 369 S.W.2d 299 (Tex.1963); see Anno. 35 A.L.R. 3d 143, at 200. Under the facts before us, we hold that there is no evidence of any negligence on any of the grounds charged.
We further find no evidence in the record to support the submission of the theory of res ipsa loquitur. We know that an ordinary water pipe in an inaccessible part of the property under the landlord's control sprung a leak. The control factor is present but the fact that such a water pipe sprung a leak is not of that character of accident as would support a reasonable inference that the lessor was negligent in causing or permitting it to occur. Mobil Chemical Company v. Bell, 517 S.W.2d 245 (Tex.1974). These facts distinguish this incident from those in a case decided by this Court forty years ago where we approved the application of res ipsa loquitur when a faucet or toilet was permitted to overflow at the same Fisher Hotel. See Washington v. Ravel, 14 S.W.2d 367 (Tex.Civ.App.El Paso 1929, no writ).
Points are also presented as to the failure to submit the Appellant's theory that the water flowing onto his property created a trespass. These points are overruled as at best there was an unintentional and non-negligent intrusion caused by a failure to act. No abnormally dangerous activity is involved nor has any affirmative volitional act been done which immediately caused an invasion of the lessee's property rights. Ruiz v. Forman, 514 S.W.2d 817 *564 (Tex.Civ.App.El Paso 1974, writ dism'd); First City National Bank of Houston v. Japhet, 390 S.W.2d 70 (Tex.Civ.App. Houston 1965, writ dism'd).
We have considered all of the Appellant's points concerning the liability of the lessor and they are overruled. Certain damage issue points are not reached.
The judgment of the trial court is affirmed.
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251 Md. 120 (1968)
246 A.2d 240
MANOR REAL ESTATE COMPANY
v.
THE JOS. M. ZAMOISKI CO.
[No. 344, September Term, 1967.]
Court of Appeals of Maryland.
Decided October 11, 1968.
The cause was argued before HAMMOND, C.J., and MARBURY, BARNES, McWILLIAMS, FINAN, SINGLEY, and SMITH. JJ.
George W. Constable, with whom was Caesar L. Aiello on the brief, for appellant.
John J. Ghingher, Jr., with whom were Weinberg & Green on the brief, for appellee.
McWILLIAMS, J., delivered the opinion of the Court.
Appellant (Manor) agreed to sell appellee (Zamoiski) a 6 acre site in its industrial park in Prince George's County for $135,000. The contract called for Manor to convey to Zamoiski *122 a fee simple title "clear of all liens and encumbrances." Zamoiski contends that the unpaid benefit charge ($10,130.76) of the Washington Suburban Sanitary Commission (WSSC) for sewer and water facilities is such an encumbrance. In the circumstances we must agree with Zamoiski.
Negotiations between Manor, a subsidiary of the Pennsylvania Railroad, and Zamoiski began some time prior to October 1964 and continued for more than a year. The first draft of the contract of sale was prepared by Manor. The next draft was prepared by Zamoiski's attorney. Then Manor submitted another draft which was followed by still another Zamoiski draft. There were also many minor revisions agreed upon before the execution of the final draft on 2 November 1965. The parties concede that the final contract was the result of "hard negotiations."
The portions of the long and elaborate contract which have become our special concern are as follows:
"4. At the closing, Grantor shall * * * execute and deliver to Grantee a deed * * * which shall convey * * * a good and marketable title, with covenants of special warranty, clear of all liens and encumbrances, * * *."
* * *
"[6.] b. Closing of this transaction shall take place at Grantee's Title Insurer's office on a mutually agreeable date on or before December 31, 1965. The Grantor shall pay for federal documentary stamps and the Grantee shall pay for state and county stamps and transfer taxes on the deed; real property taxes for the year of transfer shall be apportioned. Upon failure of Grantee to close within the time limit fixed above, Grantor may elect to rescind this contract and retain the sums paid on account of the purchase price and Grantee shall thereafter have no lien against or interest in the premises, it being understood and agreed that in such event Grantor shall not seek specific performance."
* * *
"9. In the event * * * it should develop that Grantor's *123 title to said premises for any reason is not good and marketable, clear of all liens and encumbrances, * * * and Grantee shall not be agreeable to accepting title of such lesser quality as the Grantor is willing to give, then the sum paid on account will be refunded to Grantee, who hereby agrees to accept same, whereupon this writing shall be cancelled and neither party hereto shall have any claim against the other by reason hereof.
"10. All understandings and agreements heretofore had between the parties hereto are merged into this contract, which alone fully and completely expresses their agreement, and the same is entered into after full investigation, neither party relying on any statement or representation, not embodied in this contract, made by the other." (Emphases added.)
At or about the time set for the closing, 7 March 1966, Zamoiski, for the first time, it says, learned of the charge levied by the WSSC. Upon Manor's refusal to permit Zamoiski to deduct from the purchase price the unpaid balance due on the charge the closing was adjourned. On 16 June 1966 the parties executed an amendment to the contract of sale, the relevant parts of which we have set forth below:
"Grantor and Grantee are unable to agree which of the parties hereto is obligated to pay and discharge current and future front foot benefit assessments [charge] of * * * [WSSC] for water, drainage and sanitary sewer facilities constructed in Ardwick Road and Adams Avenue.
* * *
"2. For the purposes of such closing, the front foot benefit assessment of * * * [WSSC] for the current fiscal period will be apportioned between the parties as of the date of closing.
"3. After the date of closing, the Grantee shall have the right to assert a single claim and/or suit in an amount which shall not exceed * * * $10,130.76, plus interest, to resolve the dispute between the parties over payment of current and future front foot benefit assessments *124 of * * * [WSSC] for presently constructed water and sewer facilities, which right shall not merge with but shall survive the delivery of the deed from Grantor to Grantee at closing.
"4. Any final adjudication by a court of competent jurisdiction from which adjudication the time for appeal shall have expired, shall be conclusive and binding on the parties hereto with respect to the liability of the Grantor and Grantee for the payment of said * * * $10,130.76, plus interest, which is the entire amount in controversy, notwithstanding the fact that only paid and/or then current assessments of * * * [WSSC] may be the subject matter of said suit and adjudication, since it is the intention of the parties to avoid a multiplicity of suits in this matter.
* * *
"6. This agreement shall be binding upon and shall inure to the benefit of the parties hereto, their respective successors and assigns." (Emphasis added.)
The closing took place on 24 June 1966. On 19 July 1966, Zamoiski filed suit. The trial judge, Carter, J., on 13 October 1967, holding that "the removal of all charges for the existing utility benefits involved here is the obligation of * * * [Manor]," entered a judgment in favor of Zamoiski against Manor for $10,163.76, with interest from 16 June 1966 (the date of the amendment).
Manor insists that its obligation to deliver a title "clear of all liens" applies only to existing liens and not to "future potential liens." It argues that because the WSSC benefit charge, like county taxes, is collected annually, and, "for purposes of collection * * * [is] treated as County Taxes,"[1] it does not *125 become a lien until the year in which it is collectible. In support of its argument Manor relies upon the statute. (Quoted in n. 1.) Judge Carter, however, observed, in his opinion, that treating the charges as taxes to expedite their collection does not make them taxes, any more than a mule does not become a horse just because it "may be ridden like a horse." Manor further declares that "if the future charges are encumbrances, it is only because they are first liens," which seems to us to be another way of saying that unless an encumbrance is also a lien it cannot be an encumbrance. But there are many encumbrances, such as easements, that are not liens. As Judge Carter put it "a lien is always an encumbrance, but an encumbrance need not necessarily be a lien."
For a discussion of the significance of the words "lien," "lienor," "encumbrance" and "encumbrancer", in a context different from the case at bar, see Automobile Acceptance Corp. v. Universal C.I.T. Credit Corp., 216 Md. 344, 139 A.2d 683 (1958).
We discussed, at some length, the nature of the benefit charges levied by WSSC in Morris v. Ehlers, 211 Md. 23, 124 A.2d 776 (1956), where the principal question presented is somewhat akin to the one now under consideration. There the buyer contended the benefit charges constituted liens against the property for the full 40 year period. While we chose not to resolve that issue, the language of Chief Judge Brune, who spoke for the Court, is interesting:
"As one ground of defense the appellees rely upon the fact that the amount of the asserted assessment could not have been paid off by them in a lump sum at the time of their transfer of the property. They also rely, perhaps more heavily, upon testimony that a custom exists in Montgomery County under which only annual current instalments of front foot benefit *126 charges made by the Commission are adjusted to the date of transfer and under which no allowance is made for the unpaid portion of the original assessment.
"Each of the assessments here involved is stated to be payable over a period of forty years. The purpose of this is to conform more or less with the period for which bonds issued to finance the improvements are to run. The earliest of the charges here involved ran for forty years from January 1, 1948, the second from January 1, 1949, and the third from January 1, 1951.
"The testimony of an official of the Commission showed that the appellees could not have paid off the balance of these assessments at the time of the settlement. They could have done so within one year after the original determination or the date of actual imposition of each of the several amounts chargeable against this property (there being some doubt as to which), but on either basis the time had passed. The privilege of prepayment of the unpaid balance is allowed as to certain other classifications of property after the first year, but there is no such provision with regard to `Small Acreage' property. A reclassification of this particular tract to one of these other classifications would make it possible to pay off the entire amount, but that seems immaterial for present purposes. Cf. District Title Co. v. United States, 169 F.2d 308, 83 App. D.C. 335.
"If the aggregate benefit charges made by the Commission against the appellees' thirty-two acre tract constituted assessments, we are unable to see how the fact (if it be one) that, after the first year, they could not be paid off by way of anticipation of future instalments made them any the less assessments. It is true that under the practice of the Commission shown by the testimony, the sellers could not have paid these assessments at the time of transfer. There was nothing, however, to prevent their complying with the other alternative, which was to make an allowance for them.
*127 "The facts that no assessment of the 26.546 acres purchased by the appellant was ever made in his name and that he himself never paid any front foot benefit charges based thereon seem to us wholly immaterial insofar as the existence of an assessment against the land is concerned.
"Whether these charges constituted liens against the property for the full amount thereof from the dates when they became final under the statute, or whether they constituted liens only as and when annual charges were entered by the Commission's agents on the books of the County Treasurer, is a question which we are not called upon to decide in this case." Id. at 27-28. (Emphasis added.)
In the case at bar, it should be noted, the "benefit charge may be extinguished or redeemed, at any time, upon payment"[2] of a determinable amount which, the parties here have agreed, was, at the time, $10,130.76.
The decision in Morris v. Ehlers, supra, was based entirely on the language of the contract, the pertinent paragraph of which was as follows:
"`9. Taxes, general and special, are to be adjusted according to the certificate of taxes issued by the Treasurer of the County, except that assessments for improvements completed prior to the date hereof, whether assessments therefore [sic] has been levied or not, shall be paid by the Sellers or allowance made therefore [sic] at the time of transfer.'" Id. at 25. (Emphasis added.)
Chief Judge Brune's comment in this regard is also interesting:
"Our view with regard to the interpretation of the contract is reinforced by one other document which is included in the record. That is the proposed contract of March 15, 1954, which the appellant signed, *128 but which the appellees declined to accept. That proposed contract was on a printed form, from which we may infer that it is in rather general use. One paragraph contains a sentence which is virtually identical with the first sentence of Paragraph 9 of the executed contract. The proposed form contains a succeeding sentence which reads as follows: `If the property is serviced by the Washington Suburban Sanitary Commission, annual benefit charges of said Commission are to be adjusted to the date of transfer and assumed thereafter by purchaser.' There is no corresponding provision in the executed contract. The learned trial judge took its absence as an indication of fraud or of something very close to it. So far, however, as the record discloses, the appellees did not set up fraud as a defense, and they went through with the contract with full knowledge of the plaintiff's contention and counsel for the respective parties entered into a stipulation that $3,500 should be held out of the sale price of the property and retained by the title insurance company pending determination of litigation to settle the question, which the seller was to institute promptly in the Circuit Court for Montgomery County. This case was instituted pursuant to that stipulation. The stipulation was without prejudice to rights of either party. It is also true that both parties had the advice of their own counsel before executing the contract, which was in typewritten form. The contract itself bears evidence of having been carefully studied before being executed. Changes made on the first page were carefully initialed apparently by the sellers and by the purchaser's counsel, and the same is true of an entire clause on the second page, which was eliminated. The signatures of the sellers are witnessed by their counsel. We do not think that the record evidence sustains the trial judge's characterization of this change in the form of the contract. The fact that it was made does, however, point up a material difference between the contract as executed in June and as *129 proposed in March. If it had been finally adopted in the earlier form, it would have been in accord with the custom which the defendants' witnesses said prevailed in Montgomery County.
"We hold that under the terms of the contract the sellers are required to make an allowance for the unpaid front foot benefit assessment made by the Commission for improvements completed before the execution of the contract." Id. at 29-31. (Emphasis added.)
It ought to be noted that Manor has been developing its industrial park and selling lots therein since 1957. It is familiar with the work of WSSC and its front foot benefit charges. The property is described in the contract of sale by reference to a plat, dated 28 July 1965, which shows water and sewer pipes in place in the adjoining streets. The contract indicates the property is subject to an easement granted in 1941 to WSSC for water lines. There is also a reference to engineering datum of WSSC. On the other hand this purchase appears to have been Zamoiski's first venture into the area. Moreover we have little doubt that the same printed form mentioned by Judge Brune has been in general use in Prince George's County for some time and that it was in general use during the negotiations leading up to the contract of sale under consideration and, it should be observed, Robert K. Williams, Esq., whose practice consists primarily of real estate title work in Prince George's County, testified it was customary to adjust the benefit charges between buyer and seller to the date of closing "just like real estate taxes."
In these circumstances, it seems very odd indeed that Manor would have covenanted to deliver a title "clear of all liens and encumbrances," and, at the same time, limit the apportionment of public charges to "real property taxes for the year of transfer" if it intended, as it now claims, to pass on to Zamoiski the burden of paying the remainder of the WSSC benefit charge.
We see no more reason here than we did in Morris v. Ehlers, supra, to decide whether the $10,130.76 benefit charge is a lien because, in our judgment, it is an encumbrance even if it is not a lien. It has been said that the mere fact that property becomes *130 liable for the payment of a benefit charge for municipal improvements may constitute an encumbrance even before the amount thereof has been ascertained. 4 H. Tiffany, The Law of Real Property § 1003, n. 3 at 135 (3d ed. 1939). It has been said also that present liability to an eventual lien may be sufficient to establish an encumbrance. 20 Am.Jur.2d, Covenants § 87 (1965). Both parties have cited a number of cases[3] in support of their respective positions but we have not found them to be helpful either because of the dissimilarity of the factual situations or because of the tendency of the courts to equate or confuse liens with encumbrances.
That the benefit charge of WSSC is an encumbrance upon property served by its facilities seems to us to be a proposition which requires by way of proof nothing more than serious reflection upon the purpose for which WSSC was established, how it goes about accomplishing that purpose and the statutes authorizing and directing it to do what it does. Stated simply the business of WSSC is to construct (or acquire) water mains and sewers which the Legislature has "declared to be a benefit to all property abutting the same."[4] The funds required for the construction (or acquisition) are provided by the sale of bonds.[5] To raise the money to retire the bonds WSSC "is empowered and directed to fix and levy a benefit charge upon all abutting property."[6] (Emphasis added.) The benefit charge is to "be paid annually, beginning from the time of the levy thereof, by all properties * * *, for a period of years coextensive with the period of maturity of the bonds out of the proceeds of which such construction [or acquisition] was done."[7] (Emphasis added.)
A significant feature of the benefit charge, as earlier noted, is that it "may be extinguished or redeemed, at any time" and *131 upon such redemption or extinguishment WSSC is required to use the amount paid to "purchase and cancel one or more"[8] of the bonds. Also having significance is the requirement that "the benefit charge shall be paid and extinguished," in full, whenever property subject to it is acquired for public use by "the State, county or any municipal corporation, commission, board, or * * * [other agency]."[9]
Manor insists that the benefit charge is in reality a tax. As earlier noted, it points to the statute[10] requiring that, for purposes of collection, the benefit charge shall be treated as County Taxes. But there are important differences between real estate taxes and WSSC benefit charges. Taxes are levied annually; the benefit charge is levied but once. Taxes change as to amount depending on changes in the tax rate and fluctuations in the assessed value of the property; the annual instalments of the benefit charge remain constant. Taxes continue indefinitely; the annual instalments of the benefit charge cease when the bonds are retired. Taxes cannot be "redeemed or extinguished" by the payment of a determinable amount; the benefit charge can be so redeemed or extinguished. Taxes, except special taxes, become a part of the county's general fund; the benefit charge can be used only to amortize and service the bond issue. And however unlikely it may seem to us now, it is possible that new sources of revenue may, at some future time, result in the elimination of the tax on real estate; the benefit charge must continue inexorably to its predetermined expiration.
Manor makes much of the following provision:
"The extinguishment or redemption of any benefit charge shall be conditional until the last year of maturity of the bonds from the proceeds of which the construction was done, and if following redemption or extinguishment the use of the property changes to another class so that the property would be placed in a different class yielding a greater annual benefit charge than that utilized for computing the redemption *132 amount, the Commission may reclassify the property and re-impose a benefit charge for the remaining number of years, calculating the benefit charge, however, so as to give credit for the sum paid for extinguishment or redemption."[11]
It seems clear to us, however, that any change in use is a matter entirely within the control of the property owner and that the main purpose of the provision quoted above is to achieve fundamental fairness. Otherwise it would be possible for an owner against whose property there has been levied a smaller benefit charge to redeem or extinguish the charge and then change its use to one calling for a greater charge. We do not think this changes the nature of the benefit charge.
Cotting v. Commonwealth, 205 Mass. 523, 91 N.E. 900 (1910), (not cited in either brief) provides us with a set of facts much like the facts in the instant case. In January 1899 the Commonwealth agreed to sell to Cotting a parcel of land in South Boston. In November 1899, the city of Boston ordered the construction of a main sewer in a street abutting the parcel to be conveyed. In November 1901 the parcel was conveyed by the Commonwealth to Cotting. The deed contained a covenant that the land was free from encumbrances. In December 1902 the city levied an assessment for the construction of the sewer which Cotting was obliged to pay. Holding that Cotting was entitled to an adjudication against the Commonwealth for the stipulated amount, Chief Justice Knowlton, for the court, said:
"The next questions are whether the liability to assessment for a sewer, the construction of which had been ordered previously, is a breach of the covenant of freedom from incumbrances in a deed, and whether the failure to protect the grantee from an assessment afterwards made upon the land, to pay the cost of construction of such a sewer, is a breach of the covenant of warranty. It is plain under our decisions that, if the grantor had been an individual owner whose land was liable to assessment, such an assessment would *133 be an incumbrance, even though the construction of the sewer and the assessment for it were not until afterwards. Carr v. Dooley, 119 Mass. 294. See also Hutchins v. Moody, 30 Vt. 655; 34 Vt. 433; Peters v. Myers, 22 Wis. 602. We may assume that, under our decisions, no assessment could be enforced against the Commonwealth so long as it held the title. Corcoran v. Boston, 185 Mass. 325; 193 Mass. 586. Worcester County v. Worcester, 116 Mass. 193, 194. Boston v. Boston & Albany Railroad, 170 Mass. 95. But this would not invalidate an assessment made for construction completed after the title had passed to a private person. The condition when the plaintiffs took their deeds was that this land was subject to an assessment as soon as it came into the plaintiffs' hands, under an order for a sewer which had been passed previously. There was a liability which was sure to become absolute and enforceable against the land as soon as the work was completed and the expense ascertained. This was an incumbrance from which the plaintiffs were entitled to be protected under the covenant." Id. at 526-27. (Emphasis added.)
Manor devoted much of its brief and a good deal of its argument to another paragraph of the contract and how it ought to be interpreted. Zamoiski, in opposition, did likewise. In view of what we have said, however, further consideration is unnecessary. The judgment of the trial court will be affirmed.
Judgment affirmed.
Costs to be paid by the appellant.
NOTES
[1] "Said front foot benefit charge from and after January 1st, 1927, shall for all purposes of collection be treated as County Taxes, shall bear the same interest, the same penalties and advertise in the same manner as and with County Taxes, and all property subject to said front foot benefit charges shall be sold for the same at the same time and in the same manner as said properties are sold for County Taxes, and all of the law relating to the collection of County Taxes so far as the same is applicable shall relate to the collection of the front foot benefit charge. No property redeemed from a County Tax sale, and no property sold by the County Commissioners after a final tax sale shall be redeemed or sold except upon the payment of the front foot benefit charge due thereon." Prince George's County Code § 83-72 (c) (1963).
[2] Prince George's County Code, § 83-71 (f) (1963).
[3] Magruder v. Supplee, 316 U.S. 394 (1942); District Title Ins. Co. v. United States, 169 F.2d 308 (D.C. Cir.1948); Baker v. Smith & Gottlieb, Inc., 132 F.2d 18 (D.C. Cir.1942); Ahrens v. Broyhill, 117 A.2d 452 (D.C. Mun. App. 1955); Union Realty Co., Inc. v. Ahern, 93 A.2d 84 (D.C. Mun. App. 1952).
[4] Prince George's County Code § 83-71 (a) (1963).
[5] Id. § 83-63.
[6] Id. § 83-71 (a).
[7] Id. § 83-71 (f).
[8] Prince George's County Code § 83-71 (f).
[9] Id. § 83-73.
[10] Quoted in n. 1.
[11] Prince George's County Code § 83-71 (f).
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852 S.W.2d 312 (1993)
312 Ark. 600
Anthony Antonio HART, Appellant,
v.
STATE of Arkansas, Appellee.
No. CR 92-1414.
Supreme Court of Arkansas.
April 26, 1993.
*313 William R. Simpson, Public Defender, Thomas B. Devine, Deputy Public Defender, Little Rock, for appellant.
Gil Dudley, Asst. Att'y. Gen., Little Rock, for appellee.
DUDLEY, Justice.
Appellant was found guilty of capital murder and sentenced to life in prison without parole. He appeals and, in his only point of appeal, argues that the trial court erred in refusing to suppress his confession. We affirm the ruling of the trial court on the point. Pursuant to Rule 11(f) of the Rules of the Supreme Court and Court of Appeals, under which the Attorney General must "brief ... any other points that appear to ... involve prejudicial error," the State additionally questions whether the trial court's ruling admitting the confession into evidence violated A.R.Cr.P. Rules 2.2 and 2.3. We hold the ruling of the trial court did not constitute reversible error. Since appellant was sentenced to life in prison without parole, an *314 examination has been made of all objections decided adversely to appellant pursuant to Rule 11(f), and, pursuant to that review, there was no prejudicial error in the trial. Accordingly, we affirm the judgment of conviction.
Since the sufficiency of the evidence is not questioned, we set out only the evidence that is necessary to understand the issues on appeal. On Sunday, April 7, 1991, at 11 a.m., Mary Croom's corpse was discovered at her home on East Sixth Street in Little Rock. It was obvious that she had been murdered because the corpse had forty stab wounds, and a large butcher knife with a white handle remained impaled in the corpse's torso. The police immediately began to check the neighborhood for information. The victim's sister, Bertha Jackson, thought a television set and some meat were missing from the victim's home. O.D. Kirkland stated that on the previous Tuesday he took the victim shopping, and she purchased a ham. When they returned to his house from the grocery store, the victim asked to borrow his hacksaw and white-handled butcher knife so that she could go to her home and cut up the ham. Appellant, who was standing nearby, offered to assist her in cutting up the ham. The two left together to go to the victim's home with the hacksaw and white-handled butcher knife to cut up the ham. O.D. Kirkland also told the detective that two days later, on Thursday, appellant came back by his house and sold him some meat and offered to sell him a television set.
The two detectives investigating the murder were told that appellant could be found at his grandmother's house. They went there, and while they were there, appellant phoned his grandmother. One of the detectives spoke to him and told him that they wanted to ask him some questions. Appellant responded that he was at work, but they could come to his place of employment and talk to him. The detectives drove to appellant's place of employment, found him, and asked if he would come to the police station to answer some questions. Appellant was not placed under arrest at the time, but neither of the detectives told appellant that he did not have to go with them. They got to the police station at about 3:00 or 3:30 in the afternoon, which was only four hours after the corpse had been found.
At the police station appellant was given a Miranda warning. He said he understood his rights and he waived them. He did not appear to the officers to be intoxicated, and they testified that at the time he appeared to be aware of his rights and the consequences of his decision to abandon them. While a subsequent test of his intelligence quotient measured 80, or comparatively low, he had completed high school. He was twenty-seven years of age, could read and write, and was familiar with the process since he had four prior convictions. He signed a waiver-of-rights form at 3:40 p.m. He told the detectives that they could find some evidence at 1512 Hangar Street in Little Rock. The detectives left the station to go to the address, but were never able to find such an address. While they were gone they left appellant unrestrained in an unlocked interview room. They did not tell appellant he was free to leave. The detectives returned to the station in about an hour, and appellant was still waiting in the interview room. About an hour later, at 5:45, appellant was reminded of his rights, but they were not repeated verbatim, and was asked if he understood his rights. He responded that he did and that he had signed the waiver form. Appellant then confessed to the murder and said he committed it so that he might take something of value from the victim's house and sell it in order to buy drugs. The confession was made within seven hours of the discovery of the corpse.
Appellant argues that the trial court erred in refusing to suppress the confession because the police did not "re-Mirandize" him at the time the confession was taken. The argument is without merit for two reasons. First, factually, while a new rights form and waiver-of-rights form were not executed at 5:45, the time of the confession, appellant was reminded of those rights and asked if he understood those rights. He responded that he did. Second, legally, there is no requirement *315 that Miranda warnings be repeated each time a suspect is questioned. Wainwright v. State, 302 Ark. 371, 790 S.W.2d 420, cert. denied, ___ U.S. ___, 111 S.Ct. 1123, 113 L.Ed.2d 231 (1990).
Appellant also argues that his confession should have been suppressed because it was not knowingly and intelligently given since a test of his intelligence quotient revealed a low intellect. In determining whether a suspect made a knowing and intelligent abandonment of his Fifth Amendment privilege and Sixth Amendment right to counsel, a trial court must look at the totality of the circumstances to determine whether the waiver was made with a full awareness of both the nature of the rights being abandoned and the consequences of the decision to abandon them. This inquiry necessarily includes an evaluation of the defendant's age, experience, education, background, intelligence, whether he has the capacity to understand the warnings given him in light of the nature of his Fifth, Sixth, and Fourteenth Amendment rights, and to understand the consequences of waiving those rights. Mauppin v. State, 309 Ark. 235, 831 S.W.2d 104 (1992). A low score on an intelligence quotient test does not necessarily mean the suspect is without the requisite level of comprehension to knowingly and intelligently waive his rights. Lowe v. State, 309 Ark. 463, 830 S.W.2d 864 (1992). The trial court heard the testimony in this case and considered appellant's age, his ability to read and write, his educational background, his comprehension level and, from that testimony, concluded that the waiver was made with a full awareness of both the nature of the rights being abandoned and the consequences of the decision to abandon those rights. On appeal, we reverse only if that finding was clearly erroneous. Id. The trial court's finding was not clearly erroneous.
Appellant makes an additional argument about the voluntariness of his confession. He argues that, because he was held in an interrogation room for two hours and was not told he could leave, his statement was not voluntarily given. He does not contend that any force or threats were used, or that he was incarcerated during this two-hour period, or that the police acted in any threatening manner. Rather, he argues that the police did not clearly inform him that he was free to leave the interrogation room while they were gone, and, therefore, the two-hour wait rendered the confession involuntary. This court has held that the fact that a defendant was not told that he had no legal obligation to accompany detectives to the police station does not render an interrogation coercive. See Pace v. State, 265 Ark. 712, 580 S.W.2d 689 (1979). By analogy, the fact that appellant was left alone in an unlocked interrogation room for two hours does not, of itself, render a waiver of rights involuntary. Under all of the circumstances, we cannot say that the trial court erred in refusing to suppress the confession. In sum, there is no merit in appellant's point of appeal.
The Attorney General, pursuant to his duties under Ark.Sup.Ct.R. 11(f), sets out a potential error. It involves a violation of A.R.Cr.P. Rules 2.2 and 2.3.
Rule 2.2 states that a law enforcement officer may request any person to cooperate with an investigation by responding to questions, appearing at a police station, or complying with any other reasonable request. Rule 2.3 provides that when a law enforcement officer requests someone to accompany him to the police station, he shall make it clear that "there is no legal obligation to comply with such a request." The detectives did not tell appellant that he did have to go with them to the police station. Since the detectives did not comply with the rule, there was a seizure of the appellant and a violation of his rights under the Fourth Amendment unless the detectives had probable cause to arrest him. Burks v. State, 293 Ark. 374, 738 S.W.2d 399 (1987). Probable cause exists where reasonably trustworthy information of facts and circumstances within the officers' knowledge would lead a person of reasonable caution to believe that a felony was committed by the person detained. Id., 293 Ark. at 377, 738 S.W.2d at 401.
*316 The facts known by the detectives at the time appellant went to the police station were such as would lead a person of reasonable caution to believe that the murder had been committed by the appellant. They had reasonably trustworthy information that the appellant and the victim left O.D. Kirkland's house and went to the victim's home and that they took with them a large, white-handled butcher knife and a ham. They knew that the victim's corpse was discovered at her home with a large, while-handled butcher knife impaled in it. They had reasonably trustworthy information that the meat and a television set were missing from the victim's home. They also had reasonably trustworthy information that appellant sold some meat and attempted to sell a television set. This information was such as would lead a person of reasonable caution to believe that the murder had been committed by appellant. Consequently, there was probable cause to arrest appellant, and the violation of A.R.Cr.P. Rule 2.3 becomes immaterial.
Affirmed.
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203 B.R. 681 (1997)
In re FARLEY, INC., Debtor.
Bankruptcy No. 91 B 15610.
United States Bankruptcy Court, N.D. Illinois, Eastern Division.
January 17, 1997.
*682 Mark K. Thomas and Amy A. Hijjawi, Katten Muchin & Zavis, Chicago, IL, for Debtor.
Benjamin J. Randall and Rusty A. Payton, Katz Randall & Weinberg, Chicago, IL, for Ohio Bureau of Workers' Compensation.
David K. Henriksen, Farley Industries, Inc., Chicago, IL.
MEMORANDUM OPINION ON DEBTOR'S MOTION FOR SUMMARY JUDGMENT ON OHIO BUREAU WORKERS' COMPENSATION SECOND AMENDED CLAIM NO. 509
JACK B. SCHMETTERER, Bankruptcy Judge.
This proceeding was started on July 24, 1991, by filing of an involuntary petition against Farley, Inc. ("Farley" or "Debtor") under Chapter 7 of the Bankruptcy Code. Farley consented to entry of an order for relief, and exercised its right under 11 U.S.C. § 706(a) to convert the proceeding to one under Chapter 11 of the Bankruptcy Code. 11 U.S.C. § 1101, et seq.
*683 Its Plan has since been confirmed, pursuant to which jurisdiction was retained to resolve all disputes over claims dealt with under the Plan.
On December 9, 1991, the Ohio Bureau of Workers' Compensation ("Ohio" or the "State") filed its proof of claim, later amended on September 18, 1995, and September 26, 1995 ("Claim 509"), seeking reimbursement pursuant to Farley's asserted statutory obligation under Ohio law for workers' compensation payments. Farley filed an answer and objection to this claim both denying liability to the State for reimbursement and objecting that the original Claim 509 was not timely filed. On August 22, 1996, the State moved for extension of time to file its proof of claim, and this motion was allowed on October 3, 1996, for reasons stated from the bench. Pursuant to that ruling, Farley's objection as to untimeliness of the original filing has been overruled. Merits of the claim and Motion for Summary Judgment thereon remain to be decided.
Farley moved for summary judgment on its objection to Claim 509 as amended and supported that motion with a memorandum and also a statement of undisputed facts under Local Bankruptcy Rule 402.M. The State filed a memorandum of law, its reply to Farley's 402.M Statement, and a statement of additional facts asserted to be undisputed under Rule 402.N(3). Farley filed a response to Ohio's additional facts as well as a reply memorandum.
Pursuant to Local Bankruptcy Rules 402.M and 402.N and from the filings of the parties, certain facts found to be undisputed are set forth below. Based thereon and for reasons stated herein, by separate judgment Debtor's motion for summary judgment will be allowed and judgment entered disallowing Claim 509.
Summary Judgment Procedure
The bar has had many years of experience with our Local Bankruptcy Rule 402.M and N governing summary judgment procedure (which is almost an exact copy of the even older District Court Rule for such procedure). Several opinions in the District over the years have cautioned counsel about the importance of precisely following the those Rules. However, as illustrated here, it was necessary to parse through the asserted facts to see which were supported by required procedures and papers, and those that were not, in order to separate facts that may properly be deemed undisputed for purposes of this motion from those asserted facts which may not be deemed undisputed.
Local Rule 402.M of the Bankruptcy Rules adopted for this District requires the party moving for summary judgment to file, among other things, a detailed statement ("402.M statement") of material facts as to which the movant contends there is no genuine issue. Local Bankr.R. 402.M.[1] Farley filed a 402.M statement that substantially complies with requirements of this Rule. It contains numbered paragraphs which set out assertedly uncontested facts, and most of the paragraphs refer to supporting pleadings and other materials. However, in several instances, Farley includes legal conclusions in its 402.M statement. Fed.R.Civ.P. 56 (Fed. R. Bankr.P. 7056) and Local Rule 402 contemplate statements of material fact. Statements that embody conclusions will not be treated as undisputed facts. See Maksym v. Loesch, 937 F.2d 1237, 1243 (7th Cir.1991); Davis v. City of Chicago, 841 F.2d 186, 189 (7th Cir.1988).
The party opposing a summary judgment motion is required by Local Rule 402.N to file a response ("402.N statement") to the *684 movant's 402.M statement, paragraph by paragraph, and to set forth any material facts which would require denial of summary judgment, specifically referring to the record for support of each denial of fact. Local Bankr.R. 402.N.[2] State's 402.N statement complies with the procedural rule. The State also filed a statement of additional facts pursuant to Rule 402.N(3)(b). However, in several instances that statement failed to include specific references to "affidavits, parts of the record, and other supporting materials relied upon." Local Bankr.R. 402.N. Farley disputed many of these paragraphs. Compliance with the Local Rules is not a mere technicality. The Court relies greatly upon the information presented in these statements in separating the facts about which there is a genuine dispute from those about which there is none. American Ins. Co. v. Meyer Steel Drum, Inc., 1990 WL 92882 at *7 (N.D.Ill. June 27, 1990). This Court "should not be required to guess whether the facts asserted by the opposing part[y] are in direct conflict or scour the record in search of a party's evidence." Fotsch v. Eli Lilly and Co., 1995 WL 238677 at *1, n. 1 (N.D.Ill. Apr.20, 1995). Therefore, unsupported assertions in the State's statement of additional facts, to the extent disputed by Farley, are not deemed to be undisputed facts.
Facts as to Which There is no Material Dispute
Pursuant to the foregoing, the following facts are found not to be in dispute:
1. On July 24, 1991 ("Petition Date"), an involuntary bankruptcy petition was commenced against Farley. On September 24, 1991, Farley consented to an order for relief and converted its case to a proceeding under Chapter 11. 402.M ¶ 1.
2. On September 24, 1991, an order was entered herein directing, inter alia, that all claims must be filed on or before November 15, 1991 (the "Bar Date"), and declaring that all creditors who failed to file claims on or before the Bar Date would not receive a distribution from Farley's estate. 402.M¶ 2.
3. On October 15, 1991, Farley sent notice of the Bar Date to the State. 402.M ¶ 3.
4. The State filed its formal proof of claim no. 509 on December 9, 1991. 402.M ¶ 4; 402.N ¶ 4. (By order entered October 3, 1996, and for reasons stated at the time, the State was granted an extension of time to file its claim. That order effectively made its filing timely.)
5. On August 31, 1992, Debtor filed an omnibus objection to claims on the grounds that such claims exceeded the amount set forth in Farley's records as due and owing. Farley reserved the right to file supplemental papers in support of its objections prior to any scheduled hearing thereon. Included in the omnibus objection was an objection to Claim 509. Farley Reply Memorandum, Ex D, attachment at 22.
6. On September 18, 1995, the State filed its amended Claim 509. 402.M ¶ 6.
7. On September 26, 1995, the State filed its second amended Claim 509 against which the pending motion for summary judgment lies. 402.M ¶ 7.
8. Prior to the Petition Date, Farley operated and had persons employed in the State of Ohio at its Doehler-Jarvis Division. In July 1990, Farley sold its Doehler-Jarvis Division and thereafter did not employ workers in that State. 402.M ¶ 8.
9. Claim 509 seeks reimbursement from Farley for workers' compensation claims of former Farley employees whose claims *685 arose as a result of injuries that occurred to them on or prior to July 25, 1990 (prior, that is, to when Farley sold its Ohio Division). 402.M ¶ 9.
10. In Claim 509, the State seeks reimbursement for (a) payments the State alleges it actually made to former Farley employees on account of workers' compensations claims already liquidated; (b) payments that the State anticipates it may make in the future to former Farley employees on account of liquidated workers' compensation claims yet to be liquidated; and (c) payments the State anticipates that it may make in the future to former Farley employees on account of anticipated workers' compensation claims that have not as yet been asserted or filed, let alone liquidated. 402.M ¶ 10.
11. Under the second amended Claim 509, the aggregate amount claimed is $9,335,119.03. Approximately $3,500,000 represents amounts actually paid by the State to former Farley employees and about $5,800,000 of the Claim represents the State's estimation of amounts it may have to pay to former Farley employees in the future. 402.M ¶ 11. Since filing second amended Claim 509, the State has paid additional sums to former Farley employees. 402.N ¶ 11.
12. Former Farley employees have not filed claims against Farley's bankruptcy estate nor have they filed lawsuits against Farley. 402.M ¶ 12.
13. At all times mentioned here, State law required entities having more than one employee to participate in and comply with the State's workers' compensation program. The State's workers' compensation program has been statutorily codified as the Ohio Workers' Compensation Act (the "Act"). 402.M ¶ 13.
14. Pursuant to the Act, Farley applied for, and the State approved, Farley's status as a self-insuring employer. Farley was an approved self-insuring employer from October 1, 1982 through July 25, 1990, when it sold the Ohio Division. 402.M ¶ 14. Farley's last approved self-insuring employer renewal period covered the period from October 1, 1989 to October 1, 1990. 402.N ¶ 1. As a self-insuring employer, Farley posted the surety bond required pursuant to the Act.[3]
15. On or about September 4, 1990, Farley informed the State that it had sold the Doehler-Jarvis Division, its only Ohio operation, and requested that its self-insurance privileges be rescinded as of the sale date, July 25, 1990. 402.N ¶ 2.
16. Farley, through R.E. Harrington, its claims administrator, managed existing claims through May 1991. 402.N Response ¶ 5; 402.N ¶ 3.
17. On or about April 2, 1991, Farley, through R.E. Harrington, notified the State that, as of May 1, 1991, Farley would no longer have funds to continue paying compensation claims. 402.N ¶ 5; 402.N Ex. 2. Farley also requested that the State assume responsibility for administration of the workers' compensation claims of Farley's former employees. 402.N ¶ 6; 402.N Ex. 2.
18. On May 15, 1991, the Self-Insured Review Panel of the Ohio Bureau of Workers' Compensation formally revoked Farley's self-insurance privilege. 402.N ¶ 7; 402.N Ex. 3.
19. On February 24, 1994, the State sent a letter to the Office of the Attorney General certifying a claim against Farley, Inc. in the amount of $12 million, which represented the estimated computation of future value workers' compensation claims. 402.N ¶ 9; 402.N Ex. 4. This letter did not state whether the claim was certified for the commencement of a civil action, nor did it mention Ohio Rev.Code Ann. § 4123.75. 402.N Response ¶ 9.
*686 Disputed Facts
There are no material disputed or contested fact issues preventing ruling on Plaintiffs' motion for summary judgment.
JURISDICTION
Subject matter jurisdiction lies under 28 U.S.C. § 1334. This matter is before the Court pursuant to 28 U.S.C. § 157 and Local General Rule 2.33(A) of the United States District Court for the Northern District of Illinois. Venue lies properly under 28 U.S.C. § 1409. This matter constitutes a core proceeding under 28 U.S.C. § 157(b)(2)(B) (allowance and disallowance of claims).
SUMMARY JUDGMENT STANDARDS
Summary judgment motions are governed by Fed.R.Civ.P. 56 made applicable to bankruptcy proceedings by Fed. R. Bankr.P. 7056. Summary judgment is granted to avoid unnecessary trials when there are no genuine issues of material fact in dispute. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 585-86, 106 S.Ct. 1348, 1355, 89 L.Ed.2d 538 (1986). The moving party in a motion for summary judgment has the initial burden of demonstrating that there are no genuine issues of material fact and that judgment in its favor should be granted as a matter of law. Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 2552-53, 91 L.Ed.2d 265 (1986). "The party opposing the motion may not rest upon mere allegations or denials in its pleadings. Rather, its response must set forth in required filings specific facts showing that there is a genuine issue for trial." Id. at 324, 106 S.Ct. at 2553; Anderson, 477 U.S. at 248, 106 S.Ct. at 2510; Matsushita, 475 U.S. at 587, 106 S.Ct. at 1356. The court should draw all inferences in the light most favorable to the non-moving party. Anderson, 477 U.S. at 255, 106 S.Ct. at 2513-14; Matsushita, 475 U.S. at 586, 106 S.Ct. at 1355-56. Still, a dispute of a material fact will prevent summary judgment only if the disputed fact is outcome determinative under applicable law. Anderson, 477 U.S. at 248, 106 S.Ct. at 2510.
THE OHIO WORKERS' COMPENSATION ACT
At all times mentioned until Farley left Ohio, the Ohio Workers' Compensation Act ("Act") contained the following provisions:
Section 4123.35 of the Act provided, in pertinent part:
(B) . . . that such employers and publicly owned utilities who will abide by the rules of the commission and who may be of sufficient financial ability to render certain the payment of compensation to injured employees or the dependents of killed employees . . . and who do not desire to insure the payment thereof or indemnify themselves against loss sustained by the direct payment thereof, may, upon a finding of such facts by the commission, be granted the privilege to pay individually such compensation . . . directly to such injured employees or the dependents of such killed employees.
. . . . .
(C) The commission shall require a surety bond from employers and publicly owned utilities who are granted the privilege to pay compensation directly, issued pursuant to section 4123.351 [4123.35.1] of the Revised Code, that is sufficient to compel, or secure to injured employees, or to the dependents of employees as may be killed, the payment of such compensation and expenses. . . .
Section 4123.351 of the Act provided, in pertinent part:
(A) Every employer and publicly owned utility who is granted the privilege of paying compensation directly shall obtain from the industrial commission a surety bond issued pursuant to this section. The bond shall provide for payment from the self-insuring employers' surety bond fund to the commission of any amounts paid by the commission in compensation or benefits to employees of the employer in order to cover any default in payment by the employer. The bond issued to each employer shall be for a face amount sufficient to cover *687 the estimated potential liability of that employer. (Emphasis added.)
(B) The commission shall operate a surety bond program for self-insuring employers. The program shall make available to employers and publicly owned utilities who are granted the privilege of paying compensation directly surety bonds at rates which are competitive with rates offered by companies mentioned in section 3929.10 of the Revised Code . . . The commission's program shall in all practical respects function as a surety bond company. . . . (Emphasis added.)
(C) If a self-insuring employer defaults, the commission shall recover payments of compensation or benefits from the self-insuring employer's surety bond. Payment from the bond relieves the employer of any liability for damages at common law or by statute that arises out of the injury or occupational disease that forms the basis of the workers' compensation claim to the extent of the payment. (Emphasis added.)
(D)(1) There is hereby established a self-insuring employers' surety bond fund, which shall be in the custody of the treasurer of state and which shall be separate from the other funds established and administered pursuant to this chapter. The fund shall consist of contributions and other payments thereto by self-insuring employers who purchase a bond to secure the payment of compensation and benefits required by section 4123.35 of the Revised Code. Disbursements from the fund shall be made by the industrial commission pursuant to this section. (Emphasis added.)
See Ohio Response, ¶¶ 16, 18.
The Act was amended in 1993. The 1993 amendments to § 4123.351 of the Act renamed the Surety Fund the "Self Insuring Employers' Guaranty Fund," and the 1993 amendments added § 4123.351(G) to the Act, which provided as follows:
(G) The administrator, on behalf of the self-insuring employers' guaranty fund, has the rights of reimbursement and subrogation and shall collect from a defaulting self-insuring employer or other liable person all amounts he has paid or reasonably expects to pay from the fund on account of the defaulting self-insuring employer.
See Ohio Response, ¶ 20.
The Claim originally filed by the State was "premised" upon § 4123.351(G), which section did not come into existence until 1993, and sought reimbursement from payments made to former Farley employees from the Surety Fund.[4] The State was seeking reimbursement for payments made from the Guaranty Fund, which fund was formerly known as the Surety Fund, and was then seeking payments from the "surplus" fund. However, the State's briefings on the pending motion now contend that the claim is based upon § 4123.75 of the Act, which provides in pertinent part that:
Any employee whose employer has failed to comply with Section 4123.35 . . . may file his application with the industrial commission or the bureau of workers' compensation . . . Payment of [such] claim shall be made promptly from the statutory surplus fund . . . The administrator shall institute proceedings to recovery from the employer any monies paid from the surplus fund and to secure the employer's payment of the award.
(Emphasis added.)
The State has not demonstrated on this record that it made payments from the "surplus" fund; rather the State admits that it made payments to Farley's former Ohio employees from the Surety Fund (n/k/a the Guaranty Fund).
DISCUSSION
Under the Ohio workers' compensation system, an employer may either pay workers' compensation premiums to the state fund or may self-insure under the Ohio Workers' Compensation Act ("Act"). In re Suburban Motor Freight, Inc., 36 F.3d 484, 486 (6th Cir.1994) (citing Ohio Rev.Code Ann. *688 §§ 4123.35(A), (B)). The Ohio workers' compensation system was amended in 1993, years after Debtor sold its Ohio Division. Prior to the 1993 amendments, the statute provided that an employer that opted for self-insurance was required to post a bond sufficient to secure payment of employee benefits. Id. (citing Ohio Rev.Code Ann. § 4123.35(C)). The purpose of the bond was to cover any default in payment by the employer. Ohio Rev.Code Ann. § 4123.351(A). In addition, the State acted as a surety bond company whereby it provided surety bonds to employers who did not or could not otherwise obtain them. Ohio Rev.Code Ann. § 4123.351(B); Ohio's opposition memorandum at 3.
In situations where an employer failed to comply with the workers' compensation statutes, the employee had the option of filing an application for compensation with the State. Ohio Rev.Code Ann. § 4123.75. Such compensation was and is paid out of the state surplus fund. Id.; Suburban Motor Freight, 36 F.3d at 486. If such payment is required of the State because of employer non-compliance with the Compensation Act, then ". . . [i]f a claimant secures payment from the surplus fund, the [Ohio] Bureau of Workers' Compensation turns to the noncompliant employer for reimbursement of the claims payments." Id. (citing Ohio Rev.Code Ann. § 4123.75). Ohio now claims that its right to reimbursement arises under § 4123.75 of the Ohio Revised Code.[5]
Pursuant to Fed. R. Bankr.P. 3001(f), a validly filed proof of claim constitutes prima facie evidence of the claim's validity. The objector has the initial burden to produce some evidence to overcome this rebuttable presumption. Matter of Missionary Baptist Foundation of America, Inc., 818 F.2d 1135, 1143 (5th Cir.1987); In re Stoecker, 143 B.R. 879, 883 (N.D.Ill.1992), aff'd in part, vacated in part, 5 F.3d 1022 (7th Cir.), reh'g denied (1993). The burden then shifts back to the claimant to produce evidence meeting the objections and establishing the claim. In re Chapman, 132 B.R. 132, 143 (Bankr.N.D.Ill.1991). Although the burden shifts during the claims objection proceeding, the ultimate burden is always on the claimant to prove the entitlement. In re Holm, 931 F.2d 620, 623 (9th Cir.1991); In re Chapman, 132 B.R. at 143.
As stated, the State filed its proof of claim on December 9, 1991, which claim as presently amended argues entitlement under Ohio Rev.Code Ann. § 4123.75. Farley argues that this section is inapplicable and that, even if applicable, the State has not met its burden of proof with respect to required elements under § 4123.75 to sustain the claim.
Section 4123.75, which was unchanged in any way material here by the 1993 amendments, provides:
Any employee whose employer has failed to comply with section 4123.35 of the Revised Code, who has been injured or has suffered an occupational disease in the course of his employment, which was not purposely self-inflicted, or his dependents in case death has ensued, may file his application with the industrial commission or the bureau of workers' compensation for compensation and the administrator of workers' compensation shall determine the application for compensation in like manner as in other claims and shall make an award to the claimant as he would be entitled to receive if the employer had complied with section 4123.35 of the Revised Code. Payment of the claim shall be made promptly from the statutory surplus fund . . . The administrator shall institute proceedings to recover from the employer any moneys paid from the surplus fund and to secure the employer's payment of the award. The employer shall pay the award in the manner and amount fixed thereby or shall furnish to the bureau a bond, in an amount and with sureties as the bureau requires, to pay the employee the award in the manner and amount fixed thereby. *689 Ohio Rev.Code Ann. § 4123.75 (emphasis added). Thus, the first relevant question is whether Farley failed to comply with section 4123.35 of the Revised Code so as to trigger possible liability under § 4023.75. Section 4123.35, also substantially unchanged as a result of the 1993 amendments, provides that an employer who elects and has been granted the privilege of self-insurance must provide a surety bond sufficient to compel or secure compensation to injured employees. In addition, an employer who is no longer self-insuring or operating in Ohio, is required to continue to pay certain assessments for administrative costs and for the surplus fund. Ohio Rev.Code. Ann. 4123.35.
Farley has established that it was a self-insuring employer until late July 1990, when it sold its only Ohio operation and later requested that its self-insurance privileges be rescinded. No dispute of fact has been raised suggesting that Debtor failed to comply with § 4123.35. Farley was granted self-insurance status and posted a bond in compliance with the requirements thereof.[6] The State has not established that Farley failed to comply with § 4123.35. In fact, it did not allege that Farley was a non-complying employer as that term is used in § 4123.75.
Moreover, Ohio has not established that employee applications for compensation were made in compliance with § 4123.75,[7] nor has Ohio established whether payment of such claims was made from the statutory surplus fund.[8] The State, as the claimant, had the final burden as to the validity of its claim; it failed to meet its burden.
The State's claim is actually premised on rights granted to the State in 1993 by the new provision, § 4123.351(G), rights not at all the same as those provided in the older (and here applicable) § 4123.75. There is no basis in the statute to read the 1993 amendment as restating an old or existing right of recovery by the State as Ohio has argued. Under the older provision, the State has not demonstrated a recovery right against an employer who posted the requisite bond, and the State, prior to the 1993 annulment, was only given rights against the bond. Act, § 4123.351(G). That is the situation here.
Claims of the former Farley employees arose prior to July 25, 1990. See Ohio Response, ¶ 6. At all times prior to July 25, 1990, Farley was in compliance with the coverage requirements of § 4123.35 applicable to self-insuring employers. The State does not allege or cite any facts establishing that Farley failed to comply with § 4123.35 prior to July 25, 1990. In fact, the exhibits attached to Ohio's Response establish that Farley was in compliance as a self-insuring employer at least through April 30, 1991. See Ohio Response, Exs. 2 and 3. Exhibit 3 to the Ohio Response, an order dated May 15, 1991, provides that Farley "has not demonstrated the . . . ability to continue to exercise the privilege of self-insurance." Accordingly, Farley's self-insurance privileges were first revoked in May 1991 after all the underlying claims of former Farley employees arose. Similarly, Ohio Response Exhibit 2, a letter dated April 2, 1991, indicated that: "Please note that surety has been on file since the employer was first granted self-insurance privileges."
*690 Finally, Farley paid the State's claim number 508, a claim based on Farley's "workers' compensation self-insured assessments," which assessments arose prior to the revocation of Farley's self-insuring status. See Response of Ohio to Debtor's Amended Objection to Claim No. 508, ¶¶ 1, 8, Exhibit C hereto. These assessments constituted Farley's "contributions" to the Surety Fund referenced in § 4123.351(D)(1).
The State is not entitled to the remedy set forth in § 4123.75 when dealing with a self-insuring employer who complies by providing a surety bond, because § 4123.351(C) of the Act provided that: "If a self-insuring employer defaults, the Commission shall recover payments of compensation or benefits from the self-insuring employer's surety bond." The amount of that bond was to be sufficient to cover the full estimated liability of the employer, Act § 4123.351(A), and since Farley's bond was accepted by the State, the amount of it was accepted at the time as sufficient.
Prior to 1993, the State was not granted the right to pursue the self-insuring employers further than the surety bond, and the self-insuring employer's only obligation otherwise was its required payments to the Surety Fund. Contrary to the State's unsupported argument that § 4123.75 provides a historical right to pursue a self-insured employer, the Bureau of Workers' Compensation first amended its rules in 1993 after being granted the explicit reimbursement rights in § 4123.351(G) to provide:
OAC XXXX-XX-X(G). Upon default of the self-insuring employer, it shall be the responsibility of the administrator of the Bureau of Workers' Compensation to represent the interests of the State Insurance Fund and the self-insuring guaranty fund. The administrator, on behalf of the self-insuring employer's guaranty fund, has the rights of reimbursement and the subrogation and shall collect from a defaulting self-insuring employer or other liable person all amounts the Bureau has paid or reasonably expects to pay from the guaranty fund on account of the defaulting self-insuring employer.
The State contends that the Legislature's 1993 explicit provision of a right of reimbursement and subrogation in § 4123.351(G) was intended to be a "mere recitation or restatement" of § 4123.75. When determining legislative intent under Ohio law, "the court's duty is to give effect to statutory language, not to delete words used or insert words not used." Bernardini v. Conneaut Area City School District Board of Education, (1979), 58 Ohio St.2d 1, 387 N.E.2d 1222. The State's position here would require the Court to insert § 4123.351(G) into the Act in 1990, three years before it passed the Legislature, or to change the words used in § 4123.75. Words were inserted into § 4123.351 in 1993 to give the State an explicit right of reimbursement on behalf of the Surety Fund. This provision was a new right granted to the State in the Act.
The plain meaning of the words used by the Ohio Legislature must be followed. United States v. Ron Pair Enterprises, Inc., 489 U.S. 235, 109 S.Ct. 1026, 103 L.Ed.2d 290 (1989). Moreover, specific statutory provisions control over general provisions. See Matter of Nobleman, 968 F.2d 483, 488 (5th Cir.1992), aff'd, 508 U.S. 324, 113 S.Ct. 2106, 124 L.Ed.2d 228 (1993) ("General language of a statute does not prevail over matters specifically dealt with in another part of the same enactment"); In re Pacific Far East Line, Inc., 644 F.2d 1290, 1293 (9th Cir.1981). "When there is a potential for conflict, specific provisions should prevail over the more general." In re Nadler, 122 B.R. 162, 166 (Bankr.D.Mass.1990) (citing Jett v. Dallas Independent School District, 491 U.S. 701, 109 S.Ct. 2702, 105 L.Ed.2d 598 (1989)).
Here § 4123.351(A) and (C) plainly, clearly, and specifically provide rights and remedies in the event that the State makes payment on behalf of a self-insured employer who, arguendo, had defaulted in some way. If a self-insuring employer defaults, the State shall recover payments from the self-insuring employer's surety bond (§ 4123.351(C)); the surety bond shall provide for payment from the Surety Fund (§ 4123.351(A)); and the Surety Fund is separate from the other funds established and administered under the Act, and disbursements from the Surety *691 Fund are only made pursuant to § 4123.351 (§ 4123.351(D)(1)). All the specific provisions of the Act reference payments from a surety bond and from the Surety Fund.
As opposed to the specific provisions of § 4123.351, the State relies on the general provisions of § 4123.75 (having now abandoned § 4123.351(G) adopted in 1993). The general provision, however, only authorizes the State to "institute proceedings to recover from the employer any monies paid from the surplus fund and to secure the employer's payment of the award." The plain meaning of the words used in § 4123.75 establishes that the State cannot pursue Farley for payments made from the Surety Fund, a fund separate from the "surplus" fund. The State does not claim that it made payments to former Farley employees from the "surplus fund" referenced in § 4123.75; rather, the State admits that payments were made from the Surety Fund n/k/a the Guaranty Fund. See Second Amended Proof of Claim and Ohio Response filed Sept. 18, 1995. Even if § 4123.75 applied to Farley, and it does not, the State has not met the predicate of § 4123.75. This is why the State originally "premised" the Claim on § 4123.351(G) it sought to recover payments from the Surety Fund, not payments made from the surplus fund. Its belated reliance on § 4123.75 is of no avail because Farley posted the requisite bond.
CONCLUSION
Accordingly, by separate order, Farley's motion for Summary Judgment is allowed. Debtor's objection to Claim No. 509 is sustained. Claim No. 509 as amended will be entirely disallowed for reasons stated in this memorandum opinion. Since those reasons are dispositive, other issues argued by the parties need not be reached for decision.
NOTES
[1] "With each motion for summary judgment filed pursuant to Fed.R.Civ.P. 56 (Fed. R. Bankr.P. 7056), the moving party shall serve and file (1) any affidavits and other materials referred to in Fed.R.Civ.P. 56(e); (2) a supporting memorandum of law; and (3) a statement of material facts as to which the moving party contends there is no genuine issue and that entitles the moving party to judgment as a matter of law that includes: (a) a description of the parties; and (b) all facts supporting venue and jurisdiction in this Court. The statement of facts referred to in (3) shall consist of short numbered paragraphs, including within each paragraph specific references to the affidavits, parts of the record, and other supporting materials relied upon to support the facts set forth in that paragraph. Failure to submit such a statement constitutes grounds for denial of the motion." Local Bankr.R. 402.M.
[2] "Each party opposing a motion under Fed. R.Civ.P. 56 (Fed. R. Bankr.P. 7056) shall serve and file the following: (1) any opposing affidavits and other materials referred to in Fed.R.Civ.P. 56(e); (2) a supporting memorandum of law; and (3) a concise response to the movant's statement of facts that shall contain: (a) a response to each numbered paragraph in the moving party's statement, including, in the case of any disagreement, specific references to the affidavits, parts of the record, and other supporting materials relied upon; and (b) a statement, consisting of short numbered paragraphs, of any additional facts that require the denial of summary judgment, including references to the affidavits, parts of the record, and other supporting materials relied upon. All material facts set forth in the statement required of the moving party will be deemed to be admitted unless controverted by the statement of the opposing party." Local Bankr.R. 402.N.
[3] Although existence of the bond was not formally offered as a statement of undisputed material fact, the moving papers show agreement that the requisite surety bond was posted. The State offered as an undisputed exhibit a letter from R.E. Harrington to the Bureau of Worker's Compensation which stated "[p]lease note that surety has been on file since the employer was first granted self-insurance privileges." 402.N, Ex. 2. Moreover, both parties made statements in their memoranda which allude to the existence of Farley's surety bond. See 402.N ¶ 15; 402.N Response ¶ 15.
[4] The 1993 amendments to the Act renamed the Surety Fund the "Self-Insuring Employers' Guaranty Fund" (the "Guaranty Fund"). See Ohio Response, ¶ 20.
[5] Ohio originally cited to § 4123.351 as the basis for Claim 509. However, in its reply memorandum it states that it erroneously cited to § 4123.351(G) and expressly "withdraws those allegations." Ohio Reply at 4, n. 3. Ohio now argues only that it is entitled to assert a claim pursuant to Ohio Rev.Code Ann. § 4123.75.
[6] Ohio's bankruptcy claim number 508 sought recovery for premiums due pursuant to § 4123.35, which became due on September 24, 1991. Proof of Claim No. 508. This claim was allowed and paid pursuant to Order dated February 8, 1995.
[7] Ohio includes in its statement of additional facts a paragraph stating that proceedings and payments were initiated and determined pursuant to § 4123.75. Ohio Additional Facts at ¶ 10. However, Ohio sets forth no factual basis in this record for that contention as required by Bankruptcy Rule 402 and Fed. R. Bankr.P. 7056, and Farley disputes it. It therefore cannot be deemed an undisputed fact.
[8] Ohio also included in its statement of additional facts a paragraph stating that all of Farley's surety bonds have been exhausted and any recovered amounts have been credited against Ohio's claim. Ohio Additional Facts ¶ 15. However, as with Ohio's preceding allegation, the State did not show on the record the factual basis through documents and affidavits under Fed.R.Civ.P. 7056 for this allegation which Farley disputed. It therefore cannot be deemed an undisputed fact sufficient to defeat summary judgment. Moreover, since Farley was a complying employer that posted the required bond, the fact if established that the bond has since been exhausted would not transform Farley into a non-complying employer under § 4123.75.
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246 A.2d 90 (1968)
OPINION OF THE JUSTICES of the Supreme Court in Response to Questions Propounded by the Governor Upon the Constitutionality of 56 Laws, Ch. 292.
Supreme Court of Delaware.
July 23, 1968.
*91 To His Excellency Charles L. Terry, Jr. Governor of Delaware:
Reference is made to your letter of June 3, 1968, addressed to the Chief Justice, requesting the opinions of the Justices of the Supreme Court upon five questions concerning the constitutionality of House Bill 438 with House Amendment 1 (56 Laws, Ch. 292), being an Act to provide for the reorganization of the school districts of the State. The five questions propounded by you will be quoted seriatim hereafter, and immediately followed by the answer to the question.
Because of the nature of the questions and the far-reaching effect of the answers to them, the Justices were of the opinion *92 that it was desirable to formulate answers only after full briefing and oral argument by counsel appointed for the purpose.
Accordingly, with your approval, the Justices requested and obtained the assistance of C. J. Killoran, Esquire; Andrew G. T. Moore, II, Esquire, and Charles S. Crompton, Jr., Esquire, of the Bar of New Castle County. These gentlemen aligned themselves on opposite sides of the questions, and ably and forcefully presented their respective sides. We acknowledge our debt to them for their indispensable assistance.
We turn now to the questions to which you desire answers.
Question No. 1
Does House Bill 438 with House Amendment 1, violate Article 1, Section 7 of the Constitution of the State of Delaware for the reason that it provides in Section 1006 thereof that indebtedness of component school districts comprising a reorganized school district be assumed by the reorganized school district without submission of the question of reorganization or the question of the assumption of such debt to the qualified voters of the component school districts?
Article I, § 7 of the Delaware Constitution, Del.C.Ann., provides that no person shall be deprived of property except "by the law of the land". This section of our Constitution is held to have substantially the same meaning as the due process clauses of the Fifth and Fourteenth Amendments to the Federal Constitution. Ajax Distributors, Inc. v. Springer, 26 Del. Ch. 101, 22 A.2d 838.
By § 1006 of the Act before us, it is provided that a reorganized school district (resulting from a consolidation of former districts accomplished under §§ 1004 and 1005) shall be vested with all real and personal property of the component districts, and all indebtedness and obligations of the component districts shall become the indebtedness and obligations of the reorganized district. § 1006 further provides that all bonds of the component districts shall become the common obligation of all of the residents of the reorganized district, and shall be paid off by means of a common tax levied uniformly throughout the reorganized school district.
This section of the Act is said by the opponents to be unconstitutional because it will impose an additional burden of debt and tax liability upon the residents of the component districts without adequate safeguards of notice, hearing, vote or appeal privileges being afforded to them, by delegating the power to impose taxes to an appointive agency, the State Board of Education.
The General Assembly, by Article X, § 1 of the Constitution, is directed to provide for the establishment of a general system of free public schools for the State. In following the mandate thus imposed upon it, the General Assembly may, in its wisdom, use any device appropriate to the end as long as the scheme adopted is of general application throughout the State. In so doing, it may abolish existing agencies and choose new agencies and means to accomplish the desired end. The prior existence of school districts, or of existing statutes, does not restrain the General Assembly in the exercise of that power. In re School Code of 1919, 7 Boyce 406, 108 A. 39.
Nor is there any contractual relationship existing between local school boards, residents of a school district or localities which must necessarily be preserved under the Federal Constitution. The General Assembly, in exercising its broad powers to create and abolish school districts, and to establish a general education system, gives rise to no contractual relationship which the Federal Constitution will require to be protected. Attorney General of State of Michigan ex rel. Kies v. Lowrey, 199 U.S. 233, 26 S. Ct. 27, 50 L. Ed. 167.
*93 Thus, it is clear, the pattern of laws heretofore existing in this State establishing a public school system are not binding on the General Assembly. It may change them freely in its wisdom. The fact that, heretofore, no consolidating of districts or imposition of taxes could be made without an affirmative vote of the residents of the particular district, does not mean that ever thereafter the General Assembly is bound to preserve that practice. The preservation or abolition of provisions for referenda is a matter of policy left to the discretion of the General Assembly.
The opponents to the Act, however, argue further that the General Assembly has improperly delegated to the State Board of Education, an appointed body, the power of taxation. The argument is based on § 1006(b) which requires the imposition of a common tax levied uniformly throughout the reorganized school district to pay off all the bonds of the component districts which, by the same section, are made the common obligation of the reorganized school district.
The opponents concede, as indeed they must, that the General Assembly, by act, could in terms have imposed the common tax, but it is argued that this has not been done, but that an unrestricted taxing power has been delegated to an appointive board.
In our opinion, however, the common tax to be levied in the reorganized school district has in fact, if not in terms, been imposed by the General Assembly and not by the State Board of Education. This conclusion is forced by reason of the fact that upon reorganization of school districts, the amount required to pay the bonds of the component is known to a certainty. Consequently, § 1006(b) amounts to a direction by the General Assembly to the State Board of Education to implement its levy of a tax in that amount.
The State Board of Education is nothing more than an agent of the General Assembly for this purpose, performing an administrative function. The tax, itself, is imposed by the General Assembly, the amount to be ascertained by the fact of consolidation. There is nothing inherently unconstitutional in delegating to an appointive board the fact-finding function upon which a tax levy previously formulated by the General Assembly is actually based. Cf. Mayor and Council of Wilmington v. State, 5 Terry 332, 57 A.2d 70.
The answer to Question No. 1 is in the negative.
Question No. 2
Would House Bill 438 with House Amendment 1, as applied to component school districts which were consolidated subsequent to April 25, 1962 the qualified voters of which had voted that the bonds of the then consolidating districts would remain obligations of the resident of the respective school districts violate Article 1, Section 7 of the Constitution of the State of Delaware?
We think our answer to Question No. 1 is controlling on Question No. 2. Since the General Assembly has broad powers of change with respect to the public school system, we see no reason why it could not change the result of a prior election. Indeed, this will be done in the cases of districts which heretofore have voted against consolidation.
In this connection, we have considered the cases opponents so capably urge upon us in support of their positions: Hazzard v. Alexander, 6 W.W.Harr. 212, 173 A. 517; Keller v. Wilson & Co., Inc., 21 Del. Ch. 391, 190 A. 115; Wilmington Trust Co. v. Copeland, 33 Del. Ch. 399, 94 A.2d 703. None of these cases is in point and, in our opinion, the conclusion reached herein is not in conflict with the general principle for which the cited cases stand.
The answer to Question No. 2 is in the negative.
Question No. 3
Does House Bill 438 with House Amendment 1, violate Article II, Section 1 of *94 the Constitution of the State of Delaware for the reason that the delegation of the power to reorganize school districts to the State Board of Education in Section 1004 thereof is an invalid delegation of legislative power?
Article II, § 1 of the Delaware Constitution provides that the legislative power of the State shall be vested in the General Assembly. It is the law that the General Assembly may not delegate to any other agency authority to exercise its legislative powers. State ex rel. Morford v. Tatnall, 2 Terry 273, 21 A.2d 185.
This is not to say, however, that the General Assembly may not enact a law exercising one or more of its legislative powers, declaring the policy of the law, fixing the principles which are to control in given cases, and, at the same time, delegate to an administrative body the power to ascertain the facts which will determine when the power exercised by the act shall take effect and be enforced. In re Opinion of the Justices, 4 Storey 366, 177 A.2d 205.
The precise question before us, therefore, is whether or not the Act merely delegates to the State Board of Education authority to determine in its discretion facts and conditions which will cause the legislative power exercised by the Act, i. e., the reorganization of school districts, to take effect, or whether it, in fact, delegates the power to legislate new school districts into existence.
We are of the opinion the Act is not an improper delegation of legislative power to the State Board of Education for the reason that it fixes the general principles and standards which are to control the Board in the exercise of its discretion. We are of this opinion for the following reasons:
The general purpose of the law is set out in § 1001 to be to provide for the reorganization of existing school districts by the retention of some existing districts and the combination of others in accordance with the policies, procedures, standards and criteria established by the Act.
By § 1003, the State Board of Education is directed to adopt specific criteria for such purposes which take into account certain enumerated factors, viz., topography, pupil population, community characteristics, transportation of pupils, use of existing school facilities, existing school districts, potential population changes and the capability of providing an effective education. It is to be noted that § 1003 is mandatory that the State Board of Education shall adopt criteria which take into consideration all of the listed elements.
By § 1004(c), the State Board is prevented from adopting any plan of reorganization which fails to meet certain minimum requirements. Of paramount importance in this respect is (a) the requirement that each district shall offer an instructional program for twelve grades; (b) the fixing of minimum and maximum pupil population of reorganized districts; (c) the prohibition against combining other than whole existing districts and against the subdividing of existing school districts; (d) the establishment of the City of Wilmington as a reorganized school district; (e) the prohibition against the consolidation of an existing district with 1900 pupils in twelve grades with an area of over 100 square miles, and (f) the exclusion of a district from consolidation which operates cooperatively with a school district of another state.
It seems clear to us that, by reason of §§ 1003 and 1004, the State Board of Education is told precisely what it may and what it may not do. Any plan of reorganization it formulates must not only satisfy the precise requirement of § 1004, but must also be formulated in the light of criteria set out in § 1003, which, by § 1001, are made binding on the State Board of Education.
We are of the opinion that sufficient and adequate standards have been set up under *95 which the State Board of Education acts to make it clear that the Act is not an unconstitutional delegation of legislative power.
In this connection, we have considered Chartiers Valley Joint Schools v. County Board of School Directors, 418 Pa. 520, 211 A.2d 487, upon which the opponents place special reliance. Our conclusion is not, in our opinion, in conflict with that case.
The answer to Question No. 3 is in the negative.
Question No. 4
Does House Bill 438 with House Amendment 1, violate Article II, Section 16 of the Constitution of the State of Delaware in that it embraces more than one subject?
Article II, § 16 of the Constitution requires that no bill introduced in the General Assembly shall embrace more than one subject, which shall be expressed in its title.
The title of the bill before us is as follows:
"AN ACT TO AMEND PART I, TITLE 14 OF THE DELAWARE CODE ENTITLED "FREE PUBLIC SCHOOLS" TO PROVIDE FOR THE REORGANIZATION OF SCHOOL DISTRICTS TO BE EFFECTED BY AMENDING AND REPEALING EXISTING LAWS PERTAINING THERETO."
It is now settled in this State that Article II, § 16 does not require the title of a bill to be an index of its contents. Its requirements are satisfied if the title is sufficient to put interested parties on notice that the bill relates to a subject in which they are interested in a manner which would lead them to inquire into it. In re Opinion of the Justices, 4 Storey 366, 177 A.2d 205.
It is suggested that this title does not meet this standard because the bill contains many matters which are not referred to at all in the title, such as the elimination of the right of referendum before consolidating school districts.
However, we think the title has broad implications which should cause an interested person to inquire into its contents. As we said in our opinion to the Governor cited above, "The fundamental purpose of the section is to prohibit the passage of sleeper legislation." We think by no stretch of the imagination can this bill be so characterized.
The answer to Question No. 4 is in the negative.
Question No. 5
Does House Bill 438 with House Amendment 1, violate Article 1, Section 10 of the United States Constitution for the reason that Sections 1006 and 1027 thereof impair the obligation of contract with the holders of the outstanding bonds of component former school districts and reorganized school districts which are consolidated because the assumption of outstanding indebtedness by reorganized school districts and consolidated reorganized school districts might reduce the ratio of assessed valuation to outstanding debt as it existed at the time the debt was created?
The answer to this question is to be found in In re School Code of 1919, 7 Boyce 406, 108 A. 39. In response to an argument that the creation of new school districts would impair the contract existing between the old districts and its bondholders, the Chancellor and Law Judges gave as their opinions that no impairment of contract had occurred. This was for the reason that the property securing the bonds remained the same and the bondholders' rights to enforce the collection of principal or interest remained the same.
We think this opinion is controlling. The primary security for the bondholder is the obligation of the school district to levy taxes to carry the bonds. While it is possible *96 that a technical dilution in realty assessed value behind each bond may result because of district consolidation, that is no different than the technical dilution which results from a subsequent issue of bonds by the same district.
It has never been suggested that a second bond issue is an impairment of the contract with prior bondholders. Indeed, it could not be so suggested, for the security of the bondholder is the district's promise to pay and its obligation to collect sufficient taxes to enable it to do so, whatever the ratio between real estate assessment and bond obligation may be.
In this connection, we have considered the many cases from other jurisdictions cited by the opponents. In so far as they may be contrary to the conclusion we reach, they must be deemed unpersuasive in the light of the controlling In re School Code of 1919, supra.
The answer to Question No. 5 is in the negative.
The foregoing is the unanimous opinion of the Justices of the Supreme Court.
Respectfully submitted,
DANIEL F. WOLCOTT,
Chief Justice
JAMES B. CAREY,
D. L. HERRMANN,
Associate Justices.
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367 So. 2d 1155 (1979)
STATE of Louisiana
v.
Isadore LEWIS and Clarence Lewis.
No. 61962.
Supreme Court of Louisiana.
January 29, 1979.
Dissenting Opinion March 8, 1979.
*1156 Raymond A. McGuire, New Orleans, for defendants-appellants.
William J. Guste, Jr., Atty. Gen., Barbara Rutledge, Asst. Atty. Gen., Harry Connick, *1157 Dist. Atty., Louise S. Korns, Asst. Dist. Atty., for plaintiff-appellee.
DIXON, Justice.
During the early morning hours of March 11, 1974, officers of the New Orleans police force received a call that a burglary was in progress at the Soul Stirs Lounge at 2318 St. Anthony Street. Upon their arrival, they discovered that an air conditioning unit had been removed from one of the bar's windows and had been placed on the ground. Next to the window unit was a cardboard box filled with bottles of liquor. Officers and police dogs entered the building through the window and a struggle ensued in which the defendants, Isadore and Clarence Lewis, were arrested for simple burglary, a violation of R.S. 14:62. A jury trial was held on September 24, 1974 and the defendants were found guilty as charged. Isadore Lewis was sentenced to six years at hard labor and Clarence Lewis was sentenced as a multiple offender to fifteen years at hard labor. R.S. 15:529.1.
Defendants now appeal their convictions and sentences to this court, having abandoned four of the eleven assignments of error reserved.[1]
Assignment of Error No. 1
In this assignment, the defendants contend that the trial court was in error to refuse to allow defense counsel to question prospective jurors concerning previous experience on criminal juries. The alleged error arose when the defense attorney asked on voir dire, "Did anyone sit on a criminal trial? Was that this past month?" The trial judge interrupted the defense counsel at this point: "Now that's objectionable. You can ask them if they've ever served on a jury before, and they answer yes or no, and that is as far as you can go." The defense then objected to this limitation.
In State v. Holmes, 347 So. 2d 221 (La. 1977), this court held that it was reversible error for the trial judge to forbid the defense to inquire into past jury experience while examining prospective jurors on voir dire. However, in State v. Swift, 363 So. 2d 499 (La.1978), it was decided that the rule of Holmes was not to be applied retroactively and that similar restrictions on the scope of defendant's voir dire would constitute reversible error in prosecutions begun after the date the opinion was rendered, June 20, 1977. The trial in this case was held in 1974, and the defendants cannot therefore avail themselves of the rule of the Holmes case.
This assignment lacks merit.
Assignments of Error Nos. 2 and 3
These assignments of error concern additional restrictions placed on the scope of voir dire by the trial judge. The second assignment was taken when the judge stopped defense counsel from asking one juror whether he had testified as a government witness. The third assignment was taken when the judge refused to allow the defense to question one venireman whether his decision would be influenced by the fact that he was a postal clerk and therefore paid by the federal government.
The defendant in a criminal prosecution is entitled to make reasonable and pertinent inquiries of the prospective jurors to secure bases for challenges for cause and to secure information for the intelligent exercise of peremptory challenges. State v. Jones, 282 So. 2d 422 (La.1973) (on rehearing); State v. Hills, 241 La. 345, 129 So. 2d 12 (1961). "For this reason, a wide latitude is allowed counsel in examining jurors on their voir dire, and the scope of inquiry is best governed by a liberal discretion on the part of the Court so that if there is any likelihood that some prejudice is in the juror's mind which will even subconsciously affect his decision, this may be uncovered." State v. Hills, 241 La. at 396, 129 So.2d at 31. However, the questions involved here do not appear consequential to the defendants' case; these are the only complaints of defendants about undue restriction of voir dire, and are not of sufficient importance to reverse.
*1158 These assignments of error are without merit.
Assignment of Error No. 4
By this assignment of error the defendants allege that the trial court erred in overruling a defense objection to the State's employing the term "victim" in its opening statement. While detailing the evidence the State intended to introduce, the prosecutor stated: "The first person I intend to callthere might be a difference in order, but this is what we're going to prove. We're going to have the victim. The lady who owns the store that was burglarized, the barroom."
The defense alleges that the term is improper because it has the effect of arousing sympathy for the complainant and of increasing the jury's passions. The State's employing the term is considered so prejudicial by the defense as to have required the trial judge to have admonished the jury to disregard the remark. C.Cr.P. 771.
Article 771 of the Code of Criminal Procedure condemns the use of irrelevant and immaterial remarks which could prejudice the jury against the State or the defense. The terminology at issue in the present case hardly falls into these categories, for it clearly designates the status of the proprietor of the Soul Stirs Lounge after the burglary.
This assignment of error lacks merit.
Assignment of Error No. 5
The defendants allege that reversible error was committed when the trial judge allowed the prosecuting attorney to question a defense witness as to whether another witness would be lying if their accounts of the facts were in conflict. This alleged error arose when the prosecutor cross-examined the defendants' mother, Mrs. Juanita Lewis, and inquired whether she had requested Miss Morgan to drop the charges against her sons. Defense counsel objected, but before the judge could rule the witness denied having done so. The witness then was asked, "If she said you did, she'd be lying?" To this defense counsel objected again, but was overruled by the trial judge. The question was repeated several times until Mrs. Lewis responded that Miss Morgan would be lying in that case.
Normally the trial judge should prohibit such cross-examination. See R.S. 15:463. The whole subject of the inquiry at the time of the error was a collateral issue, and did not pertain to the guilt or innocence of the defendants. The defense was not prejudiced.
This assignment of error is without merit.
Assignment of Error No. 6
The defense contends that reversible error resulted from the trial court's ruling which permitted the State to recall Miss Morgan as a rebuttal witness, even though she had remained in the courtroom after testifying and had observed the other witnesses. Miss Morgan testified on rebuttal that a pool cue had not been broken before the burglary, that a small yellow light over the bar had been left on which she closed the lounge and that one box of liquor bottles had been found in the alley beside the lounge and another inside behind the bar. She also contradicted the mother of the defendants, Juanita Lewis, and stated that she had indeed been requested to drop charges against the brothers.
An order of sequestration is intended to assure that a witness will testify as to his own knowledge of the case without being influenced by the testimony of other witnesses, and to strengthen the role of cross-examination in developing the facts. State v. Bias, 337 So. 2d 426 (La.1976). However, not every violation of a sequestration order must result in exclusion of the witness' testimony because the decision to disqualify is within the sound discretion of the trial judge. C.Cr.P. 764; State v. Johnson, 343 So. 2d 155 (La.1977); State v. Badon, 338 So. 2d 665 (La.1976). On review, this court will look to the facts of the individual case to determine whether the violation resulted in prejudice to the defendant, State v. Ardoin, 340 So. 2d 1362 (La.1976); State v. Barnard, 287 So. 2d 770 (La.1973), and will inquire whether the exposure was sufficient to affect the witness' testimony or to undermine the opposing *1159 party's ability to cross-examine. State v. Bell, 346 So. 2d 1090 (La.1977).
A review of the record convinces us that no reversible error was committed by the trial court. Miss Morgan identified the boxes and broken cue stick when she testified the first time. Her statements on rebuttal concerning the small light over the bar supported the testimony of the defendants that the lounge was not entirely dark. Finally, her statement that she had been asked to drop the charges added nothing to the case against defendants.
This assignment of error lacks merit.
Assignment of Error No. 7
By this assignment of error the defendant Clarence Lewis contends that the trial court was in error to permit the prosecution to bill him as a multiple offender based on a conviction secured by a guilty plea. The basis of the objection is that the defendant was not advised of his constitutional rights at the time of the guilty plea.
The record of the multiple offender hearing reveals that the defendant Clarence Lewis pleaded guilty to attempted armed robbery on February 16, 1970. Minutes from the criminal district court for that date were read at the hearing by the minute clerk:
"A Alright. I'm reading from the Minutes of Monday, February 16th, 1970, Section `F' Criminal District Court for the Parish of Orleans. Case entitled, Case No. 210-364, State of Louisiana vs. Clarence Lewis. Information for violating Revised Statute 14:64. The defendant accompanied by counsel, Ray McGuire, Esq. was placed at the bar for trial, and through counsel, retracted former plea of not guilty, and pleaded guilty to revised statute 14:27(64), which said plea was accepted by the state, and the defendant waived all delays. Born January 11th, 1952. The court inquired of the defendant if he was aware of his right to jury trial, and right to appeal, if he was aware of the probable and actual consequences of his plea, if his plea be voluntary, and if in truth and in fact he was guilty as pleaded, to which all said inquiries, the defendant replied in the affirmative. The court sentenced the defendant to serve three years at hard labor in the Louisiana State Penitentiary.
Q Mr. Hammer, does the record reflect that Mr. Lewis was advised that he had a right to confront accusers in the event he sought to go to trial?
A It does not.
Q Does it reflect that he also had a right to compel the court to subpoena witnesses on his behalf
BY THE COURT: That's not necessary under our law."
The defense contends that the minutes of the guilty plea do not affirmatively show that Clarence Lewis was advised that the plea constituted a waiver of his right to confront his accusers and to compulsory process, as required by Boykin v. Alabama, 395 U.S. 238, 89 S. Ct. 1709, 23 L. Ed. 2d 274 (1969). The defense argues that in the absence of such a showing, the defendant's prior guilty plea should not be used to increase his sentence pursuant to R.S. 15:529.1.
In Boykin the Supreme Court emphasized three federal constitutional rights which are waived by a guilty plea: the privilege against self-incrimination; the right to trial by jury; and the right to confront one's accusers.[2] The court then announced its unwillingness to presume waiver of these important rights from a silent record. Boykin was decided in 1969. The prospect of releasing felons incarcerated after pleas of guilty, when the record in the case did not affirmatively show the knowing and voluntary waiver of articulated constitutional rights, resulted in a stuttering approach to the application of federal constitutional law to state court proceedings in Louisiana. In *1160 State ex rel. Jackson v. Henderson, 260 La. 90, 255 So. 2d 85 (1971), we recognized the Boykin decision; the record before us showed that the defendant was not informed of the three important constitutional rights as required by Boykin, and did not waive them. It was not necessary to decide whether the sentencing hearing could be reconstructed, or whether the conviction must be upset in the absence of a record of an adequate Boykin examination contemporaneous with the plea of guilty.
However, in State ex rel. LeBlanc v. Henderson, 261 La. 315, 259 So. 2d 557 (1972), this court decided to make the Jackson decision (our construction of Boykin v. Alabama ) applicable only to guilty pleas taken after December 8, 1971, the date of finality of State ex rel. Jackson v. Henderson. The LeBlanc case held that the sentencing hearing could be reconstructed in those cases in which the guilty plea was taken prior to December 8, 1971. That is, even though no contemporaneous record of the proceedings surrounding a plea of guilty was made, the state was permitted to introduce relevant evidence to show that the plea was free and voluntary.
However, State ex rel. LeBlanc v. Henderson involved a habeas corpus proceeding filed a year after the defendant was sentenced, in which the defendant sought to set aside his previous plea of guilty. Here the defendant does not seek to have his plea of guilty set aside, but raises its invalidity as a defense in a proceeding designed to enhance his sentence for the present offense. The plea of guilty which formed the basis for the multiple offender sentence in this case was taken February 16, 1970, now almost nine years ago. The more time that passes, the more difficult it will be to reconstruct the plea of guilty and make a reasonably accurate determination of its free and voluntary nature. Therefore, we will not extend State ex rel. LeBlanc v. Henderson, supra, to a case in which the collateral effect of a plea of guilty is the issue. In a multiple offender hearing, only those previous pleas of guilty may be used to enhance a sentence which are supported by a contemporaneous record of a Boykin examination demonstrating the free and voluntary nature of a plea of guilty with an articulated waiver of the constitutional rights required by Boykin v. Alabama.[3]
This assignment of error has merit and the defendant Clarence Lewis' sentence is set aside.
For these reasons, the conviction and sentence of Isadore Lewis are affirmed. The conviction of Clarence Lewis is affirmed, but his sentence is set aside, and the case is remanded to the district court for further proceedings consistent herewith.
SUMMERS, C. J., and MARCUS, J., dissent in part and concur in part and assign reasons.
BLANCHE, J., not participating.
MARCUS, Justice (concurring in part and dissenting in part).
I concur in the conviction and sentence of Isadore Lewis and the conviction of Clarence Lewis. I dissent from the setting aside of Clarence Lewis' sentence.
SUMMERS, Chief Justice (dissenting in part and concurring in part).
I concur in the conviction and sentence of Isadore Lewis and the Conviction of Clarence Lewis. However, like Mr. Justice MARCUS I cannot agree that the sentence of Clarence Lewis should be set aside. The basis for setting aside the sentence is stated in the majority. It is said that in a multiple offender hearing, only those previous pleas of guilty may be used to enhance a sentence which are supported by a contemporaneous record of a Boykin examination demonstrating the free and voluntary nature of a plea of guilty with an articulated waiver of the constitutional rights required by Boykin *1161 v. Alabama, 395 U.S. 238, 89 S. Ct. 1709, 23 L. Ed. 2d 274 (1969).
To support this conclusion the Court relies upon the absence of any reference to a waiver of the right to confrontation of witnesses at the time of the guilty plea.
Although the United States Supreme Court states in its opinion in Boykin that several federal constitutional rights are waived when a plea of guilty is entered in a state courtamong them the privilege against compulsory self-incrimination, the right to trial by jury, and the right to confront one's accusersnowhere does the opinion state that an accused who pleads guilty must specifically and serially waive each of these rights in turn. See State v. Johnson, 260 La. 902, 257 So. 2d 654 (1972). (Summers dissenting). In my opinion, therefore, the majority's reliance upon Boykin is misplaced.
As the quotation from the minutes of the trial court makes clear, Clarence Lewis was advised of his right to trial by jury, the right to appeal, and the probable and actual consequences of his plea; it was ascertained that his plea was voluntary and also determined at that time that he was in fact guilty of the crime charged. Simply because there was no reference to the right to confront the witnesses against him, the plea is set aside. As the Federal Fifth Circuit Court of Appeal has held after an exhaustive and scholarly review of the Boykin decision,
"Finally, we hold that express articulation and waiver of the three constitutional rights referred to in Boykin by the defendant at the time of acceptance of his plea is not required, since it appears from the record that McChesney entered the plea intelligently and voluntarily with knowledge of its consequences." McChesney v. Henderson, 482 F.2d 1101 (1973); cert. denied, 414 U.S. 1146, 94 S. Ct. 901, 39 L. Ed. 2d 102.
Stated simply Boykin stands for the proposition that is "error, plain on the face of the record, for the trial judge to accept [a] guilty plea without an affirmative showing that it was intelligent and voluntary." Reference in Boykin to constitutional rights waived by a guilty pleaself-incrimination, trial by jury and confrontation of one's accuserswas an effort to impress upon trial judges the need of "canvassing the matter with the accused to make sure he has a full understanding of what the plea connotes and its consequences." This requirement was fully satisfied in the case at bar.
In my view every requirement of Boykin was complied with and this Court should desist from these highly technical and unreasonable demands upon the trial courts.
I respectfully dissent.
NOTES
[1] Assignments of error neither briefed nor argued on appeal are considered abandoned. State v. Schwartz, 354 So. 2d 1332 (La.1978); State v. Lewis, 353 So. 2d 703 (La.1977).
[2] The record of Clarence Lewis' plea of guilty includes a specific reference to the right to trial by jury. The defense has failed to refer to the absence of any specific reference to the privilege against self-incrimination. Only the absence of any reference to the confrontation right is before us since nowhere in Boykin did the court mention the right to compel the presence of witnesses.
[3] On January 11, 1979, for example, in State v. Cook, Jr., 365 So. 2d 380, we denied a writ of application to review the judgment of a trial judge quashing a bill charging the defendant with the possession of a firearm after having been convicted of a felony; the bill was quashed because there was no contemporaneous record of a Boykin examination for the felony conviction.
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251 Md. 143 (1968)
246 A.2d 604
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
v.
INSURANCE COMMISSIONER OF MARYLAND, ET AL.
[No. 209 (Adv.) September Term, 1968.]
Court of Appeals of Maryland.
Decided October 11, 1968.
The cause was argued before HAMMOND, C.J., and MARBURY, McWILLIAMS, FINAN and SMITH, JJ.
*144 Joseph H. Young, with whom were Charles T. Albert and Paul V. Niemeyer on the brief, for appellant.
Thomas A. Garland, Assistant Attorney General, with whom were Francis B. Burch, Attorney General, and S. Leonard Rottman, Assistant Attorney General, on the brief, for appellees.
FINAN, J., delivered the opinion of the Court.
This is an appeal by the Equitable Life Assurance Society of the United States (Equitable), plaintiff below, from a judgment of the Superior Court of Baltimore City in favor of Newton I. Steers, Insurance Commissioner of the State of Maryland, Francis B. Burch, Attorney General and Charles E. Moylan, Jr., State's Attorney for Baltimore City. Equitable brought this action for a declaratory judgment Code (1967 Repl. Vol.), Art. 31A, seeking clarification of its rights and liabilities under Maryland's new Usury Law, Chapter 453, 1968 Laws of Maryland (House Bill No. 11), which repeals §§ 1-16 of Article 49 of the Maryland Code entitled "Interest and Usury" and replaced it with new §§ 1-11. We shall refer to the new law as the Act.
The specific issue before the Court is the question of whether interest as defined in the Act includes insurance premiums received by Equitable on Equitable life insurance policies assigned to Equitable as additional collateral security for the repayment of residential mortgage loans. If such retained premiums were to be considered interest they would have to be included in the loan agreement between the lender and the borrower required by § 3 of the Act; they would have to be reflected as interest in the disclosure statement required by § 10 and in the computation of interest under § 6 in order to determine whether or not the interest exceeded the maximum legal permissive limit of eight per cent (8%).
The parties agreed to a stipulation of facts which sets forth that Equitable makes residential mortgage loans in Maryland under two plans, either of which the borrower may elect. One is the Assured Home Ownership plan known as "AHO" and the other Insured Residential Mortgage plan known as "IRM."
*145 If the borrower elects to borrow money from Equitable under the AHO plan, he will give as security for the repayment of the loan not only a mortgage on his home but also the assignment to Equitable of new or existing Equitable policies of permanent cash value life insurance which have premiums payable on a monthly basis, so that such premiums will be paid to Equitable in one sum along with principal and interest payments on the mortgage loan.
If the borrower elects to borrow money under the IRM plan, he also will give as security for the repayment of the loan a mortgage on his home and the assignment to Equitable of permanent cash value life insurance. However, the borrower may assign not only new or existing Equitable policies, but he may assign new or existing policies from other legal reserve life insurance companies, or he may assign a combination of both. Under this plan, the premiums are paid directly to the insurer (whether it be Equitable or not) independently of payments of principal and interest.
Under both programs (the AHO and IRM plans) the life insurance policies are assigned purely as collateral security. Equitable makes no charges and collects no fees of any sort for the assignment of this collateral security, whether it be an Equitable policy or not. If the borrower elects to assign an Equitable policy, the premiums charged for such policy are identical to those charged any other nonborrower purchasing a similar Equitable policy under similar circumstances and they are competitive with similar policies from other companies. There are no hidden charges. Any premiums paid Equitable are entirely and solely compensation for the insurance and no portion of such premiums are compensation for the loan. When a policy is assigned, the borrower retains all of the rights he would retain in any other property which he might offer as collateral security. In addition he retains all of the dividends on the policy which, in the case of a mutual company, are the return of surplus after payment of claims and expenses and after providing for adequate reserves. Upon payment of the loan the assignment is cancelled. During the year 1967 Equitable made over $5,000,000 worth of loans under these programs in the State of Maryland.
*146 For purposes of this case, the parties stipulated to a typical loan transaction under the program where the collateral security is an Equitable policy. The borrower is 40 years old, is married and has children. He is purchasing a home valued at $40,000. To purchase it he borrows $30,000 under the program from Equitable for a term of 20 years at 7 1/4% interest per year. In addition to a mortgage on his home, he gives as additional security the assignment of an Equitable adjustable whole life insurance policy with the face amount of $30,000. The premium on the policy at age 40 is $72.00 per month. This premium together with principal and interest totals $309.30 per month. Equitable as the lender retains the entire premium.
If the retained premium is construed as interest under the Act, the average rate of interest during the life of the loan would be 10.98%, a rate in excess of the permissive legal maximum rate of eight per cent (8%). On this premise, if Equitable made the loan retaining the premium and desired to bring the interest rate within the permissive limits of the Act, it could only charge 3.8% interest on the loan, apart from the premium. Equitable argues that such a rate is grossly below the current cost of money being about one-half the alleged going rate of 7.25%. It contends that it could not loan money under its programs and justify such an investment to the mutual policy holders.
The pertinent provisions of the Act are as follows:
"1. (A) The term interest as used in this article means any compensation imposed directly or indirectly by a lender for the extension of credit for the use or forbearance of money * * *.
"1. (B) The following compensation or charges may be paid in connection with a loan without considering it interest and such compensation or charges collected shall not be interest or deemed usurious under any other provision of this Article.
* * *
"1. (B) (6) Actual expenses collected by the lender are specifically enumerated in this section. All other *147 charges, other than those enumerated below, will be deemed interest:
* * *
"1. (B) (6) (C) For premiums and costs not retained by the lender for insuring or indemnifying the lender against loss or liability on or in connection with the loan. (Emphasis supplied.)
"1 (B) (6) (D) Or for insuring the life or health of the borrower on premiums and costs, not retained by the lender." (Emphasis supplied.)
In the recent case of B.F. Saul Company, et al. v. West End Park North, Inc., 250 Md. 707, 246 A.2d 591, this Court had occasion to construe a number of provisions of the Act, including §§ 1(B) (6) (D), with reference to the construction that should be placed on insurance premiums retained by the lender and had this to say:
"All appellants in their role as lenders receive the benefit of life insurance commissions on some contracts, however, there is no requirement that the borrower obtain life insurance through any institutions made available by the lender. When commissions are actually retained by the lender such a commission should be included as interest." (Emphasis supplied.)
Kenney, J., in the lower court without benefit of our decision in B.F. Saul Company, et al., in a well reasoned opinion, arrived at the same conclusion, stating:
"The Bill as originally introduced contained a paragraph numbered `2' providing:
`Actual expenses collected from a borrower by a lender or its attorney for payment for services rendered in connection with the preparation, closing, or disbursing of a loan, or for the payment of property expenses, taxes, and governmental charges, or premiums for insuring or indemnifying the lender against loss or liability on or in connection with the loan, or for insuring any interest in the property which is the security for the loan against loss from *148 any hazard, or for insuring the life or health of the borrower, shall not be interest or be deemed usurious under any other provision of this Article.'
"This language was stricken from the original Bill and an effort was made by amendment to incorporate with slight change the above provisions.
"The principal change from the language in the Bill as originally presented and the amendment as it finally passed in this area was the making of insurance premiums and costs retained by the lender interest."
* * *
"It seems to the Court that whether it was necessary or wise, what the Legislature actually said in very plain words is that expenses collected by the lender for premiums and costs in connection with insuring the life and health of the borrower are not interest if not retained by the lender. If, however, the premiums and costs in connection with insuring the life or health of the borrower are retained by the lender, then the Legislature said they are to be considered interest and within the purview of the pertinent provisions of the statute."
The legislative intent expressed by §§ 1(B) (6) (D) was also recognized by this Court in B.F. Saul Company, et al., supra, when we affirmed the language of the lower court in that case, which had also considered the question:
"* * *. The main thrust of the lower court's rationale is that the determining factor, in the event of any ambiguity as to whether or not a fee or charge should be included as interest, is whether such a charge is retained by the lender and, if so, it should be treated as interest. That such a construction is a projection of the intent of the Legislature becomes manifest upon reading the Act. * * *." (250 Md. 723)
We think that to give a contrary construction to the language of §§ 1(B) (6) (D) than that expressed by the lower court would be attributing a strained and artificial meaning to the express language of the statute.
*149 This Court on occasions too numerous to cite has employed the rule of statutory construction expressed in Maryland Medical Service v. Carver:
"* * *. The cardinal rule of construction of a statute is to discover and to carry out the real legislative intention. Barnes v. State, ex rel Pinkney, 236 Md. 564, 574; 204 A.2d 787, 792 (1962). Casey Development Corp. v. Montgomery County, 212 Md. 138, 129 A.2d 63 (1957). The legislative intent is to be sought in the first instance in the words used in the statute and if there is no ambiguity or obscurity in the language used in the statute, there is usually no need to look elsewhere to ascertain the intent of the legislature. Board of Supervisors of Election of Baltimore City v. Weiss, 217 Md. 133, 141 A.2d 734 (1958). See particularly the comprehensive review of the prior Maryland cases at pages 136 and 137 of 217 Md. If the legislative intent is expressed in clear and unambiguous language, this will be carried into effect by this Court even if this Court might be of the opinion that the policy of the legislation is unwise, or even harsh or unjust, if no constitutional guarantees are impaired by the legislation. Schmeizl v. Schmeizl, 186 Md. 371, 46 A.2d 619 (1946). * * *." (238 Md. 466 at 477-478, 209 A.2d 582, 588 (1964))
For the reasons we have stated in this opinion the judgment of the lower court is affirmed.
Judgment affirmed, with costs.
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615 F. Supp. 382 (1985)
Carl D. SCHIFFMAN, Plaintiff,
v.
CIMARRON AIRCRAFT CORPORATION, Defendant.
No. CIV 83-1284-R.
United States District Court, W.D. Oklahoma.
August 8, 1985.
*383 Mark A. Skof, Broken Arrow, Okl., for plaintiff.
Larry G. Cassil, Oklahoma City, Okl., for defendant.
*384 ORDER
DAVID L. RUSSELL, District Judge.
This is a summary judgment on a claim that a male employee was discriminated against on the basis of sex because his wife received no maternity benefits under an employment-related group disability insurance policy. After the Equal Employment Opportunity Commission granted Plaintiff a Right to Sue, this suit was filed in the Northern District of Oklahoma. Defendant's Motion to Dismiss was denied. On Defendant's motion, venue was moved to this Court. Both parties filed Motions for Summary Judgment. While those motions were pending, the Supreme Court decided Newport News Shipbuilding & Dry Dock Co. v. EEOC, 462 U.S. 669, 103 S. Ct. 2622, 77 L. Ed. 2d 89 (1983). In view of Newport News, this Court requested and received supplemental responses from both counsel.
There was no Stipulation of Facts. Local Rule 14(b) requires that the brief in support of a motion for summary judgment begin with a concise statement of the material facts which are not at issue. Furthermore, the rule requires that those facts be numbered and include references to the portion of the record from which they are drawn. Neither counsel observed this rule. Local Rule 13(h) states: "Factual statements or documents appearing only in the briefs shall not be deemed to be a part of the record in the case, unless specifically permitted by the Court." In the interest of expediting the resolution of this case and since there appears to be no factual dispute, the Court will specifically consider those facts contained only in the briefs.
Defendant, Cimarron Aircraft, qualifies as an "employer" under the Civil Rights Act of 1964, 42 U.S.C. § 2000e. Plaintiff was employed by Defendant from 1979 until sometime in 1981. Prior to early 1979, Defendant agreed to pay half the premium cost of any disability insurance policy the employees obtained as a group. The employees were to be responsible for the cost of the remaining half of each premium. Shortly after Plaintiff began working at Cimarron Aircraft, the employees met to vote on the policy coverage. The basic disability policy covered hospitalization and medical bills, but it excluded maternity benefits for both female employees and spouses of male employees. Full coverage was provided for spouses of female employees. A policy rider which covered maternity and dental benefits was rejected by a majority vote of the employees. At the time the vote was taken, Cimarron Aircraft had only one female employee, the unmarried daughter of the company president.
In April, 1979, Plaintiff's wife was hospitalized for pregnancy-related complications. She was hospitalized again in May, 1979, for childbirth. Those expenses were rejected from payment under the disability policy. Plaintiff's wife was once again hospitalized for pregnancy-related complications in 1980. This time 80% of the costs were paid under the policy. In February, 1981, Plaintiff's wife was hospitalized for the birth of a second child. Those costs were not paid under the policy.
Plaintiff brings this action under the Pregnancy Discrimination Amendment to the Civil Rights Act of 1964, 42 U.S.C. § 2000e(k), alleging that he was discriminated against on the basis of sex. Because maternity benefits for his wife were excluded from the policy, Plaintiff claims that he did not receive the same level of compensation as would a female employee whose spouse could receive full coverage under the policy. Plaintiff asks for an injunction, reimbursement for the pregnancy-related medical expenses incurred on behalf of his wife, interest, costs and attorneys fees. Defendant claims that there was no intent to discriminate and that, in fact, there was no discrimination because the policy, as applied to this particular group of employees, did not realize greater compensation for female employees. The Defendant's only woman employee claimed no maternity benefits herself and had no husband to receive spousal benefits. Defendant requests the costs of defending this action, including attorneys fees.
*385 I.
The question presented is whether an employment-related group disability insurance policy discriminates against male employees on the basis of sex when that policy excludes pregnancy-related medical expenses for female employees and for spouses of male employees, but does not limit the medical coverage for spouses of female employees.
The law in this area has undergone considerable change during the last ten years. The Supreme Court held in General Electric Co. v. Gilbert, 429 U.S. 125, 97 S. Ct. 401, 50 L. Ed. 2d 343 (1976), reh'g denied, 429 U.S. 1079, 97 S. Ct. 825, 50 L. Ed. 2d 799 (1977), that the denial of maternity benefits to female employees under an employer's disability plan was not gender-based discrimination under Title VII of the Civil Rights Act of 1964. In 1978, Congress effectively overruled Gilbert by enacting the Pregnancy Discrimination Amendment (PDA) to the Civil Rights Act of 1964. Newport News, 462 U.S. at 670, 103 S.Ct. at 2624, 77 L.Ed.2d at 94. For the purposes of the Equal Employment Opportunities subchapter, the PDA added the following definition:
(k) The terms "because of sex" or "on the basis of sex" include, but are not limited to, because of or on the basis of pregnancy, childbirth, or related medical conditions; and women affected by pregnancy, childbirth, or related medical conditions shall be treated the same for all employment-related purposes, including receipt of benefits under fringe benefits programs, as other persons not so affected but similar in their ability or inability to work, ....
42 U.S.C. 2000e(k) (in part). Under the PDA, it became unlawful for an employer to discriminate against any individual with respect to his compensation, terms, conditions, or privileges of employment because of pregnancy. 42 U.S.C. § 2000e-2(a)(1). The legislative history of the PDA indicates that Congress meant to make it clear that distinctions based on pregnancy are per se violations of Title VII. H.R.Rep. No. 95-948, 95th Cong., 2nd Sess. 3, reprinted in 1978 U.S.Code Cong. & Ad.News 4749, 4751.
In Newport News Shipbuilding & Dry Dock Co. v. EEOC, 462 U.S. 669, 103 S. Ct. 2622, 77 L. Ed. 2d 89 (1983), the Supreme Court held that an employer's health plan, that had been amended to provide maternity benefits for female employees, discriminated against male employees because their spouses did not receive maternity benefits.[1] In assessing the impact of the PDA, the Court there stated:
In short, Congress' rejection of the premises of General Electric v. Gilbert forecloses any claim that an insurance program excluding pregnancy coverage for female beneficiaries and providing complete coverage to similarly situated male beneficiaries does not discriminate on the basis of sex.
Newport News, 462 U.S. at 685, 103 S.Ct. at 2632, 77 L.Ed.2d at 103 (footnote omitted). It necessarily follows that discrimination against female spouses in the provision of fringe benefits results in discrimination against male employees. Id.
The Defendant's disability policy is a per se violation of Title VII because it draws unlawful distinctions based on pregnancy. While the effective date of the policy is not given, it is assumed to be in early 1979 since Plaintiff voted on the policy coverage after he began working there in 1979. Since the PDA went into effect on October 31, 1978, the policy failed from its inception to comply with the statute. 29 *386 C.F.R. § 1604.10(b)(2). The fact that Defendant did not intend to discriminate is no defense to this liability. Williams v. General Foods Corp., 492 F.2d 399, 404 (7th Cir.1974).
Defendant claims it is not responsible for any discrimination because the employees as a group were free to select any policy they wanted and because the Defendant's involvement was limited to paying only half of the premiums. The EEOC Guidelines for the PDA do not support that position:
23. Q. May an employer offer optional dependent coverage which excludes pregnancy-related medical conditions or offers less coverage for pregnancy-related medical conditions where the total premiums for the optional coverage is paid by the employee?
A. No. Pregnancy-related medical conditions must be treated the same as other medical conditions under any health or disability insurance or sick leave plan available in connection with employment, regardless of who pays the premiums.
Guidelines on Discrimination Because of Sex, 29 C.F.R. Pt. 1604, App. (emphasis in original). The EEOC focuses its attention on the plan's "availability in connection with employment" rather than on who was the source of premium payments or on who had responsibility for selecting the plan. While the EEOC does not have Congressional authority to promulgate rules or regulations pursuant to Title VII, Albemarle Paper Co. v. Moody, 422 U.S. 405, 431, 95 S. Ct. 2362, 2378, 45 L. Ed. 2d 280, 304 (1975), the administrative interpretation by the EEOC, as the enforcing agency, is entitled to great deference. Griggs v. Duke Power Co., 401 U.S. 424, 433-34, 91 S. Ct. 849, 854-55, 28 L. Ed. 2d 158, 165 (1971).
The Defendant further claims it is not responsible for any discrimination because the employees voted to determine the policy coverage. A vote of the employees is comparable to labor union collective bargaining. Employers are not shielded from liability under Title VII if discrimination results from a collective bargaining agreement. Taylor v. Armco Steel Corp., 373 F. Supp. 885 (S.D.Tex.1973). "The right to be free of discrimination is not one which can be bargained away by a union, by an employer, or by both acting in concert." NOW, Inc., St. Paul Chapter v. Minn. Mining & Mfg. Co., 73 F.R.D. 467, 470 (D.Minn.1977). A majority vote of the employees, like a collective bargaining agreement, is no shield for an employer against Title VII liability.
This Court holds that the disability insurance plan made available to employees of the Defendant does not comply with the PDA and, therefore, discriminates against the Plaintiff by making an unlawful distinction based on pregnancy.
II.
Defendant's liability raises the further question of whether the Newport News decision should apply retroactively to this Plaintiff. In Chevron Oil Co. v. Huson, 404 U.S. 97, 106-107, 92 S. Ct. 349, 355-356, 30 L. Ed. 2d 296, 306 (1971), the Supreme Court created a three-part test to determine when a civil, non-constitutional precedent should be limited to only prospective application:
1. Does the decision establish a new principle of law, either by overruling clear past precedent on which litigants may have relied or by deciding an issue of first impression whose resolution was not clearly foreshadowed?
2. Will retrospective application of the rule further or retard its operation, considering the history of the rule, and its purpose and effect?
3. Will retroactivity create substantial inequities such as injustice or hardship for one of the parties?
EEOC v. MTC Gear Corp., 595 F. Supp. 712 (N.D.Ill.1984) (paraphrasing the Chevron test). Under the Chevron test other jurisdictions have applied Newport News retrospectively. MTC Gear Corp; EEOC v. Puget Sound Log Scaling & Grading Bureau, 752 F.2d 1389 (9th Cir.1985); EEOC *387 v. Atlanta Gas Light Co., 751 F.2d 1188 (11th Cir.1985). Since Defendant offers no argument against retroactive application, Newport News will be applied retroactive to the effective date of the disability insurance policy. Defendant will be liable for the pregnancy-related expenses incurred by Plaintiff's wife at the same percentage of coverage as was afforded spouses of female employees under the policy.
The parties have 15 days to stipulate as to the amount of damages or the matter will be set down for trial on the damages only.
Since Plaintiff is no longer employed by Defendant and any parties to be benefited by Plaintiff's requested injunction are not before the Court, Plaintiff's request for an injunction is denied. Gregory v. Litton Systems, Inc., 472 F.2d 631, 633 (9th Cir.1972).
Accordingly, Plaintiff's Motion for Summary Judgment is granted as to liability and denied as to the damages and injunction. Defendant's Motion for Summary Judgment is denied.
NOTES
[1] In its brief, Defendant relied on two cases which had held that under the PDA, benefit plans which excluded pregnancy-related medical expenses for spouses of male employees did not involve gender-based discrimination under Title VII. EEOC v. Lockheed Missiles & Space Co., 680 F.2d 1243 (9th Cir.1982), vacated, 463 U.S. 1202, 103 S. Ct. 3530, 77 L. Ed. 2d 1383 (1983), on remand, 710 F.2d 566 (9th Cir.1983); EEOC v. Joslyn Mfg. & Supply Co., 706 F.2d 1469 (7th Cir.1983), vacated on reconsideration, 724 F.2d 52 (7th Cir.1983). The judgments in both cases were vacated as a result of Newport News. The Defendant's continued reliance on those cases was misplaced.
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251 Md. 99 (1968)
246 A.2d 235
BUGG
v.
BROWN, ET AL.
[No. 337, September Term, 1967.]
Court of Appeals of Maryland.
Decided October 9, 1968.
The cause was argued before HAMMOND, C.J., and MARBURY, McWILLIAMS, FINAN and SMITH, JJ.
Ernest C. Dickson for appellant. Pink Bugg filed brief in proper person.
No brief filed for appellees.
McWILLIAMS, J., delivered the opinion of the Court.
The altercation which provoked this litigation took place shortly after midnight on 19 October 1964 at the Whistle Stop in Perryville, Cecil County. The appellant (Bugg) and the appellees Cash and Carpenter, sitting in their taxicabs, were awaiting the arrival, on the late buses, of sailors returning to the Naval Training Station at Bainbridge, 3 miles distant. Cash was first in line; Carpenter was next; Bugg was further back. When the first bus arrived Bugg, contrary to the prevailing custom, "shot up, cut everybody off, loaded up a full load and went on to Bainbridge." Upon his return, ahead of the others, he became "first in line for the next bus." It is no surprise that Cash and Carpenter took a rather dim view of Bugg's conduct.
*101 Bugg's witnesses testified that Cash, who claims Bugg gave him "a good cussing," grabbed Bugg, aged 70, by the shirt collar, held him at arm's length and said, "Don't you never bring those words through your mouth again for I am not Mr. Gaddy you are fooling with." Cash then "backed him around * * * [behind another taxicab] and let him go." They testified further that shortly thereafter Carpenter "slapped him [Bugg] across the face and broke * * * [his] glasses," knocked him down and then hit him "in the jaw" as he tried to get up. Bugg, they said, ran in back of the Whistle Stop, "crying and begging * * * [Carpenter] not to hit * * * [him] no more." A driver named Hall took Bugg to the hospital.
Bugg filed suit against Cash, Carpenter and Ralph Brown on 31 August 1965. The declaration was signed by two members of a Baltimore law firm. A member of the Cecil County bar entered his appearance for Bugg on the same day. All of them withdrew from the case in February 1967. The trial was held before Judge Mackey and a jury on 17 October 1967. Bugg appeared in proper person. He said he had issued writs of summons for witnesses, including himself, but there is nothing in the record to show it. He advised the court that he planned "to get a lawyer" but he did not ask for a continuance. Judge Mackey was of the opinion that Bugg had had "plenty of time to get a lawyer" (8 months had passed since his attorneys withdrew). "So [said the judge] we are going ahead with the case. * * * You are representing yourself."
Although appellees pleaded only the general issue, counsel, in his opening statement, declared he would show that Bugg is "hotheaded," that he is a "litigious, contrary individual," that he was "known to carry a pistol or a knife," that he attacked Carpenter, that on other occasions he had been convicted of assault, and that on the day following the incident he "was carrying a shotgun around looking for" Cash and Carpenter.
During his direct examination, James Gaddy, produced as a witness on behalf of Bugg, was questioned by the trial judge. The following transpired:
"Q. You say [that you saw] nothing unusual about his face or his head or anything?
"A. He looked that night just about like he is looking *102 right now. He always has been a bad man, ever since I have been knowing him. Bad man. Fights with me every time he gets in conversation with me. Bad man. Of course, he is my neighbor. We are neighbors.
"BY MR. BUGG:
"Q. I didn't ask you those questions, Mr. Gaddy.
"A. Well, you asked me
"Mr. Bugg: I ask that be struck out.
"The Court: Well, I will ask you the jury to disregard it as not being responsive to Mr. Bugg's question, and not really having any bearing on this case. I will ask jury to disregard those remarks."
In his cross-examination by counsel for appellees the following transpired:
"Q. You have already said you don't know anything about the 19th. What is Mr. Bugg's reputation for good order, sobriety, peacefulness, and general reputation in the neighborhood where he lives? Is it good or bad?
"A. (Witness indicating card in hand.)
"Q. Answer my question.
"A. It is bad.
"Mr. Bugg: I object to that.
"A. It is bad. Bad as anybody I have met since I have been in the world, and I will soon be 70 years old, December 27th.
"The Court: I overrule the objection.
"A. He is the baddest man I ever met."
What follows is an excerpt from the cross-examination of Charles Woodrow Calary, another witness for Bugg:
"Q. Now, you know Mr. Bugg, don't you?
"A. Yes, sir.
"Q. What is his general reputation for peace and sobriety and good order in the community in which he lives?
"Mr. Bugg: I object to that.
"The Court: Just a minute. Mr. Evans I will hear you on the propriety of that question.
*103 "Mr. Evans: I think this man is charged with assault. The defense is going to be in here, as far as Mr. Carpenter is concerned, that Pink Bugg is a pugnacious man, he has been in trouble with the law and charged with assault before, and I want to know if Mr. Calary knows him, what his reputation is for good order and peacefulness in the community.
"Mr. Bugg: I object to that.
"Mr. Evans: I think it is relevant.
"Mr. Bugg: I object to that. We are only concerned in this case I don't think that ties in with this case anywhere, where I am concerned with the law. And I think as far as my record
"The Court: Excuse me, this question is proper in testimony as a character witness, but I can't recall this question being
"Mr. Evans: This case charges assault, and I want to know what his general reputation is in the community, if Mr. Calary knows it, as to good order, peacefulness and being law abiding.
"The Court: I am going to sustain the objection, Mr. Evans."
At the conclusion of Bugg's case counsel for appellees moved "for a dismissal, a directed verdict of acquittal" on the ground there was "no evidence of the amount of damage, money-wise, or otherwise." The trial judge appears to have agreed. Bugg had not met the burden, he said, of "satisfying the jury by a preponderance of the evidence as to the extent of his damages or anything that goes beyond, in the mind of the court, mere speculation or conjecture."
We do not find in the record anything which adds up to a prima facie case against Brown. Indeed, that he was home in bed at the time seems to be unchallenged.
Bugg's brief in this Court was filed in proper person but the case was argued by counsel. There was no brief and no appearance for the appellees.
I.
In 86 C.J.S. Torts § 22 (1954) will be found a quite adequate *104 statement of the general rule in respect of the necessity for proving damages:
"Although damage is an essential element of tort, a fundamental distinction is to be observed between two classes of torts, one composed of legal wrongs in themselves constituting invasions of right and thus giving rise to legal damage, the other of breaches of duty not necessarily violative of legal rights and with which some actual express damage must concur in order to establish the violation of right essential to tort. In the former class, damage flows from the wrongful act, itself injurious to another's right, although no perceptible loss or harm accrues therefrom; in the latter, however, some specific actual damage is a condition precedent to the tort."
In the Restatement (Second) of Torts § 18 (1965) it is said:
"Since the essence of plaintiff's grievance consists in the offense to the dignity involved in the unpermitted and intentional invasion of the inviolability of his person and not in any physical harm done to his body, it is not necessary that the plaintiff's actual body be disturbed."
The following statement is taken from Prosser's Law of Torts § 9 at 33-35 (1964):
"Proof of the technical invasion of the integrity of the plaintiff's person by even an entirely harmless, but offensive, contact entitles him to vindication of his legal right by an award of nominal damages, and the establishment of the tort cause of action entitles him also to compensation for the mental disturbance inflicted upon him, such as fright or humiliation."
* * *
"The defendant is liable not only for contacts which do actual physical harm, but also those relatively trivial ones which are merely offensive and insulting. Spitting in the face is a battery, as is forcibly removing *105 the plaintiff's hat, or any other contact brought about in a rude and insolent manner. `The least touching of another in anger,' said Chief Justice Holt, `is a battery;' and no harm or actual damage of any kind is required."
To the same effect see also Richardson v. Boato, 207 Md. 301, 302-06, 114 A.2d 49 (1955).
In Mason v. Wrightson, 205 Md. 481, 109 A.2d 128 (1954), the plaintiff, an attorney, over his strenuous objection, was required by a police sergeant to stand up and be searched. At the trial of his suit against the sergeant for assault and battery he offered no proof of pecuniary loss. The trial judge found for the defendant on the theory that the wrong done was at most technical and that no actual damage was established. We reversed and entered a judgment for the plaintiff for one cent damages and costs. Chief Judge Brune, for the Court, said:
"The remaining question is whether the appellant is entitled to recover any damages, and if so, how much. It would be very difficult, if not impossible, to estimate the appellant's damages on a pecuniary basis, and there was no proof thereof. Though there are exceptions to this rule, as in conspiracy cases, where damage is the gist of the action or an essential element of the tort (Horn v. Seth, 201 Md. 589, 95 A.2d 312), we do not regard this case as falling within such exceptions, but as coming within the rule recognized in Coca-Cola Bottling Works v. Catron, 186 Md. 156, 164, 46 A.2d 303, 306; and Salisbury Coca-Cola Bottling Co. v. Lowe, 176 Md. 230, 4 A.2d 440, under which, as was said in Horn v. Seth, 201 Md. 589, 597, 95 A.2d 312, 316, in referring to these cases, `* * * if damage is shown in a tort action, the defendant is not entitled to a directed verdict merely because the monetary amount is not proven, even though the defendant may be entitled to an instruction, if requested, limiting recovery to nominal damages.' We think that the humiliation incidental to the search here made does show some damage. As was said in Baltimore v. Appold, 42 *106 Md. 442: `It is well settled that every injury to the rights of another imports damages, and if no other damage is established, the party injured is at least entitled to a verdict for nominal damages.'" Id. at 488-89.
It is obvious that Bugg has made out a prima facie case against Carpenter. It must be assumed that he experienced some pain and suffering (he said he was "still suffering" with his shoulder and jaw) as a result of his beating. It is well settled that a pecuniary basis need not be established to make pain and suffering compensable and the jury's determination of the amount thereof will not ordinarily be disturbed. As against Cash, Bugg would clearly have been entitled to an award of nominal damages had the jury found in his favor on the issue of liability.
II.
Bugg contends the trial judge "should not have permitted counsel for defendants to show bad character of plaintiff by cross-examination of plaintiff's witness when plaintiff did not show his character on direct examination of said witness." Since, for reasons already stated, the case will be remanded, we shall not undertake to resolve this contention. Nor shall we comment on the anomalies apparent in the record. However, since it seems likely the case will be tried again, we shall set forth what seem to be the applicable rules of evidence. We have assumed, of course, that there will be some amendment to the pleadings, Maryland Rule 342 c 2 (g), and that the parties will arrange to produce their testimony in the proper manner and at appropriate times.
In civil actions evidence of the general reputation of the plaintiff generally is not admissible unless it is attacked or unless the nature of the proceedings puts the reputation of the parties in issue. Tully v. Dasher, 250 Md. 424, 438, 244 A.2d 207 (1968); Sappington v. Fairfax, 135 Md. 186, 188, 108 A. 575 (1919). In 29 Am.Jur.2d Evidence § 337 (1967), it is said that "usually in actions for assault and battery, evidence of the character or reputation of either the plaintiff or the defendant is admissible." The following is quoted from a note in 154 A.L.R. 121, 129 (1945):
*107 "In assault and battery cases evidence of the plaintiff's reputation for turbulence and quarrelsomeness may become admissible either because the defendant pleads self-defense or because it is uncertain, on the evidence, as to whether the plaintiff or the defendant was the aggressor, or, in some cases, on the issue of damages."
In 6 C.J.S. Assault and Battery § 41 (a) (1937), it is said:
"As a general rule, in actions for assault or assault and battery, the character of the parties thereto is not in issue, and evidence with respect thereto is inadmissible either for or against a party, unless it is first attacked or supported by the adversary, or placed in issue by the nature of the proceeding itself, as where there is a dispute as to who was the aggressor."
* * *
"Where justification is pleaded by way of self-defense, it is competent to show the character of plaintiff as being quarrelsome or turbulent, provided such fact has been brought to the knowledge of defendant prior to the assault, and this is so even though plaintiff has offered no evidence of his good character in that respect. This principle applies where the defense is that force was used to resist an assault on one whom defendant has right to defend.
"Where the question of who was the aggressor is a disputed issue in the case, evidence of plaintiff's character or reputation for turbulence is admissible, even though defendant did not have knowledge of such character before the assault."
See also, Peoples Loan & Inv. Co. v. Travelers Ins. Co., 151 F.2d 437 (8th Cir.1945); Cain v. Skillin, 219 Ala. 228, 121 So. 521 (1929); Phillips v. Mooney, 126 A.2d 305 (D.C. Mun. App. 1956); Niemeyer v. McCarty, 221 Ind. 688, 51 N.E.2d 365 (1943).
III.
We think Judge Mackey was justified, in the circumstances, in refusing to give Bugg a continuance. Whether his ruling in *108 respect of the so-called doctor's bills or "hospital records" was correct need not detain us. We shall assume that Bugg, if he again elects to appear in proper person, will seek information, before the trial, as to the proper procedure for the admission of these items into evidence.
Accordingly we shall reverse the judgment of the trial court in favor of Cash and Carpenter and remand the case for a new trial. The judgment in favor of Brown will be affirmed.
Judgment in favor of appellee Brown affirmed.
One-third of the costs to be paid by appellant.
Judgment in favor of appellees Cash and Carpenter reversed.
Case remanded for a new trial.
The remaining two-thirds of the costs to abide the result below.
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601 S.W.2d 104 (1980)
Louis WILSON, Appellant,
v.
Leon WILSON, Appellee.
No. 20437.
Court of Civil Appeals of Texas, Dallas.
May 19, 1980.
Noel C. Ice, II, Watson & Ice, Fort Worth, for appellant.
Hugh O. Mussina, Dallas, for appellee.
Before AKIN, ROBERTSON and STOREY, JJ.
ROBERTSON, Justice.
This is an appeal from an order overruling a plea of privilege. Appellee, Leon Wilson, filed this suit in Dallas County, Texas, against appellant, Louis Wilson, to set aside a trust agreement. Appellant filed a plea of privilege to have this suit transferred to Tarrant County, his county of domicile, contending that venue was determined when appellee, as intervenor in a prior suit against appellant on the same cause of action, took a nonsuit during the pendency of a plea of privilege filed by appellant in that prior suit. The trial court in the present suit determined that an exception existed to venue in appellant's county of domicile pursuant to section 7 of the general venue statute, Tex.Rev.Civ.Stat. Ann. art. 1995 (Vernon 1964), and rendered an order overruling the plea of privilege. We reverse the order of the trial court and order the suit transferred to Tarrant County.
In 1976 the guardian of the person and estate of Asie Lee Wilson filed a petition to *105 set aside a trust executed by Asie Lee Wilson, as trustor, to appellant, as trustee. Appellant filed his plea of privilege to be sued in Tarrant County, which was then controverted by the guardian. After the controverting affidavit was filed, but before any action was taken on the plea of privilege, appellee filed a plea of intervention and citation issued commanding appellant to appear and answer appellee's plea in intervention. Appellant's plea of privilege was never acted upon by the court, but the guardian subsequently moved for and was granted a nonsuit in that cause. Several months later appellee also was granted a nonsuit in that cause.
In January of 1978 appellee filed an original petition in this suit against appellant on the same cause of action in which he had previously taken a nonsuit. Both actions were suits to set aside the same trust instrument, and both suits based such action on the same grounds. Appellant duly filed his plea of privilege in the second suit, and appellee filed his controverting plea. At the hearing on the venue question, appellant contended that the taking of a nonsuit in the prior cause estopped appellee from raising the venue issue for a second time in a new suit on the same cause of action. Appellee contended that because the trial court never entered an order granting his plea in intervention, he never became a party to the prior suit.
The long-standing rule in Texas is that when a defendant files a plea of privilege and the plaintiff thereafter, but prior to a ruling on the plea, takes a nonsuit as to that defendant, the plaintiff thereby abandons his contest of the plea of privilege and effectively withdraws his controverting affidavit. Tempelmeyer v. Blackburn, 141 Tex. 600, 603, 175 S.W.2d 222, 223 (1943); First National Bank v. Hannay, 123 Tex. 203, 205, 67 S.W.2d 215 (1933). While in some instances this rule has been said to be based on the principle of res judicata, when no ruling is obtained on the plea prior to the nonsuit it is more properly held to be an admission of the merit of the defendant's plea of privilege that estops subsequent claims to the contrary. See Royal Petroleum Corp. v. McCallam, 134 Tex. 543, 561, 135 S.W.2d 958, 967 (1940); First National Bank v. Hannay, 123 Tex. at 205, 67 S.W.2d at 215; Joiner v. Stephens, 457 S.W.2d 351, 352 (Tex.Civ.App. El Paso 1970, no writ). In Joiner the court of civil appeals stated the policy behind the rule as follows: "[D]efendants are not to be subjected to repeated expense of pressing venue claims in successive actions by a plaintiff who, through abuse of the privilege of non-suit [sic], prevents a final adjudication upon the question." 457 S.W.2d at 352; see 1 R. McDonald, Texas Civil Practice § 4.62, at 630-31 (rev. 1965).
While appellant contends that this rule applies in the present case, appellee argues that the rule does not apply because his plea in intervention was not granted by the trial court in the prior suit, and thus, he never became a party to the plea of privilege proceeding. We conclude that the above stated rule does apply because appellee, as intervenor in the prior suit, was a party to that suit for all purposes and he was aligned opposite appellant. Rule 60 of the Texas Rules of Civil Procedure provides that "[a]ny party may intervene, subject to being stricken out . . . ." Thus, unlike federal practice, see Fed.R.Civ.P. 24, Texas practice does not require a party to obtain permission of the court before intervening, 24 B. McElroy, Civil Pre-Trial Procedure §§ 495-97 (Texas Practice 1980); rather, once a plea in intervention is filed the intervenor becomes a party for all purposes, absent a ruling by the court striking the intervention. 1 R. McDonald, Texas Civil Practice § 3.48, at 398 (1965).
When filing such a plea the intervenor either joins "the plaintiff in claiming what is sought by the complaint or [unites] with the defendant in resisting the claims of the plaintiff, or [demands] something adversely to them both." Id. § 3.46, at 393-94. Appellee clearly was aligned with the plaintiff in the first suit because his plea of intervention requested that he be "substituted as the successor in interest of" the plaintiff. Additionally, the notification to "the opposite *106 party," as required by rule 60, was served on appellant. Appellee, through these actions, adopted as his own the positions and pleadings of the plaintiff, including the plaintiff's contest of appellant's plea of privilege. See Bell v. Craig, 555 S.W.2d 210, 212 (Tex.Civ.App. Dallas 1977, no writ) (Plea in intervention sufficient to make intervenor party to temporary injunction proceedings as well as suit on the merits). Consequently, when the trial court granted a nonsuit for appellee, the rule of law first quoted above came into operation, and appellee effectively abandoned his contest of appellant's plea of privilege. Thereafter, appellee was estopped to refile the same suit in any county other than that named in appellant's original plea of privilege.
Appellee refers us to Sports Specialties, Inc. v. James Talcott Western, Inc., 389 S.W.2d 357 (Tex.Civ.App. Waco 1965, no writ), which holds that when one of two defendants is granted his plea of privilege and the case as to that defendant only is transferred, the venue rights of the other defendant are not determined and he is not precluded from later filing his own plea of privilege. Id. at 360. Appellee argues that Sports Specialties stands for the proposition that the effect of a plea of privilege will not be extended to parties not participating in the plea of privilege proceeding. We need not decide whether this broad proposition is sound because appellee, as a party aligned opposite appellant in the prior suit, was a participant in the plea of privilege proceeding, and thus, even under the rule espoused by appellee, he would be bound by the outcome of the proceeding.
Appellee cites no authority in support of his other arguments, and we find no merit in them. Accordingly, we reverse the order of the trial court, which overruled appellant's plea of privilege, and order that this suit be transferred to Tarrant County.
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246 A.2d 926 (1968)
Ira Lee SHY, Appellant,
v.
STATE of Delaware, Appellee.
Supreme Court of Delaware.
September 24, 1968.
Richard Allen Paul, Asst. Public Defender, Wilmington, for appellant.
Jay H. Conner, Deputy Atty. Gen., Wilmington, for the State.
WOLCOTT, C. J., and CAREY and HERRMANN, JJ., sitting.
WOLCOTT, Chief Justice.
The appellant, in 1963, received two five-year concurrent sentences for burglary (4th degree), and was placed on probation for a period of five years. On August 19, 1966, he received a sentence of three years on a charge of grand larceny; his probation on the two burglary charges was revoked, and he was sentenced to serve the five-year sentences on those charges.
*927 On December 14, 1966, the appellant wrote the Superior Court. His letter was docketed as a motion for reduction of sentence under Criminal Rule 35(b), Del.C. Ann. No action was taken thereafter until present counsel for appellant requested a hearing on the motion on December 8, 1967. On December 13, 1967, the Superior Court, without hearing, denied the motion for reduction of sentence.
In this appeal from the order denying the motion to reduce the sentence, the appellant asserts a single ground for reversal, viz., lack of due process by reason of the failure of the Superior Court to hold a hearing on the motion with counsel present.
It is clear by reason of Criminal Rule 43 that it is necessary for a criminal defendant and his counsel to be present at every stage of the trial when the Superior Court is exercising original jurisdiction over the defendant. This requirement embraces the imposition of final sentence following conviction. It was so held in United States v. Behrens, 375 U.S. 163, 84 S. Ct. 295, 11 L. Ed. 2d 224.
An application for reduction of sentence under Criminal Rule 35(b), however, is outside of the requirement of Criminal Rule 43, for such a motion comes after the imposition of a final sentence. Such a motion is addressed to the discretion of the court.
Criminal Rule 35 contains two subsections. Rule 35(a) permits the filing of a motion to correct an illegal sentence. It provides that "unless the motion and the files and records of the case show to the satisfaction of the court that the prisoner is not entitled to relief", the court shall hold a hearing on the motion. The meaning is clear to the effect that if, on the face of the papers, the prisoner is not shown to be entitled to relief, the court is not required to hold a hearing, but may deny the motion summarily. This procedure finds implicit approval in United States v. Behrens, supra.
Criminal Rule 35(b) permits the filing of a motion for the reduction of a sentence within four months of its imposition. No guidelines similar to those set out in Rule 35(a) are specifically set forth in Rule 35(b), but we think a Rule 35(b) motion to reduce may not rise any higher than a Rule 35(a) motion to correct. The Rule 35(a) guidelines are by implication incorporated in Rule 35(b).
It follows, therefore, that a motion under Criminal Rule 35(b) is addressed to the discretion of the court, and if the moving papers fail to make some showing for relief, the motion, in the discretion of the court, may be denied without hearing. In the case before us, it is clear that the court properly exercised its discretion in denying the motion summarily without hearing. There is no failure of due process.
The judgment below is affirmed.
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601 S.W.2d 803 (1980)
Willie Earl CHUMLEY, Appellant,
v.
Carolyn HALL, Appellee.
No. 20381.
Court of Civil Appeals of Texas, Dallas.
June 24, 1980.
Rehearing Denied July 15, 1980.
*804 James A. Martin, Burt Barr, Dallas, for appellant. Colleen A. Dunbar, Dallas, William A. Mazur, Grand Prairie, for appellee.
Before GUITTARD, C. J., and ROBERTSON and HUMPHREYS, JJ.
ROBERTSON, Justice.
This appeal concerns a suit to establish paternity. After a nonjury trial, the court entered judgment declaring appellant to be the father of appellee's child. Appeal is from that judgment. We affirm.
Appellant's first two points of error are that the court erred in finding he was the father of the child and that it erred in so finding based on a blood test. In reviewing points that simply complain of error in findings without further specificity, we need determine only the legal sufficiency of the evidence to support those findings. Chemical Cleaning, Inc. v. Chemical Cleaning & Equipment Service, Inc., 462 S.W.2d 276, 277 (Tex.1970); Shaw's D. B. & L., Inc. v. Fletcher, 580 S.W.2d 91, 93-94 (Tex.Civ. App. Houston [1st Dist.] 1979, no writ).
We find that some evidence exists in the record to support these findings. An expert in forensic serology testified that a blood test of appellant, appellee, and appellee's child showed 96.1% plausibility of paternity; other witnesses testified that appellant had directly and indirectly acknowledged that he was the father of appellee's child, and; the evidence showed that appellant had access to and had sexual relations *805 with appellee approximately nine months before the birth of the child.
Appellant argues that rather than showing 96.1% plausibility of paternity the expert's testimony establishes impossibility of paternity. We have reviewed this testimony and find no support for appellant's argument. Neither do we find the legal authority cited by appellant to be relevant to this argument. We recognize that a blood test can never establish paternity with complete certainty; however, nothing in the record indicates that this blood test or the expert's testimony based thereon was taken by the trial court as conclusive proof of paternity, nor do we consider it as such. Nonetheless, that evidence does constitute some evidence, along with the other evidence outlined above, in support of the judgment. Accordingly, appellant's first two points of error are overruled.
Appellant's third point of error is that the trial court erred in considering testimony of appellant given at a former trial without a proper predicate being laid for its admission. The statement of facts reflects that, after some testimony by appellant, the trial judge recessed the trial in order to confer in her chambers with the attorneys for both sides. She thereupon indicated to counsel that the testimony of appellant that was taken in the prior proceeding of divorce between appellant and appellee also held before this judge varied from the testimony appellant had just given. Specific quotations from the testimony of the divorce proceedings were read to the attorneys and noted by the court reporter. Appellant argues that it was improper for the court to consider this testimony without telling appellant what portions of it were considered and without giving appellant an opportunity to object to or counter this evidence.
While we strongly disapprove of the trier of fact making a private investigation of the veracity of a witness, such being the function of counsel, the record before us does not indicate that that was the situation here. Certain portions of appellant's testimony in the prior divorce proceeding were read and recorded by the court reporter. That testimony, however, was never received as evidence. Since we must presume that in a trial to the court the trial judge considered only properly admitted evidence in rendering the judgment, no error is evident in this record.
Even if we assume for the sake of argument that this testimony was admitted as evidence and considered by the trial court, no reversible error exists. Contrary to appellant's assertions the record reflects that the trial judge quoted to both parties those portions of the prior testimony that she believed were inconsistent with appellant's testimony in this case. No objection was made by appellant and the record reflects that opportunity existed for objection. Swinney v. Winters, 532 S.W.2d 396, 401 (Tex.Civ.App. San Antonio 1975, writ ref'd n. r. e.); 3 R. McDonald, Texas Civil Practice § 11.21.4 (rev. 1970). Thus, any error which may have existed in the admission of this evidence, assuming it was admitted, was waived by appellant's failure to make timely objection. Appellant's third point of error is overruled.
Affirmed.
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431 Pa. 321 (1968)
Dozor Agency, Inc., Appellant,
v.
Rosenberg.
Supreme Court of Pennsylvania.
Argued January 12, 1966.
Reargued November 29, 1967.
October 3, 1968.
Before BELL, C.J., MUSMANNO, JONES, COHEN, EAGEN, O'BRIEN and ROBERTS, JJ.
*322 Jack Brian, for appellant.
David Kanner, for appellee.
James E. Meneses, with him E.S. Lawhorne, for insurance company, appellee.
OPINION PER CURIAM, October 3, 1968:
Dozor Agency, Inc. (Dozor), a corporation engaged in selling insurance, instituted an equity action in the Court of Common Pleas of Delaware County against Carl Rosenberg (Rosenberg) and World Mutual Health and Accident Insurance Company of Pennsylvania (World).
In this action, Dozor alleged, inter alia, that in 1951 it had employed Rosenberg as a subagent, that he was thereafter promoted to sales manager and later became Dozor's president; in all of these capacities he occupied a position of trust and confidence and had access to all of Dozor's records; in May 1960, Rosenberg resigned from Dozor and, allegedly, took from Dozor's files and possession certain confidential records and data including pertinent information concerning active policyholders of Dozor; that these records and information were taken for Rosenberg's own business interest and that of World by whom Rosenberg had become employed; that both Rosenberg and World made use for their own purposes of Dozor's confidential *323 information, records and property. World and Rosenberg filed preliminary objections to Dozor's complaint which were overruled by the Court of Common Pleas of Delaware County and, on appeals from such order, this Court affirmed the order of the court below. See: Dozor Agency v. Rosenberg, 403 Pa. 237, 169 A.2d 771 (1961).
Thereafter, after hearings and the taking of considerable testimony, the Court of Common Pleas of Delaware County entered a decree which (1) permanently enjoined World and Rosenberg and their agents from making available to any other person or corporation any information obtained by them from confidential information and records of Dozor and (2) awarding damages to Dozor in the amount of $5,000 as compensatory damages and $1,000 as punitive damages. From that decree, Dozor appealed on the ground that the amount of compensatory and punitive damages was inadequate and could not be supported by the evidence of record.
On March 22, 1966, this Court, affirming the injunctive portion of the decree, remanded the case to the court below for a re-evaluation of damages. Thereafter, World and Rosenberg filed a petition for reargument which was denied.
Sometime thereafter, this Court, sua sponte, determined that reargument should be held limited to the question of the adequacy of the damages awarded by the court below and such reargument was held.
It is settled beyond question that the findings of fact of a chancellor, approved by the court en banc, are controlling unless the record reveals that such findings of fact are without evidentiary support of record or such findings are premised on erroneous inferences and deductions or an error of law. See: Bokoch v. Noon, 420 Pa. 80, 215 A.2d 899 (1966); Weiherer v. Werley, 422 Pa. 18, 221 A.2d 133 (1966).
*324 We have carefully studied and examined the record in this case. The record reveals sufficient evidence upon which the findings of fact of the chancellor, approved by the court en banc, could be bottomed and we can ascertain no erroneous inferences or deductions or any errors of law. Under such circumstances, for us to require the court below to re-evalute the damages would offend the well-settled rule of this Court as to the effect of a chancellor's findings of fact. Had we been acting in the capacity of the chancellor we might have arrived at a different result as to the amount of compensatory and punitive damages under the factual posture of this matter, yet we must accord controlling weight to the findings of fact made by the chancellor who heard the testimony and who had an opportunity to observe the witnesses.
We must affirm, in its entirety, the decree of the court below.
Decree affirmed. Appellees to pay costs.
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203 B.R. 422 (1996)
In re Russell D. GRIFFITH, Debtor.
Bankruptcy No. 96-62181.
United States Bankruptcy Court, N.D. Ohio.
November 25, 1996.
Edwin H. Breyfogle, Massillon, OH, for Plaintiff.
Bruce Hall, Medina, OH, for Defendant.
MEMORANDUM OF DECISION
JAMES H. WILLIAMS, Chief Judge.
Presently before the Court is the objection to confirmation and motion to dismiss filed by Connie Griffith, a secured creditor and the former wife of Debtor, Russell D. Griffith. Mrs. Griffith's motion was filed On September 24, 1996. A hearing on this matter was conducted on October 30, 1996 and the cause was taken under advisement. For the reasons stated below, Mrs. Griffith's motion will be GRANTED.
*423 FACTS
Mr. and Mrs. Griffith were married on August 17, 1983 and have no children. A judgment entry granting the couple a divorce was entered by the Court of Common Pleas in Wayne County, Ohio on July 24, 1995. In the judgment, the Wayne County court incorporated a provision of an earlier referee's report and recommendation that granted Mr. Griffith ownership of a marital farm consisting of 128 acres of land, a house and several buildings located at 1454 South Smyser Road, Wooster, Ohio. The judgment also ordered Mr. Griffith to pay Mrs. Griffith $87,684.50 for her share of the marital property. Mrs. Griffith's judgment was secured by an interest in the farm.
Mr. Griffith has never made the payment mandated by the divorce order. His attempt to comply by partitioning and selling lots from the farm was unsuccessful due to his inability to convey clear title to potential purchasers.[1] As time passed, Mr. and Mrs. Griffith both created their own sale proposals. Mrs. Griffith formulated a deal where the farm would be sold in its entirety for cash. Mr. Griffith sought outside assistance in the continuation of his quest to partition the farm and keep a portion for himself.
However, in response to Mr. Griffith's lack of payment, further action was taken by the Wayne County court. In July, 1996, the farm was orally ordered to be sold, by agreement of the Griffiths, within thirty days. With no partition deal imminent and believing that his farm was about to be sold in its entirety, Mr. Griffith filed a petition for relief under Chapter 13 of Title 11 of the United States Code on August 21, 1996.
The debt owed to Mrs. Griffith and other lenders holding a secured interest in the farm is the only item of major significance in Mr. Griffith's bankruptcy case. Schedule I of his petition shows his total monthly income to be $3,483.33. Other than debts that relate to the farm, the entirety of Mr. Griffith's indebtedness amounts to $12,433.94 in unsecured, nonpriority claims.[2] Mr. Griffith has proposed a fifty-four month plan with payments of $25.00 monthly. These payments would only satisfy a small percentage of Mr. Griffith's debts. However, he proposes to pay off his debts in their entirety through the future sale of lots from his farm.
DISCUSSION
The Court has jurisdiction in this matter by virtue of Section 1334(b) of Title 28 of the United States Code and General Order No. 84 entered in this district on July 16, 1984. This is a core proceeding under section 157(b)(2)(L) and (O) of Title 28 of the United States Code. This Memorandum of Decision constitutes the Court's findings of fact and conclusions of law pursuant to Rule 7052 of the Federal Rules of Bankruptcy Procedure.
There are numerous grounds raised by Mrs. Griffith in her motion. However, the issue of Mr. Griffith's good faith in the filing of his petition dominated the hearing held by the Court. Mrs. Griffith has asserted that the provisions of Section 1307(c) of Title 11 of the United States Code mandate the dismissal of this case.[3] Therefore, the Court will *424 begin its analysis by examining the good faith filing requirements for a Chapter 13 petition.
The Sixth Circuit has concluded, "We are persuaded that there is good authority for the principle that lack of good faith is a valid basis of decision in a `for cause' dismissal by a bankruptcy court." Industrial Insurance Services, Inc. v. Zick (In re Zick), 931 F.2d 1124, 1127 (6th Cir.1991) (discussing dismissal in a Chapter 7 context). A similar "good faith" test has been judicially inferred for Chapter 13 filings from the "for cause" language of section 1307(c). In the Matter of Robert John Love, 957 F.2d 1350, 1354 (7th Cir.1992); In re Brenner, 189 B.R. 121, 129 (Bkrtcy.N.D.Ohio 1995).
While the Sixth Circuit has never defined the elements of good faith in the context of Section 1307(c), it has determined the meaning of good faith as it relates to the confirmation of a Chapter 13 plan under Section 1325(a). Caldwell v. Hardin (In re Caldwell), 895 F.2d 1123, 1126 (6th Cir.1990). The policy behind good faith is the same regardless of whether the issue is raised under Section 1307(c) or 1325(a). Love, 957 F.2d at 1356-57. Therefore, similar analysis can be used to determine good faith under both sections.
Under Caldwell, the circuit suggested twelve factors that could be examined to determine if good faith is present. These factors are:
(1) the amount of the proposed payments and the amount of the debtor's surplus;
(2) the debtor's employment history, ability to earn and likelihood of future increase in income;
(3) the probable or expected duration of the plan;
(4) the accuracy of the plan's statements of the debts, expenses and percentage repayment of unsecured debt and whether any inaccuracies are an attempt to mislead the court;
(5) the extent of preferential treatment between classes of creditors;
(6) the extent to which secured claims are modified;
(7) the type of debt sought to be discharged and whether any such debt is nondischargeable in Chapter 7;
(8) the existence of special circumstances such as inordinate medical expenses;
(9) the frequency with which the debtor has sought relief under the Bankruptcy Reform Act;
(10) the motivation and sincerity of the debtor in seeking Chapter 13 relief;
(11) the burden which the plan's administration would place upon the trustee; and,
(12) whether the debtor is attempting to abuse the spirit of the Bankruptcy Code.
Caldwell, 895 F.2d at 1126-27 (citations omitted). Most of these factors are also relevant to the issues of dismissal for lack of good faith. Given the fact that Mrs. Griffith is the movant and has requested the harsh remedy of dismissal, she will bear the burden of proving her former husband's lack of good faith. This can be accomplished by determining which, if any, of the above suggested factors are applicable to the case at bar.
The court finds that Mr. Griffith's case is tainted by many of the twelve factors and it thus appears to have been filed in bad faith. He has proposed a plan that provides very low monthly payments with a vague pledge that all claims will eventually be paid through the sale of his farm.[4] Furthermore, *425 Mr. Griffith's creditors will be forced to wait up to fifty-four months to receive payment. Additionally, the accuracy of Mr. Griffith's statement about his debts must be questioned since it is clear that he has understated the value of the debt that he owes to his former wife.
However, by far the worst aspect of Mr. Griffith's case is his motivation for filing bankruptcy and the fact that his actions are an attempt to abuse the spirit of the Bankruptcy Code. Mr. Griffith admitted during the hearing before this court that his sole purpose in filing for relief under Title 11 was to avoid the sale of his farm. This was a direct effort to thwart the judicial power of the Wayne County Court of Common Pleas. Other courts in this country have dealt with efforts by debtors like Mr. Griffith who are seeking a bankruptcy appeal of a state domestic relations decision.
It must be remembered that, "Even when brought under the guise of a federal question action, a suit whose substance is domestic relations generally will not be entertained in a federal court." Firestone v. Cleveland Trust Co., 654 F.2d 1212, 1215 (6th Cir.1981) (citations omitted). This basic principle cannot be applied with bright line certainty when bankruptcy law is involved. Winn v. McCracken (In re McCracken), 94 B.R. 467, 470 (Bkrtcy.S.D.Ohio 1988). However, bankruptcy court authority should not be exercised when it is clear that the bankruptcy action is merely a continuation of a previously litigated dispute between divorced spouses. Id.
A bankruptcy court should not put itself in a position where its purpose is to second guess a previous decision of a domestic relations court. Brown v. Davis (In re Davis), 172 B.R. 696, 700 (Bkrtcy.S.D.Ga. 1993). A debtor who seeks reexamination of an issue previously considered by a state domestic relations court is acting with improper motivation. In re Bandini, 165 B.R. 317, 320 (Bkrtcy.S.D.Fla.1994). Such an action violates the spirit of the Bankruptcy Code and should not be permitted.
The court concludes that it is clear that Mr. Griffith is seeking bankruptcy protection solely to avoid the effect of a judgment fully litigated before the Wayne County Court of Common Pleas. Numerous factors that have been examined demonstrate that he has filed his bankruptcy case in bad faith. The case will be dismissed. In light thereof, it is unnecessary to consider the numerous other arguments that have been raised by Mrs. Griffith.
An order in accordance with the foregoing shall issue forthwith.
NOTES
[1] Mr. Griffith's inability to grant clear title was apparently caused by Mrs. Griffith's lack of cooperation and hesitation by the institution holding the mortgage on the farm to grant a release.
[2] Various appraisals of Mr. Griffith's farm place its value well in excess of $350,000.00. Schedule D states that he owes $295,500.00 in claims that are secured by an interest in his farm. This amount, however, should be increased by $37,684.50 as Mrs. Griffith's claim has been understated.
[3] Section 1307(c) states:
(c) Except as provided in subsection (e) of this section, on request of a party in interest or the United States trustee and after notice and a hearing, the court may convert a case under this chapter to a case under chapter 7 of this title, or may dismiss a case under this chapter, whichever is in the best interests of creditors and the estate, for cause, including
(1) unreasonable delay by the debtor that is prejudicial to creditors;
(2) nonpayment of any fees and charges required under chapter 123 of title 28;
(3) failure to file a plan timely under section 1321 of this title;
(4) failure to commence making timely payments under section 1326 of this title;
(5) denial of confirmation of a plan under section 1325 of this title and denial of a request made for additional time for filing another plan or a modification of a plan;
(6) material default by the debtor with respect to a term of a confirmed plan;
(7) revocation of the order of confirmation under section 1330 of this title, and denial of confirmation of a modified plan under section 1329 of this title;
(8) termination of a confirmed plan by reason of the occurrence of a condition specified in the plan other than completion of payments under the plan;
(9) only on request of the United States trustee, failure of the debtor to file, within fifteen days, or such additional time as the court may allow, after the filing of the petition commencing such case, the information required by paragraph (1) of section 521; or
(10) only on request of the United States trustee, failure to timely file the information required by paragraph (2) of section 521.
[4] While it is true that Mr. Griffith has little remaining income after his monthly expenses are paid, almost $2,000.00 of his monthly expenses are the direct result of his ownership of the farm. Mr. Griffith's remaining debts could be easily and quickly paid if he did not own the farm.
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203 B.R. 303 (1996)
In re Keith D. RUSSELL, and Dorothy Russell, Debtors.
Carlos R. SHANNON and Linda P. Shannon, Plaintiffs,
v.
Keith D. RUSSELL, and Dorothy Russell, Defendants.
Bankruptcy No. 91-14721-B7, Adv. No. 96-90344.
United States Bankruptcy Court, S.D. California.
December 18, 1996.
*304 *305 *306 *307 Laurie E. Wright, San Diego, CA, for Plaintiffs.
Eric C. Hoffland, Noorigian & Associates, San Diego, CA, for Defendants.
FINDING OF FACT, CONCLUSIONS OF LAW, and ORDER
JOHN L. PETERSON, Bankruptcy Judge.
In this adversary proceeding, after due notice, trial was held on October 1st and 2nd, 1996, on the Complaint to Determine Dischargeability of Debt filed on May 29, 1996, by the Plaintiffs, Carlos R. Shannon (referred to hereinafter individually as "Shannon") and Linda P. Shannon (referred to hereinafter collectively as "Plaintiffs"), against Debtors/Defendants, Keith D. Russell (referred to hereinafter individually as "Russell") and Dorothy Russell (referred to hereinafter collectively as "Debtors"). The parties appeared through counsel, and each offered the testimony of numerous witnesses, including Shannon and Russell, as well as extensive documentary evidence, including Plaintiffs' Exhibits 1-5, 7-56, 58-63, 65-178, 180-249, 253-271, and 274-276, and Defendants' Exhibits A, B, F, G, I-L, and O-Q.
Plaintiffs litigated whether their claim against Debtors should be excepted from discharge under either the fraud provisions of 11 U.S.C. § 523(a)(2)(A) or the willful and malicious injury provision of § 523(a)(6). Debtors dispute these claims not only as to the substance of the allegations, but also on the grounds that the statute of limitations bars Plaintiffs' fraud claim. At the close of trial, the Court took the matter under advisement and granted the parties 15 days to file briefs in support of their respective positions. Such memoranda having been filed, together with briefs in response and reply, the matter is ripe for disposition. Upon review of the record, the Court finds for Plaintiffs in part and for Defendants in part.
FINDINGS OF FACT
In the fall of 1987, Keith Russell, a licensed realtor since 1984, and Dorothy Russell the Debtors purchased a home at 710 Amiford Drive, in the Point Loma area of San Diego County, California, for $400,000. (Exhibit 1). They financed the transaction with a cash down payment, a $320,000.00 first trust deed with Glenfed Mortgage Corp., (Exhibit 50), and a $20,000.00 second trust deed with the sellers, (Exhibit 49). Later, Debtors obtained $80,000.00 from Wells Fargo Bank on an additional deed of trust, dated May 5, 1996, (Exhibit 51), and $22,000.00 on another deed of trust given to a Judith M. Huhn, (Exhibit 39). Finally, Debtors refinanced the loans, executing a $630,000.00 promissory note with Peninsula Bank of San Diego on January 2, 1990, (Exhibit 52), secured by a deed of trust on Debtors' Amiford property, (Exhibit 28), thereby paying off the earlier secured obligations. According to the testimony by Russell on cross-examination at trial, Debtors wound up taking some $250,000 in loan proceeds out of the property over and above the purchase price they paid of $400,000.00. (Tr. pp. 143-144).
*308 Over the two years following the purchase, Debtors did extensive remodeling on the property, costing in the neighborhood of $200,000. (Tr. p. 57). One of these renovations included installation of a swimming pool. In connection with this installation, at the request of the pool construction contractor, Russell secured and reviewed records of prior building permits obtained by former owners. (Tr. pp. 134-135). These records included a building permit from an earlier owner's foundation repair. (Exhibit 15). This permit reveals that the former owner had done work to reinforce the foundation with four concrete piers. In addition to past permits, the pool contractor also requested Russell obtain soils reports for the lot. (Exhibit 3). Russell said the contractor "wanted to make sure it was a safe place to build a pool." To Russell this meant, "I would consider it safe if it wasn't going to pull out of the ground and fall down on people below," because, as Russell emphasized, "The pool was built in the side of a cliff." (Tr. p. 122).
Russell said he never contacted the author of the soils report directly, also indicating that he did not believe he had ever spoken to the author of the report and that the pool contractor had handled the entire matter. (Tr. p. 121, 136). These statements, however, comport with neither the cover letter of December 7, 1988, addressed to Russell and included with the final report, which states the author conducted the geotechnical investigation "[P]er your request," (Exhibit 3), nor the work order notes of the reports author, which specifically relate a conversation with Russell, (Exhibit 275). In addition, the cover page of the report itself reflects that it was "Prepared for" Russell. (Id.). Finally, and most revealingly, the report reads, beginning on the first line of page 2 of the report,
This terrace, which was also at the level of the ground floor, appears to be constructed of both cut and fill. Our understanding, through conversations with the owner, is that over fifty years ago, a military armament position was situated at the site, and the retaining wall and fill were constructed for the installation. The unretained steeper portions of fill material were covered with ivies and other slope stabilizing vegetation. The overall hillside appeared to be stable with no signs of surface soil creep, or shallow or deep seated hillside failures. The site was bordered to the north by a similar developed residential property, to the west and south by undeveloped property, and to the east by Amiford Street from which the residence is accessed. (Emphasis added).
(Id.) This passage discloses that, contrary to his testimony, not only did Russell have direct contact with the author of the soils report, but Russell knew of the presence of fill soils undergirding the west side of the Amiford property before the soil report was ever prepared.
In addition to the pool installation, Debtors made a number of other renovations and repairs on the inside and outside of the property while they owned it, including replacing damaged sidewalks and concrete flatwork and removing a sidewalk bench accessible to the public that attracted disreputable people. (Tr. pp. 129-130, 133-134). Debtors repairs also included certain plumbing work. One of these instances, involving a stopped up drain line, occurred according to Russell, "about two years after we moved into the house" approximately late 1989 or 1990. (Tr. pp. 138-139). Debtors discovered this problem, again according to Russell's testimony, when "the shower in the what's called the maid's room backed up," and "wouldn't drain." (Tr. p. 138). Repair of the problem required pulling back the carpet and excavating a hole in the concrete slab underneath the family room on the lower level of the home. (Tr. pp. 138-139). Debtors then replaced the carpet, covering any evidence of the construction work.
By late summer of 1991, Russell's real estate earnings had declined to the point Debtors could no longer afford the monthly payments on the Peninsula note and the note went into default. Debtors therefore listed the Amiford house for sale. (Tr. pp. 140-141). Although Russell endeavored to market the home, Debtors received no offers from these efforts until the Plaintiffs approached them sometime in late November of 1991. (Tr. pp. 52, 141). After cursory visits to the home on two occasions within *309 one week, Plaintiffs developed a sincere interest in negotiating purchase of the property. (Tr. pp. 52-53). Consequently, shortly after Thanksgiving in 1991, Russell, as owner and broker, took the Plaintiffs on an extensive inspection of the property. (Tr. pp. 56-60). Russell described the tour thus: "I showed them everything that I had done to the house, and all the things that needed repair, that type of thing." (Tr. pp. 146).
Upon completion of the detailed inspection, the parties entered into serious negotiations, and the requested sale price was finally reduced from $745,000 (if Debtors did all necessary repairs and painting) to $715,000 (if Plaintiffs took in "as-is" condition). (Tr. pp. 60-61; Exhibit 31, ¶ B). The parties meant the "as-is" clause to refer to all the problems Russell revealed in the home, (Tr. pp. 62-63, 85-86, 197; Exhibit 31, ¶ B), specifically, among other things, problems with the maid's quarters. (Exhibit 31, ¶ B). In addition to other documents drafted to consummate the sale, Russell prepared a "Real Estate Transfer Disclosure Statement" to satisfy California law regarding sale of a residential property, which Debtors signed December 4, 1991. (Exhibit 31). Plaintiffs in turn signed the document December 7, 1991. Escrow closed on the sale on December 19, 1991. (Exhibits 25 and 26). As consideration for the sale, Plaintiffs provided a down payment of $89,745.00, assumed a first deed of trust in favor of Peninsula Bank for $623,560.52 and made other cash payments of $2,583.46 for a grand total of $715,888.98. (Exhibit 25). Then, on December 31, 1991, Debtors filed the instant bankruptcy petition.
From the testimony, the Court finds that the final showing by Russell entailed much more than a simple walk-through. As Shannon testified, and Russell does not dispute, the highly detailed home inspection lasted three hours, (Tr. pp. 56-60, 80-82), during which, Plaintiffs insisted on and Russell seemed to acquiesce in scrutinizing and obtaining explanations for the many future repairs the house and curtilage might require. When the inspection turned to the down-stairs family room, Russell spent time explaining the number of renovations done, emphasizing the quality with which Debtors had completed these renovations. (Tr. pp. 56-60, 80-82). Russell also made efforts to impress the Plaintiffs by detailing the prestigious name brands used for replacement of doors, windows and carpeting. Thus the home inspection served as an opportunity for Russell to proudly display the many recent renovations and other attractive attributes. The Plaintiffs likewise used the opportunity to satisfy themselves as to the soundness of the home. Regardless, Russell's explanations in and about the family room did not, however, as Russell admitted, include mention of the drain problems under the floor or the large excavation and patch in the concrete slab upon which they stood. (Tr. pp. 56-60, 69, 147; Exhibit 60, photograph of concrete patch date August 28, 1995).
On cross-examination by Russell's counsel, Shannon also related that Russell volunteered information about some small cracks and flaking in the dry-wall of the maid's quarters the same quarters where the shower drain repair had alerted Russell to the problems under the floor in the family room. (Tr. p. 81; see also Exhibit 31, ¶ A). In explaining away the cracks, Shannon said Russell stated he "assumed" the problems with the wall likely stemmed from the shower. (Tr. p. 81). Nevertheless, Russell, went no further to explain in full detail the true extent of the problems the shower drain had caused specifically the extensive excavation and repairs below the family room. (Exhibit 276, Dep. of Roy Toma, pp. 45-46).
Instead, rather than reveal to Plaintiffs all he knew about the shower drain, Russell deliberately misled them, volunteering what the Court finds to be a less than half-true comment about some indefinite problems with the shower. Russell calculated this comment to reassure the Plaintiffs of his honesty by appearing to frankly relate the down-sides of the premises, and at the same time disguise the true nature of the problems Debtors had experienced with the building's structure. Full-disclosure would have required Russell to discuss with Plaintiffs the year-old shower drain repair, reveal its location, and describe how, in order to accomplish the repair, workman had to tear-back the carpet and power saw and/or jack-hammer *310 a large hole through the concrete slab supporting the cliff-perched house. The Court finds, however, that, upon queries by Plaintiffs that would have kindled specific memories of those repairs, Russell chose to deliberately omit any hint of the problems with the foundation supporting the home. Consequently, the Court finds Russell deliberately failed to provide full-disclosure.
In making this finding, the Court acknowledges that Shannon testified that neither of the Plaintiffs actually read the Real Estate Transfer Disclosure Statement (Exhibit 31) before signing it. (Tr. pp. 88-89; 91-93). Thus, when making their decision to buy the Amiford Property, Plaintiffs, could not have actually relied on the representations contained therein. The document, however, compellingly reveals Russell's intent to deceive Plaintiffs. For instance, Item 6 of the disclosure form (Exhibit 31) demands answer to the question: "Landfill (compacted or otherwise) on the property or any portion thereof." Nevertheless, despite having discussed the presence of cut and fill soil with the preparers of the pool soils report, (Exhibit 3, p. 2), Russell wrote in response to Item 6: "Unknown." Russell gave the same response, "Unknown," to Item 18, "Any defects or problems relating to the foundation," notwithstanding Russell's testimony that, prior to writing the Disclosure Statement, he pulled construction permits issued in the past to former owners, (Tr. pp. 135-135), which included a permit issued in 1962 to allow the former owners to "Reinforce Existing Foundation with (4) Concrete Piers" [sic] on the premises. Furthermore, Russell wrote the Disclosure Statement less than 24 months after hiring workmen to excavate a large hole in the house's foundation. Thus the Court finds the second "Unknown" response flatly misleading. While Plaintiffs never actually read these written untruths, these falsehoods do reveal the cunning pattern of Russell's scheme to deceive. This same scheme inspired Russell's oral obfuscation and omissions to Plaintiffs regarding the maid's shower drain and the foundation under the family room during the home inspection representations upon which Plaintiffs did actually rely. Therefore, the Court finds as a result of the latter oral misrepresentations, Plaintiffs were actually deceived.
In light of the foregoing contradictions, I specifically find Russell's testimony without credibility on the central factual issues of whether and to what extent Russell actually attempted to fully disclose known problems and potential problems with the house, including the presence of fill soils under the western portion of the property, and problems associated with the plumbing and house foundation. In addition, Russell's spouse, Dorothy Russell, testified to observing a bump or lump beneath the carpet in the family room, which she said she thought to have been caused by a faulty carpet lay. (Tr. p. 186). Yet, in Dorothy Russell's deposition taken August 27, 1996, she indicated that the problem arose from a crack in the concrete slab beneath the family room. (Tr. p. 186-189). Dorothy Russell tried to explain this inconsistency by avowing that Debtors had experienced problems with the bumps in the carpet in a different area of the family room from the area where the problems with the plumbing had occurred. (Tr. p. 226). Nevertheless, she still insisted she could only remember one instance where the carpet was pulled back. (Id.) Thus the Court finds Dorothy Russell's testimony unreliable on these points. In addition, the fact Defendants cannot recall who made these recent plumbing repairs, and can find no records relating to the work, further undermines their credibility, especially given that detailed memories and records in areas of the record that support their position are so readily at hand.
Plaintiffs occupied the home at 710 Amiford Way immediately upon closing of the sale in December of 1991. Over the next three years, they made extensive renovations to the home and curtilage. One of these improvements included the construction of a deck off the rear of the home, designed by architect Austin Lucius. (Tr. pp. 175-176). In connection with this construction, Russell provided Shannon a copy of the pool soils report (Exhibit 3) which Lucius discussed with Russell and one of the pool contractor's employees on a planning visit shortly after the parties had negotiated the sale price. *311 (Tr. pp. 64-65, 176-177). Shannon claims to have never understood the content of this conversation at the time (although Lucius did apprise him of it about a month later, in early January of 1992 (Tr. V.II. pp. 44-45)), or read the report before he forwarded it to Lucius unopened after it arrived at Plaintiffs home about a month after they occupied the house. (Tr. p. 66, V.II. pp. 45-47). Thus, while both Shannon and Lucius knew of the soils report, only Austin Lucius, who was not privy to the representations made by Russell in connection with the sale of the home and the three hour walk-through, knew of its content including the portions revealing the presence of fill supporting the house until mid-December, 1994. In addition, the report makes no mention of any plumbing or other problems that might give water access to the fill.
In December of 1994, Plaintiffs noticed water on the family room floor that had the smell of raw sewage. (Tr. p. 72). Beneath the slab directly under the family room, their plumber, Roy Toma, discovered a "clean break" in a drain line, where the "pipe had snapped at one point," caused in Toma's opinion by "some kind of shift in the soil." (Exhibit 276, Dep. of Roy Toma, pp. 29-30). Further investigation by Plaintiffs' home owners' insurance company led to the discovery of damaged soils beneath the house. (Tr. pp. 74-76). In hopes of curing the problem, Shannon contacted a contractor, who estimated restoring the foundation would cost $100,000. (Tr. p. 77). Rather than undergo the costly repair, Plaintiffs decided to move out of the house in June of 1995.
Plaintiffs offered expert testimony on the value of the home had Russell chosen to reveal the presence of fill and other structural problems and possible problems with the home. Robert M. Backer, MAI, a qualified real estate appraiser in practice in the San Diego Area since 1986, testified that had proper disclosures been made at the time the parties closed the sale in late 1991, the fair market value would have been some $575,000, rather than the $715,000.00 purchase price. (Tr. V.II. pp. 60-62).
In rebuttal, Defendants' offered testimony of an expert appraiser as well. Truman Brooks, a real estate professional with thirty-five years experience, who has been appraising properties in the San Diego area since the early 1980s, testified that a home similar to the 710 Amiford Drive property valued at $715,000 in late 1991 would have declined in value over the period the Plaintiffs occupied the house due to a twenty percent decline in that particular real estate market over the period. (Tr. p. 205). The general market decline would cause the house's value to fall to a low of $411,800 in 1994, which would have then recovered to a $522,900 value in 1995. (Tr. p. 206). Brooks made the key assumption, however, that the fair market value of the home at the beginning of the period was $715,000, "since the property was sold." (Tr. pp. 205-206). Brooks also assumed Russell had made complete disclosure regarding the property prior to sale. (Tr. p. 203). Brooks later admitted, however, that if the seller had known of the fill beneath the house, and had not noted that in the Disclosure Statement, then "that is not full disclosure." (Tr. p. 218).
Thus, given the Court's previous finding that Russell knew of the fill beneath the home and failed to disclose it, the absence of the key foundational assumption made by Brooks in preparing his testimony the presence of full disclosure and consequently the fair market value negates the relevance of Brooks' testimony to the issues of this case. Thus the record contains no relevant evidence in conflict with the testimony of Plaintiffs' expert setting valuation of the property in late 1991, had Russell made proper disclosures at the time of sale, at $575,000.
CONCLUSIONS OF LAW
The Court has jurisdiction to hear this case pursuant to 28 U.S.C. §§ 1334 and 157(b)(1). This is a core proceeding for purposes of § 157(b)(2)(I). On the issue of the determination of non-dischargeability of debts, the Ninth Circuit imposes a "weighty burden" on creditors, strictly construing exceptions to discharge in order to further Congress's policy of affording debtors a fresh start. In re Rahm, 641 F.2d 755, 756-57 (9th Cir.1981); In re Houtman, 568 F.2d 651, 656 (9th Cir.1978); Quarre v. Saylor (In re *312 Saylor), 178 B.R. 209, 214 (9th Cir. BAP1995); McCrary v. Barrack (In re Barrack), 201 B.R. 985, 989 (Bankr.S.D.Cal. 1996). The Court will apply the law governing this case with the foregoing policy firmly in mind.
A. 11 U.S.C. § 523(a)(2)(A)
In a non-dischargeability action under the actual fraud provisions of 11 U.S.C. § 523(a)(2)(A)[1], the plaintiff must establish the following elements by a preponderance of the evidence:
(1) The debtor made the representations;
(2) That at the time he knew they were false;
(3) The debtor made the representation with the intention and purpose of deceiving the creditor;
(4) That the creditor relied on such representations;
(5) That the creditor sustained the alleged loss and damage as the proximate result of the representations having been made.
Grogan v. Garner, 498 U.S. 279, 111 S. Ct. 654, 112 L. Ed. 2d 755 (1991); Apte v. Japra (In re Apte), 96 F.3d 1319, 1322 (9th Cir. 1996); Eugene Parks Law Corporation Defined Benefit Pension Plan v. Kirsh (In re Kirsh), 973 F.2d 1454, 1457 (9th Cir.1992). Such a determination is a question of federal, not state law, and courts must interpret these elements consistent with the common law definition of the term actual fraud, as set forth in Restatement (Second) of Torts (1976) §§ 525-557A. Kirsh, 973 F.2d at 1457; Field v. Mans, ___ U.S. ___, ___-___, 116 S. Ct. 437, 443-444, 133 L. Ed. 2d 351 (1995).
Courts typically categorize representations as either express representations or implied representations. Interfinancial Corp. v. White (In re White), 130 B.R. 979, 985 (Bankr.Mont.1991); In re Union Bank of the Middle East, Ltd., 127 B.R. 514, 518 (E.D.N.Y.1991). "A false representation is an express misrepresentation, while a false pretense refers to an implied misrepresentation of `conduct intended to create and foster a false impression.'" Matter of Newmark, 20 B.R. 842, 854 (Bankr.E.D.N.Y.1982) (quoting In re Schnore, 13 B.R. 249, 251 (Bankr. W.D.Wis.1981)). The "conceptual difficulty attending such a fine differentiation," however, leads courts to typically ignore the negligible difference between the two phrases. Id. Moreover, of particular note for the instant case, the Court in White further held that "silence by the Debtor" or "concealment or intentional non-disclosure" of "a material fact can constitute a false representation actionable under § 523(a)(2)(A)." Id. (citing In re Schmidt, 70 B.R. 634, 640 (Bankr.N.D.Ind. 1986)); Cooke v. Howarter (In re Howarter), 114 B.R. 682, 684 n. 2 (9th Cir. BAP1990).
A recent case from the Ninth Circuit Court of Appeals underscores the foregoing. In Apte, supra, the Court held "the nondisclosure of a material fact in the face of a duty to disclose" establishes the requisite reliance for actual fraud under the Bankruptcy Code. Apte, 96 F.3d at 1323. Distilling the standards from § 551 of the Restatement (Second) of Torts (1976), the Court elaborated on its holding by explaining that a party to a transaction has a duty to disclose a hidden material fact when the other party has no suspicion of its existence and no opportunity to discover it. Id. at 1324. A material fact is one which a reasonable buyer might have considered "important in the making of th[e] decision" to purchase. Id. at 1323; see also, Candland v. Ins. Co. of North America (In re Candland), 90 F.3d 1466, 1470 (9th Cir. 1996) (for purposes of § 523(a)(2)(B), material fact is one that if revealed "would generally affect a lender's or guarantor's decision").
*313 As to elements (2) and (3) regarding present state of mind, although a plan to deceive is never "presumed," a party's conduct may allow a court to infer the elements of knowledge, falseness and intent to deceive. White, 130 B.R. at 985.
Upon a showing of intentionally made omissions or false representations, a plaintiff must also establish the plaintiff's reliance on the representations in question. Field, ___ U.S. at ___, 116 S.Ct. at 438 (1995). Such reliance need not be reasonable, but it must be justifiable. Id. As the Supreme Court has held in Field v. Mans, "a person is justified in relying on a representation of fact `although he might have ascertained the falsity of the representation had he made an investigation.'" Id. at ___, 116 S.Ct. at 444 (quoting § 540 Restatement (Second) of Torts (1976)). This standard depends upon the knowledge and experience of the person to whom the representations are made. As the Field opinion further explained:
[A] person is "required to use his senses, and cannot recover if he blindly relies upon a misrepresentation the falsity of which would be patent to him if he had utilized his opportunity to make a cursory examination or investigation. Thus, if one induces another to buy a horse by representing it to be sound, the purchaser cannot recover even though the horse has but one eye, if the horse is shown to the purchaser before he buys it and the slightest inspection would have disclosed the defect. On the other hand, the rule stated in this Section applies only when the recipient of the misrepresentation is capable of appreciating its falsity at the time by the use of his senses. Thus a defect that any experienced horseman would at once recognize at first glance may not be patent to a person who has had no experience with horses."
Id. (quoting § 541, Comment a., Restatement (Second) of Torts (1976)). Interpreting this standard, the Ninth Circuit Court of Appeals teaches: "Although one cannot close his eyes and blindly rely, mere negligence in failing to discover an intentional misrepresentation is no defense for fraud." Apte, 96 F.3d at 1322.
Finally, to prevail under 11 U.S.C. § 523(a)(2)(A), a plaintiff must establish that a claim sought to be discharged arose from an injury proximately resulting from the plaintiff's reliance on an intentionally made false representation. Britton v. Price (In re Britton), 950 F.2d 602, 604 (9th Cir.1991). "Proximate cause is sometimes said to depend on whether the conduct has been so significant and important a cause that the defendant should be legally responsible." Id. at 604. Further, as the Supreme Court explained in Field, a court may turn to the Restatement (Second) of Torts (1976), "the most widely accepted distillation of the common law of torts," for guidance on this issue. Field, ___ U.S. at ___, 116 S.Ct. at 443.
Turning to the Restatement, proximate cause entails (1) causation in fact, which requires a defendant's misrepresentations to be a "substantial factor in determining the course of conduct that results in [the plaintiff's] loss," § 546; and (2) legal causation, which requires the plaintiff's loss to have been "reasonably expected to result from the reliance," § 548A. In determining the presence of proximate cause, however, courts must refrain from relying on speculation to determine whether and to what extent a creditor would have suffered a loss absent fraud. Siriani v. Northwestern National Ins. Co. of Milwaukee, Wisc. (In re Sirani), 967 F.2d 302, 306 (9th Cir.1992).
The Court finds Plaintiffs have shown by a preponderance of the evidence that their claim satisfies the foregoing criteria for non-dischargeability under 11 U.S.C. § 523(a)(2)(A). First, Russell made both material misrepresentations and material omissions to Plaintiffs in connection with the sale of the home at 710 Amiford Drive. As has been shown, Russell distorted the true nature of problems with the plumbing in the maid quarters, and failed to disclose excavations in the concrete slab beneath the family room. The materiality of these misrepresentations arises from the $140,000 negative impact that truthful disclosure would have had on the fair market value of the home, and consequently, on Plaintiffs' decision to buy the property for $715,000.
*314 Second, as has been explained in some detail, Russell knew at the time of the home inspection with the Plaintiffs of the potential structural problems with the home. Russell cannot excuse these lapses and distortions to faulty memory. The excavation in the basement, as evidenced by Exhibit 60, constituted a major repair job. Rather than relate those problems, Russell deliberately omitted their discussion in a successful effort to deceive Plaintiffs.
Third, the written misrepresentations Russell specifically knew to be untrue in the Disclosure Statement strongly indicate a present intent to deceive Plaintiffs. While Plaintiffs failed to read the written Disclosure Statement, the presence of the falsehoods therein and the implications for intent arising from such, make the unread Disclosure Statement highly relevant to this case. The Court also finds it pertinent to consider as background behind such deception, that due to their financial condition at the time, Debtors faced imminent foreclosure on the Peninsula Note and Trust Deed, which was in default by the time of the purchase. (Tr. p. 61, 140-142). In sum, Debtors were pressed to sell the house in order to relieve themselves from their financial dilemma.
Fourth, while Plaintiffs never actually relied on the unread Disclosure Statement, as has been shown, they did rely on the oral representations made to them by Russell during the three hour home inspection, and were actually deceived by these prevarications. Whether they did so justifiably depends on whether, by the use of their senses and experience, Plaintiffs had the capacity to appreciate the falsity of Russell's representations at the time they were made. Field, ___ U.S. at ___, 116 S.Ct. at 444. Clearly, Plaintiffs could not observe or sense the problems with the foundation under their feet as they inspected the home. Nor did Plaintiffs, as "ordinary" residential home buyers, Kirsh, 973 F.2d 1454, have the kind of background, such as, for instance, in construction or real estate, that would have told them that houses built upon hill-sides can suffer from conditions that result in massive foundation problems absent catastrophic acts of God like floods, landslides or earthquakes. Further, Russell represented himself to be experienced in the real estate business, and Plaintiffs therefore placed value on the relative expertise with which Russell spoke. Thus the Court concludes the reliance Plaintiffs placed on Russell's representations with regard to the problems caused by the shower drain in the maid's quarters, and upon Russell's lack of disclosure as to any past problems relating to the foundation, or the presence of fill beneath the house, was justifiable under the circumstances. Moreover, Russell's silence, concealment and intentional non-disclosure of the slab problems constitute false representations and the requisite reliance actionable under § 523(a)(2)(A). Apte, 96 F.3d at 1323-1324 (an obligation to disclose combined with a withholding of a material fact "establish the requisite element of causation in fact"); Cooke, 114 B.R. at 684 n. 2; Newmark, 20 B.R. at 854. It may be argued that reasonable buyers would have taken the precaution to engage a building inspector, who may have apprised them of the problems with the home before they closed the sale. Given Russell representations, and the detailed inspection he gave Plaintiffs, however, the Court concludes that such a failure would be at worst negligence on Plaintiffs part, and as the holding of Apte, 96 F.3d at 1322, teaches negligence on the part of a plaintiff "is no defense for fraud."
Russell's misrepresentations caused Plaintiffs damages. Plaintiffs' expert testified that full disclosure of the problems and potential problems with the home would have given it a fair market value of $575,000. The Court has found the record barren of evidence in dispute of this figure. Absent full disclosure, Plaintiffs paid $715,000. Consequently, based on Russell's untruthfulness, Plaintiffs paid Debtors much more than the true value of the home, and thus sustained a loss of $140,000.
Defendants attempted to attack the proximate cause element of Plaintiffs' action with the expert testimony of Leslie Dean Reed, a geologist who reviewed, among other things, the various soils reports conducted on the property to prepare his testimony. In Reed's opinion, the fill soil beneath the home was properly compacted to a rate of over *315 ninety percent, which construction engineers use as their target compaction rate, and which the city of San Diego will accept as adequate. (Tr. pp. 93, 104). Reed also said fill soils commonly occur under homes in the San Diego area, and that such a presence, when adequately compacted, does not normally constitute a building defect. (Tr. p. 103). Finally, Reed said that based on his review of the records, he thought that no settlement was present under the house in 1991. (Tr. p. 102). With regard to the damage to the home in 1995, Reed opined that the presence of water affected the fill and caused the foundation problems that eventually manifested themselves. Reed further testified that no matter how well compacted the soil, excess water can cause such problems. (Tr. p. 100).
The intended implication of all this testimony is that, assuming Russell had disclosed the presence of fill, and assuming Plaintiffs had hired soil reports done, they would have discovered adequate compaction in the fill on the property, which would have had no effect whatsoever on either Plaintiffs decision to buy or on the sale price, except perhaps by decreasing its value by the cost of a soils report. Further, Reed expressly opines that the slippage which eventually undermined the foundation of the home did not occur until long after Plaintiffs took possession. Thus Defendants have sought to attack the materiality of Russell's misrepresentations, and the proximate cause of the damages. The Court finds such efforts, however, ultimately unpersuasive.
With regard to the former issue, Russell did not conceal the presence of fill alone. Two other important characteristics of the house the maid's shower drain problem and the 1962 foundation reinforcement which Russell either distorted or concealed, combined with the presence of fill, make the misrepresentations material. Defendants' expert Reed testified that the presence of water, not of fill caused the house to shift. Reed further speculated as to where the water had come from, perhaps from heavy rains. (Tr. p. 100). But in the same breath, Reed also admitted that the water could have come from the "plumbing breaks," which the record establishes in fact actually occurred. Thus, notwithstanding Reed's testimony, the presence of fill and its exposure to water damage as a result of a history of leaky plumbing are facts that "might" have influenced Plaintiffs' buying decision. Apte, 96 F.3d at 1323-1324. The Court therefore finds these facts material.
The attack on proximate cause asks the Court to surmise that had Plaintiffs been told of the presence of fill and of the leaky plumbing, and had they then decided to have a soils report prepared, they would have found at least 90% fill compaction under the property, and would have purchased the home any way, because the alleged cause of the slippage heavy rains did not occur until long after they took possession. The only evidence in the record, however, to support such a finding stems from hedged conclusions and vague implications made by Reed, whose investigation consisted merely of reviewing past building inspectors' records. Such conjecture by the Court "would indulge in the type of speculation which Siriani, 967 F.2d at 306, specifically forbids." Candland, 90 F.3d at 1471. Furthermore, pursuant to § 548A of the Restatement (Second) of Torts (1976), the Court finds an experienced real estate broker such as Russell should reasonably have expected that eventual slippage could result in a hill-side home under which he knew there was both fill soil and a history of leaky plumbing, especially when combined with his knowledge of the former foundation reinforcements done by the previous owners. Indeed, Russell displayed this sort of knowledge and expectation when expressing his concern about the safety of a pool "built in the side of a cliff." (Tr. p. 122).
In light of the foregoing discussion, the Court finds Plaintiffs claim against Debtors nondischargeable pursuant to 11 U.S.C. § 523(a)(2)(A). Now the Court must determine the measure of damages.
The Court notes at the outset that it has the requisite authority to award damages in this case. A "suit by a third party creditor . . . against the debtor (and thus the bankruptcy estate), is a `core proceeding' under 28 U.S.C. § 157(b)(2)(B). As such, the *316 bankruptcy court has jurisdiction to adjudge the validity and amount of a claim together with its dischargeability." Longo v. McLaren (In re McLaren), 3 F.3d 958, 965-966 (6th Cir.1993). As the court in McLaren recited:
"allowing the bankruptcy judge to settle both the dischargeability of the debt and the amount of the money judgment accords with the `rule generally followed by courts of equity that having jurisdiction of the parties to controversies brought before them, they will decide all matters in dispute and decree complete relief.'" [N.I.S. Corp. v. Hallahan (In re Hallahan), 936 F.2d 1496, 1508 (7th Cir.1991)] (quoting Alexander v. Hillman, 296 U.S. 222, 242, 56 S. Ct. 204, 211, 80 L. Ed. 192 [1935]). Because a party properly before a court of equity subjects himself "to all the consequences that attach to an appearance," id., the amount of [a debtor's] liability [can be] properly determined by the Bankruptcy Court. Id.
McLaren, 3 F.3d at 965-966.
Section 523(a)(2)(A) of the Bankruptcy Code limits recovery to "money, property, services, or an extension, renewal, or refinancing or credit, to the extent obtained, by" a false representation or actual fraud. In the Ninth Circuit, this means a judgment entered pursuant to § 523(a)(2)(A) may not exceed the amount of benefit to the debtor that the fraudulent conduct created. Palmer v. Levy (In re Levy), 951 F.2d 196, 199 (9th Cir.1991), cert. denied, 504 U.S. 985, 112 S. Ct. 2965, 119 L. Ed. 2d 586 (1992); Bugna v. McArthur (In re Bugna), 33 F.3d 1054, 1059 (9th Cir.1994). "Obtained" means "to get possession of; to procure; to acquire." BLACK'S LAW DICTIONARY 1078 (6th Ed.1990); Medley v. Owen (In re Owen), 181 B.R. 288, 290 (Bankr.W.D.Va.1995). Courts have relied upon the literal reading of "obtain" under § 523(a)(2)(A) to limit the amount of nondischargeable claims to the actual benefit to the debtor, rather than the full range of compensatory damages (such as the total amount due on a breached contract entered into as a result of fraud) consequential damages (such as moving costs) or punitive damages. Levy, 951 F.2d at 199; Owen, 181 B.R. at 290. Stated differently, courts should not give relief under § 523(a)(2)(A) for all damages "caused" by a debtor's fraudulent conduct, merely for those benefits "obtained" by a debtor through fraud. Levy, 951 F.2d at 198; Owen, 181 B.R. at 290-291. Plaintiffs may not, however, recover damages flowing from the harm done them unless the harm directly benefited the debtors.
In the case at bar, Debtors sold a parcel of real estate with a fair market value, given full disclosure, of $575,000 to Plaintiffs for consideration of $715,000 in cash and assumed mortgage obligations. As a result of Russell's misrepresentations, Debtors therefore acquired through the sale $140,000 more than the home was actually worth. Plaintiffs can therefore recover $140,000, or the amount obtained by Debtors through false representations. The Court cannot, however, enter judgment in favor of Plaintiffs for other damages, such as costs of repair, loss in value of the home due to structural problems, or moving costs.
As discussed above, this adversary proceeding arises under federal law, 11 U.S.C. § 523(a)(2)(A). Under this statute, Plaintiffs' Closing Brief seeks prejudgment interest, attorney fees and punitive damages. Punitive damages may be sought under 11 U.S.C. § 523(a)(6), infra. Such damages, even if awarded in a § 523(a)(2) action, however, would be subject to discharge. Levy, 951 F.2d at 199. The Court declines to award punitive damages only to turn around ultimately and declare them dischargeable. The law does not require the Court to indulge in an idle act.
Having found, however, Plaintiffs entitled to relief under § 523(a)(2)(A), the Court has the discretion to award prejudgment interest from the date Plaintiffs made their demand for damages in the adversary proceeding. In Acequia, Inc. v. Clinton (In re Acequia, Inc.), 34 F.3d 800, 818 (9th Cir. 1994) (relying on Purcell v. United States, 1 F.3d 932, 942-943 (9th Cir.1993)), the Court *317 held: "[T]he award of prejudgment interest in a case under federal law is a matter left to the sound discretion of the trial court. Awards of prejudgment interest are governed by considerations of fairness and are awarded when it is necessary to make the wronged party whole." Although subsection 523(a)(2)(A) does not specifically provide for an award of interest, "the failure to mention interest in [federal] statutes which create obligations has not been interpreted by the courts as manifesting a unequivocal Congressional purpose that the obligations shall not bear interest." Rodgers v. United States, 332 U.S. 371, 373, 68 S. Ct. 5, 6-7, 92 L. Ed. 3 (1947). Nevertheless, Acequia, 34 F.3d at 818-819, specifically restrains the award of prejudgment interest in this manner:
. . . In bankruptcy proceedings, the courts have traditionally awarded prejudgment interest from the time demand is made or an adversary proceeding is instituted unless the amount of the contested payment was undetermined prior to the bankruptcy court's judgment.
(quoting Turner v. Davis, Gillenwater & Lynch (In re Investment Bankers, Inc.), 4 F.3d 1556, 1566 (10th Cir.1993)) (emphasis added). In the case sub judice, the claims of the plaintiff were undetermined and unliquidated prior to the filing of the adversary complaint. Until this Court's Order and Judgment specifically calculating the damages, the amount clearly remained in dispute and undetermined. Under this set of circumstances, the award of prejudgment interest is foreclosed. Acequia, 34 F.3d at 818-819; Turner, 4 F.3d at 1566.
In addition, under the Code, a creditor may not recover attorney fees. Sunclipse, Inc. v. Butcher (In re Butcher), 200 B.R. 675 (Bankr.C.D.Cal.1996); AT & T Universal Card Services v. Bonnifield (In re Bonnifield), 154 B.R. 743, 745 (Bankr. N.D.Cal.1993); Itule v. Metlease, Inc. (In re Itule), 114 B.R. 206, 213 (9th Cir. BAP 1990); Fobian v. Western Farm Credit Bank (In re Fobian), 951 F.2d 1149 (9th Cir.1991). Section 523(a)(2)(A) does not provide for an award of attorney fees and the Court may not award Plaintiffs such fees for prosecuting this non-dischargeability action. Plaintiffs' reliance on the terms of the written contract which provides for attorney fees is likewise misplaced. To reiterate, under the foregoing analysis, Plaintiffs are entitled to only $140,000.00 the amount obtained from them by Debtors by fraud.
B. 11 U.S.C. § 523(a)(6)
In McCrary v. Barrack, Hon. Peter W. Bowie, Bankruptcy Judge for the Southern District of California, recently surveyed the case law interpreting 11 U.S.C. § 523(a)(6).[2]Barrack, 201 B.R. at 985. The facts underlying the claim involved misrepresentations by the debtors with regard to their financial condition. Id. at 988. Because the representations related to the debtors' financial condition, the plaintiffs could not pursue the action under 11 U.S.C. § 523(a)(2)(A), but could rely only on § 523(a)(2)(B). Id. The representations, however, were all oral, and therefore could not satisfy the writing requirement of the latter subsection. Consequently, the plaintiffs attempted to pursue their action under the willful and malicious provisions of § 523(a)(6). Id. In granting the debtors' motion to dismiss, Judge Bowie concluded that notwithstanding the decisions by other bankruptcy courts to the contrary, actions for non-dischargeability of claims based on misrepresentations made by debtors give rise to actions only under 11 U.S.C. § 523(a)(2). Barrack, 201 B.R. at 989. To allow such wrongdoing to give rise to actions under § 523(a)(6) would be to render the fraud sections of § 523 superfluous. Id. Determining the two sections mutually exclusive, the holding specifically stated:
Furthermore, even if the injury suffered by the Plaintiff could fall within the scope *318 of Section 523(a)(6), the more specific statute, Section 523(a)(2), should still control. It is a fundamental maxim of statutory construction that a specific statutory section qualifies a more general section and will govern, even though the general provisions, standing alone, would encompass the same subject. Trustees of Amalgamated Ins. [Fund] v. Geltman Industries, 784 F.2d 926, 930 (9th Cir.1986), cert. denied, 479 U.S. 822, 107 S. Ct. 90, 93 L. Ed. 2d 42 (1986); Monte Vista Lodge v. Guardian Life Ins. Co. of America, 384 F.2d 126, 129 (9th Cir.1967), cert. denied, 390 U.S. 950, 88 S. Ct. 1041, 19 L. Ed. 2d 1142 (1968). See also Markair, Inc. v. C.A.B., 744 F.2d 1383, 1385 (9th Cir.1984). Where both a specific and a general statute address the same subject matter the specific one takes precedence. In re County of Orange, 179 B.R. 185, 190 (Bankr.C.D.Cal.1995). Since Section 523(a)(2) deals specifically with debts arising from fraud and misrepresentations it should govern such debts; Section 523(a)(6) should not be used as a catch-all by claimants who cannot meet the requirements of Section 523(a)(2).
Id. at 990-991.
In the instant case, this Court has already found that 11 U.S.C. § 523(a)(2)(A) applies. Nevertheless, Plaintiffs have pled under 11 U.S.C. § 523(a)(6) in an effort to circumvent the "obtained by" limits on their damages, either compensatory or punitive. See Part B., supra; Grogan, 498 U.S. at 282, n. 2, 111 S. Ct. at 657 n. 2. In addition, it could be argued that Judge Bowie's decision covers only claims arising from fraudulent misrepresentations of financial condition not relevant to the facts at bar. This Court concludes, however, to the contrary. Judge Bowie's opinion expressly clarified that in cases where plaintiffs have alleged only financial loss and no other damages, such as conversion of property or personal injury, § 523(a)(6) simply does not apply.[3]Barrack, 201 B.R. at 993; Levy, 951 F.2d at 199. Finding the record barren of other than claims for financial losses, the Court cannot invoke the willful and malicious provisions of § 523(a)(6) against the Debtors in this case.
Furthermore, even if the Court could apply § 523(a)(6), a plaintiff must show a defendant committed a "wrongful act . . . done intentionally, [which] necessarily produces harm and is without just cause or excuse . . . even absent proof of a specific intent to injure." Gee v. Hammond (In re Gee), 173 B.R. 189, 191-192 (9th Cir. BAP 1994) (citing In re Cecchini, 780 F.2d 1440, 1443 (9th Cir.1986)) (emphasis in original). The BAP went on to explain that:
In order to show "malice" under § 523(a)(6), a creditor must show: . . . (b) that the [debtor's] act necessarily produced harm. . . . The phrase "necessarily produced harm" has been interpreted to mean that the "act must be targeted at the creditor, at least in the sense that the act is certain or almost certain to cause financial harm." The Ninth Circuit further refined its definition of malice by ruling that a creditor must show that the debtor had actual knowledge or the reasonable foreseeability that his conduct might result in injury to the creditor.
Id. at 192 (citations omitted).
Applying these standards to Russell's actions in the case at bar, the Court finds that Plaintiffs have failed to show that Russell had actual knowledge of any damages that may have occurred to the house prior to the date of sale, or that Russell had a reasonable foreseeability that damages would necessarily occur due to his misrepresentations. Russell certainly knew these kinds of problems could result, but Plaintiffs have not shown by a preponderance that he knew, with a reasonable degree of certainty, that damages had already resulted, or that they necessarily would. Consequently, in view of the Code's underlying fresh start policy, which gives the benefit of the doubt to the debtor in matters of dischargeability, the Court finds the wrongdoing visited upon Plaintiffs by Russell does not rise to the degree of culpability necessary to find "malice" pursuant to 11 U.S.C. § 523(a)(6).
*319 C. Statute of Limitations
Finally, Defendants claim the affirmative defense that the Statute of Limitations has run on Plaintiffs' fraud and non-disclosure claims arising under California law. As has been discussed, claims under 11 U.S.C. § 523(a)(2)(A) arise under purely federal common law. Kirsh, 973 F.2d at 1457. Nevertheless, state statutes of repose determine the enforceability and therefore the allowability of such claims in bankruptcy. 11 U.S.C. § 502(b)(1); Lawrence King, 3 Collier on Bankruptcy ¶ 502.02 (15th ed.). So too does state law govern the time-bar dismissal of complaints for dischargeability of debt. Lee-Benner, by and through Mills v. Gergely (In re Gergely), 186 B.R. 951, 961 (9th Cir. BAP 1995); Klein v. Deicas (In re Deicas), 137 B.R. 51 (Bankr.S.D.Cal.1992).
In Gergely, the plaintiff sued in state court on theories of medical negligence. The state court ultimately found in plaintiff's favor for some $700,000. Id. at 954. The defendant's insurance carrier, however, turned out to be insolvent, and the claim went unpaid. Id. Three years after the adverse judgment, the defendant filed Chapter 7, listing the plaintiff as an unsecured creditor. Id. In an effort to defeat the discharge, and ten years after the factual events giving rise to the claim, plaintiff brought a non-dischargeability action under §§ 523(a)(2)(A), 523(a)(4) and 523(a)(6) allegations that plaintiff had never pleaded in the state court case. The BAP surveyed, analyzed and distinguished the leading case law on this issue. Citing Penn. Dept. of Public Welfare v. Davenport, 495 U.S. 552, 559, 110 S. Ct. 2126, 109 L. Ed. 2d 588 (1990), the Panel ruled that at the defendant's petition date the claims were not enforceable under state law due to the state statute of limitations and therefore were not allowable claims against the estate under § 502(b)(1). Gergely, 186 B.R. at 955. Consequently, since only obligations enforceable at the time of filing can be declared nondischargeable, the BAP affirmed the bankruptcy court's dismissal of the case on the grounds that the state statute of limitations had expired.
In Deicas, 137 B.R. at 51, from 1979 to 1983 the defendants sold plaintiffs certain stocks in various domestic and foreign corporations, purportedly formed to purchase and develop real estate. The plaintiffs, however, never received stock certificates. Id. at 52. The plaintiffs also purchased, by separate transaction, real estate from the defendants, but no deed was ever issued. In 1984, the defendants repurchased their interests in the described assets from the plaintiffs in exchange for two promissory notes from a third party corporation owned by the defendants, one of which was secured by deed of trust, and three promissory notes from the defendants, two of which were secured. Id. at 53. When the defendants could not make payments, the parties entered into a "settlement agreement" in 1986 to restructure the debt, and mutually absolve one another from liability on the past transactions. After the defendants failed to meet their obligations under the latter agreement, according to its terms, in August 1986, the past obligations became due and owing. In March of 1988, the defendants filed bankruptcy under Chapter 11. In a June 1988 § 2004 examination, plaintiffs claimed to discover they had been defrauded. The case was converted to Chapter 7 in March 1989, and in June 1989, the plaintiffs filed an adversary proceeding objecting to the discharge of claims arising from fraud. The Chapter 7 was dismissed, but then defendants in January 1991, filed another Chapter 7, which led to a second adversary complaint filed by the plaintiffs under 11 U.S.C. § 523(a)(2)(A). Id. at 53.
In dismissing the complaint as tardily filed, Hon. John J. Hargrove, Bankruptcy Judge for the Southern District of California, held that since federal law contains no statute of limitations for § 523(a)(2)(A), pertinent state law, in that case the California Code of Civil Procedure, § 338(d) (West 1982), applies. Id. at 54. Judge Hargrove explained: "To determine whether the statute of limitations bars the plaintiffs' fraud claim, the sole issue is whether the plaintiffs could have discovered the fraud through the exercise of reasonable diligence." Id. (citing Sun `n Sand, Inc. v. United California Bank, 21 Cal. 3d 671, 148 Cal. Rptr. 329, 582 P.2d 920 (1978)). In addition, discovery of fraud does not mean discovery of the evidence to prove it, but *320 discovery of enough evidence to merely suspect it. Id. at 54-55. "Where the circumstances compel the conclusion that a prudent person would have suspected the fraud, the court may determine as a matter of law, that there has been discovery." Id. at 55 (citing National Automobile & Cas. Ins. Co. v. Payne, 261 Cal. App. 2d 403, 409, 67 Cal. Rptr. 784 (1968)). Since the plaintiffs and their competent legal advisers were determined to have had enough information in 1986, at the time of the "settlement agreement," to have aroused suspicions of fraud in a reasonable mind, the statute of limitations was held to have begun to run at that time. Id. at 54-55.
Judge Hargrove further ruled that filing of a bankruptcy petition does not toll the statutory period, expanding thus:
Section 108(c) was intended to remedy the situation where a debtor filed bankruptcy to allow the statute of limitations to run, and then used the statute of limitations as a complete defense. In re Morton, 866 F.2d 561, 566 (2d Cir.1989). There is no language in section 108(c) that suspends a statute of limitations from running. Grotting v. Hudson Shipbuilders, Inc., 85 B.R. 568, 569 (W.D.Wash.1988). Rather, in partial exchange for the stay, section 108(c)(2) grants a claimant an exclusive 30 day period in which to file its claim when the claims' limitation period expired before the automatic stay was lifted. "The language in section 108(c)(1) referring to `any suspension of such period' means those non-bankruptcy law tolling periods such as minority or incompetency of a plaintiff." Id. at 569.
Id. at 55. Moreover,
[I]t is clear that § 108(c) does not apply to proceedings in the bankruptcy court. Non-dischargeability proceedings accelerate the discovery process because the dischargeability of a debt can significantly affect a debtor's ability to obtain a fresh start.
Id. (footnote omitted). Thus, the defendants' filing of bankruptcy had no effect on the time-bar clock. Id. Consequently, since the statute of limitations began to run prior to three years before the filing of the defendants Chapter 7 bankruptcy, on January 18, 1991, the statute had expired on the plaintiffs non-dischargeability claims. Id. at 54.
Neither of the foregoing cases is perfectly analogous to the facts at bar. Both cases, however, illustrate the controlling principle that, for the purposes of complaints alleging the non-dischargeability of debts in bankruptcy, state statutes of limitations apply, and the filing of a bankruptcy petition should have no effect on when such statutes expire.
The applicable statute of limitations for fraud in the instant case is identical to the one in Deicas, supra Cal.Civ.Pro. Code § 338(d) (West 1996 Supp.), which provides:
Within three year: . . . (d) An action for relief on the ground of fraud or mistake. The cause of action in that case is not to be deemed to have accrued until the discovery, by the aggrieved party, of the facts constituting the fraud or mistake.
As the opinion in Deicas teaches, 137 B.R. at 55, if a reasonable person would have suspected the facts constituting fraud, a cause of action for such is deemed to have accrued. Thus, Debtors in the instant case argue that as soon as Shannon learned of the presence of the soils report from architect Lucius, or as soon as Lucius learned of the presence of fill from reviewing the report, at latest by January of 1992, the statute of limitations began to run. The Court disagrees.
First, while Shannon learned of the soils report from Lucius, he never learned of its content. Moreover, while Lucius learned of the presence of fill from review of the report, Lucius never knew of Russell's omissions with regard to fill during the home inspection. Thus, unless, after Lucius reviewed the report, it would have been reasonable for Shannon to question him about it, the Court cannot say Shannon or Lucius could or should have had the requisite information available to suspect fraud. Since Shannon testified that Lucius' would "take care of everything for me," there was no reason for Shannon the layman to interrogate Lucius the expert about the details of the deck plans. Further there was certainly no reason *321 for the two to discuss the conversations Russell had with Shannon regarding the plumbing under the house. Even if they had, since Russell never mentioned the hole in the slab put there to repair a water leak, Lucius could never have learned of it from Shannon. Thus the Court concludes that, given the foregoing circumstances, it would not have been reasonable for Shannon or Lucius to have discovered sufficient facts to give rise to a suspicion of fraud in December of 1991 or January of 1992. This conclusion follows even if, as Debtors argue, Shannon must be charged with the knowledge of Lucius, as Shannon's architectural agent.
In Deicas, 137 B.R. at 53-54, somewhat analogous, yet fundamentally different facts obtained. The plaintiffs had engaged expert advisors, in the persons of what the court found to be competent legal counsel, to represent them. Consequently, the court charged the plaintiffs with the expertise, and the reasonable suspicions that should have arisen therefrom, of their lawyers in negotiating a "settlement agreement" with the defendants. Notwithstanding this similarity, unlike the experts in Deicas (who had access to all the information and responsibility for offering counsel on all aspects of the negotiations that the court determined should have aroused in plaintiffs suspicions of fraud), the expert adviser in this case had, at best, limited knowledge of the facts surrounding the change in possession or the representations constituting the deception. Further, the Plaintiffs in this case did not seek or rely on the expert's advice in making the decision to enter the transaction. Thus, the ultimate decision in Deicas is factually distinguishable from the case at bar.
Furthermore, the facts that constitute the fraud alleged in this case go beyond Russell's mere concealment from Plaintiffs of the presence of fill. The crux of the case involves three facts concealed by Russellthe fill, the water access to it via the plumbing problems and the subsequent foundation excavations. The Court found that Russell concealed the excavation in the basement, knowledge of which would have had an impact on Plaintiffs' buying decision. This fact was never revealed, and Plaintiffs' cause of action never accrued, until January 3, 1995, when plumber Toma jack-hammered a hole in the family room floor and discovered the broken plumbing and the evidence of Debtors' prior repair. Under California law, the Court holds that Plaintiffs had three years from this discovery to file an action for fraud, or until January 3, 1998. Since Plaintiffs did so on May 29, 1996, Debtors can find no refuge from the statute of limitations.
Conclusion
The Court finds from the evidence that Russell made material misrepresentations and omissions to Plaintiffs, with both knowledge of their falsity and an intent to deceive. Moreover, due to such deception, Plaintiffs suffered loss. Therefore, pursuant to 11 U.S.C. § 523(a)(2)(A), Plaintiffs claims are non-dischargeable, at least to the extent that Debtors obtained monies by fraud. The Court further determines that Debtors obtained by fraud $140,000.00 in value greater than the consideration they gave in return. Finally, Debtors can claim no defense from the statute of limitations because such would not have expired until approximately 18 months after Plaintiffs filed the instant complaint. On the other hand, since 11 U.S.C. § 523(a)(2)(A), applies, Plaintiffs may not recover under § 523(a)(6) for damages due to false representations. Furthermore, even if § 523(a)(6) did apply, Plaintiffs have failed to show that Debtors injured them with sufficient malice to satisfy the requirements of the subsection. Moreover, Plaintiffs are not entitled to prejudgment interest, attorney fees or punitive damages on any of their claims. Accordingly,
IT IS ORDERED The Clerk of the Court shall:
1. Enter a judgment in favor of Debtors/Defendants Keith D. Russell and Dorothy Russell on the Complaint filed by Plaintiffs Carlos R. Shannon and Linda P. Shannon on May 29, 1996, dismissing the allegations lodged under 11 U.S.C. § 523(a)(6);
2. Enter a judgment in favor of Plaintiffs Carlos R. Shannon and Linda P. Shannon and against Debtors/Defendants Keith D. Russell and Dorothy Russell on the Complaint *322 filed by Plaintiffs on May 29, 1996, declaring nondischargeable, pursuant to 11 U.S.C. § 523(a)(2)(A), a claim in the amount of $140,000.00 owed to Plaintiffs by Debtors/Defendants arising from the Debtors' commission of false representations and actual fraud.
NOTES
[1] § 523(a)(2)(A) provides:
(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
* * * * * *
(2) for money, property, services, or an extension, renewal, or refinancing of credit, to the extent obtained by
(A) false pretenses, a false representation, or actual fraud, other than a statement respecting the debtor's or an insider's financial condition; . . .
[2] § 523(a)(6) provides:
(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
* * * * * *
(6) for willful and malicious injury by the debtor to another entity or to the property of another entity; . . .
[3] Judge Bowie also consigned footnote 2 of Grogan to mere obiter dicta not binding on the Court. Barrack, 201 B.R. at 992.
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296 So. 2d 375 (1974)
John P. WHITTINGTON, Plaintiff-Appellant,
v.
GIBSON DISCOUNT CENTER and C. O. Dorsey, Defendants-Appellees.
No. 12325.
Court of Appeal of Louisiana, Second Circuit.
May 28, 1974.
*376 Gamm, Greenberg & Kaplan, by Jack H. Kaplan, Shreveport, for plaintiff-appellant.
Lunn, Irion, Switzer, Johnson & Salley, by Jack E. Carlisle, Jr., Shreveport, for defendants-appellees.
Before PRICE, HALL and WILLIAMS, JJ.
HALL, Judge.
This appeal by plaintiff, John P. Whittington, is from a judgment of the district court rejecting his demands against defendants, Gibson Discount Center and C. O. Dorsey, for damages arising out of an alleged false arrest and malicious prosecution. We reverse the judgment of the district court and award damages.
On April 16, 1971, plaintiff, who lived in Huxley, Texas and operated a marina on Toledo Bend, went to the Gibson Discount Center located at the corner of Hollywood Avenue and Mansfield Road in Shreveport with a truck and a driver for the purpose of purchasing garden plants and flowers. Several days earlier plaintiff had made arrangements with James S. Garcia, manager of the store's garden center, for the purchase of a substantial quantity of the Center's remaining plants and was quoted prices on an end-of-the-season basis. Garcia gave the information and price list to Grady L. Thomas and Richard C. May, III, also employees in the garden center.
When plaintiff arrived at the store, Garcia was out and he was waited on by May. The plants plaintiff wanted were picked out and were loaded on the truck. A question arose concerning the prices and it was decided that plaintiff should wait for Garcia to return. Plaintiff was also interested in purchasing some other items and wanted to obtain prices on those items.
Plaintiff waited for a considerable period of time, going in and out of the store and to various departments within the store while he was waiting. At one point while he was waiting he moved the truck loaded with the plants from near the door of the garden center to a place in the main parking lot with the knowledge and consent and perhaps at the request of May. May wrote down the license number of the truck and plaintiff noticed that he did so.
While waiting at Gibson's plaintiff realized that it was getting close to closing time at Lorant's Sporting Goods where he had sent another truck and driver to pick up a number of boats being purchased by him from that store. He called Lorant's and learned that the truck was loaded and waiting on him. Plaintiff decided to go to Lorant's and pay for the boats and then to come back to Gibson's at which time Garcia should be back. Plaintiff testified he told May what he was going to do. May denied that plaintiff told him he was going to leave. In any event, plaintiff left Gibson's in the truck, accompanied by the driver, and went to Lorant's located at the corner of Jewella Road and Lakeshore Drive in Shreveport where he settled up for the boats. Before plaintiff left Gibson's, Garcia returned to the store, saw plaintiff and waved at him, but Garcia did not think plaintiff saw him.
After plaintiff left Gibson's, May reported to the security officer, an off-duty policeman, *377 that plaintiff had left the store without paying for the merchandise. The Shreveport Police Department was called and given the description and license number of the truck and an order issued to stop the truck if it was seen.
After finishing his business at Lorant's, plaintiff and the driver started back down Jewella on the most direct route back to Gibson's. The truck was spotted by a Shreveport police officer who pulled up behind the truck at the corner of Jewella and Greenwood Road. The police officer was under the impression the truck was goint to turn right on the Greenwood Road in a westerly direction and honked at the truck. The truck pulled on across the Greenwood Road, still headed back toward Gibson's and pulled over. The police officer informed plaintiff why the truck was being stopped and after some discussion, the police officer, followed by plaintiff and the driver in the truck, drove back to the Gibson Discount Center.
At Gibson's there was a discussion between plaintiff, the police officers, and C. O. Dorsey, manager of the Gibson Store. Dorsey signed an affidavit charging plaintiff with attempted theft and plaintiff was taken to the police station and booked. He posted a $155 cash bond and was released. Subsequently, he was tried in Shreveport City Court and was found not guilty and discharged.
Prior to the incident in question, plaintiff, in connection with his marina operation, had purchased several thousand dollars worth of merchandisemostly sporting goodsfrom Gibson Discount Center. He was known by Dorsey, the store manager, whose secretary happened to be plaintiff's former wife. Plaintiff was known by Garcia, the garden center manager, by virtue of their previous discussion and arrangements about the purchase of the plants. Plaintiff was known by May who had on a previous occasion assisted in loading plaintiff's truck with a large quantity of sporting goods purchased at Gibson's.
The jurisprudence of this state has established rather firm and clearcut principles applicable to malicious prosecution actions. In an action to recover damages for malicious prosecution, the plaintiff must prove (1) termination of the proceeding in favor of the plaintiff; (2) lack of probable cause; and (3) malice on the part of the defendant. The existence of probable cause in any case depends upon the particular facts of that case. Probable cause does not depend merely upon the actual state of the facts, but upon the defendant's honest belief of the facts in making the charge against the plaintiff. Malice exists where the charge is made with knowledge that it is false or with a reckless disregard as to whether it is false or not. See Cormier v. Blake, 198 So. 2d 139 (La.App. 3d Cir. 1967) and cases cited therein.
In a recent case, Jones v. Simonson, 292 So. 2d 251 (La.App. 4th Cir. 1974) the Fourth Circuit in an opinion authored by Judge Redmann, approached the determination of liability in tort cases of this nature in a more flexible and civilian-oriented manner. Starting from the premise that Louisiana's basic tort law is Civil Code Article 2315, the court noted that categorizations of tort, such as false imprisonment and malicious prosecution, may sometimes impede rather than effectuate the civil law's basic principle of liability for damages caused by fault. Great caution is necessarily demanded in determining fault in the context of society's efforts to suppress crime. Reasonable efforts toward crime suppression should not be punished and, therefore, curtailed by civil liability for simple mistake. However, the efforts must be reasonable; the individual remains obliged to act as a reasonable person would, taking into consideration all of the circumstances. Not every mistake in defending one's self or community against *378 crime is actionable fault, but only such mistake as is not reasonably justified by the surrounding circumstances. The court pointed out that most unjustifiable mistakes could be categorized as cases of malice, but that unqualified recitals that recovery in these cases depends on proof of "false" arrest or "malicious" prosecution in accordance with traditional common law theories do not appear flexible enough.
In the instant case, the action of the defendant store manager and the defendant corporation, acting through its employees, in causing the arrest of the defendant and his prosecution on a charge of attempted theft was not reasonably justified by the surrounding circumstances. The acts of the defendants constituted fault and caused damage to the plaintiff. Applying the traditional tests established by the jurisprudence, the proceeding terminated in favor of the plaintiff, there was a lack of probable cause and there was malice on the part of the defendants in that they acted with a reckless disregard as to the truth or falsity of the charge.
Considering all of the circumstances, the facts were not such as to cause a reasonable man in the position of the store manager or in the position of the other store employees, to believe that plaintiff had committed or attempted to commit a theft of the plants and flowers with the intent to deprive defendant permanently of the property without paying for it. Plaintiff was known to the store employees, having done a substantial amount of business with the store. The plants and flowers were put into plaintiff's possession by the store's employees when they were loaded on his truck. The employees had his license number and a description of the truck. The total value of the plants was only $72. Even if plaintiff did not tell the employees that he was leaving and would be back (and we are inclined to believe he did) there was no reasonable basis for a belief that he was attempting to take the goods permanently and never pay for them. The evidence shows the store employees rigidly applied a company policy to arrest and prosecute anyone who took goods away from the store without paying for them without giving any consideration to the unusual circumstances readily known and apparent to the employees. This was not a run-of-the-mill shoplifting situation and the store employees showed a reckless disregard of the facts in treating it as such.
We conclude the defendants were at fault and are obliged to repair plaintiff's damages caused by their fault.
The only evidence as to the damages sustained by plaintiff is the account of what actually happened to him. He was stopped by the police, escorted back to the store, detained in the store for a period of time and placed under arrest. He was carried to the police station, booked and was released on bond. He appeared in City Court once for arraignment, again on an occasion when the case was continued, and on another occasion for trial at which he was acquitted. No evidence was offered as to any special damages beyond those which would normally ensue from such an experience. We conclude plaintiff is entitled to recover the sum of $2,500.
For the reasons assigned, the judgment of the district court is reversed and it is hereby ordered, adjudged and decreed that there be judgment in favor of the plaintiff, John P. Whittington, and against the defendants, Gibson Discount Center and C. O. Dorsey, in solido, in the full sum of Two Thousand Five Hundred ($2,500) Dollars, together with legal interest thereon from date of judicial demand until paid. All costs, including the cost of appeal, are assessed to the defendants, in solido.
Reversed and rendered.
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601 S.W.2d 469 (1980)
EXTENDED SERVICES PROGRAM, INC., Appellant,
v.
FIRST EXTENDED SERVICE CORPORATION, Appellee.
No. 20291.
Court of Civil Appeals of Texas, Dallas.
May 28, 1980.
Rehearing Denied June 26, 1980.
*470 William L. Martin, Jr., Hubbard, Thurman, Turner & Glaser, Dallas, for appellant.
Robert W. Jordan, Rain, Harrell, Emery, Young & Doke, Dallas, for appellee.
Before AKIN, ROBERTSON and STOREY, JJ.
AKIN, Justice.
This is an appeal from a summary judgment granted the defendant. Plaintiff appeals, complaining that the depositions supporting summary judgment were not timely filed and thus could not properly have been considered by the trial court. Plaintiff also argues that the trial court erred in failing to grant its motion for nonsuit filed after the summary judgment hearing but before summary judgment was granted. We agree with both propositions and accordingly reverse.
Defendant-appellee filed a motion for summary judgment which was heard on July 6, 1979. The only summary judgment evidence on file at the time of the hearing was the deposition of Carl H. Wescott. Additional depositions were filed by the defendant subsequent to the hearing but leave of the court to permit late filing was not requested nor was the late filing agreed to by the plaintiff. On July 11, five days after the hearing, plaintiff filed a motion for nonsuit, which was denied. On August 28 the trial judge entered a partial summary judgment that plaintiff's alleged trademark was generic in nature and that appellant was not a consumer under the Deceptive Trade Practices Act and thus could not recover under that act. Defendant then took a nonsuit as to a counterclaim, thus making the summary judgment final.
Plaintiff argues that the trial judge erred in granting summary judgment because no summary judgment evidence was on file more than twenty-one days prior to the hearing. We agree. In this respect, Tex.R.Civ.P. 166-A(c) provides in part: "Except on leave of court, the motion shall be served at least twenty-one days before the time specified for the hearing. Except on leave of court, the adverse party, not later than seven days prior to the day of hearing may serve opposing affidavits or other written response." [Emphasis added.] We hold that implicit in this language of rule 166-A(c) is the requirement that the movant shall serve all summary judgment evidence upon which the movant's motion depends at least twenty-one days prior to the hearing. In our view, by placing a seven-day limitation on the nonmovant's response, rule 166-A(c) presupposes that the nonmovant has had at least fourteen days to obtain and to file summary judgment evidence to refute the movant's evidence. To hold otherwise would permit the movant to take unfair advantage of the nonmovant by permitting the movant to serve his summary judgment evidence on the nonmovant on the seventh day before the hearing, thus requiring the nonmovant's response to depend upon leave of the court. This would be untenable under our summary judgment practice. Thus the deposition of Wescott, filed 18 days prior to the hearing, was not properly before the court as summary judgment evidence. Likewise, the depositions *471 filed after the summary judgment hearing could not properly be considered because plaintiff did not have fourteen full days to respond.
Plaintiff also contends that the judge erred in overruling its motion for nonsuit. We agree. Tex.R.Civ.P. 164 provides:
Upon the trial of any case at any time before plaintiff has rested his case, i. e., has introduced all of his evidence other than rebuttal evidence, the plaintiff may take a non-suit [sic], but he shall not thereby prejudice the right of an adverse party to be heard on his claim for affirmative relief. [Emphasis added.]
Under this rule the plaintiff has the right to take a nonsuit until he has presented all of his direct evidence at a trial on the merits. The language of rule 164 does not prohibit the plaintiff from taking a nonsuit between the summary judgment hearing and the pronouncement of judgment. Defendant contends that the summary judgment proceeding is a trial for purposes of rule 164 and that the nonsuit was properly denied, citing Mainland Savings Association v. Wilson, 545 S.W.2d 491 (Tex.Civ.App. Houston [1st Dist.] 1976, no writ) and Collins v. Waldo, 291 S.W.2d 360 (Tex.Civ.App. Eastland 1956, no writ). We cannot agree that rule 164 applies to summary judgment proceedings because rule 164 gives plaintiff the right to take a nonsuit until the time he has rested his case. Thus, the language of rule 164 applies only to a trial on the merits and is not capable of being read logically to apply to summary judgment proceedings. For example, in this case the defendant moved for summary judgment and had the burden of proof at the hearing. Admittedly the evidence on file at the time of the hearing was insufficient to sustain defendant's motion, and, as we have held, filed too late for consideration, thus making it unnecessary for plaintiff to present any evidence in order to avoid summary judgment. The plaintiff certainly never "rested his case," a phrase that implies that the plaintiff has produced all the evidence that he intends to use in support of his allegations. Even if defendant had produced sufficient evidence prior to the summary judgment hearing, the plaintiff would not have to "rest his case" in order to avoid summary judgment, but could have avoided summary judgment merely by producing evidence to controvert the summary judgment evidence of the defendant. The language of rule 164 also refers to rebuttal evidence which has no place in a summary judgment proceeding, but is applicable only in a trial on the merits. Consequently, we hold that Tex.R. Civ.P. 164 grants the plaintiff the right to take a nonsuit during the pendency of the trial judge's ruling on a motion for summary judgment, and that rule 164 does not apply to summary judgment proceedings.
The cases cited by defendant are inapposite. In Mainland Savings, the court indicated that a summary judgment proceeding may be a trial on the merits under rule 164 and that a plaintiff may be barred from taking a nonsuit after a summary judgment hearing. But that proposition is dicta since under the facts of Mainland Savings the motion for nonsuit was filed prior to the summary judgment hearing and the holding in that case was that the plaintiff had the right to take a nonsuit prior to the hearing. Consequently, we do not regard Mainland Savings as authority to hold that rule 164 applies to summary judgment proceedings. Neither is Collins authority supporting the defendant's contention. In Collins, the plaintiff contended that he could take a nonsuit after the judge announced that he would grant the defendant's motion for summary judgment but before the entry of that judgment. That court held that the plaintiff had no right to a nonsuit after the trial court announced its decision granting the defendant's motion for summary judgment. We agree with Collins, but hold that it is inapplicable here because judgment had not been announced at the time plaintiff moved for a nonsuit.
Accordingly, because the plaintiff was not given proper notice of the defendant's summary judgment evidence, we reverse the judgment of the trial court and remand *472 for further proceedings. If plaintiff desires a nonsuit, it has a right to it as a matter of law. Tex.R.Civ.P. 164.
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251 Md. 227 (1968)
246 A.2d 555
KATZ, ET AL.
v.
SIMCHA COMPANY, INC.
[No. 347, September Term, 1967.]
Court of Appeals of Maryland.
Decided October 23, 1968.
The cause was argued before HAMMOND, C.J., and MARBURY, McWILLIAMS, FINAN and SMITH, JJ.
Isadore B. Katz, with whom was J. Ambrose Kiley on the brief, for appellants.
Herman Miller, with whom were Collins, Lawrence & Larsen on the brief, for appellee.
*229 FINAN, J., delivered the opinion of the Court.
Joseph Katz and Pauline Katz, his wife, have appealed from a judgment in the amount of $4,900.50, rendered against them in the Circuit Court for Montgomery County in an action at law brought by the appellee, Simcha Company, Inc., to obtain a deficiency judgment on two promissory notes dated July 6, 1955. The notes were secured by two deeds of trust on property designated as No. 712 F Street N.W., Washington, D.C. The trusts were second and third trusts respectively, being subject to a first trust in the amount of $7,000.00. At the time of the execution of the notes by the appellants they were made payable to the order of Jennie Michaelson, a secretary in the office of William Spurling, a real estate broker who negotiated the sale of the notes. One was in the amount of $4,950.00 payable at the rate of $50.00 each month, the entire balance being due in five years and the second in the amount of $1,000.00 payable at the rate of $10.00 each month. Both notes bore interest at the rate of six per cent (6%) per annum.
The record reveals that Jennie Michaelson purchased the property 712 F Street, N.W., from an Arren Paulson and the same day July 6, 1955, conveyed it to the appellants, receiving from them as a part of the consideration for the purchase price the two promissory notes which we have mentioned. The deeds and deeds of trust were all recorded July 19, 1955. It would also appear from the record that the appellants deposited $2,000.00 in cash with the real estate agent, Spurling, and further that the appellants either purchased the property subject to an existing first trust in the amount of $7,000.00 or arranged to borrow that sum, secured by a first trust in that amount, from the Perpetual Building Association, the total purchase price being $14,950.00.
There was evidence to the effect that Jennie Michaelson was a "straw man" for her employer William Spurling, in this purchase from Paulson and sale to the Katzes, and that Spurling was the real party at interest.
There was also testimony that Mr. and Mrs. Katz were acting in some capacity as "straw men" for the same William Spurling, which might well surround this transaction with a *230 malodorous aura. However, the testimony fails to reveal that Mr. Irvin Kas, or the corporate holders of the notes, whom he represented in the purchase of the notes, knew of any such "straw man" transactions on the part of Spurling. The only positive testimony on this point came from Spurling himself, who stated that Irvin Kas did not know of the "straw man" position of Mr. and Mrs. Katz. It is significant to note in this connection, as did the lower court in its opinion, that the appellants, Mr. and Mrs. Katz, did not testimony in this case.
Thereafter, it appears that the note dated July 6, 1955, in the amount of $4,950.00 was sold for $3,150.00 and about two weeks later the note of July 6, 1955, in the amount of $1,000.00 was sold for $300.00, both to the District Mortgage and Investment Corporation, of which Irvin Kas was an officer and director. At the direction of Mr. Spurling the check in the amount of $3,150.00 in payment of the $4,950.00 note was made payable to the District Title Insurance Company and the check in the amount of $300.00 for the purchase of the $1,000.00 note was made payable to Franklin Realty Co. A Mr. Paroni, Vice-President of the District Title Insurance Company, which handled the preparation and filing of the papers, testified that the settlement sheet showed the Title Company did in fact receive $3,150.00 from the sale of the one note for application to the purchase price which Jennie Michaelson paid to Arren Paulson.
The deeds of trust were all properly recorded in the District of Columbia.
There was evidence that Mr. Irvin Kas prior to purchasing the notes made some inquiry and investigation concerning them, with both the realtor, Mr. Spurling and the District Title Insurance Company.
The appellants made some 38 payments from August 25, 1955, through September 18, 1959, on the larger note and continued payments on the smaller note until January 18, 1960. There was also evidence that prior to instituting the foreclosure proceedings in the District of Columbia, Irvin Kas visited the appellants at their place of business in Virginia, in an effort to impress them with the necessity of bringing the payments up *231 to date, and personally collected several payments from them, although shortly after the notes had been purchased by the District Mortgage and Investment Corporation they had been placed in the hands of the American Security and Trust Company for collection purposes. The District Mortgage and Investment Corporation assigned the notes to the appellee, Simcha Company, Inc., another corporation owned and controlled by Irvin Kas and his associates.
On March 31, 1960, the notes secured by the second and third trust then being in default, the appellee, as the holder and owner of the notes directed the trustees to foreclose on the second deed of trust. The trustees advertised the property for sale under the power contained in the trust and the appellee "bought in" the property for the sum of $1,000.00 at public sale, he being then and there the highest bidder. The property was sold subject to the first deed of trust which then had an unpaid balance in the amount of $5,443.46. There does not appear to have been any irregularity concerning this sale.
The appellee further testified that it had paid $300.00 to the Perpetual Building Association to make current the payments in arrears on the first deed of trust and certain water bills due the District of Columbia, auctioneer fees and other expenses incident to the sale.
On August 1, 1961, the appellee filed this action to obtain judgment for the deficiency represented by the unpaid balance due on both notes which it contended amounted to $5,389.50, with interest on $3,833.95 from October 6, 1959, and interest on $1,555.55 from January 18, 1960. The case was heard by Judge Shure sitting without a jury.
Although Mrs. Katz, as one of the defendants below, filed a general issue plea on July 13, 1962, and Mr. Katz filed his plea September 21, 1964 (there having been some difficulty in obtaining service on Mr. Katz), the party defendants did not file a special plea setting up the defense of usury until September 12, 1966.
The appellants raise the following contentions on appeal: (1) the defense of usury, arguing that the substantial discount at which the notes were purchased was indicative that the instruments were a devious method to circumvent the usury law; (2) *232 that purchase of the notes at such a substantial discount should nullify the appellee's contention that it was a holder in due course; (3) appellants as "straw men" for the realtor, William Spurling, were in effect accommodation makers and that William Spurling was the maker; (4) that appellee Simcha Company, Inc., was not a holder of the note for value; (5) that appellee sued in the wrong cause of action and could not maintain a suit for a deficiency because the deed of trust did not contain a covenant to pay the debt; (6) that appellee was not entitled to sue in the Maryland Courts because it was a Delaware corporation not qualified to do business in Maryland; (7) that there was a fatal variance between the declaration, wherein it was alleged that the appellee was a District of Columbia corporation, and the testimony at the trial which revealed the appellee to be a Delaware corporation; and (8) that the lower court erred in its refusal to allow appellants to attack the fairness of the foreclosure proceedings in the District of Columbia.
I through IV
The first four contentions of the appellants which we have enumerated above, all stand or fall on the question of whether the transactions, whereby the appellee purchased the notes on which the appellants appear as makers, were permeated with fraud to which the appellee was a party.
We call attention to the fact that the lower court heard this case sitting without a jury and accordingly was to judge both the law and the facts. Maryland Rule 886 a provides:
"a. Upon Both Law and Evidence.
"When an action has been tried by the lower court without a jury, this Court will review the case upon both the law and the evidence, but 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."
The significance of Rule 886 a cannot be minimized in this case because the several legal theories upon which the appellants relied to establish their defense became inapplicable because *233 of their failure to prove the facts which may have rendered their theories apposite.
The lower court found that the evidence did not support a finding of any devious or fraudulent conduct on the part of the appellee which colored the transaction and we do not think the court erred in so holding.
Judge Shure having had the opportunity to observe and listen to the witnesses and form an opinion as to their credibility made these observations in his opinion:
"* * * both of the defendants did sign the notes in July, 1955 and they did sign deeds of trust in July 1955 and according to the testimony in this case, the first time that they mentioned anything irregular about the transaction was when they filed a plea of usury on September 16, 1966.
"In addition the suit was filed in August 1961 and their original plea doesn't mention usury or anything improper, but merely a general plea a general issue plea that they were not indebted as alleged.
"* * * there is no evidence from any source, from any witness of any improper conduct on the part of the corporation, who is the plaintiff in this case or Irvin Kas, who testified in the corporation's behalf.
"There is no evidence that he had any knowledge that the broker was going to use any part of the money for improper purposes if this was in fact the case, and as I intimated, there is no evidence that he knew or could have known that there was any irregularity about the transactions, if in fact, there was any irregularity there.
"The evidence before me indicates that there was no irregularity, but I mention that because the attorney for the defendants keep repeating that there is something improper about this transaction.
"In any event, Mr. and Mrs. Katz signed the notes and they signed the deed of trust and there is no evidence that there was any duress or impropriety about that and more importantly, there is no evidence that Mr. Kas for the plaintiff corporation had any knowledge *234 that there was anything improper about it. On the contrary, the evidence is that he knew the Katzs, Mr. and Mrs. Katz for a year prior to that time. He says that, and that he went and saw the property that was to be security for the note and that he got a statement from Mr. Spurling the broker and then he delivered the money, so he paid for the notes that he received, and the evidence further discloses that later on he not only received payment for the notes.. . on the notes, but that he went to Virginia and made collections from the Katzs and he talked about conversations that he had with them and that finally they told him that things weren't working out so, he foreclosed on the second trust note and he purchased the property and there is no evidence that there was anything irregular about the sale and he testified without contradiction that he bought the property for $1,000." [Subject to the first trust.]
To this we add, that the testimony of Mr. Paroni, an officer of the District Title Insurance Company, who explained the data contained on the settlement sheets prepared by an employee of the Title Company, reveals that $3,150.00 was paid by Jennie Michaelson to Arren Paulson, from whom she purchased the property, simultaneously with her sale to the appellants, and this $3,150.00 came from the proceeds of the sale of the second trust note. This is corroborative of the fact that this was the $3,150.00 which Mr. Kas paid for the second trust note on behalf of the District Mortgage and Investment Corporation and which bore on its face the legend that it was given for "deferred purchase money." The settlement sheet, which was received in evidence, further revealed that the purchase price on the sale from Jennie Michaelson to the appellants was listed at $14,950.00. Mr. Katz affixed his signature to the sheet signifying his approval of its contents.
The appellants rely heavily on the cases of Hill v. Hawes, 79 U.S. App. D.C. 168, 144 F.2d 511 (1944), and Beatty v. Franklin Investment Company, Inc., 115 U.S. App. D.C. 311, 319 F.2d 712 (1963). We think that both cases are distinguishable from the case at bar.
*235 In Hawes, supra, the Court said:
"The defense is that the $2,286.80 was advanced by the defendant, not as a loan, but as the purchase price of a previously executed $3,600 note which he testified he bought in due course at a 40% discount from a man named Robinson. This note was signed by the Byrds and secured by a trust deed on the same property. Robinson was the payee. Defendant testifies that he did not know either the Byrds or Robinson but bought the note through a man named McKinley, who represented himself to be the agent of Robinson.
"We do not consider this evidence sufficient to show that the defendant was a holder in due course of the original note which he claims to have purchased. The circumstances surrounding the transaction constitute a badge of fraud which is not rebutted. Competent businessmen do not purchase notes in substantial sums executed by parties unknown to them whose credit they have not investigated. This circumstance, coupled with the fact that the defendant claims to have bought a note which was amply secured at the outrageous discount of about 40%, makes a prima facie showing of usury which must be explained before the purchaser can be found to be a holder in due course. * * *." (Emphasis supplied.) [Id. at 169]
In Beatty, supra, the Court again found circumstances surrounding the transaction which constituted a badge of fraud and "made a prima facie showing of usury which had to be explained before Franklin could be found to be a holder in due course." [Id. at 714]
Note, however, that in the instant case we are dealing with a second and third trust which were subject to a first trust in the amount of $7,000.00, a substantial sum when viewed in contemplation of the purchase price of $14,950.00. It is not unreasonable to assume that a second and third trust under such circumstances might well be purchased at a substantial discount. See Metropolitan Loan and Trust Co. v. Schaefer, 44 App. D.C. 356 (1916), Elliott et al. v. Schlein, 104 A.2d 418 (1954). It could not be said that there was ample security for the trust, *236 as was stated by the court in Hills v. Hawes, supra; nor are we dealing with a situation such as found in Beatty, supra, wherein the court had before it a chattel mortgage transaction securing the sale of a motor vehicle, which instrument had on its face an item listed "finance charge" of $150.00 and which was included as a part of the purchase price which was listed at $695.00. The cash down payment was $294.00; there was a trade-in allowance of $100.00 and an unpaid balance of $301.00, on which there was the stated finance charge of $150.00, all incorporated in the purchase price.
The lower court readily agreed with the law set forth in Hill v. Hawes, supra, and Beatty, supra, but pointedly observed that the facts of the instant case did not square with those cited by the appellants. The court emphasizes, as we have noted in the excerpts from its opinion which we have quoted, that the appellee did not purchase the notes from a stranger but knew the appellants, that Kas visited the property, made inquiries concerning the transaction from the realtor involved and the Title Company, and had no knowledge of any "straw" transactions on the part of the appellants. One cannot review the opinion of the lower court without concluding that it found that if there were any suspicious circumstances raised by the discounting of the notes, it had been rebutted by the testimony and evidence presented by the appellee. Certainly the appellants, while relying upon Hill v. Hawes, supra, and Beatty, supra, did little at the trial of this matter to bring their case within the scope of those decisions, as they did not testify as to their version of the transaction and did not rebut the testimony of the appellee. Furthermore, their own delay in raising the defense of usury two years after filing their general issue plea did not strengthen their defense.
We do not think that under the circumstances of this case the transactions were usurious. We hasten to point out that any action to recover any usurious portion of the interest, if in fact it was usurious, would had to have been brought within one year of the date of payment of the interest (D.C. Code (1961), § 28-2704), which of course was not done in this case. The finding by the lower court that the transactions were not usurious is also significant in dispelling the badge of fraud, *237 which if it had existed would have affected other questions surrounding the transaction, such as the appellee's knowledge as to whether or not the appellants were "straw men" of Spurling, as they alleged, and therefore accommodation makers.
Again, in viewing the findings of the lower court we see that it was satisfied that the appellee had no knowledge of the appellants being cast in any role, other than in their capacity of maker and had no knowledge that they were "straw men" of Spurling.
We accept the court's finding that the appellee is a holder in due course, for reasons we have already indicated. We also note, that once it is conceded that the appellee was a holder in due course, the defense of usury is not available to the appellants. Beatty v. Franklin Investment Company, 319 F.2d 712, 713 (1963). As a corollary to the finding that the appellant is a holder in due course, we think it becomes of no significance that the District Mortgage and Investment Corporation, which was controlled and owned by Irvin Kas and Associates, assigned the note to the appellee, a corporation also controlled and owned by Irvin Kas and Associates, without value. It was explained by Mr. Kas on cross-examination that this transfer of the notes was done for bookkeeping purposes and that both companies "were owned by the same people"; this testimony was uncontradicted.
V
The appellants advanced the argument that the appellee sued in the wrong cause of action and could not sustain a suit for a deficiency because the deed of trust did not contain a covenant to pay the debt. This was an action brought to obtain a judgment for the unpaid balance, together with interest due and owing, on the two promissory notes which were secured by two deeds of trust. There had been a foreclosure proceeding on the second trust, with a resulting deficiency on the second and third trusts amounting to $5,389.50, as stated in the appellee's declaration. The action was not on the deeds of trust but rather on the obligation contained in the two notes which were secured by the deeds of trust. Appellants have not afforded us with any authority which would persuade us that the appellee, holder of the notes, could not properly proceed in a separate *238 action on the notes to recover the deficiency remaining after the foreclosure proceedings. It would appear to us that this action on the notes is authorized under the law of the District of Columbia, Brice v. Walker, 73 App. D.C. 377, 121 F.2d 864 (1941), as well as under the law of the State of Maryland.
Maryland Rule W75 b provides that where there has been a sale at a mortgage foreclosure and the net proceeds of the sale are insufficient to pay the mortgage debt and the accrued interest, as found by the court upon the report of the auditor, a motion for a decree in personam for the deficiency may be made. This is really done as an accommodation to the mortgagee so that he may obtain a deficiency judgment in the same suit without having to institute a separate action. However, there is nothing in this rule to prevent the mortgagee from proceeding by a separate action at law. With regard to a deed of trust, the holder of the note could only proceed to obtain a decree in personam for the deficiency in the foreclosure proceedings in the event there was a covenant to pay the obligation in the deed of trust. Maryland Rule W77. However, this would not preclude the holder of the note secured by the deed of trust from proceeding in a separate action at law to obtain judgment for the balance due and owing on the note, together with interest, after a proper credit had been given on the notes of the proceeds realized from the foreclosure proceedings. The important thing is, there can be only one satisfaction of the obligation. In the instant case we are of the opinion that the appellee had the right to bring this action at law for the balance due and owing on the notes, together with interest, in the Circuit Court for Montgomery County.
VI
We find no merit to the appellants' contention that the appellee was a foreign corporation transacting business in the State of Maryland and accordingly, pursuant to Code (1966 Repl. Vol.) Art. 23, § 91(c), could not maintain this suit because it had not filed a certificate of registration with the State Department of Assessments and Taxation. There was no evidence in the record that the appellant was "doing business" in this State and maintenance of suit itself does not constitute "doing business". G.E.M., Inc. v. Plough, Inc., 228 Md. 484, 180 A.2d 478 (1962).
*239 VII
The appellants' contention that the variance between the appellee's declaration, wherein it was designated as a District of Columbia corporation, and the testimony which revealed it to be a Delaware corporation, was fatal, is without substance. The record does reveal that the appellee corporation was entitled to do business in the District of Columbia and was a Delaware corporation. The issue of the status of the appellee was not raised by the appellants in any pleading but was argued by the appellants' counsel at the trial.
Had the issue been properly raised before the Court we are satisfied it would have allowed an amendment of the pleadings to conform with the proof and that it would have been proper for it to do so. Maryland Rule 320.
VIII
The appellants also assign as error the lower court's refusal to allow them to introduce evidence attacking the fairness of the foreclosure proceedings in the District of Columbia. A reading of the transcript reveals that appellants' counsel questioned Mr. Kas concerning the price for which the property was sold at public auction in the District of Columbia and the price received by the appellee at a subsequent resale. The court sustained the appellee's objection to this line of questioning and the appellants' counsel made no attempt to make a proffer of what he intended to prove by it, as required by Maryland Rule 522 b. Later the appellants in their brief and in argument before this Court contended that the purpose of the line of questioning was to impeach the fairness of the District of Columbia foreclosure sale. The issue thus intended to be raised, even if it has merit and we do not think that it does, is not properly before this Court for review. Leitch v. Anne Arundel County, 248 Md. 611, 616, 237 A.2d 748, 751 (1968).
We are further of the opinion that the court below made the proper allowances for the trustees' fee, water bill and interest and we affirm the judgment in the amount of $4,009.50, with interest from October 11, 1967.
Judgment affirmed, appellants to pay costs.
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250 Md. 707 (1968)
246 A.2d 591
B.F. SAUL COMPANY, ET AL.
v.
WEST END PARK NORTH, INC., ET AL.
[No. 189 (Adv.), September Term, 1968.]
Court of Appeals of Maryland.
Decided October 2, 1968.
*709 The cause was argued before HAMMOND, C.J., and MARBURY, BARNES, McWILLIAMS, FINAN, SINGLEY and SMITH, JJ.
Hal C.B. Clagett, with whom were Thomas A. Farrington and Sasscer, Clagett, Powers & Channing on the brief, for appellants.
William L. Kahler, with whom were DeBlasis & Kahler on the brief, for corporate appellees.
Thomas A. Garland, Assistant Attorney Genenal, with whom was Francis B. Burch, Attorney General, on the brief, for State of Maryland, other appellee.
Amicus curiae brief filed by Maryland Bankers Association. Norwood B. Orrick on the brief.
FINAN, J., delivered the opinion of the Court.
This is an appeal from a declaratory decree entered in equity by the Circuit Court for Prince George's County pursuant to the Uniform Declaratory Judgment Act Code (1967 Repl. Vol.), Art. 31A §§ 1-16 construing Chapter 453, 1968 Laws of Maryland (House Bill No. 11) which repeals §§ 1-16 of Art. 49 of the Maryland Code entitled "Interest and Usury" and replaces it with §§ 1-11. The new law, hereinafter referred to as the Act, had an effective date of July 1, 1968.
*710 The three plaintiffs are corporations whose principal business is residential construction and development and the three defendants are corporate lenders. In each instance the defendant had entered into a contract with the plaintiff to supply it with money for the permanent financing of mortgage loans to be made to prospective home purchasers, either insured by the Federal Housing Administration (FHA), or guaranteed by the Veterans Administration (VA). In each instance the commitment was well in excess of a half million dollars ($500,000).
Subsequent to the passage of the Act, each mortgage loan broker notified the developers that they could not honor their original financing commitment because of the ambiguity created by the Act with regard to the legal rate of interest, the computation of points and uncertainty regarding the judicial interpretation which might be given to certain fees and charges set forth in the Act and normally paid by the borrower or seller and at times retained by the lender. The purpose of the plaintiffs in the action below was to seek clarification of provisions of the Act, so that the loan commitments made on the part of the mortgage brokers might be specifically enforced by the developers. After answers were filed by the defendants the cases were consolidated in the court below and the Attorney General was permitted to intervene on behalf of the State of Maryland.
This Court is somewhat hard pressed to discern in these proceedings a justiciable matter because all parties are corporate entities whose common gravamen is the possibility of unwitting exposure to penalties attached to usurious interest as provided by § 3 of the Act. It was thought that Art. 23 § 125 of the Code (1967 Repl. Vol.) which provides "No corporation shall interpose the defense of usury in any action," provided an escape hatch which would exculpate the corporate plaintiffs from any usurious conduct and thus render the question of usury moot. However, we do acknowledge a valid question regarding the applicability of the disclosure provisions of the Act, commonly referred to as the "Truth in Lending" provision, found in Section 10, as the same may relate to the parties to this action and their transactions. We are also aware that the home mortgage financing ultimately contemplated by the parties, *711 and the purpose for which they have entered into a commitment agreement, would involve, in practically every instance, individual residential property owners to which transactions the provisions in the Act pertaining to usury, as well as disclosure, would be applicable. We therefore are of the opinion that we have a justiciable matter before us.
At the beginning of the 1968 Session of the General Assembly of Maryland, the Legislature addressed itself to the crisis precipitated by the demand for higher interest rates for home financing, induced by a tight money market, juxtaposed against Maryland's Usury Law (Code Art. 49, § 1) which established the maximum legal rate of interest at six per cent (6%).
To alleviate the situation, House Bill No. 11 was introduced which permitted the lender and borrower to agree to an interest rate not to exceed a legal maximum of eight per cent (8%). However, the Act coupled the raise in interest rates with certain restrictive provisions designed to regulate unscrupulous lenders, and by § 2(A) specifically prohibited the practice of charging "points," except for business or commercial borrowers of more than $5,000 and in the case of "* * * any loan guaranteed or insured by FHA, VA or any other instrumentality of the Federal Government where the maximum interest rate is not more than 7%; * * *." The Act also contained a "truth in lending" provision which required that certain disclosures be made by the lender to the borrower.
Long before the Governor's imprimatur was on the Act, home mortgage brokers were posing, not the metaphysical question of "how many angels may be balanced on the point of a needle," but the very mundane question of how many "points" may be charged at the inception of the loan while keeping the transaction within the framework of the legal maximum interest rate of eight per cent (8%). If for example, in the case of $10,000 mortgage loan, bearing interest at six per cent (6%) per annum, payable over a 20 year term, a fee of five "points" were to be charged at the inception of the loan and the "points" were to be construed as interest payable during the initial year of the loan, the interest rate for the first year would be eleven per cent (11%) and obviously usurious. On the other hand, if the five "points" were to be computed or spread over the twenty *712 year life of the loan it would come within the permissive rate of the Act, as we shall later illustrate.
The legal acceptance of the spreading of "points" was the main issue presented to the court below and argued on appeal, however, the "truth in lending" or disclosure provisions of the Act, as well as the treatment to be given other items of expense attendant to the consummation of a mortgage financed real estate transaction, were challenged for ambiguity.
The consternation within the home mortgage market created by the possible legal construction which might be placed on various provisions of the Act, wrought little short of havoc.[1]
For the sake of clarity our discussion of the Act will be divided into four categories: (1) the proper method for computing interest in determining if a given loan is usurious; (2) the treatment to be given interest when the loan is prepaid; (3) the nonapplicability of the disclosure provisions of the Act to commercial loans in excess of $5,000 and the manner in which disclosure regarding the interest in construction loans may be met; (4) which of the many items involved in the settlement of a loan are required to be considered as interest and which are not.
The lower court in an able opinion by POWERS, J., specifically delineated answers to the problems encountered under the above categories with the exception of that of prepayment of the loan, under category 2. The primary question before the court below was the manner in which interest should be computed and we agree with its concept of the spreading of "points" over the *713 life of the loan in computing the effective interest rate. We further agree with the court's treatment of expenses collected by the lender at the time of the consummation of the transaction and its designation as to which items should or should not be construed as interest. However, we disagree with the court's conclusion that the disclosure provisions of the Act were intended to be applicable to commercial loans in excess of $5,000. We shall discuss all categories seriatim.
I
All parties agree that the most troublesome problem raised by the Act is the manner in which "points" should be treated in context with the term "interest," "stated interest" and "effective rate of simple interest," all terms used rather inartistically, in various sections of the Act. To fully understand this problem a brief discussion of the anomalous term "points" should be helpful.
Our search reveals that there is no mysterious connotation to the word "point." It simply denotes a fee or charge equal to one per cent (1%) of the principal amount of the loan which is collected by the lender at the time the loan is made. It may be used interchangeably with the term "bonus," "premium," "loan origination fee" or "service charge." The basic tenent to remember is that it is a fee or charge which is collected only once, at the inception of the loan, and is in addition to the constant long term stated interest rate on the face of the loan.
This Court discussed the question of a "bonus" in Birmingham v. Maryland Land and Homestead Association, 45 Md. 541 (1876) and again we find the use of the term "premium" in Washington National Building and Loan Association v. Andrews, 95 Md. 696, 53 A. 573 (1902). Mr. James D. Laudeman, Jr., Chairman of the Legislative Coordinating Committee of the Savings and Loan Industry in Maryland, a member of the American Bar Association Committee on Real Estate, Probate and Trust Law and a member of the Governor's Study Commission on Interest and Usury Laws, testified as an expert witness on the custom and usage of "points" in the home mortgage finance industry in Maryland. He emphasized the acceleration given to the practice of exacting points since the *714 advent of the FHA and VA programs to the extent that today it is a term given universal acceptance in the lending industry throughout the country.[2]
One theory advanced in justification for charging "points" is the recoupment of the administrative or operating costs attendant to negotiating the loan. See 91 A.L.R. 2d 1392 Anno: Usury-Procuring Money Loaned-Expense § 3.
To bring into focus the tolerance allowable for "points" within the framework of the eight per cent (8%) legal maximum interest rate permitted by the Act, when dealing with FHA or *715 VA guaranteed or insured loans or those insured by any other instrumentality of the Federal Government as provided by § 2(A), we can employ no better example than that used by the lower court to illustrate both the problem and the answer.
Let us assume that the borrower has applied for a loan of $10,000 bearing interest at the rate of six per cent (6%), with the interest and unpaid balance being paid in fixed monthly installments over a period of twenty (20) years, with a charge of five "points" being deducted by the lender. This $10,000 loan with five "points" charged results in a five per cent (5%) discount applied to the principal sum and yields a $9,500 net loan to the borrower.[3]
The borrower who thus receives a net of $9,500 after deducting five "points" and pays back $10,000, plus interest, in monthly installments over twenty (20) years is not paying the $500 deducted from the face amount of the loan in the first year but is paying a small portion of this each month over the entire twenty (20) years.
The determinative factor as to whether or not the interest in such a case is usurious is the annual effective rate of interest (not to be confused with the term "stated interest"). If the annual effective rate of interest does not exceed eight per cent (8%) then it is not usurious and this annual effective rate of interest is computed as follows, again borrowing the example used by the court below:
"The dollar amount of interest payable during the life of the loan is ascertained by multiplying the amount of each monthly payment by the number of months and subtracting the net principal of the loan. Hence, in the case of a $10,000 loan at six per cent (6%) *716 with five points deducted, payable over 20 years, with the fixed monthly payment of $71.65:
$71.65 X 240 (20 years X 12 mos.) = ................ $17,196.00
total paid by borrower
Less net loan after subtracting points deducted .... 9,500.00
Total dollar amount of interest paid for the use
of $9,500.00 during life of loan ................. 7,696.00
The stated rate of interest in the note itself
is ... 6%
The current yield to the lender, who receives
interest at the rate of $600.00 per year for a
$9,500.00 loan, is $9,500.00 divided into
$600.00= ... 6.31%
But because the lender not only receives a current
yield of 6.31% but during the life of the
loan also receives back the $500.00 deducted
from the face amount of the loan, he has a
yield to maturity of ... 6.65%"[4]
(6.65% being the annual effective rate of interest)
The 6.65% annual yield to maturity set forth in the above example is the annual effective rate of interest and is not usurious.[5] Adopting the validity of the above illustration this Court concludes that the charge of a fee, commonly called "points" made at the inception of the loan, should not be considered interest paid in the initial year of the loan but is to be computed or spread over the term of the loan.
Although the Act manifests legislative hostility to the charging of points, as may be deduced from § 2(A), yet the language of § 2(B) expresses an expectation of the usage of points with regard to the FHA, VA and other federally insured or guaranteed loans. We do not think it was the intent of the Legislature that Maryland should be different from other jurisdictions, where such charges made at the inception of the loan, are not *717 construed as usurious when the amount obtained plus the interest actually charged spread over the life of the loan is less than the legal maximum interest. 57 A.L.R. 2d 649 Anno: Usury-Interest In Advance § 6. We think that the Legislature, although eliminating "points" with regard to conventional home mortgage loans, (§ 2(A)), did not intend to eliminate them with regard to FHA and VA loans, or other loans guaranteed by an instrumentality of the federal government where the maximum interest rate was not more than seven per cent (7%), but rather to regulate them. (§ 2(B)).
We think this Court also should attempt to resolve any ambiguities occasioned by the usage in various sections of the Act of the term "interest" (§ 1(A)), "simple interest" (§ 3) "effective rate of simple interest" (§ 10(a) (2)), and "stated rate" (§ 8(2)) and their interrelation with each other.
"Interest" is defined in § 1 (A) of the Act as follows:
"(A) The term interest as used in this Article means any compensation imposed directly or indirectly by a lender for the extension of credit for the use or forbearance of money, including but not limited to loan fees, service and carrying charges, discounts, interest, time-price differentials, investigators' fees and any amount payable under a point, discount, orgination fee or other system of additional services except as specifically provided in this section. * * *"
"Simple interest" is that paid on the principal lent as distinguished from compound interest which is interest paid on unpaid interest. See 47 CJS 11, § 1. The "effective rate of simple interest," as we have already stated, refers to the yield to maturity rate received by the lender after deducting any premium, discount or points. We think that the Legislature intended that this "effective rate" should be the rate recited in the disclosure statement which the lender must furnish to the borrower pursuant to § 10(a) (2).
Section 3 of the Act which provides that the interest rate, by written agreement between the borrower and the lender, may be *718 as high as eight per cent (8%) per annum simple interest on the unpaid balance requires that:
"* * * This agreement must set out the annual rate of interest which is charged, stated in percentage and be a separate instrument from the contract of indebtedness * * *."
It is our interpretation of the language used in § 3 that it was the intent of the Legislature that the rate of interest set forth in the agreement required by § 3 should be the rate of interest which appears on the face of the mortgage and mortgage note, if the latter is used. This would be the stated rate of interest. See also § 8(2). Referring to the example previously used in this opinion, it would be the six per cent (6%) item illustrated therein. Again, we emphasize that the test as to whether the loan is usurious would be the amount of the effective annual interest rate (yield to maturity) which in our example is 6.65%. This latter figure, as we have already stated, should appear in the disclosure statement.
Any discussion regarding the proper computation of interest and the treatment of "points" in relation to the rate would be incomplete without a clarification regarding "points" which are charged to the seller. We think that § 2(A) adequately covers this question and that it makes no difference whether the "points" are to be collected from the seller or the borrower insofar as their being included within the computation of the interest rate is concerned. The pertinent language in § 2(A) states "a charge or fee commonly called `points' or mortgage origination fee, and extracted by a lender from either the borrower or any other person as additional compensation for the loan of money * * *." (Emphasis supplied.); obviously, the seller in any transaction comes within the definition of "any other person." The fact that § 2(A) specifically prohibits such charges with regard to conventional loans, that is, loans other than FHA, VA or those guaranteed by other federal instrumentalities where the maximum rate is not over seven per cent (7%), leaves but one conclusion and that is that points were to be permitted with regard to those loans guaranteed by FHA, VA or other federal instrumentalities and that "points" collected *719 from the seller must be incorporated in the computation of the interest rate. See Opinion of the Attorney General, June 7, 1968 (Daily Record June 18, 1968).
II
The question of the manner in which interest should be treated under the Act when the prepayment of the loan occurs was not pressed in the court below nor did the court discuss it in its opinion, however, we think it germane to the issues presented on this appeal. The problem which arises is that prepayment of the loan has the effect of increasing the interest yield to the lender and accordingly, depending upon the construction adopted, may render the loan usurious.
It must be remembered that the loan agreement between the lender and the borrower is prospective in its operation and it is reasonable to anticipate that there will be compliance with its terms. We are of the opinion that where the annual effective interest rate is within the legal rate of interest, there can be no question but that the lender is entitled to accept prepayment of all the outstanding principal without rebate. Such actually would be the case in the event of foreclosure of the mortgage lien. In cases where the loan contract provides for prepayment of the loan at the election of the borrower (FHA and VA mortgages provide for such an election) should the borrower exercise this option to prepay the loan and such action in fact renders the effective interest rate greater than eight per cent (8%), the transaction is not usurious as long as the interim payments of the effective interest rate would have been legal in contemplation of continued payments to the maturity specified in the contract. 55 Am. Jur. 360, Usury, Sec. 48; 75 A.L.R. 2d 1265; 130 A.L.R. 73; 100 A.L.R. 1431; 84 A.L.R. 1283. See Opinion of the Attorney General, July 11, 1968 (Daily Record, October 1, 1968).
It would appear that the Legislature recognized the possibility of prepayment of the loan and intended that this could be accepted without requiring a rebate on the part of the lender. Section 1(B) (2) specifically provides that the collection of a prepayment penalty be allowed, where such is provided in the original loan contract, during the first three years of a loan secured *720 by certain types of property, including homes, and prohibits prepayment penalties thereafter. Section 1(B) (2) is silent as to any rebate requirements in the event of prepayment; this gains significance by contrast with § 5(a) wherein it is specifically provided, in case of loans not secured by real property, that rebate be made of any excess interest, by way of refund to the borrower or by a credit to his account, should an excess occur by reason of prepayment of a loan prior to maturity.
III
The question as to legislative intent regarding the application of the disclosure or "truth in lending" provision of the Act, § 10 raises two issues of general concern to the mortgage industry: (a) whether the disclosure provisions of § 10 apply to commercial loans in excess of $5,000; and (b) the difficulty of accurate disclosure of interest in construction loans.
(a)
Section 7 of the Act specifically exempts from the disclosure provisions required by § 10 any loan in excess of $5,000 made "* * * to any business or commercial organization or to a person or persons owning or desiring to acquire a business as a sole proprietor or joint venture, if the loan is transacted solely for the purpose of carrying on or acquiring a business or commercial investment, * * *." The lower court is of the opinion that although § 7 exempted the commercial loans described therein from the provisions regarding usury, that nonetheless commercial transactions were subject to the disclosure provisions set forth in § 10 of the Act. We disagree with the lower court's interpretation.
In order to divine the legislative intent behind the disclosure provisions of § 10, it is necessary to consider the primary objective sought to be achieved by the Act, which was to provide protection for the home buyer from sharp practices of some lenders. The entire rationale of the Act is predicated on the recognition of the naivete of laymen who do not engage in a sufficient number of mortgage transactions to acquire any degree of expertise and whose exposure is oft-times limited to a once in a lifetime mortgage contract. Clearly, protection for the vast majority of the public who fall into this category is needed *721 and can best be achieved by the disclosure statement required by § 10, which puts them on notice as to the rate and amount of interest they will pay, as well as other charges incident to the closing of the transaction, prior to the execution of the contract of indebtedness.
On the other hand the borrower for commercial purposes usually possesses a degree of sophistication regarding the practices of the market place and is prompted to make his deal where money is cheapest.
We think the lower court was overly impressed by the evidence concerning an earlier draft of § 10(a) of the Act which contained provisions requiring a written statement setting forth certain information and which excluded business and commercial loans from its application, and from which draft the words accomplishing the exclusion were ultimately stricken by amendment. The lower court concluded that the deletion of the words of exclusion indicated a legislative intent to subject commercial loans to the disclosure provision. We, however, are of the opinion that the reason the words exempting commercial loans from the disclosure provisions were stricken from the earlier draft of § 10, was for the reason that they constituted excess verbiage. The answer is simple, why should specific language be needed in § 10 to exclude commercial loans from the application of its disclosure provisions when such loans had already been excluded from the operation of the Act by § 7. We think § 7 goes that far and that it was the legislative intent that § 7 should have a broad effect. Section 7 commences with the clear introductory clause that reads: "7. Notwithstanding the other provisions of this article," and then proceeds to exclude commercial loans in excess of $5,000.
It is true that the main thrust of § 7 is to cover the usury provisions of the Act; however, we think that the disclosure provisions of § 10 were included in the Act to fortify the control over interest sought to be achieved by § 7, ergo, since commercial loans in excess of $5,000 are exempted from the usury regulations in § 7 there would be little or no practical benefit derived from subjecting such loans to the disclosure provisions of § 10, and we do not think the legislature intended such an exercise in futility.
*722 We think the reading of the statute as a whole supports our conclusion regarding the nonapplication of the disclosure provisions to commercial loans exempted by § 7. We are not unmindful that this technique has frequently been employed by this Court.
"`In ascertaining the intention of the legislature, all parts of a statute are to be read together to find the intention as to any one part, and all parts are to be reconciled and harmonized if possible.'" McConihe v. Comptroller, 246 Md. 271, 275, 228 A.2d 432, 434 (1967), and cases cited therein."
(b)
In the case of construction loans, the industry shies away from the requirement in the disclosure provision of § 10(a) (2) which provides that the interest rate be "stated in percentage calculated to the nearest 2/10 of 1%." The mortgage brokers contend that a construction loan is a hybrid transaction providing for the release of mortgage money in stages as the construction advances and that both principal and interest are frequently subject to final adjustment. It is argued that the nature of the loan renders a precise determination of interest inordinately difficult, if not impossible, at the time the contract of indebtedness is executed. Not wanting to be accused of financial legerdemain, the lenders have asked for guidance which will give legal sanction to some elasticity in this area. In the lower court, Powers, J., was of the opinion that there would be compliance with the disclosure provisions of § 10, if the lender set forth in the disclosure statement the "maximum amount of interest `to be collected' as anticipated under the contract of indebtedness as of the date of its execution, * * *."
We find the lower court's construction to be a practical and sensible solution to a problem which the lenders may have over-endowed with technicalities. One of the cardinal rules of statutory construction is that wherever possible an interpretation should be given to the statutory language which will not lead to oppressive, absurd or unjust consequences. Kolb v. Burkhardt, 148 Md. 539, 129 A. 670 (1925); Bouse v. Hutzler, 180 Md. 682, 26 A.2d 767 (1942); Rogan v. Baltimore & O.R. Co., 188 Md. 44, 52 A.2d 261 (1947).
*723 IV
Subsections 1(B) (1) through §§ 1(B) (5) of § 1(B) of the Act enumerate those charges which may be imposed by the lender and which by the express language of the Act are removed from the definition of interest. Subsection 1(B) (6) represents an attempt to set forth and limit actual legitimate expenses that have no relation to any compensation paid to the lender, and although §§ 1(B) (6) provides that any other expenses (than those listed in §§ 1(B) (6)) shall be considered interest, it must be construed as meaning that any other expenses other than those specifically enumerated and excluded from being interpreted as interest, in §§ 1(B) (1) through 1(B) (5), shall be considered as interest. In other words § 1(B) (6) must be read in harmony with §§ 1(B) (1) through 1(B) (5) and not as qualifying the items exempted from interest therein. McConihe v. Comptroller, 246 Md. 271, 275, 228 A.2d 432, 434 (1967).
The parties to this action entered into a stipulation in the lower court, setting forth the various charges and fees collected by the lender and the manner in which they were customarily treated prior to the effective date of the Act. The court below elaborated in detail on each item set forth in the stipulation and the construction which should be given them when viewed in light of the charges and fees enumerated in §§ 1(B) (1) through 1(B) (6) of the Act. We think it did so with sufficient clarity to enable the parties to ascertain, by virtue of the guidelines given, whether a specific item set forth in the stipulation should, or should not, be included in the computation of interest. We adopt the lower court's classification of specific items as set forth in its order, with what we hope to be appropriate comment, by way of supplemental explanation. The main thrust of the lower court's rationale is that the determining factor, in the event of any ambiguity as to whether or not a fee or charge should be included as interest, is whether such charge is retained by the lender and, if so, it should be treated as interest. That such a construction is a projection of the intent of the Legislature becomes manifest upon reading the Act. The lower court in the following portion of its opinion expressed it well:
*724 "All of the charges customarily made at the time of settlement and not retained by the lender appear to come within either § 1(B) (3), § 1(B) (4) or § (B) (6).
Conversely any charge retained by the lender is suspect and therefore deemed interest. A significant test is determining whether charges made to the borrower are to be deemed interest is whether or not they are retained by the lender. The intent obviously was that it is through `padded' charges made by an unscrupulous lender that additional compensation for the use of the money could be realized."
The interest rates and points to be charged by the three appellants were as follows: B.F. Saul Company, 6 1/2% interest per annum and 5 points (1 point to be paid by the purchaser and 4 points by the seller), term of the loan 30 years; Frederick W. Berens, Inc., 6 3/4% interest per annum and 7 1/2 points (1 point to be paid by purchaser and 6 1/2 by seller), term of the loan 30 years; Weaver Bros., Inc., 6 3/4% interest per annum and 7 points (1 point to be paid by the purchaser and 6 points by the seller); all lenders intended to spread the points over the term of the loan. The lower court in the first four paragraphs of its decree found that an actual controversy exists and that in all three instances the commitment of the lenders (appellants) does not violate the interest and usury provisions of Chapter 453 of the Laws of 1968 of the General Assembly (House Bill No. 11).
The court proceeded in its decree to classify the various fees and charges itemized in the stipulation and the other issues raised by the parties. A proper understanding of what the lower court ordered in its decree and those portions of it with which we agree, requires us to set forth the remaining portion of the decree verbatim:
"5. That under Chapter 453 of the Laws of Maryland, 1968, the charge of a fee commonly called `points' together with other charges which are considered as interest under the Act and which points and charges are made at the outset of the transaction should be *725 computed as interest over the term of the loan even though paid in the initial year of the loan.
6. That the interest rate to be stated in the agreement required in § 3 and the effective rate of simple interest to be stated as required by § 10(a) (2) is to be based on the full amount paid by the borrower for the use of the money.
7. That § 10 of Chapter 453 requires that the disclosure statement be furnished to borrowers in business or commercial transactions concluded under § 7 of said chapter.
8. That the provisions of § 10 apply to a construction loan when the length of time and dates of funding parts of the loan must await subsequent developments, and all that is required of the lender is to furnish the information on the basis of the provisions of the loan agreement as written, without responsibility to anticipate the various contingencies which might arise.
9. That § 1(B) (6) and the other provisions of § 1(B) are not in conflict but that the terms `actual expenses collected by the lender are specifically enumerated in this section' as set forth in § 1(B) (6) includes those enumerated in § 1(B) (1) through § 1(B) (5).
10. That generally any charge made by a lender in connection with the loan, even though for one of the classes of expenses enumerated in § 1(B) (6), if retained by the lender constitutes interest under the Act.
11. That with specific reference to the items of expense before the Court in the present cases:
The cost of a Credit report not retained by the lender and required by FHA and VA loan procedures is within the terms of § 1(B) (6) (C) as a cost for insuring the lender `against loss or liability on or in connection with the loan.'
The cost for Appraisal fees required by FHA and VA loan procedures is exempt from the calculation of interest under § 1(B) (3) and in other cases under *726 § 1(B) (6) (C) provided the charge is not retained by the lender.
Title examination fees are not interest under § 1(B) (6) (C) provided the same are not retained by the lender.
Charges for preparation of deed of trust and note and title insurance charges not retained by the lender but paid to the persons furnishing the services and insurance are not interest under § 1(B) (6) (C).
Charges for recording the deed of trust and the recordation tax are paid to the Clerk of the Circuit Court under requirements of law and are not interest under § 1(B) (3).
Tax assessor's fee is a cost of acquiring the certificate as to the status of real estate taxes on the security property. It is a necessary expense and paid to a governmental agency and is not interest under § 1(B) (3).
Notary fee is a charge imposed by a public officer for the required acknowledgment of legal documents and is not interest under § 1(B) (6) (C).
Sums charged and retained in escrow by the lender on account of future taxes are held for the account of the borrower and are not to be considered interest.
Charges for fire insurance premiums, life or health insurance premiums and monthly payments to escrow accounts and renewals thereof, provided that such charges are actually paid to the insurer and are not retained by the lender, except during the period of any escrow accrual, are not interest.
Charges collected for FHA insurance premiums are collected at the direction of FHA, a governmental agency and constitute premiums for insuring or indemnifying the lender. They are not to be considered interest under either § 1(B) (3) or § 1(B) (6) (C).
Charges for the cost of a survey are necessary to securing an unqualified title certificate or title insurance policy and are not interest under § 1(B) (6) (C) when paid to the surveyor.
*727 Charges for VA inspection fee and VA funding fee are requisite to the securing of a VA guarantee and are not interest under § 1(B) (6) (C); * * *."
The only portions of the decree with which we disagree are paragraph No. 7, wherein the court states that the disclosure provisions of § 10 of the Act applies to commercial loans in excess of $5,000 (§ 7) and that portion of paragraph No. 6 relating to the manner in which interest shall be set forth in the loan agreement. For reasons stated in some detail elsewhere in this opinion we reverse those portions of the decree.
We should like to point out that the stipulation of the parties reveals that with regard to some items of cost the lender retains all or a portion of the fee. This practice should be modified to comply with the guidelines furnished by the court, should the lender desire that such charges not be computed as interest.
The FHA retains all of the appraisal fee and since this is a governmental agency this fee is specifically excluded from interest by virtue of § 1(B) (3). However, VA appraisals are not paid to the VA and in the case of Frederick W. Berens, Inc. and B.F. Saul Company, are retained by them as the appraisal is done by a staff appraiser on the lenders' payroll. In such a case the appraisal fee would be computed as interest.
Weaver Bros., Inc., on occasion does its own title work through house counsel and retains the fee. In such an instance this charge should be included in the interest. Also, a salaried house counsel of Weaver Bros., Inc., receives the fee for preparation of the deed of trust and note. Although the house counsel's salary is unrelated to the fees which he retains, since he is an employee of the lender, we construe this practice as retention by the lender and it should be construed as interest.[6]
*728 Weaver Bros., Inc., and B.F. Saul Company are also licensed insurance brokers and retain a commission on fire insurance. Under such a practice the commission should be treated as interest.
All appellants in their role as lenders receive the benefit of life insurance commissions on some contracts, however, there is no requirement that the borrower obtain life insurance through any institutions made available by the lender. When commissions are actually retained by the lender such a commission should be included as interest.
For the reasons stated in this opinion the decree of the lower court is affirmed with the exception of paragraph No. 7, holding the disclosure provisions set forth in § 10 applicable to commercial transactions concluded under § 7 of the Act and that portion of paragraph No. 6 as to the manner in which interest should be stated in the loan agreement.
Decree affirmed in part, reversed in part and case remanded for the entry of a decree in accordance with this opinion: appellants and appellees to share costs equally.
NOTES
[1] POWERS, J. in the opinion of the lower court described the disruptive influence caused by the passage of the Act on the mortgage loan market in the following graphic language:
"While accomplishing the important purpose of increasing the maximum legal rate of interest to 8%, the Act was not received by those concerned as a model of clarity or simplicity nor was there complete unanimity in the interpretation of its many provisions. Most out of state sources of substantial funds, including Federal National Mortgage Association, became unavailable, stagnation of the home building business was threatened, and many wondered if the Act would accomplish the purpose for which it was intended."
[2] Excerpts from testimony of James D. Laudeman, Jr.: "With the introduction of the FHA and VA programs, however, the amount of the points or the amount of the premium that was paid rapidly became standardized at one per cent of the amount of the loan because the regulations issued by the two agencies both expressly allowed the lender to collect and the borrower to pay an amount equal to one per cent of the amount of the loan. VA Regulations, Section 36:4312, subsection (d), part I B, and FHA Regulations, Section 203.27, subsection (a) (2).
"Since the late 1940's the term `point' has been a term of general usage in the mortgage lending industry to describe a fee or charge of one per cent of the amount of the loan collected at the time the loan is made but it was not until the Virginia Legislature early in 1968 enacted Section 6.1-319 of the Code of Virginia that the word had any legislative definition.
"* * * `For the purpose of this section the term points is defined as the amount of money, or other consideration, received by the lender, from whatever source, as a consideration for making the loan and not otherwise expressly permitted by the statute.'
"So Virginia defined the term `point' in putting it into their act.
"The Maryland Legislature then enacted House Bill 11 which makes several references to the word `point' thus indicating that the term was intended to have the meaning generally associated with it in the industry.
"On May 29, 1968, the President of the United States signed Public Law 90-321, the 1968 Consumer Protection Act. Section 106 of that Act, in defining the term `Finance Charge,' states that it consists of `interest, time price differential, and any amount payable under a point, discount, or other system of additional charges."
[3] Section 2B of the Act: "In the event that charges or fees which, under this Article are deemed interest, are assessed at the inception of the contract of indebtedness, the rate of interest required in Section 10 of this Article shall be determined in the same manner as if fees and charges had not been assessed except that the principal of the loan used in determining the rate of interest shall be the face value of the loan less any fees or charges which are interest."
[4] Yield figure obtained from "Prepayment Mortgage Yield Table for Monthly Payment Mortgages," Sec. Ed., p. 338.
[5] Were the 5 points to have been construed as interest during the initial year of the loan the transaction would be usurious as the interest during the first year would have been 11%.
[6] We do not wish to further complicate this opinion by commenting on the question of the propriety of such an arrangement whereby lender's house counsel is paid for title work and preparation of instruments where the charge is made to the borrower, however, reference is made to § 47 of the "Canons of Professional Ethics of the American Bar Association" and the provisions regarding unauthorized practice of law found in Code Art. 27, § 14 (1967 Repl. Vol.)
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615 F. Supp. 371 (1985)
AIR LINE PILOTS ASSOCIATION, INTERNATIONAL, Plaintiff,
v.
TRANSAMERICA AIRLINES, INC., Defendant.
No. C 85-2803 SW.
United States District Court, N.D. California.
August 8, 1985.
*372 Michael E. Abram, Jay P. Levy-Warren, James L. Linsey, Cohen, Weiss & Simon, New York City, James R. Ritchie, Henning, Walsh & Ritchie, San Francisco, Cal., for plaintiff Air Line Pilots Ass'n, Intern.
Fisher & Phillips, Ned A. Fine, San Francisco, Cal., and Robert J. Berghel, William F. Kaspers, James J. McDonald, Jr., Atlanta, Ga., for defendant Transamerica Airlines, Inc.
ORDER GRANTING DEFENDANT'S MOTION TO DISMISS
SPENCER WILLIAMS, District Judge.
The matter is before the court on defendant Transamerica Airlines, Inc.'s (hereafter "Transamerica") motion to dismiss plaintiff Air Line Pilot Association, International's (hereafter "ALPA") complaint in its entirety for lack of subject matter jurisdiction and for failure to state a claim upon which relief can be granted. At the conclusion of the hearing on this motion, the court dismissed without prejudice the first count of plaintiff's complaint. The court requested supplemental briefing on and took under advisement that portion of the motion which pertained to the second count of the complaint.
In the second count, plaintiff contends that defendant's creation of a separate airline subsidiary "subverts and impairs the representative standing, collective bargaining rights and legitimate effectiveness of ALPA to represent Transamerica's pilots ..., and violates rights of ALPA and Transamerica's pilots to a collective bargaining relationship free of influence, interference, or coercion by defendant." ALPA contends that this conduct violates the Railway Labor Act (hereafter "RLA" or "the Act"), 45 U.S.C. § 152, Third and Fourth, which, respectively, prohibit interference with the designation of representatives and give employees the right to organize and bargain collectively without interference from a carrier. The issue is whether this claim presents a simple representation dispute, committed to the exclusive jurisdiction of the National Mediation Board ("NMB") pursuant to 45 U.S.C. § 152, Ninth, or whether the claim encompasses factors other than representation which this court has jurisdiction to entertain at this time. After careful consideration of all the arguments and evidence before the court, it is hereby ordered that defendant's motion to dismiss the second cause of action is GRANTED.
FACTS
Transamerica is a charter airline engaged in the business of providing air transportation service in interstate and foreign commerce. Plaintiff ALPA is the duly authorized exclusive collective bargaining representative of the airline pilots employed by Transamerica. For many years, plaintiff and defendant have made and maintained collective bargaining agreements.
The RLA requires that the parties before the court "exert every reasonable effort to make and maintain agreements concerning rates of pay, rules and working conditions and to settle all disputes ... in order to avoid any interruption to commerce." 45 U.S.C. § 152, First. Before disputing parties covered by the Act may resort to self-help, they are required to exhaust a procedure set out in the Act. Initially, the parties must attempt by good faith conferences to reach agreement. 45 U.S.C. § 152, Second. If the conferences fail, the parties may invoke the services of the NMB, 45 U.S.C. § 155, First, which is required to use its best efforts to bring them to agreement. If the NMB determines that a settlement through mediation is not possible, it must endeavor to induce the parties to arbitrate their controversy. Id. If either party refuses to arbitrate, the NMB notifies the parties that its mediatory efforts have failed; the parties then enter a 30-day cooling off period, after which time they may resort to self-help. Id.
ALPA and Transamerica commenced negotiations over the terms of a new collective bargaining agreement in March 1984. Unable to reach agreement, they jointly invoked the NMB's assistance and have *373 been engaged in mediation sessions since July 1984. On March 27, 1985, plaintiff filed its complaint in which it seeks injunctive and other relief against defendant for alleged violations of the RLA, 45 U.S.C. §§ 151 et seq.
In count I of its complaint, ALPA alleges that Transamerica, together with its corporate parent, "formulated and commenced to implement a plan to compel Transamerica's pilots to operate in accordance with rates of pay and working conditions to be imposed by Transamerica whether or not they would be agreed to by ALPA." Transamerica and its parent allegedly created Trans International Airline, a subsidiary, to achieve this goal. ALPA contends that although Transamerica entered into collective bargaining negotiations, it has refused to bargain in good faith and to exert every reasonable effort to make and maintain disputes and to settle disputes in a manner consistent with the requirements of 45 U.S.C. § 152, First. Because the court determined that it had no jurisdiction to entertain this claim prior to the exhaustion of the RLA's dispute resolution procedures, defendant's motion to dismiss this count of the complaint was granted without prejudice.
In the second count of the complaint, ALPA alleges that defendant's course of conduct, particularly the creation of Trans International Air, violates 45 U.S.C. § 152, First and Fourth, by subverting and impairing "the representative standing, collective bargaining rights, and legitimate effectiveness of ALPA to represent Transamerica's pilots." Essentially, ALPA believes that defendant together with its corporate parent established Trans International Air, a charter airline which allegedly operates in Transamerica's marketplace, so that work which would otherwise be done by ALPA members will be performed by Trans International pilots. Defendant contends that the court lacks jurisdiction to entertain this claim as it raises a representation dispute committed wholly to the NMB.
ANALYSIS
The issue for the court to decide is how to properly characterize plaintiff's second claim. As will be discussed infra, the Second Circuit has affirmed the dismissal for lack of subject matter jurisdiction of a substantially similar claim brought by ALPA in another proceeding. Plaintiff contends, however, that the Ninth Circuit authorities in Labor Management Relations Act (hereafter "LMRA") and in an RLA case demonstrate that the exercise of subject matter jurisdiction over plaintiff's second cause of action is appropriate.
In seeking to have the second count of the complaint dismissed for lack of subject matter jurisdiction, defendant argues that ALPA's claim arises under 45 U.S.C. § 152, Ninth, which provides in relevant part:
If any dispute shall arise among a carrier's employees as to who are the representatives of such employees designated and authorized in accordance with the requirements of this chapter, it shall be the duty of the Mediation Board, upon request of either party to the dispute, to investigate such dispute ...
Defendant contends that ALPA itself demonstrated that its claim raises a representation dispute when it filed with the NMB a petition for classification of carrier status, seeking a ruling on whether Transamerica and Trans International constitute a single carrier and whether ALPA has the right to bargain on behalf of pilots employed by Trans International.
In addition, defendant argues that the claims raised by ALPA here are nearly identical to those it raised in ALPA v. Texas Int'l. Airlines, 656 F.2d 16 (2d Cir. 1981). In Texas Int'l., ALPA was the collective bargaining representative of the pilots of Texas International. The corporate parent of Texas International established New York Air, a separate, non-union airline subsidiary. ALPA alleged that this corporate restructuring constituted an effort to defeat the existing collective bargaining agreement between ALPA and Texas International. This conduct was alleged to violate Texas International's statutory duties
*374 "(1) to `treat with" ALPA as the exclusive representative of (Texas International)'s pilots, § 2, Ninth; (2) to maintain the collective bargaining agreement, § 2, First; (3) to allow representatives to be designated without interference, influence, or coercion, § 2, Third; (4) to refrain from interference in the organization of the employees, § 2, Fourth; and (5) to refrain from attempting to unilaterally change rates of pay, rules, and working conditions, § 2, Seventh, § 6."
Id. at 18. Thus, ALPA's claim here that the creation of Trans International violates 45 U.S.C. § 152, Third and Fourth, essentially tracks claims ALPA made in Texas Int'l.
The district court's dismissal of ALPA's claims was affirmed by the Second Circuit, which noted at the outset that the case presented neither a pure representation dispute under 45 U.S.C. § 152, Ninth, nor a pure interference claim under 45 U.S.C. § 152, Third and Fourth. No traditional representation dispute existed because there was no rival union and there had been an application to nor a certification by the NMB. Nonetheless, the court held where a representation dispute appears on the face of a complaint, the court must dismiss the action in light of 45 U.S.C. § 152, Ninth. Acknowledging that courts traditionally play a narrow role in enforcing the RLA, the Second Circuit concluded that "(n)either the framework and history of the RLA nor the cases authorizing judicial intervention under the Act", Id. at 24, establish that subject matter jurisdiction over this claim exists.
Were Second Circuit authority controlling here, this court clearly would lack subject matter jurisdiction over the claim before it. It is plaintiff's contention that under Ninth Circuit authority, which does control, subject matter jurisdiction does lie.
One argument that plaintiff makes in support of its position that the court possesses jurisdiction over this claim is based cases arising under the LMRA.
In Bhd. of Teamsters, Local No. 70 v. California Consolidators, Inc., 693 F.2d 81 (9th Cir.1982) (per curiam), plaintiff filed an action under section 301(a) of the LMRA, 29 U.S.C. § 185(a), seeking a declaratory judgment that a trucking firm was bound by the union's collective bargaining agreement with a pool car distributor because the two entities constituted a single employer. The Ninth Circuit reversed the district court, which had found that it lacked jurisdiction because the National Labor Relations Board had exclusive jurisdiction over the single employer issue.
Employing the two step analysis adopted by the Supreme Court in South Prairie Construction Co. v. Local 627, Int.'l Union of Operating Engineers, 425 U.S. 800, 96 S. Ct. 1842, 48 L. Ed. 2d 382 (1976) (per curiam), the Ninth Circuit determined that questions whether two entities are bound by a collective bargaining agreement "comprise two subsidiary issues", California Consolidators, 693 F.2d at 82. The court held that a district court "may decide under § 301 whether two companies constitute a single employer, (b)ut a single employer conclusion fails to determine that the employees form a single or an appropriate bargaining unit." Id. at 83 (citations omitted). The court held that under § 301 district courts have jurisdiction to decide whether employers constitute a single employer but do not have jurisdiction to determine the second part of the issue, the appropriateness of the bargaining unit. See also Northwest Administrators v. Con Iverson Trucking, Inc., 749 F.2d 1338 (9th Cir.1984) (court generally has no jurisdiction to decide representational issues in NLRA cases, but under § 301 it does have jurisdiction to determine whether one company was a successor or alter-ego to another which could be bound by an agreement the other entered, and if so, to determine whether the successor or alter-ego ever effectively repudiated the collective bargaining agreement).
Plaintiff argues that the same two-step analysis must govern in this RLA case and that California Consolidators, South Prairie, and Northwest Administrators demonstrate that, at a minimum, this court *375 has jurisdiction to consider the first part of the inquiry, i.e., whether Transamerica and Trans International constitute a single employer.
While it certainly is true there are parallels between the RLA and other labor statutes, such parallels "should be drawn with the utmost care and with full awareness of the differences between the statutory schemes." Chicago and N.W. R. Co. v. United Transportation Union, 402 U.S. 570, 579 n. 11, 91 S. Ct. 1731, 1736 n. 11, 29 L. Ed. 2d 187 (1971). See also Bhd. of R.R. Trainmen v. Jacksonville Terminal Co., 394 U.S. 369, 383, 89 S. Ct. 1109, 1118, 22 L. Ed. 2d 344 (1969) (although cases arising under the NLRA are useful in construing the RLA, they cannot be "imported wholesale in the railway labor arena" and analogies must be drawn "circumspectly, with due regard for the many differences between the statutory schemes").
Even assuming arguendo that the second count of ALPA's complaint raises an issue which should be analyzed under the two-part analysis originally set out in South Prairie, the RLA differs from the LMRA in ways which would make the exercise of jurisdiction over any part of ALPA's second claim improper.
Section 301 of the LMRA[1] expressly confers jurisdiction upon federal courts to enforce contracts; that jurisdiction extends to determinations of whether a particular employer is bound by a collective bargaining agreement. In contrast, the RLA contains no corollary to § 301; rather, as will be discussed infra, questions of contract interpretation constitute minor disputes which must be submitted to final and binding arbitration and are subject to limited judicial review only after such an arbitration award has been rendered. See 45 U.S.C. § 153. Therefore, the fact that the court possesses jurisdiction to adjudicate the single employer question in NLRA cases does not indicate that it also has jurisdiction to make the same determinations in RLA cases. The statutory framework of the RLA demonstrates that Congress intended that, with few exceptions, questions of contract interpretation not be brought before the courts until binding arbitration has occurred.
Plaintiff's second argument evolves from Butte, Anaconda & Pacific Ry. v. Bhd. of Locomotive Firemen and Enginemen, 268 F.2d 54, 58 (9th Cir.), cert. denied, 361 U.S. 864, 80 S. Ct. 122, 4 L. Ed. 2d 104 (1959). In Butte, the railway established a new switching and loading yard and ascertained that its employees, who were represented by the union, were willing to perform at the new yard under work rules different from those in existence at its other yard. The railway then served upon the union a notice proposing amendments to the labor agreements, and the parties commenced negotiations on the proposed work rule changes. When the union did not agree readily to the changes the railway desired, the railway announced that the work at the new yard would be done by employees of its corporate parent. The union threatened to strike, and the railway sued to enjoin the threatened strike.
The district court dismissed the action and the court of appeals affirmed. One of the issues before the circuit was whether the controversy presented a major or a minor dispute under the RLA. Plaintiff contends that in the course of its discussion of the major/minor dispute issue, the Ninth Circuit demonstrated that this court has jurisdiction over single employer questions in RLA cases. For the following reason, the court disagrees.
Disputes under the RLA are classified either as major or minor disputes. Major disputes, which involve attempts to form collective bargaining agreements and/or change rates of pay, rules or working conditions, are resolved through the conference, *376 mediation, and arbitration process described above. Minor disputes, which involve grievances directed to the meaning or proper application of a particular provision in an agreement, are to be resolved through arbitration which is binding upon the parties and final. See Elgin J. & E.R. Co. v. Burley, 325 U.S. 711, 724, 65 S. Ct. 1282, 1290, 89 L. Ed. 2d 1886 (1945).
In RLA cases where injunctions prohibiting a strike are sought, such as Butte, it is necessary as a threshold matter to determine whether a dispute is major or minor. The Norris-LaGuardia Act prohibits the issuance of an injunction in an RLA case involving a major dispute, but a strike may be enjoined when a minor dispute occurs.
It is for this reason that the Butte court began its analysis with an examination of whether the dispute before it was major or minor. In so doing, the court rejected the railway's contention that a major dispute had concluded when the union rejected that railway's proposal, the railway withdrew its section 6 notice, and the switching operations at the new yard were transferred to employees of the railway's parent.
In discussing the railway's last assertion that the transfer of jobs terminated the dispute the court stated:
It may be assumed ... that where an independent shipper, not acting in concert with a carrier, determines to perform its own switching service on its own property, section 6 mediation proceedings involving a dispute relative to such service are necessarily terminated.
Here, however, the carrier is the wholly-owned subsidiary of the shipper ... The two have common principal officers and the unified purpose of serving the ultimate best interests of the shipper. Under these circumstances the act of Anaconda in taking over the switching service, to be performed by employees represented by another union, must be regarded as the act of the carrier. Otherwise, a carrier by interrelation with its shipper would always have it within its power to circumvent the mediation provision of the RLA.
Id. at 59-60.
Plaintiff argues that this passage demonstrates that this court has jurisdiction to consider the single employer question under the RLA. It argues that Transamerica, like the carrier in Butte, acted in concert with its corporate parent to use the device of separate corporations to avoid its bargaining and representation obligations under the Act.
The court rejects plaintiff's argument for two reasons. First, the factual setting in Butte was not similar to the one before this court. The court in Butte was not addressing the question whether a court has jurisdiction to consider whether two employers are bound by a collective bargaining agreement signed by one of them; instead, the court was addressing the separate issue of whether the major dispute had terminated, leaving only a minor dispute and depriving the court of jurisdiction to issue an injunction. In the course of its discussion, the court did determine that the conduct of one employer could be attributed to another, but it did so only because a threshold jurisdictional question was raised by defendant's assertion that the dispute the court was examining was a minor one.
The situation before the court in this instance does not present the same question. The resolution of the single employer question here is not a necessary precondition to the determination whether the court has jurisdiction over the case; rather, the single employer question is the ultimate issue which plaintiff seeks to have the court determine. This question simply was not before the Butte court.
Second, the passage quoted above does not constitute the holding of Butte. It merely is dicta. Because the factual situation there was so different, this dicta provides little or no guidance to this court.
In sum, the question whether this court has jurisdiction over plaintiff's second count has never been addressed directly in the Ninth Circuit. In view of the careful *377 and convincing analysis of this issue which the Second Circuit undertook in Texas Int'l. and the unmistakable congressional intent, evident in 45 U.S.C. § 152, Ninth, to have representation issues in RLA cases resolved exclusively by the NMB, the court finds that dismissal of plaintiff's second count is mandated.
IT IS THEREFORE ORDERED that defendant's motion to dismiss the second count of the complaint is GRANTED.
NOTES
[1] Section 301(a) provides in relevant part:
Suits for violation of contracts between an employer and a labor organization representing employees in an industry affecting commerce ... may be brought in any district court of the United States having jurisdiction over the parties ...
29 U.S.C. § 185(a).
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601 S.W.2d 418 (1980)
LYKES BROS. STEAMSHIP CO., INC., Appellant,
v.
Chester BENBEN, Appellee.
No. B2083.
Court of Civil Appeals of Texas, Houston (14th Dist.).
May 14, 1980.
Rehearing Denied June 11, 1980.
*420 Kenneth D. Kuykendall, Royston, Rayzor, Vickery & Williams, Houston, for appellant.
Richard P. Hogan, Helm, Pletcher & Hogan, Houston, for appellee.
Before COULSON, SALAZAR and JUNELL, JJ.
JUNELL, Justice.
This is an appeal from a judgment awarding Chester Benben (Benben) $258,400.00 in damages for personal injuries received in an accident which occurred on September 27, 1976 while he was working as the Chief Mate on board the Howell Lykes, a cargo vessel owned and operated by Lykes Brothers Steamship Co., Inc. (Lykes). The cause of action was pursued under both the Jones Act, 46 U.S.C.A. § 688 (1975), and under the General Maritime Law of the United States. The case was tried before Honorable James Wallace, Judge of the 215th District Court of Harris County, without a jury. Judge Wallace rendered a judgment on September 6, 1978 in favor of Benben. The judgment itself contained general findings that Lykes was negligent, that the Howell Lykes was unseaworthy, that Benben was twenty percent contributorily negligent, and that the total damages amounted to $323,000.00, which were reduced by twenty percent contributory negligence, leaving a net recovery of $258,400.00.
Lykes timely filed its request for findings of fact and conclusions of law, but none were made and filed by Judge Wallace prior to the time that he resigned as judge of the 215th Judicial District Court and assumed his responsibilities as an associate justice on the Houston Court of Civil Appeals, First District. Thereafter, Lykes filed its supplemental motion for new trial in which it urged that the successor judge, Honorable William Kilgarlin, could not make and file findings of fact and conclusions of law necessary to support the judgment and that the judgment should be set aside and a new trial granted. Judge Kilgarlin overruled that motion and made and filed findings of fact and conclusions of law submitted to him by Benben's attorney.
Lykes assigns thirty-one points of error. Finding no error, we affirm the judgment of the trial court.
The first three points of error deal with the questions concerning the findings of fact and conclusions of law. The first point asserts that Judge Wallace erred in failing to prepare his findings and conclusions before he resigned as judge of the 215th District Court, inasmuch as the legal effect of such action was to deny Lykes findings of fact and conclusions of law as required by the Texas Rules of Civil Procedure. The second point challenges the propriety of Judge Kilgarlin's action in making the findings and conclusions because he was not the judge who tried the case and had no basis for ascertaining the truth of the requested findings and conclusions. Point three claims that constitutional due process requires the trial judge who heard the evidence and rendered judgment in a non-jury case to make the findings of fact and conclusions of law in support of the judgment.
We hold that Judge Kilgarlin was authorized under Tex.R.Civ.P. 18 to make the findings of fact and conclusions of law. While Rule 18 does not refer specifically to findings of fact and conclusions of law, it provides that the successor judge shall hear "... all motions undisposed of...." We are of the opinion that a request for findings of fact and conclusions of law is a motion under Rule 18. The Texas Supreme Court in Storrie v. Shaw, 96 Tex. 618, 75 S.W. 20 (1903), the case so much relied upon by Lykes, twice referred to the request for findings of fact and conclusions of law as a motion.
At the time of the trial in 1902 of Storrie v. Shaw, there was no statute or rule of procedure governing the question here presented. In that case the term of office of Judge Wilson, the judge who tried the non-jury case, expired without his having made findings of fact and conclusions of law. Thereafter, findings of fact and conclusions of law were made by Judge Wilson at a time when he had been succeeded as *421 judge by the Honorable W. P. Hamblen. The findings of fact and conclusions of law were signed not only by Judge Wilson but also by Judge Hamblen. The supreme court, answering certified questions from the First Court of Civil Appeals, held that Judge Wilson had authority after the expiration of his term of office to make and file such findings and conclusions in response to the motion of one of the parties. The supreme court opinion stated that no authority directly in point had been found but that it regarded the signing of bills of exceptions as being most analogous to the question presented. A number of conflicting authorities were cited. The court concluded that the weight of authority and better reasoning support the rule that in cases of removal, resignation or expiration of the term of the judge who tried the case, he was the proper person to sign bills of exceptions and his successor could not do so, as he was a stranger to the judicial proceeding related therein. Applying the reasoning in the cases involving bills of exceptions, the supreme court stated that it would be impossible for a judge who had not heard the testimony to express in findings of fact and conclusions of law the impression which conflicting evidence had made upon the mind of one who heard it. The court stated that it was especially important that the judge who tried the case should make and file the findings of fact and conclusions of law, and the court failed to see any sound objection to the conclusion that upon the retirement of a judge the judicial function survives and continues as far as necessary for him to complete that which reflects the operation of his own mind or relates to his own conduct in the particular case.
Although the decision by the Texas Supreme Court in Storrie v. Shaw appears sound and the result of logical reasoning, the Texas Supreme Court and the Texas Legislature in a number of actions have apparently determined that the logic of the decision in that case should be sacrificed to the need for a more efficient judicial process. For example, Tex.Rev.Civ.Stat.Ann. art. 2248 (Vernon 1971), authorizes a successor judge to make findings of fact and conclusions of law and to approve statements of facts and bills of exceptions in cases where the predecessor judge dies after a trial and before those post-trial matters have been completed. Also, Tex.R. Civ.P. 18, applicable in cases where the predecessor judge dies, resigns or becomes unable to hold court, authorizes the successor judge to hear and determine all motions undisposed of and to approve statements of facts and bills of exceptions. The source of Tex.R.Civ.P. 18 was 1913 Tex.Gen.Laws, ch. 130, at 260. Because of these actions of the Texas Supreme Court and the Texas Legislature, we are satisfied that the reasoning of the court in Storrie v. Shaw no longer applies to preclude a successor judge from acting in such matters.
We believe that our decision on this point is supported by the following cases: Stronck v. Stronck, 538 S.W.2d 854 (Tex. Civ.App. Houston [14th Dist.] 1976, writ ref'd n. r. e.); Fortenberry v. Fortenberry, 545 S.W.2d 40 (Tex.Civ.App. Waco 1976, no writ); Horizon Properties Corporation v. Martinez, 513 S.W.2d 264 (Tex.Civ.App. El Paso 1974, writ ref'd n. r. e.). Although we recognize that Stronck dealt with approval of a statement of facts and the last two cases involved the death rather than the resignation of the predecessor judge, the following statement by the El Paso Court of Civil Appeals in Horizon Properties Corporation v. Martinez fairly summarizes our view on this question:
Rule 18, Tex.R.Civ.P., provides for all pending motions to be continued following the death of a judge until his successor has taken office. While Rule 18 does not specifically name findings of fact and conclusions of law, we think the language is broad enough to include findings of fact and conclusions of law, so that they were timely in this case. 513 S.W.2d at 266.
In the present case we also disagree with the claim by Lykes that constitutional due process requires the trial judge who heard the evidence and rendered judgment to make the findings of fact and conclusions of law. While the federal courts require that *422 the trial judge who heard the evidence make the findings and conclusions, the requirement is not based on constitutional grounds but on the provisions of Fed.R. Civ.P. 63. Arrow-Hart, Inc. v. Phillip Carey Co., 552 F.2d 711 (6th Cir. 1977). Appellant has cited no authority in which the question has been decided on constitutional grounds, and we have found none.
For the reasons set forth above we overrule the first three points of error.
Points five through twenty-two attack the trial court's findings of negligence of Lykes and unseaworthiness of the vessel. Those points include claims of no evidence, insufficient evidence and that the findings are against the great weight and preponderance of the evidence. The findings complained of are that Lykes was negligent: in failing to inform and properly warn Benben that the top rung of the ladder in question had been cut off, in failing to chain and placard the ladder, in failing to remove the ladder until it could be repaired and in providing an unsafe ladder, the top rung having been removed, rendering the vessel unseaworthy.
Benben was injured while descending a vertical metal ladder which was about twelve feet long. The ladder extended from the top of the resistor house down to the main deck of the ship. The ladder had been damaged before the vessel sailed from Houston, but Benben, who was the Chief Mate, and Captain Rivas, the master of the ship, had decided that the ladder was safe for use even though the top rung was bent and fractured at one end. The ladder received further damage while cargo was being discharged at Barcelona, Spain, but again Benben decided that the ladder was safe for use. He notified Captain Rivas of the additional damage and recorded it in the ship casualty log. Several days later Captain Rivas checked the ladder. Seeing that the top rung was bent further and believing it was not safe to use, Captain Rivas order Chief Engineer Staewuen to have the top rung of the ladder removed. The record is not clear whether Captain Rivas initiated the removal of the rung or whether Chief Engineer Staewuen did so. In any event Rivas and Staewuen discussed the matter and were in agreement that the top rung should be removed. Both thought it would be safer to use the ladder without the top rung than with a top rung damaged to the extent it was at that time. The top rung of the ladder was at most about four inches below the deck at the top of the resistor house, and most of the witnesses were of the opinion that it was unlikely that anyone ascending or descending the ladder would step on the top rung.
The top rung of the ladder was sawed off under orders from Chief Engineer Staewuen. This occurred while the Howell Lykes was lying at anchor at Ilichevsk, Russia, waiting on the availability of a dock-side berth. No witness testified that Benben was ever notified that the top rung of the ladder had been removed. He testified positively that he was not so notified and in fact he did not know that the top rung was missing until the accident in question occurred.
Benben as Chief Mate had the primary responsibility for seeing that all top-side equipment, including the ladder in question, was maintained in good repair and in a seaworthy condition. Repairs would be made by the deck crew under the supervision of the Chief Mate; or if the deck crew could not handle the repairs, they would be made by the engineering department under the supervision of Chief Engineer Staewuen.
While the Howell Lykes was at anchor at Ilichevsk, work was done by both the engineering department and the deck department on the top of the resistor house. The ladder rung was removed about ten days before the accident in question while the Chief Engineer was having work done on the top of the resistor house. For two to three days before the accident Benben was supervising work by his deck crew on the top of the resistor house, and it was necessary for Benben to be on top of the resistor house several times to check on that work. However, Benben testified that on the day of the accident he used the aft ladder on *423 the starboard side of the resistor house to go from the deck up to the top of the resistor house. The ladder with the missing rung was the forward ladder on the starboard side of the resistor house. The evidence was conflicting as to whether there were two ladders on the starboard side of the resistor house. Benben testified very positively that there were two ladders. All other witnesses who testified on the question stated with equal conviction that there was only one ladder on the starboard side. Benben did not remember when he had last used the forward starboard ladder, although he had used it on more than one occasion while the ship was lying at anchor at Ilichevsk. He stated that he "must have used it" the day the deck crew was doing work up there, shown by other evidence to be Saturday, September 25, two days before the accident. In any event when Benben used that forward starboard ladder, he did not notice that the ladder rung was missing.
On Sunday, September 26, the vessel was moved from the point where it had been anchored to a berth at dock-side, and the stevedores began discharging cargo from the port side of the ship. Discharge of cargo continued on Monday morning, September 27; during that morning Benben climbed the aft starboard ladder to the top of the resistor house to check on work being done there by his deck crew. He was up there about five minutes. While there he found a dead bird which he tried to throw over the starboard side of the vessel. Wind was blowing from the starboard side and the bird landed on the main deck below. Benben walked over to the forward starboard ladder, turned his back to the starboard side of the vessel and stepped back and down to the second rung of the ladder as he held on to the stanchions, or vertical pipe railings, extending upward from the deck on top of the resistor house. As he stepped down the rungs of the ladder, he released the grip he had with his left hand on the upright railing and reached for the top rung of the ladder, intending to use it as a hand hold. As he reached for the top rung of the ladder, he loosened the grip he had with his right hand on the other upright railing. As he discovered that the top rung of the ladder was missing, he lost the grip he had with his right hand and fell backward to the deck below, receiving the injuries made the basis of this suit.
A marine surveyor, who had had experience working as a mate on a seagoing vessel, testified as an expert witness for Benben. The substance of his testimony was that the top rung of the ladder should have been replaced, not simply removed that a barricade should have been placed to prevent use of the ladder until the rung was replaced, that it was reasonable to use the ladder rung as a hand hold and that the master of the ship should have informed Benben that the rung had been removed.
The chief engineer testified that a missing ladder rung can cause a man to fall and that some notice should have been given when the master decided to have the ladder rung removed.
The first assistant engineer testified in substance that notice should be given to people who might be affected by the removal of a ladder rung.
A naval architect, a witness for Lykes, admitted that a missing ladder rung makes the ladder dangerous to a crewman using it.
The negligence cause of action was brought under the Jones Act, 46 U.S. C.A. § 688 (1975), which is remedial legislation designed to give a seaman the same right to recover against his employer as was given a railroad worker under the Federal Employers' Liability Act, 45 U.S.C.A. § 51 et seq., (1972). Ferguson v. Moore-McCormack Lines, Inc., 352 U.S. 521, 523, 77 S. Ct. 457, 458, 1 L. Ed. 2d 511 (1957). Evidence of "the slightest negligence" is sufficient to sustain a finding of Jones Act liability. Sanford Bros. Boats, Inc. v. Vidrine, 412 F.2d 958 (5th Cir. 1969); Perry v. Morgan Guaranty Trust Company of New York, 528 F.2d 1378 (5th Cir. 1976). The foregoing evidence supports the trial court's finding of negligence and unseaworthiness.
Although Lykes has challenged the trial court's findings of negligence and unseaworthiness, *424 the real thrust of its complaint is that Benben is completely barred from recovery because his own contributory negligence in failing to discover the correct the condition of the ladder was a breach of his affirmative and primary duty as chief mate to see that the ladder in question was kept in good repair and that it was safe for use. Point four presents this alleged error, and Lykes relies on Walker v. Lykes Bros. S.S. Co., Inc., 193 F.2d 772 (2nd Cir. 1952). That case announced what has come to be known as the "primary duty rule." Under that rule an employee may not recover against an employer for injuries occasioned by his own neglect of some independent duty arising out of the employer-employee relationship.
We feel that the rule announced in Walker v. Lykes does not apply to the instant case. There the plaintiff, master of the vessel, had full knowledge of the very defects which caused his injury and failed to see that the defects were repaired although he had many opportunities to do so. Here Benben had no knowledge of the absence of the top rung of the ladder, the defect which caused his injury. He did know that the ladder rung had been damaged, but he and the master of the ship had decided that it was safe for use. The master, without giving Benben any notice whatsoever, later determined that the ladder rung should be removed because, in his opinion, further damage rendered it unsafe. We are unwilling to apply the rule announced in Walker v. Lykes to the facts developed in the instant case.
In points twenty-five through twenty-eight Lykes claims that the damages found by the trial court were excessive, were not supported by sufficient evidence, and were not properly computed under the Jones Act and General Maritime Law. We overrule these points. We hold that the damages finding was not excessive and there was sufficient evidence to support it. We also hold that the record does not show that the trial court improperly computed damages. The trial court merely found total damages of $323,000.00 for past and future loss of earnings, past and future physical impairment and past and future physical pain and mental anguish. On this record there is no way to determine that the trial court included any improper elements of damages. Lykes claims that the method of calculation of damages under the Jones Act and General Maritime Law is different from Texas damage calculations and that we should presume that the trial court included improper elements of damages in his findings. We hold to the contrary. We presume that the trial court did not include any improper elements of damages and that the trial court disregarded incompetent evidence and improper elements in arriving at his decision. Bellows v. Crow, 557 S.W.2d 861 (Tex.Civ.App. Tyler 1977, writ dism'd); Lambert v. Lambert, 545 S.W.2d 542 (Tex.Civ.App. Houston [1st Dist.] 1976, no writ); City of Arlington v. Tex. Elec. Serv. Co., 540 S.W.2d 580 (Tex.Civ.App. Forth Worth 1976, writ ref'd n. r. e.). There is ample competent evidence from which the trial court could conclude, as it did, that the total damages to Chester Benben were $323,000.00.
Point thirty claims that the trial court erred in failing to make additional findings of fact and conclusions of law as requested by Lykes. Tex.R.Civ.P. 298 requires that a request for additional findings be made within five days after the trial judge filed his original findings of fact and conclusions of law. Here the original findings were filed on December 20, 1978 and the additional findings were not requested until December 29, 1978. This request did not comply with the requirements of Rule 298. The trial court did not err in refusing to make additional findings, and Lykes has waived its right to complain of such refusal on appeal. Adams v. Houston Belt & Terminal Railway Company, 405 S.W.2d 838 (Tex.Civ.App. Houston 1966, no writ); Mosolowski v. Mosolowski, 562 S.W.2d 24 (Tex.Civ.App. Tyler 1978, no writ); Elrod v. Elrod, 517 S.W.2d 669 (Tex.Civ.App. Corpus Christi 1974, no writ). Point thirty is therefore overruled.
*425 Point thirty-one is overruled because it presents nothing but a recapitulation of the matters raised in earlier points and contends that all of the matters previously complained of should cause a reversal and remand.
Having considered and overruled all of the points of appeal, we affirm the judgment of the lower court.
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852 S.W.2d 678 (1993)
Larry Gary COOPER, Appellant,
v.
The STATE of Texas, Appellee.
No. C14-90-01140-CR.
Court of Appeals of Texas, Houston (14th Dist.).
April 8, 1993.
Discretionary Review Refused June 16, 1993.
*679 Lott J. Brooks, III, Houston, for appellant.
Ernest Davila, Houston, for appellee.
*680 Before J. CURTISS BROWN, C.J., and ELLIS and LEE, JJ.
OPINION
ELLIS, Justice.
Appellant, Larry Gary Cooper, appeals his judgment of conviction for the offense of possession of a controlled substance, namely, cocaine, weighing less than 28 grams by aggregate weight including any adulterants and dilutants. TEX. HEALTH & SAFETY CODE ANN. §§ 481.102(3)(D) and 481.115(a), (b) (Vernon 1992). Appellant waived his right to a jury trial. The Court rejected his not guilty plea and after finding the two enhancement paragraphs of the indictment to be true, assessed punishment at sixty-five (65) years confinement in the Institutional Division of the Texas Department of Criminal Justice. We affirm.
The relevant facts are as follows: On August 27, 1990, Houston Police Officer Charles Jefferson, while working undercover, was contacted by a confidential informant. The informant told Officer Jefferson that appellant had several pieces of cocaine inside a residence at 1103 Robin Street. The informant specified that cocaine was kept in the front bedroom. Jefferson deemed the informant trustworthy, and reliable based on previous contacts. On that date, at about 4 p.m. based on the informant's tip, the officer set up surveillance about a block away from 1103 Robin Street. The officer remained on surveillance for two to three hours. During that time, he saw appellant standing on the porch of the house and walk in and out of the house several times. He also saw about 15 other persons walk in and out of the house. Based on his experience as a narcotics officer, he suspected that the activity involved sale of illegal narcotics.
On August 28, 1990, Jefferson contacted the same informant. At about 4 p.m., the officer and the informant drove in an unmarked car to appellant's residence at 1103 Robin. The officer had previously searched the informant and found no contraband on him. The informant then walked up to the porch of the house and met with appellant. Appellant said "Yes, I have it" and the two walked inside the house. After a few minutes, the informant returned to the car and gave Jefferson some crack cocaine. As a result, the officer obtained a warrant to search the residence.
On August 29, 1990, at about the same time of day, Jefferson returned to the same area for further surveillance. The officer observed the same type of activity as the previous two days.
On August 30, 1990, Jefferson and a police raid team went to the area near appellant's house. Jefferson drove Officer Gary W. Doyle in front of appellant's house to show him where the raid team was to execute the search warrant. They saw appellant standing on the street and walk back into his house. Jefferson then drove Officer Doyle back to the raid team which was waiting in a van. About five minutes later, Officer Doyle drove the van to the front of appellant's house. The officers exited the van and entered the house to execute the search warrant; the house door was not locked.
Appellant was arrested by one of the officers. Officer Doyle then walked into the front bedroom and on a shelf, in plain view, found some crack cocaine wrapped in a paper towel. In addition, he found two envelopes which had appellant's name written on them; a photograph of appellant and a pistol. Another officer found a wallet in an adjacent bedroom. The wallet had the name "Cooper" stamped on it. The wallet contained appellant's Social Security card and his Texas Department of Corrections Identification card. The front bedroom closet contained men's clothes that appeared to fit appellant.
The cocaine that was seized was tested as 87.8 percent pure and weighed 12.8 grams. Officer Doyle estimated that that amount could yield 40 to 50 rocks of cocaine at a value of $450.
Appellant's wife, Jackie Cooper, testified for the defense. She claimed that appellant did not live at that house. She stated that during August 27 through 30, 1990, she was working from 3:30 to midnight.
*681 She also stated that the door of the house at 1103 Robin was left unlocked while she was away. She admitted that appellant could have sold cocaine while she was at work. Appellant testified that he did not live at that house but was only visiting his children on the day that he was arrested. He claimed that Officers Jefferson and Doyle were liars.
In his sole point of error, appellant contends that the trial court should have granted his "motion to quash" because the State failed to establish affirmative links between him and the cocaine that was found at the house where he was arrested. Appellant's point of error does not allege that there was insufficient evidence to support the court's verdict of guilty. In State v. Jimenez, 763 S.W.2d 436, 437 (Tex.App.El Paso 1988, pet. ref'd), the court held that "there is no pre-trial procedure to test the sufficiency of evidence in a criminal case." For that reason alone, appellant's point of error should be overruled. The insufficiency of the evidence to support the offense alleged will not alone invalidate an indictment and call for its dismissal. Givens v. State, 438 S.W.2d 810 (Tex.Crim.App.1969).
The point of error as presented will be treated as challenging the sufficiency of the evidence to support the conviction. When reviewing a sufficiency of the evidence claim, the appellate court should view the evidence in the light most favorable to the verdict and determine whether a rational trier of fact could have found the appellant guilty of all the elements of the offense beyond a reasonable doubt. Jackson v. Virginia, 443 U.S. 307, 99 S.Ct. 2781, 61 L.Ed.2d 560 (1979). This standard applies to both direct and circumstantial evidence cases. Geesa v. State, 820 S.W.2d 154 (Tex.Crim.App.1991). The trial judge, when sitting as the trier of fact, is the exclusive judge of the credibility of the witnesses and the weight to be given their testimony. Mattias v. State, 731 S.W.2d 936, 940 (Tex.Crim.App.1987). The trial judge is entitled to accept or reject any or all of a witness's testimony. Id. at 940.
To establish unlawful possession of a controlled substance, the State must prove that the accused exercised care, custody, control and management over the contraband. Cude v. State, 716 S.W.2d 46, 47 (Tex.Crim.App.1986). The control over the controlled substance need not be exclusive, but can be jointly exercised by more than one person. Id. at 47. When the accused is not in exclusive control of the place where the contraband is found, the State must show additional affirmative links between the accused and the contraband. Id. The affirmative links can be established by showing additional facts and circumstances which raise a reasonable inference of the accused's knowledge and control of the contraband. Pollan v. State, 612 S.W.2d 594, 596 (Tex.Crim.App.1981). See Brown v. State, 807 S.W.2d 615 (Tex. App.Houston [14th Dist.] 1991, no pet.); Brazier v. State, 748 S.W.2d 505, 508 (Tex. App.Houston [1st Dist.] 1988, pet. ref'd).
In the instant case, various facts were shown to affirmatively link appellant to the crack cocaine found at 1103 Robin. There were several factors that showed that appellant lived in that residence. He was at the house for at least four consecutive days, i.e., he was there every time Officer Jefferson conducted surveillance at that location. During that period, appellant went in and out of the house without knocking. See Edwards v. State, 813 S.W.2d 572 (Tex.App.Dallas 1991, no pet.) (circumstances indicated that the accuse lived in apartment where drugs were found even though no documents, personal effects or keys were found). The clothes in the closet of the bedroom where the cocaine was found appeared to fit appellant. Pigg v. State, 760 S.W.2d 330 (Tex.App. Beaumont 1988, no pet.) (clothes that fit the defendant were found in the closet where drugs were seized). Two envelopes found in that bedroom were addressed to him. Herrera v. State, 561 S.W.2d 175 (Tex.Crim.App.1978) (letters addressed to the defendant were in the apartment where marijuana was found). See also Brown, 807 S.W.2d at 617. Appellant's picture was found in that bedroom. Id. (photographs of the accused seized during the search).
*682 Appellant's wallet was found in an adjacent bedroom. The wallet contained his Social Security card and his Prison Inmate card. Soon after appellant's wife found out that appellant was paroled, she moved to that residence and had electricity service supplied to the house. Appellant listed his wife's address as the place to be paroled out to. When appellant was arrested and was being taken away, his children pleaded that their father not be taken from home.
Appellant's activity during Officer Jefferson's surveillance (going in and out of the house with various other persons), indicated that he was involved in the illegal sale of narcotics. Appellant's wife, who worked from 3:30 to midnightduring the period of surveillance, testified that appellant could have sold cocaine while she was away. She indicated that she left the door to the house open so that appellant would not need a key. Therefore, he was able to sell the drugs form that house even if he did not live there.
The confidential informant, who was known to be trustworthy and reliable, told Officer Jefferson that appellant had drugs in the front bedroom of the house. The informant's tip was corroborated when Officer Doyle found the cocaine in the front bedroom. The most telling evidence was the actual purchase of cocaine from appellant, at 1103 Robin, by the confidential informant on August 28, 1990, two days before his arrest. Price v. State, 756 S.W.2d 777, 779-81 (Tex.App.1988, no pet.) (informant's tip corroborated by discovery of contraband).
We find that the State provided the Court with sufficient facts and circumstances which affirmatively linked appellant to the crack cocaine and thus created a reasonable inference that the accused knew of the contraband's existence and that he exercised control over it. See Dickey v. State, 693 S.W.2d 386, 389 (Tex.Crim.App. 1984).
Further, we have reviewed the evidence using the reasonable hypothesis test. The test states that a conviction on circumstantial evidence cannot be sustained if the circumstances proved do not exclude every other reasonable hypothesis except that of the guilt of the accused, and proof amounting to only a strong suspicion or mere probability is insufficient. Freeman v. State, 654 S.W.2d 450, 454 (Tex.Crim.App. 1983). We find after reviewing the evidence that, as fact-finder, the trial court was entitled to believe or disbelieve the witnesses that testified. We therefore come to the conclusion that under the evidence presented, there was proof of appellant's guilt excluding all other reasonable hypothesis. Appellant's sole point of error is overruled.
Accordingly, the judgment of the trial court is affirmed.
J. CURTISS BROWN, C.J., concurs in the result only.
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4 So.3d 592 (2007)
DANIEL JOHNSON
v.
STATE.
No. CR-06-0425.
Court of Criminal Appeals of Alabama.
January 22, 2007.
Decision of the alabama court of criminal appeals without opinion. Dismissed.
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10-30-2013
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605 F.2d 657
79-2 USTC P 9596
Joseph LORCH and Hannah Lorch, Petitioners-Appellants,v.COMMISSIONER OF INTERNAL REVENUE, Respondent-Appellee.Michael T. HARGES and Janet G. Harges, Petitioners-Appellants,v.COMMISSIONER OF INTERNAL REVENUE, Respondent-Appellee.
No. 1097, Docket 79-4051.
United States Court of Appeals,Second Circuit.
Argued May 24, 1979.Decided Sept. 5, 1979.
Leonard Bailin, P. C., New York City, for petitioners-appellants.
Daniel F. Ross, Atty., Tax Div., Dept. of Justice, Washington, D. C. (M. Carr Ferguson, Asst. Atty. Gen., Gilbert E. Andrews, Ernest J. Brown, Attys., Tax Div., Dept. of Justice, Washington, D. C., of counsel), for respondent-appellee.
Before LUMBARD, MANSFIELD and GURFEIN, Circuit Judges.
LUMBARD, Circuit Judge:
1
Joseph Lorch and Michael Harges appeal from an order of the Tax Court approving the Commissioner's assessment of deficiencies in their federal income tax returns for the year 1970.1 Finding that petitioners were not entitled to certain ordinary losses claimed under IRC § 165(c)(2) on their 1970 returns, we affirm the decision of the Tax Court.
2
The facts are undisputed. In January of 1962, Lorch and Harges entered into separate agreements with Hayden, Stone & Company, Inc., a brokerage firm, designed to help Hayden Stone meet the minimum capital requirements of the New York and American Stock Exchanges. The agreements, similar to those Hayden Stone had with over one hundred other investors, required Lorch and Harges each to give to Hayden Stone a noninterest bearing promissory note in the face amount of $100,000, and as collateral on the note, to place securities into an account with Hayden Stone. Petitioners' liability on their notes was expressly limited to the value of the assets in their collateral accounts, and each was free at all times to withdraw any of the securities in his account so long as it was replaced with cash or securities of equivalent value. Although petitioners' rights to the assets in their accounts were subject to Hayden Stone's authority to demand payment on their notes, each otherwise retained full legal and beneficial ownership of his securities, including the right to vote as a shareholder and to receive interest or income distributions.
3
In return for the obligations undertaken by Lorch and Harges, Hayden Stone agreed to pay them 5% Annually on the face value of their notes. Additionally, Hayden Stone was required, in the event that it demanded payment on the promissory notes, to give to each petitioner the firm's subordinated debentures at 6% Interest in the face amount each actually paid in satisfaction of his note.2
4
Lorch and Harges maintained their collateral accounts with Hayden Stone and received the 5% Annual interest called for by the agreement from 1962 until 1970. In 1970, however, Hayden Stone faced severe financial difficulties and it consequently demanded that its subordinated lenders, Lorch and Harges included, pay their secured notes or face liquidation of the assets in their accounts. In response to the demand, Lorch deposited an additional $10,000 with Hayden Stone and took back certain common stock from his account. Lorch permitted the rest of the securities in his account, in which he had a cost basis of $126,005.51, to be liquidated by Hayden Stone, which ultimately received $80,026.84 upon their sale. Including dividends and interest retained by Hayden Stone and a pre-existing credit balance, all of which amounted to $1,074.75, a total of $91,101.59 was used to satisfy Lorch's obligation to Hayden Stone.
5
Upon receiving Hayden Stone's call for payment, Harges deposited $66,825.05 with the firm and in return took back all of the securities in his collateral account except for one bond in which his cost basis was $20,000.00. Hayden Stone received $19,460.73 from the sale of that bond, and thus the total amount used to satisfy Harges' obligation to the firm, including $2,269.70 in interest and dividend income retained by Hayden Stone, was $88,592.48.
6
Hayden Stone's demand for payment from its subordinated lenders did not resolve the firm's financial difficulties, and by September of 1970 Hayden Stone had begun to liquidate its business assets. In order to eliminate the firm's negative net worth and thus reduce the possibility of the firm's being placed in liquidation under court-supervision, the subordinated lenders, petitioners included, agreed to exchange their rights to the firm's as yet unissued debentures for preferred stock. Under the terms of the agreement, Lorch and Harges each received one share of the firm's preferred stock for each $100 in claims against the firm.3 Altogether, Lorch received 911.01 shares and Harges 885.92 shares. The parties have stipulated that the preferred stock was worth $20 per share at the time petitioners received it. As of May, 1977, the date of trial, neither petitioner had disposed of his stock.
7
Lorch and Harges each claimed ordinary loss deductions under § 165(c)(2) on their 1970 federal income tax returns in the amount by which the sum of the cash in their collateral accounts plus their bases in the securities liquidated by Hayden Stone exceeded the fair market value of the Hayden Stone preferred stock they ultimately received. The Commissioner subsequently issued a notice of deficiency against each petitioner.
8
Following petitioners' appeal, the Tax Court held that the only deductible losses incurred by petitioners were capital losses resulting from Hayden Stone's sale of their unredeemed securities and limited in amount to the excess of petitioners' bases in the securities over the amount realized upon sale. The Tax Court determined that Hayden Stone acted as petitioners' agent in selling their unredeemed securities and that petitioners then exchanged the proceeds of those sales together with the additional cash deposited in their accounts for rights to Hayden Stone's subordinated debentures. Although the debenture rights were worth less than the consideration given for them, the Tax Court concluded that no loss on their acquisition was as yet deductible since petitioners' subsequent exchange of their debenture rights for preferred stock was a tax free recapitalization under IRC § 368(a)(1)(E).4
9
Not surprisingly, petitioners on this appeal argue that the Commissioner and the Tax Court have mischaracterized their transactions with Hayden Stone. Citing Stahl v. United States, 142 U.S.App.D.C. 309, 441 F.2d 999 (D.C. Cir. 1970) petitioners contend that in substance the transactions were bailments, petitioners transferring possession and limited use of their pledged securities to Hayden Stone while retaining legal and beneficial ownership. Since the bailments were entered into in the hope and expectation of profit, petitioners claim they are entitled to ordinary loss deductions under § 165(c)(2) to the extent that the preferred stock they received from Hayden Stone was worth less than the cash and securities they surrendered.
10
As the Commissioner has argued, petitioners' attempt to characterize their arrangements with Hayden Stone as bailments disregards the fact that petitioners partially terminated any bailment that existed by redeeming for cash certain of the securities in their collateral accounts before those accounts were liquidated. But even ignoring the extent to which petitioners' analysis collapses separate transactions into one, petitioners cannot, simply by applying the label bailment, alter the fact that the losses they seek to deduct resulted from their agreement to become, at Hayden Stone's option, creditors of the firm through the purchase of its subordinated debentures. Regardless of whether petitioners and Hayden Stone stood as bailors and bailee with respect to the securities deposited in the collateral accounts, the deposit arrangements simply secured petitioners' commitments to pay, upon Hayden Stone's demand and in return for its subordinated debentures, the amount fixed in their promissory notes.
11
From Hayden Stone's viewpoint the arrangement permitted it to include the taxpayers' assets in its capital for the purpose of meeting the stock exchanges' asset requirements. From the taxpayers' point of view, the arrangement enabled them to receive an additional 5% Annual income over and above the interest and dividends received by them on the securities deposited with it to secure their obligations to make the loans to it upon demand. The risk the taxpayers took was that Hayden Stone might make such a demand in which event they would be required to honor their commitments to lend it an amount equal to the value of their assets deposited with it to secure their obligations under the arrangement. Thus each transaction amounted to a purchase by Hayden Stone of a call on a line of credit or, alternatively, a put on its debentures, the cost to Hayden Stone being the 5% Annual interest it was required to pay petitioners. When the demands for the loans were made, each taxpayer had the right to withdraw any securities by depositing their market value in cash. Thus, when Hayden Stone liquidated the account, it sold the securities, in effect, as custodian for the taxpayer. Hence, the taxpayer was required to recognize gain or loss, as the case may be, on the sale of the securities, and the gain or loss was a capital one. Under the taxpayers' analysis, the net loss would differ depending on whether the taxpayer withdrew the securities, sold them independently and remitted the proceeds to Hayden Stone, or let Hayden Stone do the selling. Such a procedure would permit considerable tax evasion.
12
When Hayden Stone demanded payment on the notes its relationship with petitioners became one of debtor-creditor. It is elementary that a taxpayer does not incur a loss when he makes a loan unless the debt is worthless, IRC § 165(g), in which event the resulting loss must be considered one from a sale or exchange of a capital asset within the taxable year, IRC § 166(d). Such was not the case here, since the taxpayers expected to receive repayment in the form of debentures bearing 6% Interest5 and the debentures, while not worth their face value, would have been far from worthless.
13
Despite petitioners' reliance on Stahl, we do not believe that our characterization of Hayden Stone's and petitioners' eventual relationship as debtor-creditor, with Hayden Stone's debt being evidenced by the subordinated debentures to which petitioners became entitled, necessarily contradicts anything written in that case. The taxpayer in Stahl, like the petitioners in this case, loaned securities to a brokerage firm under an arrangement that left the taxpayer with beneficial ownership of the securities. However, the securities were subordinated to claims of the firm's creditors and the taxpayers had no right to redeem them in the event they were needed by the brokerage firm to satisfy its creditors. The Court of Appeals for the District of Columbia concluded that the arrangement constituted a bailment and permitted the taxpayer to deduct from ordinary income the loss sustained when the brokerage firm sold the securities to satisfy creditor claims. The basic rationale for the court's decision, however, was that no debtor-creditor relationship existed between the firm and the taxpayer since the agreement did not clearly obligate the firm to reimburse the taxpayer in the event the taxpayer's securities were sold to satisfy claims of the firm's creditors. In contrast, petitioners' status as creditors of Hayden Stone and the fixed nature of Hayden Stone's obligation to repay them was made unmistakably clear by petitioners' entitlement to the firm's debentures in the event their notes were called.
14
The final issue that we must address is whether the petitioners suffered a deductible loss when they exchanged their debenture rights for Hayden Stone preferred stock. Petitioners have disputed the Tax Court's finding that the exchange was a tax-free recapitalization, arguing that there was no intent to continue business activity in corporate form since Hayden Stone had already begun the process of liquidation. We find this argument unpersuasive, however. The exchange enabled Hayden Stone to avoid involuntary liquidation and, indeed, it was still in business at the time of trial, some seven years after the exchange. Its business objective during this period was to proceed with the collection of its assets and payment of its creditors while avoiding court-supervised liquidation, and the exchange of debenture rights for preferred stock enabled it to continue with that activity. In all other respects the exchange was an archetypal recapitalization, converting Hayden Stone's net worth from negative to positive but leaving unaffected the priority of petitioners' claims on the firm. Accordingly, petitioners incurred no deductible loss upon the exchange of their debenture rights for Hayden Stone preferred stock.
15
In sum, we find no basis for granting petitioners tax benefits that are unavailable to ordinary creditors or debenture holders. Hayden Stone's liquidation of petitioners' securities entitled them to a capital loss in the amount by which their bases in those securities exceeded the proceeds of sale. Petitioners have as yet sustained no other deductible loss.
16
Affirmed.
1
Petitioners' wives are parties to this proceeding solely by virtue of their having joined in the filing of the 1970 returns
2
Petitioners' arrangement with Hayden Stone was terminable by either party upon six months written notice
3
Among the business assets disposed of by Hayden Stone was the firm name. Consequently the preferred stock received by petitioners was actually issued in the firm's new name, Hayden Stone Equities
4
Non-recognition of gain or loss pursuant to a reorganization is provided by IRC § 354(a)
5
In a case involving another of Hayden Stone's subordinated lenders, Michtom v. United States, 573 F.2d 58 (Ct.Cl.1978), the Court of Claims held that the taxpayer was entitled to an ordinary loss upon the exchange of his debenture rights for preferred stock. The Commissioner had not argued that the exchange was a tax free recapitalization and the Court of Claims held that taxpayer's debenture rights were not a capital asset because they lacked the ability to appreciate or depreciate over time
We find the Court of Claims reasoning difficult to comprehend. Even if a necessary characteristic of a capital asset were the ability to appreciate or depreciate, and we know of nothing which suggests that it is, factors such as the soundness of Hayden Stone and the prevailing interest rate could influence the value of its debentures. We note in addition that adherence to the Court of Claims' reasoning would create opportunities never intended by Congress for the conversion of bad debt losses from capital to ordinary.
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615 F. Supp. 20 (1985)
SAUL STONE & COMPANY, Plaintiff,
v.
Jerry BROWNING, Defendant.
John BLUM, Plaintiff,
v.
SAUL STONE & COMPANY and Bonnie Frost, Defendants.
Nos. 84 C 644, 84 C 8133.
United States District Court, N.D. Illinois, E.D.
May 20, 1985.
As Corrected August 20, 1985.
Howard J. Stein, Patrick J. Lamb, Katten Muchin Zavis Pearl & Galler, Chicago, Ill., for Saul Stone & Company.
*21 Gregory A. Friedman, James J. Stamos, Coffield Ungaretti Harris & Slavin, Chicago, Ill., for Jerry Browning & John Blum.
Lloyd Kadish, Pamela Rogers, Chicago, Ill., for defendant Frost.
MEMORANDUM OPINION AND ORDER
PARSONS, District Judge.
In late 1983, John Blum filed a complaint in the State of Washington against Saul Stone & Company, a brokerage house, and Bonnie Frost, one of its agents, alleging that Frost solicited from the plaintiff, through the plaintiff's agent, the sum of $80,000 to be invested in the commodities market for the benefit of the plaintiff. Thereafter, Frost represented that the investment was showing considerable earnings and that the earnings had increased the plaintiff's investment to over $350,000. At that point Blum allegedly directed Stone & Co., through his own agent, Browning, to liquidate the account. This request was repeated on several occasions. These requests, says the plaintiff, were ignored and then the entire investment, including all the earnings, was lost. In his original complaint filed in the U.S. District Court in the District of Washington, Blum sought recovery for securities fraud under both state and federal laws. In addition he sought recovery for common law fraud, for violation of the Washington State Consumer Protection Act, for negligent misrepresentations, for breach of contract and for breach of fiduciary duty.
In January of 1984, Saul Stone & Company in turn filed an action in this court seeking indemnification against Jerry Browning, a/k/a Jerry Bloom, the undisclosed agent for Blum. The complaint of Saul Stone states that Browning opened the account under the name of "Jerry Bloom" with the knowledge of Stone that the name was an alias, that Browning did not advise Stone that he was opening an account as an agent for Blum, and that therefore Browning should be liable to Stone for any amount Stone might be required to pay to Blum should Blum be successful in his claim.
Then in March of 1984, Blum, without leave of court, filed an amended complaint in his case pending in the Eastern District of Washington alleging the existence of a partnership between himself and Browning.
Finally in October of 1984, the two cases were consolidated in this district and by assignment both are before me. The consolidated cases currently are before me for decision of a motion by Saul Stone & Company for summary judgment or partial summary judgment. In support of its motion for summary judgment, Saul Stone & Company asserts that (1) the alleged partnership claims set out in the amended complaint are barred by the applicable statute of limitations, and (2) the amended complaint fails to name as the party-plaintiffs the alleged partners of the partnership.
As a preliminary matter, an important distinction must be made between a joinder of claims and a joinder of parties. Saul Stone asserts that the newly alleged "partnership claims" are now barred by the statute of limitations. But the applicable Federal Rule here is 15(c). It states:
Whenever the claim ... asserted in the amended pleading arose out of the conduct, transaction, or occurance set forth or attempted to be set forth in the original pleading, the amendment relates back to the date of the original pleading.
It is apparent from reading the original complaint and the first amended complaint, that the claims do arise out of the same transaction. The only difference is the relationship of Blum and Browning at the time of the transaction. It was an agency relationship in the original complaint and a partnership relationship in the amended complaint. The claim, itself, has remained the same.
Then, the notes which follow Rule 15(c) direct the reader, in cases of amendments changing plaintiffs to Rule 17(a) which deals with the question of "real parties in interest". Rule 17(a) provides in pertinent part:
*22 No action shall be dismissed on the ground that it is not prosecuted in the name of the real party in interest until a reasonable time has been allowed after objection for ... joinder ... of the real party in interest; and such ... joinder ... shall have the same effect as if the action had been commenced in the name of the real party in interest.
Whether the amendment to the complaint in this matter is viewed under Rule 15(c) as an amendment of the claim or viewed under Rule 17(a) as a failure to name the real party in interest, it is clear from the rules that dismissal would not be appropriate.
The second basis on which Saul Stone seeks dismissal is that the amended complaint fails to name as party-plaintiffs all alleged partners of the partnership. Rule 21 which deals with misjoinder and non-joinder of parties states that:
Parties may be ... added by order of the court on motion of any party or of its own initiative at any stage of the action and on such terms as are just.
Clearly, dismissal for non-joinder also would be inappropriate here. Browning may be joined as a party-plaintiff and the partnership entity may also be joined as a party-plaintiff. Accordingly, the motion of Saul Stone for summary judgment must be and the same hereby is denied.
In the alternative, Saul Stone seeks partial summary judgment as to the causes of action set out in the amended complaint for violation of the Washington State Securities Act and Consumer Protection Act. The grounds given are that Illinois law, not Washington law, governs the rights and liabilities of the parties to this action. The customer's agreement between Mr. Browning and Saul Stone provides in paragraph 13:
All actions or proceedings arising directly, indorectly, or otherwise in connection with, out of, related to, or from this agreement or any transaction covered hereby shall be litigated at the discretion and election of Stone only in courts whose situs is within the State of Illinois. The undersigned consents to and submits to the jurisdiction of any state or federal court located within the State of Illinois.
Paragraph 12 provides in part:
The provisions of this agreement shall in all respects be construed according to, and the rights and liabilities of the parties hereto shall in all respects be governed by, the laws of the State of Illinois.
Paragraph 12 relates to the choice of laws. This paragraph, however, is limited by its own terms to "provisions of the agreement" and cannot be extended to torts such as those claimed here. Paragraph 13 is much broader. However, it relates only to forum selection and not the choice of law. Therefore, the motion of Saul Stone cannot be granted on these grounds.
Saul Stone also asserts that partial summary judgment should be granted in its favor and that the causes of action based on the Washington State Securities Act and Consumer Protection Act should be stricken because they are preempted by the Commodity Exchange Act, 7 U.S.C. § 1, et seq. It is elementary that a state statute is preempted to the extent it purports to regulate a subject over which Congress has sought to exercise exclusive jurisdiction. Numerous courts have held that the exclusive jurisdiction provisions of the Commodity Exchange Act prevent the application of state statutes in this area. As the court stated in Hofmayer v. Dean Witter & Company, Inc., 459 F. Supp. 733, 737 (N.D.Cal.1978),
In light of Congress' plainly stated intent to have the Commodity Exchange Act, as amended, preempt the field of regulation of commodity futures trading, any claim under Federal or state securities statutes is barred. (Citations omitted)
In Bache Halsey Stuart Shields, Inc. v. Erdos, 35 Wash.App. 225, 667 P.2d 89, 92-93 (1983), a Washington Appellate Court recognized the preemption of the Commodity Exchange Act over federal and state securities laws dealing with commodity futures trading. The weight of authority dictates that the claims based on the Washington Securities Act and the Washington Consumer Protection Act should be *23 stricken as having been preempted by the Commodity Exchange Act.
In summary, the motion of Saul Stone for summary judgment is denied. The alternative motion of Saul Stone for partial summary judgment as to those matters in the complaint based on Washington state law should be and the same hereby is granted.
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601 S.W.2d 712 (1980)
William BARBER, Plaintiff-Appellant,
v.
Morris WESTMORELAND, Leonard Westmoreland, Marjorie Davis, and all unknown heirs of Mary Barber, Deceased, Defendants-Appellees.
Court of Appeals of Tennessee, Middle Section.
April 25, 1980.
Certiorari Denied June 23, 1980.
*713 Weill, Ellis, Weems & Copeland, Chattanooga, for plaintiff-appellant.
Hall, Haynes, Lusk & Foster, Chattanooga, for defendants-appellees.
Certiorari Denied by Supreme Court June 23, 1980.
OPINION
LEWIS, Judge.
In October, 1974, plaintiff filed a complaint to remove a cloud on title to lands he alleged he owned in Marion County, Tennessee. His complaint alleged that defendants Morris Westmoreland, Leonard Westmoreland, Marjorie Davis, and all unknown heirs of Mary Barber, deceased, claimed a one-half undivided remainder interest in certain lands which he owned in fee simple absolute under a deed from Mary Barber to her husband, plaintiff. Defendants answered and denied that plaintiff owned a fee simple absolute title to the land and alleged that he owned only a life estate with the remainder to Mary Barber and her heirs, who are defendants, and that their remainder interest is clouded by plaintiff's complaint. In their cross-complaint they asked for an accounting for waste allegedly committed by plaintiff and for the proceeds of a condemnation proceeding against a portion of the property involved in the case at bar. Plaintiff answered the cross-complaint and denied that defendants had any interest in the property or any of the proceeds thereof.
On May 10, 1977, the Chancellor rendered a Memorandum Opinion in which he found that plaintiff William Barber held only a life estate in the subject property and that defendants had the remainder interest as heirs of Mary Barber, deceased. At the close of an evidentiary hearing on May 16, 1979, the Chancellor reaffirmed his Memorandum Opinion and assessed plaintiff for waste. The proceeds of the condemnation proceeding were distributed between plaintiff and defendants.
The facts are as follows: Plaintiff occupies all of the real property known as the W.P. Westmoreland place in Marion County, Tennessee, on the south side of the Tennessee River and south of Old Rankins Ferry. The lands in question contain approximately 386 acres. Plaintiff acquired title to the property in the following manner:
An undivided one-half interest, which is not in dispute, was conveyed by warranty deed of September 28, 1929, from J.D. Lay to William Barbree (William Barbree being the same person as plaintiff William Barber) and wife Mary Barbree (Mary Barbree being the same person as plaintiff's deceased wife, Mary Barber). Ownership of this one-half undivided interest continued in plaintiff and his wife Mary Barber as tenants by the entireties until her death at which time title passed to plaintiff.
The other one-half interest, the subject of this lawsuit, was owned by Mary Barber and was conveyed by Mary Barbree (the same person as plaintiff's deceased wife, Mary Barber) to William Barbree, her husband (the same person as plaintiff) by deed dated September 2, 1931. The language in question in the deed is as follows:
For value received, I, Mary Barbree, have this day bargained and sold and do by this instrument transfer and convey unto William Barbree during his natural life and at his death to me or my heirs if I survive him, all my undivided interest in and to what is known as W.P. Westmoreland place located on south side of Tenn. River and south of Old Rankins Ferry and being the lands purchase by W.P. Westmoreland from C.C. Anderson and wife, Georgia Ann Anderson, and of record in Book TT pages 219 220 of the registers office of Marion County, Tennessee and containing 386 acres and to which reference is here made for a more particular description.
To have and to hold unto the said William Barbree his heirs and assigns forever. It being understood that the vendor herein reserves the rents and profits off said above described land during her natural *714 life and during the life of the vendee and that should the vendor survive the vendee theis [sic] conveyance to become null and void and of no effect.
This Sep. 2nd, 1931.
/s/ Mary Barbree
This deed was drawn by Marshall Hall, a Justice of the Peace. Mary Barber died June 15, 1969, and left plaintiff, her husband, surviving.
A portion of the subject property was condemned in the Circuit Court for Marion County, Tennessee, and $8500 is on deposit there as proceeds of the condemnation proceeding. In 1976 William Barber also sold from the lands in dispute fill dirt for which he was paid the sum of $24,037.92. Plaintiff has never made any accounting for these sums to defendants or to any other persons.
Defendants, nieces and nephews of Mary Barber, claim a remainder interest in one-half of the land by virtue of the aforesaid deed. Plaintiff asserts that the deed operated to convey him an estate in fee simple subject to a divesting condition subsequent.
Plaintiff has appealed and asserts, first: "The Chancellor below erred in not finding that the deed from Mary Barber vested in William Barber a fee simple estate subject to a divesting condition subsequent." The question presented, therefore, is whether the deed operated to convey to plaintiff an estate in fee simple subject to a divesting condition subsequent or a life estate in the undivided one-half interest in lands formerly owned by plaintiff's deceased wife, Mary Barber.
There are several concepts which are common to construction of all deeds. First, the deed is to be construed to effect the intention of the grantor. Thornton v. Thornton, 39 Tenn. App. 225, 230, 282 S.W.2d 361, 363 (1955) (citations omitted). This intent is to be ascertained from a "consideration of the entire instrument, read in the light of the surrounding circumstances." Id. Technical words are to be construed as the grantor intended and not necessarily in their technical sense. Hutchison v. Board, 194 Tenn. 223, 229, 250 S.W.2d 82, 84 (1952). In construing the deed the intention of the grantor will be determined without resort to technical rules of construction such as division of the deed into its formal parts with certain parts prevailing over others if at all possible. Bennett v. Langham, 214 Tenn. 674, 681, 383 S.W.2d 16, 19-20 (1963) (citations omitted). "[I]n the construction of deeds the intention of the grantor is ascertained by consideration of the entire instrument of conveyance... ." Lockett v. Thomas, 179 Tenn. 240, 243, 165 S.W.2d 375, 376 (1942) (citation omitted). "In construing a deed, as in construing a will, the Court is primarily concerned in trying to ascertain the intention of the parties." Collins v. Smithson, 585 S.W.2d 598, 603 (Tenn. 1979). "It has long been the preferred rule in this state, however, that all of the provisions of an instrument be considered together and that the intention of the grantor of a deed be ascertained from the entire document, not from separate parts thereof, if at all possible." Id. (citation omitted).
Clearly, the granting clause of the deed, "unto William Barbree during his natural life," gives plaintiff a life estate. The habendum uses the language, "[t]o have and to hold unto the said William Barbree his heirs and assigns forever." There seems to be an irreconcilable conflict between the granting clause and the habendum clause, and if these phrases were all of the language, there would be such a conflict. Here, however, plaintiff is granted a life estate with the remainder to the grantee (Mary Barbree) "or my heirs."
In Quarles v. Arthur, 33 Tenn. App. 291, 231 S.W.2d 589 (1950), "the granting clause of the deed ... created a life estate in [the grantee] with the remainder to the heirs of her body living at the time of her death," and the habendum contained the language, "`to the said [grantee] her and her heirs and assigns.'" Id. at 294, 231 S.W.2d at 590. Here upon the death of plaintiff the property was to revert to Mary Barber or her heirs, and in Quarles at grantee's death the property was to go to *715 the grantee's heirs. The Court in Quarles stated:
[U]nder the primary rule of considering the instrument as a whole without regard to formalisms, there is no sufficient predicate for assuming any substantial conflict between the granting clause and the habendum and covenant. We think the vice of appellants' argument lies in their overlooking the grant of a remainder interest to the heirs of the body of the life tenant. When the vesting of that estate under the terms of the granting clause is considered, the effect of the habendum, under appellants' construction, is entirely to eliminate the fee title granted in remainder to the heirs. Why would the grantor so carefully carve out a life estate as indicated by the language "to her her life time" and grant the remainder in fee to the heirs of the body of the life tenant, as appellants concede, only to enlarge the life estate and eliminate, in the habendum, the grant of the fee to the remaindermen? Id. at 296-97, 231 S.W.2d at 591.
In Bennett v. Langham, supra, the Court said:
Of all the technical words creating an estate, those creating a life estate are the most easily understood. Certainly they are more easily understood by a layman than the terms tenancy by the entirety, joint tenancy, fee-tail, etc. Therefore it is reasonable to assume that the import of the words life estate were [sic] understood by the grantor more so than the legal phrasing in the habendum and covenant clauses and the legal significance of the sentence following the description which, it is contended, creates a tenancy by the entirety. It is doubtful that the grantor ever heard of such an estate.
The habendum and covenant clauses of the deed are in their regular form. It is also reasonable to assume that the drafter of the instrument did not know that there was any required variance from the printed form of the habendum and covenant clauses required for the granting of a life estate. 214 Tenn. at 682, 383 S.W.2d at 20.
That the language of the deed in the case at bar, drafted by Marshall Hall, a justice of the peace, is inartistic is conceded by all parties. No showing has been made that either the grantor or grantee, who were relatively young at the time the deed was drawn or Mr. Hall, who drew the deed, possessed any particular legal background or understanding. The creation of a life estate was certainly within the contemplation of, and understood more readily by, the parties than the legal significance of "heirs and assigns."
We are of the opinion that the construction placed on the deed by the Chancellor is logical and gives effect to all of the deed. The Chancellor's construction gives effect to the intention of the grantor to show that title passed to her heirs if she failed to survive plaintiff. Also, if the grantor had survived plaintiff, the fee is fully vested in her since plaintiff's life estate would have been at an end and she could have done with it as she pleased. The language, "It being understood that the vendor herein reserves the rents and profits off said above described land during her natural life and during the life of the vendee and that should the vendor survive the vendee theis [sic] conveyance to become null and void and of no effect," is given meaning. If the effect of the habendum was to grant a fee to plaintiff, this reservation would be inconsistent. The first issue raised by plaintiff is without merit.
Plaintiff also asserts: "The Chancellor erred in giving the defendants any interest in the proceeds from the sale of fill dirt from the subject property and proceeds from the condemnation of a portion of this property." This issue is rendered moot by our holding under the first issue raised by plaintiff.
Defendants contend: "The Chancellor erred in reducing the judgment granted the defendants for the waste of the plaintiff." Plaintiff sold from the lands in dispute fill dirt for which he was paid the sum of $24,037.92. The Chancellor found:
*716 [T]he defendants were entitled to have and recover of the plaintiff the sum of Twelve Thousand Eighteen and 96/100 Dollars ($12,018.96), said sum representing a recovery for waste heretofore committed by William Barber in the sale of certain fill dirt from the real property which is the subject matter of this action which had not heretofore been accounted for.
The Chancellor further found that defendants were entitled to this sum less an amount indicating the value of the life estate of plaintiff. The Chancellor found that the life tenant had committed waste by the sale of fill dirt but was, nevertheless, entitled to a life estate in the waste.
"[O]nly that which does a lasting damage to the remainder, or depreciates its value, is waste." Thompson v. Thompson, 206 Tenn. 202, 214, 332 S.W.2d 221, 227 (1959) (citing Owen v. Hyde, 14 Tenn. 333, 339 (1834). "[I]t may be observed here that the term `waste' has a very extensive meaning. Specifically, with regard to waste by a cotenant, the term includes the taking away of soil, the quarrying of rock, and the removal of structures or of fixtures attached thereto." 20 Am.Jur.2d Cotenancy and Joint Ownership § 38 (1965) (footnotes omitted). The evidence here is that the removal of the fill dirt did substantial damage to the land. We are of the opinion that the Chancellor was incorrect in decreasing defendants' recovery for waste by the value of plaintiff's life estate. Plaintiff's life estate entitled him to those emoluments incident upon the life estate. Waste is not one of the emoluments of a life estate.
The judgment of the Chancellor holding that plaintiff took a life estate under the deed is affirmed. The judgment of the Chancellor holding that plaintiff was entitled to the value of the life estate in the waste is reversed. Costs are assessed to plaintiff. This cause is remanded to the Trial Court for collection of costs and entry of any further necessary orders.
SHRIVER, P.J., and DROWOTA, J., concur.
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601 S.W.2d 776 (1980)
John William CYRUS, Jr., Appellant,
v.
The STATE of Texas, Appellee.
No. 20375.
Court of Civil Appeals of Texas, Dallas.
June 11, 1980.
Rehearing Denied July 7, 1980.
John William Cyrus, Jr., for appellant.
Fred C. McDaniel, Maridell Templeton, Asst. Dist. Attys., Dallas, for appellee.
Before GUITTARD C. J., and AKIN and STOREY, JJ.
*777 AKIN, Justice.
This is an appeal from an order denying the expunction of appellant's arrest record. Because we hold that appellant established his right to an expunction as a matter of law, we reverse and render judgment for appellant.
On January 17, 1977, appellant was involved in an incident in which he smashed the side window of a 1973 Datsun automobile and did other damage to that vehicle with a sledge hammer. According to appellant's version of the incident, the acts were performed in self-defense as the driver attempted to run over appellant with the vehicle. Appellant was subsequently indicted for the offense of criminal mischief. Tex.Penal Code Ann. § 28.03 (Vernon 1974). Violation of that statute is a felony if it involves damage to property with a pecuniary loss of $200 or more but less than $10,000. If the property damage is less than $200, the violation is a misdemeanor. The indictment charged that appellant did ". . . knowingly and intentionally damage and destroy one windshield, without the effective consent of ... the owner, said damage and destruction amount to a pecuniary loss of at least $200.00 but less than $10,000.00." The evidence is uncontradicted that appellant in fact broke the side window and that the repair of that window cost $35.00. The indictment was dismissed on April 20, 1978. Upon the basis that the indictment was predicated upon false information or mistake, appellant moved for expunction of his arrest record under Tex.Code Crim.Pro.Ann. art. 55.01 (Vernon Supp.1980). The motion to expunge was denied and this appeal ensued.
The initial question is our jurisdiction over the denial of expunction of a criminal arrest record. We have jurisdiction of this appeal because the expunction proceeding is civil rather than criminal in nature. S. P. v. Texas Department of Human Resources, 577 S.W.2d 385 (Tex.Civ. App. Eastland 1979, writ ref'd n. r. e.).
We turn now to the State's contention that we lack jurisdiction because the appeal bond was not timely filed. The bond was filed November 21, 1979. The order denying the petition for expunction states that it was "entered" on October 5, 1979. The State argues that the thirty-day period for filing the cost bond begins to run from that date. A subsequent order of the trial judge states that the order denying the petition for expunction was signed on November 15, 1979. The date of signing of the judgment determines the time limits for perfection of appeal if the date of signing is shown therein. Tex.R.Civ.P. 306a. Under Tex.R.Civ.P. 306b, time limits for appeal from a nunc pro tunc judgment begin on the date of signing of the nunc pro tunc order if shown therein. The omission of the date of signing is a clerical error which may be corrected by a judgment nunc pro tunc. City of San Antonio v. Terrill, 501 S.W.2d 394, 397 (Tex.Civ. App. San Antonio 1973, writ ref'd n. r. e.). Since the omission of the date of signing may be corrected by a judgment nunc pro tunc, we hold that the trial judge may also correct that omission by filing an additional order which specifies the date that the original judgment was signed. Thus the thirty-day period for filing appellant's appeal bond began on November 15, 1979, and appellant's appeal bond was timely filed.
The expunction statute, Tex.Code Crim. Proc.Ann. art. 55.01 (Vernon Supp.1980) provides:
Article 55.01. Right to expunction.
A person who has been arrested for commission of either a felony or misdemeanor is entitled to have all records and files relating to the arrest expunged if each of the following conditions exist:
(1) an indictment or information charging him with commission of a felony has not been presented against him for an offense arising out of the transaction for which he was arrested or, if an indictment or information charging him with commission of a felony was presented, it has been dismissed and the court finds that it was dismissed because the presentment had been made because of mistake, false information, or other similar reason indicating absence of probable cause at the time of the dismissal to believe the *778 person committed the offense or because it was void;
(2) he has been released and the charge, if any, has not resulted in a final conviction and, is no longer pending and there was no court ordered supervision under Article 42.13, Code of Criminal Procedure, 1965, as amended, nor a conditional discharge under Section 4.12 of the Texas Controlled Substances Act (Article 4476 15, Vernon's Texas Civil Statutes); and
(3) he has not been convicted of a felony in the five years preceding the date of the arrest.
Amended by Acts 1979, 66th Leg., p. 1333, ch. 604, § 1, eff. Aug. 27, 1979.
Appellant contends that he proved his right to expunction of his arrest records by uncontroverted evidence and that the trial judge erred in refusing his petition for expunction. We agree. There is no question as to appellant's proof of paragraphs (2) and (3). The question before us is the sufficiency of appellant's proof under paragraph (1). Appellant contends that he proved by uncontroverted evidence that the dismissal of the indictment against him was based on mistake or false information indicating a lack of probable cause at the time of dismissal to believe that he committed the offense charged in the indictment. Thus he asserts that he is entitled to expunction of his arrest records as a matter of law. We agree.
Appellant presented his own testimony and the record from his examining trial to show that the side widow of the Datsun vehicle was destroyed rather than the windshield and that the cost to repair the window was only $35.00 rather than $200 or more as alleged in the indictment. The State presented no controverting evidence as to the reasons for dismissal of the indictment, even though the reason was peculiarly within the knowledge of the Dallas County District Attorney's office, which represented the state in this action. The testimony of an interested witness can establish a right to judgment as a matter of law where that testimony is clear, positive, and direct and does not contain inconsistencies. Collora v. Navarro, 574 S.W.2d 65 (Tex.1978). This is especially true where there exists corroborating evidence, such as the record from the examining trial presented by appellant in the case at bar. Id. at 70. Appellant's evidence of the reason for dismissal of his indictment is especially compelling in light of the State's failure to present evidence showing that the indictment was dismissed for another reason. Washington v. Reliable Life Insurance Co., 581 S.W.2d 153, 158-59 (Tex.1979). Great American Reserve Insurance Co. v. San Antonio Plumbing Supply Co., 391 S.W.2d 41, 47 (Tex.1965). Thus we hold that appellant has established his right to expunction of his arrest records as a matter of law.
The State contends that a mistake as to the value of the property destroyed does not show a lack of probable cause to believe that appellant committed the offense. The State contends that under the indictment the appellant could be prosecuted for the lesser crime of misdemeanor criminal mischief even though the window destroyed had a value of only $35.00. Thus the State contends that appellant is not entitled to expunction. We cannot agree. The offense set forth in the indictment is a felony. Appellant has proved that his indictment for that offense was based on false information or mistake. Even if, as the State argues appellant may be prosecuted under this indictment for the lesser offense of misdemeanor criminal mischief, this is not a reason to deny expunction of his arrest records for the felony offense. A substantial difference exists between the stigma imposed by a felony arrest record and that of a misdemeanor charge. Consequently, we hold that by proving that the felony offense set forth in the indictment was dismissed because of false information or mistake, appellant has the right to expunction under article 55.01. Accordingly, we reverse and render judgment that the records of appellant's arrest for criminal mischief be expunged.
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615 F. Supp. 871 (1985)
Peter T. CAMPANA, Plaintiff,
v.
The Honorable Malcolm MUIR, Defendant.
Civ. A. No. 83-0310.
United States District Court, M.D. Pennsylvania.
August 2, 1985.
*872 *873 Robert C. Fogelnest, Philadelphia, Pa., and Ambrose R. Campana, Williamsport, Pa., for plaintiff.
Gordon A.D. Zubrod and Sally Lied, Asst. U.S. Attys., Harrisburg, Pa., for defendant.
OPINION
LATCHUM, Senior District Judge.[1]
Plaintiff, Peter T. Campana ("P. Campana"), an attorney, filed a complaint on April 22, 1983, in this Court, seeking monetary damages against the defendant, the Honorable Malcolm Muir ("Judge Muir"), a United States District Court Judge for the Middle District of Pennsylvania. On July 11, 1983, this Court entered summary judgment in favor of Judge Muir based on the doctrine that a United States District Court Judge is immune from liability for damages on the claims asserted. See 585 F. Supp. 33 (M.D.Pa.1983). (Docket Item ["D.I."] 24.) Presently before this Court is defendant's motion for attorneys' fees in favor of the United States and against P. Campana and his counsel, Ambrose R. Campana ("A. Campana"), pursuant to 28 U.S.C. § 1927 (1980) and Roadway Express Inc. v. Piper, 447 U.S. 752, 100 S. Ct. 2455, 65 L. Ed. 2d 488 (1980). (D.I. 36.) Because of defendant's motion, the Court held an evidentiary hearing on April 26, 1985, to receive evidence concerning attorneys' fees in order to determine whether P. Campana and A. Campana acted in bad faith when they continued to prosecute the claims in light of the defense of judicial immunity. (D.I. 49.) The parties completed post-hearing briefing on July 19, 1985, and the matter is now ripe for disposition.
I. APPLICABLE LEGAL PRINCIPLES
A. Roadway Express, Inc. and The Court's Inherent Power To Assess Attorneys' Fees
The general rule of law, known as the "American rule," is that each litigant must pay his own attorneys' fees. Alyeska Pipe Line Serv. Co. v. Wilderness Soc'y, 421 U.S. 240, 95 S. Ct. 1612, 44 L. Ed. 2d 141 (1975). The rationale for this rule is that "one should not be penalized for merely defending or prosecuting a lawsuit, and that the poor might be unjustly discouraged from instituting actions to vindicate their rights if the penalty for losing included the fees of their opponents' counsel." F.D. Rich Co. v. Industrial Lumber Co., 417 U.S. 116, 129, 94 S. Ct. 2157, 2165, 40 L. Ed. 2d 703 (1974) (quoting Fleischmann Distilling Corp. v. Maier Brewing Co., 386 U.S. 714, 718, 87 S. Ct. 1404, 1407, 18 L. Ed. 2d 475 (1967)). However, over the years courts have carved out a number of narrowly defined exceptions.[2]See Alyeska Pipe Line Service, 421 U.S. at 247-57, 95 S.Ct. at 1616-21. In Alyeska, the Supreme Court acknowledged the "inherent power" of courts to
assess attorneys' fees for the "willful disobedience of a court order ... as part of the fine to be levied on the defendant[,] Toledo Scale Co. v. Computing Scale Co., 261 U.S. 399, 426-28 [43 S. Ct. 458, 465-66, 67 L. Ed. 719] (1923)," Fleischmann Distilling Corp. v. Maier Brewing Co., supra, [386 U.S.] at 718 [87 S.Ct. at 1407]; or when the losing party *874 has "acted in bad faith, vexatiously, wantonly or for oppressive reasons...." F.D. Rich Co. [v. United States ex rel. Industrial Lumber Co.], 417 U.S. [116], at 129 [94 S. Ct. 2157, at 2165, 40 L. Ed. 2d 703] [(1974)] (citing Vaughan v. Atkinson, 369 U.S. 527, 82 S. Ct. 997, 8 L. Ed. 2d 88 (1962)).
421 U.S. at 258-59, 95 S.Ct. at 1622.
The bad-faith exception for the award of attorneys' fees is not restricted to cases where the action is filed in bad faith. "`[B]ad faith' may be found, not only in the actions that led to the lawsuit, but also in the conduct of the litigation." Hall v. Cole, 412 U.S. 1, 15, 93 S. Ct. 1943, 1951, 36 L. Ed. 2d 702 (1973). Moreover, the Supreme Court recently acknowledged the principle that it is within the inherent power of a federal court to assess attorneys' fees against an attorney who has acted unreasonably, vexatiously or in bad faith in connection with a piece of litigation so as to constitute an abuse of the judicial process. Roadway Express, Inc. v. Piper, 447 U.S. 752, 766, 100 S. Ct. 2455, 2464, 65 L. Ed. 2d 488 (1980).
B. Section 1927
28 U.S.C. § 1927, which provides for the assessment of sanctions directly against counsel, reads:
Any attorney or other person admitted to conduct cases in any court of the United States of any Territory thereof who so multiplies the proceedings in any case unreasonably and vexatiously may be required by the court to satisfy personally the excess costs, expenses, and attorneys' fees reasonably incurred because of such conduct.
Although the statute enables courts to impose sanctions for attorney misconduct, courts should exercise this power "only in instances of a serious and studied disregard for the orderly process of justice." Overnite Transportation Co. v. Chicago Industrial Tire Co., 697 F.2d 789, 795 (7th Cir.1983) (quoting Kiefel v. Las Vegas Hacienda, Inc., 404 F.2d 1163, 1167 (7th Cir. 1968), cert. denied, 395 U.S. 908, 89 S. Ct. 1750, 23 L. Ed. 2d 221 (1969).
Pursuant to section 1927, three substantial requirements must be met before liability may be imposed: (1) a multiplication of proceedings by an attorney; (2) by conduct that can be characterized as unreasonable and vexatious; and (3) a resulting increase in the cost of the proceedings. Baker Industries, Inc. v. Cerberus, Ltd., 764 F.2d 204, 214 (3d Cir.1985) (dissent, Higginbotham, J.). Because the lynchpin of section 1927 liability is "improper conduct," for purposes of analysis, the requirement of unreasonable and vexatious conduct will be considered first.
1. The Unreasonable and Vexatious Requirement
In order to assess fees against an attorney where the effect of the attorney's conduct is such that it "unreasonably and vexatiously increases the costs," the Court of Appeals for the Third Circuit follows the majority rule which holds that before attorneys' fees and costs may be taxed under section 1927, the district court must make a finding of "willful bad faith on the part of the offending attorney." Baker Industries, Inc. v. Cerberus, Ltd., 764 F.2d 204, 209, 215 fn. 3 (3d Cir.1985).[3]
*875 In Baker the plaintiff and defendant entered into a stipulation pursuant to a full and complete agreement whereby the district court would appoint a special master to make findings of fact and conclusions of law concerning the issues pending before the district court relating to a contract for the sale of smoke detectors. The stipulation barred review by any court of the referee's findings of fact and conclusions of law. Despite the bar of the stipulation, counsel for defendant filed objections to the legal conclusions of the special master. In disputing the non-reviewability of the master's findings and conclusions, defendant's counsel relied on precedents which were cited for the proposition that parties cannot effectively stipulate to shield from review the legal conclusions of a Fed.R. Civ.P. 53 master. The district court awarded attorneys' fees pursuant to 28 U.S.C. § 1927. The Court of Appeals for the Third Circuit affirmed, stating that the conduct of defendant's attorneys constituted "bad faith" when they blatantly violated the stipulation.
The Second Circuit also has stated that an action is brought in bad faith when there is clear evidence that the claim is entirely without color and has been asserted wantonly for purposes of harassment or delay or for other improper purposes. Browning Debenture Holders' Committee v. DASA Corp., 560 F.2d 1078, 1088 (2d Cir.1977). The bad faith criteria does not require that the legal and factual bases for the action prove totally frivolous. Where a litigant is motivated by vindictiveness, obduracy or mala fides, the assertion of a colorable claim will not bar the assessment of attorneys' fees. In re National Student Marketing Litigation, 78 F.R.D. 726, 728 (D.D.C.1978), aff'd, 663 F.2d 178 (D.C. Cir.1980).
In Roadway Express, Inc. v. Piper, 447 U.S. 752, 100 S. Ct. 2455, 65 L. Ed. 2d 488 (1980), the Supreme Court held that a federal court has the inherent power to assess attorney's fees against an attorney who litigates in bad faith. The Court stated that a finding of "bad faith" concerning either the filing or the prosecution of the litigation would have to precede any sanction against an attorney. 447 U.S. at 767, 100 S.Ct. at 2464. In McCandless v. The Great Atlantic and Pacific Tea Co., Inc., 529 F. Supp. 476 (N.D.Ill.1982), aff'd, 697 F.2d 198 (7th Cir.1983), the court of appeals upheld the district court's finding that an attorney acted in bad faith when he filed a frivolous lawsuit, misquoted precedent, and failed to respond to defendant's motion for fees and costs. The court noted that: "The lawsuit could have been avoided had [plaintiff's] counsel done the minimum amount of research required by a responsible member of the bar. Basic research would have revealed that exhaustion of adequate internal union remedies ... is a prerequisite to suit...." Id. at 478.
A careful review of the evidentiary record (D.I. 49) is necessary to determine whether A. Campana and P. Campana acted in bad faith.
(1) On February 23, 1983, P. Campana commenced an action against Judge Muir by issuing a writ of summons against the defendant in the Court of Common Pleas of Lycoming County. (Civil Action No. 83-00363.) This lawsuit was based upon alleged libelous statements contained in Judge Muir's opinion dated February 18, 1983. Before any complaint was filed in the Court of Common Pleas, on March 8, 1983, the action was removed to this Court on defendant's request pursuant to 28 U.S.C. § 1443. (D.I. 1.)
(2) Shortly after the commencement of the state court action against Judge Muir (in late February or early March of 1983), Assistant United States Attorney Gordon A.D. Zubrod ("Zubrod") contacted plaintiff's attorney, A. Campana, and informed him that Zubrod would be representing Judge Muir and that Judge Muir intended to raise the defense of judicial immunity. (D.I. 49 at 25.)
(3) On March 7, 1983, Judge Muir was served with a notice of deposition in the *876 case of Peter T. Campana v. Malcolm Muir, Civil Action No. 83-00363 (Court of Common Pleas of Lycoming County). In the notice of deposition the plaintiff stated:
The nature of the cause of action in this case is based upon alleged libelous statements contained in an Opinion written by the Defendant in his capacity as a Judge for the United States District Court for the Middle District of Pennsylvania. The Opinion was filed on February 18, 1983 in a case involving criminal contempt proceedings against the Plaintiff. It is the Plaintiff's contention that the various statements contained in that Opinion are false, were made by the Defendant with the knowledge that they were false, and have a tendency to defame the Plaintiff's character.
The matters to be inquired into at the deposition include the knowledge of the Defendant as to the various statements made concerning the Plaintiff's "manner of practicing law". Additionally, the Plaintiff wishes to inquire into the manner in which the Defendant's opinion came into the hands of agents of the Williamsport Sun Gazette, i.e. whether or not the Defendant took steps to see to it that his opinion received the attention of the press and whether the Williamsport Sun Gazette may also be liable to the Plaintiff.
(4) On March 11, 1983, P. Campana filed a praecipe for issuance of a writ of summons and obtained an ex parte order in the Court of Common Pleas for Lycoming County to conduct discovery of Judge Muir as a non-party witness in the case of Peter T. Campana v. Williamsport Sun Gazette and Joseph Musselman, Civil Action No. 83-00533. Pursuant to that order P. Campana served notice on Judge Muir to take his deposition on May 2, 1983 (the same date, time and place as stated in the March 7, 1983 notice of deposition). P. Campana requested, in his notice of deposition, that Judge Muir bring with him to the deposition "any handwritten notes, typewritten notes, handwritten memoranda, typewritten memoranda, or any writings relative to the opinion written by yourself...."
(5) On March 30 the United States filed a motion for a protective order staying discovery of Judge Muir. (D.I. 10.)
(6) On April 4, 1983, a hearing was held on the United States' motion to quash P. Campana's subpoena served on Judge Muir. In responding to the defendant's motion to quash the subpoena and to obtain a protective order from the Court of Common Pleas, A. Campana stated in his brief:
As to the argument that the subject matter of the lawsuit was doomed to failure at the onset because of the so called absolute immunity, Malcolm Muir errs. Firstly, Mr. Campana did not anticipate Judge Muir would or will run to cover in this matter. Plaintiff anticipated that Malcolm Muir would stand his ground, waive his judicial immunity, and defend the defamation suit on the merits. Secondly, if Malcolm Muir does assert the defense of judicial immunity, whether that defense will be upheld is a matter to be decided in the district court. [Emphasis added]
(7) On April 22, 1983, P. Campana filed a two-count complaint in this case (D.I. 15) alleging malicious prosecution and libel and seeking a judgment against Judge Muir for $10,000 on each count.
(8) On April 29, 1983, P. Campana withdrew his subpoena to Judge Muir after both parties were informed by the Chief Judge of the Court of Common Pleas Lycoming County that the Court was going to issue an order quashing the subpoena.
(9) The United States filed on May 11, 1983, a motion to dismiss or in the alternative for summary judgment. (D.I. 16.) In his brief in opposition to the motion, P. Campana stated:
The last part, IV of Defendant's argument, is to say the least, ludicrous. The Defendant desires this case to be dismissed on the grounds of judicial immunity. Yet, he admonishes all who read it that it is not an admission that his statements weren't true. The Defendant would have his cake and eat it too. He importunes the reader that his assertions *877 in his eleven page Opinion are true. Why, then, does he not desire to put them to a jury. (D.I. 20.)
(10) On July 11, 1983, this Court granted summary judgment in favor of Judge Muir and against P. Campana. (D.I. 24.) On July 13, 1983, the plaintiff filed a Motion to Alter or Amend the Court's Judgment, which motion was ultimately denied on August 3, 1983. (D.I. 25, 28.) P. Campana appealed the denial of the motion on August 19, 1983, to the United States Court of Appeals for the Third Circuit. (D.I. 29.)
(11) On September 29, 1983, Zubrod, as attorney for appellee, wrote a letter to A. Campana, counsel for appellant, designating additional parts of the record to be included in the Appendix pursuant to Fed. R.App.P. 30. (D.I. 49 at 28-30.) On October 4, 1983, A. Campana wrote a letter to Zubrod refusing to include the Appellee's designations in the Appendix. A. Campana stated that he did not find the designations made by Zubrod to be "necessary for the determination of the issues presented on appeal." On October 5, 1983, Zubrod wrote a letter to A. Campana where Zubrod set forth the pertinent parts of Rule 30(b) requiring the appellant to include all of the appellee's designations. Zubrod demanded that the appellee's designations be included in the Appendix and warned Mr. A. Campana that failure to comply with the appellee's designations would result in the appellee seeking "appropriate sanctions." (Id. at 31-33.)
Appellant, P. Campana, filed the Appendix in the Third Circuit on November 7, 1983, and failed to include any of the appellee's designations in that Appendix. (Id. at 33.) As a result, the United States was forced to file a petition for permission to file a Supplemental Appendix with the designations which were omitted by the appellant in the original Appendix. (Id. at 34.) Ultimately, the Court of Appeals ruled in favor of the appellee and denied appellant's motion to alter or amend the judgment. See 738 F.2d 420 (3d Cir.1984).
(12) On July 31, 1984, Zubrod filed a motion to hold P. Campana and A. Campana liable for costs of the proceedings pursuant to 28 U.S.C. § 1927 and the inherent powers of the Court as stated in Roadway Express, Inc. (D.I. 36.) On September 7, 1984, the United States filed a Bill of Costs in support of its motion for attorneys' fees and on April 26, 1985, this Court held an evidentiary hearing based on the United States' motion.
a. Colorable Claim
It is accepted that the meritlessness of a claim may be evidence of bad faith, but the claim must lack "even a colorable basis in law to justify an award of fees." Baker v. Cerberus, Ltd., 764 F.2d at 216 (quoting Suslick v. Rothschild Securities Corp., 741 F.2d 1000, 1006 (7th Cir.1984)). A colorable claim for purposes of the bad faith exception has some legal and factual support and a reasonable attorney could have concluded that the facts supporting the claim might be established. Nemeroff v. Abelson, 620 F.2d 339, 348 (2d Cir.1980). The issue in the present case, therefore, becomes whether P. Campana maintained a "colorable claim" alleging libel and malicious prosecution against Judge Muir after the defense of judicial immunity was raised. The doctrine of judicial immunity, the origin of which can be traced to 1872 (Bradley v. Fisher, 13 Wall 335, 20 L. Ed. 646 (1872)), is clear and unequivocal. Judges are not liable in civil suits for their judicial acts even when such acts are in excess of their jurisdiction and are alleged to have been done maliciously or corruptly. 13 Wall at 351. The doctrine of judicial immunity is absolute in that it covers whatever a judge speaks, writes or does in the performance of their judicial functions, "irrespective of the motives with which those acts are alleged to have been performed," (Barr v. Matteo, 360 U.S. 564, 569, 79 S. Ct. 1335, 1338, 3 L. Ed. 2d 1434 (1959)) as long as the statements are "pertinent, relevant and material to any issue" in the proceeding. Read v. Baker, 430 F. Supp. 472, 476 (D.Del.1977) (applying Pennsylvania law).
*878 As this Court has already determined, the doctrine of judicial immunity bars Judge Muir from liability in this case. Once the Campanas were put on notice that Judge Muir intended to raise the defense of judicial immunity with respect to statements made in opinions authored by him, they knew or should have known that P. Campana's claim had no factual or legal support. In certain cases, where the law is "so clear and well established" the moving party's position is deemed untenable. Maneikis v. Jordan, 678 F.2d 720 (7th Cir.), cert. denied, 459 U.S. 990, 103 S. Ct. 346, 74 L. Ed. 2d 386 (1982). Such is the case here. In addition, because the defense of judicial immunity rendered P. Campana's claims entirely without color, a reasonable attorney, when put on notice of the defense of judicial immunity, would have advised his client to abandon his claim. A. Campana gave no such advice. (D.I. 49 at 117.)
b. Plaintiff's Motive
But even assuming arguendo that P. Campana had a colorable claim, the Court must examine the record to determine whether P. Campana and his attorney were motivated by vindictiveness or obduracy in the way that they continued to pursue the claim after having been given notice that Judge Muir was raising the defense of judicial immunity. The record indicates that in late February or early March, 1983, A. Campana was informed by Zubrod in a telephone conversation that Judge Muir intended to raise the defense of judicial immunity. (D.I. 49 at 25, 110.) With full knowledge that Judge Muir intended to raise the defense, P. Campana filed a complaint in this case on April 22, 1983, alleging libel and malicious prosecution. The complaint, however, is totally devoid of any facts which would factually support a cause of action in which judicial immunity is raised as a defense, i.e. "clear absence of all jurisdiction" exception, Stump v. Sparkman, 435 U.S. 349, 357, 98 S. Ct. 1099, 1105, 55 L. Ed. 2d 331 (1978). Indeed, P. Campana has neither alleged nor proved any facts concerning the lack of jurisdiction.
In reviewing the entire record it is clear that both P. Campana and A. Campana were motivated by vindictiveness in the filing and prosecution of this case. First, the Campanas made two attempts to depose Judge Muir asking to review his handwritten or typewritten notes. Then they attempted to "taunt" Judge Muir into waiving his privilege of judicial immunity and "stand his ground." Thirdly, they refused to cooperate with opposing counsel with respect to filing appendices with the United States Court of Appeals for the Third Circuit. Finally, when this Court granted Judge Muir's motion for summary judgment, P. Campana appealed this Court's decision to deny P. Campana's Motion to Reconsider because A. Campana believed that the Court had included in its opinion a footnote which was "offending ... pure dictum, uncalled for [and] not necessary to the opinion." (D.I. 49 at 104.)[4]
However, with respect to the Campanas' motive, this Court need not guess as to what motivated P. Campana and A. Campana to file and prosecute this suit. Pursuant to the mandate of the Supreme Court in Roadway Express, Inc. v. Piper, 447 U.S. 752, 767, 100 S. Ct. 2455, 2464, this Court gave notice and held a hearing on the record. At that hearing on April 26, 1985 (D.I. 49), the Campanas were given an opportunity under oath to explain their reasons *879 for their conduct. The purpose of this hearing was to determine whether or not the Campanas filed and prosecuted the claims in bad faith.
At the hearing, A. Campana testified that as a result of the opinion published by Judge Muir concerning P. Campana that A. Campana was infuriated, incensed and angry with Judge Muir. A. Campana stated that he was "mad as hell" because "the statements were untrue" and "he [Judge Muir] locked the door to review of his opinion by dismissing the criminal contempt." (D.I. 49 at 92-93.) When both A. Campana and P. Campana were asked about the issue of judicial immunity, their response was that they felt that the defense would not be raised. (Id. at 95, 126.) When A. Campana was asked by the Court why he pursued the suit once he was advised in a motion for a protective order that Judge Muir was going to raise the defense of judicial immunity, the following colloquy took place:
BY MR. A. CAMPANA:
If what you are saying, Judge, is that you know better than to sue a judge, a federal judge because he automatically will raise the judicial immunity defense, you are saying more than I can accept, your Honor. I cannot accept that.
THE COURT: All right. You would file one again tomorrow.
MR. CAMPANA: Absolutely.
THE COURT: In the same situation.
MR. CAMPANA: Absolutely, your Honor.
BY MR. FOGELNEST:
Q In light of the fact that this one was dismissed because he raised judicial immunity, and you now know that Judge Muir would proceed in the same fashion, would you file one tomorrow?
A Absolutely.
(D.I. 49 at 101.) A. Campana further qualified that statement, however, by saying: "[I]f I knew he was going to raise judicial immunity before I filed this suit. No, I wouldn't do it [sue Judge Muir.]" (Id. at 103.) Finally, when A. Campana was asked whether he gave any thought to abandoning the litigation he stated that at no time during the course of this litigation did he think he should discontinue the suit. (Id. at 117.)
With respect to P. Campana,[5] the record indicates that he was motivated by the same attitude and for the same reasons as A. Campana. (D.I. 49 at 124.) P. Campana testified that the reason he filed the lawsuit was because "I felt humiliated ... [and] I had no recourse ... but to sue the man who made the statements." (Id. at 129.) When asked by the Court whether P. Campana would do the same thing today, P. Campana stated: "Given the circumstances as they existed then, yes." (Id.)
2. The Multiplication of Proceedings Requirement
The first prong of section 1927 requires the court to assess the impact of an attorney's improper conduct on the court processes. In Kiefel v. Las Vegas Hacienda, Inc., 404 F.2d 1163 (7th Cir.1968), cert. denied, 395 U.S. 908, 89 S. Ct. 1750, 23 L. Ed. 2d 221 (1969), the defendant's attorney deliberately changed an answer in a deposition that he was reading to the jury, examined a witness on an exhibit that had not been offered into evidence and repeatedly made meritless objections. The district court, in response to these actions and a history of well-documented misconduct, levied costs on the attorney pursuant to 28 U.S.C. § 1927. See also Bardin v. Mondon, 298 F.2d 235 (2d Cir.1961) (plaintiff's counsel held liable under section 1927 when after counsel stated that he was ready to go to trial counsel requested a continuance on the morning of the trial on the grounds that the attorney designated to try the case was unable to proceed due to illness).
In the present case, this Court has been forced to continued to deal with this case because of the persistence and adamant *880 conduct of the Campanas after they were given notice that Judge Muir had raised the defense of judicial immunity thereby rendering P. Campana's allegations without a legal basis. In addition, the unyielding and inflexible position taken by A. Campana when he refused to include the appellee's designation of additional parts of the record in the Appendix to the brief filed before the Court of Appeals for the Third Circuit also extended the proceedings in this case. A. Campana's stubbornness forced the appellee (Judge Muir) to file a petition with the Court of Appeals for permission to file a Supplemental Appendix to include the appellee's designations that A. Campana refused to include.
3. Increased Costs Requirement
The third element that must be present in order to find liability under 28 U.S.C. § 1927 is an increase in the costs of the proceedings over those which should properly have been incurred. Based upon the record in this case the Court finds that once Judge Muir affirmatively defended his actions based upon the doctrine of judicial immunity, the Campanas knew or should have known that, without factual proof that would support a claim based upon the lack of jurisdiction exception, the action was both factually frivolous and without a legal basis. As a result, all the costs[6] and legal fees incurred by the United States after actual notice of the defense of judicial immunity was given will be assessed against P. Campana, and his counsel, A. Campana.
II. ASSESSMENT OF COUNSEL FEES AND COSTS
Because the Court has determined that legal fees and costs should be assessed, the Court must now determine the amount of the award. The assessment of fees against a non-prevailing party and counsel must be fair and reasonable based upon the particular circumstances of the case. Tedeschi v. Smith Barney, Harris Upham & Co., Inc., 579 F. Supp. 657, 664 (S.D.N.Y.1984), aff'd, 757 F.2d 465 (2d Cir. 1985). The standard to be used to determine the proper award of fees is the "lodestar" method of fee calculation. See Lindy Bros. Builders, Inc. of Philadelphia v. American Radiator & Standard Sanitary Corp., 540 F.2d 102, 108 (3d Cir.1976). A lodestar fee is determined by multiplying a reasonable hourly rate by the number of hours reasonably expended on the suit. (Id.)
The United States has filed a Bill of Costs[7] in support of its motion for attorneys' *881 fees. (Appendix A attached.) The United States argues that it should be compensated $7,510 based on a reasonable rate of compensation for an attorney with more than ten years of litigation experience ($100 per hour) and the total number of hours expended on this case (75.1 hours). The United States made no request for an adjustment of the lodestar fee of $7,510.
A. Number Of Hours Reasonably Expended In This Litigation
Neither P. Campana nor A. Campana seriously challenge any particular item on the United States' Bill of Costs. Instead, the Campanas have made a blanket assertion that "the allegations upon which the Defendant would have this Court find that both he [plaintiff] and his counsel acted in `bad faith' would be insufficient factors upon which to base such a finding." (D.I. 38 at 10.) Although the Campanas have failed to set forth with any clarity reasons to adjust the award suggested by the United States in its Bill of Costs, this Court finds that some adjustment in the amount of the award is necessary. First, in an effort to give the Campanas the benefit of any doubt with respect to the issue of when they were given "notice" of the defense of judicial immunity, the 20 hours of time requested by the United States prior to the filing of its Motion to Dismiss (wherein the defense was actually raised) will be deleted. Secondly, the party seeking an award of fees should submit evidence supporting the hours worked and the rates claimed. Where the documentation of hours is inadequate, the court may reduce the award accordingly. Hensley v. Eckerhart, 461 U.S. 424, 103 S. Ct. 1933, 76 L. Ed. 2d 40 (1983). In the present case, the United States has submitted a Bill of Costs based upon an estimate of the amount of time the Assistant United States Attorney spent on this case. This estimate is based upon a "general record" of the amount of time allocated to the case by the Assistant United States Attorney. (The record does indicate that the estimate of 75.1 hours is a conservative one, not taking into account any time spent on: written correspondence, research and writing of the brief with respect to the motion for attorneys' fees and the Bill of Costs, telephone conversations between Zubrod and the Department of Justice lawyers concerning judicial immunity or any printing or reproduction costs. (D.I. 49 at 14-23.)) Because the United States failed to contemporaneously document the number of hours spent by the Assistant United States Attorney, this Court finds that the number of hours claimed should be further reduced by 25% to insure that the number of hours expended on this suit is reasonable. Therefore, 41.3 hours should be allowed. (55.1 hours × 75% = 41.3 hours.)
B. Reasonable Hourly Rate
At the evidentiary hearing, the United States presented as an expert witness, Smith B. Gephart, Esquire, an attorney who has been practicing law in the Middle District of Pennsylvania, Dauphin County, for 18 years. Mr. Gephart testified that an attorney with the experience of Mr. Zubrod (a lawyer for 11 years, an Assistant United States Attorney for five years with substantial litigation experience in the defense and prosecution of criminal cases and the defense of civil cases) (D.I. 49 at 10-14) would have a billing rate between $100 and $120 per hour. (Id. at 7.) Because the Campanas have failed to produce any evidence to rebut this claim, the Court finds that $100 per hour is a reasonable hourly rate consistent with charges being made by law firms in the Middle District of Pennsylvania, Dauphin County.
Therefore, for purposes of this motion, the computation of attorneys' fees is determined as follows: 41.3 hours reasonably expended multiplied by a reasonable hourly rate of $100 equals $4,130 which will be the total fees awarded in this case.
C. Apportionment Of Fees And Expenses Between P. Campana And His Counsel
Pursuant to 28 U.S.C. § 1927 and the Court's inherent power as stated in Alyeska *882 Pipe Line Services and Roadway Express, Inc., the Court has authority to hold a party or his counsel or both personally liable for attorneys' fees. Lewis v. Brown & Root, Inc., 711 F.2d 1287, 1289, 1292 (5th Cir.1983) (upholding award of attorneys' fees under § 1927 against plaintiff and his attorney jointly and severally), cert. denied, ___ U.S. ___, 104 S. Ct. 975, 79 L. Ed. 2d 213 (1984), modified, 722 F.2d 209 (5th Cir.1984) (per curiam) (remanding for trial court to determine whether attorneys' fees for entire proceeding or just a portion of it should be awarded), cert. denied, ___ U.S. ___, 104 S. Ct. 2690, 81 L. Ed. 2d 884 (1984); see also Tedeschi v. Barney, 757 F.2d 465 (2d Cir.1985) and Taylor v. Belger Cartage Service, Inc., 102 F.R.D. 172 (W.D.Mo.1984).
P. Campana engaged his father, A. Campana, to represent him. P. Campana, also an attorney, should equally share in the responsibility for his counsel's actions. It is clear from the record that P. Campana as much as A. Campana acted in bad faith in pursuing this case once they had definitive notice by motion that Judge Muir would raise the defense of judicial immunity. There is evidence in the record that both Campanas were involved in the research and preparation in the filing of the case, although it is difficult to determine exactly what part P. Campana played in the prosecution of this case. Nevertheless, P. Campana did testify that "whatever Ambrose Campana did, I approve of it." (D.I. 49 at 113, 128.) Therefore, the Court finds that the total attorney fee of $4,130.00 should be assessed against P. Campana and his attorney, A. Campana, jointly and severally.
This opinion shall constitute the findings of fact and conclusions of law as required by Rule 52(a), Fed.R.Civ.P.
A judgment will be entered in accordance with this opinion.
APPENDIX A
BILL OF COSTS
Motion For Protective Order and
Brief filed 3/30/83 2 hours
Petition For Removal filed 3/30/83 1 hour
Motion To Designate A U.S. District
Judge From Outside The Middle
District of Pennsylvania filed
3/30/83 2 hours
Motion To Quash Subpoena and Brief
filed 4/11/83 and 4/18/83 6 hours
Travel to and from Williamsport,
Pennsylvania for hearing on Motion
To Quash Subpoena 4/24 to 4/25 4 hours
Hearing on Motion to Quash
Subpoena (4/25/83) 1 hour
Motion To Dismiss, Or, In The
Alternative, For Summary
Judgment and Brief filed 5/11/83 30 hours
Reply Brief filed 6/17/83 2.5 hours
Brief In Opposition To Plaintiff's
Motion To Amend Judgment 10 hours
Third Circuit Appellee's Brief 8 hours
Motion For Leave To File
Supplemental Appendix plus
preparation of Supplemental
Appendix 2 hours
Telephone Conversations with Judge
Muir (12) 3.6 hours
Telephone Conversations with
Attorney for Williamsport Sun
Gazette and with Clerk of Court
personnel regarding affidavits for
Motion to Quash Subpoena 3 hours
___________
TOTAL HOURS 75.1
NOTES
[1] Senior Judge of the United States Court for the District of Delaware sitting by designation pursuant to 28 U.S.C. § 292(b).
[2] The power of the court to assess attorneys' fees covers both litigants and their counsel. "If a court may tax counsel fees against a party who has litigated in bad faith, it certainly may assess those expenses against counsel who willfully abuse judicial process." Roadway Express, Inc. v. Piper, 447 U.S. 752, 766, 100 S. Ct. 2455, 2464, 65 L. Ed. 2d 488 (1980) (emphasis added).
[3] Courts in other jurisdictions have also addressed the issue of "bad faith" under section 1927. In Morris v. Adams-Millis Corp., 758 F.2d 1352 (10th Cir.1985), the Court affirmed a district court's finding of bad faith and the award of attorney's fees and costs under section 1927 against counsel for plaintiff who failed to present any opposition to defendant's motion for summary judgment or motion to tax attorney's fees when counsel had been directed to so respond. In Tedeschi v. Barney, 757 F.2d 465 (2d Cir.1985), the Court affirmed the district court's finding of bad faith and the award of attorney's fees under section 1927 against plaintiff and his attorney because the plaintiff brought an action against his brokerage firm and its attorney for malicious prosecution, abuse of process, defamation, fraud on the court and emotional distress and there was no factual basis to support the allegations. See also United States v. Blodgett, 709 F.2d 608 (9th Cir.1983); United States v. Ross, 535 F.2d 346 (6th Cir.1976); and Kiefel v. Las Vegas Hacienda, Inc., 404 F.2d 1163 (7th Cir.1968), cert. denied, 395 U.S. 908, 89 S. Ct. 1750, 23 L. Ed. 2d 221 (1969).
[4] P. Campana filed a Motion to Reconsider (D.I. 25) whether or not footnote number 4 of the Summary Judgment Opinion, 585 F.Supp. supra at 35, should be excised. That footnote reads, in toto:
Because the Court is assuming that the allegations of the complaint are true, it should not be understood that this would be this Court's independent determination if it were necessary to make such a decision. Indeed, based on the underlying criminal contempt record, this Court would have to hold that the statements that plaintiff complained of were neither untrue nor maliciously motivated and that the criticism of plaintiff was entirely justified.
The court of appeals ultimately denied P. Campana's motion to alter or amend the district court opinion. See 738 F.2d 420 (1984).
[5] The record indicates that P. Campana is an attorney who has been practicing law in the Middle District of Pennsylvania since September 8, 1972. (D.I. 49 at 124.)
[6] In his brief in opposition to the award of attorney's fees pursuant to 28 U.S.C. § 1927, P. Campana argues that in Roadway Express, Inc., 447 U.S. 756, 100 S. Ct. 2455, 65 L. Ed. 2d 488 (1980), the United States Supreme Court held that this statutory provision cannot be read to support the sanction of taxing attorney's fees against counsel because the term "costs" does not include attorney's fees. Therefore, P. Campana claims, 28 U.S.C. § 1927 does not establish a basis for the levying of attorney's fees upon the opposing party and his counsel. (D.I. 38 at 7.)
However, it is important to note that while it is true that on June 23, 1980, the Supreme Court in Roadway Express, Inc., held that under section 1927 "costs" did not include attorneys' fees, on September 12, 1980, Congress amended § 1927. See The Antitrust Procedural Improvements Act of 1980, Pub.L.No. 96-349 § 3, 94 STAT 1154, 1156 (Sept. 12, 1980). Congress amended § 1927 to expressly provide that any attorney who so multiplies proceedings "unreasonably and vexatiously may be required by the court to satisfy personally the excess costs, expenses, and attorneys' fees reasonably incurred because of such conduct." 28 U.S.C. § 1927 (emphasis added). The legislative history makes clear that the September 12, 1980 amendment was intended to "expand[] the category of expenses the judge might require an attorney to satisfy personally to include `... attorneys' fees.'" Joint Explanatory Statement of the Committee of Conference 96th Cong. 2d Sess. 8, reprinted in 1980 U.S.Code Cong. & Ad.News 2716, 2781, 2782.
[7] The fact that the party seeking counsel fees is the United States does not bar an award. Odbert v. United States, 576 F. Supp. 825, 828 (E.D. Cal.1983). Pursuant to Alyeska Pipe Line Services, 421 U.S. 240, 258, 95 S. Ct. 1612, 1622, 44 L. Ed. 2d 141 (1975), a court may assess attorneys' fees when the losing party has acted in bad faith and "there is no reason why government officials should be harassed by bad faith litigation at no risk to the plaintiff." Odbert v. United States, 576 F.Supp. at 828, citing Moon v. Smith, 523 F. Supp. 1332 (E.D.Va.1981).
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601 S.W.2d 897 (1980)
Betty Sue PARKER and Carol Jane Parker, Co-Executrixes of the Estate of Parker Parker, Deceased, Appellants,
v.
Alfred W. PLEDGER et al., Appellees.
No. CA 80-110.
Court of Appeals of Arkansas.
July 9, 1980.
*898 Gardner & Gardner by Richard E. Gardner, Jr., Russellville, for appellants.
Richard L. Peel, Russellville, for appellees.
WRIGHT, Chief Judge.
Appellants co-executrixes of the estate of Parker Parker, deceased, appeal from a decree of the chancery court dismissing the estate's petition to reform and foreclose a second mortgage upon the home of appellee Pledger. F.H.A. holds the first mortgage on the real estate and for this reason the United States of America was made a party to the action.
Appellee Pledger borrowed $50,000 from the Bank of Russellville, hereinafter referred to as the Bank, in November, 1972, and secured the loan with a mortgage on a store building and fixtures and inventory of a hardware store in Dardanelle. On October 17, 1974, Pledger borrowed an additional $23,000 from the Bank secured by a security agreement on the hardware store fixtures and inventory. Parker Parker, an attorney now deceased, signed the $23,000 note as a surety and to protect himself obtained the signature of Pledger on an instrument dated October 18, 1974, referred to as a note and also on a real estate mortgage to secure said note. The description in the mortgage called for Lot 9 of Parkhill Addition to Dardanelle and the mortgage recited the existence of a prior mortgage of record but does not identify the prior mortgage. The document referred to as a note reads as follows:
Dardanelle, Ark. 10/18-1974
$23,000
24 Monthly after date due in equal promise to pay ____ or order Payments Payable at First National Bank Dollars Russellville as Addition Security for Parker Parker endorsing Alfred Pledger *899 Note to Said Bank for value received, with interest at the rate of 10 per cent per annum from date until paid, interest payable annually. If interest be not paid annually, to become as principal and bear the same rate of interest. Witness My hand and seal.
/s/ Alfred W. Pledger (Seal)
The Bank on October 24, 1972, assigned to Parker Parker without recourse the $50,000 note, and on October 14, 1976, assigned to him the original $23,000 note dated October 17, 1974, along with a renewal note for same dated October 29, 1975, together with the security agreement.
On October 27, 1976, Pledger was adjudicated a bankrupt and the Parker estate thereafter on June 10, 1977, filed its amended claim as a secured creditor for the sum of $43,920.78 on the $50,000 note and the sum of $14,177.28 on the $23,000 note. Thereafter the bankruptcy judge allowed the amended claim in favor of the Parker estate in the total sum of $58,986.00. The real estate and personal property securing the indebtedness evidenced by the two notes were sold in the bankruptcy proceeding and the trustee paid the estate the sum of $49,971.98. Pledger was released by the bankruptcy court from all dischargeable debts on February 28, 1977.
Thereafter, appellants filed action on the above mentioned note and mortgage held by Parker estate, sought judgment for $24,932.96 and foreclosure on Lot 9 of Parkhill Addition. Later appellants filed an amended petition reducing the amount alleged to be due the estate to $17,239.35. In January, 1979, appellants further amended their petition and alleged there was a scrivener's error in the land description in the mortgage, and sought reformation to correct the description to Lot 92 of Parkhill Addition.
Appellee answered the petition denying indebtedness to the estate and pleading his discharge from bankruptcy as a further defense. In addition he alleged the October, 1974, $23,000 note to the Bank, which Parker co-signed was released by the execution of a renewal note; and Parker thereafter became the owner of the renewal note and the only security for payment was the personal property in the security agreement.
At trial Pledger testified he had no knowledge of having executed the mortgage on Lot 9 of Parkhill Addition to Dardanelle or the document referred to in the mortgage as a promissory note, but the signature on each was his signature. He had never owned Lot 9, but does own Lot 92 of Parkhill Addition which is his home. His home was not disturbed in the bankruptcy proceeding, and he testified it was supposed to be encumbered only by the F.H.A. mortgage. He denied his signature was affixed to the documents knowingly and denied acknowledging the mortgage before a notary public. The notary who executed the acknowledgment of the mortgage testified she had no recollection of the document or of Pledger acknowledging it. Pledger further testified Parker frequently got him to sign documents in blank which Parker did not allow him to read. The evidence does not show what part of the $49,971.98 paid out of the bankruptcy assets was produced by the sale of assets securing the $23,000 note Parker co-signed.
Appellant Betty Sue Parker, the only witness testifying as to the amount of the alleged indebtedness, testified the debt was $9,126.08, but modified her testimony to state the amount to be $8,126.08. She was unable to explain how the figure was determined other than taking the claim as allowed by the bankruptcy court and subtracting the amount paid the estate by the trustee, leaving a net balance of $8,126.08.
At the conclusion of the evidence the court held the mortgage in question was security to Parker for a $23,000 note to the Bank he co-signed for Pledger on or about the same date, that the note to the Bank had been satisfied by a renewal note, and that the mortgage in issue does not extend security to assure payment of the renewal note to the Bank executed in October, 1975. *900 Decree was entered dismissing the complaint.
For reversal appellant contends the trial court erred in finding the mortgage in issue was extinguished by renewal of the $23,000 note to the Bank, and erred in failing to reform the mortgage and grant foreclosure.
We conclude the trial court based its decision on an erroneous conclusion of law and that the execution of a renewal note for $23,000 in October, 1975, did not operate to extinguish the debt for which the original October, 1974, note was executed. The original note was retained by the Bank and later assigned to Parker along with the renewal note, and the renewal was merely an extension of time for the payment of the debt. Bank of Dermott v. Measel, 172 Ark. 193, 287 S.W. 1017 (1926). However, we review chancery appeals de novo, and if we determine from the record the result of the decree to be correct, we affirm, even though the reason given by the trial court is incorrect. Apple v. Cooper, 263 Ark. 467, 565 S.W.2d 436 (1978).
First, we conclude the indebtedness was not established by the evidence. The only witness who attempted to establish the indebtedness did not produce in court underlying data to establish an unpaid balance on the $23,000 note to the Bank other than the copy of the order of the bankruptcy court allowing the claim in favor of the Parker estate on the two secured notes in the total amount of $58,098.06, and that $49,971.98 was paid on the claim by the trustee. No other payments had been made from any source after allowance of the claim. However, the mere allowance of an uncontested claim by the bankruptcy court simply determines the creditor is entitled to a dividend out of the bankruptcy assets in the hands of the trustee. Such an allowance is not res judicata and does not estop the bankrupt from defending a subsequent suit by the creditor. The allowance of an uncontested claim is not binding on the bankrupt except as to the assets in the bankruptcy proceeding. 8A C.J.S. Bankruptcy § 444; Walley v. United States, 9 Cir., 259 F.2d 579 (1958); United States v. Verrier, D.C., 179 F. Supp. 336 (1959). Appellee denied any unpaid indebtedness and failure of appellant to establish the debt by competent evidence supports dismissal of the complaint.
Secondly, the document bearing the signature of Pledger and offered in evidence by appellants as a note is not in fact a note. A note whether it is to be a negotiable instrument or otherwise, must contain a promise to pay to the bearer or an identified payee. The instrument which appellants present as a basis for the mortgage does not name a payee and is not payable to the bearer. It is neither a negotiable nor non-negotiable note. Ark.Stat.Ann. § 85-3-102(1)(b) requires that to be negotiable the instrument to whom the promise to pay is addressed must be identified with reasonable certainty. The instrument here in question refers to payments payable at the Bank and contains no express promise to pay bearer or any named person.
In 10 C.J.S. Bills and Notes § 7(4)b, it is stated a note must include the following:
Payment must be promised absolutely and unconditionally for the instrument to be a note, either negotiable or nonnegotiable. If the instrument contains no promise to pay, it cannot be a note.
We are unable to say the instrument here contains an absolute and unconditional promise to pay. In fact, the evidence shows the document was never intended to be an unconditional promise to pay, but it purports to provide security to the co-signer for payment of the note held by the Bank. Thus, appellants concede the note was intended only to be a conditional obligation. It should be kept in mind that the Parker estate would not be entitled to recover a deficiency under the $23,000 note assigned to Parker by the Bank as any balance of that obligation was released upon the discharge of Pledger from bankruptcy.
*901 We conclude the instrument is not a note securing a debt to the Parker estate. Pledger was not indebted to Parker when the document was executed and the document contains no promise to pay Parker. The instrument creates no obligation for the mortgage to secure, and appellants are not entitled to foreclose.
Third, we conclude the evidence for reformation of the description in the mortgage does not warrant reformation. Before reformation may be granted because of mistake the mistake must be mutual. Jeffers v. American Pioneer Life, Inc. Co., 256 Ark. 332, 507 S.W.2d 713 (1974). There was no testimony that Pledger intended to give Parker a second mortgage on his home property. On the contrary, Pledger testified he never agreed or intended to mortgage his home to Parker, and that he did not knowingly execute the mortgage or appear before a notary and acknowledge same. The notary had no recollection of the mortgage, and Pledger further testified Parker often insisted upon his signing instruments that were blank. To justify the court in reforming the instrument, the evidence must be clear, cogent and decisive. North v. Griffin, 227 Ark. 402, 298 S.W.2d 700 (1957). We conclude the evidence in favor of reformation does not meet that test.
Affirmed.
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601 S.W.2d 385 (1979)
R. B. WILLOUGHBY et al., Appellants,
v.
CIBA-GEIGY CORPORATION et al., Appellees.
No. 8344.
Court of Civil Appeals of Texas, Beaumont.
December 27, 1979.
Rehearing Denied February 7, 1980.
*386 Petry & Petry, Carrizo Springs, for appellants.
Butler, Binion, Rice, Cook & Knapp, Houston, Crawford, Crawford & Hughes, Uvalde, for appellees.
*387 CLAYTON, Justice.
Appellants, R. B. Willoughby, individually, and R. B. Willoughby and R. B. Willoughby, Jr., d/b/a R. B. Willoughby and Son, filed this suit against appellees, Ciba-Geigy Corporation (Geigy), Agricultural Supplies of Batesville, Inc. (Ag Supplies), and M. L. Coleman, seeking damages resulting from the use and application of a certain herbicide, Evik, to appellants' 1974 corn crop. Appellants alleged separate causes of action against all appellees under the theory of strict liability, gross negligence, fraud and deceit, deceptive trade practices, and breach of implied warranties. Appellants' basic complaint was that the yield of their 1974 corn crop was diminished due to the application of Evik, a post-emergence herbicide manufactured by Geigy and sold to appellants by Ag Supplies through Coleman, an employee of Ag Supplies. Trial was to a jury.
The trial court granted a motion for instructed verdict against appellants on the cause of action as to gross negligence, fraud and deceit, deceptive trade practices, and breach of implied warranties. Special issues were submitted to the jury upon the strict liability cause of action. All issues were answered favorably to appellees, and, based upon the verdict, a take nothing judgment was entered. No complaint has been made as to the instructed verdict in favor of Coleman, and appellants have abandoned their appeal as to him.
Appellants' first point complains of error in instructing a verdict against them on their cause of action for breach of implied warranties. This being an appeal from an instructed verdict, we must accept as true the evidence supporting appellants' allegations. All conflicts and inconsistencies must be resolved in favor of appellants, and we must draw all inferences therefrom most favorable to their alleged cause of action. Constant v. Howe, 436 S.W.2d 115 (Tex.1968); Hart v. Van Zant, 399 S.W.2d 791 (Tex.1965).
The record before us shows, in considering the evidence in the light most favorable to appellants, that Geigy manufactured the product Evik and that it was sold for the purpose of killing and controlling weeds found among growing corn plants. The product, Evik, was sold to Ag Supplies, and the product was then sold to its customers.
Coleman, manager of Ag Supplies' plant in Batesville, had discussed with appellant Willoughby, Jr., the condition of appellants' corn field with reference to the weeds, seedlings, and Johnson grass growing within appellants' corn field. Coleman had made recommendations during the preceding eight to ten years as to the type of products to use on their field, and appellants had always relied upon his recommendations. On this particular occasion, Coleman recommended the use of Evik for the grass and weed problems, and appellants relied upon this recommendation. This discussion occurred in the month of May 1974. Coleman had visited appellants' farm and knew of the conditions of this corn crop before making his recommendation. Appellant Willoughby, Jr., did not purchase the Evik and take the product in his possession. There is no evidence that he ever saw the package container of the product. He merely requested the use of a product to solve his weed and grass problems.
Coleman recommended Evik, and Coleman applied the product to appellants' corn crop. There is no evidence that the product was improperly applied, except as to the timely application of same. Coleman applied the Evik to approximately six hundred acres of appellants' 1974 corn crop between May 15 and May 20, 1974. He had seen literature furnished by Geigy, and such literature contained no instructions or warnings with reference to spraying Evik within three weeks prior to tasseling. Coleman testified it was in 1976 that he, for the first time, received a bag of Evik from Geigy with the warning, "Do not apply within three weeks of tasseling of corn." Coleman applied the Evik to appellants' corn crop at a time when some of the corn was tasseling, inferring that some was not tasseling. He further testified that at the time of spraying the Evik, the corn crop was normal with the exception of the weeds and grass.
*388 Within a week or ten days after the Evik was sprayed, appellants observed problems with the corn. The leaves were burned, and the corn "was starting to deteriorate on the ends in places." This was reported to Coleman who in turn reported it to a representative of Geigy. Willoughby, Jr., testified he had some acreage planted with corn which was sprayed with herbicides other than Evik. One such acreage yielded 72.8 bushels per acre. Another acreage yielded 102 bushels per acre. On the acreage sprayed with Evik, the yield was approximately twenty-five bushels per acre. Some of the corn sprayed with Evik was defective in that some of the ears were small, curved, and void on one side, and some ears appeared "where there would be sufficient shuck but you would open it up and there would be a cob the size of your finger."
Willoughby, Jr., testified that prior to spraying the Evik in May 1974, he attended a meeting sponsored in part by Geigy. At this meeting, he came into possession of a pamphlet prepared by Geigy. There was nothing in this pamphlet warning that Evik should not be applied to corn after it had been planted for six or seven weeks or shouldn't be applied within three weeks before tasseling. This meeting was held in the early part of 1974 and prior to the time of the application of Evik to appellants' corn crop.
Dr. Cowett, director of technical sales service of Geigy, testified his department sent a memo to all of "our field personnel of [Geigy]" that "recent field and laboratory results have indicated that late applications of [Evik] on corn may affect yield.. . . Our experience in 1973 and recent experimental results indicate that Evik should be applied no later than six to seven weeks after corn planting, and in any event, no later than twenty-one days prior to tasseling." He admitted that Geigy received ten to twenty reports in 1973 where growers had complained of the yield reduction from using Evik. As a result of tests made in the winter of 1973-74, it was recommended that Evik not be applied "closer than twenty-one days prior to pollination." Their tests and recommendations were made prior to the application of Evik to appellants' crop. This information was not at any time given or received by appellants prior to the application of the product to their corn crop. The testimony further shows that Evik will kill corn if improperly applied, and it "would make it dangerous to the growth of the corn."
Dr. Bruce Perry testified that Evik caused the damage to appellants' corn crop. He stated the damage was caused by the "chemical" in the Evik, and the "Evik caused the damage."
There is an implied warranty as to merchantability and fitness for the use to which it was intended, i. e., killing or controlling weeds and grass growing among corn plants without producing damage or injury to the corn plants. Tex.Bus. & Corn. Code Ann. § 2.315 (Vernon 1968); Mid Continent Aircraft v. Curry County Spraying Service, Inc., 572 S.W.2d 308, 311 (Tex. 1978); Ford Motor Co. v. Tidwell, 563 S.W.2d 831 (Tex.Civ.App. El Paso 1978, writ ref'd n. r. e.); Chaq Oil Company v. Gardner Machinery Corporation, 500 S.W.2d 877 (Tex.Civ.App. Houston [14th Dist.] 1973, no writ); Tracor, Inc. v. Austin Supply & Drywall Co., Inc., 484 S.W.2d 446 (Tex.Civ.App. Austin 1972, writ ref'd n. r. e.).
Appellees argue there can be no liability on breach of implied warranty because Geigy had printed on the side of the container of Evik a disclaimer of warranty as provided by Tex.Bus. & Com.Code Ann. § 2.316(b) (Vernon 1968).
The evidence in this case clearly shows the disclaimer of warranty was never disclosed or brought to the attention of appellants, who had not, at any time, come into possession of the container. Appellants did not see the disclaimer; the container upon which the disclaimer appeared was never in their possession, and it was not called to their attention by Coleman. Under these circumstances, we hold the disclaimer relied upon by appellees was ineffective to relieve appellees of liability. See Weintraub, "Disclaimer of Warranties and *389 Limitation of Damages for Breach of Warranty Under the UCC," 53 Tex. L. Rev. 60, 69 (1975); Longino v. Thompson, 209 S.W. 202 (Tex.Civ.App. San Antonio 1919, writ ref'd); Sugarland Industries, Inc. v. Falco, 360 S.W.2d 806 (Tex.Civ.App. Waco 1962, writ ref'd n. r. e.).
The evidence, when viewed by the appropriate standard, raises an issue of fact as to implied warranty, breach thereof, and causation, and this cause of action based upon implied warranty should have been submitted to the jury. The trial court erroneously instructed a verdict as to this cause of action. This point is sustained.
Appellants, in their 5th, 6th, 7th, 8th, 9th, and 10th points of error complain that the answers of the jury to certain special issues were contrary to the overwhelming weight and preponderance of the evidence. All of the issues basically called for a finding that a danger was presented to corn by the application of Evik when the corn was Bilking and tasseling and, further, that the appellees failed to adequately warn appellants of such danger. The jury answered each issue adversely to appellants.
We have carefully reviewed the evidence, and it is clear that the testimony as to the danger created by the use of the herbicide during such period of time is conflicting. Where there is any conflicting evidence in the record of probative value, a determination of the issue is for the jury. Texas Employers Insurance Association v. Page, 553 S.W.2d 98 (Tex.1977). The jury was the judge of the credibility of the witnesses and the weight to be given their testimony. It chose to accept the testimony given adversely to appellants' claim. The jury findings are not so against the weight and preponderance of the evidence as to be manifestly unjust and clearly wrong. These points are overruled.
Appellants' 2nd, 3rd, and 4th points are without merit and are overruled.
The action of the trial court in instructing a verdict upon the implied warranty cause of action is reversed and that part of the judgment is remanded for trial on its merits. The causes of action based upon gross negligence, fraud and deceit, deceptive trade practices and strict liability, are severed from the cause of action based upon breach of implied warranty, and the judgment of the trial court as to such severed causes of action is affirmed. The judgment as to M. L. Coleman, which was granted based upon a plea of the statute of limitations, is affirmed.
REVERSED and REMANDED in part; AFFIRMED in part.
On Motion for Rehearing
Appellees urge, for the first time, that the submission of the strict tort liability cause of action to the jury was tantamount to a submission of the case on implied warranty, and, therefore, it was not error for the trial court to direct a verdict on implied warranty and "send the case to the jury solely on strict liability in tort." We do not agree with this argument.
In our original opinion, we expressed no opinion as to the propriety of submitting the case upon strict tort liability. Appellees made no objection to this submission and, consequently, did not raise this question by cross-point since the jury answered all issues on this cause of action favorably to appellees.
Appellants plead and proved (by the applicable standards as expressed in our opinion) a cause of action based upon implied warranty. They were entitled to a submission of this cause of action to the jury. Appellees now argue that, even though such a cause of action existed, appellants could only submit to the jury either the cause of action on implied warranty or strict tort liability, but not both. We do not find it necessary to express an opinion on this question because this question is not before us. According to their argument, appellees now say, in effect, that appellants had the choice of submitting either cause of action to the jury but could not submit both. Assuming, arguendo, and without deciding the soundness of this argument, it is obvious that such a choice was not given appellants. At the time of submitting any requested *390 issues by appellants and at any time prior to the submission of the court's charge to the jury, appellants were not given a choice as to which cause of action they chose to submit. They had been deprived of the right to make a choice the choice was made by the trial court in granting the instructed verdict on the implied warranty cause of action. Based upon the trial court's action, appellants were left with only the cause of action of strict liability.
Even though the question of dual submission is not before us, we are not persuaded by the argument that the two causes of action are one and the same. See Signal Oil and Gas Company v. Universal Oil Products, 572 S.W.2d 320 (Tex.1978); Mid Continent Aircraft Corporation v. Curry County Spraying Service, Inc., 572 S.W.2d 308 (Tex. 1978). In each cause of action, i. e., implied warranty and strict tort liability, the elements of proof are different, the burden of proof on some elements is different, and in some cases the measure of damages may be different.
The motions for rehearing filed by appellants and both appellees are overruled.
KEITH, Justice, dissenting.
I feel that we erred in reversing the judgment of the trial court; consequently, I respectfully dissent from the order overruling the motions for rehearing of the defendants.
As noted in the original opinion, plaintiffs did not carry their burden of proof of procuring favorable answers to the special issues submitting strict liability in tort. We overruled and I concurred all of plaintiffs' complaints except that which denied them a dual submission on the same facts of breach of an implied warranty in contract. As to the latter, we reversed the judgment and remanded the cause for a new trial.
I adopt the language of Justice Pope in his "concurring" opinion in Signal Oil & Gas Co. v. Universal Oil Products, 572 S.W.2d 320, 333 (Tex.1978):
"If this is, as the majority says, a tort case, then why is it being remanded for trial as a contract case? If it is a strict liability case, why is it remanded for retrial as a case for breach of an implied warranty? What the majority is really saying is that it is unimportant whether the plaintiff's action is one in tort or contract. Whatever the case might be, the plaintiff can try it once, lose it, and then start over in a new trial. The ruling is basically unfair and affords a plaintiff two separate trials on the same set of facts."
The plaintiffs had a shot at defendants under the strict liability theory with the relaxed standard of producing cause instead of the more onerous proximate cause issue. They avoided all the pitfalls accompanying submission under the implied warranty theory. See Tex.Bus. & Comm.Code Ann. §§ 2.313-2.315 (1968); Mid Continent Aircraft Corp. v. Curry County Spraying Service, Inc., 572 S.W.2d 308, 313 (Tex.1978).
While I have not found a Texas case precisely in point, I note that the Court has discussed the possibility of conflict in the causation findings under the two theories. See Signal Oil & Gas Co. v. Universal Oil Products, supra (572 S.W.2d at 326).
Defendants have called to our attention several out-of-state cases, noted in the margin,[*] which have, in effect, denied the dual submission. After my review of the authorities, I conclude that the trial court was correct in permitting only the single submission of the liability issue. Under no circumstances have the plaintiffs established reversible error under Tex.R.Civ.P. 434.
I would sustain Ciba-Geigy's second assignment in its motion for rehearing which was adopted by the other remaining defendant. I concur in the remainder of the *391 original opinion but would affirm the judgment of the trial court for the reasons herein set forth.
NOTES
[*] Defendants cite, inter alia, the following cases in support of their contention: Realmuto v. Straub Motors, Inc., 65 N.J. 336, 322 A.2d 440, 443 (1974); Austin v. Ford Motor Co., 86 Wis. 2d 628, 273 N.W.2d 233, 241 (1979); Hawkeye Security Ins. Co. v. Ford Motor Co., 199 N.W.2d 373, 382 (Iowa 1972); Sansing v. Firestone Tire & Rubber Co., 354 SO.2d 895, 897 (Fla.App.1978).
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601 S.W.2d 801 (1980)
CARS & CONCEPTS, INC., Appellant,
v.
Randy FUNSTON, d/b/a Tex-Hide Paint Industries, Appellee.
No. 18251.
Court of Civil Appeals of Texas, Fort Worth.
June 19, 1980.
Rehearing Denied July 24, 1980.
Fillmore, Lambert, Purtle & Lee, and Larry L. Lambert, Wichita Falls, for appellant.
Banner, McIntosh & Dobbs, and Juanita Pavlick, Wichita Falls, for appellee.
OPINION
MASSEY, Chief Justice.
We reverse judgment by default in this treble damages case for want of jurisdiction of the person of the defendant.
Randy Funston, as plaintiff, brought suit, under the Tex.Bus. & Comm.Code Ann., Subchapter E. "Deceptive Trade Practices and Consumer Protection", § 17.41, et seq, and including § 17.46, "Deceptive Trade Practices Unlawful" (in sub. (b) "(5) representing that goods ... have ... characteristics, ... benefits, or quantities which they do not have ...").
Date suit originally brought was June 26, 1978, and in plaintiff's petition the defendants named were Morgan Motor Company, Inc., from which company Funston had purchased a certain automobile, and Chrysler Corporation, the manufacturer for which Morgan Motor Company was dealer-distributor. Thereafter, pursuant to discovery procedures which indicated advisability that such be done, plaintiff filed an amended petition in which there was added to the original defendants the new defendants, Safelite Industries, Inc., and Cars and Concepts, Inc. For purposes of default judgment the pleadings were sufficient to present allegations entitling plaintiff to the *802 relief for which he prayed from each of these defendants.
In answer to the suit all the defendants, save and except Cars and Concepts, Inc., filed answer in opposition. On May 3, 1979, plaintiff took an interlocutory default judgment against Cars and Concepts, Inc. for the amount of $37,292.00, being treble the purported difference in value of the automobile he had purchased as represented to be delivered from the value thereof as delivered; plus a sum representing treble the expenditure to obtain a substitute automobile for over a year; and plus $5,000.00 as attorney's fees. (The measure of damages used was error, but by our action that fact becomes immaterial.)
As of the time of the default judgment the defendants (other than Cars and Concepts, Inc.) remained as parties to the suit. It was for this reason the judgment was interlocutory merely. The trial court not only retained jurisdiction of the entire case as it existed against the remaining defendants, but it also retained jurisdiction as applied to the suit against Cars and Concepts, for that defendant could not then appeal. This situation obtained until date of June 20, 1979, when, upon motion by plaintiff, his case against all the defendants other than Cars and Concepts was severed and redocketed for trial under a new case number in the trial court. Under the original number the only defendant was Cars and Concepts; by reason of the severance, Cars and Concepts became the only defendant and no impediment being existent, the judgment originally interlocutory became a final and appealable judgment on June 20, 1979. This judgment decree, whether considered as rendered May 3, 1979 or as rendered June 20, 1979, was never interfered with at any time.
At the same hearing held June 20, 1979, pursuant to which there was the order of severance, the court heard the motion of Cars and Concepts to set aside and vacate the default judgment, then interlocutory, which had been rendered on May 3, 1979. Upon having received the usual postcard notice from the clerk of the trial court that a default judgment had been rendered against it, Cars and Concepts began action. On May 21, 1979 its Michigan attorney filed a motion to set aside the interlocutory default judgment. By June 12, 1979 it had employed Wichita Falls attorneys, and these attorneys filed a supplemental motion in embellishment, and appended thereto they attached the general denial they desired to file. Therein they plead that Cars and Concepts did not permit the default to be taken by design, willfully, or by intentional failure, but by excusable accident or mistake. It was averred that upon receipt of citation the same was turned over to its regular attorney who in turn forwarded suit papers to its insurance agent; that it was assured that an answer would be filed; and that it had no knowledge that none had been filed until the postcard notice was received from the clerk. Represented was that by the answer desired to be filed was presented a meritorious defense to plaintiff's suit.
The appeal is important to be considered in two ways: (1) As though it was a direct appeal from the default judgment, and (2) as though it was an appeal from the denial of a new trial as sought by the motion to set aside the interlocutory judgment by default rendered May 3, 1979.
ON THE QUESTION OF JURISDICTION ON MAY 3, 1979
This was a case in which, upon application for default judgment, plaintiff had not only the obligation to make proof of service of citation upon Cars and Concepts by authorized substitute service thereof upon the Secretary of State, but was obligated to go further and prove that the Secretary of State had discharged the duty of mailing notice thereof to Cars and Concepts. At the trial on May 3, 1979, when the interlocutory default judgment was rendered, plaintiff proved the service of citation upon the Secretary of State, but failed to go further and prove the fact of notice, by certificate of the Secretary of State, or otherwise, that proper mail notice had been sent to Cars and Concepts by the Secretary.
*803 At the time it was taken there was no valid interlocutory default judgment for want of that proof. In other words the situation displayed is one in which the court had rendered judgment without jurisdiction of the person of Cars and Concepts. Such a judgment would be void (actually voidable), for the validity of every judgment depends upon the jurisdiction of the court before it is rendered, not upon what may occur subsequently. Prine v. American Hydrocarbons, Inc., 519 S.W.2d 520 (Tex.Civ.App. Austin 1975, no writ).
Here, it is to be remembered, the judgment was not final even were it not void. The existence of other defendants, undisposed, inhibited finality so long as they remained parties under the same case (or until there was the severance which did actually occur pursuant to the hearing on June 20, 1979).
Immediately prior to severance the motion of Cars and Concepts to vacate the interlocutory default was heard, considered, and denied by the trial court on June 20, 1979. In other words, it might be said that while plaintiff's case pended in the trial court, and before any final and appealable judgment had been rendered, the defendant had presented itself as contestant of any right of the plaintiff to obtain valid judgment without trial of all the issues upon liability and damages. This hearing, on June 20, 1979, was not for purposes of a trial of the plaintiff's case; rather was it held to determine whether action theretofore taken in the case (and, as we have observed, at a time when the court did not have jurisdiction of the person, of the defendant Cars and Concepts) should be set aside because unconscionable. The fact that Cars and Concepts had in fact learned it had been sued at a time earlier than May 3, 1979 sort of "leaked out" as the admission of that defendant during the course of the June 20th hearing. From a close examination of all the evidence on June 20, 1979, however, it obviously showed the mere fact of that defendant's knowledge of the suit prior to May 3, 1979, not how that knowledge was acquired. Specifically, it was never shown that such knowledge was acquired from the Secretary of State nor by receipt of that mailed notice provided for by Tex.Rev.Civ.Stat.Ann. art. 2031b, "Service of process upon foreign corporations and nonresidents", in its Sec. 5, "Delivery of process to Secretary of State; forwarding copy" (Supp.1980).
Anyway, that the Secretary of State had completely performed was not proved on May 3, 1979 when the trial court rendered default judgment. Our conclusion is that, because it was not proved at that trial, there was a fatal flaw in the interlocutory default judgment of that date which could not be cured at the hearing on June 20, 1979, and/or, if it could have been, was not cured. The fact that Cars and Concepts actually had knowledge that the suit pended did not "put it in court" even if the fact of its knowledge had been proved at the trial on May 3rd. Whitney v. L & L Realty Corporation, 500 S.W.2d 94 (Tex.1973); Brace v. Busboon, 261 Ark. 556, 549 S.W.2d 802 (Ark.1977). The default judgment must be reversed because of the trial court's want of jurisdiction of the person at the time it was rendered.
By our disposition of the case we do not reach the question of the Court's abuse of discretion in its denial of new trial at the hearing held June 20, 1979.
Judgment is reversed with the cause remanded to the trial court.
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[Cite as State v. Jells, 90 Ohio St. 3d 454, 2000-Ohio-93.]
THE STATE OF OHIO, APPELLEE, v. JELLS, APPELLANT.
[Cite as State v. Jells (2000), 90 Ohio St. 3d 454.]
Appellate procedure — Application for reopening appeal from judgment of
conviction based on claim of ineffective assistance of appellate counsel
— Court of appeals’ denial of application affirmed — Application denied
when applicant fails to establish a colorable claim of ineffective
assistance of counsel on the part of appellate counsel.
(No. 00-1053 — Submitted October 10, 2000 — Decided December 27, 2000.)
APPEAL from the Court of Appeals for Cuyahoga County, No. 54733.
Appellant, Reginald Jells, was convicted of aggravated murder with a
death specification, and two counts of kidnapping. He was sentenced to death.
Upon appeal, the court of appeals affirmed the convictions and sentence. State v.
Jells (May 1, 1989), Cuyahoga App. No. 54733, unreported. On direct appeal as
of right, we also affirmed his convictions and sentence on August 8, 1990. State
v. Jells (1990), 53 Ohio St. 3d 22, 559 N.E.2d 464.
On March 11, 1999, appellant filed an application for reopening with the
court of appeals pursuant to App.R. 26(B) and State v. Murnahan (1992), 63 Ohio
St.3d 60, 584 N.E.2d 1204, alleging ineffective assistance of appellate counsel on
his direct appeal.
The court of appeals stated that the application was untimely and that Jells
had failed to show good cause for the late application. The court further opined
that res judicata also required that the application be denied. In addition, the
court of appeals reasoned that counsel failed to file a sufficient affidavit, pursuant
to App.R. 26(B)(2)(d), setting forth the basis for the claim that appellate counsel
had been deficient in prejudicially affecting the outcome of the appeal.
Notwithstanding those findings, the court of appeals reached the merits of
appellant’s claims of ineffective assistance of appellate counsel, and found that
none of them was meritorious. The court relied on the standard of review in State
v. Spivey (1998), 84 Ohio St. 3d 24, 25, 701 N.E.2d 696, 697, which adopted the
two-prong analysis found in Strickland v. Washington (1984), 466 U.S. 668, 104
S. Ct. 2052, 80 L. Ed. 2d 674, in rejecting appellant’s six assignments of error on
their merits.
The cause is now before the court upon an appeal as of right.
__________________
William D. Mason, Cuyahoga County Prosecuting Attorney, and Reno J.
Ordani, Jr., Assistant Prosecuting Attorney, for appellee.
Shawn Martin, for appellant.
__________________
Per Curiam. Based on the reasoning set forth in its opinion, we affirm the
judgment of the court of appeals denying appellant’s application for reopening for
failing to establish a colorable claim of ineffective assistance of counsel on the
part of appellate counsel. Spivey, supra, 84 Ohio St.3d at 25, 701 N.E.2d at 697.
In none of the six instances has Jells raised “a genuine issue as to whether [he]
was deprived of the effective assistance of counsel on appeal” before the court of
appeals, as required under App.R. 26(B).
Judgment affirmed.
MOYER, C.J., DOUGLAS, RESNICK, F.E. SWEENEY, PFEIFER, COOK and
LUNDBERG STRATTON, JJ., concur.
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102 N.J. Super. 370 (1968)
246 A.2d 59
STATE OF NEW JERSEY, PLAINTIFF,
v.
CARL WENOF, DEFENDANT.
Superior Court of New Jersey, Camden County Court, Law Division Criminal.
Decided July 17, 1968.
*372 Mr. Victor Librizzi, Jr. Assistant Attorney General for the State of New Jersey (Mr. Arthur J. Sills, Attorney General, attorney).
Mr. Gerald E. Haughey for defendant.
HEINE, J.S.C. (temporarily assigned).
Defendant appeals his conviction of violating R.S. 39:3-40, driving when his license had been suspended or revoked. The statute in pertinent part provides:
"No person * * * whose driver's license * * * has been suspended or revoked * * * shall personally operate a motor vehicle during the period of * * * suspension, revocation, or prohibition. * * *
*373 A person violating any provision of this section shall be fined not less than $200.00 nor more than $1,000.00, or be imprisoned in the county jail for not more than 6 months, or both."
The facts are stipulated. On December 19, 1965 defendant was given a summons for speeding. He failed to appear or answer the summons. On May 20, 1966 the Director of the Division of Motor Vehicles sent him written notice of proposed suspension of his driving privileges for failure to satisfy the summons. The notice was sent by ordinary mail addressed to defendant's address as listed by him in his application for driver's license. The notice indicated that the suspension was to be effective June 10, 1966 unless written evidence was furnished the Division of Motor Vehicles that the court summons had been satisfied. Defendant did not respond to the notice, whereupon the Director on July 22, 1966 sent him by ordinary mail addressed to the same address an order that his driver's license had been suspended. A copy of the order was sent to the local police department. The officer reported that he was unable to comply with the order to collect the driver's license certificate because defendant had moved and left no forwarding address.
On February 15, 1966 defendant was given a summons for speeding. He failed to appear or answer the summons. On September 1, 1966 the Director sent defendant written notice of proposed suspension of his driving privileges for failure to satisfy the summons. This notice was sent by ordinary mail to the same address. The suspension was to be effective September 22, 1966 unless the summons was previously satisfied. Defendant did not respond to this notice, whereupon the Director on October 20, 1966 sent him by ordinary mail addressed to the same address an order that his driver's license had been suspended. A copy of the order was sent to the local police department. On November 1, 1966 the local officer reported that he was unable to comply with the license collection order because the address proved to be a business address and defendant had moved *374 therefrom some six months ago. He had left no forwarding address with the postal authorities.
On June 2, 1967, while the above suspensions were still in force and effect, defendant was apprehended a third time for speeding. He was given a summons. A subsequent routine check by the police revealed that defendant was driving while still on the revoked list. A summons was then issued for the instant violation. His license still showed the same address.
Defendant denies receipt of any of the above notices relating to his suspensions. It is admitted that the notices were mailed but not received. He consequently contends that his driving privilege was suspended without due process and, he is therefore not guilty of the charge.
Preliminarily, it might appear that the reason assigned for reversal of the conviction constitutes a collateral attack upon the determination of the Director of Motor Vehicles that could only be made by direct review by the Appellate Division under the provisions of R.R. 4:88-8. Normally, attempts to question or collaterally attack prior decisions of an administrative agency are rejected by the courts except on grounds that the agency lacked jurisdiction over the subject-matter or the person. Maguire v. Van Meter, 121 N.J.L. 150 (E. & A. 1938); Clay v. Civil Service Commission, 89 N.J.L. 194 (E. & A. 1916); Miske v. Habay, 1 N.J. 368 (1949); Handlon v. Belleville, 4 N.J. 99, 107 (1950); 2 Am. Jur.2d 299, § 493; 30A Am. Jur. 794, § 881. Since the determination of whether there was due process in the revocation proceedings runs parallel to and is subsumed by answer to the question of whether the Director had jurisdiction over the person of defendant, this court elects to answer the question.
N.J.S.A. 39:5-30 provides in pertinent part as follows:
"Every registration certificate and every license certificate to drive motor vehicles may be suspended or revoked, and any person may be prohibited from obtaining a driver's license or a registration certificate, and the reciprocity privilege of any nonresident may be *375 suspended or revoked by the commissioner for a violation of any of the provisions of this Title or on any other reasonable grounds, after due notice in writing of such proposed suspension, revocation or prohibition and the ground thereof."
The question to be answered here is what is "due notice in writing of such proposed suspension." No attack is made upon the specificity of the grounds stated in the notice. Compare Bechler v. Parsekian, 36 N.J. 242 (1961); Cresse v. Parsekian, 81 N.J. Super. 536 (App. Div. 1963), affirmed 43 N.J. 326 (1964); State v. Martin, 75 N.J. Super. 413 (App. Div. (1962)). Rather, it is contended that "due notice" requires actual notice.
It is no longer arguable that a driver's license or privilege may not be revoked without procedural due process. Bechler v. Parsekian, supra. Additionally, the court there stated the proposition that the Director has wide discretion in the procedures he may care to utilize, provided he act fairly. 36 N.J., at p. 255. But that is not to say that procedural due process can be satisfied only with actual service of the notice. "No fool-proof system of giving notice exists. Since perfection is unattainable, the best one can hope for is the creation of methods reasonably calculated to produce the desired result without imposing unrealistically heavy burdens on the party charged with the duty of notification." Gellhorn and Byse, Administrative Law, 852 4th ed. (1960). There is always a risk that notice may not reach the intended person, but this is not the test for legal sufficiency. The test is, rather, whether the notice was reasonably calculated to reach the intended parties. State by Parsons v. Standard Oil Co., 5 N.J. 281, 305-6 (1950); Mullane v. Central Hanover B. & T. Co., 339 U.S. 306, 70 S.Ct. 652, 94 L.Ed. 865 (1949).
The statute here involved does not prescribe the method of giving due notice of the proposed suspension. It has been recognized that notice sent by ordinary mail will be received. Cf. Szczesny v. Vasquez, 71 N.J. Super. 347, 354 (App. Div. 1962). The notice in the within case was *376 addressed to defendant at the address he specified as his. Sending the notice through ordinary mail was calculated to reach him and afford him the opportunity of resisting or avoiding the proposed suspension. Short of requiring delivery to addressee only, it would make no difference to the evading licensee whether the notice was sent by regular, registered or certified mail.
Actual receipt of the notice is not a prerequisite in the revocation proceeding. Cf. Pacific Discount Co. v. Jackson, 68 N.J. Super. 331, 334 (App. Div. 1961), reversed on other grounds, 37 N.J. 169, 171 (1962); Szczesny v. Vasquez, supra. If such requirement existed, the scofflaw would have it in his power to thwart the revocation proceedings. The legislative intent runs to the contrary. Under penalty of fine a licensed operator is required to notify the Director in writing of a change in his residence within one week after the change is made. N.J.S.A. 39:3-36.
While it is conceded that defendant did not receive the mailed notices of the proposed revocation proceedings, this is not to say that he was totally unaware that such proceedings were in the making. The original summons issued to him on the occasions of the initial speeding violations contained the notice and warning, "For failure to appear in response to this summons or to pay the prescribed fine and costs, a warrant may be issued for your arrest and your driving privileges in New Jersey may be revoked."
It would thus appear that defendant had notice that a revocation proceeding might be instituted if he chose to ignore the summons. He chose to do so. He compounded his choice by moving without leaving a forwarding address or informing the Director where he could be reached by mail. He should not now be heard to complain of lack of due process. He had it. Any breakdown in the scheme to inform him of the proposed action was of his own making.
Additionally, it is contended by defendant that one cannot be found guilty of an offense unless it was knowingly committed. In other words, defendant would have the court *377 read into the statute a requirement that awould-be violator must intentionally drive while knowing he is on the revoked list in order to be guilty of violating R.S. 39:3-40. It is not the province of this court to read into a statute that which the Legislature did not intend. Halstead v. State, 41 N.J.L. 552, 597 (E. & A. 1879); State v. Gibson, 92 N.J. Super. 397, 400 (App. Div. 1966). "[S]ince the crime is statutory the Legislature is free to require or omit guilty knowledge as an element thereof." State v. DeMeo, 20 N.J. 1, 8 (1955).
There is no inference that may be culled from the statute which would imply that knowledge or intent is to be grafted onto this legislation. Neither is there any constitutional impediment to the enactment of a criminal statute in which mens rea is not an element. Morss v. Forbes, 24 N.J. 341, 358 (1957); State v. DeMeo, supra; Williams v. North Carolina, 325 U.S. 226, 238, 65 S.Ct. 1092, 89 L.Ed. 1577 (1944).
Furthermore, since defendant must have been aware that continued driving after disregard of several summons could result in adverse penal consequences, including loss of one's driving privilege, his behavior was not inadvertent and essentially nonculpable. Cf. State v. Labato, 7 N.J. 137, 148 (1951). On the contrary, defendant did not make "a bona fide, diligent effort * * * to ascertain and abide by the law." State v. DeMeo, 20 N.J., at p. 12.
Since it is stipulated that defendant personally operated his vehicle while his license was suspended or revoked, I find him guilty of the charge and impose a fine of $200.00 and costs.
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615 F.Supp.2d 448 (2009)
UNITED STATES of America
v.
William J. JEFFERSON, Defendant.
Criminal No. 1:07cr209.
United States District Court, E.D. Virginia, Alexandria Division.
May 8, 2009.
*449 Mark Lytle, Rebeca H. Bellows, United States Attorney's Office, Alexandria, VA, Charles E. Duross, U.S. Department of Justice, Washington, DC, for United States of America.
Amy Berman Jackson, Robert Powel Trout, Gloria B. Solomon, Trout Cacheris PLLC, Washington, DC, for Defendant.
ORDER
T.S. ELLIS, III, District Judge.
In this multi-count prosecution of a now-former Member of Congress,[1] defendant seeks to suppress evidence seized from his congressional office. This evidence was seized during a search authorized by a carefully crafted warrant issued by the United States District Court for the District of Columbia. Because they are central to a resolution of the motion to suppress at bar, the terms of the warrant and its litigation history merit a brief recounting here.
On May 18, 2006, the government filed an application and supporting affidavit for a warrant to search Room 2113 of the Rayburn House Office Building, defendant's congressional office at the time. The warrant sought only non-legislative materials, and the affidavit described the following special procedures to be used in executing the search:
(1) The search would be conducted by FBI agents with no substantive role in the investigation.
(2) The FBI agents were (i) to review all paper records to determine which were responsive to the search warrant and (ii) to copy, without reviewing, all electronic files on the computer hard drives or other electronic media in defendant's office.
(3) The FBI agents would be forbidden from disclosing any politically sensitive and non-responsive items seen during the course of the search.
(4) The responsive paper documents and the images of defendant's electronic files would be turned over to a filter team, composed of an FBI agent and two Justice Department attorneys not otherwise involved in the investigation, which would review the materials for Speech or Debate Clause privilege and responsiveness.
(5) Materials determined by the filter team to be privileged or non-responsive to the warrant would be returned to defendant without dissemination to the prosecution team.
(6) Materials determined by the filter team not to be privileged would be delivered to the prosecution team, with copies to defendant.
(7) Finally, materials determined by the filter team to be potentially privileged *450 would be given to defendant and submitted to the district court for a privilege determination.
On May 18, 2006, the United States District Court for the District of Columbia issued the search warrant, which was executed on May 20 and May 21, 2006. Pursuant to the procedures outlined in the warrant's supporting affidavit, the designated FBI agents reviewed every paper record in the office and copied, without reviewing, the hard drives of all the office's computers and other electronic storage devices. In the end, these agents seized two boxes of documents deemed responsive to the warrant, as well as images of all the office's electronic files.
Immediately following the search, the Deputy Attorney General halted review of the seized materials by ordering a freeze. On May 24, 2006, defendant moved for the return of all seized property pursuant to Rule 41(g), Fed.R.Crim.P., which motion was denied by the United States District Court for the District of Columbia on July 10, 2006. In re Search of the Rayburn House Office Bldg. Room No. 2113 Washington, D.C. 20515, 432 F.Supp.2d 100 (D.D.C.2006). The district court also denied defendant's subsequent motion for a stay pending appeal, see In re Search of the Rayburn House Office Bldg., 434 F.Supp.2d 3 (D.D.C.2006), following which defendant immediately sought and obtained an emergency stay pending appeal from the United States Court of Appeals for the District of Columbia. United States v. Rayburn House Office Bldg., Room No. 2113, Washington, D.C. 20515, No. 06-3105 (D.C.Cir. July 25, 2006) (Order). Thereafter, the D.C. Circuit remanded the record to the district court with instructions to make findings regarding which, if any, of the seized materials were records of legislative acts. Rayburn House Office Bldg., No. 06-3105, 2006 U.S.App. LEXIS 19466 (D.C.Cir. July 28, 2006). Specifically, the D.C. Circuit instructed the district court to
(i) provide copies of all the seized paper records to defendant;
(ii) determine which electronic files would be responsive to the search warrant and provide a list of responsive records to defendant;
(iii) provide defendant with an opportunity to submit, ex parte, any claims that specific documents are legislative in nature; and
(iv) review the specific documents in camera to determine whether they are privileged under the Speech or Debate Clause.
The D.C. Circuit further enjoined the government from reviewing any of the seized documents pending further order of that Court. See id. This order was subsequently amended to allow the government to review seized materials that defendant concedes are not privileged under the Speech or Debate Clause. See Rayburn House Office Bldg., No. 06-3105, 2006 U.S.App. LEXIS 28335 (D.C.Cir. Nov. 14, 2006). During the course of today's hearing, the parties represented that the district court's privilege review is ongoing.[2] As a result, the only materials from the May 20-21, 2006, search that the prosecution team has reviewed and could offer at trial are materials defendant concedes are not protected by the Speech or Debate Clause.
On August 3, 2007, the D.C. Circuit issued a decision in defendant's appeal of the district court's denial of his motion seeking the return of all materials seized in the May 20-21, 2006, search pursuant to Rule 41(g), Fed.R.Crim.P. The D.C. Circuit *451 held that because the Speech or Debate Clause protects members of Congress from compelled disclosures of legislative materials, the FBI agents' search of the paper records in defendant's congressional office violated the Constitution since defendant was denied "any opportunity to identify and assert the [Speech or Debate Clause] privilege with respect to legislative materials before their compelled disclosure to Executive agents." See Rayburn House Office Bldg., 497 F.3d 654, 662 (D.C.Cir.2007).[3] As a remedy for that violation, the D.C. Circuit rejected defendant's argument that all materials seized in the search should be returned to him under Rule 41(g), holding instead that defendant was only entitled to the return of materials protected by the Speech or Debate Clause. Id. at 665. The D.C. Circuit further ordered (i) that "the FBI agents who executed the search warrant shall continue to be barred from disclosing the contents of any privileged or politically sensitive and non-responsive items" and (ii) that the agents who conducted the search "shall not be involved in the pending prosecution." Id. at 666. The crux of the D.C. Circuit's opinion is that "a search that allows agents of the Executive to review privileged materials without the Member's consent violates the [Speech or Debate] Clause." Id. at 663. This does not mean that the Member has the last word on whether the privilege applies; rather, any claim of Speech or Debate Clause privilege must still be judicially assessed in camera.
Defendant now moves here to suppress all evidence seized during the May 20-21, 2006, search of his congressional office. The threshold question raised by defendant's motionwhether the manner in which defendant's congressional office was searched violated the Speech or Debate Clausehas already been answered by the D.C. Circuit. The government argues that the D.C. Circuit's finding of a Speech or Debate Clause violation is not binding here and asserts that the D.C. Circuit's opinion should receive little, if any, deference in this litigation. Although the government correctly observes that the D.C. Circuit's decision is not binding here,[4] the government's invitation to reconsider the constitutionality of the search is appropriately declined based on considerations of judicial comity and economy. This is so especially given the D.C. Circuit panel's extensive consideration of the constitutional question, a question the government urged the D.C. Circuit to resolve even after the return of the indictment in this jurisdiction.[5] Thus, notwithstanding the appealing reasoning of Judge Henderson's dissent,[6] the lawfulness of the search will not be reconsidered.
*452 Yet, acceptance of the D.C. Circuit's finding of a constitutional violation does not compel the further conclusion, as defendant urges, that materials seized during the search that are not covered by the Speech or Debate Clause must be excluded from trial. Defendant's argument, distilled to its essence, is that suppressing all seized materials is the only remedy that will adequately redress the constitutional violation and deter future violations of the Speech or Debate Clause. The government makes essentially two arguments in response. First, the government relies on the Fourth Circuit's "general rule . . . that items properly seized may still be admitted even when they are obtained at the same time as improperly seized items." United States v. Ruhe, 191 F.3d 376, 383 (4th Cir.1999); see also United States v. Jones, 31 F.3d 1304, 1314 (4th Cir.1994). This argument alone would fail to persuade given that the general rule described in Ruhe and Jones applies in situations in which police are found to have exceeded the scope of a valid warrant, but not necessarily where, as here, a court has determined that the search was "unconstitutional in its design and implementation." Rayburn House Office Bldg., 497 F.3d at 661.
More persuasive is the government's reliance on United States v. Leon, 468 U.S. 897, 104 S.Ct. 3405, 82 L.Ed.2d 677 (1984). In Leon, the Supreme Court made pellucidly clear that "the exclusionary rule is neither intended nor able to cure the invasion of the defendant's rights which he has already suffered." 468 U.S. at 906, 104 S.Ct. 3405 (citation and internal quotation marks omitted). Instead, the rule represents "a judicially created remedy designed to safeguard . . . [constitutional] rights generally through its deterrent effect, rather than a personal constitutional right of the party aggrieved." Id. (citation and internal quotation marks omitted). Based on these principles, the Supreme Court held that evidence obtained in objectively reasonable reliance on a warrant is admissible even if the warrant is determined subsequently to be invalid. Id. at 922, 104 S.Ct. 3405.
Although Leon created a good-faith exception to the exclusionary rule in the Fourth Amendment context, Leon's rationale is nonetheless applicable and persuasive here. In this case, as the D.C. Circuit noted, "[t]here is no indication that the Executive did not act based on a good faith interpretation of the law, as reflected in the district court's prior approval and later defense of the special procedures set forth in the warrant affidavit." Id. at 664. Clearly, the agents' reliance on the warrant issued by the district court was objectively reasonable. Moreover, the district court, confronted with an unprecedented question, meticulously and sensitively sought to craft search procedures that would accommodate Speech or Debate Clause concerns. Given this, there is no good reason to believe that the blanket suppression in this case of evidence not covered by the Speech or Debate Clause would have any deterrent effect and hence suppression of the unprivileged documents is unwarranted.
Accordingly, for these reasons and for the reasons stated from the Bench,
It is hereby ORDERED that defendant's motion to suppress evidence from Room 2113 of the Rayburn House Office Building (Dkt. No. 37) is DENIED.
The Clerk is directed to send a copy of this Order to all counsel of record.
NOTES
[1] At the time of the search at issue here and at the time the indictment was returned defendant was the sitting member of the United States House of Representatives for Louisiana's 2nd Congressional District.
[2] The government also stated at today's hearing that it is prepared to proceed to trial without receiving the results of the district court's privilege review.
[3] According to the D.C. Circuit, the search would have been lawfully executed in a manner consistent with the Executive's interest in law enforcement if, prior to the agents' search and with his office sealed, defendant had been allowed to identify and segregate legislative materials protected by the Speech or Debate Clause. Following the conclusion of the search, defendant's assertions of privilege would have been subject to judicial review. Id. at 662-63.
[4] In its opposition brief, the government argued that the D.C. Circuit's decision is not binding in this matter because the decision is not final and the law-of-the-case doctrine is inapplicable. Although the D.C. Circuit's decision subsequently became final when the government's writ of certiorari was denied, see Rayburn House Office Bldg., ___ U.S. ___, 128 S.Ct. 1738, 170 L.Ed.2d 539 (2008), its opinion is not controlling authority here.
[5] See Letter from Roy W. McLeese III, Assistant United States Attorney, to Mark J. Langer, Clerk (June 7, 2007).
[6] See Rayburn House Office Bldg., 497 F.3d at 666 (Henderson, J., dissenting).
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615 F.Supp. 533 (1985)
Donald F. TAYLOR, Plaintiff,
v.
Willie NELSON, et al., Defendants.
Civ. A. No. 80-0295.
United States District Court, W.D. Virginia.
August 19, 1985.
Charles L. Williams, Jr., Gentry, Locke, Rakes & Moore, Roanoke, Va., for plaintiff.
Robert C. Osterberg, Abeles Clark & Osterberg, New York City, Dudley F. Woody, Woods, Rogers & Hazlegrove, Roanoke, Va., for defendants.
*534 MEMORANDUM OPINION
TURK, Chief Judge.
This case is before the court on the plaintiff's Motion to Vacate Arbitration Award pursuant to 9 U.S.C. § 10 and on the defendant's Motion to Confirm Arbitration Award pursuant to 9 U.S.C. § 9.[1] The arbitration award at issue was entered in favor of the defendant, Willie Nelson, on September 11, 1984 by the American Federation of Musicians.[2] The parties have submitted numerous briefs and affidavits, the court has heard oral arguments, and the matter is now ripe for a decision.
HISTORY OF CASE
On September 26, 1980, the plaintiff commenced this breach of contract action against the defendant Nelson and others. On December 15, 1980, Nelson moved for a stay of that action pending arbitration pursuant to the contract, which provided:
In accordance with the Constitution, By-Laws, Rules and Regulations of the Federation, the parties will submit every claim, dispute, controversy or difference involving the musical services arising out of or connected with this contract and the engagement covered thereby for determination by the International Executive Board of the Federation or a similar board of an appropriate local thereof and such determination shall be conclusive, final and binding upon the parties.
On August 2, 1982, this court denied Nelson's motion for a stay. That order was appealed to the United States Court of Appeals for the Fourth Circuit on August 13, 1982. On November 15, 1982, the fourth circuit reversed and stayed the trial of the contract action until arbitration could be had.
The arbitration began on March 20, 1984 before the executive board of the AFM, which rendered a decision on September 11, 1984. The decision was in favor of the defendant Nelson.
On September 21, 1984, Nelson petitioned the Supreme Court of the State of New York for a judgment confirming the arbitration award. Taylor opposed the motion and, by way of cross-motion dated November 16, 1984, sought to have the petition dismissed on the grounds that the underlying contract action was pending before this court and that the New York court did not have jurisdiction. Taylor's cross-motion was granted and Nelson's petition was dismissed by an order dated January 28, 1985 and filed February 1, 1985. Judgment was entered on that order on March 8, 1985, and was filed on March 11, 1985.
On February 12, 1985, Taylor moved to have the arbitration award vacated.
NELSON'S MOTION TO CONFIRM PURSUANT TO 9 U.S.C. § 9
The Federal Arbitration Act at 9 U.S.C. § 9 provides:
If the parties in their agreement have agreed that a judgment of the court shall be entered upon the award made pursuant to the arbitration, and shall specify the court, then at any time within one year after the award is made any party to the arbitration may apply to the court so specified for an order confirming the award, and thereupon the court must grant such an order unless the award is vacated, modified, or corrected as prescribed in sections 10 and 11 of this title.
The defendant asserts that this section expressly mandates the confirmation of the arbitration award in this case in that the parties have agreed to the entry of judgment upon the arbitration award, the application to confirm has occurred within one year of the award, and the order has not yet been vacated, modified or corrected. This, however, fails to recognize that the *535 plaintiff's motion presently before this court is for the specific purpose of having the arbitration award vacated as prescribed in section 10. Nowhere does the Act require this or any court to summarily confirm an arbitration award which is also before the court on a motion to vacate which alleges bias, prejudice and evident partiality.
TIMELINESS OF MOTION TO VACATE
Section 9 U.S.C. § 12 provides that "[n]otice of a motion to vacate, modify, or correct an award must be served upon the adverse party or his attorney within three months after the award is filed or delivered." As previously stated, Taylor's motion to vacate was filed in this court on February 12, 1985, more than five months after the award was rendered. However, from late September, 1984, through the first week in February, 1985, Taylor was challenging the intervening state court proceeding which was brought by the defendant in New York. It was this New York proceeding which delayed the filing of the motion to vacate in this court, and it would be inequitable to allow Nelson now to assert the three-month period to bar Taylor's motion to vacate. Therefore, the three-month period should be tolled beginning November 16, 1984 when Taylor served his Cross-Motion in the New York proceeding. That time being tolled, Taylor's motion to vacate was filed within the three-month statutory period.
Furthermore, as stated in Florasynth, Inc. v. Pickholz, 750 F.2d 171 (2d Cir.1984), the three month period is designed to encourage parties to an arbitration to move expeditiously through the judicial system. There is no evidence in this case that Taylor has failed to move as expeditiously as possible throughout the litigation. In fact, Taylor has acted with all due diligence with respect to his efforts to vacate the arbitration award. To bar Taylor's motion to vacate would ignore that Nelson had timely notice of Taylor's intent to challenge the award. Such a result would be manifestly unfair and unwarranted.
The application of tolling pending the outcome of the New York proceeding and the application of the "due diligence exception," Holodnak v. Avco Corporation, 381 F.Supp. 191 (D.Conn.1974), reversed in part on other grounds, 514 F.2d 285 (2d Cir.), cert. denied, 423 U.S. 892, 96 S.Ct. 188, 46 L.Ed.2d 123 (1975), precludes a finding by this court that Taylor's motion to vacate was not timely filed.
LAW OF THE CASE
Nelson also argues that the doctrine of the "law of the case" compels this court to find that Taylor's motion to vacate should be denied. According to that doctrine, once an issue has been decided, explicitly or by necessary implication, by the appellate court, the lower court may not "vary it or examine it for any other purpose than execution; or give any other or further relief; or review it, even for apparent error. ." In re Sanford Fork & Tool Company, 160 U.S. 247, 16 S.Ct. 291, 40 L.Ed. 414 (1895). See also Stamper v. Baskerville, 724 F.2d 1106 (4th Cir.1984). For the doctrine to apply, therefore, the appellate court must have addressed and decided the issue. Nelson maintains that the fourth circuit in staying proceedings in this court pending arbitration "in accordance with the terms of the arbitration clause in the contract at issue" necessarily ruled on the issues of adhesion and evident partiality. In ordering the stay, however, the fourth circuit restricted itself to a determination that the contract had an arbitration provision in it and that it had not been complied with. This limited review is apparent from the fourth circuit's opinion in the matter, which states:
this court recently observed that a federal court confronted with a motion to stay its proceedings pending arbitration under such a contract must only be satisfied of `(1) the making of the agreement to arbitrate and (2) the breach of the agreement to arbitrate' to find itself under compulsion of the Act to grant the motion.
The fourth circuit did not address or decide the issues of adhesion or evident partiality. *536 There is no reference or discussion whatsoever of these issues in its opinion. Therefore, the doctrine of the "law of the case" is inapplicable to the motions presently before this court.
ADHESION AND EVIDENT PARTIALITY
Arbitration by agreement of the parties is welcomed and encouraged by Congress and by the courts. As the United States Supreme Court has stated, however, what is encouraged is not merely arbitration, but impartial arbitration. Commonwealth Coatings Corporation v. Continental Casualty Company, 393 U.S. 145, 89 S.Ct. 337, 21 L.Ed.2d 301 (1968). Therefore, the United States Arbitration Act, 9 U.S.C. § 10, provides for vacation of an award "where there was evident partiality or corruption in the arbitrators, or either of them."
Nelson argues, citing International Produce, Inc. v. A/S Rosshavet, 638 F.2d 548 (2d Cir.1981), that federal law does not read "evident partiality" in section 10 to include "appearance of bias." The narrow holding in Rosshavet, however, dealt with a situation very different from the one now before this court. Rosshavet, a maritime arbitration case, involved what the second circuit referred to as "speculation without substance." This court is not persuaded that Rosshavet should be so broadly interpreted or applied as, in effect, to overrule the holding in Commonwealth Coatings. In that case, the United States Supreme Court clearly stated:
... any tribunal permitted by law to try cases and controversies not only must be unbiased but also must avoid even the appearance of bias. We cannot believe that it was the purpose of Congress to authorize litigants to submit their cases and controversies to arbitration boards that might reasonably be thought biased against one litigant and favorable to another.
393 U.S. at 150, 89 S.Ct. at 340.
It is difficult to imagine an arbitration board which could more "reasonably be thought biased against one litigant and favorable to another" than the Executive Board of one party's union. The argument made here by the defendant, that actual impartiality or bias must be shown, was also made by the dissenters in Commonwealth Coatings and rejected by the majority. It is also rejected by this court.
The AFM contract pursuant to which the arbitration in this case was held was a form contract prepared by the AFM. AFM members such as the defendant may only perform concerts pursuant to an AFM contract. Any promoter desiring to contract for a performance by an AFM member had to enter into the AFM contract. The only AFM contract available to Taylor contained no choice regarding the forum for arbitration; the sole forum permitted was an arbitration conducted by the International Executive Board of the AFM. When it became evident that an arbitration would be required, Taylor requested that the AFM allow that arbitration to be before the American Arbitration Association.[3] This request, along with a request that the hearing take place in Roanoke, Virginia, was refused. Such evidence points clearly to the fact that Taylor "was required by the realities of his business as a concert promoter to sign A.F. of M. form contracts with any concert artist with whom he wished to do business." Graham v. Scissortail, Inc., 28 Cal.3d 807, 623 P.2d 165, 171 Cal.Rptr. 604 (En Banc, 1981).
When, as here, the contract requiring arbitration is a form contract which smacks of adhesion, the court must scrutinize that contract with particular care in order to ensure that "certain minimum levels of integrity" are maintained. Id., at 824-825, 623 P.2d at 176, 171 Cal.Rptr. at 615. Two separate state courts have reviewed the identical arbitration procedure at issue here and found it to be unconscionable. In each case the award rendered pursuant thereto was held unenforceable. See Chimes v. Oritani Motor Hotel, Inc., 195 N.J.Super. *537 435, 480 A.2d 218 (N.J.Super.Ct.1984) and Graham, supra.
The Supreme Court of California in Graham, while recognizing that nothing on the record before it indicated that the AFM arbitration procedure denies either party an opportunity to be heard, nevertheless found that:
a contractual provision designating the union of one of the parties to the contract as the arbitrator of all disputes arising thereunder including those concerning the compensation due under the contract does not achieve the `minimum levels of integrity' which we must demand of a contractually structured substitute for judicial proceedings. Such a provision, being inimical to the concept of arbitration as we understand it, would be denied enforcement in any circumstances; clearly it cannot stand in a case which, like that before us, requires the careful and searching scrutiny appropriate to a contract with manifestly adhesive characteristics.
Graham, 28 Cal.3d at 828, 623 P.2d at 178, 171 Cal.Rptr. at 617.
A New Jersey appellate court also called upon to review the AFM arbitration provision, held that it was void as being contrary to public policy, stating:
In the circumstances we conclude that the so-called arbitration provision, giving the Board power to decide disputes between its members and defendant, is contrary to public policy. The relationship between the Board and its members is obviously too close to assure the dispassionate and impartial resolution of disputes between AFM members and nonmembers.
Chimes, 480 A.2d at 223.
Although the defendant correctly argues that this court is not bound by the decisions of state courts in New Jersey and California, the contract provision at issue is identical in all three cases, and the reasoning of the state courts applies equally in the case at bar. The partiality which is apparent from the procedure itself is made even more evident by the statistical study prepared by the plaintiff. An analysis of claims initiated by non-members against members reveals that approximately fifty-nine percent (59%) were decided in favor of the AFM member.[4]
CONCLUSION
The evident partiality alleged under 9 U.S.C. § 10 stems from the pervasive control which the AFM union exerted over the entire arbitration procedure, and is supported by the statistics. The contract provided no option except AFM arbitration. Under the contract, the AFM selects the hearing referee, the hearing date and the hearing site. In this case, requests for alternate arbitrators, dates, and sites were refused. The AFM establishes the format, the rules, and the procedure. The AFM Executive Board even makes the final decision and hears any appeal. The integrity of arbitration as a neutral forum for the resolution of disputes was nowhere to be found in the procedure to which Taylor was subject. Therefore, it is the holding of this court that the defendant's motion to confirm and dismiss should be DENIED and the plaintiff's motion to vacate the arbitration award should be GRANTED. An order consistent with this opinion shall be entered this date.
NOTES
[1] The defendant also seeks an order dismissing this action pursuant to Rule 12(b)(6) and Rule 56 of the Federal Rules of Civil Procedure, alleging that, once the arbitration award is confirmed, there no longer exists any claim upon which relief can be granted.
[2] The American Federation of Musicians (AFM) the defendant Nelson's union. The plaintiff is not a member of the AFM.
[3] Subsequent AFM form contracts permit such an option.
[4] Even more staggering is that of claims by members against non-members, ninety percent (90%) of the total number of claims analyzed, eighty-two percent (82%) were decided in favor of the member.
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91 F.3d 152
NOTICE: Ninth Circuit Rule 36-3 provides that dispositions other than opinions or orders designated for publication are not precedential and should not be cited except when relevant under the doctrines of law of the case, res judicata, or collateral estoppel.In re William A. KNAUSS, Debtor.Fred R. KARTCHNER; Beverly Kartchner, Plaintiffs-Appellees,v.William A. KNAUSS, Debtor-Appellant.
No. 95-17375.
United States Court of Appeals, Ninth Circuit.
Submitted July 9, 1996.*Decided July 15, 1996.
Before: HUG, Chief Judge, SCHROEDER, and POOLE, Circuit Judges.
1
MEMORANDUM**
2
Debtor William A. Knauss ("Debtor") appeals pro se the district court's dismissal of his appeal from the bankruptcy court's remand of an action to state court. We affirm.
3
Here, the bankruptcy court remanded a state court action of Fred and Beverly Kartchner ("Kartchners") for lack of federal jurisdiction.1 The issue on appeal, therefore, is whether the bankruptcy court's non-discretionary remand, which is not barred from review by 28 U.S.C. § 1452(b)2, is nonetheless barred from review by the general removal provision as set forth in 28 U.S.C. § 1447(d).
We have stated:
4
Although section 1447(d) refers to review of orders remanding an action to the state court as improvidently removed under section 1447(c), this court has held that the prohibition on review applies to any statutory remand order based on lack of federal jurisdiction. See Federal Savings and Loan Insurance Corp. v. Frumenti Development Corp., 857 F.2d 665 (9th Cir.1988) (section 1447(d) applies to actions removed under statutes other than 28 U.S.C. § 1441).
5
Krangel v. General Dynamics Corp., 968 F.2d 914, 915 n. 1 (9th Cir.1992) (per curiam).
6
Accordingly, the district court did not err by dismissing the Debtor's appeal. Id. at 916. ("Review of a remand order that is based solely on lack of federal jurisdiction is precluded.").
7
AFFIRMED.
*
The panel unanimously finds this case suitable for decision without oral argument. See Fed.R.App.P. 34(a); 9th Cir.R. 34-4
**
This disposition is not appropriate for publication and may not be cited to or by the courts of this circuit except as provided by 9th Cir.R. 36-3
1
The bankruptcy court held that Debtor's rights and liabilities were not affected by the real property at issue because it was previously sold. The bankruptcy court also held that jurisdiction was lacking because the Debtor's notice of removal was untimely filed
2
Section 1452(b) is applicable to removal of claims that are related to bankruptcy cases. It provides:
The court to which such claim or cause of action is removed may remand such claim or cause of action on any equitable ground. An order entered under this subsection remanding a claim or cause of action, or a decision to not remand, is not reviewable by appeal or otherwise by the court of appeals under section 158(d), 1291, or 1292 of this title or by the Supreme Court of the United States under section 1254 of this title.
As stated above, the bankruptcy court remanded the Kartchners' state court action for lack of jurisdiction. Section 1452(b) is therefore not applicable, since the bankruptcy court's remand was not based on an "equitable ground."
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615 F.Supp. 1122 (1985)
CITYFED FINANCIAL CORP., Plaintiff,
v.
FEDERAL HOME LOAN BANK BOARD, Federal Savings & Loan Insurance Corporation, George S. Mann, Unicorp American Corporation and Unicorp Canada Corporation, Defendants.
Civ. A. No. 85-2306.
United States District Court, District of Columbia.
August 14, 1985.
*1123 James H. Schropp, Robert E. Juceam, Stephen Lew, Robert H. Ledig, Fried, Frank, Harris, Shriver & Jacobson, Washington, D.C., for plaintiff.
Scott B. Schreiber, A. Patrick Doyle, Robert N. Weiner, Arnold & Porter, Washington, D.C., and Steven M. Barna, Kenneth B. Forrest, Louis J. Barash, Wachtell, Lipton, Rosen & Katz, New York City, for Unicorp defendants.
William K. Black, Denise Z. Field, James T. Lantelme, Federal Home Loan Bank Bd., Washington, D.C., for Federal Home Loan Bank Bd. and Federal Savings and Loan Ins. Corp., Norman H. Raiden, Gen. Counsel, Ralph W. Christy, Deputy Gen. Counsel, Washington, D.C., of counsel.
MEMORANDUM
OBERDORFER, District Judge.
I.
Plaintiff CityFed Financial Corp ("CityFed") is a publicly held savings and loan holding company incorporated under Delaware law with total assets in excess of $7 billion. Defendants Federal Home Loan Bank Board ("Board") and the Federal Savings and Loan Insurance Corporation ("FSLIC") are agencies of the United States Government. Defendant George S. Mann ("Mann"), an alien residing in Canada, *1124 is chairman of the board of directors and a controlling person of defendants Unicorp Canada Corporation ("UCC") and Unicorp American Corporation ("UAC"), respectively a Canadian management and investment holding company and a Delaware corporation engaged in direct and indirect investment in the United States. Mann, UCC, and UAC are collectively referred to herein as "Unicorp." Unicorp currently owns approximately 13 percent of CityFed shares (including common stock and convertible preferred stock), and seeks to increase its ownership up to 24.99 percent of shares outstanding.
The Board is the operating head of the FSLIC. As such, it is empowered to administer the provisions of the Change in Savings and Loan Control Act of 1978 ("CSLCA") and the Savings and Loan Holding Company Amendments of 1967 to the National Housing Act ("SLHCA").[1] CityFed claims that the procedures followed by the Board in processing a "Notice in Change of Control" ("Notice") filed pursuant to the CSLCA by Unicorp in connection with its acquisition of CityFed shares were inadequate. CityFed further contends that these deficiencies invalidate the Board's June 28, 1985 determination[2] that the period for review of the Notice had expired and that Unicorp could therefore proceed with its proposed acquisition of additional CityFed stock. As a result, CityFed claims, the Board has in effect authorized Unicorp to acquire control of CityFed without adequately investigating allegations that Unicorp has a record of mismanagement and misconduct which, if repeated after gaining control of CityFed, would seriously injure CityFed's depositors and the public generally.
An Order entered August 6, 1985 invalidated the June 28, 1985 determination by the Board, which determination had the effect of authorizing defendant Unicorp to acquire additional shares of plaintiff CityFed.[3] That Order referred to a Memorandum to be filed. This is that Memorandum.
The CSLCA, the controlling statute in this case, requires a person acquiring a substantial number of shares in a savings and loan institution such as CityFed to file a prescribed notice.[4] If the Board fails to *1125 disapprove the acquisition within sixty days after the acquirer files a notice deemed "sufficient", the acquirer may proceed.
The Board has promulgated regulations to implement the CSLCA's provisions. These regulations delegate to the Board's staff responsibility for determining when a notice is complete as well as authority to terminate a review period by declaring an intent not to disapprove an acquisition.[5] The Board has reserved to itself authority to disapprove an acquisition.[6] Other regulations provide in substance that the 60-day review period will commence at such time as the Board has received a notice which it deems sufficient to satisfy the requirements of 12 C.F.R. § 563.18-2(e)(1). That regulation provides that a notice "shall not be deemed sufficient unless it includes all of the information required by the form prescribed by the Corporation, and any additional relevant information as the Corporation may require by specific request in connection with any particular notice." 12 C.F.R. § 563.18-2(e)(1) (1985).[7]
On October 1, 1984, Unicorp filed a change in control notice regarding CityFed with the Board pursuant to the CSLCA requesting authorization to acquire up to 24.99 percent of CityFed common stock. When the Board (actually the Board's staff acting with delegated authority) rejected the notice as incomplete, Unicorp filed "amended notices" on November 1, 1984, A.R. 011345-011347; January 18, 1985, A.R. 010801-010802; and April 18, 1985, A.R. 010552-010561. At the Board's specific request, Unicorp also filed an executed "Stipulation and Undertaking" relating to the proposed acquisition on June 27, 1985.
From time to time during this same period, CityFed submitted to the Board information and allegations relating to Unicorp's past practices and present intentions. The Board included much of this information in the record of its proceedings. In general, CityFed questioned whether Unicorp met appropriate standards of competence, experience, and integrity suggested by the CSLCA and urged the Board to disapprove Unicorp's notice, as authorized by 12 U.S.C. § 1730(q)(7).[8]
In the months that followed the filing of the October 1, 1984 Notice, the Board staff notified Unicorp several times that the Notice as submitted and amended did not in the view of the staff satisfy the requirements of Board regulations, and as a result, the 60-day review period would not commence.
The first such letter was dated October 9, 1984. A.R. 011351. A second letter, dated December 31, 1984, requested further information from Unicorp and stated that "[u]pon the filing of this required information, a determination will be made as to whether the Notice, as amended, is sufficient for purposes of commencing the 60-day period for review." A.R. 010803. On March 8, 1985, the Board staff again advised Unicorp that it required additional information, that the Notice was not deemed complete and that the 60-day period *1126 would not commence until the additional information requested was provided. A.R. 010587-010591.
By this March 8, 1985 letter, the Board staff also requested that Unicorp execute a "Stipulation and Undertaking" (the "Stipulation") along the lines of a draft the staff submitted to Unicorp. The letter stated that the staff would accept the execution of the Stipulation "in lieu of requiring the immediate submission of a detailed business plan which conforms to the requirements of [an earlier communication]." A.R. 010588. Significantly, the staff suggested that Unicorp attach the executed Stipulation under cover of an amended Notice. Thereafter, and up until June 27, 1985, the staff and Unicorp negotiated about the Stipulation. During the course of these negotiations, Unicorp filed two unexecuted, proposed Stipulations. A.R. 010583; A.R. 010545.
On June 17, 1985, the Board staff advised Unicorp in writing that it was extending, for ten days, the 60-day period allowed for review of a completed Notice. A.R. 010041. The Board took this action without any indication in the administrative record that they had ever notified Unicorp that its Notice had been deemed substantially complete.[9] The letter merely described the Notice as "last amended on April 18, 1985." On that date counsel for Unicorp wrote to the Board to transmit an executed amendment No. 3 to the Notice. A.R. at 010566. Unicorp stated in this letter that "[the] amendment responds to the inquiries in your letter of March 8, 1985, except that no Stipulation and Undertaking is filed herewith." A.R. at 010566 (emphasis added).
On June 27, 1985, Unicorp finally submitted an executed Stipulation and Undertaking to the staff. The June 27 Stipulation and Undertaking, similar in many respects to earlier versions, generally provided that Unicorp must seek approval of the Supervisory Agent of the Federal Home Loan Bank of New York before it could: (1) materially alter or attempt to materially alter CityFed's operations or business; (2) effect or attempt to effect a corporate reorganization of CityFed; or (3) seek to control the election of a majority of the Board of Directors. A.R. 010005A-010005B. On the following day, June 28, 1985, the Board staff notified Unicorp by letter that the 60-day period for review of its Notice had expired and, accordingly, Unicorp could proceed to acquire additional shares of CityFed. A.R. 010000.
II.
CityFed contends here that the June 27, 1985 Stipulation and Undertaking constituted "additional information ... required for review of the notice" under 12 C.F.R. § 563.18-2(e)(3), and as such its filing should have caused the 60-day review period to recommence, thus precluding Unicorp from further acquisitions for 60 days from June 27 or until the Board announced an intent not to disapprove the acquisitions.[10] Plaintiff further contends that:
(1) a May 23, 1985 submission which it made to the Board[11] and an inquiry made by the Board on June 25, 1985 to Canadian authorities[12] produced "additional information *1127 ... required for its review of the notice" which, under 12 C.F.R. § 563.18-2(e)(3) should have recommenced the review period;
(2) the Board erred by initially commencing to process Unicorp's October 1, 1984 Notice as Unicorp was allegedly already in violation of Board regulations;
(3) the Board should not have delegated the processing of this particular notice to staff;
(4) the Board's action constituted the granting of a license which necessitated a prior hearing;
(5) the Board was required to hold a hearing to consider the applicability of the SLHCA to Unicorp's actions; and
(6) the Board's failure to disapprove the Notice despite the information supplied to it by CityFed indicated inadequate investigation, constituted arbitrary and capricious action, and was an abuse of discretion and otherwise not in accordance with law.
The Board contends in opposition that:
(1) plaintiff is without standing to bring this action;
(2) the June 27, 1985 Stipulation and Undertaking did not constitute "additional information ... required for review of a notice" under 12 C.F.R. § 563.18-2(e)(3);
(3) the Court lacks authority to afford the relief against the Board sought by the plaintiff;
(4) plaintiff does not have a private right of action to seek injunctive relief under the CSLCA or the SHLCA;
(5) the matters of which plaintiff complains are committed to agency discretion by law and therefore not amenable to judicial review;
(6) the Board's delegation to staff was authorized by regulation;
(7) no hearing in regard to the notice was required under the SLHCA or § 558(c) of the Administrative Procedure Act; and
(8) the Board's processing and ultimate determination with respect to the Notice did not constitute arbitrary and capricious action.
Defendant Unicorp echoes the Board's contentions. Unicorp also contends that the CSLCA does not grant plaintiff a private cause of action for injunctive relief against Unicorp, and suggests further that if there is jurisdiction to review the Board's determination, it lies with the Court of Appeals.[13]
III.
A.
As a threshold issue, defendants challenge plaintiff's standing to bring this action. This defense must fail. Plaintiff is a party aggrieved and adversely affected by the Board staff's determination and its alleged failure to fulfill its duty under the CSLCA to protect a savings and loan institution and its depositors from a threatened takeover. The Administrative Procedure Act provides that "[a] person suffering legal wrong because of agency action, or adversely affected or aggrieved by agency action within the meaning of a relevant statute, is entitled to judicial review thereof." 5 U.S.C. § 702 (1976).
The plaintiff's allegations meet Article III's requirement that plaintiff show that it has personally suffered threatened injury as a result of the putatively illegal conduct of defendant and that such injury is "`likely to be redressed by a favorable decision.'" Valley Forge Christian College v. Americans United for Separation of Church and State, Inc., 454 U.S. 464, 472, 102 S.Ct. 752, 758, 70 L.Ed.2d 700 (1982), quoting Simon v. Eastern Kentucky *1128 Welfare Rights Org., 426 U.S. 26, 38, 96 S.Ct. 1917, 1924, 48 L.Ed.2d 450 (1976). A decision for the plaintiff sets aside the Board's assumption that the review period ended June 27, 1985, and makes it unlawful for Unicorp to acquire more CityFed stock at least until August 26, 1985, or until the Board has acted pursuant to 12 C.F.R. § 565.18-2(g)(2). Plaintiff also meets the prudential requirement of standing that the asserted interests fall within the zone of interests to be protected by the statute in question. Id. 454 U.S. at 475, 102 S.Ct. at 760. As our Court of Appeals has recently reiterated:
The zone of interests adequate to sustain judicial review is particularly broad in suits to compel federal agency compliance with law, since Congress itself has pared back traditional prudential limitations ... by the Administrative Procedure Act, which affords review to any person "adversely affected or aggrieved by [federal] agency action within the meaning of a relevant statute."
FAIC Securities, Inc. v. United States, No. 84-5408, slip op. at 8 (D.C.Cir., July 26, 1985) (citations omitted).[14]
The CSLCA is ultimately designed to serve the public interest by protecting depositors in savings and loan institutions,[15] and the depositors clearly fall within the zone of interest contemplated by the statute. The institution has standing in these circumstances because of its fiduciary responsibility to its depositors. See GAF Corp. v. Milstein, 453 F.2d 709, 719-21 (2d Cir.1971), cert. denied, 406 U.S. 910, 92 S.Ct. 1610, 31 L.Ed.2d 821 (1972). As the Court noted in FAIC Securities, supra: "[w]e have been unable to find any case in which the Supreme Court has relied upon the plaintiff's failure independently to meet the zone of interests tests as the basis for its refusal to accord standing for the assertion of third-party rights." Id. at 11.
B.
Since plaintiff has standing to challenge the Board's action under the Administrative Procedure Act and the relief granted herein should prevent further acquisitions by private defendants[16] until after 60 days from June 28, 1985, or until the Board has pursuant to 12 C.F.R. § 563.18-2(g)(2) announced its intent not to disapprove the acquisition, it is unnecessary to resolve the issue of whether plaintiff has a private cause of action directly against Unicorp. Accordingly, the August 6 Order granted Unicorp's motion to dismiss the complaint against the Unicorp defendants.
IV.
Having resolved the threshold challenge to plaintiff's standing to bring this action, it is appropriate to explore the statutory and regulatory framework and its application to the contentions of the parties. The administrative record vindicates plaintiff's contention that the Board's June 28, 1985 determination that the 60-day period for review had expired was erroneous as a matter of law. 12 C.F.R. § 563.18-2(e)(3) mandates that the Board "will" send a letter of acknowledgement indicating the date of receipt of a notice deemed to be sufficient (emphasis added). That regulation also mandates that when a notice has *1129 been determined to be insufficient, the 60-day period for review shall commence "in its entirety upon the receipt of the additional information." 12 C.F.R. § 563.18-2(e)(3) (1985) (emphasis added).
On several occasions between October 1, 1984 and June 28, 1985, the Board staff notified Unicorp that its Notice was insufficient.[17] On the last such occasion, March 8, 1985, the staff advised Unicorp in writing that the Notice was "determined to be insufficient" and that "[u]pon the filing of [specific requested information], a determination will be made as to whether the Notice, as amended, is sufficient for purposes of commencing the 60-day period for review." A.R. 010587 (emphasis added). Among the specifically requested items of information was the executed and notarized Stipulation and Undertaking which the staff was willing to accept "in lieu of requiring the immediate submission of a detailed business plan." This executed Stipulation was not received by the Board until June 27, 1985.
The transaction detailed by Unicorp's original and interim notices (which on March 8, 1985 the Board found to be incomplete without an executed Stipulation and Undertaking) is materially different from the transaction limited by the execution of the June 27, 1985 Stipulation and Undertaking. The statute requires the Board to obtain a business plan[18] from the acquirer which would, among other things, make specific representations as to how the acquirer would conduct itself. The Stipulation and Undertaking was proposed by the Board, in lieu of a business plan, to limit Unicorp's prerogatives with respect to assumption of control. It could only take critical steps after notifying the Board. The significance of this commitment is evidenced by Unicorp's resistance to making it. In his April 18, 1985 letter to the Board, for example, Unicorp's counsel stated that the enclosed amendment "responds to the inquiries in your letter of March 8, 1985 except that no Stipulation and Undertaking is filed herewith." A.R. at 010566 (emphasis added). The fact that an executed Stipulation and Undertaking had not been filed in an amended Notice and that its contents were still the subject of debate at least as late as April 24, 1985, is demonstrated by an internal Board memorandum of that date, in which it is stated that "[t]he matter of the Stipulation and Undertaking to be signed by the Applicants has been under negotiation since our original proposal was sent to the Applicants on March 8, 1985."[19] Significantly, this memorandum stated the staff's belief that "it is important that any revisions to the proposed Stipulation and Undertaking be carefully analyzed to determine the potential impact of such revisions on the effectiveness of the document as a supervisory tool." Id.
Unicorp's resistance to the making of this significant commitment is further demonstrated by a May 14, 1985 letter from Unicorp's counsel to the Board, in which Unicorp transmitted yet another proposed Stipulation and Undertaking which, like its predecessors, was not an executed document. A.R. at 010545. The administrative record clarifies that Unicorp only executed and filed the final Stipulation and Undertaking after the staff purported to extend the review period for ten days. An obvious implication is that the staff could have extended the review period indefinitely until it had an executed Stipulation and Undertaking in hand.
In sum, the Board's letter of March 8, 1985 explicitly represented that the Board considered the submission of an executed Stipulation and Undertaking to be a critical *1130 aspect of Unicorp's Notice, without which it would not be sufficient to commence the 60-day period for review. The Board cannot now properly take the position that the Notice was "sufficient" as of April 18, 1985, when Unicorp filed an amended Notice in which it specifically declined to include the executed Stipulation required by the March 8 letter.
The conclusion that the Board was not on April 18, 1985 satisfied that it had collected all the information required for its review is bolstered by the Board's letter of June 25, 1985, in which the Board requested from Canadian authorities certain information regarding George Mann and Unicorp.[20] The holding that the 60-day review period did not commence on April 18, 1985 does not, however, rest on this request for additional information. The regulations are unclear as to whether additional information received by the Board after requests to sources other than the acquirer will cause the review period to recommence. The June 25 request, however, does support the conclusion that the Board was not satisfied that the information in its possession on April 18, 1985 was sufficient for it to complete its review of Unicorp's Notice.
V.
The Board argues that the 60-day review period as imposed by Congress and implemented by regulation was only intended: (1) to put a limit on the time during which the Board could hold an acquisition in suspense; and (2) for the convenience of the Board. Thus, presumably, when the staff was satisfied that a previously incomplete notice had been completed, the staff could determine that the review period had ended and thereby clear the track for consummation of the transaction. Congress formulated this statute, however, before the Board adopted the regulation which delegated to the staff authority to determine that a notice was complete. At argument, counsel for the Board indicated that the Board itself had no formal knowledge of this very large transaction or of the staff's processing and disposition of the Notice. For ought that appears in the record, the Board itself remains unaware of the staff's disposition, despite vigorous efforts by CityFed to attract the Board's attention. As a practical matter, the Court's determination that the 60-day review period commenced, rather than expired, on June 27, 1985, creates at least an opportunity for the Board itself to look into the staff's treatment of a potential shift in control of a $7 billion savings and loan holding company and a contest which has generated a significant amount of attention.
Moreover, a ruling that the 60-day review period recommenced upon the execution and filing of the June 27, 1985 Stipulation and Undertaking does not tie the hands of the staff or the Board. It is recognized that the Board's regulations do not require that the staff allow a full sixty days for review of a notice once it is complete. 12 C.F.R. § 563.18-2(g)(2) indicates that the Board may, prior to the expiration of the 60-day review period, notify the acquiring person in writing of its intent not to disapprove the proposed acquisition. The letter of June 28, 1985, however, was not by its terms such a notice of intent. Instead, the letter represented that the period for review had "expired." That conclusion was inconsistent with (1) the staff's March 8, 1985 request for, inter alia, an executed Stipulation and Understanding without which the Notice would not be deemed sufficient to commence the 60-day review period, A.R. 010587-010588, and (2) the fact that the executed Stipulation and Understanding was not received until June 27, 1985.
If it is determined administratively that the recommenced review period should be shortened, the staff is free to announce pursuant to 12 C.F.R. § 563.18-2(g)(2) that it does not intend to disapprove the acquisition, recognizing, of course, that such a *1131 determination might be reviewable under an arbitrary and capricious standard. The Court's holding clarifies that the staff must either conform strictly to the 60-day review period upon completion of a notice as required by the statute and regulations, or else openly announce its determination that the transaction should not be disapproved. This should remove any temptation to attempt to avert a risk of judicial review by declaring the notice period ended without having announced that it had begun.
VI.
In view of the finding that the June 27 Stipulation and Undertaking constituted additional information which recommenced the 60-day review period, it is unnecessary to resolve whether plaintiff's May 23 submission and the Board's June 25 request to Canadian authorities also constituted such additional information. Similarly, in view of this disposition of this matter, it is unnecessary and would be premature to address plaintiff's contention that the Board's failure to disapprove the Notice in spite of the information supplied to it by CityFed indicated inadequate investigation and constituted arbitrary and capricious action not in accordance with law. It will be time enough to deal with this issue when and if the Board determines and announces pursuant to 12 C.F.R. § 563.18-2(g)(2) that it has no intention to disapprove further acquisitions by Unicorp.
It is also unnecessary, in the absence of such a determination, to reach plaintiff's claims that the Board was required under the Administrative Procedure Act or the SLHCA to hold hearings on this matter. Furthermore, plaintiff's contention that the Board should not have delegated the processing of this Notice to staff is without merit. The regulations expressly provide for such delegation and neither the statute nor the regulations intimate that "more significant" notices are not appropriate for delegation. See 12 C.F.R. § 563.18-2(1) (1985). As has been discussed, however, the Court's finding that the 60-day review period commenced, rather than expired, on June 27, 1985 provides additional time in which the Board itself has an opportunity to consider the determination made by staff on this significant transaction.
Plaintiff's contention that the Board erred in commencing to process this Notice in the first instance is similarly without merit. The regulations provide that Board staff are authorized to "[d]etermine [the] sufficiency of a notice for the purpose of commencing or recommencing the review period under paragraph (e)(3)," 12 C.F.R. § 563.18-2(1)(vi) (1985). It cannot be overemphasized, however, that the Board must abide by its own regulations relating to procedures to be followed in making that determination[21] and conducting its review. Board staff on March 8, 1985 advised Unicorp that its Notice was incomplete and explicitly represented that the Notice would not be sufficient to commence the review period without specific requested information which included the executed Stipulation and Undertaking. The administrative record contains no evidence that a letter acknowledging the sufficiency of the amended Notice was ever sent as required by § 563.18-2(e)(3). Instead, the staff's letter of June 17, 1985 skipped a step and purported to extend the 60-day review period (which by Board regulations had not yet commenced) an additional ten days. Thus, the Board's own regulations and actions require the conclusion in this case that the Notice was not complete at least until an executed Stipulation and Understanding was on file, at which time under the plain terms of 12 C.F.R. § 563.18-2(e)(3) the 60-day review period recommenced. For this reason, the Board's contention that its conduct *1132 with respect to this Notice was "committed to agency discretion by law," 5 U.S.C. § 701(a)(1), and therefore not amenable to judicial review, must fail.
As the Supreme Court stated in Burlington Truck Lines, Inc. v. United States, 371 U.S. 156, 167, 83 S.Ct. 239, 245, 9 L.Ed.2d 207 (1962): "[e]xpert discretion is the lifeblood of the administrative process, but `unless we make the requirements for administrative action strict and demanding, expertise, the strength of modern government, can become a monster which rules with no practical limits on its discretion,'" (quoting New York v. United States, 342 U.S. 882, 884, 72 S.Ct. 152, 153, 96 L.Ed. 662 (1951) (dissenting opinion)).[22]
An agency's own regulations provide such "practical limits on its discretion." In this case, the administrative record demonstrates both (1) an agency's failure to follow its own regulations relating to appropriate procedures, and (2) an agency determination that implicitly and without adequate explanation contradicts its earlier findings. In such circumstances, the agency cannot attempt to avoid judicial review under 5 U.S.C. § 702 with the claim that the final decision made by the agency is one committed to its discretion by law.
In view of the disposition of this matter detailed in the Order of August 6, 1985, it would be premature to consider the question of whether a notice of intent not to disapprove the acquisition would be subject to judicial review, and, if so, whether issuance of such a notice in this case would be arbitrary, capricious and contrary to law.
For the foregoing reasons the Order of August 6, 1985, granted a declaratory judgment for plaintiff, denied its prayer for equitable relief, and dismissed the complaint as against Unicorp.
NOTES
[1] In this Memorandum, descriptions of actions taken by "the Board" refer more precisely to actions taken by Board staff acting under authority delegated to it by the Board pursuant to 12 C.F.R. § 563.18-2(1) (1985).
[2] As expressed in the June 28, 1985 Letter from William J. Schilling, Director, Office of Examinations and Supervision, Federal Home Loan Bank Board, to Thomas J. Haggerty, Esq. A.R. 010000.
[3] On July 19, 1985, this action came before the Court for a hearing on plaintiff's application for a temporary restraining order. On July 22, 1985, the Court granted plaintiff's application, and on July 30, 1985, a hearing was held on plaintiff's motion for a preliminary injunction. Subsequently, by Order dated July 30, 1985, the Court extended the temporary restraining order to August 10, 1985 to preserve the status quo pending an expeditious adjudication of the merits. After filing briefs, exhibits and affidavits, and making extensive oral arguments, the parties on August 2, 1985 submitted this matter for decision on the merits.
[4] The pertinent part of the statute provides that:
[n]o person acting directly or indirectly or through or in concert with one or more other persons, shall acquire control of any insured institution through a purchase [note omitted], assignment, transfer, pledge, or other disposition of voting stock of such insured institution unless the Corporation [here the Board] has been given sixty days' prior written notice of such proposed acquisition and within that time period the Corporation has not issued a notice disapproving the proposed acquisition or extending up to another thirty days the period during which a disapproval may issue.
12 U.S.C. § 1730(q)(1) (1978).
Section 1730(q)(6) details the requirements of such notice, indicating that a notice should contain seven identified categories of information, including, among others, the identity, business background and experience of the potential acquirer; the assets and liabilities of the proposed acquiror and the terms and conditions of the proposed acquisition. 12 U.S.C. § 1730(q)(6)(A)-(G). Beyond that, the notice must include "[a]ny additional relevant information in such form as the Corporation may require by regulation or by specific request in connection with any particular notice," 12 U.S.C. § 1730(q)(6)(H), thus giving the Board the ability to obtain additional information relevant to consideration of the notice.
[5] See 12 C.F.R. § 563.18-2(1) (1985).
[6] See 12 C.F.R. § 563.18-2(k) (1985).
[7] 12 C.F.R. § 563.18-2(e)(3) also states in part:
Receipt of Notice; effect. The period for Corporation review of any proposed acquisition will commence upon receipt by the Corporation of any notice substantially complying with the provisions of paragraph (e)(1). The Corporation will send a letter of acknowledgement to an acquiring person indicating the date of receipt of a notice deemed to be sufficient or specifying the reasons why a notice is insufficient. After the Corporation notifies the acquiring person that the notice is sufficient, the Corporation may subsequently make a determination that additional information is required for its review of the notice, and it shall notify the acquiring person that the notice is insufficient. In such case the period for Corporation review will be deemed to commence again in its entirety upon the receipt of the additional information. [Emphasis added.]
[8] 12 U.S.C. § 1730(q)(7) lists certain circumstances under which the Board may disapprove a proposed acquisition, including (D): "[when] the competence, experience, or integrity of any acquiring person or any of the proposed management personnel indicates that it would not be in the interests of the depositors of the institution or in the interest of the public to permit such person to control the institution."
[9] Such a notification would have triggered commencement of the 60-day review period under Board regulation 12 C.F.R. § 563.18-2(e)(3) (1985). See discussion supra at p. 1125, n. 7.
[10] As is authorized by 12 C.F.R. § 563.18-2(g), which states that "[p]rior to the expiration of the 60-day review period or any extension thereof, the [Board] may notify the acquiring person in writing of ... [i]ts intent not to disapprove the proposed acquisition."
[11] CityFed, in this May 23 submission, provided additional information supplementing earlier submissions relating to George Mann and Unicorp and their activities in connection with Unity Bank of Canada. The May 23 letter presented allegations that George Mann was instrumental in the approval of loans to a particular borrower, which loans were chronically and seriously under-collateralized. A.R. at 010052-010455.
[12] In its June 25 letter, the Board requested information from Canadian authorities regarding George Mann and Unicorp and their activities in connection with Unity Bank of Canada. See Letter from Julie L. Williams, Associate General Counsel, Director, Corporate and Securities Division, to William Kennett, Inspector General of Banks, Department of Finance (June 25, 1985). A.R. 010039.
[13] The Board apparently disagrees with Unicorp on this issue, having stated on oral argument that "we believe that as with other Bank Board actions and other agency actions that aren't specifically addressed in the ... agency statute itself, the route for review of that action would be under the APA directly in the district court." Tr. of Hearing, July 19, 1985 at 38.
[14] In which the Court upheld over appellant Federal Home Loan Bank Board's challenge the standing of deposit brokers to challenge regulations promulgated by the FDIC and the Bank Board.
[15] The legislative history clarifies Congress' intent in the CSLCA to provide regulatory agencies with additional authority to control "fly-by-night" takeovers of financial institutions. See 124 Cong.Rec. 33,308 (1978). A primary objective of the CSLCA was to "enhance and maintain public confidence in the savings and loan industry by preventing identifiable serious adverse effects resulting from ... inadequate financial support, or unsuitable management in these institutions." 44 Fed.Reg. 10,501-10,502 (1979).
[16] In reaching this conclusion the Court relies upon the representations made by counsel for Unicorp that "No showing has been made that [Unicorp] would act in a manner inconsistent with the law...." Letter from Scott B. Schreiber to Robert E. Juceam dated August 5, 1985, at p. 2. Such a showing could, on short notice, result in further proceedings and orders.
[17] See discussion supra at p. 1125.
[18] 12 U.S.C. § 1730(q)(6) mandates that a notice shall contain inter alia "[a]ny plans or proposals which any acquiring party making the acquisition may have to liquidate the institution, to sell its assets or merge it with any company or to make any other major change in its business or corporate structure or management." 12 U.S.C. § 1730(q)(6)(E) (1978).
[19] Memorandum from Edward J. O'Connell, III, Assistant Director for Regional Operations, to William J. Schilling, dated April 24, 1985. A.R. at 010551 (emphasis added).
[20] Letter from Julie L. Williams, Associate General Counsel, Director, Corporate and Securities Division, to William Kennett, Inspector General of Banks, Department of Finance (June 25, 1985), A.R. 010039.
[21] 12 C.F.R. § 563.18-2(e)(1) (1985) (emphasis added) states that "[a] notice ... shall not be deemed sufficient unless it includes all of the information required by the form prescribed by the Corporation and any additional information [here the executed Stipulation] as the Corporation may require by specific request in connection with any particular notice."
[22] These principles were reaffirmed in Motor Vehicles Manufacturers Association v. State Farm Mutual Automobile Insurance Company, 463 U.S. 29, 103 S.Ct. 2856, 77 L.Ed.2d 443 (1983), in which the Court stated that "[w]e have frequently reiterated that an agency must cogently explain why it has exercised its discretion in a given manner [citations omitted]; and we reaffirm this principle again today." Id. at 48-49, 103 S.Ct. at 2869-2870.
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852 S.W.2d 508 (1993)
Willie Ray ROBERSON, Appellant,
v.
The STATE of Texas, Appellee.
No. 489-92.
Court of Criminal Appeals of Texas, En Banc.
February 24, 1993.
Rehearing Denied April 21, 1993.
*509 William E. Sterling, Jr., Lawrence A. Russell, Cedar Park, for appellant.
Ken Anderson, Dist. Atty., Sally Ray, Asst. Dist. Atty., Georgetown, Robert Huttash, State's Atty., Austin, for the State.
Before the court en banc.
OPINION ON STATE'S PETITION FOR DISCRETIONARY REVIEW
PER CURIAM.
Appellant was convicted by a jury of three counts of delivery of cocaine. The court assessed punishment at two concurrent fifty-year sentences and a ten-year sentence, which was probated. The court of appeals reversed the judgment and remanded for a new trial, holding that appellant had not received effective assistance of counsel at trial. Roberson v. State, 798 S.W.2d 602 (Tex.App.Austin, 1990) (Roberson I). On original appeal appellant challenged the sufficiency of the evidence to support each of his three convictions for delivery of cocaine. The court of appeals failed to conduct a sufficiency review and relied instead on its decision to grant a new trial based on its holding that appellant received ineffective assistance of counsel. We granted the State's petition for discretionary review and remanded the case to the court of appeals for a determination of the sufficiency of the evidence, and to reconsider its decision pertaining to effectiveness of trial counsel. Roberson v. State, 810 S.W.2d 224 (Tex.Cr.App.1991) (Roberson II).
On February 12, 1992, the court of appeals handed down another opinion finding the evidence sufficient to support the guilty verdicts. Roberson v. State, No. 03-89-144-CR (Tex.App.Austin, delivered February 12, 1992) (Roberson III). After incorporating by reference the original discussion on ineffective assistance of counsel in Roberson I, the court held that of all of the shortcomings of counsel discussed in Roberson I, the most significant was counsel's failure to request a charge on the defense of mistaken identity. The court found that had a mistaken identity defense been presented, the jury might well have found in appellant's favor. Thus, the court concluded that "but for counsel's errors, there is a reasonable probability that the result of the trial would have been different." Roberson III, supra, slip op. at 4.
In its petition for discretionary review the State contends the court of appeals improperly based a determination of ineffective assistance of counsel primarily on trial counsel's failure to request a jury instruction on "mistaken identity" when there is no authority for giving such a charge, and that the court of appeals has not made a proper analysis under Strickland v. Washington, 466 U.S. 668, 104 S.Ct. 2052, 80 L.Ed.2d 674 (1984). We *510 granted the State's petition to examine the opinion of the court of appeals in light of these contentions.
Appellant was indicted for selling cocaine in Taylor, Texas, on three separate occasions in July, 1988; to Officer Hayes on the 21st and 27th of July, and to Officer Delarosa on July 27th. Appellant's identical twin brother, Willie James Roberson, was also indicted and pleaded guilty to selling cocaine to Officer Hayes on July 21, 1988. The court of appeals noted that "counsel's explicit trial strategy" involved appellant's assertion that the undercover officers confused him with his twin brother.
After setting forth the standard for review of an ineffective assistance of counsel claim as provided for in Strickland, the court of appeals cataloged the alleged errors of counsel. The court conceded that none of the identified omissions standing alone would constitute ineffective assistance of counsel but, without specifying what alleged errors met the first prong of Strickland and without explaining how any of these errors prejudiced appellant such that the second prong of Strickland was met, the court summarily concluded that "but for counsel's errors, there is a reasonable probability that the result of the trial would have been different." Roberson III, supra, slip. op. at 4.
The proper standard by which we review the adequacy of representation at the guilt-innocence stage of trial is that articulated in Strickland, and adopted by this Court in Hernandez v. State, 726 S.W.2d 53, 57 (Tex.Cr.App.1986). The Strickland test encompasses a two-part analysis. First, a defendant bears the burden of proving that, in light of all the circumstances viewed at the time of trial, counsel's performance fell below an objective standard of reasonableness under prevailing professional norms. If a defendant is able to demonstrate that the attorney's performance did fall below the accepted standard, he then must demonstrate that there is a reasonable probability that, but for counsel's errors, the result of the trial would have been different. Id. In order for a defendant to meet his burden with respect to the first prong of Strickland, he must overcome the presumption "that counsel is strongly presumed to have rendered adequate assistance and made all significant decisions in the exercise of reasonable professional judgment." Strickland, 466 U.S. at 690, 104 S.Ct. at 2066, 80 L.Ed.2d at 695. Accordingly, we now review the court of appeals' opinion concerning counsel's deficiencies under a Strickland analysis. The court of appeals discussed five areas in which it determined counsel erred.
(1) "Trial counsel's ineffectiveness flowed primarily from his failure to raise objections or to diligently pursue discovery." Roberson I, 798 S.W.2d at 604.[1] The court of appeals expressed particular concern that although the testimony from investigating officers at trial established they relied on pictures of the twins during their undercover operation in order to distinguish them, counsel failed to press the officers for an explanation as to why they would not or could not produce them, and failed to request a ruling on any pre-trial motions filed with the court. This is the extent of the court of appeals' discussion of this alleged deficiency of counsel. The court failed to explain how failure to formally pursue the discovery of these pictures constitutes deficient performance or how appellant was harmed. It is possible that counsel consulted with his client and determined that production of the photos would in fact discredit appellant's sole defense of mistaken identity. The record is not developed in this regard. Although a hearing was held on appellant's motion for new trial based on allegations of ineffective assistance of counsel, no questions were asked of counsel in this respect. Thus, under Strickland, we are to presume that counsel "made all significant decisions in the exercise of reasonable professional judgment." Strickland, 466 U.S. at 690, *511 104 S.Ct. at 2066, 80 L.Ed.2d at 695. See also, Delrio v. State, 840 S.W.2d 443 (Tex. Cr.App.1992). What the record does reflect is that the prosecutor has an "open file" policy on discovery, and had, in fact, at some time before trial made his entire file available to appellant's counsel so that he would have access to all of the evidence of which the prosecutor was aware.
The court of appeals also stated without subsequent analysis, "apparently, the pre-trial hearing was waived, and defense counsel made no attempt to secure a ruling on any of the various pre-trial motions contained in the record." Roberson I, 798 S.W.2d at 604. There is no showing that a ruling on any of the pre-trial motions would have changed anything in the case. Further, the record reflects that it was agreed between the trial court and the parties that any evidence on contested issues of fact raised by pre-trial motions which were still unresolved by the morning of trial would be considered at that time. At the hearing on appellant's motion for new trial, counsel admitted he received from the prosecution all matters requested in pre-trial motions filed.
(2) "Counsel did not request a pre-trial identification hearing in which the court might have forced disclosure of the informant's identity if the court determined that they were necessary for the determination of guilt and innocence." Id. Officer Hayes testified at trial that he initially met appellant through a confidential informant; that he relied upon this information to identify appellant; and that as far as he could recall, the informant did not even know appellant's brother, Willie James. Again, without any evidence in the record to demonstrate otherwise, we must presume counsel had a plausible reason for not pursuing identification of the informant. It is quite possible counsel determined that it would not be in his client's best interest to seek out this informant's testimony.
(3) "Defense counsel's most egregious error in the context of this case was his failure to object to the court's charge." Roberson I, 798 S.W.2d at 604. As support for holding that the instruction was available the court of appeals cited to 8 McCormick & Blackwell, Texas Practice, § 85.10, at 312. The court contends that had counsel requested a charge on the defense of mistaken identity, the jury might well have found in appellant's favor.
A defense may be recognized two ways: by the legislature, or by the courts. Vasquez v. State, 830 S.W.2d 948 (Tex.Cr. App.1992). Misidentification is not an affirmative defense; the Texas Penal Code does not provide for a statutory defense of "mistaken identity." Furthermore, this Court has held that a charge on mistaken identity is an improper comment on the weight of the evidence and should not be given. Caldwell v. State, 818 S.W.2d 790, 799 (Tex.Cr.App.1991), citing Laws v. State, 549 S.W.2d 738 (Tex.Cr.App.1977); Waller v. State, 581 S.W.2d 483 (Tex.Cr. App.1979). Counsel is not ineffective per se to fail to raise defenses which are not recognized by statute or the courts. Thus, counsel's performance was clearly not deficient for failing to request a jury instruction on mistaken identity when entitlement to such a charge has been repeatedly rejected by caselaw and is not recognized by statute. See Vasquez, 830 S.W.2d at 950-951.
Counsel aptly presented the defense of mistaken identity to the jury from the point of his opening statement to his final jury argument. The jury charge clearly explained to the jury that they had to find that appellant was the perpetrator in order to convict. The issue that the officers could have been mistaken in their identification of appellant was raised by defense counsel on cross-examination. Specifically, the officers admitted how similar appellant and his twin brother appeared, how difficult they were to distinguish, and the fact that the Taylor Chief of Police had once confused them when one was arrested on a warrant issued for the other. The officers, nevertheless, stated that they could distinguish the twins, and explained to the jury the precautions taken during the undercover operation to reliably identify each one.
*512 In addition to having the twins appear before the jury in identical haircuts, defense counsel called appellant's brother who testified that he, not appellant, was the one involved in the purchase and sale of the drugs. Both appellant and his brother testified to the ways in which their appearances differed during the time of the undercover operation. Much of the closing argument of counsel concentrated on the defense of misidentification. Counsel repeatedly urged the jury to acquit appellant because there was a reasonable doubt that it had been appellant, as opposed to his brother, who had sold cocaine on the dates and to the persons alleged. The jury simply chose to disbelieve the defensive evidence. There is absolutely no support in the record for the court of appeals' conclusion that counsel was deficient for not properly asserting the defense of mistaken identity.
The court of appeals concludes its analysis by citing several other examples of counsel's deficient performance. We will address them individually.
(4) "Counsel failed to object to the court's award of a ten-year probated sentence on one of the counts charged." Roberson I, 798 S.W.2d at 605. It is clearly within the trial court's authority to assess probation where the maximum punishment does not exceed ten years imprisonment. See Article 42.12, § 3, V.A.C.C.P. The court of appeals failed to state how counsel was deficient for failing to object to something that was completely within the trial judge's authority and discretion to grant.
(5) "The record reveals numerous errors during jury selection including counsel's failure to preserve error for juror challenges denied by the court." Roberson I, 798 S.W.2d at 605. Appellate counsel failed to timely request that the jury list be included in the appellate record. Thus, how the court of appeals was able to conclude that counsel made numerous errors in jury selection is without explanation. Indeed, the court does not explain what errors were made, how they constitute deficient performance of counsel, or how appellant was harmed thereby.
In sum, in applying the first prong of the Strickland standard, the court of appeals neglected to "recognize that counsel is strongly presumed to have rendered adequate assistance and made all significant decisions in the exercise of reasonable professional judgment." Strickland, 466 U.S. at 690, 104 S.Ct. at 2066, 80 L.Ed.2d at 695. It is appellant's burden to overcome this presumption. We find insufficient bases in the present record to overcome that presumption. Accordingly, we hold that the court of appeals erred in reversing the conviction on the basis of ineffective assistance of counsel. We therefore reverse the judgment of the court of appeals and remand the cause to that court for disposition of appellant's remaining points of error.
CLINTON, J., dissents.
NOTES
[1] Many of the references within will be to the court of appeals' original opinion, Roberson I, since it was incorporated by reference into the court's final analysis and holding in Roberson III, regarding the effectiveness of counsel at trial.
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852 S.W.2d 516 (1993)
Daniel RODRIGUEZ, Appellant,
v.
The STATE of Texas, Appellee.
No. 1284-92.
Court of Criminal Appeals of Texas, En Banc.
April 28, 1993.
*517 Paul C. Looney, Houston, for appellant.
John B. Holmes, Jr., Dist. Atty., Ernest Davila and Marie Munier, Asst. Dist. Attys., Houston, Robert Huttash, State's Atty., Austin, for State.
Before the court en banc.
OPINION ON STATE'S PETITION FOR DISCRETIONARY REVIEW
CLINTON, Judge.
Appellant was convicted by a jury of indecency with a child and his punishment was assessed at seven years confinement, probated, and a $5000.00 fine. On appeal he contended, inter alia, that the trial court erred to continue on with his trial after having granted a mistrial in the cause. The Texarkana Court of Appeals agreed, holding that once the trial court granted the mistrial, it was without authority to rescind that order, and reversed. Rodriguez v. State, 834 S.W.2d 610 (Tex. App.Texarkana 1992). We granted the State's petition for discretionary review to determine the novel question whether the trial court had authority to rescind its grant of a mistrial. Tex.R.App.Pro., Rule 200(c)(2).
During the presentation of defensive evidence, the trial court granted defense counsel's motion for mistrial based upon a comment the trial judge made in front of the jury.[1] After the mistrial had been granted but before the trial court had addressed the jury to explain what had occurred, the prosecutor asked for a bench conference. Out of an abundance of caution, the trial court removed the jury from the courtroom. The ostensible purpose of the conference was to make sure appellant understood that because he had requested the mistrial, he could be retried. However, at one point during the conference, the State turned the discussion back to the appropriateness of the trial court's order of mistrial. After further discussion off the record, the trial court withdrew the order. The trial court then brought the jurors back into the courtroom and instructed them to disregard its earlier, objectionable comment. The trial resumed, and ultimately appellant was convicted.
The court of appeals held that the trial court's declaration of a mistrial required that the subsequent judgment be reversed. Initially, the court of appeals noted that the trial court never expressly "rescinded" its order of mistrial. The court of appeals observed that "[o]n this factual basis, the proceeding could be treated as if a mistrial had been granted and no order `rescinded' that mistrial, thus requiring a reversal of the judgment." Rodriguez v. State, supra, at 612. Despite this potential "factual basis" for reversal, the court of appeals declared that its "decision ... rests further on a legal basis." Thus, the court of appeals held "further" that the trial court was not authorized to withdraw its pronouncement of mistrial and "the order, if any, rescinding the order granting the mistrial was void and of no effect." Id.
Appellant argues that we need not reach the "legal basis" for the court of appeals' opinion. He maintains that the State has failed to challenge what he deems to be an alternative, "factual basis" for its decision, and that, given this alternative basis for decision, any ruling we might make on the issue we granted discretionary review to address would be purely advisory. We do *518 indeed note an ambiguity in the court of appeals' opinion. However, when the court of appeals declared that its decision "rests further on a legal basis[,]" we take that to mean the court eschewed the potential "factual basis" for decision in favor of its subsequent legal analysis.[2] We therefore proceed to the question for review, viz: whether a trial judge has authority to rescind or withdraw an order of mistrial.
As the court of appeals noted, this is indeed a question of first impression. Because of the absence of cases addressing this issue, the court of appeals was obliged to resort to analogy. Accordingly, the court of appeals cited State v. Garza, 774 S.W.2d 724 (Tex.App.Corpus Christi 1989, pet. ref'd), and reasoned that the trial court's order of mistrial was "functionally indistinguishable" from an order granting a new trial. The authority of the trial court to rescind an order of mistrial is therefore limited by the "well established rule" that, absent clerical errors, an order granting a new trial cannot be rescinded. Matthews v. State, 40 Tex.Cr.R. 316, 50 S.W. 368 (1899).
The court of appeals' analogy is flawed. In State v. Garza, supra, the Corpus Christi Court of Appeals concluded that the trial court's post-verdict mistrial ruling was functionally indistinguishable from an order granting a new trial; therefore, the State could appeal from the granting of the motion for mistrial. See Article 44.01, V.A.C.C.P. The court of appeals held that because the order of mistrial set aside the jury's verdict of guilt, "the trial court's order, in substance, was one granting a new trial." State v. Garza, supra, 774 S.W.2d at 726; See Tex.R.App.Pro., Rule 30.[3] Nevertheless, the court of appeals recognized that generally a motion for mistrial and a motion for new trial are not the same. Indeed, although nowhere expressly provided for in the Code of Criminal Procedure, an order of mistrial ordinarily occurs before completion of the trial and the rendition of judgment. An order for new trial, however, comes only after sentence is imposed in a completed trial. Tex.R.App. Pro., Rule 31. Unlike the unusual order of mistrial in Garza, the trial court's order of mistrial in the instant cause did not set aside a jury's verdict, but occurred mid-trial, prior to any finding or verdict of guilt. Under these circumstances, it cannot be said that the trial court's ruling was "indistinguishable" from an order of new trial.
In any event, whether or not a mistrial and an order granting a new trial are invariably "functionally indistinguishable," we are not persuaded that Matthews, supra, prohibits the trial court's actions in the instant case. In Matthews, this Court interpreted the then-extant criminal statutes concerning new trials and concluded that *519 "it would appear that the granting of a new trial in a criminal case is a finality, and not subject to a reconsideration during the term." Id., 50 S.W. at 369. Consequently, we held the trial court did not have authority to set aside or overrule its order granting a new trial. However, the Court did not cite any case authority in support of this holding. And it is far from obvious that our provisions governing motions for new trial, then or now, would dictate such a rule.[4]
In the few cases in which this Court has revisited Matthews, there has yet to be a clear explanation for the trial court's lack of authority to vacate its order granting a new trial. In every case the rule set out in Matthews has been applied without question or further explication of its rationale. See Moore v. State, 749 S.W.2d 54 (Tex.Cr. App.1988); English v. State, 592 S.W.2d 949 (Tex.Cr.App.1980); Davis v. State, 394 S.W.2d 521 (Tex.Cr.App.1965); Alexander v. State, 129 Tex.Cr.R. 500, 89 S.W.2d 411 (1936). Our decision in Moore provides perhaps the clearest explanation for such a rule. There we held that a trial court did not have authority to rescind its order granting a new trial when the grant of new trial was based solely on insufficiency of the evidence. Under those circumstances, the court no longer had jurisdiction over the case because the grant of new trial was equivalent to an acquittal and "to allow a trial judge to change his ruling and deny the motion having once granted it" would violate principles of double jeopardy. Moore, 749 S.W.2d at 58. This rationale is limited to new trials granted on the basis of legally insufficient evidence, however, and does not fully justify the holding in Matthews.
Moreover, the holding in Matthews does not appear to be the majority view among jurisdictions that have decided the question. A majority of the states are of the view that a trial court does have power to rescind its order granting a new trial in a criminal case. See Annotation, Power of Trial Court or Judge to Revoke Order Granting New Trial in Criminal Case, 145 A.L.R. 400 (1943). Nevertheless, without a better explanation for why a trial court may not rescind an order granting a new trial, we are reluctant to extend that holding by analogy to prohibit a trial court from rescinding a mistrial order, especially where the two are not "functionally indistinguishable" as was the case in Garza.
Appellant argues further, and the court of appeals agreed, that the declaration of a mistrial has the practical effect of restoring the case to its pre-trial status, thereby rendering the pending trial a "nugatory proceeding." Appellant contends that "by virtue of such an order, the trial itself becomes a dead horse, not susceptible to resurrection." A similar argument was made to this Court with success in the context of the dismissal of an indictment. Garcia v. Dial, 596 S.W.2d 524, 527 (Tex. Cr.App.1980). In Garcia we held that once a trial court had dismissed the indictment against the accused, the jurisdiction of the *520 trial court was exhausted, and an order entered thereafter purporting to reinstate that cause was void. Unlike the dismissal of the indictment in Garcia, in the present context of an order of mistrial there is still an indictment to confer subject-matter and personal jurisdiction over the cause. Although a declaration of mistrial renders a pending trial a "nugatory" proceeding, this does not mean that following an order of mistrial the trial court has lost its jurisdiction over the cause, as was true in Garcia. Thus, at least as a matter of jurisdiction, the trial court does not lack authority to withdraw or rescind its order of mistrial. Appellant suggests, and we can conjure no other reason to hold that the trial court lacked authority to correct or modify its orders. That an order granting a mistrial that is not subsequently withdrawn does indeed have the effect of nullifying all proceedings to that point does not mean the trial court may not rescind that order, and continue with the trial, so long as that remains a viable option under the circumstances.
Here the trial court declared a mistrial, but that order was apparently withdrawn before the jury was discharged and presumably even before the jury was made aware of what exactly had occurred. On these facts, we hold that the trial court retained its authority to withdraw its order of mistrial. The court of appeals erred to conclude otherwise.
Accordingly, the judgment of the court of appeals is reversed and the cause remanded to that court for further disposition consistent with this opinion.[5]
NOTES
[1] For a more complete recitation of the facts, see the court of appeals' opinion. Rodriguez v. State, supra, at 611-12. We express no opinion as to whether a mistrial was necessary under the circumstances.
[2] Moreover, it must be questioned whether a formal order rescinding the order of mistrial need appear in the record. That the trial court proceeded with the trial despite its earlier order of mistrial would seem to count as a de facto rescission.
(All emphasis supplied unless otherwise indicated).
[3] State v. Garza, supra, involved very unusual facts. After the jury found the defendant guilty, the trial court ordered a pre-sentence investigation and scheduled a punishment hearing. The day before the hearing, the parties appeared in court. Defense counsel informed the trial court that a juror he had peremptorily struck from the jury panel had erroneously served on the jury. He then requested a mistrial. The State argued that the defendant had waived any error by not objecting before the jury was sworn; nevertheless, the mistrial was granted. Subsequently, the State filed a motion for the trial court to reconsider its ruling, asserting that a new trial would violate the defendant's double jeopardy rights. The trial court denied the State's motion and defendant's new trial followed. At the new trial, the defendant pleaded guilty; however the State refused to present evidence, again asserting that the new trial was barred by double jeopardy. Because the State offered no evidence at the new trial, the trial court granted the defendant's motion for a directed verdict. The State appealed from the trial court's initial order of mistrial. The court of appeals held that while the State could appeal the trial court's order of mistrial, inasmuch as it was, under the circumstances, "functionally indistinguishable" from an order granting a new trial, any appeal was moot "because the trial court proceeded with the defendant's case, a new trial was held, and a final judgment was entered in this case before the State made any effort to appeal the trial court's interlocutory ruling." Id., 774 S.W.2d at 727.
[4] As we stated in Matthews, in 1899 the Texas criminal statutes governing motions for new trial provided:
"that a new trial is the rehearing of a criminal action after verdict, before the judge or another jury, as the case may be; and that in no case shall a new trial be granted where the verdict or judgment has been rendered for the defendant. New trials must be applied for within two days after conviction, and all motions for new trials shall be in writing, and shall set forth definitely the grounds upon which the new trial is asked. The State may take issue with the defendant upon the truth of the causes set forth in the motion for new trial, and in such case the judge shall hear evidence, by affidavit or otherwise, and determine the issue. In granting or refusing a new trial the judge shall not sum up or comment on the evidence in the case, but shall simply grant or refuse the motion, without prejudice to either the state or the defendant. The effect of a new trial is to place the cause in the same position in which it was before any trial had taken place. The former conviction shall not be regarded as any presumption of guilt, nor shall it be alluded to in the argument."
Matthews v. State, supra, 50 S.W. at 369; See Articles 815-824, C.C.P. (1895). Much of the language in the former provisions has been carried over into our current rules governing new trials. Tex.R.App.Pro., Rules 30-32. Manifestly, nothing in this language even purports to address the trial court's authority or lack of authority to rescind an order granting a new trial.
[5] In a footnote at the conclusion of its opinion the court of appeals summarily disposed of all other points of error raised on direct appeal, including a point of error raising legal sufficiency of the evidence. Rodriguez v. State, supra, 834 S.W.2d at 612, n. 5. Appellant filed a cross-petition for discretionary review complaining that this treatment of his remaining points of error did not meet the mandate of Tex.R.App. Pro., Rule 90, which requires that the opinion of a court of appeals "address every issue raised and necessary to final disposition of the appeal." We did not grant appellant's cross-petition. Nevertheless, rather than simply affirm the judgment of the trial court, we now remand the cause to the court of appeals for further disposition. Given the fact that we have reversed its judgment on State's petition for discretionary review, that court may choose to address appellant's other contentions on direct appeal in greater detail.
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28 Pa. Commonwealth Ct. 185 (1977)
Cora Lee Phillippi, Phyllis Catz, Cheryl Schlosser, Charles Knipe, et al.
v.
School District of Springfield Township. Cora Lee Phillippi, et al., Appellants.
No. 676 C.D. 1976.
Commonwealth Court of Pennsylvania.
Argued October 7, 1976.
January 14, 1977.
*186 Argued October 7, 1976, before President Judge BOWMAN and Judges CRUMLISH, JR. and WILKINSON, JR., sitting as a panel of three.
*187 Richard W. Rogers, with him Rogers, King & Cole, for appellants.
Charles Potash, with him, of counsel, Wisler, Pearlstine, Talone, Craig & Garrity, for appellees.
OPINION BY PRESIDENT JUDGE BOWMAN, January 14, 1977:
By resolutions adopted on April 21, 1975, and May 22, 1975, the Board of School Directors (Board) of the School District of Springfield Township, Montgomery County, provided for a reduction in the teaching staff after the conclusion of the 1974-1975 school year, due to a substantial decrease in pupil enrollment. Pursuant to these resolutions, six tenured professional employes, three of whom were employed part time, were suspended pursuant to Sections 1124 and 1125 of the Public School Code of 1949 (Code)[1] and the contracts of fourteen temporary professional employes were not renewed.
At the request of the affected employes, the Board conducted a hearing on May 29, 1975, and thereafter issued an adjudication upholding the reduction in staff. Ten of the employes then appealed to the *188 Montgomery County Court of Common Pleas pursuant to Section 7 of the Local Agency Law, Act of December 2, 1968, P.L. 1133, 53 P.S. § 11307.[2] Since no record of the hearing before the Board was made, the court below elected to conduct a hearing de novo pursuant to Section 8 of the Local Agency Law, 53 P.S. § 11308.[3]
Nine of the ten appellants below have now appealed to this Court. Of these nine, one is a full-time tenured professional employe, two are part-time tenured professional employes and six are temporary professional employes.[4]
Appellants' arguments focus into two major issues: (1) was there a substantial decrease in pupil enrollment sufficient to justify the suspensions and *189 terminations involved? and (2) if so, was the manner of selecting those employes to be suspended or terminated proper and in accordance with the Code? We note that our scope of review is limited by Section 8 of the Local Agency Law and we must affirm the Board and the court below unless we find a violation of constitutional rights, an error of law or manifest abuse of discretion, or that a necessary finding of fact is not supported by substantial evidence. Gabriel v. Trinity Area School District, 22 Pa. Commonwealth Ct. 620, 350 A.2d 203 (1976).
Appellants first argue that there was insufficient competent evidence to determine whether a decrease in enrollment had occurred and that if such decrease did occur, it was not "substantial" enough to justify the suspensions and terminations in question. Specifically, appellants object that some of the enrollment records admitted were not signed, that some were in pencil or ink rather than typewritten, and that there was insufficient evidence as to a custodian of the records or the regularity of their entry.
We have carefully reviewed the testimony of the superintendent of the school district with regard to the records of enrollment and how they were compiled. We agree with the court below that while these records left something to be desired, they did qualify as business records and did establish a decrease in enrollment.[5]
*190 With respect to whether this decrease was "substantial" within the meaning of Section 1124 of the Code, we note that there is not and cannot be a precise definition of what is a "substantial" decrease sufficient to justify a given number of job eliminations. This is an area in which school boards must exercise discretion and board action will not be disturbed absent a showing that such discretion was abused, or that the action was arbitrary, based on a misconception of law or ignorance of facts. Board of School Directors of the School District of Scranton v. Roberts, 13 Pa. Commonwealth Ct. 464, 320 A.2d 141 (1974); Smith v. Board of School Directors of The Harmony Area School District (hereinafter Harmony), 16 Pa. Commonwealth Ct. 175, 328 A.2d 883 (1974). Just as we found a decrease of 114 students over a ten year period to be "substantial" enough to justify the suspensions in Harmony, supra, we find that a decrease of 486 students over a five year period (or 661 students over a six year period, if the 1975-76 projections are considered) is "substantial" under any definition of the term and is sufficient to justify the action taken in this case.[6]
On this same issue, appellants make an additional argument with specific reference to the nonrenewal of the contract of appellant Edgerton, a school nurse. Appellants contend that the Superintendent, in determining that her services were no longer required because of decrease in enrollment, did not take into account the fact that the school district provides nursing services to private and parochial schools in the area as well as to its own students. The Board responds that Section 1402(a.1) of the Code, 24 P.S. § 14-1402(a.1), *191 only requires that the number of pupils under the care of each school nurse not exceed 1500 and that, in this case, the pupils, including private and parochial students, assigned to each of the five nurses remaining after Nurse Edgerton was terminated, did not exceed that figure. While we agree with appellants that Section 1402(a.1) does not mandate that there be no more than one nurse for each 1500 students, we reiterate that this is an area in which the Board must exercise discretion. Under these facts, we can find no error of law or abuse of discretion in the decision not to renew Nurse Edgerton's contract.
The more difficult issue in this case is whether the Board properly determined which teachers were to be suspended or terminated. This requires a rather extensive review of the record and a careful analysis of the relevant provisions of the Code.
Section 1125 of the Code, 24 P.S. § 11-1125, outlines the procedure for suspending professional employes when a decrease in staff is necessary:
(a) Whenever a board of school directors decreases the size of the staff of professional employes, the suspensions to be made shall be determined by the the [sic] district superintendent on the basis of efficiency rank determined by ratings made in accordance with standards and regulations, determined by rating cards prepared by the Department of Public Instruction, as required by section one thousand one hundred twenty-three of this act. It shall be the duty of boards of school directors to cause to be established a permanent record system, containing ratings for each professional employe employed within the district. . . .
(b) In cases in which suspensions are to be made, professional employes shall be retained on the basis of seniority rights, acquired within *192 the school district of current employment, where no differences in rating are found. Seniority rights shall also prevail where there is no substantial difference in rating. In cases where there are substantial differences in rating of those under consideration for suspension, seniority shall be given consideration in accordance with principles and standards of weighting incorporated in the rating cards. . . .
(c) No suspended employe shall be prevented from engaging in other occupation during the period of such suspension. Suspended professional employes shall be reinstated in the inverse order of their suspension. No new appointment shall be made while there are suspended professional employes available, who are properly certified to fill such vacancies. (Footnote omitted.)
The court below found, the record supports and the appellants do not dispute that the procedure used and the factors considered by the superintendent (and approved by the Board) to determine which teachers would be suspended or terminated was essentially as follows. First, the superintendent determined the subject areas in which the most significant declines in enrollment had occurred.[7] He then identified the employes teaching these subjects and established three separate seniority lists for (1) full-time tenured professional employes, (2) part-time tenured professional employes and (3) temporary professional employes. The superintendent and the Board took the position that neither the temporary professional employes nor the part-time professional employes, although the latter were tenured, were "professional employes" within *193 the meaning of Section 1125 and thus were not entitled to its protection. Nevertheless, as a matter of fairness, the Board resolved to treat the temporary professional employes, whose contracts were not renewed, "as if suspended," thus gratuitously applying the criteria of Section 1125(a) and (b) to them and according them reinstatement rights as provided in Section 1125(c). The Board did not similarly designate the part-time employes "as if suspended" but rather did, in fact, simply "suspend" them along with the full-time tenured professional employes, presumably pursuant to Section 1125, despite the previous determination that they (the part-time employes) were not entitled to such treatment. Thus while the part-time employes were suspended in the order of their seniority within the class of part-time employes, their seniority was not compared with that of full-time tenured employes. It should also be noted that, with respect to the tenured professional employes (both full and part-time), no efficiency ratings existed within the meaning of Section 1125(a). The Board therefore decided to treat them as though "no substantial differences in rating" existed, and thus made the suspensions based entirely on seniority pursuant to Section 1125 (b). Finally, the superintendent considered "realigning" the staff so as to retain the teachers with the greatest seniority as required by Welsko v. Foster Township School District, 383 Pa. 390, 393, 119 A.2d 43, 44 (1956), but was unable to implement such a plan.
Based on these considerations and determinations, the superintendent recommended that the most junior employes in each affected subject area be suspended or terminated depending upon whether they were tenured professional employes (full and part-time) or temporary professional employes. In all cases the part-time employes, although tenured, were considered *194 junior to temporary professional employes and the temporaries, in turn, were junior to the full-time tenured employes.
Appellants attack the procedure described above on a number of grounds as not in compliance with Section 1125. We shall first consider those arguments advanced primarily on behalf of the temporary professional employes. In this regard, appellants contend: (1) that the term "professional employe" in Sections 1124 and 1125 includes "temporary professional employes" and that such temporary professional employes are thus entitled to be suspended thereunder rather than having their contracts terminated; (2) that Section 1125 requires that in determining suspensions, efficiency ratings should first be applied across the board to all teachers, whether tenured or not, and to all subject areas, regardless of where declines in enrollment have occurred, and that seniority rights should only come into play where no differences in rating as to all such teachers are found; and (3) that since no efficiency ratings existed for the tenured employes, the superintendent's inability to compare ratings as between tenured and temporary employes renders all the suspensions and terminations invalid. We reject all of these contentions for the reasons that follow.
First, we disagree with the contention that temporary professional employes are "professional employes" within the meaning of Sections 1124 and 1125 of the Code. Section 1101 of the Code, 24 P.S. § 11-1101, provides the following distinct definitions:
As used in this article,
(1) The term `professional employe' shall include those who are certificated as teachers, supervisors, supervising principals, principals, assistant principals, vice-principals, directors of vocational education, dental hygienists, visiting *195 teachers, home and school visitors, school counselors, child nutrition program specialists, school librarians, school secretaries the selection of whom is on the basis of merit as determined by eligibility lists and school nurses.
. . . .
(3) The term `temporary professional employe' shall mean any individual who has been employed to perform, for a limited time, the duties of a newly created position or of a regular professional employe whose services have been terminated by death, resignation, suspension or removal.
Although it is not clear from these definitions, it is clear from a thorough reading of Article XI of the Code, and particularly Section 1108, 24 P.S. § 11-1108, that the key feature distinguishing temporary professional employes from professional employes is tenure. See George v. Department of Education, 15 Pa. Commonwealth Ct. 239, 325 A.2d 819 (1974). Section 1108 (d) of the Code expressly provides:
(d) Temporary professional employes shall for all purposes, except tenure status, be viewed in law as full-time employes, and shall enjoy all the rights and privileges of regular full-time employes. (Emphasis added.)
Section 1108(b) further provides the manner in which a temporary professional employe becomes a "professional employe," i.e., obtains tenure:
(b) A temporary professional employe whose work has been certified by the district superintendent to the secretary of the school district, during the last four (4) months of the second year of such service, as being satisfactory shall thereafter be a `professional employe' within the meaning of this article. The attainment of this status shall be recorded in *196 the records of the board and written notification thereof shall be sent also to the employe. The employe shall then be tendered forthwith a regular contract of employment as provided for professional employes. . . . (Emphasis added.)
Absent the two distinct definitions in Section 1101 and the concept of tenure in Section 1108, it would be possible to argue that the term "professional employe" in Sections 1124 and 1125 is ambiguous or that it includes temporary professional employes. However, those sections foreclose such an argument as does the fact that when the Legislature intended that particular provisions of Article XI apply to both (tenured) professional employes and (nontenured) temporary professional employes, it so stated, or used the term "teacher." See e.g., Sections 1106, 1109, 1111, 1112, 1123, 1141(1), 1144 and 1154 of the Code, 24 P.S. §§ 11-1106, 11-1109, 11-1111, 11-1112, 11-1123, 11-1141(1), 11-1144, and 11-1154. It did not do so with respect to Sections 1124 and 1125 and we must conclude that the term "professional employe" as used therein refers only to tenured professional employes and does not include temporary professional employes.[8] Consequently, temporary professional employes are not entitled to be suspended pursuant to Sections 1124 and 1125 and therefore have no rights of retention based either on efficiency rating or seniority as against tenured employes or as among themselves.[9] And while Sections 1124 and 1125 are *197 not, therefore, applicable to temporary professional employes, these Sections do, by analogy, provide a sound reason for the nonrenewal of their contracts. For if tenured employes may be suspended by reason of a substantial decrease in enrollment, it follows logically that the Board may refuse to renew the contracts of nontenured employes for the same reason.
We note that the conclusion reached here is merely a result of the whole scheme of Article XI of the Code in attributing tenure and its associated rights, including seniority, only after a two year trial period. The Board in resolving to treat the temporary professional employes "as if suspended" and thus granting them seniority and reinstatement rights as among themselves, did, in fact, extend them rights to which they were otherwise not entitled under the Code.
Our conclusion that temporary professional employes have no right to be retained on the basis of efficiency ratings or seniority as against tenured employes or among themselves, necessarily disposes of appellants' contention that efficiency ratings should first be applied to all teachers whether tenured or not. With respect to whether such ratings should be applied to all subject areas, regardless of where the most significant declines in enrollment have occurred, we previously rejected such a contention, by analogy, in Harmony, supra: "The law does not require a school district to retain unneeded teachers in one area of education at the expense of not hiring needed teachers in another area." 16 Pa. Commonwealth Ct. at 178, 328 A.2d at 885. Similarly, while we expressly do not approve of the Board's failure to maintain efficiency ratings on the tenured professional employes as required by Section 1125(a) of the Code, such failure cannot benefit the temporary professional employes who have no right to be retained or compared to the tenured employes on the basis of such ratings. As to *198 the tenured professional employes, we hold to the view expressed in Harmony, supra, at 180, 328 A.2d at 886, that the failure to maintain ratings does not invalidate the suspensions, at least where the suspended employes are the least senior.
Next, appellants argue that the superintendent failed to realign the teaching staff as required by Welsko v. Foster Township School District, 383 Pa. 390, 119 A.2d 43 (1956); see also Harmony, supra. The concept of realignment is explained in Welsko, supra, as follows:
A school board has not done its duty simply because it retained no one with less continuous years teaching the subject which the suspended teacher was qualified to teach. Where a reduction in teaching staff is called for, the Board's first consideration should be how to retain those teachers with the longest years of service by realigning the staff so that the remaining teachers, after the reduction has been effected, can teach the subjects of those who, because of lesser seniority rights, have been suspended. 383 Pa. at 393, 119 A.2d at 44.
The superintendent testified that he examined the records of all teachers with certification in more than one subject area but was unable to effect a practical realignment. Appellants argue that in one instance, a tenured chemistry teacher could have been shifted to the position of guidance counselor, for which she was also certified, thus, after some additional shifting, enabling retention of a nontenured chemistry teacher. In view of our determination that nontenured teachers do not have seniority rights, we do not feel that the concept of realignment in Welsko, supra, which is a device for enforcing seniority rights, is applicable to a nontenured teacher. Even if it were, *199 however, the record clearly demonstrates that the proposed shift was totally impractical.
Appellants' final arguments are advanced on behalf of the tenured part-time professional employes. Here, appellants contend first, that there is no basis in the Code for distinguishing part-time employes and treating them as a separate class, and, second, that there was error in the way in which the seniority of the part-time employes was computed.
As indicated earlier, the part-time tenured employes were "suspended" presumably pursuant to Sections 1124 and 1125, although they were given seniority rights only among themselves and were considered junior to both temporary and tenured full-time professional employes. The Board attempts to justify so treating the part-time employes on the grounds that: (1) part-time employes, even if tenured, are not "professional employes" within the meaning of Sections 1124 and 1125 and are thus not entitled to seniority rights; and (2) part-time positions are year to year positions which, in this case, the Board decided to eliminate.
In support of its position that part-time employes, even if tenured, are not "professional employes" within the meaning of Sections 1124 and 1125, the Board first points to Section 1101 of the Code, 24 P.S. § 11-1101, which provides in pertinent part: "As used in this article, (1) The term `professional employe' shall include those who are certificated as teachers. . . ." The Board then refers to Section 1141 of the Code, 24 P.S. § 11-1141, which provides, in pertinent part:
For the purposes of this subdivision [relating to compensation].
(1) `Teacher' shall include all professional employes and temporary professional employes, who devote fifty per centum (50%) of their time, or more, to teaching or other direct educational *200 activities, such as class room teachers.. . . (Emphasis added.) (Footnote omitted.)
The Board argues that since the part-time employes who were suspended taught only 16.5 hours per week,[10] which is less than fifty per cent (50%) of a normal work week, they are not "teachers" within the meaning of Section 1141(1) and therefore are not "professional employes" within the meaning of Sections 1124 and 1125. In support of this construction, the Board cites the following language from Brentwood Borough School District Appeal, 439 Pa. 256, 260, 267 A.2d 848, 850 (1970):
Construing sections 1101 and 1141 together, an individual is a teacher for purposes of § 1141 if he holds the necessary certificate and devotes at least half his time to teaching or direct educational activities, and he is a professional employe under § 1101 if he is a teacher under § 1141.
While a reasonable argument can be made that the fifty per cent (50%) test of Section 1141(1) is, as its introductory phrase seems to indicate, only relevant for compensation purposes and not for purposes of determining professional employe status, we need not explore this issue here. For the test, in any event, turns on whether the particular employes devote fifty per cent (50%) or more "of their time" to teaching *201 or other direct educational activities. The part-time employes in this case devoted all of their time to teaching and direct educational activities. The Board relies on language in an Opinion of the Secretary of Education[11] to the effect that the test turns on fifty per cent (50%) of the "normal work week."
Such opinions are not, of course, binding on this Court and we reject the reasoning which reads the words "normal work week" into the otherwise clear meaning of the words "their time."[12]
In this case the part-time employes were certificated as teachers, were serving as teachers, and were tenured; they were, therefore, and are professional employes within the meaning of Sections 1101, 1124 and 1125 of the Code and entitled to any and all rights provided therein. We can find no support in the Code for the Board's relegation of tenured part-time employes to a status less than that accorded temporary professional employes and nothing, in fact, that supports a distinction between them and their full-time counterparts.[13] At the same time, fairness and justice dictate that some distinction be drawn between part-time and full-time tenured employes with respect to two factors: (1) the computation of seniority and (2) the elimination of part-time positions.
While there is no reason why a tenured professional employe who, for whatever reason, happens to teach part time should thereby forfeit any seniority rights, it is also manifestly unfair for one year of part-time employment to equal one year of full-time employment *202 for seniority purposes. We are not aware of any provisions in the Code or of any regulation or case dealing with the computation of seniority of a part-time professional employe. We feel it was error, however, in this case, for the Board to allow no credit at all for part-time years of service. In the absence of statutory or regulatory guidelines, the solution that suggests itself is to compute such seniority on a pro rata basis determined by the proportion of full-time duties performed. Thus, the part-time employes in this case, who appear to have performed one-half of full-time duties (see supra, note 10), would earn one-half year seniority for each year taught. This case will require a remand for a precise determination of their seniority and a comparison of the result with the seniority of other tenured employes, both part-time and full-time.
A second problem area arises where, as here, a school board eliminates a part-time position, or where one or more part-time positions are consolidated into a full-time position. While school boards should, for economic or other reasons, be free to take such action at any time, they must also respect the seniority rights of tenured employes. As the Supreme Court stated in Welsko, supra:
Seniority rights exist for the dual purpose `of assuring continuity of service for faithful labor and providing efficient service to the state gained by experience.' (Wesenberg Case, 346 Pa. 438)
Seniority is a matter not to be treated lightly. The very stability of our schools depends on retaining those teachers who because of long years of experience and devotion have earned the obedience of the pupils, the admiration of the parents and the respect of the community.
383 Pa. at 392, 119 A.2d at 44.
*203 We believe the interest of school boards in eliminating part-time positions and the necessity of respecting the seniority rights of tenured part-time employes can be reconciled through the "realignment" process developed in Welsko, supra, and discussed above. For just as a teacher with multiple certification may be shifted to a different subject area so as to provide a position for another teacher with seniority rights, there is no reason why a tenured part-time teacher with seniority (computed on a pro rata basis as described above), whose position is being eliminated, should not be given the opportunity, in accordance with her seniority rights, to take a full-time position. If such position is not desired, the teacher could then be suspended pursuant to Sections 1124 and 1125 of the Code, subject to reinstatement when and if another part-time position becomes available.
We, therefore, affirm the adjudication of the Board and the order of the court below with respect to the nonrenewal of the contracts of the six temporary professional employes and the suspension of the full-time tenured professional employe.[14] We must, however, reverse the adjudication of the Board and the order of the court below with respect to the suspension of the two part-time tenured professional employes and remand to the court below for a redetermination of their seniority and the rights associated therewith, in a manner consistent with this opinion.
ORDER
NOW, January 14, 1977, the order of the Court of Common Pleas of Montgomery County as applicable to temporary professional employes and the full-time *204 tenured professional employe is hereby affirmed. As said order is applicable to part-time tenured professional employes it is hereby reversed and the matter is remanded to said court for further proceedings consistent with this opinion.
NOTES
[1] Act of March 10, 1949, P.L. 30, as amended, 24 P.S. §§ 11-1124, 11-1125. Section 1124 provides, in pertinent part:
Any board of school directors may suspend the necessary number of professional employes, for any of the causes hereinafter enumerated:
(1) Substantial decrease in pupil enrollment in the school district;
. . . .
[2] As we indicated in Smith v. Board of School Directors of The Harmony Area School District, 16 Pa. Commonwealth Ct. 175, 328 A.2d 883 (1974), this was the proper appeal procedure inasmuch as temporary professional employes have no appeal rights under the Code and the appeal procedure provided for tenured professional employes at Section 1127 et seq. of the Code, 24 P.S. §§ 11-1127 et seq., is only applicable to dismissals and not to suspensions.
[3] On this point, appellants contend that a stenographic record of the proceedings before the Board is a prerequisite to a valid adjudication pursuant to Section 4 of the Local Agency Law, 53 P.S. § 11304. This contention is without merit inasmuch as Section 4 clearly provides that a full and complete stenographic record "may" be kept and that if such record is not provided by the local agency, it may be kept by any party agreeing to pay the costs thereof. Appellants do not contend that they ever requested that a stenographic record be made or that they agreed to pay for same.
[4] The appellants are Cora Lee Phillippi and Phyllis Catz, tenured part-time employes, Bonnie M. Cohen, a tenured full-time employe, and Cheryl Schlosser, Charles Knipe, Barry Goldstein, Muriel W. Edgerton, Maria Kotch and Paula Jane Schwartz, all temporary professional employes. Joan R. Holmes, who was an appellant below, was apparently reinstated and withdrew from the case at the lower court level. Winifred Carlson-Swartz is alleged, in the brief, to be an appellant here, but cannot be inasmuch as she was not a party below.
[5] The superintendent testified to the following figures which were included in the Board's resolution of April 21, 1975:
Enrollment
School Year Elementary Secondary
1969-70 1,976 2,163
1970-71 1,860 2,222
1971-72 1,818 2,324
1972-73 1,714 2,331
1973-74 1,617 2,282
1974-75 1,520 2,133
1975-76 (projected) 1,439 2,039
[6] Perhaps more significant is the fact that in the secondary schools, where most of the suspensions and terminations took place, enrollment has declined by approximately 300 students in the last three years.
[7] All of the present appellants, except Maria Kotch, taught in the secondary schools and were certified in one or more specific subject areas.
[8] See Mazzei v. Scranton School District, 341 Pa. 255, 19 A.2d 155 (1941) for a similar analysis of substantially the same provisions under the former Teachers Tenure Act.
[9] We are aware that Harmony, supra, involved an appeal by temporary professional employes who were, in fact, suspended pursuant to Sections 1124 and 1125 and who appealed on that basis. The issue of the applicability of those Sections to them was apparently never raised.
[10] There was a conflict in the testimony with respect to the precise number of hours worked by the part-time employes. In any event, we view the Board's calculation as somewhat of a technicality in view of the uncontradicted testimony that: (1) the part-time teachers taught 5 courses per year (2 courses one semester and 3 courses the next) and full-time teachers taught 10 courses per year; (2) the part-time teachers assumed extracurricular and miscellaneous duties as did their full-time counterparts; and (3) the part-time teachers received exactly one-half the full-time salary for teachers with their education and experience. This clearly suggests to us that these employes were, in fact, precisely "one-half-time" teachers.
[11] Appeal of Lipperini, Secretary of Education Opinion No. 235 (1974).
[12] Moreover, these part-time employes appear to qualify even under the "normal work week" test. See supra, note 10.
[13] The only reference to part-time teachers that we have found in Article XI of the Code appears in Section 1146, 24 P.S. § 11-1146 and relates to compensation.
[14] The full-time tenured professional employe cannot benefit from any redetermination of the seniority of part-time employes since she was considered, by the Board, as having seniority rights superior to theirs.
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01-03-2023
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10-30-2013
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https://www.courtlistener.com/api/rest/v3/opinions/8302427/
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Mr. Justice McKinney
delivered the opinion of the Court.
Clayton Winton, a colored hoy, twenty years of age, hereinafter referred to as the defendant, shot and killed John Oakley, a deputy sheriff, on the night of December 30, 1922, at the home of his parents about one mile north of Watertown, in Wilson county.
*179Defendant was indicted for murder in the first degree, and was put to trial at the April, 1923, term of the criminal court.
The jury being unable to agree, a mistrial was entered, and he was again put to trial at the January, 1924, term, when the jury found him guilty of murder in the first degree with mitigating circumstances, and fixed his punishment at imprisonment in the State penitentiary for a perod of twenty-five years.
His motions for a new trial and in arrest of judgment having been overruled, he prayed and was granted an appeal to this court, and, through counsel, has filed nineteen assignments of error, the first five of which question the sufficiency of the evidence to sustain a conviction for murder in the first degree.
According to the evidence the defendant had always borne a good reputation; had never been in any trouble before, and for about two years preceding the homicide had been making his home in Lebanon attending school. In the mornings and afternoons he worked about the homes of several prominent citizens of Lebanon, and in that way earned money with which to educate himself. These parties gave him a good name.
His father and mother, George and Nolie Winton, lived in a negro settlement in the suburbs of Watertown, which is twelve miles from Lebanon. George was a confirmed drunkard,- and was worthless and trifling. According to the record, Nolie was a woman of good character, and by her industry had bought her home and supported herself by taking in washing. Her dwelling house faced south and was ten or twelve feet from the street or road. It had a front and back porch, and a hallway connecting the two porches, and there were two rooms on each side *180thereof. The shooting ocenrred in the southwest room of this dwelling, which was fourteen feet square.
On the night of December 29, 1922, the defendant had gone by train from Lebanon to Watertown to spend a few days with his mother. His father spent that night in his home, but left early the next morning, and, so far as the record shows,, has not been seen in Watertown since that time.
It also appears that on December the 29th the grand jury of Wilson county found an indictment against George for public drunkenness, and on that day Oakley advised Sheriff Reeves that George was preparing to leave. On the same day that the indictment was found, Reeves had the clerk to issue a capias for George, and Reeves' testified that he mailed same to Oakley on the afternoon of the 29th, and in due course of mail, Oakley should have received same that night or the next day. But it does not appear from the record that Oakley actually received said capias, or that he had , same with him when he went to the home of the defendant for the purpose of arresting his father.
A little after dark on the evening of the 30th, Oakley procured Will Luck, who was marshal of Watertown, and a mechanic by the name of W. J. Hooberry to go with him to the Winton home for the purpose of placing George under arrest.
When within about one hundred thirty yards of said home, Oakley and his associates saw the defendant with two boys, and heard him say, “I have forgotten something,” and thereupon turned and walked back to his home. The two boys, with whom the defendant was standing when he was observed by the officers, were in*181troduced by the defendant, and both of them testified that they saw the three officers and recognized them.
Luck admits that it was dark at the time, and that they were not on the street upon which the defendant’s home was located (which runs east and west), but were on a street that intersected same, which runs north and south.
The defendant admits the circumstances set forth above, and admits that he saw the three men, but claims that he did not recognize them on account of it being dark, although he knew them and knew that they were officers, and says that their presence had nothing to do with his sudden determination to return to his home. He testified that he went back home to call “Boston,” but does not show that “Boston” lived at his home, nor that he had any reason to expect to find “Boston” in his home. In fact, he was not questioned about this one way or the other.
He further testified that, upon arriving at his home, he was persuaded by his mother to remain at home with her because of the absence of his father; that he then got his pistol and proceeded to the front porch for the purpose of firing it as a Christmas celebration, when he saw Hooberry at the front gate, which caused him to re-enter the house without shooting his pistol.
When the party of officers reached the home of defendant, Luck and Oakley went around to the back of the house, leaving Hooberry at the front gate. Hooberry testified that the defendant came to the front door and opened it with his hand in his right overcoat pocket, the pocket in which the defendant admits that he had the pistol with which he subsequently killed Oakley; that the defendant’s mother followed him to the door and said *182to him: “There is two men at the back door; go let them in, and don’t'act the fool.”
Lnck testified that Oakley knocked, on the rear do'or of the home, and that he then heard the voices of the defendant and his mother in the .hallway, bnt did not understand what was said by them; that the defendant opened the door, and Oakley asked him if his father were there, receiving a negative reply; that Oakley told the defendant he wanted to see him, and thereupon the defendant and his mother led them through the hall and into the front room, where the shooting occurred..
Luck’s statement as to what happened after they entered the room is as follows:
“Q. When you got in the room, Mr. Luck, just go ahead and tell in your own way what was said by the defendant, and what Mr. Oakley said, and tell what occurred. Talk out loud so the jury can hear you.
“A. Mr. Oakley went in front of me, and they led the way into the room. Winton stepped out towards, kinder in front of the fireplace, maybe four or five feet out there, and Mr. Oakley stepped over towards the grate and his mother. Eight at the right, as you go in the door, there is a little closet there, and she stands by that, and I still stands just inside of the door. The door was standing open at the left as you come in.
“Q. You mean the door leading from the hall opened into the room so that when you turned it. back it went back to the left?
“A. And I went back to the left as you go in. Just to the right of this door is a closet/on the right hand side, with a door that forms a part of the wall, and the fireplace is in the rest of the wall there.
*183“Q. Go ahead.
“ A. I walked just in front of the door, and his mother was standing kinder to the hack of me, kinder to the right and hack of me, out from, the closet door a piece. Mr. Oakley asked them if George was there again, and they said he wasn’t there. He told them he had a warrant for him and Clayton asked him if he had a search warrant. He said: ‘No; I haven’t a search warrant; I don’t need any search warrant.’ Mr. Oakley was standing kinder just a little hit, not exactly in front of the fireplace, somewhere close to it; I don’t know the exact position'; and he reached around, he was facing the south talking, and Clayton Winton was in front of him, and he reached around with his left hand to pull that closet door open to see if George was in there, and Clayton jumped hack. He had his hand in his right-hand overcoat pocket, and jumped back in an angry mood towards the rear of the house, and his mother holloed.
“Q. You said to the rear of the house?
“A. He backed hack towards the back.
“Q. Backed back towards the south?
“A. Yes, sir; and his mother said: ‘Don’t do that, Clayton, don’t do that’; and about that time he had already fired, and Mr. Oakley, I seen him scrambling, and he jumped back into a position in front of the place about the time he fired, maybe he had got in position by the time he fired, and that is when the firing started. Mr. Oakley shot as quickly as he got his position to shoot.
“ Q. How long was it Mr. Luck, from the time Winton fired until you saw Mr. Oakley’s pistol, if you did see it?
“A. It was under those circumstances there, it was pretty critical time, and I couldn’t hardly tell. It was *184as quick as a man of bis age could get Ms gun out and shoot. It. was all done in a few seconds.
“Q. It was all right together?
“A. Yes, sir; it was all right together.
"Q. When you saw Winton’s pistol, what did you do then?
“A. When he pulled his pistol out and fired at Mr. Oakley, I pulled out mine and fired at him.
“Q. How many times did you shoot, Mr. Luck?
“A. Twice.
“Q. How many times did Winton shoot, if you know?
“A. He must have shot three or four times; I can’t be positive as to that.
“Q. How many times did Mr. Oakley shoot?
“A. I think that he shot three times.”
Cross-examination:
"Q. You said'it was dark in there?
“A. Thére was a little lamp on the table.
“Q. It wasn’t dark?
"A. You know what kind of a light a small lamp will give in a room.
"Q. It was not as visible as it would have been had there been a better light; that is what you mean?
"A. Yes, sir.
"Q. This boy came and answered the knock?
"A. Yes, sir.
"Q. He opened the door and you all came in?
"A. Yes, sir.
"Q. You came on down and read no warrant?
"A. No.
"Q. You didn’t show any warrant?
*185“A. No.
“Q. Mr. Oakley didn’t show any warrant?
“A. Not when he went in.
“Q. You went from the hack entrance going south-wardly in that hall, on up to the front?
“A. To the front.
“Q. Until you came to that door on the right west-wardly that led into the southwestern room of the house; you all entered the room the shooting occurred in?
“ A. Yes, sir.
“Q. Did you stop there and read any paper or have any conversation?
“A. We just went into the room behind them.
“Q. At the time you entered, no indignity, no obstruction was offered you, or nobody with you, so far as you know?
“A. No, sir.”
The defendant’s account of the shooting is as follows:
“Q. What else did you do?
“A. I went in home, and I called Boston, and went in the house and told my mother I was going to the entertainment, and she said: ‘Don’t leave the house to-night, son. George is out, and I want you to stay with me. I am sick.’ I said: ‘Well, I will go in and get my gun and go out on the porch and shoot some. ’ I went in the house and got my gun, and went out on the porch, and saw somebody standing there in front at the gate, and I didn’t shoot. I stood out there, and then she came to me and called.me and said: ‘Clayton, there is somebody at the back door and knocked; go let them in.’ When I went to the back door and opened it Mr. Oakley came in.
*186“Q. Did anybody else come with. Mm?
“A. No, sir.”
“Q. What did Mr. Oakley say!
“A. He. came in and never said nothing to me, and walked on down the ball and said: ‘Nolie, where is George'?’ She said: ‘I don’t know, Mr. Oakley, be is not here.’ He said: ‘I will have to search for him.’ She said: ‘Search as much as yon please, but it looks like you could show me some paper.’ He said: ‘I don’t need any.’ I walked on down the hall. I was behind him, where him and her was talking, and I went in her room and when I went in her room they stood out there, I don’t know—
“Q. He and your mother?
“A. Yes, sir; and they came in the room where I was, and when he came in there was a closet right next to the door where she was, and he started to open that closet, and she said: ‘It looks like you might show me some papers,’ and he turned around with his pistol in his hand and said: ‘ This is my papers, damn you. ’ And I turned and started walking towards the end of the house, and he shot.
“Q. Who shot?
“A. Mr. Oakley.
“Q. Shot you?
“A. Yes, sir.
“Q. Where did the first bullet hit you?
“A. In the back.
“Q. What then, occurred?
“A. I turned around, and when I turned around Mr. Will Luck was in the door, and he began to shoot.
*187“ Q. Did he shoot yon ?
“A. Yes, sir.”
The testimony of the mother of the defendant as to what occurred is as follows:
“Q. Aunt Nolie, on the night that the trouble occurred, what was the first you knew of these officers being there!
“A. When they came in the rear, I told the boy. to go open the door, there was some one at the door. He went and opened the door, and Mr. Oakley came in, and walked on up to me, and asked me where was my husband. I told him I didn’t know. He said he would have to search for him. I said: ‘ Mr. Oakley, you can search all you want to; but where is your papers!’ When I said that he said: ‘I have got to search.’ And he walked into my room door; and when he went into my room door I went in behind him; and there was a little closet, the door, coming into my room like this, and went back that way and closed the door just like this, chair, like this in the door here; when he came in the grate was right over here. I stepped up to him at the closet door, and I said: ‘It does look like you could show me some papers.’
“Q. What did he say?
“A. He jerked out his gun and said, ‘Here is my papers, damn you;’ that is what he said to me.
“Q. How did he point that pistol?
“A. He just snatched it out, and said: ‘Here is my papers, damn you.’
“Q. When he said, ‘Here is my papers, damn you,’ and had the pistol out, in whose direction was it pointing?
*188“A. It was pointed right in towards me; my boy was standing behind me.”
The defendant received two or three bullet wounds upon this occasion, from which he recovered.
Luck does not contradict the testimony of the defendant and his mother to the effect that authority to search the premises was demanded before they went into the room where the shooting occurred. The witnesses are in conflict as to whether it was the defendant or his mother who demanded a search warrant after they entered the southwest room.
The first question which it is necessary for us to determine is, do the facts detailed above, as testified to by the witness Luck for the State, when taken in connection with the physical facts and circumstances, make out a case of murder in the first degree?
The theory of the State is thus stated by the learned assistant attorney general in his reply brief as follows:
“This evidence (referring to that detailed above) clearly warrants the inference that the defendant had recognized the officers, and that he had gone home in an angry mood, for the purpose of preventing the arrest of his father. The statement made to him by his mother, which was overheard by Mr. Hooberry, clearly indicates that the defendant had made statements to his mother which indicated to her that he was about to act rashly, over her protest, and in the light of this evidence, the jury were abundantly warranted in reaching the conclusion that the defendant had gone to the front door, with his hand on his pistol, to prevent the entry of the officers into his father’s home.
*189“From this purpose he was no donbt deterred by his mother, who, as she admitted, had never received anything bnt kindly treatment at the hands of the deceased, and the officers were admitted at her request. Angered by the action of the officer in ignoring his demand that a search warrant be produced, and pursuant to a preconceived purpose, the defendant fired at the officer without warning and without cause, and the homicide committed during the ensuing exchange of shots was clearly one amounting to murder in the first degree. ’ ’
The theory of the State is based largely upon surmise rather than upon facts. For example, there is nothing in the record to indicate that the defendant knew that his father-had been indicted, or that the officers, whom he passed, were going to his home to search same. The evidence shows that his father was not at home, and there is no suggestion that he had any grudge against these officers, or that he had even had any trouble with them, or entertained any ill will towards them.
While his story about shooting his pistol may be “colorable,” as suggested by the attorney general, it finds support in the testimony of IToo berry that he walked out onto the front porch, but, upon seeing him, entered the house, and, at the request of his mother, admitted the officers instead of resisting their entry into the house, which the State assumes was his purpose in arming himself. He had a right to protect his home against an unlawful invasion, and to use such force as was necessary to prevent such a wrong. He and his mother deny that the latter said: “Don’t make a fool out of yourself.” But, accepting Hooberry’s testimony, his mother *190could have referred to Ms contemplated act in firing his pistol from the porch, and within a few feet of the road or street.
The evidence does not support the State’s theory that the defendant armed himself for the purpose of preventing the officers from entering the house.
He and his mother evidently conceived the idea that the search of their home by these officers was unlawful, because they made two requests for their authority, which was not produced.
The defendant evidently resented what he conceived to be a wrongful act, and became very angry when Oakley started to search the closet, and began shooting.
Luck, as previously stated, testified that when Oakley started to open the closet, after a demand had been made upon him for his authority, the defendant "jumped back in an angry mood,” and shot.
The thing that enraged him and caused him to shoot was the searching of the premises by Oakley, which he conceived to be wrongful. If his passions were thus aroused, and, acting upon that impulse, he shot, it would not be murder in the first degree.
Section 6439 of Shannon’s Code provides that:
"Every murder perpetrated by means of poison, lying in wait, or by any other kind of willful, deliberate, malicious, and premeditated killing, or committed in the perpetration of, or attempt to perpetrate, any arson, rape, robbery, burglary, or larceny, is murder in the first degree. ’ ’
A very clear and correct exposition of the characteristics of first degree murder is found in the opinion of *191Judge McFarland, in Rader v. State, 5 Lea, 619, as follows:
“It is unnecessary to detail the testimony at any greater length. The material inquiry is, whether this testimony shows sufficient deliberation and premeditation to sustain a verdict of murder in the first degree. When the murder is not committed in the perpetration of, or attempt to perpetrate, any of the felonies named in the act of 1829, Code, section 4598, then, in order to constitute murder in the first degree, it must he perpetrated by poison or lying in wait, or some other hind of willful, deliberate, malicious and premeditated killing; that is to say, the deliberation and premeditation must be akin to the deliberation and premeditation manifested where the murder is by poison or lying,in wait — the cool purpose must be formed and the deliberate intention conceived in the mind, in the absence of passion, to take the life of the person slain. Murder by poison or lying in wait, are given as instances of this sort of deliberate and premeditated killing, and in such cases no other evidence of the deliberation and premeditation is required; but where the murder is by other means, proof of deliberation and premeditation is required. It is true it has been held several times that the purpose need not be deliberated upon any particular length of time — it is enough if it precede the act; but in all such cases the purpose must be coolly formed, and not in passion, or, if formed in passion, it must be executed after the passion has had time to subside. As was clearly pointed out by the circuit judge, if there was provocation of a sufficient character, and the killing was under passion thus excited, it would *192be manslaughter; But it is not every provocation that will reduce the killing to manslaughter, not even blows under all circumstances, for the resentment must bear a reasonable proportion to the provocation. Nevertheless, although there be no sufficient provocation to reduce the killing to manslaughter, still there may be such provocation as to excite passion in fact, and if the purpose to kill is formed in passion thus excited, and executed without time for the passion to cool, it is not murder in the first degree, but murder in the second degree.”
Applying this test to the facts of the case under consideration, it is apparent that the defendant is not guilty of murder in the first degree, because his act was not done coolly and in the absence of passion.
Passion and anger mean the same thing in criminal law.
In 30 Cyc., 801, passion is thus defined: “Any of the emotions of the mind known as anger (q. v.), rage, sudden resentment, or terror, rendering the mind incapable of cool reflection.”
In 2 Corpus Juris, 1345, anger is thus defined: “A strong passion or emotion of the mind excited by real or supposed injury to or intent to injure one’s self or others, a strong passion or emotion of displeasure or antagonism, excited by a real or supposed injury or insult to one’s self or others by the intent to do such injury ; a violent passion of the mind excited by a real or supposed injury, or by an injury offered to a relative or friend; passion; ire; gall; choler; indignation; displeasure; vexation; grudge; spleen; a short madness.”
*193In 6 Words and Phrases, First Series, p. 5227, it is said: “ ‘Passion,’ as used in a charge defining manslaughter as voluntary homicide committed under the immediate influence of sudden passion arising from an adequate cause, means any of the emotions of the mind known as ‘anger,’ ‘rage,’ ‘sudden resentment,’ or ‘terror,’ rendering the mind incapable of cool reflection. Stell v. State (Tex.), 58 S. W., 75, 76.”
In the same work (Second Series, vol. 3, p. 916) it is said: “ ‘ In common use among the people in the everyday affairs of life, the words “anger” and “passion” are interchangeable and mean practically the same thing.’ Morris v. Territory, 99 P., 760, 768, 1 Okl. Cr., 617.
“The word ‘passion,’ as applied to a jury’s action, means anger, resentment, heat, absence of reflection, disregard of the rights of others, and kindred motives. Murphy v. Southern Pac. Co., 101 P., 322, 327, 31 Nev., 120, 21 Ann. Cas., 502.”
In Webster’s International Dictionary it is said: “When any feeling or emotion completely masters the mind, we call it a passion; as, a passion for .music, dress, etc.; especially is anger (when thus extreme) called passion. The mind, in such cases, is considered as having lost its self-control, and become the passive instrument of the feeling in question.”
Since the passage of chapter 5, Acts 1919, reducing the punishment for murder in the first degree to a minimum of twenty years’ imprisonment, we have had to reverse a number of like cases, where the punishment was fixed *194at from twenty to twenty-five years’ imprisonment, because the facts did not support the findings of the juries.
It is not likely that, in any of these cases, the juries would have found for the higher offense had the punishment been death or life imprisonment. Their verdicts have the appearance of being compromises.
The distinction between the two degrees of murder is well defined by our statutes, and the decisions of this court.
If those charged with the enforcement of the criminal laws would not insist upon convictions for first degree murder when the facts do not justify it, the result would be more affirmances in this court, and the trouble and expense of new trials would, in many instances, be avoided.
The officers of the law should be protected, and, where one is ruthlessly shot down, public sentiment often demands a severer punishment than the law provides, for, under the -law, there can be no conviction for murder in the first degree where the killing was done in anger or passion.
If the punishment provided for such offenses is inadequate, the remedy is legislative and not judicial.
After a most painstaking investigation of this record, we are thoroughly convinced that the defendant shot the deceased in passion, and that conviction for murder in the first degree cannot be sustained. That element of premeditation characteristic of murder by poisoning or lying in wait is absent.
In view of the fact that the case will have to go back for another trial, we find it unnecessary to pass upon the other assignments of error.
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01-03-2023
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10-17-2022
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https://www.courtlistener.com/api/rest/v3/opinions/1515148/
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852 S.W.2d 698 (1993)
Olga GOODWIN, Appellant,
v.
James T. CAMP, Appellee.
No. 07-92-0305-CV.
Court of Appeals of Texas, Amarillo.
April 13, 1993.
Wischkaemper & Martinez, David Martinez, Lubbock, for appellant.
Nelson & Nelson, J. David Nelson, Lubbock, for appellee.
Before DODSON, BOYD and POFF, JJ.
POFF, Justice.
Appellant Olga Goodwin sued James T. Camp, appellee, for damages arising out of an automobile accident. Trial was to a jury. The jury found appellee negligent and awarded appellant $1,500. Dissatisfied with her award, appellant comes to this court seeking a new trial on the basis of a single point of error. We will affirm the judgment of the trial court.
As a direct result of her automobile accident with appellee, appellant sustained injuries to her neck, back and spine. Two chiropractors, Dr. Rick Housewright and Dr. Lloyd Payne, treated appellant for her injuries. They charged appellant $4,094 for their services. At trial, appellee called Dr. Allen Brian Pires, a California chiropractor who is not licensed in Texas, to testify concerning appellant's chiropractic bills. Dr. Pires testified that the majority of the charges were unreasonable and that reasonable charges for the necessary treatment of the injuries appellant sustained in the automobile accident would be $431.
*699 In her solitary point of error, appellant claims that the trial court erred in permitting Dr. Pires to testify as a chiropractic expert because he was not licensed to practice chiropractic in Texas. We disagree.
Rule 702 of the Texas Rules of Civil Evidence states:
If scientific, technical, or other specialized knowledge will assist the trier of fact to understand the evidence or to determine a fact in issue, a witness qualified as an expert by knowledge, skill, experience, training, or education, may testify thereto in the form of an opinion or otherwise.
In the present case, the amount of damages sustained by appellant due to the accident in question was most definitely a fact in issue. Expert testimony would certainly assist the jury in determining the amount of damages to which appellant was entitled. There is no question that Dr. Pires easily qualified as an expert in the field of chiropractic. At the time of trial, Dr. Pires has been a licensed doctor of chiropractic in California for nine years. He had been appointed by the State of California as an expert examiner for the State Board of Chiropractic. In 1983, Dr. Pires graduated from Los Angeles College of Chiropractic in the top ten percent of his class. He has published articles regarding the cervical spine. Dr. Pires is affiliated with the American Chiropractic Association and the International Chiropractic Association. He is a fellow of the American Board of Chiropractic Orthopedists.
Approximately ten percent of Dr. Pires' practice involves the review of chiropractic claims and billings. Dr. Pires regularly reviews charges and treatment records from the State of Texas. He has become familiar with the reasonable range of chiropractic charges in the West Texas and South Plains area by virtue of his subscriptions to certain surveys detailing the average rates charged by chiropractors in the area. It can hardly be maintained that Dr. Pires does not qualify as an expert in the field of chiropractic.
Appellant argues that even though Dr. Pires is an expert, he is precluded from testifying in a Texas court as a chiropractic expert because he is not a licensed Texas chiropractor. For authority appellant cites the Court to the following excerpt from Vernon's Ann.Civ.Stat. article 4512(b):
A person shall be regarded as practicing chiropractic within the meaning of this Act if the person: (1) uses objective or subjective means to analyze, examine, or evaluate the biomechanical conditions of the spine and musculoskeletal system of the human body;
Appellant interprets this language to mean that the practice of chiropractic medicine includes the giving of expert testimony concerning chiropractic procedures. The legislative intent of art. 4512(b) according to appellant is "to prevent out-of-state unlicensed chiropractors from evaluating medical records of Texas licensed chiropractors." Appellant cites no legislative or judicial authority for this position. Yet, she does raise certain policy arguments which she believes support the exclusion of testimony from chiropractors not licensed in Texas.
We do not conclude from our reading of art. 4512(b) that the legislature intended to require chiropractors to be licensed in Texas as a prerequisite to their giving expert testimony. Appellant's policy argument if carried to the extreme would permit the State of Texas to require that any expert witness, whose field of expertise is subject to licensing in Texas, secure a Texas license as an additional requirement to offering expert testimony. This position is clearly contrary to the recent trend to dismantle artificial barriers to expert medical testimony.
Relevant case law supports the trial court's decision to allow Dr. Pires' testimony. In Hart v. Van Zandt, 399 S.W.2d 791, 798 (Tex.1965), the supreme court found that a trial court erred in excluding the deposition testimony of a Pennsylvania medical doctor. In Lee v. Andrews, 545 S.W.2d 238, 245 (Tex.Civ.App.Amarillo 1976, writ dism'd), this court held that a New York pathologist was competent to testify against a Texas family practitioner. Chief Justice Ellis declared:
*700 The fact that [Dr.] McCarthy was from New York does not disqualify him from testifying. Hart v. Van Zandt, 399 S.W.2d 791 (Tex.1965). Under Hart, a doctor from another state is competent to testify in Texas proceedings.
Lee v. Andrews, 545 S.W.2d at 245. See also Johnson v. Hermann Hosp., 659 S.W.2d 124, 126 (Tex.App.Houston [14th Dist.] 1983, writ ref'd n.r.e.) ("Doctors are no longer required to be from the same city, state, or school of practice in order to testify so long as they are equally familiar with the subject of inquiry...."); Darrell L. Keith, Medical Expert Testimony in Texas Medical Malpractice Cases, 43 Baylor L.Rev. 1, 9 (1991).
On the strength of the foregoing authorities, we conclude that the trial court did not abuse its discretion in allowing Dr. Pires to testify as a chiropractic expert. Appellant's point of error is overruled and the judgment of the trial court is affirmed.
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01-03-2023
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10-30-2013
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https://www.courtlistener.com/api/rest/v3/opinions/1515373/
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852 S.W.2d 110 (1993)
313 Ark. 87
McKinley Charles GREEN, Appellant,
v.
STATE of Arkansas, Appellee.
No. CR 92-1171.
Supreme Court of Arkansas.
May 3, 1993.
*111 Jan Thornton, El Dorado, for appellant.
Teena L. White, Asst. Att'y. Gen., Little Rock, for appellee.
CORBIN, Justice.
Appellant, McKinley Charles Green, appeals a judgment of the Union Circuit Court convicting him of attempted kidnapping and sentencing him as an habitual offender to forty years in the Arkansas Department of Correction. Our jurisdiction is pursuant to Ark.Sup.Ct.R. 1-2(a)(2), In re: In the Matter of Rules of the Arkansas Supreme Court and the Arkansas Court of Appeals, 311 Ark.App. (Feb. 1, 1993). Appellant asserts three points for reversal of the judgment entered in accordance with the jury's verdict. We find no merit to the arguments and affirm.
Appellant's first argument for reversal is that the trial court erred in denying his motion for directed verdict. Appellant claims the state failed to prove he intended to commit the offense of attempted kidnapping. He argues that the evidence the state presented of his intent is circumstantial evidence, and that this circumstantial evidence is not substantial because it does not exclude all reasonable hypotheses inconsistent with appellant's guilt.
We treat the challenge of a denial of a motion for directed verdict as a challenge to the sufficiency of the evidence. Chism v. State, 312 Ark. 559, 853 S.W.2d 255 (1993). The test for determining the sufficiency of the evidence is whether there is substantial evidence to support the verdict. Id. On appeal, we review the evidence in the light most favorable to appellee and affirm if there is any substantial evidence to support the jury's verdict. Id. Evidence is substantial if it is of sufficient force and character to compel reasonable minds to reach a conclusion and pass beyond suspicion and conjecture. Id. Circumstantial evidence may constitute substantial evidence; however, in order for circumstantial evidence to constitute substantial evidence, it must exclude every other reasonable hypothesis inconsistent with an accused's guilt. Id. Whether the circumstantial evidence excludes all other reasonable hypotheses inconsistent with an *112 accused's guilt is a question to be determined by the finder of fact. Id.
The crime of attempted kidnapping is encompassed in Ark.Code Ann. §§ 5-3-201 and 5-11-102 (1987). As applied to this case, these sections provide that a person commits attempted kidnapping if he intends to commit kidnapping and purposely engages in conduct that constitutes a substantial step toward the commission of the kidnapping. A person commits kidnapping if, without consent, he restrains another person so as to substantially interfere with that person's liberty, with the purpose of inflicting physical injury upon that person, or engaging in sexual intercourse, deviate sexual activity, or sexual contact with that person. Ark.Code Ann. § 5-11-102(a)(4).
We recite the evidence as viewed most favorably to appellee. Appellant entered a convenience store and purchased a cigar. He loitered in the store for a while and asked to use the telephone. The store clerk denied his request pursuant to store policy. While loitering in the store, appellant stared at the store clerk's breasts and buttocks, and inquired of her marital status and whether she was lonely. After the denial of his subsequent request to use the telephone, appellant jumped over the counter and grabbed the clerk. She struggled with appellant for some time, but to no avail. He pinned her arms to her sides and forced her to walk outside the store. Appellant, still pinning the victim's arms to her sides, stopped at his car and opened the passenger door. The victim was able to slam the car door on appellant's hand causing him to lose his grip on her. The victim escaped and flagged down a car that was passing by. Appellant then drove away from the convenience store. The victim and the driver of the car who stopped to help her returned to the store where the victim called the El Dorado police. Soon thereafter, the police apprehended appellant while driving his car. The victim later identified appellant as her attacker. A search of appellant's vehicle produced an unsmoked cigar.
Kidnapping, or in this case, attempted kidnapping, requires that the victim's liberty be restrained without consent. Ark.Code Ann. § 5-11-102. "Restraint without consent" is defined as including restraint by physical force. Ark.Code Ann. § 5-11-101(2) (1987); Fairchild v. State, 305 Ark. 406, 808 S.W.2d 743 (1991). Substantial interference with another person's liberty does not require that the interference be for a substantial period of time. Jackson v. State, 290 Ark. 160, 717 S.W.2d 801 (1986). The purpose of the restraint may be inferred from circumstantial evidence. Id.; Fairchild, 305 Ark. 406, 808 S.W.2d 743. Intent to commit a crime may also be inferred from the circumstances. Jackson, 290 Ark. 160, 717 S.W.2d 801.
The foregoing evidence is substantial evidence and supports the jury's verdict of guilt. The victim's testimony that she struggled with appellant and that he had her arms pinned to her sides while pushing her through the store and outside clearly indicates he restrained her without her consent and that he interfered substantially with her liberty. Appellant's use of physical force against the victim leads to an inference that he intended to cause her physical harm. The questions appellant asked the victim regarding her marital status and her state of loneliness lead to the inference that he was considering sexual contact with the victim. See Fairchild, 305 Ark. 406, 808 S.W.2d 743; Jackson, 290 Ark. 160, 717 S.W.2d 801; and Ark.Code Ann. §§ 5-11-101, -102.
Thus, the jury could have reasonably concluded that appellant intended to commit kidnapping and that no other reasonable conclusion consistent with appellant's innocence could be drawn from this evidence. The evidence is substantial and supports the jury's verdict of guilt. The trial court did not err in denying appellant's motion for directed verdict on the charge of attempted kidnapping.
As his second point for reversal, appellant argues that his Sixth Amendment rights were violated because he was incarcerated longer than nine months while awaiting trial. He recognizes this court has held that release on one's own recognizance, rather than a dismissal or discharge, *113 is the remedy for an accused who has been incarcerated continuously since his arrest and not brought to trial within nine months. A.R.Cr.P. Rules 28.1(a), 30.1(b); Jackson v. State, 290 Ark. 375, 720 S.W.2d 282 (1986). However, appellant urges this court to reverse its ruling in Jackson and adopt the rule that one who, while awaiting trial, is incarcerated for a period in excess of that provided for in A.R.Cr.P. Rule 28.2 should be released and discharged pursuant to the Speedy Trial Clause of the Sixth Amendment and Barker v. Wingo, 407 U.S. 514, 92 S.Ct. 2182, 33 L.Ed.2d 101 (1972).
As part of this argument, appellant claims he was prejudiced by the trial court's order granting the state's motion to exclude the period of time from when the original scheduled trial date until the actual trial date. The state moved for the period to be excluded because of the trial court's crowded docket.
We do not reach the merits of appellant's speedy trial argument because he never raised this argument to the trial court. We have stated time and time again that we do not consider arguments raised for the first time on appeal, and even speedy trial arguments must be so raised. Gooden v. State, 295 Ark. 385, 390, 749 S.W.2d 657, 660 (1988). Moreover, even constitutional arguments are waived when not raised below. Kittler v. State, 304 Ark. 344, 802 S.W.2d 925 (1991).
As his third point for reversal, appellant argues that his prior conviction for second degree sexual assault in Wisconsin should not have been used to sentence him as an habitual offender because his sentence for that conviction was probation for four years. Appellant claims that our habitual offender statutes allow a conviction from another state to be used only when the defendant actually serves a sentence of imprisonment for more than one year.
Appellant acknowledges the rule announced in Rolark v. State, 299 Ark. 299, 772 S.W.2d 588 (1989), that, for purposes of our habitual offender statutes, previous convictions resulting in probation are nonetheless previous convictions and may be considered for enhanced sentencing purposes. However, appellant urges this court to overrule Rolark, arguing it is inconsistent with legislative intent. The state argues that Rolark is good law and should be followed here.
We agree with the state. This court has held that a prior conviction in another state resulting in a sentence of probation may be used for enhanced sentencing purposes, provided the law in the other state authorizes a sentence of imprisonment for more than one year. See e.g., Cherry v. State, 302 Ark. 462, 791 S.W.2d 354 (1990); Campbell v. State, 264 Ark. 575, 572 S.W.2d 845 (1978). See also Ark.Code Ann. § 5-4-503 (1987). Our habitual offender statutes focus on prior convictions, not on prior sentences as appellant contends. That the legislature intended the focus of the act to be on prior convictions is evident in the official commentary to section 5-4-503, which states as follows:
If a sentence in excess of one year in prison was authorized upon conviction in the other jurisdiction, then regardless of the sentence actually received, the defendant has a previous felony conviction or finding of guilt for purposes of § 5-4-501 [emphasis added].
As our prior holdings on this issue are consistent with section 5-4-503 and its supporting legislative intent, we decline to overrule Rolark. The trial court's order denying appellant's motion to dismiss habitual offender status states that as appellant was sentenced to four years probation, it is clear that Wisconsin law authorized a sentence of imprisonment in excess of one year. We agree and find no error in the trial court's imposition of an enhanced sentence.
The judgment of conviction is affirmed.
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915 N.E.2d 1050 (2009)
LEWIS
v.
STATE.
No. 89A04-0812-CR-748.
Court of Appeals of Indiana.
October 30, 2009.
MATHIAS, J.
Disposition of case by unpublished memorandum decision Affirmed.
DARDEN, J., concurs.
ROBB, J. Concurs with opinion.
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601 S.W.2d 441 (1980)
Mike RUTHERFORD, Appellant,
v.
WHATABURGER, INC., Dally Advertising, Inc., Dal-Worth Whatco, Inc., Appellees.
No. 20251.
Court of Civil Appeals of Texas, Dallas.
May 19, 1980.
Rehearing Denied June 13, 1980.
*442 John D. Griggs, Dallas, for appellant.
S. Gary Werley, Bishop, Larimore, Lamsens & Brown, Fort Worth, for appellees.
Before GUITTARD, C. J., and AKIN and STOREY, JJ.
AKIN, Justice.
This litigation was instituted by a dissatisfied winner of a promotional contest, when the defendants did not deliver the prize that they had promised. A partial summary judgment was rendered that plaintiff had no cause of action under the Deceptive Trade Practices Act and that plaintiff was not entitled to attorney's fees under Tex.Rev.Civ.Stat.Ann. art. 2226 (Vernon Supp.1980) on his theory of recovery under an oral contract. Plaintiff obtained a severance as to these two rulings and appealed although the remainder of plaintiff's cause of action is still pending in the trial court, including that part of plaintiff's cause of action upon which recovery of attorney's fees under article 2226 depends. We hold that this is a final judgment over which we have jurisdiction. We reverse the ruling that plaintiff is not entitled to attorney's fees, but affirm the partial summary judgment holding that plaintiff has no cause of action under the Deceptive Trade Practices Act.
Whataburger is a Texas corporation providing franchises to a chain of fast-food restaurants. Appellee Dal-Worth Whatco, Inc. is a corporation formed for group advertising purposes by some of the Whataburger, Inc. franchise dealers in the Dallas and Fort Worth area. These appellees hired appellee Dally Advertising, Inc. to participate in a six week sales promotion called the "Good Old Days Celebration," designed to increase the sales of "Whataburger" hamburgers in the Dallas and Forth Worth area. As a prize in this promotional scheme, appellees offered an automobile that was supposedly a full-scale replica of a 1930 Bentley automobile, and, as a part of this promotion, also offered reduced prices on their food products. Appellees announced appellant to be the winner of the 1930 Bentley replica and subsequently used his picture for additional promotional publicity. However, appellant never received the prize. Appellees claimed that they were dissatisfied with the quality of the Bentley replica and considered it unsafe to drive; thus they refused to deliver it to appellant. Negotiations as to a substitute prize failed to reach a mutually satisfactory solution. This litigation was instituted with appellant, as plaintiff, alleging Deceptive Trade Practices Act violations and breach of an oral contract along with other causes of action with which this appeal is not concerned. The trial court granted a partial summary judgment for appellees, the defendants below, holding that appellant had no cause of action under the Deceptive Trade Practices Act and that he was not entitled to attorney's fees under Tex.Rev. Civ.Stat.Ann. art. 2226 (Vernon Supp.1980). Appellant then moved for a severance on these issues for the express purpose of obtaining an appellate ruling prior to the trial on the merits. The severance was granted and appeal was perfected on these two issues. The remainder of appellant's cause of action is still pending in the trial court.
*443 Our initial question is whether the judgment in the case at bar is final, a prerequisite for our jurisdiction. Hall v. City of Austin, 450 S.W.2d 836 (Tex.1970). Appellant asserts that Pierce v. Reynolds, 160 Tex. 198, 329 S.W.2d 76 (1959) and Schieffer v. Patterson, 433 S.W.2d 418 (Tex. 1968) compel us to hold that we have jurisdiction of the instant case. We agree. As we read Pierce and Schieffer, each holds that the granting of a severance makes the judgment in the severed portion of the case final for purposes of appellate jurisdiction regardless of whether the severance was proper. The propriety of the severance may be raised by the parties on appeal and the case may be reversed on the ground that the severance should not have been granted. Nevertheless, the judgment in the severed portion of the action is final for the purpose of determining appellate jurisdiction without respect to whether the severance was proper. Because appellant does not attack the propriety of the severance, we do not address that question. Although we hold that the judgment is final for the purpose of determining our jurisdiction, we note the following footnote in Pierce v. Reynolds, 329 S.W.2d at 79 n.1, in which the supreme court stated:
Under our holding in this case, the trial court has the power to burden the appellate courts with a number of appeals in a controversy which should be determined in one proceeding. Severance of a single cause of action into two parts is never proper and should not be granted for the purpose of enabling the litigants to obtain an early appellate ruling on the trial court's determination of one phase of the case. [Emphasis added.]
The severance in this case was granted for the express purpose of obtaining an advisory opinion prior to the trial on the merits, an action with which we strongly disapprove. This is true because both questions of whether the plaintiff falls within the ambit of the Deceptive Trade Practices Act and of whether the plaintiff is entitled to attorney's fees under article 2226 could be determined in the trial on the merits and an appeal therefrom, thus obviating two trials and two appeals.
Appellant argues that the trial court erred in granting summary judgment denying recovery of attorney's fees under article 2226 on his oral contract claim. Appellant contends that this ruling was erroneous because appellee's motion for summary judgment did not contain a specific ground relating to recovery of attorney's fees under article 2226. We agree. Tex.R. Civ.P. 166-A(c) provides that "[T]he motion for summary judgment shall state the specific grounds therefor." We hold that a summary judgment cannot be sustained on a ground not specifically set forth in the motion. Rowlett v. McMillan, 574 S.W.2d 625 (Tex.Civ.App. Houston [14th Dist.] 1978, writ ref'd n. r. e.).
Appellee argues, nevertheless, that the summary judgment on attorney's fees was rendered on the ground requesting the court "to ascertain what material facts are actually controverted in good faith and according to law and to then enter an order granting a partial summary judgment which specifies the uncontroverted facts and directs such further proceedings in this action which are justly required." We cannot agree. The quoted portion of the motion requested the trial court to specify undisputed facts. The trial judge's ruling that attorney's fees are not recoverable under article 2226 on an oral contract claim is a legal ruling not raised by the motion for summary judgment.
Under Rule 166-A the only grounds considered for reversal of a summary judgment on appeal are those presented in the motion for summary judgment or a response by the nonmovant. Regardless of whether the nonmovant files a response to the motion for summary judgment, the movant has the burden of establishing his right to summary judgment as a matter of law on the grounds set forth in his motion. City of Houston v. Clear Creek Basin Authority, 589 S.W.2d 671 (Tex.1979); Combs v. Fantastic Homes, Inc., 584 S.W.2d 340 (Tex.Civ.App. Dallas), aff'd per curiam 596 S.W.2d 502 (1979). Thus, it follows that *444 a summary judgment will be affirmed on appeal only if the grounds upon which it was granted are specifically set out in the motion.
We recognize that Phil Phillips Ford, Inc. v. St. Paul Fire and Marine Insurance Co., 465 S.W.2d 933 (Tex.1971) held that a summary judgment could be affirmed on grounds not specifically set out in the motion. At the time of the Phillips Ford decision, Rule 166-A(c) did not require the motion to state the specific grounds upon which summary judgment was sought nor was the nonmovant required to respond with grounds for denial of summary judgment in order to present them as grounds for reversal on appeal. The amendments to Rule 166-A after that decision have effectively overruled it.
Appellant argues that the trial judge erred in entering a partial summary judgment that he was not a consumer under Tex.Bus. & Com.Code Ann. § 17.45(4) (Vernon Supp.1980). We cannot agree. We hold that the appellant is not a consumer under the Deceptive Trade Practices Act because he did not purchase nor seek to purchase the contest prize. We hold that because the appellant is not a consumer under § 17.45(4), he may not recover under that act. Accordingly, the trial court's partial summary judgment that appellant has no cause of action under the Deceptive Trade Practices Act is affirmed.
It is well settled that the plaintiff must be a consumer as defined by § 17.45(4) in order to maintain an action under the Deceptive Trade Practices Act.[1]Baldwin v. Calcasieu Lumber Co., 588 S.W.2d 659 (Tex. Civ.App. Austin 1979, no writ); Hi-Line Electric Co. v. Travelers Insurance Co., 587 S.W.2d 488 (Tex.Civ.App. Dallas 1979, writ ref'd n. r. e.). The definition of consumer under the Deceptive Trade Practices Act is set forth in Tex.Bus. & Com.Code Ann. § 17.45(4) (Vernon Supp.1980), as follows:
(4) "Consumer" means an individual, partnership, corporation, or governmental entity who seeks or acquires by purchase or lease, any goods or services. [Emphasis added.]
We have previously held that in order to be a consumer under the Deceptive Trade Practices Act, the plaintiff must seek or acquire goods from the person he is suing. Hi-Line Electric Co. v. Travelers Insurance Co., 587 S.W.2d at 490. As we read § 17.45(4), the words purchase or lease modifies both the words seek and acquire. Thus the plaintiff must either purchase or lease goods from the defendant or seek to purchase or lease goods from the defendant in order to fall within the purview of § 17.45(4). Exxon Corp. v. Dunn, 581 S.W.2d 500 (Tex.Civ.App. Dallas 1979, no writ); see Anderson v. Havins, 595 S.W.2d 147, 155 (Tex.Civ.App. Amarillo 1980, no writ).
The question before us is whether appellant purchased or sought to purchase goods from the appellees. Appellant argues that he is a consumer because he purchased food products from Whataburger. We cannot agree. Appellant has no complaint with respect to the food products. We hold that in order to be a consumer under § 17.45(4) the plaintiff must have purchased or sought to purchase the goods upon which his complaint is based. His cause of action is based on the failure to deliver the contest prize; thus his purchase of the hamburger and french fries does not make him a consumer with respect to the prize. No purchase was required to enter the contest; consequently, appellant did not purchase a chance to win the prize. Furthermore, appellant did not make a purchase under § 17.45(4), so as to be a consumer of the contest prize. Since appellant sought solely to win the prize, he also did not "seek to purchase" it within the ambit of § 17.45(4).
Our holding is also supported by a reading of § 17.45(4) together with the remainder of the act. As we read § 17.45(4) in conjunction with the laundry list of § 17.46, we perceive no intent to grant a private *445 treble damage remedy where there is no defect or misrepresentation as to the goods purchased or sought to be purchased. None of the laundry list violations appear applicable to a situation where the goods are completely satisfactory but a misrepresentation as to a matter unrelated to the goods being sold occurs in a promotional scheme.
Accordingly the summary judgment with respect to plaintiff's cause of action under the Deceptive Trade Practices Act is affirmed, but the summary judgment with respect to attorney's fees is reversed and remanded for trial. Because the severance was erroneous, we direct that plaintiff's claim with respect to attorney's fees be consolidated with plaintiff's primary suit upon which the plaintiff's right to attorney's fees depends. Tex.R.Civ.P. 434.
Affirmed in part and reversed in part.
NOTES
[1] This view has been subjected to recent criticism. Delaney Realty, Inc. v. Ozuna, 593 S.W.2d 797 (Tex.Civ.App. El Paso 1980, no writ) (Justice Ward concurring).
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601 S.W.2d 759 (1980)
Linda MIDDLETON, Appellant,
v.
Ivan Maurice PALMER, Appellee.
No. 20203.
Court of Civil Appeals of Texas, Dallas.
May 23, 1980.
Rehearing Denied June 25, 1980.
*761 Bertran T. Bader, III, Bader & Cox, Dallas, for appellant.
Sidney H. Davis, Jr., Touchstone, Bernays, Johnston, Beall & Smith, Dallas, for appellee.
Before ROBERTSON, CARVER and HUMPHREYS, JJ.
CARVER, Justice.
Linda Middleton appeals from a judgment denying her relief against Ivan Maurice Palmer in a negligence case arising out of an automobile collision at a rural intersection. We find that (1) under the circumstances shown in the record, cross-examination of Middleton as to other accidents, injuries suffered, and claims filed was not improper as showing her "claim mindedness"; (2) side-bar exchanges between counsel were either harmless or invited; (3) Palmer's question to Middleton as to her refusing to give a medical authorization was not improper under the record; (4) jury's answer to special issues declining to find both negligence and damages against Palmer had adequate support in the evidence; and (5) trial court's prior ruling on the plea of privilege, that "some" evidence of negligence which was the proximate cause of "some" injury to Middleton was established for venue purposes, does not bind the trial court when considering a motion for new trial after a jury has reached a different conclusion on same issues. Consequently, we affirm the judgment of the trial court.
The collision occurred in Kaufman County on February 26, 1976, at the intersection of highways US 175 and FM 148. Middleton *762 was proceeding westerly on US 175 and Palmer was proceeding northerly on FM 148. Traffic on FM 148 was required to stop at a stop sign before entering or crossing US 175. The weather was clear and dry and each driver could see the other for 200 to 250 yards. It is undisputed that Palmer came to a stop on FM 148 in obedience to the sign. The movements of the parties thereafter appear to be the inquiry to which the trial was principally devoted, although Middleton's damages were also the subject of considerable testimony. The jury refused to find that Palmer failed to keep a "look out," failed to apply his brakes, or failed to yield the use of the road, but the jury did find that Middleton failed to keep a "look out," failed to apply her brakes, and drove at an excessive speed. The jury answered "None" to a damage issue inquiring as to Middleton's pain and suffering, loss of earnings, and medical expense. Following entry of a take-nothing judgment, Middleton's motion for a new trial was denied and she appeals.
CLAIM-MINDEDNESS
Middleton's points I and II relate to an incident that occurred during her cross-examination. That incident is as follows:
Q. Now, as a result of that accident you were claiming that you hurt your neck and back, aren't you?
A. Yes, Sir.
Q. And you have filed a lawsuit as a result of those injuries, and that lawsuit you're claiming you hurt your neck and your back, didn't you?
MR. BADER: Your Honor, again we object to counsel sticking into the record the fact that these people have filed a lawsuit against their own insurance company as a result of an accident of uninsured motorist. It's highly improper, prejudicial, and it's an attempt to try to show the jury that these folks somehow are claim-minded, object to it. Ask the jury be instructed to disregard it as highly improper and ask that counsel be instructed not to bring these matters up, and we would renew our previous motion made.
MR. SMITH: Your Honor, we object to the side-bar comments of counsel. This matter was taken up with the Court before this trial began and the Court ruled that this was proper, and for counsel at this time to try to infer there's anything improper about this is highly insinuating and improper and we object to his side-bar comments and ask that he be instructed not to pursue them further and ask that the jury
MR. BADER: Your Honor, counsel has now in front of the jury violated another
THE COURT: Overrule the objection and we will proceed.
MR. BADER: Your Honor, may I have in the record that counsel has now violated another order of the Court in front of the jury, and can we have the jury retired so that I can make a motion?
THE COURT: All right, sir. Mr. Tackett, take the jury to the jury room.
Middleton argues that Palmer's question alone improperly called her "claim mindedness" to the jury's attention. We conclude that Middleton's attorney's own extended remarks emphasizing "claim mindedness" in the guise of an objection contributed equally to the injury, if any, and she should not be heard to complain of error of her own making.
If we exclude the extended remarks of Middleton from consideration and examine only Palmer's question, we conclude that no reversible error is shown. In Bonham v. Baldeschwiler, 533 S.W.2d 144 (Tex.Civ.App. Corpus Christi 1976, writ ref'd n.r.e.), the rule with regard to evidence concerning "claim mindedness" is stated:
Generally it is error to admit evidence of prior claims to show that the plaintiff is claims minded. [Citation omitted.] When the evidence, however, is offered to show statements which are inconsistent with the party's present position, it is receivable as an admission against interest. [Citation omitted.] It has also been *763 recognized that it is proper to allow a party to be fully cross-examined as to previous injuries, claims and actions to show that his present physical condition is not the result of the injury presently sued for, but was caused in whole or in part by an earlier or subsequent injury or a pre-existing condition. [Citations omitted.]
533 S.W.2d at 148. Middleton was involved in two accidents, less than three months apart. She filed two lawsuits, each asserting that she suffered neck and back injuries as a result of each accident. We find sufficient inconsistency between Middleton's allegations in the separate suits to justify the questions asked by Palmer as admissions against interest or inquiries about similar injuries from other accidents. Appellant's points I and II are overruled.
SIDE-BAR REMARKS
Middleton's points III and IV complain that Palmer improperly accused her of side-bar remarks and improperly claimed the benefit of a prior court ruling to justify Palmer's improper question. Middleton urges that these remarks were so injurious as to warrant reversal. "Side-bar" remarks describe remarks of counsel that are neither questions to a witness nor an appropriate address to the court. The practice is condemned for the risk of error which both counsel should avoid, but not every side-bar remark is automatic error requiring reversal. Unless the subject matter of the remark is deemed to deny a fair trial, the remark will be treated as harmless error. We perceive that each counsel improperly demeaned the other in this exchange and that each improperly sought to cloak his action with a prior or current court ruling to impress the jury. We conclude, however, that the trial court's rulings, correctly allowing the question originally asked the witness and denying both counsel's objections as to each others remarks, sufficiently suppressed any possible prejudice to a "fair trial." Appellant's points III and IV are overruled.
MEDICAL AUTHORIZATIONS
Middleton complains in points V and VI that Palmer was permitted to ask her about her action in declining to give a medical authorization and that her counsel was not permitted to tell the jury of a condition he had imposed as a condition precedent to such authorization. The exchange is as follows:
Q. Do you remember when you gave your deposition, Mrs. Middleton, back on November 20, 1978?
A. I remember.
Q. You were present with your lawyer, Mr. Bader?
A. Yes, sir.
Q. And you were asked if you would sign a medical authorization which would permit all the parties to review and examine your medical and hospitalization records so we would all know what the doctors and hospitals said about you and you refused to do that, didn't you?
MR. BADER: Excuse me, Your Honor, object to that, especially unless counsel reads into the records upon what basis we said we would do it.
THE COURT: Overruled.
MR. BADER: Your Honor, the Defendant has got absolutely no right to that information. He's got no right to get a medical authorization and attempt to interrogate doctors outside the presence of counsel and Mr. Smith knows that. It's privileged records and they're fully available to him by subpoena if he wants them. He could have made a motion to discover them. We gave him everything we had and now he wants to infer that we're somehow hiding something from him, Judge.
MR. SMITH: Your Honor, object to the side-bar comments.
THE COURT: Overrule the objection. You may proceed.
MR. BADER: Note our exception, Your Honor.
Q. And you refused to sign the medical authorization, didn't you, Mrs. Middleton?
*764 A. On the advice of my attorney.
Q. That's right. That's all we have, thank you.
Middleton relies upon Travelers Ins. Co. v. Woodard, 461 S.W.2d 493 (Tex.Civ.App. Tyler 1970, writ ref'd n.r.e.), where a question similar to that put to her was prohibited by the trial court and such prohibition was held not an abuse of the trial court's discretion. However, in Martinez v. Rutledge, 592 S.W.2d 398 (Tex.Civ.App. Dallas 1979, writ filed), this court held that a trial court did not err in ordering a party to give an authorization to secure his Naval Hospital records from a distant state and from an entity against whom the subpoena power was ineffective. In Martinez this court answered several contentions similar to Middleton's arguments here. To a contention that medical records are privileged, Martinez holds that any privilege or privacy of medical records is waived when the subject of the records (bodily injuries and conditions) has been placed in issue. To a contention that the records were not actually in the possession of the party and thus incapable of production, Martinez holds that a party has a duty "to exercise reasonable diligence to gain production" of the records sought including execution of an authorization. To a contention that it should first be shown that discovery from third persons in possession of the records would refuse access, or refuse to honor a subpoena, Martinez holds that useless or wasteful effort will not be required. To a contention that a tendered admission of fact precludes discovery, Martinez holds that conclusory admissions do not provide the technical information available from the whole medical record sought in order to examine, or cross-examine medical witnesses. While no contention was made in Martinez regarding "conditions" for the protection of the responding party such as Middleton urges here, the court observed:
Finally, we observe that the plaintiff did not move in the trial court for a protective order as he is authorized to do by Tex.R.Civ.P. 186b. For example, he could have requested that the court require the examining or treating doctors not be questioned out of his presence or that it require a delivery of the records for in camera inspection to determine materiality or relevancy. Further, the court's order did not attempt to set out the terms of the authorization which it required plaintiff to furnish. We perceive no reason why plaintiff could not have incorporated into the authorization any reasonable safeguard he deemed necessary as an alternative to his refusal to obey.
592 S.W.2d at 401. Examining Middleton's extended objections here in the light of Martinez, we hold that a refusal to discovery voluntarily, "on the advice of counsel," a medical record of a party claiming injury deserves an explanation from the party so refusing. Middleton's refusal to explain must impose on her any conclusion that the jury might wish to draw. Consequently, we find no error in Palmer's posing the question about Middleton's refusal during deposition to sign a medical authorization. We disagree with Woodard to the extent of any conflict with Martinez or with our holding here.
Middleton also complains that she was not given the opportunity to explain her refusal or the "conditions" for signing the medical authorization. We do not find in the record any tender of such testimony by Middleton or her counsel. Neither do we find an exclusion of such testimony, if offered, by the trial court. Middleton's counsel did ask the court to compel Palmer's counsel to develop the testimony, but we know of no authority which holds such a duty to exist. We hold that rehabilitation of a witness is an opportunity of the offering party, not the duty of the cross-examining party. Middleton's points V and VI are overruled.
NEGLIGENCE AND DAMAGE FINDINGS
Middleton's points VII through XII and points XIV through XVII complain that the jury's answers, declining to find Palmer negligent in any respect and declining *765 to find that Middleton suffered any measurable damage, were supported by "no evidence" or "insufficient evidence." Middleton also complains that these answers were "so against the great weight and preponderance of the evidence as to be manifestly unjust." Since Middleton had the burden of proof on each of these issues, the "no evidence" and "insufficient evidence" points are inappropriate. See Keystone-Fleming Transports, Inc. v. City of Tahoka, 315 S.W.2d 656 (Tex.Civ.App. Amarillo 1958, writ ref'd n.r.e.). We may, however, review on the complaint of "manifestly unjust." See In re Kings Estate, 150 Tex. 662, 244 S.W.2d 660 (1951).
Factual versions of the accident were presented by the testimony of Middleton, operating her car on US 175, and Palmer, operating his car on FM 148. Palmer was facing a stop sign and admittedly stopped before entering US 175. The issues to the jury reflect the extended examination of these two drivers as to their respective conduct just prior to the collision. In addition, a peace officer testified as to the physical indications he found at the scene a short while after the collision. We have examined this entire record as to the asserted conduct of the parties just prior to the collision and we are unable to conclude that the jury's answers absolving Palmer of negligence in "look out," "brakes," and "yielding right-of-way" are manifestly unjust under King.
Middleton also urges that, apart from the jury's answers, Palmer was negligent as a matter of law because, after stopping at the stop sign, he failed to yield the right-of-way to Middleton as evidenced by the collision itself. Middleton's argument asserts that the duty to yield right-of-way after stopping at a stop sign is absolute and not conditioned upon the "reasonable man" standard. This argument had been rejected by Renfroe v. Ramsey, 477 S.W.2d 648 (Tex.Civ.App. Houston [14th Dist.] 1972, no writ); Kiebach v. Luker, 476 S.W.2d 46 (Tex.Civ.App. Houston [1st Dist.] 1972, no writ); Londow v. Bergeron, 398 S.W.2d 297 (Tex.Civ.App. Beaumont 1966, writ ref'd n.r.e.). We conclude that the "yield" issue was not one of law, but an issue of fact, the answer to which by the jury was not manifestly unjust.
Middleton further complains that the jury's findings that she suffered no damage is manifestly unjust. Middleton sought damages for pain and loss of earnings, both before and after the trial. At the accident scene, Middleton denied being injured according to Palmer. The peace officer quoted Middleton as saying she hit her knee during the accident. Middleton went to doctor that same day but this doctor did not testify. Some days later she saw a different doctor who testified he found some swelling on the outside of one knee but x-rays reflected nothing. The next doctor Middleton consulted was a month after the accident and her complaint at that time was her neck and back. This doctor testified Middleton's symptoms were principally subjective. Less than three months after the accident in question Middleton had another accident from which she also claimed an injury to her neck and back. Middleton had also had an accident in 1973 where she hurt her neck and back, which injury her doctor said she "would never quite get over." Middleton bore the burden of proof and persuasion on these issues and sought to discharge her burden with her own "interested" testimony which the jury was not bound to accept. Middleton further offered the opinions of doctors that the jury was not bound to accept. See Hulsey v. Drake, 457 S.W.2d 453 (Tex.Civ.App. Austin 1970, writ ref'd n.r.e.). Middleton urges that the jury could not disregard the "objective" evidence of injury without being "manifestly unjust." Middleton relies upon a line of authorities exemplified by Morgan v. Mustard, 480 S.W.2d 416 (Tex. Civ.App. El Paso 1972, no writ); however, these authorities rest upon (1) "objective" symptoms of injury substantially uncontested in the record and (2) no dispute in the records as to there being but a single accident as a source of injury. Middleton's symptoms were dependent upon her verbal description of "subjective" conditions, although *766 her physicians found physical evidence of swelling and spasms or "objective" conditions of her body which, in the doctor's opinion, were consistent with the verbal description by Middleton. There was no directly observable or "objective" evidence that the source of Middleton's injury was the result of the particular accident in question. We conclude that this record reflects substantial evidence which would have supported a jury's conclusion either way, hence, the conclusion the jury did choose on issues of Palmer's negligence and Middleton's damages are not "manifestly unjust." Benoit v. Wilson, 150 Tex. 273, 239 S.W.2d 792 (1951). Middleton's points VII through XII and XIV through XVII are overruled.
VENUE FINDINGS IN SUPPORT OF NEW TRIAL
Middleton's point XIII complains that her motion for new trial was overruled because the trial court erroneously relied upon the jury's findings absolving Palmer of any negligence instead of the court relying on its own prior ruling, at the venue hearing, that Palmer was guilty of some negligence which was the proximate cause of some damage to Middleton. In essence, Middleton urges that a venue ruling in favor of the plaintiff in a negligence case imposes a liability (act of negligence plus proximate cause) upon the defendant as the "law of the case" and that, should a jury later find otherwise, the trial court errs in failing to grant a new trial. No case is cited in support of this extraordinary proposition, and we have found none. In the absence of authority supporting this argument and in the absence of any compelling demand of justice that this court originate this proposition, we hold that a finding of a venue fact in a venue hearing does not become the "law of the case" or, in any way, bind the court, or jury, in a subsequent trial on the merits. See Stockyards Nat'l Bank v. Maples, 95 S.W.2d 1300 (Tex. Com.App.1936, opinion adopted); Farmers Seed & Gin Co. v. Brooks, 81 S.W.2d 675 (Tex.Com.App. 1935, opinion adopted); Byrd & Foster Drilling, Inc. v. Centennial Royalty Co., 477 S.W.2d 319 (Tex.Civ.App. El Paso 1972, no writ). Middleton's point XIII is overruled.
Affirmed.
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601 S.W.2d 66 (1980)
HARRIS COUNTY WATER CONTROL AND IMPROVEMENT DISTRICT NO. 84 et al., Appellants,
v.
Hazel HORNBERGER Trust et al., Appellees.
No. 17610.
Court of Civil Appeals of Texas, Houston (1st Dist.).
April 10, 1980.
Rehearing Denied May 22, 1980.
Underwood & Durst, Olen Underwood, J. C. Durst, Conroe, James M. Seabolt, Houston, for appellants.
Butler, Binion, Rice, Cook & Knapp, Michael Connelly and Wm. Blanton, Jr., Houston, for appellees.
WARREN, Justice.
This is an appeal from a judgment refunding the total amount paid by appellees on a "benefit basis line" tax assessed and *67 collected by appellants for the years 1973, 1974 and 1975.[1]
Appellees own land situated within the water district. In 1973, appellant Water District assessed a "benefit basis" tax on landowners within the district. Under protest, appellees paid the tax for the years 1973 and 1974. In 1975, appellees filed suit alleging and seeking a declaration that the benefit basis line taxes assessed for the years 1973 and 1974 were void, excessive, illegal and unconstitutional.
Appellant did not timely file an answer to the suit and on July 1, 1975, the court granted a default judgment, as to liability and ordered a writ of inquiry. On July 11, 1975, appellants filed an unverified motion to set aside the default judgment which was heard and overruled on June 8, 1976. Appellants did not present any affidavits or other evidence in support of the motion to set aside the default judgment.
Subsequent to the default judgment, but before the writ of inquiry was held, appellees filed an amended petition seeking a refund of the 1975 benefit basis line tax making the same pertinent allegations.
On September 17, 1979, the writ of inquiry was held and testimony was received regarding the amount of taxes paid for the years 1973, 1974 and 1975. Although appellants asked for a running objection pertaining to any testimony regarding the 1975 taxes, their counsel, previous to the objection, announced ready for trial as to all three years. The court gave judgment refunding to appellees the entire amount of the benefit basis line taxes paid for the years 1973, 1974 and 1975 plus interest.
Appellants claim that the trial court erred (1) in refusing to set aside the interlocutory default judgment, (2) in applying the wrong measure of damages, and (3) in awarding damages for the year 1975 because this claim was not asserted until after the default judgment had been granted.
In their original motion to set aside the interlocutory default judgment, filed July 11, 1975, appellants alleged that an answer was not filed because settlement negotiations were being conducted between the parties and, as a result, they were lulled into a sense of security that no action would be taken. No allegations were made that counsel for appellees had in anyway led them to believe that it would be unnecessary to file an answer or that no action would be taken.
As meritorious defenses to appellees' petition, appellants pled that their records showed that appellees owned 74.12 acres, instead of the 67.28 acres alleged by appellees, and that the benefit tax was adopted pursuant to the provision of the Water Code and was well within the constitutional authority bestowed upon the appellants. The fact that appellants' records showed a certain number of acres were owned by appellees is not a relevant fact pertinent to any defense to appellees' cause of action for a refund of the benefit basis line taxes. The second allegation is merely a conclusion which does not set up a meritorious defense as contemplated by Craddock v. Sunshine Bus Lines, Inc., 134 Tex. 388, 133 S.W.2d 124 (1939). A trial court does not abuse its discretion by refusing to set aside a default judgment where facts have not been alleged setting up a meritorious defense or where the facts which have been alleged are not supported by affidavit or other evidence. Ivy v. Carrell, 407 S.W.2d 212 (Tex.1966).
Appellants' second and third points of error claim that the trial court erred in rendering judgment for the full amount of taxes paid rather than for the excessive amount of taxes paid.
In support of their position, appellants rely on many ad valorem tax cases holding that after an ad valorem tax has been implemented, a taxpayer is only entitled to recover excess taxes paid, even though the tax plan as implemented, is erroneous. In *68 all of the cases cited by appellants, the taxing authority had the power and the authority to levy the tax. Appellees present cases involving suits to refund taxes other than ad valorem taxes, in which the courts have allowed full refund where the tax was shown to be illegal. In general, these cases have held that where a tax is unconstitutional or void, a taxpayer is entitled to receive a refund of all amounts paid to the taxing authority. See Crow v. City of Corpus Christi, 146 Tex. 558, 209 S.W.2d 922 (Tex.1948); State v. Akin Products Co., 155 Tex. 348, 286 S.W.2d 110 (1956).
A default judgment admits all matters properly alleged in plaintiff's petition except the amount of damages. 4 McDonald § 17.23.3 (1971 rev. ed.); Southern S.S. Co. v. Schumacher Co., 154 S.W.2d 283 (Tex.Civ.App. Galveston 1941, writ ref'd w.o.m.).
Even though some of the allegations in appellees' petition were couched in the form of legal conclusions, they were sufficient to apprise appellants that they were contending that the benefit basis line taxes assessed by appellants were void, illegal and unconstitutional. Therefore, the default judgment would be effective to declare these taxes void, illegal and unconstitutional. Under these circumstances, appellees were entitled to a refund of the entire amount paid to the water district. Appellants' second and third points of error are overruled.
Appellants' final point of error alleges that the trial court erred in rendering judgment for appellees refunding the amount of taxes for the year 1975, because appellees' claim for taxes paid in 1975 was not made until after the interlocutory default judgment was granted. We sustain this point of error. The interlocutory default judgment was granted on July 1, 1975, as to benefit basis line taxes paid for the years 1973 and 1974. On April 22, 1976, appellees filed a supplemental petition seeking to recover a refund of the benefit basis lines taxes paid in 1975 alleging the same ground for recovery as alleged in the original petition for the recovery of the 1973 and 1974 taxes. At the writ inquiry held on September 17, 1979, the court, over an objection by appellant, (which was never ruled on except by implication) admitted evidence concerning the payment of the 1975 taxes. No evidence was presented, however, that the 1975 tax was illegal, void or unconstitutional. Therefore, liability was never established for the year 1975, since the interlocutory default only applied to 1973 and 1974, and the writ of inquiry concerned damages only.
The judgment is affirmed as to damages awarded for the years 1973 and 1974 and reversed and remanded as to damages awarded for the year 1975.
PEDEN and EVANS, JJ., also sitting.
NOTES
[1] The judgment also refunded, with interest, the excessive portion of an ad valorem tax. This portion of the judgment is not in dispute.
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601 S.W.2d 350 (1980)
Ex parte Ronald Lee WATSON.
No. 64615.
Court of Criminal Appeals of Texas, En Banc.
July 7, 1980.
Paul G. Johnson, Sugarland, for appellant.
Robert Huttash, State's Atty., Austin, for the State.
Before the Court en banc.
*351 OPINION
PHILLIPS, Judge.
This is an application for a writ of habeas corpus filed pursuant to Art. 11.07, V.A.C. C.P.
Petitioner urges that his conviction in Cause No. 4985 in the 42nd District Court of Callahan County is void because the court lacked jurisdiction to enter the judgment and sentence.
Petitioner was charged by information and complaint with the offense of aggravated robbery. Both documents allege that petitioner committed the offense in Taylor County. Each document is signed by an assistant district attorney of Callahan County. Prosecution in the cause took place in Callahan County. Petitioner pleaded guilty to the court, and was convicted. Punishment was assessed at eight years' imprisonment. Sentence was imposed.
Venue for the offense of aggravated robbery is the county where the offense was committed in this case alleged to be Taylor County. Art. 13.18, V.A.C.C.P. According to petitioner, there was no change of venue to Callahan County. It follows, petitioner reasons, that the District Court of Callahan County lacked jurisdiction to enter the judgment and sentence in this cause.
It is implicit in petitioner's contention that venue is jurisdictional, i.e. that because venue was improper, the court lacked jurisdiction to try the cause. Although we cannot tell from the state of the record before us whether venue actually was improper, we shall assume that it was improper in order to dispose of this case.[1]
Petitioner misconstrues the nature of venue. Venue is distinct from jurisdiction. The latter concerns the power of the court to hear and determine the case. Venue means the place where a case may be tried. Etchieson v. State, 574 S.W.2d 753 (Tex.Cr.App.1978); Martin v. State, 385 S.W.2d 260 (Tex.Cr.App.1964, Opinion on Appellant's Motion for Rehearing); Ellzey v. State, 158 Tex. Crim. 604, 259 S.W.2d 211 (1953); Williams v. State, 145 Tex. Crim. 536, 170 S.W.2d 482 (1943); Taylor v. State, 81 Tex. Crim. 347, 197 S.W. 196 (1917) (Morrow, J., dissenting).
Improper venue, unlike jurisdiction, may be waived by the defendant's failure to object at trial. Etchieson, supra; Ellzey, supra; Gates v. State, 140 Tex. Crim. 228, 143 S.W.2d 780 (1940, Opinion on Appellant's Motion for Rehearing); Townsend v. State, 121 Tex. Crim. 79, 51 S.W.2d 696, 701 (1932); Johnson v. State, 120 Tex. Crim. 368, 48 S.W.2d 274 (1932); see Art. 44.24(a), V.A.C.C.P. Unlike jurisdiction, venue may be acquired by consent. Williams, supra; Taylor, supra. (Morrow, J., dissenting); see Art. 13.20, V.A.C.C.P.
Regarding the criminal jurisdiction of district courts, i.e. the power of those courts to hear criminal cases, Art. 5, § 8 of the Texas Constitution provides only that those courts "shall have original jurisdiction in all criminal cases of the grade of felony," and "of all misdemeanors involving official misconduct." The Texas Constitution provides no other limitation on the jurisdiction of district courts in regard to criminal matters. The Code of Criminal Procedure simply traces the constitutional provision. Art. 4.05, V.A.C.C.P.
The distinction between venue and jurisdiction was stated early on by Judge Morrow in his dissent in Taylor, supra:
The Constitution having fixed no venue for the trial of felonies, and [in Art. 3, § 45] having expressly vested the power to change the venue in the courts, and specifically declares that the district *352 courts have jurisdiction to try all felonies, and the district court of Williamson county having ordered this cause transferred to the district court in Bexar county, and the appellant having made no objection either to the transfer of the cause or the trial of it, I do not think that the district court of Bexar county was without jurisdiction of the subject-matter so as to render its judgment void.
197 S.W. at 201.
Not long after Taylor, Judge Morrow spoke for the majority of the Court:
... The precedents are numerous to the point that a mistake of the trial judge in exercising his discretion to change the venue does not affect the jurisdiction of the court to which the transfer is made.
Cotter v. State, 113 Tex. Crim. 535, 21 S.W.2d 503, 506 (1929, Opinion on Motion for Rehearing).
This Court subsequently stated in Johnson, supra:
... The mistake of the trial judge in exercising his discretion to change the venue does not affect the jurisdiction of the court to which the transfer is made. Cotter v. State, supra. Under the Constitution, district courts have jurisdiction to try all felonies. The district court of Medina county having ordered this cause transferred to the district court of Caldwell county, and appellant having made no objection either to the transfer of the cause or the trial of it, the district court of Caldwell county was not without jurisdiction of the subject-matter so as to render its judgment void. Taylor v. State, 81 Tex. Crim. 347, 197 S.W. 196.
48 S.W.2d at 276.
To the same effect see Seaton v. State, 29 S.W.2d 375 (Tex.Cr.App.1930); Gates, supra; Williams, supra; Ellzey, supra.
More recently, in Martin, supra, we stated:
The trial court clearly had jurisdiction over the person of appellant and over the subject matter of the case. The state's failure to prove venue did not affect the court's jurisdiction.
385 S.W.2d at 261. See generally Stumberg, "Jurisdiction and Venue in Criminal Cases," 1 Vernon's Ann.C.C.P., p. XIII (1925).
It is apparent from the above that, strictly as a matter of jurisdiction, a district court may try any case in which the offense takes place within the State.[2] Of course in a given case venue may not be proper under the provisions of Chapter 13 of the Code of Criminal Procedure. The failure to comply with those provisions, however, does not deprive the district court of jurisdiction. Ultimately, whether the provisions of Chapter 13 are enforced depends on whether the defendant asserts his rights under those provisions. We conclude that the trial court in this case had jurisdiction of the cause even if venue were improper.
It is well-established that habeas corpus will lie only to review jurisdictional defects or denials of fundamental or constitutional rights. Ex parte Shields, 550 S.W.2d 670 (Tex.Cr.App.1977, Opinion on State's Motion for Rehearing); Ex parte Mayes, 538 S.W.2d 637 (Tex.Cr.App.1976); Ex parte Young, 418 S.W.2d 824 (Tex.Cr. App.1967). A judgment and sentence may be collaterally attacked only where they are void for want of jurisdiction on the part of the trial court. Ex parte Shields, supra; Ex parte Young, supra; Ex parte Williams, 165 Tex. Crim. 130, 303 S.W.2d 403 (1957). Petitioner may not collaterally attack his conviction in this cause on the basis that venue was improper.[3]
Relief is denied.
NOTES
[1] Petitioner asserts in his application that there was no change of venue. However, we are not bound by that assertion, and there is nothing in the record concerning the matter. A valid change of venue might have been effected pursuant to Art. 27.15, V.A.C.C.P. or Art. 13.20, V.A.C.C.P. Moreover, the commission of the offense may have extended over both Taylor and Callahan counties, or appellant may have removed the stolen property from one of those counties to the other. In such case venue would be proper either in Taylor or Callahan County. See Hignite v. State, 522 S.W.2d 210 (Tex.Cr.App.1975); Arts. 13.08, 13.19, V.A.C. C.P.
[2] For the limitations on the exercise of jurisdiction over conduct occurring in part outside the boundaries of this State, see V.T.C.A. Penal Code, § 1.04.
[3] Petitioner also appears to assert that the information is fundamentally defective. Petitioner argues that because the information recites that the offense was committed in Taylor County rather than Callahan County, it shows on its face that the District Court of Callahan County lacked jurisdiction. See Art. 27.08(4), V.A.C.C.P.; Art. 21.21(5), V.A.C.C.P. This contention is without merit. We just have held that the District Court of Callahan County had jurisdiction even if the offense were committed in Taylor County. Moreover, venue may have been proper in Callahan County, as we noted at the outset. When an offense may be prosecuted in either of two or more counties, the information may allege the offense to have been committed in the county where the prosecution takes place, or the county where the offense actually occurs. Art. 21.06, V.A.C.C.P.; Art. 21.23, V.A.C.C.P.
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615 F. Supp. 239 (1985)
Charlie HARRIS and Mose Batie, individually and on behalf of all others similarly situated, Plaintiffs,
v.
Charles A. GRADDICK, in his official capacity as Attorney General of Alabama; et al., Defendants,
John W. Jones, Jr., as Judge of Probate of Dallas County, Alabama; et al., Defendant-Intervenors.
Civ. A. No. 84-T-595-N.
United States District Court, M.D. Alabama, N.D.
July 19, 1985.
*240 James U. Blacksher, Larry T. Menefee, Blacksher, Menefee & Stein, Mobile, Ala., Delores Boyd, Mandell & Boyd, Terry Davis, Montgomery, Ala., Jack Greenberg, Lani Guinier, New York City, for plaintiffs.
Joseph E. Faulk, Troy, Ala., for Powell and Anderson.
Charles A. Graddick, Atty. Gen., Susan McKinney, Algert S. Agricola, James Callen Sparrow, Asst. Atty. Gen., Montgomery, Ala., for Stone, Graddick & Wallace.
Edward Still, Birmingham, Ala., for State Democratic Exec. Committee.
Edwin A. Strickland, R. Clifford Fulford and Max C. Pope, Fulford, Pope & Natter, Birmingham, Ala., for Jefferson County Probate Judge, Circuit Clerk & Sheriff.
MYRON H. THOMPSON, District Judge.
ORDER
This statewide class action lawsuit challenging the practices for the appointment of poll officials in the State of Alabama as racially discriminatory is before the court on a May 2, 1985, motion to approve settlement filed by all parties except defendants Charles A. Graddick and George C. Wallace. For reasons that follow, the court concludes that the motion should be granted and the settlement approved.
I.
Plaintiffs Charlie Harris and Mose Batie, black citizens residing in Pike County, Alabama, brought this lawsuit against defendants Attorney General Charles A. Graddick, Governor George C. Wallace, the State Democratic Executive Committee, and the appointing authority of Pike County. The complaint alleged that state and county officials throughout Alabama have appointed disproportionately too few black persons as poll officials in violation of, among other things, section 2 of the Voting Rights Act of 1965, as amended, 42 U.S. C.A. § 1973 (West Supp.1985). Harris and Batie sought certification of both plaintiff and defendant classes and preliminary and permanent injunctive relief.
On August 1, 1984, this court issued a preliminary injunction requiring that all but one of Alabama's sixty-seven county appointing authorities appoint more black persons as poll officials. Harris v. Graddick, 593 F. Supp. 128 (M.D.Ala.1984) (Harris I). The court also certified, pursuant to Fed.R.Civ.P. 23(a) & (b)(2), a plaintiff class of all black citizens in Alabama and a defendant class of all county appointing authorities in Alabama except the one excluded *241 from the preliminary injunction.[1] The plaintiff class is represented by Harris and Batie and the defendant class is represented by the Pike County appointing authority. 593 F.Supp. at 136-37. The court later excused another county appointing authority from the preliminary injunction and the defendant class.[2]
In a memorandum opinion accompanying the August 1 order, the court focused on Alabama's history of widespread discrimination against black persons, enforced by state and local governments. 593 F.Supp. at 130-31, 133. The court noted that this history is not without its modern-day manifestations. As the court found, black persons in Alabama continue to consider voting to be an intimidating experience, especially when the voting officials are all white. Id. Nevertheless, those in authority have grossly failed to appoint black persons as poll officials even though, as the evidence indicated, the presence of black poll officials does much to remedy the intimidation of black voters. Id. The court determined that the "effect" of this practice violated section 2 of the Voting Rights Act of 1965. Id.
After the court's August 1 order, the appointing authorities for Jefferson County and Dallas County intervened as defendants. On October 30, 1984, the Jefferson County appointing authority moved to dissolve or modify the injunction as applied to it. The court denied this motion on December 13, 1984. Harris v. Graddick, 601 F. Supp. 70 (M.D.Ala.1984) (Harris II). The court found that the Jefferson County appointing authority had intentionally discriminated on the basis of race in appointing poll officials, in violation of section 2, and the court preliminarily enjoined such further conduct. 601 F.Supp. at 73, 74.
The trial of this cause on the plaintiffs' request for permanent injunctive relief began on February 4, 1985, but was recessed before its conclusion. Before it resumed, all the parties except Graddick and Wallace informed the court that they had reached a settlement in the form of a consent decree. On May 2, 1985, they filed a joint motion to approve settlement, and on May 16, 1985, the court preliminarily approved the proposed consent decree. As preliminarily approved, the proposed decree provided for notice to members of the plaintiff class and defendant class, an opportunity for such members to present any objections to the settlement and an opportunity for members of the defendant class to opt out of the settlement and participate in the trial along with Graddick and Wallace.
On May 3, 1985, Graddick and Wallace filed objections to the proposed consent decree, and on May 31, 1985, the appointing authority for Mobile County filed an objection. No appointing authorities opted out of the settlement. On June 14, 1985, the court held a hearing on the joint motion to approve settlement and the objections to the settlement. At this hearing, the settling parties and the court agreed to an amendment of the decree as suggested by the objection filed by the Mobile County appointing authority.
II.
Courts have often expressed a judicial policy favoring settlement as the means of resolving class action lawsuits. See, e.g., Bennett v. Behring Corp., 737 F.2d 982, 986 (11th Cir.1984); Holmes v. Continental Can Co., 706 F.2d 1144, 1147 (11th Cir.1983). However, "[b]ecause of the potential for a collusive settlement, a sellout of a highly meritorious claim, or a settlement that ignores the interests of minority class members, the district judge has a heavy duty to ensure that any settlement is `fair, reasonable and adequate'...." Piambino v. Bailey, 757 F.2d 1112, 1139 (11th Cir.1985). The district judge also has *242 a duty to ensure that the settlement is not illegal or against public policy. United States v. City of Alexandria, 614 F.2d 1358, 1362 (5th Cir.1980).
A.
Here, the plaintiffs have obtained agreement to an injunction lasting until December 31, 1988, that sets specific requirements for the increased appointment of black persons as poll officials throughout Alabama. Compliance with the injunction is insured by mandatory, detailed record keeping and the opportunity for renewed judicial scrutiny if necessary. Thus, the members of the plaintiff class will receive the full relief that their representatives sought for them.
Graddick and Wallace have suggested that the settlement ignores members of minority groups other than black persons. However, Graddick and Wallace have failed to identify any such other minority groups whose interests the settlement might implicate, and they have not throughout the course of this litigation sought to join any members or representatives of such groups under Fed.R.Civ.P. 19 or 20.
For their part, the members of the defendant class and their representatives will avoid additional litigation and a finding of liability whose likelihood the court necessarily indicated in ordering the preliminary injunctions. See Harris II, supra; Harris I, 593 F.Supp. at 132-35. Also, there has been no evidence that compliance with the requirements of the preliminary injunction, which the settlement largely extends, has proved in any way onerous to any of the appointing authorities. Harris II, 601 F.Supp. at 72; Harris I, 593 F.Supp. at 135-36. Throughout the course of this litigation, the appointing authorities have had several opportunities to indicate any difficulties with compliance and even to intervene as parties. All but two chose to rely on their class representative, and these two now join in the settlement.
Graddick and Wallace contend that one provision of the proposed consent decree misleads members of the defendant class regarding the opportunity to exercise the "bail-out" provisions of section 4 of the Voting Rights Act of 1965, as amended, 42 U.S.C.A. § 1973b (West Supp.1985). In light of this objection, the court amended the proposed notice to members of the defendant class to indicate Graddick and Wallace's objections to certain provisions of the proposed consent decree and to advise any defendant class members to consult them for an explanation of these objections. Having learned of Graddick and Wallace's contention regarding the "bail-out" provision, any defendant class member could have objected to or opted out of the settlement on this basis. None did so. Furthermore, the court does not find the pertinent provision of the proposed consent decree to be misleading.
Finally, in assessing whether a proposed settlement is fair, reasonable and adequate, "[t]he trial court is entitled to take account of the judgment of experienced counsel for the parties." Pettway v. American Cast Iron Pipe Co., 576 F.2d 1157, 1215 (5th Cir.1978), cert. denied, 439 U.S. 1115, 99 S. Ct. 1020, 59 L. Ed. 2d 74 (1979). Here, counsel for all parties seeking settlement unanimously and emphatically concur that the settlement meets this requirement.
In light of the vigor and skill of their representation in this litigation and based on the court's own independent assessment of the settlement, the court finds the settlement to be fair, reasonable and adequate for both the plaintiff class and the defendant class. See, e.g., Johnson v. Montgomery County Sheriff's Department, 604 F. Supp. 1346 (M.D.Ala.1985); Lurns v. Russell Corporation, 604 F. Supp. 1335 (M.D.Ala.1984).
B.
Graddick and Wallace contend that the settlement exceeds the requirements and indeed violates the provisions of section 2 of the Voting Rights Act of 1965, as amended, 42 U.S.C.A. § 1973 (West Supp. 1985). They contend that the proposed consent *243 decree establishes illegal "quotas." The decree contains several provisions providing, in general, that the failure of a county appointing authority to appoint black persons as poll officials in sufficient numbers to correspond proportionately to the number of black persons in the county population constitutes prima facie proof of violation of the decree.
Race-conscious relief is appropriate in a consent decree if the relief is necessary, reasonable, and otherwise appropriate under the circumstances. United States v. City of Miami, 664 F.2d 435 (5th Cir. Dec. 3, 1981) (Former 5th en banc); United States v. City of Alexandria, 614 F.2d 1358 (5th Cir.1980). See also Palmer v. District Board of Trustees of St. Petersburg Junior College, 748 F.2d 595, 600-601 (11th Cir.1984). Here, the race-conscious requirements in the proposed consent decree are necessary. This court has previously found that the underrepresentation of black persons as poll officials "is substantially impeding and impairing the access of many black persons to the political process," Harris I, 593 F.Supp. at 133; and that without immediate, affirmative, race-conscious measures this intolerable condition will not end within the near future. 593 F.Supp. at 135.
The requirements are also reasonable. They are specifically tailored to redress the present effects of past discrimination, but they do "not unnecessarily trammel" the interests of white citizens of the state. United Steelworkers of America v. Weber, 443 U.S. 193, 208-09, 99 S. Ct. 2721, 2730, 61 L. Ed. 2d 480 (1979). Under the decree, not only will white persons continue to serve as poll officials, they will more than likely continue by a large margin to be a majority of poll officials. Moreover, the requirements are but a temporary measure, designed not to maintain a racial balance, but to eliminate a manifest vestige of Alabama's regrettable past; the provisions of the decree will remain in force only until December 31, 1988. Finally, as already noted, the requirements, "while significant, will not disrupt or unreasonably burden the state and county political process." Harris I, 593 F.Supp. at 135.
Graddick and Wallace also contended that the U.S. Department of Justice should preclear the settlement pursuant to section 5 of the Voting Rights Act of 1965, as amended, 42 U.S.C.A. § 1973c. See McDaniel v. Sanchez, 452 U.S. 130, 101 S. Ct. 2224, 68 L. Ed. 2d 724 (1981). However, in their letter brief filed on July 8, 1985, they have clarified that they do not contend that preclearance is necessary before the court may approve the proposed consent decree. Rather, they contend that should any member of the defendant class change its voting procedures in order to comply with the consent decree it may be necessary for such change to be precleared pursuant to section 5. The court agrees with Wallace and Graddick's clarified position that this issue, should it arise, should be left for another day.
III.
Graddick also challenges the authority of the Pike County appointing authority, as representative of the defendant class, to enter into the settlement. Graddick is not only a party to this lawsuit, he is also the attorney for the circuit court clerk of Pike County, one of the three members of the Pike County appointing authority. The other two members are represented by private counsel. Each county appointing authority is composed of the county probate judge, the county sheriff, and the clerk of the circuit court of the county. 1975 Ala.Code § 17-6-1.
At least two members of the Pike County authority have decided to settle this lawsuit. Since the members of a county appointing authority act as a body by majority vote, any action taken by these two members acting together would constitute the action of the authority. 1975 Ala.Code § 17-6-1. These two members therefore have the authority to settle this lawsuit on behalf of the Pike County appointing authority and the defendant class represented by the authority.
*244 IV.
Finally, there is the matter of the amendment of the proposed consent decree to meet the objection of the appointing authority of Mobile County. This appointing authority, the only member of the defendant class to object to the settlement, raises a limited objection to one provision of the proposed consent decree: the requirement that appointing authorities record and report the race of registered voters after the primaries scheduled for 1986. The objection suggests that the Mobile County appointing authority be permitted to supply this information by alternative means if necessary. In light of the settling parties' agreement to amend the proposed consent decree, the issue for the court is whether members of the plaintiff class and defendant class, certified pursuant to Fed.R.Civ.P. 23(a) & (b)(2), must be notified of the amendment. Fed.R.Civ.P. 23(e) generally requires notice to all class members when a class action is compromised or settled. However, "[i]n a Rule 23(b)(2) class action, mechanics of the notice process are left to the discretion of the district court subject only to the broad `reasonableness' standard imposed by due process." Fowler v. Birmingham News Co., 608 F.2d 1055, 1058 (5th Cir.1979); see also Marcera v. Chinlund, 595 F.2d 1231, 1240 n. 13 (2d Cir.), vacated on other grounds, 442 U.S. 915, 99 S. Ct. 2833, 61 L. Ed. 2d 281 (1979) (same for notice to defendant class). Since the members of the plaintiff class and defendant class have already received notice of the proposed consent decree, the issue for the court is whether declining to require additional notice to members of the plaintiff class and defendant class would be reasonable. The court finds that it would.
The amendment to the proposed consent decree is extremely narrow. It applies only to the appointing authority of Mobile County and simply permits it to use means other than actual records of the race of registered voters to make the reports required by the proposed consent decree, and this only for a limited period of time if necessary. The court credits plaintiff class counsel's representation that the interests of the plaintiff class are in no way impaired by the amendment. It also appears that few if any other appointing authorities face the same possible difficulty with record keeping as Mobile County's which currently is involved in litigation regarding this very matter. Any such other appointing authorities had the same opportunity as Mobile County's to object to the settlement on such grounds. None did so.
Under these limited circumstances where the amendment is narrow and it is clearly apparent that the interests of the classes are not substantially impaired, the court is of the opinion that the notice already given is adequate and that additional notice is not required pursuant to Rule 23(e).
V.
The court therefore concludes that the proposed consent decree, as amended, offers a settlement that is fair, reasonable and adequate to all participating and is not illegal or against public policy.
Accordingly, it is ORDERED that the May 2, 1985, motion to approve settlement, filed by plaintiffs Charlie Harris and Mose Batie, defendants State Democratic Executive Committee of Alabama and the appointing authority for Pike County, and defendant-intervenors appointing authorities of Jefferson County and Dallas County, be and it is hereby granted to the extent that the proposed consent decree, as amended, and the settlement it contains are approved. The approved consent decree is attached.
The clerk of the court is DIRECTED to mail copies of this order and the consent decree by certified mail, return receipt requested, to the members of the appointing authorities of all counties in the State of Alabama except Conecuh County and Winston County.
CONSENT DECREE
This cause is before the Court on the joint motion of the Plaintiffs and the Defendant appointing authorities of the counties of Pike, Jefferson and Dallas and the *245 State Democratic Executive Committee (hereinafter referred to as "settling Defendants") to approve their settlement of this action. Plaintiffs Charlie Harris and Mose Batie filed their complaint on April 30, 1984, against Charles A. Graddick, Attorney General of the State of Alabama, George C. Wallace, Governor of Alabama, the State Democratic Executive Committee of Alabama, the Pike County Appointing Board comprised of Ronald L. Powell, William C. Stone, and Harold Anderson to enforce the provisions of Section 2 of the Voting Rights Act of 1965, as amended, 42 U.S.C. sec. 1973, and the thirteenth, fourteenth, and fifteenth amendments to the Constitution of the United States. The complaint alleges that the Defendants have engaged in racial discrimination against black voters at polling places, and that the adoption and maintenance of procedures for the selection of poll officials has resulted in impairing and impeding the voting rights of black citizens in Alabama. Defendants denied these allegations. On July 9, 1984, this Court received submissions from the parties on a Preliminary Injunction concerning the selection of poll officials for the remaining 1984 elections. On August 1, 1984, this Court ordered that this action was properly maintainable as a class action with respect to both a Plaintiff and Defendant class. The Court provisionally certified a Plaintiff class of all black citizens of the State of Alabama and a Defendant class of all the appointing authorities in every county in the State of Alabama, except Conecuh and Winston counties, that is, the probate judge, circuit clerk and sheriff of each county. The court further issued the Preliminary Injunction. The appointing boards of Dallas and Jefferson Counties were granted leave to intervene as named Defendants.
On February 4, 1985, this Court began hearing evidence on the trial of this cause. Plaintiffs presented their case and Defendants had begun the presentation of their case. The hearing lasted five days and was then recessed.
At the request of the Court during recess, and desiring to avoid the burden and expense of further contested litigation in this action, the Plaintiffs and the settling Defendants have negotiated a settlement of Plaintiffs' claims against the settling Defendants.
The Court has jurisdiction over the Plaintiffs and the settling Defendants and the subject matter of this action. This Decree is final and binding between the parties to this settlement and their successors regarding the issues raised in the Complaint and resolved herein. Upon due consideration, the Court is of the opinion that the provisions of this Decree are equitable, just, and in accordance with the Constitution and laws of the United States, and that it ought to be approved.
Accordingly, it is hereby ORDERED, ADJUDGED, and DECREED as follows:
A. The preliminary injunctions entered August 1, 1984, and December 13, 1984, are hereby modified and amended as provided in the following paragraphs B. through J. and are continued in force and effect until December 31, 1988, and the memorandum opinion of December 13, 1984, is hereby withdrawn as it pertains to the settling Defendants.
B. (1) The settling Defendants and members of the Defendant class, their successors, officers, agents, attorneys, employees and those acting in concert with them or at their direction are enjoined from appointing poll officials in any manner which will have the purpose or effect of discriminating against black persons on account of race.
(2) With regard to all appointments of poll officials in countywide elections prior to January 1, 1989, the failure of the settling Defendants and Defendant class members to appoint in their respective counties a proportion of black poll officials equal to or greater than the proportion of black persons in the voting age population of the county as shown in the 1980 census shall be deemed prima facie proof of noncompliance with paragraph B(1).
(3) With regard to all appointments of poll officials prior to January 1, 1989, the *246 failure of the settling Defendants and Defendant class members to appoint for any polling place a proportion of black poll officials within five percent of the percentage of black registered voters assigned to that polling place as of a date no more than 30 days in advance of the election or primary, or to appoint at least one black poll official in any polling place where black persons constitute 20% or more of the registered voters assigned to that polling place, shall be deemed prima facie proof of noncompliance with paragraph B(1).
C. (1) The settling Defendants and members of the Defendant class, their successors, officers, agents, attorneys, employees and those acting in concert with them or at their direction are enjoined to appoint a sufficient number of black poll officials to prevent discrimination on the basis of race against voters.
(2) With regard to all appointments of poll officials prior to January 1, 1989, the number of black poll officials necessary to establish prima facie compliance with paragraph (C)(1) will be the number yielding (a) in each county, in countywide elections, a proportion of black poll officials equal to or greater than the proportion of black persons in the voting age population of that county as shown in the 1980 census, and (b) for each polling place, a proportion of black poll officials within five percent of the proportion of black registered voters assigned to that polling place on a date no more than 30 days in advance of the election or primary, and in any event no less than one black poll official in any polling place where black persons constitute 20% or more of the registered voters assigned to that polling place.
(3) If any settling Defendants or members of the Defendant class believe that the number of black poll officials necessary in any particular county to eliminate the discrimination referred to in paragraph C(1) is different than the number in paragraph C(2), they may apply to the Court for an appropriate order.
D. (1) The settling Defendants and members of the Defendant class, their successors, officers, agents, attorneys, employees and those acting in concert with them or at their direction are enjoined from appointing chief inspectors, inspectors, chief clerks, managers, returning officers and officers by other name in any manner which will have the purpose or effect of discriminating against black persons on account of race.
(2) With regard to all appointments of such officers prior to January 1, 1989, the failure of the settling Defendants and Defendant class members to appoint in any county, in a countywide election, a proportion of black officers equal to the proportion of black persons in the voting age population of that county as shown in the 1980 census shall be deemed prima facie proof of noncompliance with paragraph D(1).
(3) It is recommended that persons appointed as chief inspector have experience as a poll official in one prior election. In evaluating prior experience, Defendants may consider previous service as a poll official, previous political campaign experience or other experience in the electoral process. Experience as a poll official in one prior election shall be presumed sufficient for appointment as chief inspector. Provided however, nothing contained herein shall be considered as an excuse for failure to meet the requirements of this Decree.
E. To the extent necessary to meet the above requirements regarding the appointment of black poll officials, county appointing authorities may appoint poll officials from sources other than those authorized by state law.
F. The settling Defendants and the members of the Defendant class of appointing boards shall file a report with the Clerk of this Court 7 days before each election in which the settling Defendants appoint poll officials. For the purposes of this Decree, the Plaintiffs agree that the settling Defendants and Defendant class members shall not be expected to supply to the Plaintiffs or the Court the race designation for registered voters pursuant to sec. 17-4-187, *247 Alabama Code (Supp.1984), until the primaries scheduled for 1986, unless those data are currently available. The Plaintiffs further agree during the term of this Consent Decree that should Mobile County be unable to supply race designations for registered voters pursuant to sec. 17-4-187, Alabama Code (Supp.1984), because the Mobile County Board of Registrars does not have complete or accurate data, then, so long as they are making good faith efforts to identify the race of voters from available sources, Mobile County shall be allowed to supply race designations for registered voters by means of statistical estimates, polling, sampling, and the use of sources other than records maintained by the Board of Registrars, but the incomplete race designations by the Board of Registrars shall also be supplied. Subject to the above, each report shall provide the following information:
G. For each county, the report shall contain: names of all offices (e.g., chief inspector, chief clerk, returning officer, etc.), the total number and percent of blacks and whites appointed to each such office, the number and percent of black and white registered voters countywide as of a date no more than 30 days in advance of the election or primary for which the report is being prepared, the number and percent of white and black total population and voting-age population countywide as shown in the 1980 census.
H. For each polling place within the county, the report shall contain: the name and numerical designation of the polling place, the House and Senate districts, the total number and percent of poll officials by race, the total number and percent of registered voters by race as of a date no more than 30 days in advance of the election or primary for which the report is being prepared. For any polling place where the percentage of black poll officials does not reasonably correspond to the percentage of black registered voters, those Defendants must give a short explanation for the reason.
I. Furthermore, there shall be appended to such report a list by polling place of the name, address, race designation, and office of all polling officials for such election. For the convenience of the reporting officials, a suggested form for such report is appended hereto as Appendix A. A copy of each report shall also be mailed by the Defendant class member at least 7 days before election upon James U. Blacksher, Esquire and Larry T. Menefee, Esquire, Blacksher, Menefee & Stein, P.A., 405 Van Antwerp Building, P.O. Box 1051, Mobile, Alabama 36633, attorneys for the Plaintiff class.
J. Notwithstanding the foregoing provisions, the State Democratic Executive Committee is enjoined only to give notice to each of its county committees within 20 days of the date hereof by sending a copy of this decree to each committee.
K. This preliminary injunction shall continue in force until December 31, 1988. At that time, all of Plaintiffs' claims against the settling Defendants shall be dismissed, unless, by motion filed on or before December 31, 1988, Plaintiffs show that particular settling Defendants have not complied substantially with the preliminary injunction. If such motion is filed, the Court will order said settling Defendants to show cause why Plaintiffs should not be allowed to pursue their claims against said settling Defendants to final judgment. Following a hearing thereon, the Court shall either dismiss the claims against the particular settling Defendants or schedule a trial on the merits with respect to Plaintiffs' claims against them.
L. From the inception of this lawsuit, Plaintiffs have taken the position that it is the State of Alabama, acting through the Governor and its Attorney General, that ultimately is responsible for seeing that the federal voting rights of the plaintiff class are protected and enforced throughout its political subdivisions. Consequently, Plaintiffs have contended that their attorneys' fees and expenses for prosecuting this action should be the responsibility of the State Defendants, and that Plaintiffs *248 should not have to bear the burden of litigating the extent to which any of the county Defendants or Defendant class members should contribute to their fees and expenses. Accordingly, the settling Defendants agree that Plaintiffs are the prevailing parties. Plaintiffs agree that they will seek to recover their attorneys' fees and expenses from the state Defendants and will not request an award of attorneys' fees and expenses against the Pike County or Dallas County Defendants or against members of the Defendant class or against the State Democratic Executive Committee except to the extent of services rendered seeking enforcement of the preliminary injunction against particular settling Defendants or pursuit of claims against them after the preliminary injunction is dissolved. However, if the Court orders these Defendants or class members to share Plaintiffs' attorneys' fees or expenses as a result of any claim by one or both of the state Defendants, Plaintiffs do not waive their right to demand payment of same from these county Defendants or class members.
M. Consistent with the provisions of the preceding paragraph, Plaintiffs agree that they will not request an award of attorneys' fees and expenses against the Jefferson County Defendants, except to the extent of fees and expenses incurred opposing matters that were raised exclusively by Jefferson County, pursuing enforcement of the preliminary injunction against Jefferson County or pursuing claims against said Defendants after the preliminary injunction has been dissolved. However, if the Court orders the Jefferson County Defendants to pay a greater share of Plaintiffs' attorneys' fees and expenses as a result of any claim by the state Defendants, Plaintiffs do not waive their right to demand payment of same from the Jefferson County Defendants.
N. This Consent Decree shall not constitute an adjudication of or admission by any settling Defendants or class members of any violation of Plaintiffs' federal statutory rights or constitutional rights, nor shall it operate to preclude any members of the Defendant class from utilizing the provisions set forth in Section 4 of the Voting Rights Act of 1965, as amended, 42 U.S.C. sec. 1973b. In this respect, the parties agree that this Consent Decree will not result in any abandonment of a voting practice challenged in this action.
APPENDIX A
Report of ______________________ County
___________________________ ___, 19___
Section I
County Totals: 1980 census total total population ___________________ _____%
black population ___________________ _____%
1980 census total voting-age population ___________________ _____%
black voting-age population ___________________ _____%
Total registered voters as of ___/___/8 ____________________ _____%
Total black registered voters as of ___/___/8 ____________________ _____%
Total poll officials ___________________
white poll officials ___________________ _____%
black poll officials ___________________ _____%
other ___________________ _____%
Total White Black
Returning Officer __________ _________ ___% ___________ _____%
Chief Inspector __________ _________ ___% ___________ _____%
*249
Inspector __________ _________ ___% ________ _________%
Supervisor __________ _________ ___% ________ _________%
Manager __________ _________ ___% ________ _________%
Chief Clerk __________ _________ ___% ________ _________%
Section II
For Each Polling Place
Name: _____________________________________
Senate District: _____________________________________
House District: _____________________________________
Precinct, Ward or Box designation: _____________________________________
Total White Black
Registered Voters ________ ________ ___% ________ _____%
(___/___/8___)
Poll Officials ________ ________ ___% ________ _____%
Explanation for non-compliance:
_________________________________________________________________________
Name: _____________________________________
Senate District: _____________________________________
House District: _____________________________________
Precinct, Ward or Box designation: _____________________________________
Total White Black
Registered Voters ________ ________ ___% ________ _____%
(___/___/8___)
Poll Officials ________ ________ ___% ________ _____%
Explanation for non-compliance:
NOTES
[1] The Conecuh County appointing authority was excluded because it had already entered into a consent decree in another district court regarding the issue raised by this lawsuit. Harris I, 593 F.Supp. at 137 n. 10.
[2] The Winston County appointing authority was later excused because the evidence showed that, over the years, it had met the requirements set by the preliminary injunction.
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615 F. Supp. 501 (1985)
LOW INCOME PEOPLE TOGETHER, INC., Plaintiff,
v.
Henry E. MANNING, et al., Defendants.
Civ. A. No. C84-2863.
United States District Court, N.D. Ohio, E.D.
August 16, 1985.
*502 Robert H. Bonthius, Jr., Harold L. Williams, Legal Aid Soc. of Cleveland, Cleveland, Ohio, Gail White, American Civil Liberties Union of Cleveland Foundation, Inc., Akron, Ohio, for plaintiff.
Robert C. Maynard, R. Dean Jollay, Jr., Frances Floriano Goins, Squire, Sanders & Dempsey, Cleveland, Ohio, for defendants.
ANN ALDRICH, District Judge.
A non-partisan political action group of low-income citizens brings this First Amendment challenge to a public hospital's refusal to permit it to register voters and distribute leaflets in the lobby of its out-patient clinic building and in waiting areas adjacent to the clinics. Following a preliminary injunction hearing, the parties conducted additional discovery, agreed that the injunctive hearing would be considered to be the trial on the merits,[1] and submitted post-hearing briefs. On consideration of the entire record, this Court makes the following findings of fact and conclusions of law, as required by Fed.R.Civ.P. 52(a), and enters judgment for the defendants.
I. FINDINGS OF FACT
A. The Parties
The Cleveland Metropolitan General/Highland View Hospital ("the Hospital") is a large public facility on the Near West Side of Cleveland. It is a unit of the Cuyahoga County Hospital System. The Hospital was organized pursuant to Ohio Rev. Code §§ 339.01-99 and is owned by Cuyahoga County ("the County"). The Board of *503 Cuyahoga County Commissioners ("the Commissioners") provides a portion of the Hospital's operating revenue. A Board of Trustees operates the Hospital and is appointed by the Commissioners, the senior Probate Judge and the Senior Judge of the Court of Common Pleas for Cuyahoga County. The Hospital provides a wide range of health services, including preventive and primary services and care. Many of its patients are poor and low-income residents of the County.
Low Income People Together, Inc. ("LIPT") is a non-profit corporation organized pursuant to the Ohio Revised Code. LIPT is located in the West Side Community House in Cleveland, not far from the Hospital. Most of its 400 members are unemployed heads of households; they and their families receive various forms of public assistance.
The dispute between the Hospital and LIPT originates in the increasingly severe financial problems faced by the Hospital as its sources of revenue have become depleted. The Hospital is exploring the possibility of restructuring itself from a governmental entity to a non-profit corporation; as a corporation, the Hospital would contract with the County and continue to provide essentially the same services. LIPT contends that this process known as "privatization" would be detrimental to patients, employees, and County taxpayers.
B. The Bell Greve Facility
The Hospital occupies 27.5 acres and comprises a number of buildings of different ages and sizes. Out-patient clinics are located on six floors of the Bell Greve Building ("Bell Greve").[2]
The ground floor of Bell Greve contains the main entrance for the clinics and for the emergency department, which is located in the adjacent South Building. Inside the doors is a lobby ("the Bell Greve Lobby") measuring approximately sixty-four feet by thirty-nine feet. The Bell Greve Lobby was completed and first placed in use in the fall of 1983. One end of the lobby is occupied by approximately thirty-five seats, which are used by relatives and friends of Bell Greve patients and patients undergoing surgery in the adjoining South Building. A Hospital employee with a telephone sits at a desk in that portion of the lobby and provides information about operations. At the other end of the lobby is a corridor leading to the South Building, a vending area, and an automatic, computerized banking machine operated by the AmeriTrust Company ("AmeriTrust").
Just beyond the lobby is the central registration area for all the Bell Greve out-patient clinics. A reception area and triage area are nearby. Directly across a ten-foot wide corridor from the registration area is the Family Practice Clinic and a waiting area. Further down the corridor are the Women, Infants and Children ("WIC") Clinic, the out-patient laboratory and pharmacy, a Patient Accounts office, the Orthopedic/Spinal Cord Injury Clinic, Multi Service Clinics, and diagnostic facilities. Each clinic, office, or facility has an adjacent waiting area.
On the same corridor there are elevators leading to clinics on other floors of Bell Greve. The first floor houses the Department of Surgery, the Surgery Clinic, Oral Surgery Clinic, Oncology Clinic, and other medical and administrative facilities. The Obstetrics/Gynecology Clinics occupy much of the second floor, the Medicine Clinics are on the third floor, and the Pediatric Clinics are on the fifth floor. Each clinic has an adjacent waiting area. Other portions of the building are not relevant to this action.
The out-patient clinics provide an increasingly large proportion of the Hospital's medical care, primarily because federal and state policy changes have required hospitals to reduce the length of the in-patient stays of ambulatory patients. In the first eleven months of 1984, the Hospital treated outpatients in more than 243,812 visits to the clinics.
*504 The Bell Greve Lobby is the focal point for all medical activity in the clinics; it is also the space through which ambulatory patients proceed on their way to the Emergency Room in the South Building. Patients coming to any of the clinics and the relatives or friends accompanying them enter the Bell Greve Lobby, register in the central registration area, and proceed to the waiting areas for the various clinics. Approximately 1,000 patients pass through the clinics and emergency room each day. A survey conducted for LIPT by an expert in architectural environment found that during busy mid-morning and early afternoon hours between thirty-one and forty-six people were either sitting or moving about the lobby.
The architect accurately concluded that, in terms of architectural design, the lobby resembles an airport more than an emergency room. Nonetheless, doctors frequently utilize the lobby in connection with their medical duties. Surgeons often come directly from the operating rooms in the South Building to that portion of the lobby used by their patients' visitors; there the doctors seek to find a quiet corner to discuss the outcome of the operation. Hospital physicians also testified that in certain circumstances it might prove necessary to administer emergency care to incoming patients as soon as they enter the lobby.
When out-patients and their companions arrive at the Bell Greve Lobby, they register and then proceed through the corridors and, if necessary, elevators or stairways, to the clinic or clinics that provide the patients with medical care. There they remain in a waiting room adjacent to the clinic until a physician can see the patient. Hospital officials and physicians readily concede that even though patients have appointments for a specific time they must often endure long waits. Some of the waiting areas are very crowded; in the General Medicine clinics, for example, as many as fifty to one hundred patients are seen during a morning or afternoon session.
By definition, the patients at the clinics are ill often seriously and sometimes terminally ill and both they and their companions are under considerable stress. Even patients whose malaises are not life-threatening are under a great deal of stress. Examples cited by the Hospital include teenagers who visit the Pediatrics Clinic with respect to pregnancy, sexually transmitted diseases, sexual abuse, and drug and alcohol problems, or older patients visiting the Obstetrics/Gynecology Clinics concerning similar matters. The physicians emphatically state that a quiet and peaceful atmosphere is medically required to relieve stress on these individuals and to protect their safety, privacy, and dignity. They also note that individuals in the waiting areas are essentially a "captive audience," confined there not only by their impending appointments but in some cases also by disabilities that restrict them to stretchers, wheelchairs, or crutches. Furthermore, the doctors unanimously emphasize that the environment in the waiting areas should be identical to that in their private offices where they see patients and families, teach, and perform administrative and office work and contend that disruptions in either area are equally detrimental to patients. As with the main lobby, the clinic waiting areas are sometimes the site of medical discussions or even treatment. On one occasion during the past year, a patient in the waiting area of the Cardiology Clinic suffered a cardiac arrest and received cardiopulmonary resuscitation treatment.
The Hospital's position with respect to the need for patient privacy and insulation is not universally shared. LIPT's expert medical witness, Dr. Quentin Young, stated that while he was chairman of the Department of Medicine at Cook County Hospital in Chicago, outside groups were permitted to distribute leaflets and discuss health issues in the clinic waiting areas. He asserted that no health care per se is delivered in the waiting rooms and suggested that patients' participation in health-related public policy issues is "health-enhancing". Dr. Young testified that he would respect, but respectfully disagree with, a different judgment *505 reached by other physicians such as those at the Hospital.
C. The Solicitation Policy
Having weighed the costs and benefits and concluded that leafletting and proselytizing in the main lobby and clinic waiting areas does its patients more harm than good, the Hospital maintains a strict antisolicitation policy ("the Solicitation Policy"). As set forth most recently on March 26, 1984, the Solicitation Policy states:
I. POLICY
Solicitation on Hospital premises is prohibited except as specifically authorized under the terms of this policy.
II. SCOPE
This policy applies to all units of the Cuyahoga County Hospital System.
III. DEFINITION
Solicitation, for purposes of this policy, is defined as selling merchandise or services, collecting funds, or distributing literature of any kind that is not part of the day-to-day business of the Hospital.
IV. PURPOSE
This policy is adopted to prohibit unauthorized solicitations on Hospital property which are not in the best interest of the hospital and its patients.
V. RULES
A. Authorized Solicitations: When it is determined by the office of the Senior Vice President of Operations that a request to solicit is beneficial to the Hospital's employees, its patients, the community, or public relations, a solicitation may be authorized. Examples: United Appeal and Auxiliary Membership Drive. Solicitation of funds for a social occasion such as a marriage, birth of a child, or retirement are permitted within a department with the advance approval of the Department Head.
B. Unauthorized Solicitations: Any attempts to sell merchandise or services, distribute literature, or to collect funds from individual employees, visitors, or patients unrelated to the Hospital's interest and goals will not be authorized and as such are prohibited.
C. In no event will a solicitation be allowed in any area where patient care or services are provided; or where patients must pass or wait to obtain such care or services; or where patients may come to make requests and inquiries; or which are set aside for patient rest and recreation; or where patients may meet with their physicians or visitors; or in and through which emergency services must be able to move properly without interference.
D. In no event will a solicitation be allowed by an employee during his/her scheduled work time, or of an employee during his/her scheduled work time.
E. The posting of any written solicitation material in or on Hospital property, at anytime, is prohibited.
VI. PROCEDURE
Any person who wishes to request the privilege of soliciting on Hospital premises for other than a social occasion must submit an advance request in writing to the Senior Operating Officer of each unit of the Cuyahoga County Hospital System.[[3]]
* * * * * *
*506 In recent years, the Hospital has enforced its anti-solicitation policy by confiscating and disposing of a variety of political and religious literature, has ordered removed from its premises individuals distributing literature on behalf of palm readers, spiritualists, the Unification Church and Jehovah's Witnesses, along with a salesman of a socialist newspaper. Two leafletters of the Revolutionary Communist Party who refused to stop distributing literature were arrested. Martha Kutik, the Hospital's vice president for management services and author of the policy, testified that she had a one-and-one-half inch thick file of literature proposed for distribution, concerning topics ranging from car repair to school busing. In addition, several years prior to issuing the present Solicitation Policy the Hospital instructed several resident physicians not to wear buttons and insignia espousing personal positions on various social issues while they were on the Hospital premises.
The Hospital's restrictions have not left the facility entirely devoid of all literature, communications, and expressive activity, and not all activity in the Bell Greve lobby and outpatient clinic waiting areas has been strictly limited to patient care. The most prominent examples of such activity are summarized below. In no case, however, has the Hospital conducted or permitted expressive conduct of the sort sought by LIPT to take place during the hours when the clinics are open. The following activities were either substantially different from those proposed by LIPT or took place in other, and therefore irrelevant, areas of the Hospital.
1. Bulletin Boards and Television
Many of the clinics have bulletin boards containing posters, notices or leaflets concerning health education and other health-related matters. In the Pediatric Clinic, for example, notices are posted concerning remedies for choking and poisoning, along with information about children's car seats. Only notices concerning health issues are permitted. When commercial posters or leaflets are placed on the bulletin boards by salespersons, and when outside groups disperse literature dealing with political, moral and sociological issues not directly relating to health care or health education, Hospital employees remove such papers from the bulletin boards and discard them. Neither the Solicitation Policy nor any other Hospital document defines with precision the border between permissible and impermissible literature; the Hospital's view is essentially that its employees recognize improper solicitations, as defined by Part II of the Solicitation Policy, when they see them. However, the nature of the literature found on the bulletin boards was similar in the waiting areas of the different clinics that this Court observed.
In addition to the bulletin boards, the Hospital also facilitates patient education via a closed-circuit television channel, which provides a regular schedule of films about health.
2. Gift Shop and Gift Cart
Part V-A of the Solicitation Policy explicitly endorses the membership drive of the Auxiliary, a volunteer organization whose purpose is to raise funds for the Hospital and staff for projects which are approved by administrators. The Auxiliary provides almost all the funds for certain patient activities and recreation programs. It operates a gift shop for patients and visitors and a gift cart which circulates through the various waiting areas. Volunteers manning the cart distribute magazines and other reading materials contributed by Auxiliary members and other volunteers. The cart will not distribute leaflets or literature provided by outside groups. Determinations concerning the content of the cart's contents rest with the Auxiliary.
3. Voter Registration
The Hospital has also conducted voter registration campaigns for nearly a decade. In 1976 it conducted several days of registration as part of its efforts in support of a county levy for health and human services. In 1978, it offered long-term rehabilitation patients the opportunity to register to vote by absentee ballot. In 1980, off-duty employees and volunteers who were deputized *507 by the Board of Elections conducted a registration drive, at the Hospital cafeteria. Long-term patient and employee registration programs were repeated in 1982. The Bell Greve lobby was opened in 1983 and voter registration efforts were conducted there that year. Some materials were posted in the Hospital in opposition to two tax-reduction referenda that were on the Ohio ballot that year; however, no posters or other literature were posted in the Bell Greve lobby or outpatient clinic waiting areas.
In 1984, the Hospital expanded its efforts to include a registration table in the Bell Greve lobby, staffed at different times by approximately thirty off-duty employees and volunteers. At the time this lawsuit began, the Hospital planned to conduct registration between 11 a.m. and 1 p.m., Monday through Friday, from September 10, 1984 until the last day permitted by statute, October 9, 1984.
4. AmeriTrust Bank-At-Work Station and Representative
In addition to these educational or volunteer activities, the Hospital permits at least two commercial activities to be conducted on its grounds. One is the AmeriTrust Bank-At-Work station located just to the right of the main entrance to the Bell Greve lobby, next to the vending machine area. One day a week, an AmeriTrust employee sits at a table next to the automated teller machine to explain its functions, answer other questions, and sign up new accounts. The machine was installed to permit hospital employees to conduct their banking without leaving the Hospital; however, any individual AmeriTrust account-holder who possesses the necessary electronic card can use the machine. The AmeriTrust representative may only deal with employees and always checks for identification cards. With certain exceptions not relevant here, the representative must remain at the table, and cannot distribute literature or brochures to anyone except upon request. AmeriTrust has never opened accounts for anyone except Hospital employees, with the exception of an employee of a vending machine company whose full-time job is to service Hospital vending machines. Finally, the Hospital refused AmeriTrust's request that it be permitted to place posters in other areas of the Hospital.
5. Photographs of Newborns
The other commercial activity involves an agreement between the Auxiliary and the Hospital Photo Guild of Lakewood, Ohio to provide mothers with a picture of their newborn children. A photographer takes a picture of every baby born at the Hospital. The mothers are then given one picture free of charge and the opportunity to purchase other copies; twenty-five percent of the sale proceeds is returned to the Auxiliary. It is not entirely clear from the record whether the photographer or an Auxiliary member approaches the mother to discuss the sale of the photos. Hospital administrators stressed that the photographs are a service, not a solicitation, and that presenting such photos is one of the most common and popular Auxiliary activities in hospitals across the country, serving to ease the patient's stay and create a pleasant, happy environment. In any event, neither the photographing nor the "service"/"solicitation" takes place in the lobby or the clinic waiting areas.
6. Other Uses of Bell Greve Lobby
The Hospital has also utilized the Bell Greve lobby for community events and private parties during hours when the clinics and lobby were closed to the public. On Saturday, October 22, 1983, the Hospital sponsored a "Community Day" celebration featuring health screening tests, general health information, voter registration, and children's fingerprinting identification. On October 20, 1984, also a Saturday, the lobby was used for a family festival for Hospital employees.
D. LIPT and the Hospital
The Hospital had its first contact with LIPT in February of 1984. After the group requested information about the Hospital's services, a tour was organized of the facility, concentrating on the most-used out-patient services. During the first week *508 of May of 1984, LIPT members requested that the Hospital permit them to conduct voter registration in out-patient waiting areas. On May 8, 1984, the Hospital declined the request, citing both the existence of its own voter registration program and the crowded conditions in the Bell Greve Lobby and Emergency Room waiting area due to relocation and renovation.
In making its request to the Hospital, LIPT sought to extend a voter registration drive that it has conducted in welfare offices, food stamp centers, grocery stores, and during door-to-door canvassing. The policy of seeking out low-income potential voters in such places was adopted on the advice of nationwide groups such as Project VOTE! and Human Serve. LIPT members believe they must present health care issues to low-income voters at the Hospital because no alternative forums exist; they claim that their audience cannot afford, cannot read, or cannot understand newspapers and do not own television sets or do not watch news programs.
On May 11, LIPT members went to the Hospital with voter registration materials and leaflets for the purpose of registering voters and distributing leaflets in the Bell Greve Lobby. A Hospital official, accompanied by security guards, denied them entrance and informed them that they would not be permitted to conduct their planned activities in the Hospital. Attorneys for LIPT then wrote a letter to the Hospital, claiming that the group possessed a First Amendment right to canvass for unregistered voters and distribute leaflets in the out-patient waiting areas of the Hospital. The attorneys indicated that LIPT would commence a lawsuit if its demands were not satisfied. After a further exchange of correspondence, on August 3, 1984 LIPT hand-delivered to Hospital Vice President and General Counsel Ted F. Zawadski a "Statement of the Goals of L.I.P.T. for Registering Voters at Metro Hospital." As later amended, it states:
A. WHAT WE WANT
We want to have seven or eight of our members go Mondays through Fridays, during the hours of 8:30 A.M. to 1:30 P.M., from now until 10/9/84, to register to vote people waiting in sitting areas and on lines at the Out-Patient Lobby/Clinic Registration Area of the Bel [sic] Greve Building, and in the waiting areas of the emergency room and the various out-patient clinics, (including family practice, pediatrics, WIC, OBGYN, eye, and ENT), as well as the pharmacy waiting room.
We intend to approach people who are waiting in these areas, and ask them if they are registered to vote. If they are not, we will ask if we can register them. We will use forms and information on the clip boards we will each carry. If they say "no," we will move on.
We also intend to discuss ballot-related issues affecting the delivery of health care in Cuyahoga County. We may also hand out leaflets.
In addition to using clip boards, we would like to set up a card table in the outer lobby of the Bel [sic] Greve Building during the same hours. One of our members will remain at the table to register voters, hand out leaflets, and discuss issues of potential concern to health-conscious poor people. The table will have signs telling its purpose forming an apron around it.
B. RESTRICTIONS WE AGREE TO.
1. Not to go into any area where medical care is routinely given.
2. To approach people one-on-one.
3. Not to badger anyone who expresses disinterest or disapproval in what we are doing.
4. Not to approach or continue to talk to anyone who appears to be in pain or acutely ill.
5. Not to block any area or interfere with the movement of people.
6. Not to make loud noise or cause disruption of the normal activity of the hospital.
7. Not to have more than 4 registrars in the Out-Patient Lobby/Clinic registration area at a given time; and not to *509 have more than 2 registrars in any one of the other areas at a given time.
8. Not to approach the person being served at the desk or the first and second people in line.
9. To pick up any of our leaflets that have been dropped on the floor or left laying about a waiting room.
On September 11, 1984, LIPT filed a verified complaint and a motion for temporary restraining order and subsequent preliminary injunction. The complaint seeks declaratory and injunctive relief under 42 U.S.C. § 1983, invoking jurisdiction under 28 U.S.C. §§ 1331, 1343(3), 2201 and 2202. The defendants are the Hospital and its President, Henry E. Manning. In its claim for relief LIPT asserts that "[t]he Hospital is a public forum and the activities in which L.I.P.T. members intend to engage are protected by the First Amendment." It seeks "a declaratory judgment that the First Amendment of the United States Constitution guarantees and protects the right of L.I.P.T. members to conduct non-partisan voter registration and to distribute leaflets concerning public health care issues in public out-patient waiting areas of the Hospital" and "preliminary and permanent injunctions prohibiting the Hospital and Mr. Manning from refusing to permit L.I.P.T. members to exercise their First Amendment rights by conducting voter registration and leafletting in the public out-patient waiting areas of the Hospital in a manner that does not interfere with the normal operation of the Hospital ..."
On the same day, this Court held a hearing at which the parties entered into an agreed restraining order, to remain in effect until a preliminary injunction hearing could be held. The agreement permitted two LIPT members to conduct voter registration at the Hospital's voter registration table in the lobby between 10:00 a.m. and noon, confined them to sitting or standing at the table, and allowed them to place a sign identifying LIPT on the table and to distribute organizational literature.[4] When the injunction hearing was rescheduled for September 28, 1984, this Court extended the temporary restraining order to that date. The defendants then moved for summary judgment. At the conclusion of the hearing, in light of undisputed testimony that the presence of LIPT members in the lobby under the terms of the temporary restraining order had not disrupted medical care in the Hospital, this Court extended the order until October 9, 1984, the last day of voter registration for the November elections. The portion of the order which permitted the distribution of organizational literature was vacated.
II. CONCLUSIONS OF LAW
The First Amendment provides that "Congress shall make no law ... abridging the freedom of speech...." Political canvassing, soliciting, proselytizing and leafletting are expressive activities protected by the First Amendment. Carey v. Brown, 447 U.S. 455, 100 S. Ct. 2286, 65 L. Ed. 2d 263 (1980), Gregory v. Chicago, 394 U.S. 111, 89 S. Ct. 946, 22 L. Ed. 2d 134 (1969). This protection assures individual *510 interests in self-expression, Police Department of Chicago v. Mosley, 408 U.S. 92, 92 S. Ct. 2286, 33 L. Ed. 2d 212 (1972), and permits free exchange of ideas and proposals for political and social change. Buckley v. Valeo, 424 U.S. 1, 96 S. Ct. 612, 46 L. Ed. 2d 659 (1976) (per curiam). But the First Amendment does not prohibit appropriate governmental regulation of the time, place and manner in which these constitutional rights are exercised. Members of the City Council of the City of Los Angeles v. Taxpayers for Vincent, 466 U.S. 789, 104 S. Ct. 2118, 80 L. Ed. 2d 772 (1984); Heffron v. International Society for Krishna Consciousness, Inc., 452 U.S. 640, 101 S. Ct. 2559, 69 L. Ed. 2d 298 (1981). "[T]he First Amendment does not guarantee access to government property simply because it is owned or controlled by the government." United States Postal Service v. Council of Greenburgh Civic Associations, 453 U.S. 114, 129, 101 S. Ct. 2676, 2685, 69 L. Ed. 2d 517 (1981). More specifically, "[n]othing in the Constitution requires the Government freely to grant access to all who wish to exercise their right to free speech on every type of government property without regard to the nature of the property or to the disruption that might be caused by the speaker's activities." Cornelius v. NAACP Legal Defense and Educational Fund, Inc., ___ U.S. ___, 105 S. Ct. 3439, 3448, 87 L. Ed. 2d 567 (1985).
LIPT advances two alternative contentions: that the Bell Greve lobby and waiting areas are a "public forum" in which regulation of First Amendment activity is severely circumscribed; and, that even if the spaces are not regarded as a public forum, the Hospital's restrictions on its activity there are so unreasonable as to violate the Constitution. The standard by which the Hospital's regulation must be measured depends upon an initial determination as to what sort of forum a public hospital is under the First Amendment.
As an initial matter, this Court accepts the Hospital's arguments that the Ohio law governing voter registration forbids the specific combination of voter registration plus lobbying and leafletting that LIPT's amended complaint demands.[5] Moreover, the record fails to demonstrate any inadequacy in the Hospital's current voter registration efforts except in LIPT's view, that the registration has not been linked to dissemination of information about the privatization issue. Accordingly, what this dispute is really about is LIPT's demand to be permitted to discuss political issues and hand out political pamphlets in the Bell Greve lobby and out-patient clinic waiting areas.
A.
Contentions that certain public property constitutes a "public forum" in which activities protected by the First Amendment must be given considerable leeway rest upon the line of cases commencing with Hague v. CIO, 307 U.S. 496, 59 S. Ct. 954, 83 L. Ed. 1423 (1939), and its holding that public streets and parks "have immemorially been held in trust for the use of the public and, time out of mind, have been used for purposes of assembly, communicating thoughts between citizens, and discussing public questions." Id. at 515, 59 S.Ct. at 964. Use of these traditionally public spaces "for communication of views on national questions may be regulated in the interest of all" but "it must not, in the *511 guise of regulation, be abridged or denied." Id. at 516, 59 S.Ct. at 964.
In subsequent cases, the Court has wrestled with the conflict between the First Amendment and the government's proprietary interests in public property other than streets and parks. In Perry Education Ass'n v. Perry Local Educators' Ass'n, 460 U.S. 37, 103 S. Ct. 948, 74 L. Ed. 2d 794 (1983), it divided state-owned territory and structures into three categories:
In places which by long tradition or by government fiat have been devoted to assembly and debate, the rights of the state to limit expressive activity are sharply circumscribed. At one end of the spectrum are streets and parks which "have immemorially been held in trust for the use of the public, and, time out of mind, have been used for purposes of assembly, communicating thoughts between citizens, and discussing public questions." ... In these quintessential public forums, the government may not prohibit all communicative activity. For the State to enforce a content-based exclusion it must show that its regulation is necessary to serve a compelling state interest and that it is narrowly drawn to achieve that end.... The State may also enforce regulations of the time, place and manner of expression which are content-neutral, are narrowly tailored to serve a significant government interest, and leave open ample alternative channels of communication....
A second category consists of public property which the State has opened for use by the public as a place for expressive activity. The Constitution forbids a State to enforce certain exclusions from a forum generally open to the public even if it was not required to create the forum in the first place.... Although a State is not required to indefinitely retain the open character of the facility, as long as it does so it is bound by the same standards as apply in a traditional public forum. Reasonable time, place and manner regulations are permissible, and a content-based prohibition must be narrowly drawn to effectuate a compelling state interest....
Public property which is not by tradition or designation a forum for public communication is governed by different standards. We have recognized that the "First Amendment does not guarantee access to property simply because it is owned or controlled by the government." ... In addition to time, place, and manner regulations, the state may reserve the forum for its intended purposes, communicative or otherwise, as long as the regulation on speech is reasonable and not an effort to suppress expression merely because public officials oppose the speaker's view.... As we have stated on several occasions, "[t]he State, no less than a private owner of property, has power to preserve the property under its control for the use to which it is lawfully dedicated." ...
460 U.S. at 45-46, 103 S.Ct. at 954-955 (citations and footnotes omitted).
LIPT does not contend that the lobby and waiting areas constitute a traditional or customary forum, like a street or park. Instead, it offers two theories under which the locations should be deemed a "limited public forum" under the second prong of Perry. First, because the Hospital areas are places where people congregate, they are said to be a "natural forum" similar to other forums in which prohibitions on First Amendment activity recently have been overruled, including airports, commuter train stations, subway platforms, bus stations, and waiting areas in welfare and unemployment offices. Second, LIPT contends that by permitting Auxiliary activities and the AmeriTrust machine and representatives in the lobby, the Hospital has opened its grounds for use by the public as a place for expressive activity, a "designated forum." On examination, both positions prove to be without merit. 1.
LIPT regards the lobby and waiting areas as a natural forum because the spaces "are open to the general public seeking medical care, accompanying people seeking *512 medical care, waiting for people seeking medical care," and because they "are architecturally similar to an airport terminal," rendering them "a natural and appropriate site for the constitutionally protected exchange of ideas."[6] The argument relies heavily on the only federal appellate case finding public hospital grounds to be a public forum. Dallas Association of Community Organizations for Reform Now v. Dallas County Hospital Dist., 670 F.2d 629 (5th Cir.1982) ("Parkland II"), rev'g 656 F.2d 1175 (5th Cir.) ("Parkland I"), reh'g denied, 680 F.2d 1391 (5th Cir.), cert. denied, 459 U.S. 1052, 103 S. Ct. 471, 74 L. Ed. 2d 619 (1982). But since Parkland II is not controlling precedent in this circuit and is inconsistent with the Supreme Court's recent pronouncements on public forums, this Court declines to follow it.
Initially, a sweeping contention that any large, publicly-owned area where people gather should automatically be largely free from governmental regulation finds no support. In United States v. Grace, 461 U.S. 171, 103 S. Ct. 1702, 75 L. Ed. 2d 736 (1983), decided two months after Perry, the Court stated:
Publicly owned or operated property does not become a "public forum" simply because members of the public are permitted to come and go at will.... Although whether the property has been "generally opened to the public" is a factor to consider in determining whether the government has opened its property to the use of the people for communicative purposes, it is not determinative of the question. We have regularly rejected the assertion that people who wish "to propagandize protests or views have a constitutional right to do so whenever and however and wherever they please." ... There is little doubt that in some circumstances the Government may ban the entry on to public property that is not a "public forum" of all persons except those who have legitimate business on the premises. The Government, "no less than a private owner of property, has the power to preserve the property under its control for the use to which it is lawfully dedicated." ...
461 U.S. at 177-178, 103 S.Ct. at 1707 (citations omitted).
Both Perry and Grace endorse the now lengthy line of cases in which the Court has upheld regulation of First Amendment activities in public spaces which are unsuited for unfettered expression: military bases, Greer v. Spock, 424 U.S. 828, 96 S. Ct. 1211, 47 L. Ed. 2d 505 (1976), jails and prisons, Adderley v. Florida, 385 U.S. 39, 87 S. Ct. 242, 17 L. Ed. 2d 149 (1966); Jones v. North Carolina Prisoners' Union, 433 U.S. 119, 97 S. Ct. 2532, 53 L. Ed. 2d 629 (1977); advertising space in city rapid transit cars, Lehman v. City of Shaker Heights, 418 U.S. 298, 94 S. Ct. 2714, 41 L. Ed. 2d 770 (1974); and the Postal Service's letterboxes. United States Postal Service v. Council of Greenburgh, 453 U.S. at 129, 101 S.Ct. at 2685. Summarizing these cases, Grace stated: "As Greer v. Spock, supra, teaches, the property is not transformed into `public forum' property merely because the public is permitted to freely enter and leave the grounds at practically all times and the public is admitted to the building during specified hours." 461 U.S. at 178, 103 S.Ct. at 1707; Perry, 460 U.S. at 49 n. 9, 103 S.Ct. at 957 n. 9. Two recent decisions adhere to these principles. In United States v. Albertini, ___ U.S. ___, 105 S. Ct. 2897, 2905, 86 L. Ed. 2d 536 (1985), the Court wrote: "Greer expressly rejected the suggestion that `whenever members of the public are permitted freely to visit a place owned or operated by the Government, then that place becomes a "public forum" for purposes of the First Amendment.'" And Cornelius repeated: "In cases where the principal function of the property would be disrupted by expressive activity, the Court is particularly reluctant to hold that the Government intended to designate a public forum." 105 S.Ct. at 3450 (citing Lehman, Greer and Adderley).
*513 Consequently, while Grace held that the public sidewalks forming the perimeter of the Supreme Court grounds were a public forum, Perry held that a public school's internal mail system was not a public forum. Taxpayers for Vincent upheld a Los Angeles ordinance prohibiting the posting of signs on public lampposts, in that "[appellees] fail to demonstrate the existence of a traditional right of access respecting such items as utility poles for purposes of the communication comparable to that recognized for public streets and parks ... Lampposts can of course be used as signposts, but the mere fact that government property can be used as a vehicle for communication does not mean that the Constitution requires such uses to be permitted." 104 S.Ct. at 2134. Albertini rejected a First Amendment challenge to a criminal conviction for unlawfully reentering a military base after having been barred by the commanding officer, noting that "the record does not suggest that the military so completely abandoned control that the base became indistinguishable from a public street ..." 105 S.Ct. at 2906. And Cornelius held that the Combined Federal Campaign ("CFC"), "an annual charitable fund-raising drive conducted in the federal workplace during working hours largely through the voluntary efforts of federal employees," was not created "for purposes of providing a forum for expressive activity" and was neither a natural nor a limited public forum. 105 S.Ct. at 3443, 3451.[7]
The Cornelius opinion relies extensively on Lehman, see 105 S.Ct. at 3451, 3452, 3453, and in its recent public forum cases the Court frequently has utilized the approach enunciated in Justice Blackmun's plurality opinion in Lehman. Upholding a ban on political advertising in transit cars, he emphasized that the mere fact than an instrumentality is used for the communication of ideas does not make a public forum, stating: "Were we to hold to the contrary, display cases in public hospitals, libraries, office buildings, military compounds, and other public facilities immediately would become Hyde Parks open to every would-be pamphleteer and politician. This the Constitution does not require." 418 U.S. at 304, 94 S.Ct. at 2718 (emphasis added).
Of course, neither Lehman nor its progeny means that public property is precluded from being a limited public forum and a proper site for First Amendment activities merely because governmental activities other than speech and expression are performed there. "The crucial question is whether the manner of expression is basically incompatible with the normal activity of a particular place at a particular time." Grayned v. City of Rockford, 408 U.S. 104, 116, 92 S. Ct. 2294, 2303, 33 L. Ed. 2d 222 (1972); Cornelius, 105 S.Ct. at 3457 (Blackmun, J., dissenting). Phrasing this point more specifically, the Second Circuit stated:
... If, however, an area is not public forum, but is one used by the government to perform some non-speech related function, it may nevertheless be "appropriate" for the exercise of First Amendment activities if that exercise does not interfere with the primary activity for which it is intended, ... and if that exercise does not infringe the rights of a captive audience ...
New York City Unemployed and Welfare Council v. Brezenoff, 677 F.2d 232, 237 (2d Cir.1982) ("Brezenoff I") (citations omitted), after remand, 742 F.2d 718 (2d Cir. 1984) ("Brezenoff II"). Thus, the court distinguished Greer, Adderley and Jones and found the waiting areas of a welfare center to be a limited public forum from which all discussion of welfare issues could not be banned. Id. at 238. Likewise, Lehman did not preclude another appellate court from finding National and Dulles Airports to be forums from which all political advertising could not permissibly be *514 banned. U.S. Southwest Africa/Namibia Trade & Cultural Council v. United States, 708 F.2d 760, 763-67 (D.C.Cir.1983) (and other airport cases cited therein), or bar a trial court from finding that commuter railroad stations are an appropriate forum for newspaper sales. Gannett Satellite Information Network v. Metropolitan Transportation Authority, 579 F. Supp. 90, 93-96 (S.D.N.Y.), rev'd on other grounds, 745 F.2d 767 (2d Cir.1984). See also Eastern Connecticut Citizens Action Group v. Powers, 723 F.2d 1050 (2d Cir. 1983) (upholding public access to stateowned railroad bed); Wolin v. Port of New York Authority, 392 F.2d 83 (2d Cir.1968); Project VOTE! v. Ohio Bureau of Employment Services, 578 F. Supp. 7, 10 (S.D. Ohio 1982) (unemployment offices).
Where do public hospitals fit into this body of public forum law? The Supreme Court has never directly addressed the issue. On the one hand, a footnote in Tinker v. Des Moines Independent Community School District, 393 U.S. 503, 512 n. 6, 89 S. Ct. 733, 739 n. 6, 21 L. Ed. 2d 731 (1969), compares public hospitals to jails, suggesting that Adderley and Jones may be relevant. And Lehman, as noted, stated in dicta that the Constitution does not require public hospitals to become "Hyde Parks". On the other hand, NLRB v. Baptist Hospital, Inc., 442 U.S. 773, 99 S. Ct. 2598, 61 L. Ed. 2d 251 (1979), and Beth Israel Hospital v. NLRB, 437 U.S. 483, 98 S. Ct. 2463, 57 L. Ed. 2d 370 (1978), upheld the right of hospital employees to solicit and distribute literature to each other during non-working time in non-working areas of hospitals. In both of those cases, however, the majority and concurring opinions are filled with repeated expressions of concern for patient well-being. Furthermore, the cases involved not the First Amendment, but employee rights under the National Labor Relations Act, 29 U.S.C. §§ 151-68, and appear to leave room for considerable regulation of expressive activity in patient-care parts of hospitals. See NLRB v. Harper-Grace Hospitals, Inc., 737 F.2d 576, 578 (6th Cir.1984) (prohibition on union activities during non-work time in non-work areas "is presumptively invalid under § 8(a)(1) [of the NLRA] unless the hospital can justify the prohibition as necessary to avoid disruption of health-care operations or disturbance of patients.")
In the absence of an applicable Supreme Court ruling, LIPT urges adherence to the approach utilized by the Fifth Circuit in the Parkland cases, which involved a constitutional challenge to a public hospital's "no solicitation" rule. The district court, after a bench trial, held that the hospital was not a public forum and that the ban on solicitation was constitutional. The court of appeals initially affirmed:
... There can be little question that a public hospital is, for First Amendment purposes, very different from municipal streets and parks which have traditionally served and previously been characterized as forums for free public assembly and communication of thoughts by private citizens....
The Supreme Court has suggested that while performing public functions public hospitals are akin to jails and may impose reasonable time, place and manner restrictions on First Amendment activities. See Tinker ... Moreover, in Lehman ... the Supreme Court stated that the Constitution does not require that display cases in public hospitals become public forums open to every would-be pamphleteer and politician.... Following these intimations, other courts also have concluded that even peaceful speech and assembly interfering in any way with the functioning of a hospital may be excluded....
Parkland I, 656 F.2d at 1179-80. The court found Baptist Hospital and Beth Israel Hospital factually distinguishable because the overcrowding and congestion at Parkland "warrant the implementation of time, place, and manner restrictions on First Amendment activity in even the nonpatient care areas of the Hospital and outpatient clinic areas which might in a different hospital not interfere with the functions of providing care to the sick and injured.... We merely wish to enable *515 those who need health care at Parkland to receive it without interference and without the grave possibilities of adverse medical reactions from such disturbing conditions." Id. The court therefore declined to consider the constitutional challenge to the hospital's no solicitation rule.
After a petition for rehearing en banc was filed, the panel reaffirmed its concern with "the necessity of preventing disruptive activity in the crowded front lobby of Parkland, the waiting room, the outpatient clinic, and the emergency treatment area, as well as any other area for patient treatment." Parkland II, 670 F.2d at 631. However, turning from the patient care areas to the remainder of the hospital grounds, the court determined that the hospital is a public forum, and voided the no-solicitation rule:
The First Amendment is violated by unreasonable and unequal restrictions on access to public property, as well as by the delegation of authority to a single person to determine who may use public property for free speech....
What may be forbidden is expression that interferes with the functioning of the hospital. An acceptable rule would prevent only those expressions that are basically incompatible with the normal activity of a particular place at a particular time....
We hold that the rules at Parkland with regard to solicitation or leafletting must define by objective standards the literature that is forbidden because of the potential inference with the hospital's administration. Parkland need not allow disruption of the hospital or interference with patient care by proper rules, with fixed standards, such disruption can be forbidden. The present rule, however, which contains no time, place and manner guidelines, and which is applied by the hospital administrator at his discretion, must be held unconstitutional.
Id. at 632 (citations and footnote omitted).
Judge Coleman dissented, stating in part:
... [I]n the absence of a Supreme Court decision to the contrary, I would hold that a hospital designed, constructed, and operated for the sole purpose of treating human ills is not a public forum. The overriding function of such a unique institution should not be subjected to a room to room, place by place, analysis for the promulgation of some kind of a limited rule as to those particular areas. Overworked, understaffed personnel of hospitals should not have their mission diverted by such stumbling blocks. No real First Amendment right is promoted by allowing it. The privacy of and a reasonably tranquil atmosphere for sick people, and the efforts to help them if not always to cure them, ought not to be hampered by the necessity for specially tailored handling, which may survive the hair splitting analysis fostered by litigation. Let all propagandizers, of whatever purpose or ilk, stand clear of the last refuge of the sick.
Id. at 633-34.
The hospital's petition for a writ of certiorari was denied, but received votes from Justices Blackmun and Rehnquist. 459 U.S. at 1052, 103 S.Ct. at 471. The latter filed a dissent criticizing the Fifth Circuit's view that the hospital was a "public forum" and its holding invalidating the hospital's regulation. On the "public forum" issue, Justice Rehnquist stated:
... I think the Court of Appeals misunderstood the distinction in our cases between public property, such as city streets and parks, which has been historically treated as a "public forum," ... and public property, such as jails, military bases, and postal delivery boxes, which has been held not to be a public forum.... The decision of the Court of Appeals, mistakenly I believe, thus requires a hospital to promulgate a set of "regulations" which would provide for access to at least a part of its premises by such protest groups as respondents. To say that the decision severely limits the ability of public hospitals to devote their premises to the purpose of furnishing *516 medical care to the sick would be an understatement.
459 U.S. at 1052-53, 103 S.Ct. at 471.
While Justice Rehnquist's dissent is not Supreme Court precedent and Judge Coleman's dissent is not the law of the Fifth Circuit, there is much merit in the Hospital's contention that their views, and the views expressed in Parkland I, are much more consistent with Perry, Grace, Taxpayers for Vincent, Albertini and Cornelius than is the Parkland II opinion. Adhering to the admonition in Perry, 460 U.S. at 44, 103 S.Ct. at 954, and Taxpayers for Vincent, 104 S.Ct. at 2134, that the "existence of a right of access to public property and the standard by which limitations upon such a right must be evaluated differ depending upon the character of the property at issue," this Court concludes that the Bell Greve Lobby and the outpatient clinic waiting areas are not public forums. Their sole purpose is to serve patients, friends and families of patients, and the Hospital staff who provide medical care. Since the Supreme Court has determined that jails, prisons, army bases, lampposts, school mail systems, letterboxes, and office fundraising campaigns are not public forums, it would be illogical to conclude that the Hospital's busy, sometimes crowded waiting areas, in close proximity to treatment and in frequent use for doctor-patient or doctor-family consultation, are an appropriate site for political activity. Accordingly, this Court declines to accept LIPT's contention that the lobby and waiting areas are a "natural forum."
2.
Nor can it reasonably be concluded that, by permitting a newstand, magazine cart, occasional open houses, and a courtesy banking service for employees within its walls, or by permitting its officials to discuss the privatization issue in other forums, the Hospital "has opened [its grounds] for use by the public as a place for expressive activity" under Perry. LIPT's repeated focus on the AmeriTrust machine and representative is particularly inapposite. In Lehman, the court explicitly held that "the managerial decision to limit car card space to innocuous and less controversial commercial and service-oriented advertising does not rise to the dignity of a First Amendment violation." 418 U.S. at 304, 94 S.Ct. at 2718. In Perry, it stated:
... If by policy or by practice the Perry School District has opened its mail system for indiscriminate use by the general public, then PLEA could justifiably argue a public forum has been created. This, however, is not the case. As the case comes before us, there is no indication in the record that the school mailboxes and interschool delivery system are open for use by the general public. Permission to use the system to communicate with teachers must be secured from the individual building principal. There is no court finding or evidence in the record which demonstrates that this permission has been granted as a matter of course to all who seek to distribute material. We can only conclude that the schools do allow some outside organizations such as the YMCA, Cub Scouts, and other civic and church organizations to use the facilities. This type of selective access does not transform government property into a public forum....
Moreover, even if we assume that by granting access to the Cub Scouts, YMCAs, and parochial schools, the School District has created a "limited" public forum, the constitutional right of access would in any event extend only to other entities of similar character. While the school mail facilities thus might be a forum generally open for use by the Girl Scouts, the local boys' club and other organizations that engage in activities of interest and educational relevance to students, they would not as a consequence be open to an organization such as PLEA, which is concerned with the terms and conditions of teacher employment.
460 U.S. at 47-48, 103 S.Ct. at 956 (emphasis added). Albertini held that an air force base did not "become a public forum merely because the base was used to communicate *517 ideas or information during [an] open house," 105 S.Ct. at 2905, and, Cornelius reiterated that the mere fact that "expressive activity ... occurs in the context of the forum created does not imply that the forum thereby becomes a public forum for First Amendment purposes." 105 S.Ct. at 3451.
Consequently, this Court concludes that the Hospital lobby and outpatient waiting areas are neither a public forum nor a "limited public forum." In light of this conclusion, LIPT can only demonstrate a likelihood of succeeding on the merits if it can demonstrate that the Hospital's regulation of the nonpublic forum is not reasonable and is, in fact, "an effort to suppress expression merely because public officials oppose the speaker's view." Perry, 460 U.S. at 46, 103 S.Ct. at 955.
B.
In Cornelius, the Court defined in greater detail what constitutes a "reasonable" restriction on access to a nonpublic forum. While earlier decisions had cautioned against utilizing "workplace disruption" as "a shibboleth, the mere recitation of which dictates constitutionality," Frontiero v. Richardson, 411 U.S. 677, 690, 93 S. Ct. 1764, 1772, 36 L. Ed. 2d 583 (1973), Cornelius vests vast discretion with the agencies and officials who govern nonpublic forums:
... The Government's decision to restrict access to a nonpublic forum need only be reasonable; it need not be the most reasonable or the only reasonable limitation. In contrast to a public forum, a finding of strict incompatibility between the nature of the speech or the identity of the speaker and the functioning of the nonpublic forum is not mandated.... Even if some incompatibility with general expressive activity were required, the CFC would meet the requirement because it would be administratively unmanageable if access could not be curtailed in a reasonable manner. Nor is there a requirement that the restriction be narrowly tailored or that the Government's interest be compelling. The First Amendment does not demand unrestricted access to a nonpublic forum merely because use of that forum may be the most efficient means of delivering the speaker's message.... Rarely will a nonpublic forum provide the only means of contact with a particular audience. Here, as in Perry ..., the speakers have access to alternative channels, including direct mail and inperson solicitation outside the workplace, to solicit contributions from federal employees.
The reasonableness of the government's restriction of access to a nonpublic forum must be assessed in the light of the purpose of the forum and all the surrounding circumstances....
* * * * * *
... Although the avoidance of controversy is not a valid ground for restricting speech in a public forum, a nonpublic forum by definition is not dedicated to general debate or the free exchange of ideas. The First Amendment does not forbid a viewpoint-neutral exclusion of speakers who would disrupt a nonpublic forum and hinder its effectiveness for its intended purpose.
105 S.Ct. at 3453-54.
LIPT challenges the Hospital's blanket prohibition on solicitation as unreasonable, but the record is devoid of evidence to support its contentions. It suggests first that the prohibition on solicitation is based on an "undifferentiated fear or apprehension" that patients or their visitors will be disturbed. The hearing, deposition and affidavit testimony of Hospital doctors and administrators provides ample basis for concluding that the Hospital has sound medical reasons for wishing to keep the lobby and the outpatient waiting areas clear of individuals whose stated aim is to confront and lobby patients and families. A second argument is that enforcement of the solicitation policy is "content-based" because the Hospital bars LIPT while permitting its own voter registration efforts and AmeriTrust solicitation and while utilizing Hospital facilities to disseminate its views on the "privatization" issue. Under Lehman, Perry, and Cornelius, however, the *518 Hospital may conduct a voter registration drive and permit a bank to assist its employees without waiving its right to exclude activities such as lobbying on political issues which are of an entirely different, and disruptive, character. As for the contention that the Hospital impermissibly uses the disputed facilities to publicize its position on the "privatization" issue, the evidence fails to demonstrate that the Hospital has taken a formal position on privatization, that any form of proselytization, solicitation, or political communication directed at patients and their companions has ever been permitted in the Bell Greve lobby or outpatient areas, or that the Hospital has been the last bit inconsistent or arbitrary in imposing a blanket prohibition on expressive conduct in those areas.
This court finds no merit in LIPT's other objections to the regulation. The argument that no alternative forum exists for LIPT to mobilize opposition to the privatization proposal ignores those forums mentioned at the hearing by LIPT's chairperson, Frances Blevans supermarkets, welfare offices, and door-to-door solicitations. It also ignores the availability of outdoor sites such as sidewalks adjacent to the Hospital. As the Parkland I panel observed, "just because [the] Hospital may be the best forum does not mean it is a constitutionally protected forum." 656 F.2d at 1180 (quoting district court opinion). The argument that the solicitation regulation unconstitutionally delegates unfettered discretion to a Hospital administrator ignores the fact that the relevant regulation, Paragraph V of the Solicitation Policy, is sufficiently detailed to satisfy even the requirements enunciated in Parkland II; more to the point, it ignores the fact that Perry upheld a system where access to the school mailbox system was simply controlled by the individual school principal, 460 U.S. at 47, 103 S.Ct. at 956, and that in Cornelius the court sustained an Executive Order which "delegated to the Director of the Office of Personnel Management the authority to establish criteria for determining appropriateness" of groups seeking to participate in the CFC. 105 S.Ct. at 3445. Finally, LIPT's argument that individuals sitting in the lobby and waiting areas have a constitutionally-protected "right to receive information" under Board of Education, Island Trees Union Free School District No. 26 v. Pico, 457 U.S. 853, 102 S. Ct. 2799, 73 L. Ed. 2d 435 (1982), ignores Pico's unique factual setting and the absence of a public forum issue in that case, and fails to indicate how a limitless "right to receive information" could be reconciled with the nonpublic forum cases discussed above.
Absent convincing evidence that the Hospital's solicitation policy is unreasonable, deference to the Hospital's expertise in patient care is mandated. In Clark v. Community for Creative Non-Violence, ___ U.S. ___, 104 S. Ct. 3065, 82 L. Ed. 2d 221 (1984), the Court held that "symbolic sleep" in Lafayette Park, facing the White House, that was intended to demonstrate the plight of the homeless could be banned altogether pursuant to the United States Park Service's duty to conserve park property. It declined to hold that United States v. O'Brien, 391 U.S. 367, 88 S. Ct. 1673, 20 L. Ed. 2d 672 (1968), and other
... time, place, and manner decisions assign to the judiciary the authority to replace the Park Service as the manager of the Nation's parks or endow the judiciary with the competence to judge how much protection of park lands is wise and how that level of conservation is to be attained.
Id. at 3072. Albertini quoted this passage and added: "We are even less disposed to conclude that O'Brien assigns to the judiciary the authority to manage military facilities throughout the Nation." 105 S.Ct. at 2907. This approach also has been deemed appropriate with respect to welfare offices, Brezenoff II, 742 F.2d at 723-24, and train stations. Gannett Satellite Information Network v. Metropolitan Transit Authority, 745 F.2d at 775 n. 4. In light of the Hospital's nondiscriminatory conduct, such deference is equally appropriate here. LIPT has failed to show that *519 the regulation of the nonpublic forum in question is unreasonable.
IV.
This action presents difficult constitutional questions and an unfortunate clash between two parties who both seek to guarantee continuing high-quality health care for the Hospital's low-income patients. On consideration, adhering as it must to higher courts' interpretations of the First Amendment, this Court enters judgment for the defendant.
IT IS SO ORDERED.
NOTES
[1] Fed.R.Civ.P. 65(a)(2) provides:
Before or after the commencement of the hearing of an application for a preliminary injunction, the court may order the trial of the action on the merits to be advanced and consolidated with the hearing of the application....
[2] On September 28, 1984, prior to the hearing in this case, this Court and counsel for the parties toured the pertinent portions of the Bell Greve Building.
[3] For purposes of comparison, the Hospital introduced into evidence the pertinent policy statement of the Cleveland Clinic Foundation, a local private hospital:
The Cleveland Clinic foundation's policy concerning solicitation and distribution of literature is as follows:
1) Employees Solicitation of any nature or distribution of any literature by employees of the Foundation, with exception of that activity related to United Torch fund drives, are not permitted during an employee's working time ("working time" does not include lunch or break periods) or at any time in any patient care area, such as patients' rooms, operating rooms, x-ray rooms, or therapy areas.
2) Non-Employees Solicitation by non-employees within the Cleveland Clinic Foundation's buildings or anywhere on its private property are prohibited. This rule will be enforced with all available legal remedies.
This solicitation policy is adopted to prevent inconvenience to our employees and visitors and to prevent interference with patient care.
[4] The Order, as filed on September 12, 1984, provides in part:
Plaintiff's representatives shall have the right to be present in the Cleveland Metropolitan General Hospital ("CMGH") Bell Greve Lobby to conduct a voter registration program and to distribute organizational literature, subject to the following guidelines:
(1) Plaintiff's representatives shall conduct said activities beginning on Wednesday, September 12, 1984, and continuing through Tuesday, September 18, 1984, between the hours of 10:00 a.m. and 12:00 noon;
(2) Two members of plaintiff's organization shall be permitted to conduct the described activities at any given time;
(3) Plaintiff's representatives shall make use of the table, chairs and space employed by CMGH in its own voter registration program;
(4) Plaintiff's representatives shall be confined to sitting or standing at the table in conducting their activities;
(5) Plaintiff's representatives shall be permitted to place signs identifying their organization and their purpose on the table together with their organizational literature during the period referred to in paragraph (1) above; and
(6) CMGH retains the right to insure that the activities of plaintiff's representatives do not interfere with the purpose and function of CMGH.
[5] Ohio Rev.Code § 3599.38 provides:
No judge, clerk, witness, deputy sheriff, special deputy sheriff, police officer, or other election officer, while performing the duties of his office, shall wear any badge, sign, or other insignia or thing indicating his preference for any candidate or for any question submitted or influence or attempt to influence any voter to cast his ballot for or against any candidate or issue submitted at such election.
Whoever violates this section shall be fined not less than fifty nor more than one hundred dollars and imprisoned not less than thirty days nor more than six months.
In its final pleading, LIPT has apparently abandoned its wholly unpersuasive argument that § 3599.38 is inapplicable to volunteer registrars. Compare Plaintiff's Reply to Defendants' Brief in Opposition to Plaintiff's Brief Upon Completion of the Record (no discussion of registration issue) with Defendants' Reply Brief to Plaintiff's Brief Upon Completion of the Record at 21-22.
[6] Plaintiff's Brief in Opposition to Defendants' Motion for Summary Judgment at 19.
[7] See also Chapman v. Thomas, 743 F.2d 1056, 1059 n. 3 (4th Cir.1984) (residential areas of college dormitories not public forum) (citing prior unpublished decision), cert. denied, ___ U.S. ___, 105 S. Ct. 1866, 85 L. Ed. 2d 160 (1985); Pennsylvania Alliance for Jobs and Energy v. Council of the Borough of Munhall, 743 F.2d 182, 186 (3d Cir.1984) (door-to-door canvassing not public forum).
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601 S.W.2d 58 (1980)
Audelia MATA, Appellant,
v.
Gilbert G. MORENO, Appellee.
No. 17664.
Court of Civil Appeals of Texas, Houston (1st Dist.).
April 10, 1980.
Weycer & Kaplan, Richard M. Kaplan, Houston, for appellant.
Richard E. Anderson, Houston, for appellee.
Before PEDEN, EVANS and WARREN, JJ.
WARREN, Justice.
This is an appeal from an order dismissing a Motion to Modify a support order. We affirm.
In 1973, appellant sued appellee for divorce, alleging that a common law marriage existed between them, that a child was born of the marriage and, that appellee should be required to contribute to the support of the child. During the hearing on the merits, the parties announced to the court that a compromise had been reached, and pursuant to the compromise an order was presented to and signed by the court. The order recited that it was agreed that no marriage existed between the parties, that appellee *59 denied that he was the father of the child but was willing to "buy his peace" and pay the sum of $115 per month in support of the child until she reached 18 years of age, and that appellant, though still contending appellee was the father of the child, was willing to accept the sum of $115 as child support.
Based upon the agreement, the petition for divorce was denied and appellee was ordered to pay the sum of $115 per month in child support through the Harris County Juvenile Probation Office commencing on December 1, 1973, and payable on the first day of each month thereafter until the child attained the age of eighteen (18) years.
In 1979, appellant filed a Motion to Modify the 1973 order, praying for an increase in the amount of child support.
Appellant's only point of error alleges that the trial court erred in granting the Motion to Dismiss because as a matter of law appellant has the right to bring the modification under § 14.08(a) of the Texas Family Code.
Section 14.08(a) of the Texas Family Code provides in part:
"A court order or the portion of a decree that provides for the support of a child may be modified . . . only by the court having jurisdiction of the suit affecting the parent-child relationship."
Appellant contends that the consent judgment is subject to modification because it is an order of the court providing for the support of a child. This narrow construction disregards the provision of the Family Code which predicates the initial award of child support upon a finding that a parent-child relationship exists. Section 14.05(a) of the Family Code provides that a court may, "order either or both parents to make periodic payments for the support of a child.. . ." (emphasis ours).
A man is a "parent" within the meaning of the Family Code if he adopts a child or the child is legitimate to him. Tex. Fam.Code Ann. § 11.01(3) (Vernon 1975). A child is the legitimate issue of a man if (a) the child is born or conceived before or during the marriage of his father and mother, or (b) the child is born or conceived before or during an attempted marriage of his father and mother or (c) the paternity of the man is established pursuant to Chapter 13 of the Family Code. Tex.Fam.Code Ann. § 12.02 (Vernon 1975 as amended Vernon Cumm.Supp.1980).
The Family Code empowers a court to order an individual to pay child support only if it determines that a parent-child relationship exists.
In our case, appellee voluntarily assumed the obligation to pay support without conceding that he was the parent of the child and no finding of paternity has ever been made.
A consent judgment which fails to predicate the payment of child support upon either an express or implied finding that a parent-child relationship exists is not subject to modification pursuant to § 14.08(a) of the Texas Family Code.
Affirmed.
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601 S.W.2d 766 (1980)
In the Interest of S. R. M., a child.
No. 9150.
Court of Civil Appeals of Texas, Amarillo.
May 28, 1980.
*767 John W. Kennedy, West Texas Legal Services, Lubbock, for appellant.
Lewis P. Terrell, Lubbock, for appellees.
DODSON, Justice.
This is an action to terminate a parent-child relationship and to adopt the child. The child is S. R. M. The appellant is L. M. S., the natural mother of the child. The appellees are E. E. O. and wife N. L. O. The appellees were the petitioners for termination and adoption in the trial court. After a bench hearing, the trial court granted the appellee's petition for adoption. The natural mother appeals from this judgment. On appeal, the natural mother maintains, inter alia, that the judgment should be reversed because the trial court terminated her parental rights to the child upon unpled grounds and that the evidence is legally insufficient to support the trial court's findings on the unpled grounds for termination. Sustaining these contentions of the appellant, we reverse and render.
By court decree, the appellant and W. F. M., Jr., were divorced on 17 June 1977. During the marriage the appellant gave birth to two male children. Prior to the divorce, the appellant and W. F. M., Jr., had been living apart for approximately eighteen months. The appellant had been living with a male companion for several months before the divorce proceeding. S. R. M. was born on 9 March 1977.
By the divorce decree, W. F. M., Jr., was appointed managing conservator of the two children and the appellant was appointed possessory conservator. Shortly after the divorce the appellant and her male companion went to Minnesota. They remained in Minnesota for approximately two and one-half months. Upon returning to Lubbock, Texas, in September of 1977, they moved into the house with W. F. M., Jr. and the two children. During this period, the appellant cared for the children while W. F. M., Jr., was at work. Within two or three weeks the appellant and her male companion moved out.
After the divorce proceedings, and at other various times, W. F. M., Jr.'s mother kept the children while he was at work. Also, the appellees' teenage daughter baby-sat with the children. In late September or early October of 1977, E. E. O. went to W. F. M., Jr.'s residence, found the father sick and attempting to care for the children by himself. At this time E. E. O. obtained *768 permission from W. F. M., Jr., to take the children home with him. After W. F. M., Jr., recovered from his illness, he picked up the oldest boy, but left S. F. M. with E. E. O. W. F. M. Jr., instructed E. E. O. that the appellant was not to visit with the child without his prior consent. In December of 1977, the appellant determined from W. F. M., Jr. that S. F. M. was living with the appellees. At Christmas time, she visited S. F. M. and gave him presents.
In early January of 1978, W. F. M., Jr., took both of the children to the appellant and left them with her. He, however, did not want the managing conservatorship changed. The appellant testified that he wanted to have the right to determine where the children would be but that he did not want to pay child support. Sometime later in the month of January 1978, E. E. O. went to the appellant's house, found her sick and obtained her permission to take S. F. M. home with him.
The appellees have five children ranging in age from approximately 14 years of age to 26 years of age. Among their children is an unmarried daughter who was approximately twenty-two years of age at the time of the trial. This young woman was employed in an administrative position at a nursing home in Rotan, Texas.
After E. E. O. obtained S. F. M. from the appellant in January of 1978, the unmarried daughter took S. F. M. to Rotan, Texas to live with her. The child remained with the young lady in Rotan until approximately October of 1978. During this period, the young daughter brought the child to Lubbock almost every week-end, and the appellant visited with the child on the week-ends and provided some clothes for him. The appellant and E. E. O. discussed the matter of monetary support for the child. E. E. O. told her that he did not want and would not take any money for keeping the child because the appellant needed the money to support herself and the other child.
On 1 September 1978, the appellant married R. L. S., and on 2 November 1978, the appellant filed a motion to have herself appointed managing conservator of the two children. The appellees filed a petition on 5 January 1979, to terminate the parent-child relationship of the appellant and W. F. M., Jr., with S. F. M. In the same cause, the appellees also filed a petition to adopt S. F. M.
In the petition for termination, the appellees allege that:
Termination of the parent-child relationship between L. F. M. S. and the child is in the best interest of the child, and such termination is requested. As further grounds for termination, Petitioners allege that this parent voluntarily left the child alone or in the possession of another not the parent and, although expressing an intent to return, failed to do so without providing adequate support of the child and remained away for a period of at least six months.
Termination of the parent-child relationship between W. F. M. and the child is in the best interest of the child, and such termination is requested. As further grounds for termination, Petitioners allege that this parent has executed an unrevoked or irrevocable affidavit of relinquishment of parental rights as provided by section 15.02 of the Texas Family Code. This affidavit or relinquishment is attached to this petition or will be filed herein.[1]
No other grounds for termination are alleged in the petition.
By the first quoted paragraph from appellees' petition, they purport to allege grounds for termination under section 15.02(1)(C) of the Texas Family Code. Tex. Fam.Code Ann. § 15.02(1)(C) (Vernon Supp. 1980). This subsection provides that the parent-child relationship may be terminated when the parent "voluntarily [leaves] the child alone or in the possession of another without providing adequate support of the *769 child and remain[s] away for a period of at least six months." The undisputed evidence shows that the appellant did not remain away from the child for a period of at least six months. In fact, appellee E. E. O. admitted by his testimony at the trial that the appellant did not remain away from the child for that long. Thus, the trial court refused to find the grounds pled in support of the judgment. Accordingly, under rule 299 of the Texas Rules of Civil Procedure, we may not supply the omitted finding.
Nevertheless, the trial court did find, inter alia, that the appellant (1) voluntarily left the child alone, and in the possession of Mr. and Mrs. E. E. O., and expressed an intent not to return; (2) voluntarily left S. F. M. in the possession of Mr. and Mrs. E. E. O., without expressing an intent to return, without providing for the adequate support of the child, and remained away for a period of at least three months; (3) engaged in conduct and knowingly placed the child with A. G., who engaged in conduct which would endanger the physical or emotional well-being of S. F. M.; and (4) from the date of the divorce, until October, 1978, failed to support S. F. M. in accordance with her ability. None of the above findings are supported by the pleadings.
The appellant maintains that the judgment should be reversed because the trial court terminated her parental rights to the child upon unpled grounds. In this connection, the appellees contend that the appellant impliedly consented to a trial upon the unpled grounds by not excepting to the pleadings and by not objecting to the introduction of evidence related to the unpled grounds. In support of their position, the appellees rely on Robinson v. Reliable Life Insurance Co., 554 S.W.2d 231 (Tex. Civ.App. Dallas 1977), aff'd, 569 S.W.2d 28 (Tex.1978), and Adcock v. King, 520 S.W.2d 418 (Tex.Civ.App. Texarkana 1975, no writ). We do not consider these cases controlling in this instance. The issues tried by consent in these cases do not involve the same mandatory statute nor are they of the same constitutional dimension as the issues present in the case before us.
We agree that the judgment should be reversed because the trial court terminated the appellant's parental rights to the child upon unpled grounds. Section 11.07(a) of the Texas Family Code provides that "A suit affecting the parent-child relationship shall be commenced by the filing of a petition as provided in this chapter" (emphasis added). Tex.Fam.Code Ann. § 11.07(a) (Vernon Supp.1980). Section 11.08(b)(10) of the Texas Family Code further provides that "The petition must include: (10) a statement describing what action the court is requested to make concerning the child and the statutory grounds on which the request is made" (emphasis added). Tex. Fam.Code Ann. § 11.08(b)(10) (Vernon Supp.1980). In a juvenile transfer proceeding, the Supreme Court of Texas determined, among other things, that the word "must" as used in section 53.04 of the Texas Family Code and other sections set forth therein denotes mandatory statutory requirements. In the Matter of D. W. M., 562 S.W.2d 851, 852 (Tex.1978); In the Matter of H. S., Jr., 564 S.W.2d 446, 448 (Tex.Civ. App. Amarillo 1978, no writ). Accordingly, we conclude that the word "must" as used in section 11.08(b)(10) denotes a mandatory statutory requirement; and therefore, the statutory grounds for termination must be stated in the petition.
Furthermore, with good reason, the legislature mandatorily required that the statutory grounds for involuntary termination of the parent-child relationship must be stated in the petition. The Supreme Court of the United States and the Supreme Court of Texas have recognized that involuntary termination of parental rights involves fundamental constitutional rights. Stanley v. Illinois, 405 U.S. 645, 651, 92 S. Ct. 1208, 1212, 31 L. Ed. 2d 551 (1972); In the Interest of G. M., 596 S.W.2d 846 (Tex. 1980). In Stanley, the Court stated that "The integrity of the family unit has found protection in the Due Process Clause of the Fourteenth Amendment, ... the Equal Protection Clause of the Fourteenth Amendment, ... and the Ninth Amendment." Stanley v. Illinois, supra, at *770 651, 92 S.Ct. at 1213. In Board of Regents v. Roth, 408 U.S. 564, 572, 92 S. Ct. 2701, 2707, 33 L. Ed. 2d 548 (1972), the Court said that the term "liberty", as used in the due process cause of the Constitution, "denotes not merely freedom from bodily restraint but also the right of the individual to ... marry, establish a home and bring up children.... Meyer v. Nebraska, 262 U.S. 390, 399, 43 S. Ct. 625, 626, 67 L. Ed. 1042 (1923)." Moreover, the United States Supreme Court has determined that in a juvenile delinquency adjudication hearing, to comply with the due process requirements, notice of the charges "must be given sufficiently in advance of scheduled court proceedings so that reasonable opportunity to prepare will be afforded." In re Gault, 387 U.S. 1, 33, 87 S. Ct. 1428, 1446, 18 L. Ed. 2d 527 (1967). Thus, we are persuaded that this constitutional principle from Gault and the rationale for the principle are equally applicable to proceedings to involuntarily terminate the parent-child relationship.
In the case before us, there is a total absence from the record of any notice to the appellant that the trial court was trying, considering or even contemplating termination upon any unpled statutory grounds. Accordingly, we conclude that the appellant did not knowingly relinquish or waive her right to have the statutory grounds for termination stated in the petition, and that she did not expressly or meaningfully consent to a trial upon the unpled grounds.
The appellant further contends that the judgment should be reversed because the evidence is legally insufficient to support the trial court's challenged findings upon the unpled grounds for termination.[2] Our Texas Supreme Court has determined that in involuntary parent-child termination proceedings, the essential facts must be proved by "the clear and convincing evidence standard." In the Interest of G. M., 596 S.W.2d 846, 847 (Tex.1980). The clear and convincing evidence standard is defined as "that measure or degree or proof which will produce in the mind of the trier of fact a firm belief or conviction as to the truth of the allegations sought to be established" (emphasis added). In the Interest of G. M., supra, at 847; State v. Addington, 588 S.W.2d 569, 570 (Tex.1979). In determining whether there is any clear and convincing evidence to prove each of the unpled grounds for termination, we must review the entire record and consider all of the evidence.
The trial court's finding that the appellant voluntarily left the child alone, in the possession of Mr. and Mrs. E. E. O., and expressed an intent not to return relates to section 15.02(1)(A) of the Texas Family Code. Tex.Fam.Code Ann. § 15.02(1)(A) (Vernon Supp.1980). The court's finding paraphrases the unpled statutory requirements for the involuntary termination of the parent-child relationship. The grounds for termination alleged against the appellant in the petition for termination states, inter alia, that "Petitioners allege that this parent [the appellant] voluntarily left the child alone or in the possession of another, not the parent and, although expressing an intent to return, failed to do so" (emphasis added). This pleading is a judicial admission by the appellees that the appellant did not leave the child with them and did not express an intent not to return. Furthermore, there is no clear and convincing evidence in the record to support the trial court's finding.
The trial court further found that the appellant voluntarily left the child in the possession of the appellees without expressing an intent to return, without providing for adequate support of the child and remained away for a period of at least three months. The finding relates to the unpled grounds set forth in section 15.02(1)(B). Tex.Fam.Code Ann. § 15.02(1)(B) (Vernon Supp.1980). The evidence shows, inter alia, *771 that after E. E. O. obtained the child from the appellant in January of 1978, she continued to visit the child and she did not remain away from the child for a period of three consecutive months.
The trial court also found that the appellant engaged in conduct and knowingly placed the child with A. G. who engaged in conduct which endangered the physical or emotional well being of the child. This finding paraphrases the unpled grounds set forth in section 15.02(1)(E). Tex.Fam.Code Ann. § 15.02(1)(E) (Vernon Supp.1980). There is no clear and convincing evidence to support these unpled grounds for termination. In this connection, the only evidence is that after a spat or argument with A. G., her male companion, the appellant left the child with him for a period of two or three hours. There is no evidence that A. G. engaged in any conduct which would endanger the physical or emotional well-being of the child.
Likewise, no clear and convincing evidence exists to support the finding by the trial court that from the date of the divorce, 17 June 1977, the appellant failed to support the child in accordance with her ability. The appellant has a ninth grade education with no particular employment skills. The evidence shows that during the period in question, she worked as a waitress for two different establishments. There is no evidence of how long she worked at these jobs, whether she was physically able to work during this period and what amount of money she earned or was able to earn during the period of time in question. Nevertheless, the evidence does show that for a period of time in January of 1978, she supported and had the child in her possession. Moreover, the evidence further shows that the appellant provided clothing and gifts for the child from time to time during the period in question. Under these circumstances, we are not persuaded that clear and convincing evidence establishes the appellant failed to support the child in accordance with her ability during the period from 17 June 1977, the date of the divorce, until October 1978. See Wiley v. Spratlan, 543 S.W.2d 349, 351 (Tex.1976).
In summary, we sustain appellant's points of error one, two, four, six, eight and ten which are summarized in the appellant's contentions set forth. Our disposition of these points is dispositive of this appeal. Accordingly, the judgment of the trial court is reversed, and judgment is rendered that the appellees' petitions for termination and adoption are denied.
NOTES
[1] An affidavit of relinquishment executed by W. F. M., Jr. is not attached to the petition and such affidavit does not appear in the record.
[2] The challenged findings are set forth above. In this connection, our disposition of the appellant's first stated contention is dispositive of this appeal. Nevertheless, we speak to the appellant's second stated contention upon the arguendo assumption that the unpled grounds were tried by consent, even though we have rejected appellees' trial by consent contention.
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251 Md. 55 (1968)
246 A.2d 226
BLOCKER
v.
STERLING, ET AL.
[No. 309, September Term, 1967.]
Court of Appeals of Maryland.
Decided October 9, 1968.
*56 Edward T. Conroy, with whom was James J. Lombardi on the brief, for appellees.
HAMMOND, C.J., delivered the opinion of the Court.
Sterling and Sorenson, each a passenger in the automobile of Blocker when it swerved and overturned as a result of his efforts to avoid a rear-end collision, sued him for the injuries they sustained. Blocker was insured by American Motorists Insurance Company (American) under a policy which afforded various forms of coverage. Under Part I, Liability, Coverage A, Bodily Injury Liability, and Coverage B, Property Damage Liability, American agreed "to pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages" by reason of bodily injury (including death) sustained by any person and property damage arising out of the ownership, maintenance or use of the insured's automobile.
Under Part II Expenses for Medical Services, Coverage C, Medical Payments, American agreed to pay, without regard to the legal liability of the insured, under Division 1, "all reasonable expenses * * * for necessary medical, surgical, X-ray and dental services * * * and necessary ambulance, hospital, professional nursing and funeral services * * *" to or for the insured and each relative who sustains bodily injury (including sickness and death) while in or entering or alighting from the owned automobile, while in a non-owned automobile with the permission of the owner or through being struck by an automobile; and under Division 2, to or for any other person who sustains bodily injury caused by accident while in or entering or alighting from the owned automobile while it is being used *57 by the insured, member of his household or another with the permission of the insured.
Before the suit for damages charging Blocker, the insured, with negligence came to trial, American paid Sterling $2,000 and Sorensen $1,848.25 under its medical payments contractual obligations spelled out in Coverage C of American's policy, and the parties so stipulated before the trial. They further agreed that after the trial Blocker, on behalf of American, would file appropriate motions, to be passed on by the court, to reduce the jury verdicts for Sterling and Sorensen, respectively, by the amount of the medical payments each had received.
At the trial each plaintiff proved his medical expenses and each was given a verdict which, presumably, included these damages, Sterling in the amount of $22,500 and Sorensen in the amount of $20,000. Judge Powers denied Blocker's motions for reduction of the damage verdicts by the amount previously received by Sterling and Sorensen, holding in effect that within American's policy were two separate contracts one under Part I to indemnify Blocker for any amount within policy limits he "became legally obligated to pay as damages," and the other to pay medical expenses to injured third party beneficiaries without regard to Blocker's legal liability.
Blocker argues that the collateral source rule the rule of Plank v. Summers, 203 Md. 552, that a claimant who has received benefits from a third person may nevertheless recover the same amount as part of his damages owed by the tortfeasor because the wrongdoer cannot escape responsibility for the full consequence of his wrong should not apply in the present situation because here the tortfeasor created and paid for the source of both payments by taking out the two-edged insurance policy with American. Various state and federal courts have reached the result Blocker seeks and permitted but one recovery for medical expenses under policies similar to that before us. Various grounds have been relied on after the court in question has rejected the applicability of the collateral source rule. It has been held that payment of medical expenses by him who created the insurance fund was equivalent to direct payment of such expenses by the insured. It has been held that the insurer and insured could not reasonably have intended, and therefore did not *58 intend, that there be a double recovery (in one case where the policy was not before the court). It has been held in an action at law on a formal written contract that it would be inequitable to permit the insured to be "mulcted twice" for the same items of damages. There is a case in which there was a policy provision that medical payments "shall reduce the amount payable hereunder for such injury." See the annotation to Yarrington v. Thornburg (Del. Sup.), 205 A.2d 1, in 11 A.L.R. 3d 1115, 1117-22.
There have been a number of decisions reaching a contrary conclusion and result. 11 A.L.R. 3d 1115, 1122-23.
This Court has given indication that it shares the view that double recovery is allowable. In Thomas v. Erie Ins. Exchange, 229 Md. 332, the majority held that a general release of all claims given the driver of a car by a passenger who was injured when the car struck a pole was broad enough to release the insurer of the driver from obligation to pay medical expenses under that coverage of the driver's insurance policy. The majority opinion said:
"For the purposes of this opinion we will assume that she had a right to double recovery, that is by way of special damages for her medical expenses under the tort liability provision of the policy and also under the medical pay clause. The majority of the courts which have considered the problem have recognized the right to double recovery." [Citations omitted.] [229 Md. at 337]
Judge Henderson, dissenting for himself and Judge Hammond on the ground that the release did not bar the additional recovery of the medical expenses, said:
"In effect, the insurer executed two contracts, one to defend or indemnify the insured against liability for damages recoverable by an injured party by reason of the insured's negligence, and another, for a separate premium, to pay directly to a passenger, as a third party beneficiary, any medical expenses incurred up to $1,000, regardless of negligence. The cases recognize *59 that there can be a double recovery on each separate undertaking. See Severson v. Milwaukee Auto. Ins. Co., 61 N.W.2d 872 (Wis.); Truitt v. Gaines, 199 F. Supp. 143 (D.C. Del.); note 42 A.L.R. 2d 983. In 8 Appleman, Insurance Law & Practice § 4896, p. 349, it is said that since recovery under a medical payments clause `is completely independent of liability on the part of the insured, insurance under the medical indorsement clause is closely akin to a personal accident policy.' Thus, if the suit against the insured had been pressed to judgment, and the judgment paid, this would not have barred another recovery under the clause sued on. Cf. Baltimore Transit Co. v. Harroll, 217 Md. 169, 175, and Plank v. Summers, 203 Md. 552, 556." [229 Md. at 340-41]
Four years after Thomas the Supreme Court of Appeals of Virginia decided Moorman v. Nationwide Mutual Insurance Company, 148 S.E.2d 874, reversing the trial court which had found for the insurer in a suit against it by an injured passenger for medical expenses, brought after a settlement of the passenger's suit against the tortfeasor for personal injuries and medical expenses.
The Court set out the various policy provisions which did not differ materially from those of the policy before us, and said:
"There is no ambiguity in the insurance policy before us. It needs no interpretation. We gather its purpose and intention from the plain and simple words employed.
"Nationwide could have issued separate policies for the several coverages. It could have embodied several coverages in one policy for one premium; but it chose to list separate coverages, with a separate and `specific premium' for each coverage, as provided in Item 4 of its policy. The coverage under Item `E' is a distinct contract for the benefit of the insured, that is, insurance against liability to the extent named. The coverage under Item `G' is under `Division 2' of `PART II PAYMENTS FOR MEDICAL EXPENSES,' a distinct *60 and separate contract for the benefit of the injured person, regardless of negligence of the insured. It is an absolute and unconditional agreement to assume and pay to an injured person `who sustains bodily injury caused by accident, while occupying' the insured automobile, medical expenses not exceeding $1,000.00. Consequently, the coverages are separate and distinct, and a separate and specific claim can arise under each coverage. * * *
"Nationwide concedes, in its brief, that there is `no explicit exclusion under its policy which limits payments for medical expenses to only those situations where payment is not made for claim against the named insured.' However, it contends that a consideration of the entire insurance contract shows that it was not the intent of Nationwide to provide for more than one payment of medical expenses.
"The insurance contract was prepared by Nationwide. Had it intended to limit or reduce the amount of its liability for medical payments under Coverage `G,' if other medical payments were available to the injured person under any other coverage of its policy, or from another source, it could easily have so provided. It cannot ask us to make a contract for the parties, which they did not make themselves. * * *
"We have carefully examined the entire insurance policy. We are accepting the language and provisions employed by Nationwide. `Item 4' providing that, `Insurance is afforded only for the Coverages for which specific premium is shown below,' is clear and free from ambiguity. In accordance therewith, Nationwide asked for, and received payment of, a premium for assuming the risk under `Coverage G.'
"This proceeding concerns plaintiff's right to recover from Nationwide for breach of its contract, and not to recover from Mrs. Wynn for her alleged tort. The claim against Mrs. Wynn has been settled. The payment for the settlement, it is true, was made by Nationwide on behalf of its insured; but that was because *61 of Nationwide's agreement to indemnify Mrs. Wynn in the event of her liability for negligence.
"We do not base our decision on the theory of one claim sounding in tort and the other in contract. Our decision is based on the provisions of the insurance policy before us. We are not concerned, under the facts of this case, as to which of the two claims was first settled or who paid it.
"Here, the engagement of Nationwide under Coverage `G' to pay medical expenses, regardless of negligence on the part of the insured, is somewhat similar to a personal accident policy, [8 Appleman, Insurance: Law and Practice, page 312, Par. 4896] for the benefit of an insured person, rather than for a person insured against liability. The injured person is placed in the position of a third party beneficiary, and as such, has in Virginia a statutory right to maintain an action on the contract in his own name." [148 S.E.2d at 876-77]
We have repeated the Virginia Court's opinion at such length because it is a recitation of our views as to the right approach to the question at issue and its correct solution.
American's policy created separate coverages, one of indemnity for Blocker and one analogous to a personal accident policy for injured passengers in Blocker's car who became, by virtue of being injured, third party beneficiaries of the medical expense coverage contract. In Part II of its policy American provided under "Exclusions" that:
"If there is other automobile medical payments insurance against a loss covered by Part II of this policy the company shall not be liable under this policy for a greater proportion of such loss than the applicable limit of liability stated in the declarations bears to the total applicable limit of liability of all valid and collectible automobile medical payments insurance; * * *."
American provided no other exclusion to indicate that the payments under the medical expense coverage should not be in *62 addition to payments under liability coverage. Severson v. Milwaukee Auto Ins. Co. (Wis.), 61 N.W.2d 872, 42 A.L.R. 2d 976, the leading early case permitting recovery of medical expenses under both the medical expense coverage and liability coverage, was decided in 1953. This case was noted in the Insurance Law Journal, May, 1954:
"Those liability insurers who are not too happy in the implications of this decision can protect themselves, of course, by amending their liability policy to limit medical payments recovery to a single payment to the qualifying claimant, whether it be under the liability provisions of the insurance contract or under the medical payments coverage." [Ins. L.J. 1954: 303 at 327]
American has had ample time and notice in which to insert policy provisions requiring credit on liability coverage recovery of sums received under medical expenses coverage as some insurers have done and its failure to do so indicates that it did not intend such a requirement.[1]
We find nothing in the policy implicitly suggesting an intent that medical expense payments were not to be in addition to liability payments. The terms of the medical expense coverage indicate that it is largely for the benefit of relatives and friends of the insured and it would seem not unlikely therefore that he would want those whose injuries had been caused by him to be compensated from the insurance he had created for their protection, as well as his own, as liberally as possible. Neither the liability payment nor the medical payment would come from his pocket but from that of the insurer, as the insured had foreseen when he paid the premiums that produced that result.
We think Judge Powers reached the correct conclusion.
Orders affirmed, with costs.
NOTES
[1] Paragraph C "Supplementary Payments" in which American agrees "to pay, in addition to the applicable limits of liability * * * expenses incurred by the insured for such immediate medical and surgical relief to others as shall be imperative at the time of an accident involving an automobile insured hereunder," may give some indication that medical expenses payments were intended to be in addition to liability payments.
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601 S.W.2d 436 (1980)
WARREN BROTHERS COMPANY, Appellant,
v.
A.A.A. PIPE CLEANING COMPANY, Appellee.
No. 17626.
Court of Civil Appeals of Texas, Houston (1st Dist.).
May 15, 1980.
Rehearing Denied June 26, 1980.
*437 Prappas, Moncure, Harris & Termini, Brantly Harris, Houston, for appellant.
Bresenhan, Martin & Wingate, Albert H. Wingate, Houston, for appellee.
Before PEDEN, EVANS and DOYLE, JJ.
PEDEN, Justice.
Warren Brothers Company, defendant below, appeals from a judgment awarding A.A.A. Pipe Cleaning Company $22,044.34 for pipe cleaning services furnished pursuant to a proposal dated March 16, 1970. A.A.A. contends that the prices charged for the labor and services were reasonable and agreed to by Warren Brothers but that $22,361.48 of such charges remain unpaid. Warren Brothers argues that the parties contracted to calculate the charges in question on a lineal foot basis rather than by the hour, as A.A.A. billed them.
Warren Brothers was under contract with the State of Texas to construct the interchange at the intersection of North Belt Boulevard and U. S. Highway 59. Because North Belt was three to four feet below ground level at that intersection, a network of pipes was installed to drain water into a wellhouse where it could be removed by a pump. A second network of pipes drained the frontage roads and the main lines of Highway 59.
On March 16, 1970, A.A.A. submitted a proposal to Warren Brothers which provided: "Furnishing Sewer Jets and a Sewer Vac to clean 18 through 48 sewer lines on North Belt Freeway job." The job location notation on this proposal reads "North Belt Freeway." A Warren Brothers purchase order dated March 17, 1970, describes the job as "N Belt 59," and provides for compensation on an hourly basis plus a flat fee for cleaning the wellhouse.
Pursuant to this purchase order, A.A.A. cleaned the pipe draining into the wellhouse, and cleaned the wellhouse itself on April 3rd and 4th. Other pipe running from the wellhouse was cleaned for up to a week following the cleaning of the wellhouse.
Warren Brothers then issued a second purchase order which referred to the job as "N Belt," and provided that A.A.A. would "Clean remainder of Storm Lines on Rt. 59N 20 cents per Lineal Foot. Minimum of Three Sewer Sets After 4-8-70 Per Day. 10 hrs. 6 days." This purchase order is undated, but apparently it was issued on April 6, 1970.
William Dewey, general manager for A.A.A. in 1970, testified that between April 6th and May 9th, A.A.A. worked on the storm lines on Highway 59. Only two A.A.A. invoices, PX-7, dated April 9, and PX-8, dated April 30, refer to the April 6 purchase order. PX-7 is the only A.A.A. invoice in evidence in which charges for amounts owed by Warren Brothers are made by the lineal foot. These charges are for work performed from April 6 through April 8. All other charges on A.A.A. invoices to Warren Brothers are computed by the hour.
It is the position of Warren Brothers, supported by testimony of its former project superintendent Dale Mantooth, that all work performed by A.A.A. on Highway 59 was intended by the parties to be billed under the April 6 purchase order, on a lineal *438 foot basis. The opposing contention of A.A.A., supported by the testimony of Mr. Dewey, was that only the small sewer lines that run beneath Highway 59 were intended by the parties to be cleaned pursuant to the April 6 purchase order at the rate of 20 cents per lineal foot. A.A.A. asserts that all other work, whether performed on the North Belt or on Highway 59, was intended by the parties to be billed by the hour under the first purchase order, and that A.A.A. based its petition solely upon the agreement of Warren Brothers to the terms of that March 16 proposal.
The case was submitted to a jury on two special issues, the first of which asked the jury to find "the unpaid balance of the amount Warren Brothers Company agreed to pay to A.A.A. Pipe Cleaning Company for the work done by A.A.A. Pipe Cleaning Company for Warren Brothers Company pursuant to the contract of March 16, 1970 and purchase order B-04501 [PX-1] in 1970 as shown by the evidence." The jury answered "$22,044.34." In answer to the second special issue the jury found that Warren Brothers had not paid or tendered payment to A.A.A. at the agreed rate for all work done pursuant to the March 16 proposal. Judgment was entered pursuant to this verdict.
Appellant's third point of error is:
The trial court erred in admitting in evidence the testimony of William Dewey that the second purchase order was only intended to cover cleaning small lines that ran across Highway 59 over Defendant's objection that such testimony violated the parol evidence rule, inasmuch as the purchase order by its terms required Plaintiff to `Clean Remainder of storm lines on RT 59 N 20 cents per lineal foot' and not merely the small lines running across the highway.
Dewey testified, over objection, at several points in the trial that the April 6 purchase order was intended by the parties as an agreement that A.A.A. would clean only the small sewer lines that run under Highway 59 at the rate of 20 cents per lineal foot.
Volume 2 of Ray, Texas Law of Evidence (3rd ed. 1980) Sec. 1611, at 318-320, contains the following passage concerning the application of the parol evidence rule:
If, under the foregoing principles, the instrument appears, as read in the light of the surrounding circumstances, to be intended, not as a complete and all-inclusive embodiment of the terms relating to the subject matter of the instrument, but as a professedly partial or incomplete memorial or memorandum, then it may be supplemented by proof of other oral or written terms outside the document. Such is the case ... where the instrument is a mere skeleton note or reminder obviously not designed to be complete. Likewise the indefiniteness of the words used in the instrument has been held to show that as to such terms the parties did not intend to supersede prior agreements as to the features covered by such vague terms.
Ray points out that the Texas cases dealing with incomplete instruments "shade by imperceptible degrees into those where the use of extrinsic evidence is justified by ambiguity in some term of the instrument," Sec. 1611, n. 27, at 320, and states in Sec. 1685, at 412, that "(p)arol evidence is admissible to explain ambiguities apparent on the face of a writing. This proposition is well established, and frequently applied..."
The Texas Supreme Court held in Magnolia Warehouse & Storage Co. v. Davis & Blackwell, 108 Tex. 422, 195 S.W. 184, 185 (1917):
... one of the exceptions to the general [parol evidence] rule is that if the written instrument itself shows to be either ambiguous or incomplete, parol testimony is admissible to show what the real contract was to the extent necessary to remove the ambiguity, and to make the contract complete in its terms which show to be incomplete. The exception to the general rule is as well settled as is the rule itself.
Where a writing is incomplete or ambiguous, parol evidence is admissible to *439 explain the writing or to assist in the ascertainment of the true intention of the parties insofar as the parol evidence does not alter or contradict any part of the written memorandum in question.[1] In Henry v. Powers, 447 S.W.2d 738, 742 (Tex.Civ.App. 1969, no writ), we stated:
Parol testimony as to the circumstances under which contracts were entered into is admissible for the purpose of ascertaining the real intention of the parties.
* * * * * *
The Supreme Court of Texas has held that where the language of a contract is ambiguous, the court can look to the record as a whole to determine just what the parties intended by the language employed. The court also stated: `No principle of interpretation is more firmly established than that great, if not controlling weight should be given by the courts to the interpretation placed upon a contract of uncertain meaning by the parties themselves. Courts rightfully assume that the parties to a contract are in the best position to know what was intended by the language employed.' James Stewart & Co. v. Law, 149 Tex. 392, 233 S.W.2d 558 (1950).
We hold that the testimony of Mr. Dewey was properly admitted by the trial court. On its face, PX-3 appears to have been intended not as a "complete and all-inclusive embodiment of the terms" relating to the agreement between the parties, but rather as an "incomplete memorial or memorandum." Ray, supra Sec. 1611, at 318.
In addition, the terms of that purchase order, particularly the specification of the storm lines to be cleaned as the "remainder... on RT 59 N," are so general as to logically encompass either of the two interpretations offered by the parties. A contract is ambiguous when the application of pertinent rules of interpretation to the face of the instrument leaves it genuinely uncertain which one of two or more meanings is the proper one. Universal C.I.T. Credit Corp. v. Daniel, 150 Tex. 513, 243 S.W.2d 154 (1951); Owens v. Upper Neches River Municipal Water Authority, 514 S.W.2d 58 (Tex.Civ.App. 1974, writ ref'd n. r. e.). Appellant's third point of error is overruled.
The appellant's other points of error are:
1. The judgment is erroneous because the evidence is insufficient to support the jury's answer to Special Issue No. 1 that the sum of $22,044.34 is the unpaid balance of the amount Defendant agreed to pay Plaintiff for work done pursuant to the contract of March 16, 1970 and the first purchase order.
2. The trial court erred in failing to grant Defendant's motion to disregard the jury's answer to Special Issue No. 1 because there is no evidence that the sum of $22,044.34 is the unpaid balance of the amount Defendant agreed to pay Plaintiff for work done pursuant to the contract of March 16, 1970 and the first purchase order.
The A.A.A. claim was based upon nine invoices introduced into evidence as plaintiff's exhibits 4 through 13. The total amount of the invoices is $23,831.89, of which $290.80 was based upon computations by the lineal foot. Neither party complains that the jury found a different amount, $22,044.34. Appellant's argument concerning the invoices introduced by A.A.A. asserts only that they are hearsay and so cannot support the judgment of the trial court.
Appellee contends that the invoices, plaintiff's exhibits 4-13, were properly admitted into evidence under the Business Records Act, Article 3737e, V.T.C.S. Sections one and two, the pertinent parts of that article provide:
*440 Section 1. A memorandum or record of an act, event or condition shall, insofar as relevant, be competent evidence of the occurrence of the act or event or the existence of the condition if the judge finds that:
(a) It was made in the regular course of business;
(b) It was the regular course of that business for an employee or representative of such business with personal knowledge of such act, event or condition to make such memorandum or record or to transmit information thereof to be included in such memorandum or record;
(c) It was made at or near the time of the act, event or condition or reasonably soon thereafter.
Section 2. The identity and mode of preparation of the memorandum or record in accordance with the provisions of paragraph one (1) may be proved by the testimony of the entrant, custodian, or other qualified witness even though he may not have personal knowledge as to the various items or contents of such memorandum or record. Such lack of personal knowledge may be shown to affect the weight and credibility of the memorandum or record but shall not affect its admissibility.
Dewey, then the general manager of A.A.A., testified as to how the invoices, and the work tickets upon which they were based, were prepared. He said the men came in from the job in the evening, made out work tickets, and turned them in to the office. A young lady in the office took the information off the work ticket, compiled the invoice and sent the invoice and a copy of the work ticket to whomever Warren Brothers had done the work for. The people that prepared the work tickets were under his supervision, but the girl in the office was not. These invoices were prepared within a day or so after the work tickets were filled out. He also testified that the work tickets contained in Plaintiff's Exhibit 22 were prepared on the job each day by the foreman of the crew whose work they reflect. Each of the foremen, who worked for Dewey, brought the work tickets into the office and turned them into the administrative secretary. It was in the regular course of the employee making these tickets to make them on the day the work was done.
At trial, counsel for Warren Brothers stated that he had no objection to the introduction into evidence of the invoices, plaintiff's exhibits 4-13. He later stated that his objection to the admission of the work tickets they were based on (plaintiff's exhibit 22) did not "go with whether they comply with Article 3737e ..."
In Mew v. J & C Galleries, Inc., 554 S.W.2d 249 (Tex.Civ.App. 1977, writ ref'd n. r. e. Tex., 564 S.W.2d 377), counsel for the appellant stated that he had no objection to the admission into evidence of certain exhibits. On appeal, however, appellant argued that the exhibits were inadmissible hearsay. The Dallas Court held:
We conclude that defendants have waived any complaint based upon lack of the predicate required by article 3737e. To allow defendant's counsel to state specifically that he has no objection to the admission of these exhibits and then later complain of plaintiff's failure to lay a proper predicate would permit a party to benefit from error for which his counsel is, in part, responsible due to his affirmative acts ... Counsel's statement that he had no objection to the admission of the exhibits is, in effect, an agreement that the proper predicate can be laid and that further proof of the predicate need not be presented.
See also: Loper v. Andrews, 395 S.W.2d 873 (Tex.Civ.App. 1965), aff'd on other grounds, 404 S.W.2d 300 (Tex. 1966); Missouri Pacific Railroad Company v. Watson, 346 S.W.2d 640, 641 (Tex.Civ.App. 1961, writ ref. n. r. e.).
We also consider that Mr. Dewey testified to facts sufficient to lay the necessary predicate under Article 3737e. University Savings and Loan Assn. v. Security Lumber Co., 423 S.W.2d 287 (Tex. 1967) and Fuqua v. Moody & Clary Co., 462 S.W.2d 321 (Tex. Civ.App. 1970, no writ).
*441 Appellant also contends that the evidence establishes no possible basis for a finding that the work on all the remaining storm lines on Highway 59 was performed by A.A.A. pursuant to the March 16 proposal upon which A.A.A. based its cause of action. However, the March 17 purchase order reflects the notation "JOB: N Belt 59". Mr. Dewey testified that the term "North Belt" alone included both the work on the North Belt under the Highway 59 interchange and on the remainder of Highway 59. He further testified that the March 17 purchase order authorized A.A.A. to clean the storm lines on Highway 59 and the North Belt interchange. The jury was entitled to conclude in answering special issue number one that modification of the terms of that first purchase order pertained solely to the small lines running underneath Highway 59.
The appellant's first two points of error are also overruled.
Affirmed.
NOTES
[1] See: Home Indemnity Company v. Draper, 504 S.W.2d 570, 578 (Tex.Civ.App. 1973, writ ref'd n. r. e.); Allstate Insurance Co. v. Furr, 449 S.W.2d 295 (Tex.Civ.App. 1969, writ ref'd n. r. e.); Olan Mills, Inc. v. Prince, 336 S.W.2d 186 (Tex.Civ.App. 1960, no writ); Geyser Ice Co. v. Sharp, 87 S.W.2d 883, 886 (Tex.Civ.App. 1935); Pyron v. Brownfield, 269 S.W. 202 (Tex. Civ.App. 1925, writ dism'd).
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601 S.W.2d 523 (1980)
John W. HACKNEY, Appellant,
v.
Doris JOHNSON, Appellee.
No. 6933.
Court of Civil Appeals of Texas, El Paso.
June 11, 1980.
Rehearing Denied July 2, 1980.
*524 Freeman & Hyde, Robert F. Freeman, John G. Hyde, Midland, for appellant.
Robert L. Evans, Jr., P. C., Midland, for appellee.
OPINION
WARD, Justice.
One of three individual lessees filed this suit against the landlord for damages for an alleged eviction. Trial was to a jury, and, based upon the verdict rendered, judgment for substantial damages was entered in favor of the lessee. The landlord appeals, complaining that a release of the lease executed by the two other tenants was binding against the claim of the Plaintiff, and that the Plaintiff's claim was further barred when she introduced into evidence, without limitation, the Defendant's first amended answer. We affirm.
The Defendant, John W. Hackney, was the owner of a building and the business located therein, known as "Johnny's Barbeque," in Midland. In September, 1976, he leased the premises and equipment to three individuals, Luther Massengil, Sammie L. Hunt and the Plaintiff, Doris Johnson, the written lease being for a period of five years. It was contemplated that the three lessees would operate the barbeque business and, by the terms of the lease, the lessees agreed to pay $200.00 weekly rental to the lessor, together with 25% of the net profit. In this connection, the lease provided that each of the lessees would be allowed a salary of $150.00 per week prior to computation of net profit. The lease contained a provision that recognized the lessees were forming *525 a corporation, and that the lease would be assigned to the corporation. Other terms of the lease were to the effect that the lessees agreed to maintain certain insurance policies, while the lessor granted unto the lessees the right to use the name of "Johnny's Barbeque" during the term of the lease.
Thereafter, the tenants operated the business and occupied the premises until January, 1977, when trouble occurred, differing versions of which were presented in evidence. At that time, the Defendant and the two tenants, Hunt and Massengil, executed an agreement which provided that the parties mutually released each other of all the terms and conditions of the written lease of September, 1976, all their rights under the lease being thereby cancelled. The Plaintiff, Doris Johnson, refused to execute this instrument.
The jury, by answer to special issues submitted, determined that the Defendant Hackney went back into possession of the premises in January, 1977, at a time when the Plaintiff was not in default in any of her obligations in the lease and over her objection, and that he willfully excluded her from the premises. By other issues, the jury found against the Defendant on various defensive issues, and, further, found that, while the Plaintiff was not obligated to form a corporation, the corporation was formed but that the lease was not assigned to the corporation. No challenge has been made by the Defendant to the jury findings. Thereafter, the Court entered judgment for the Plaintiff for the damages assessed.
Defendant's first point is to the effect that the release of the lease agreement which was signed by Hunt and Massengil bound the Plaintiff as a matter of law from recovery on the lease agreement. In this connection, the Defendant argues that the business arrangement between the three tenants was at least that of a partnership, and that the execution of the release by the two tenants effectively bound the Plaintiff, even though she refused to sign the instrument. The Defendant relies on Article 6132b, Sec. 9, Texas Uniform Partnership Act, which in subsection (1) provides that every partner is an agent of the partnership for the purpose of its business, and that the act of a partner for apparently carrying on the usual way of business of the partnership binds the partnership. The Defendant chooses to ignore subsection (2) which provides that an act of a partner which is apparently not for the carrying on of the business of the partnership in the usual way does not bind the partnership unless authorized by the other partners. Further ignored is subsection (3) which provides:
Unless authorized by the other partners... one or more but less than all of the partners have no authority to:
. . . . .
(b) Dispose of the good-will of the business,
(c) Do any other act which would make it impossible to carry on the ordinary business of a partnership.
In this case, the Plaintiff did not authorize Hunt and Massengil to execute the release for herself or for the partnership. If the three tenants were operating the business and the lease as a partnership, the release was a transaction outside the ordinary course of the business as the lease was a vital part of the capital assets, and the act would not be within the apparent authority of a partner under Section 9(2). See Crane & Bomberg, Law of Partnerships Sec. 51, at 291 (1968).
The act of the two partners in executing the release could be considered an act which disposed of the good will of the business. Good will is used in the sense that it is generally associated with such items as place of business, sales, etc. Law of Partnerships, supra, Sec. 52. Finally, it would clearly be an act which would make it impossible to carry on the ordinary business of the partnership and was within the terms of Section 9(3)(c), Texas Uniform Partnership Act. If the three tenants were acting as a partnership, then the release did not bind the partnership or the Plaintiff.
*526 If the three tenants could be considered as acting as joint venturers prior to the formation of a contemplated corporation, the results would be the same, as joint venturers are generally governed by the rules applicable to partners. Law of Partnerships, supra, Sec. 35 at 189, et seq.
The evidence disclosed that the three tenants had formed a corporation, they being the initial directors. According to the unchallenged jury finding, no transfer of the lease to the corporation had ever been made. The Defendant's argument that the execution of the release should be considered as a binding corporate act is overruled. The first point is overruled.
The Plaintiff offered into evidence the Defendant's first amended original answer without limitation. The answer consisted of a general denial and various allegations that the Plaintiff had breached the lease. The Defendant's second point is that the introduction of the pleading without limitation bound the Plaintiff and entitled the Defendant to an instructed verdict. There are cases in this State holding that, where a party offers in evidence a pleading of his opponent without limitation, the allegations in such pleading are conclusively established. Texas & N. O. Ry. Co. v. Patterson & Roberts, 192 S.W. 585 (Tex.Civ. App. Amarillo 1917, no writ); McClung Const. Co. v. Langford Motor Co., 33 S.W.2d 749 (Tex.Civ.App. Fort Worth 1930, no writ); Lincoln v. Pohly, 325 S.W.2d 170 (Tex.Civ.App. Texarkana 1959, writ ref'd n.r.e.); Seddon v. Harrison, 367 S.W.2d 888 (Tex.Civ.App. Houston 1963, writ ref'd n.r. e.). Granted that such positive statements can be found, they have generally been used as an alternative reason for the decision of the court in the particular case. Recently, it was pointed out that the stated rule is an extraordinarily harsh one since an unsworn pleading, even if offered by the opposing party, logically does not tend to show what the true facts are, but only what the pleader has asserted them to be, unless the allegations are contrary to the position taken by the pleader at the trial. Booker Custom Packing Company, Inc. v. Caravan Refrigerated Cargo, Inc., 575 S.W.2d 329 (Tex.Civ. App. Dallas 1978, no writ). Actually, the Dallas court merely considered the offered pleadings as being some evidence to support a jury verdict without going any further, and that should be a proper limitation on the rule.
A better statement is contained in Ballard v. Aetna Casualty and Surety Company, 391 S.W.2d 510 (Tex.Civ.App. Corpus Christi 1965, writ ref'd n.r.e.), at 513:
It is a well-established general rule of law that `if a party introduces a statement of his adversary in evidence, he is ordinarily bound by it. For example, a party who introduces without limitation a pleading of his adversary will generally be bound thereby.' ...
'However, while such is generally stated to be the rule, there are exceptions and one exception is that in analogy to the rule that a party may prove the truth of particular facts in direct contradiction of the testimony of his witness, he may disprove facts stated in a document introduced by him.' ...
A party may introduce other witnesses to show the truth of a particular fact in contradiction to what one of his own witnesses has testified. This is not an attack on the general credibility of the witness, but is intended to show that he was in error on the particular point. If this were not permitted, one would be unable to prove the facts of his case if his first witness testified falsely. See 1 Ray, Texas Laws of Evidence Sec. 636 (3d ed. 1980).
The pleadings are merely documentary evidence and the rule as to documentary evidence is stated in Gevinson v. Manhattan Construction Company of Oklahoma, 449 S.W.2d 458 (Tex.1969) at 466:
It has been said that one who introduces a document vouches for its accuracy and will not be allowed to impeach or contradict its recitals. This rule can avail plaintiffs nothing, because it has been largely engulfed by its own exceptions. In analogy to the rule that a party may prove the truth of particular facts in direct *527 contradiction of the testimony of his witness, he may also disprove factual recitals in a document introduced by him. (Citations omitted).
In the case before us, we hold that the Plaintiff is not conclusively bound by her introduction of the Defendant's pleadings. She introduced other evidence which established that she was not in default under her lease and the jury chose to believe this evidence. The point is overruled.
The judgment of the trial Court is affirmed.
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5 Md. App. 312 (1968)
246 A.2d 773
JOHN RUSSELL COLOPIETRO
v.
STATE OF MARYLAND.
No. 33, September Term, 1968.
Court of Special Appeals of Maryland.
Decided October 22, 1968.
The cause was argued before MURPHY, C.J., and ANDERSON, MORTON, ORTH, and THOMPSON, JJ.
Louis Peregoff, with Claude Hanley on the brief, for appellant.
William E. Brannan, Assistant Attorney General, with whom were Francis B. Burch, Attorney General, Samuel A. Green, *313 Jr., State's Attorney for Baltimore County, and Gary Huddles, Assistant State's Attorney for Baltimore County, on the brief, for appellee.
PER CURIAM:
John Russell Colopietro, the appellant, was convicted under four separate indictments for larceny and under a fifth indictment for possession of barbiturates in a non-jury trial in the Circuit Court for Baltimore County. He was sentenced to a term of five years under each larceny indictment and a term of one year on the barbiturate indictment, all sentences to run concurrently. On appeal he contends his arrest was illegal and barbiturates found on him at the time should not have been admitted into evidence. He further contends that he was not advised of his right to counsel prior to his confessions of the larceny charges, and that the confessions should not have been admitted into evidence.
THE ARREST
The evidence shows that a police officer of Baltimore County was staked out in a vacant apartment above Colopietro's for the purpose of serving a warrant upon one Frank Vincent Garbo for whom the officer had a warrant. When Garbo appeared at Colopietro's apartment door and opened it the officer arrested him under the warrant and simultaneously arrested Colopietro. As gleaned from a meager record the reasons for Colopietro's arrest consisted simply of the officer's statement that he had reliable information from a reliable informant that prior to a burglary Colopietro had been observed in the same car that approximately a month later was connected with a second burglary. Apparently some additional information had also been obtained from the prior tenants of the apartment in which the officer hid prior to the arrest but the record does not disclose the information. The record also does not disclose why any of the informants were considered reliable. Prior to trial Colopietro made a motion to dismiss which can be considered as a motion to suppress the barbiturates which a search after the arrest revealed on Colopietro's person. We hold that the arrest was illegal. The mere fact that Colopietro was observed riding in an automobile near the scene of, but prior to, a burglary a *314 month earlier and that same automobile was involved in a subsequent crime might well be grounds for suspicion that he was some way involved in criminal activity but hardly satisfies the test that prior to an arrest for a felony an officer must have reasonable grounds to believe that a felony has been committed and that the accused had committed it. We ruled in Scott v. State, 1 Md. App. 481, 231 A.2d 728 and in Kist v. State, 4 Md. App. 282, 242 A.2d 586 that a search warrant must disclose the underlying circumstances upon which the informer believed that a crime had been committed and the underlying circumstances in which the officer had a reason to believe that the information was reliable. In a somewhat similar case, Beck v. Ohio, 379 U.S. 89, 85 S. Ct. 223, 13 L. Ed. 2d 142 the Supreme Court of the United States held that the information required to be possessed by an officer who arrested without a warrant was certainly no less than that required where an arrest warrant had been obtained. It further held that the record must clearly indicate the information on which the officer relied and that information must show that he had probable cause to believe that a felony had been committed and the accused had committed it. Compare Draper v. United States, 358 U.S. 307, 79 S. Ct. 329, 3 L. Ed. 2d 327 and McCray v. Illinois, 386 U.S. 300, 87 S. Ct. 1056, 18 L. Ed. 2d 62. The officer's conclusion that he had reliable information from reliable informants cannot be accepted as furnishing sufficient basis for an arrest.
THE CONFESSION
The police testimony which was accepted by the trial judge as being accurate consisted of the fact that Colopietro was made no promises or inducements and that no threats were made against him, and that the Miranda warnings were given to him in the following manner:
"Q. Now, Detective Sellman, after arresting Mr. Colopietro what did you do?
"A. He was arrested, taken out to the police car, the Miranda was read. While he was in the car the Miranda was read to Mr. Garbo and while he was sitting in the back
"Q. When you say Miranda the Miranda Warning?
*315 "A. Yes.
"Q. Do you have the card with you?
"A. Yes.
"Q. Would you read exactly what you read to him?
"MR. HANLEY: He didn't read it.
"THE WITNESS: I did.
"THE COURT: Did you read it to Mr. Colopietro?
"THE WITNESS: Both were in the back seat and I read it to both of them, but again I read it this would be the first time. It is a card issued to us by Baltimore County Police Bureau. The following was read to both subjects in the police car: `You have the absolute right to remain silent. Anything you say can and will be used against you in a court of law. You have the right to talk to an attorney before you are questioned and have him present thereafter. If you cannot afford an attorney, one will be appointed by the Circuit Court immediately and before any questions are asked. If you desire to ask questions, you can at anytime insist upon all your rights at which time all questioning will cease and no further questions will be asked.' I asked the two following questions: `Do you understand each of the rights I have explained to you?' And I received a reply of yes. `Having these rights in mind, do you wish to talk to us now?' Mr. Colopietro did not reply and Mr. Garbo replied, no, he didn't want to say anything.
"Q. What happened at that time?
"A. I called for assistance due to the fact I was alone. Detective Kroner and Detective Miranda came to 5503 Ashbourne Avenue. Detective Miranda stayed at Ashbourne Avenue and Detective Kroner accompanied me to Baltimore County Police Headquarters.
"Q. Did you question Mr. Colopietro at the Baltimore County Police Headquarters?
"A. He was processed and questioned by myself and Detective Robert LeCain. This occurred on October 18, 1967 at 9:30 p.m. At this time again I read *316 the Miranda warning with Detective LeCain present in the investigation room of the Baltimore County Police Headquarters, reading the exact same wording I read to the Court and receiving the answer to the question on the back, Do you understand each one of your rights? if I remember correctly there were a few things Mr. Colopietro asked me questions on and I explained to simplify the language on the Miranda card, I explained it thoroughly and he said, Yes, now I understand my rights. I said, Having these rights in mind, do you wish to talk to us? He said, Yes. At that time the interrogation took place after his rights were read to him again."
Subsequently the appellant admitted the four larceny charges and in addition rode in a police car to point out the specific properties which he had burglarized.
Colopietro's testimony was to the effect that he was under the influence of narcotics and did not remember making the statements or pointing out the locations to the officers. The police officers denied that he showed any effects of the narcotics, and this testimony was accepted by the trial judge.
As to the confession Colopietro contends only that he was not properly warned of his right to counsel. This record clearly shows that all warnings required by Miranda v. Arizona, 384 U.S. 436, 86 S. Ct. 1602, 16 L. Ed. 2d 694 were given to the accused and further that he understood his rights and knowingly and intelligently waived them, Brown v. State, 3 Md. App. 313, 239 A.2d 761. Since this information is in the record, together with a denial of any promises, inducements or threats, we cannot say the trial judge abused his discretion in admitting the confession into evidence. See Carrington v. State, 1 Md. App. 353, 230 A.2d 112, Robinson v. State, 3 Md. App. 666, 240 A.2d 638.
Judgment reversed as to the conviction for possession of barbiturates and case remanded for a new trial.
Judgment affirmed as to the larceny convictions.
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34 Md. App. 217 (1976)
367 A.2d 525
KATIE SUE SARD ET VIR
v.
ERVING D. HARDY.
No. 853, September Term, 1975.
Court of Special Appeals of Maryland.
Decided December 21, 1976.
The cause was argued before MORTON, POWERS and DAVIDSON, JJ.
Lawrence P. Pinno, Jr., with whom were Joseph F. Lentz, Jr., and Lentz & Hooper on the brief, for appellants.
George J. Goldsborough, Jr., with whom were Goldsborough, Franch & Collett, on the brief, for appellee.
POWERS, J., delivered the opinion of the Court. DAVIDSON, J. dissents and filed a dissenting opinion at page 239 infra.
The parties in this appeal, Katie Sue Sard and her husband, David Penn Sard, Jr., appellants, and Erving D. Hardy, M.D., appellee, went to trial before a jury and Judge Harry E. Clark, Jr. in the Circuit Court for Talbot County, on an amended declaration containing eight causes of action asserted by Mrs. and Mr. Sard against Dr. Hardy.
Suit was filed on 29 August 1972. The amended declaration was filed on 1 February 1973. Trial was held on 26 and 27 March 1974. At the close of all of the evidence offered by the plaintiffs, the defendant filed a motion for a directed verdict. Maryland Rule 552. After hearing arguments, the court granted the motion. On 1 April 1974 the plaintiffs filed a motion for a new trial. That motion was heard by Judge Clark on 28 July 1975, and was overruled. Judgment absolute was entered. The plaintiffs appealed.
We shall discuss briefly the significant allegations *219 of the amended declaration, to aid in understanding the legal foundations upon which the several claims rest.
The first three causes of action are asserted only by Mrs. Sard. In the first she said that Dr. Hardy was a licensed physician, a specialist in obstetrics and gynecology, and in the performance of bilateral tubal ligation to prevent pregnancy; that in March 1968 she employed Dr. Hardy to treat her for the purpose of accomplishing sterilization; that she had undergone several difficult prior pregnancies, terminating in Caesarean sections, and Dr. Hardy recommended that she be sterilized; that on 26 March 1968 Dr. Hardy delivered her child by Caesarean section and attempted to perform a bilateral tubal ligation upon her, and represented to her that it would accomplish sterilization. She alleged that Dr. Hardy did not use the usual, ordinary, or accepted method of performing that operation or, in the alternative, that he was so negligent in performing the operation as to fail totally in accomplishing its purpose; and that in April 1970 she again became pregnant. The other allegations related primarily to damages.
In her second cause of action Mrs. Sard adopted the allegations of the first, except as to negligent performance of the operation, and alleged that Dr. Hardy negligently failed to inform her that the surgical procedure for sterilization was not absolute, and that the possibility did exist that she could thereafter become pregnant, so that she might declare her decision in accepting or rejecting the procedure.
The third cause of action differed only in that the negligence alleged was that Dr. Hardy advised her after the delivery and operation that she could engage in sexual intercourse with safety and could not become pregnant, and that he gave this advice without having performed suitable postoperative tests to ascertain the success or failure of the operation.
The fourth, fifth, and sixth causes of action, asserted by both plaintiffs, paralleled the first, second, and third, respectively, and differed only in that they claimed damages incurred jointly by both plaintiffs.
*220 The seventh cause of action, by Mrs. Sard alone, alleged that Dr. Hardy expressly warranted the success of the operation. The eighth, brought by both plaintiffs, was based upon the same allegation of express warranty, and claimed joint damages.
Mrs. Sard's relevant medical history as disclosed by the record was that in December 1965, when she was eight months pregnant, she developed eclampsia and severe convulsions. An emergency Caesarean section was performed. The baby did not survive. She first saw Dr. Hardy, the defendant in this case, in October 1966, after she had become pregnant a second time. He rendered routine prenatal care, and on 4 March 1967 delivered a normal baby girl by Caesarean section in the hospital at Easton. There were no complications.
Dr. Hardy again saw Mrs. Sard when she came to him on 28 November 1967. She was five months pregnant. He rendered care through an uneventful prenatal course, culminating in the delivery of a normal baby girl on 26 March 1968 by Caesarean section, at The Memorial Hospital at Easton. At the same time Dr. Hardy performed upon Mrs. Sard an operative procedure described as a bilateral tubal ligation.
In June 1970 Mrs. Sard, suspecting that she was pregnant, consulted a different physician, who confirmed that she was. The time of conception was estimated to have been the middle of April 1970, slightly more than two years after the tubal ligation was performed. The child was born at the hospital in Cambridge in January 1971.
At the trial of the case Mr. and Mrs. Sard relied upon the testimony of four witnesses to support the issues of liability. The witnesses were Dr. Hardy, called by the plaintiffs as an adverse witness, Mr. Sard, Mrs. Sard, and Dr. Eldon L. Hawbaker, who had been in training as a resident in general surgery in the hospital in March 1968, and had assisted Dr. Hardy at the operation. Dr. Hawbaker was called by the defendant out of turn, by agreement, to testify that he had dictated the operative report, and that it was true, to the best of his knowledge. The record suggests that during cross *221 examination, the plaintiffs made him their witness for a limited purpose.
The issues, as they were pleaded and tried below, fell into four areas, which we summarize as follows:
1. That the doctor was negligent in the manner in which he performed the sterilization operation. (First and fourth causes of action.)
2. That the doctor was negligent in failing to inform his patient of facts material to her consent to the sterilization operation. (Second and fifth causes of action.)
3. That the doctor was negligent in failing to perform postoperative tests to ascertain the success or failure of the operation. (Third and sixth causes of action.)
4. That the doctor expressly warranted to his patient that the operation would accomplish sterilization. (Seventh and eighth causes of action.)
In argument to Judge Clark on the motion for a directed verdict, plaintiffs' counsel relied for evidence of negligent performance upon the eventual "failure" of the operation recanalization of a fallopian tube. The trial judge rejected that argument, and granted the motion as to the first and fourth causes of action. The issue is not raised or argued in this appeal.
As to the alleged failure to make postoperative tests for success or failure, plaintiffs' counsel conceded below that there was no evidence to support that claim, and that the motion should be granted as to the third and sixth causes of action. It was. The issue is not raised or argued in this appeal.
Two issues are raised in this appeal as to the correctness of the directed verdict, and an error in ruling on evidence is asserted.
In their brief, appellants state the Questions Presented in this way:
I. Was it error for the trial court to direct a *222 verdict in favor of the Defendant, Dr. Ervin D. Hardy?
A. Was the plaintiff's evidence legally sufficient to sustain a finding by the jury that Dr. Hardy had failed to obtain an informed consent from Mr. and Mrs. Sard prior to the sterilization of Mrs. Sard?
II. Was it error for the trial court to refuse to allow Dr. Hawbaker, who had assisted Dr. Hardy in Mrs. Sard's sterilization, to testify as to the standard of care required of physicians and surgeons who performed sterilizations in Easton, Maryland in 1968.
III. Was it error for the trial court to hold that Dr. Hardy's express warranty of sterilization was unenforceable for lack of consideration.
Consent to Operate
Generally, a physician has no right to operate upon the body of a patient without that patient's consent.[1] To do so has been treated historically by the courts as a battery, or assault and battery. As the Court of Appeals of New York, through Cardozo, J. said in Schloendorff v. Society of New York Hospital, 211 N.Y. 125, 105 N.E. 92 (1914):
"Every human being of adult years and sound mind has a right to determine what shall be done with his own body; and a surgeon who performs an operation without his patient's consent commits an assault, for which he is liable in damages."
In that case the testimony of the patient was that she had consented to an abdominal operation for the purpose of examination, but had notified the doctor that there must be no operation. The surgeon who operated removed a tumor. The Court held that the hospital was not liable for the *223 physician's wrong, but said of it, "* * * the wrong complained of is not merely negligence. It is trespass."
The assault and battery theory has been widely applied, with some of the cases holding that an apparent consent which is not "informed" is no consent at all. In A. Holder, Medical Malpractice Law, 228-29 (1975), the author explains:
"There are two different legal theories to support actions by plaintiffs alleging lack of consent. The original theory on which this cause of action was predicated was that treatment to which the patient had not knowingly consented was a classic example of the tort of `assault and battery.' This is still the case where the patient is in total ignorance of what is to be done."
* * *
"The other approach to this problem is to treat it as negligence and allege that a physician's failure to explain the consequences of treatment to which the patient has consented without understanding is negligence per se and a violation of the requisite standards of due care. In most cases in which the doctrine of informed consent arises, the patient is aware of the nature of the procedure which he is to undergo and has in fact signed a consent for it. What he does not understand is that there are some risks of permanent damage inherent in the procedure. Failure to have told him this means that the action is one in negligence.
"The practical difference between the two theories is that if assault and battery is alleged, no expert testimony is required to prove it. Lay witnesses are sufficient. On the other hand, in most, but not all, states, before a claim of medical negligence can go to the jury for determination, expert testimony to the fact that the reasonably careful physician would have explained the given risk is required."
*224 An interesting observation of the change in the trend of judicial thinking is found in W. Prosser, The Law of Torts 165-66 (4th ed. 1971), which says:
"A considerable number of late cases have involved the doctrine of `informed consent,' which concerns the duty of the physician or surgeon to inform the patient of the risk which may be involved in treatment or surgery. The earliest cases treated this as a matter of vitiating the consent, so that there was liability for battery. Beginning with a decision in Kansas in 1960, it began to be recognized that this was really a matter of the standard of professional conduct, since there will be some patients to whom disclosure may be undesirable or even dangerous for success of the treatment or the patient's own welfare; and that what should be done is a matter for professional judgment in the light of the applicable medical standards. Accordingly, the prevailing view now is that the action, regardless of its form, is in reality one for negligence in failing to conform to the proper standard, to be determined on the basis of expert testimony as to what disclosure should be made. The factors to be considered by the physician or surgeon include the likelihood and seriousness of the bad result, the feasibility of alternative methods, the interest of the patient, knowledge of his past history, his emotional stability, the necessity of treatment, and the existence of an emergency."
Perhaps the most articulate and exhaustive judicial discussion of the "informed consent" principle is found in the case of Cobbs v. Grant, 8 Cal.3d 229, 104 Cal. Rptr. 505, 502 P.2d 1 (1972), written by Justice Mosk for the Supreme Court of California. The case had been submitted to a jury on a claim that the physician was negligent in undertaking and in performing an operation for a duodenal ulcer, and on a claim that the physician's failure to disclose the inherent *225 risks of the initial surgery vitiated the patient's consent to operate.
The patient's course following the surgery was complicated by three occurrences. He suffered internal bleeding which required an emergency operation for the removal of his spleen, because an artery at the hilum of the spleen had been severed during the operation. This was stated to be a risk inherent in the type of surgery performed. A month or two later the patient developed pains, which were caused by a developing gastric ulcer. The evolution of a new ulcer was stated to be another risk inherent in the surgery performed. A third operation, removal of one half of the patient's stomach, was performed to relieve the gastric ulcer. Still another hospitalization was required because of internal bleeding due to the premature absorption of a suture, another inherent risk. This condition abated without further surgery.
The California court held that there was not substantial evidence to support a jury verdict on the issue of liability for negligence in deciding to operate, or in performing the surgery, and reversed the judgment against the physician, for retrial. The court then discussed the question of informed consent. We shall quote portions of that discussion, generally omitting the numerous citations it contains. Justice Mosk wrote:
"Where a doctor obtains consent of the patient to perform one type of treatment and subsequently performs a substantially different treatment for which consent was not obtained, there is a clear case of battery.
* * *
"However, when an undisclosed potential complication results, the occurrence of which was not an integral part of the treatment procedure but merely a known risk, the courts are divided on the issue of whether this should be deemed to be a battery or negligence.
*226 * * *
"Although this is a close question, either prong of which is supportable by authority, the trend appears to be towards categorizing failure to obtain informed consent as negligence. That this result now appears with growing frequency is of more than academic interest; it reflects an appreciation of the several significant consequences of favoring negligence over a battery theory. As will be discussed infra, most jurisdictions have permitted a doctor in an informed consent action to interpose a defense that the disclosure he omitted to make was not required within his medical community. However, expert opinion as to community standard is not required in a battery count, in which the patient must merely prove failure to give informed consent and a mere touching absent consent.
* * *
"We agree with the majority trend. The battery theory should be reserved for those circumstances when a doctor performs an operation to which the patient has not consented. When the patient gives permission to perform one type of treatment and the doctor performs another, the requisite element of deliberate intent to deviate from the consent given is present. However, when the patient consents to certain treatment and the doctor performs that treatment but an undisclosed inherent complication with a low probability occurs, no intentional deviation from the consent given appears; rather, the doctor in obtaining consent may have failed to meet his due care duty to disclose pertinent information. In that situation the action should be pleaded in negligence.
"The facts of this case constitute a classic illustration of an action that sounds in negligence. Defendant performed the identical operation to which plaintiff had consented. The spleen injury, development of the gastric ulcer, gastrectomy and internal bleeding as a result of the premature *227 absorption of a suture, were all links in a chain of low probability events inherent in the initial operation.
* * *
"Defendant * * * points out that the majority of the California cases have measured the duty to disclose not in terms of an absolute, but as a duty to reveal such information as would be disclosed by a doctor in good standing within the medical community. * * * Moreover, with one state and one federal exception every jurisdiction that has considered this question has adopted the community standard as the applicable test. Defendant's second contention is that this near unanimity reflects strong policy reasons for vesting in the medical community the unquestioned discretion to determine if the withholding of information by a doctor from his patient is justified at the time the patient weighs the risks of the treatment against the risks of refusing treatment.
* * *
"Despite what defendant characterizes as the prevailing rule, it has never been unequivocally adopted by an authoritative source. Therefore we probe anew into the rationale which purportedly justifies, in accordance with medical rather than legal standards, the withholding of information from a patient.
"Preliminarily we employ several postulates. The first is that patients are generally persons unlearned in the medical sciences and therefore, except in rare cases, courts may safely assume the knowledge of patient and physician are not in parity. The second is that a person of adult years and in sound mind has the right, in the exercise of control over his own body, to determine whether or not to submit to lawful medical treatment. The third is that the patient's consent to treatment, to *228 be effective, must be an informed consent. And the fourth is that the patient, being unlearned in medical sciences, has an abject dependence upon and trust in his physician for the information upon which he relies during the decisional process, thus raising an obligation in the physician that transcends arms-length transactions.
"From the foregoing axiomatic ingredients emerges a necessity, and a resultant requirement, for divulgence by the physician to his patient of all information relevant to a meaningful decisional process. In many instances, to the physician, whose training and experience enable a self-satisfying evaluation, the particular treatment which should be undertaken may seem evident, but it is the prerogative of the patient, not the physician, to determine for himself the direction in which he believes his interests lie. To enable the patient to chart his course knowledgeably, reasonable familiarity with the therapeutic alternatives and their hazards becomes essential.
"Therefore, we hold, as an integral part of the physician's overall obligation to the patient there is a duty of reasonable disclosure of the available choices with respect to proposed therapy and of the dangers inherently and potentially involved in each.
* * *
"A medical doctor, being the expert, appreciates the risks inherent in the procedure he is prescribing, the risks of a decision not to undergo the treatment, and the probability of a successful outcome of the treatment. But once this information has been disclosed, that aspect of the doctor's expert function has been performed. The weighing of these risks against the individual subjective fears and hopes of the patient is not an expert skill. Such evaluation and decision is a nonmedical judgment reserved to the patient alone.
*229 * * *
"The scope of the disclosure required of physicians defies simple definition. Some courts have spoken of `full disclosure' * * * and others refer to `full and complete' disclosure, * * * but such facile expressions obscure common practicalities. Two qualifications to a requirement of `full disclosure' need little explication. First, the patient's interest in information does not extend to a lengthy polysyllabic discourse on all possible complications. A mini-course in medical science is not required; the patient is concerned with the risk of death or bodily harm, and problems of recuperation. Second, there is no physician's duty to discuss the relatively minor risks inherent in common procedures, when it is common knowledge that such risks inherent in the procedure are of very low incidence.
* * *
"In sum, the patient's right of self-decision is the measure of the physician's duty to reveal. That right can be effectively exercised only if the patient possesses adequate information to enable an intelligent choice. The scope of the physician's communications to the patient, then, must be measured by the patient's need, and that need is whatever information is material to the decision. Thus the test for determining whether a potential peril must be divulged is its materiality to the patient's decision.
"We point out, for guidance on retrial, an additional problem which suggests itself. There must be a causal relationship between the physician's failure to inform and the injury to the plaintiff. Such causal connection arises only if it is established that had revelation been made consent to treatment would not have been given. Here the record discloses no testimony that had plaintiff *230 been informed of the risks of surgery he would not have consented to the operation.
* * *
"The patient-plaintiff may testify on this subject but the issue extends beyond his credibility. Since at the time of trial the uncommunicated hazard has materialized, it would be surprising if the patient-plaintiff did not claim that had he been informed of the dangers he would have declined treatment. Subjectively he may believe so, with the 20/20 vision of hindsight, but we doubt that justice will be served by placing the physician in jeopardy of the patient's bitterness and disillusionment. Thus an objective test is preferable: i.e., what would a prudent person in the patient's position have decided if adequately informed of all significant perils."
What the California court said in Cobbs v. Grant, supra, closely parallels much of what was said by Robinson, J. for the court in Canterbury v. Spence, 464 F.2d 772 (D.C. Cir.1972). In addition, however, it includes what we feel is a more illuminating discussion of whether the scope of the duty of disclosure is measured by lay standards or by medical standards. On this question there is a substantial division of authority.[2]
Although it seems to be the fact, as appellants state in their brief, that there is no Maryland authority ruling on *231 informed consent, the principle was applied in Kruszewski v. Holz, 265 Md. 434, 290 A.2d 534 (1972), apparently by common acquiescence of both parties, the trial court, and the Court of Appeals. One of the patient's allegations was that the doctor was negligent in failing to inform her adequately of the possible risks of and alternatives to the operation. Expert opinion evidence was received on the question of whether the standard of care required of a physician was satisfied when he merely informed his patient that a hysterectomy was major surgery and complications could arise. Questions presented to and decided by the Court of Appeals involved the proper wording of hypothetical questions, and the adequacy of a special issue submitted to the jury to present the question of whether the doctor deviated from the standard of care by not sufficiently informing the patient of the alternatives and risks involved in obtaining her consent to operate. The very existence, in the law of Maryland, of a duty to disclose, and the extent of such a duty, were not before the Court.
Upon our consideration of the leading recent cases and the texts, we embrace the principle of informed consent, and we hold that it should be applied by the courts of Maryland in appropriate cases where there is a claim of professional negligence in failing to meet a duty to disclose.
The duty is to make an adequate disclosure of substantial facts which would be material to the patient's decision. The trial court must decide as a matter of law, on the facts and circumstances of each case, whether the evidence is sufficient to support a finding by the jury that there has been a negligent failure to disclose such facts.
A subsidiary question, which also must be decided by the trial court as a matter of law, on the facts of each case, is whether the duty to disclose is to be determined by standards of the profession, thus requiring expert opinion evidence,[3] or may be determined by a jury without the aid of *232 expert opinion. We do not agree that either rule could be applied in all cases.
We now examine the evidence in the case before us, so that we may determine whether there was any evidence tending to show a negligent failure by Dr. Hardy to disclose to Mrs. Sard any substantial fact which would have been material to her decision.
It is perfectly clear that Mrs. Sard consented to the performance upon her by Dr. Hardy of the surgical procedure medically described as bilateral tubal ligation she so alleges in her declaration. She said that they discussed the fact that she did not want to have any more children, and he suggested birth control pills, an intrauterine device, or sterilization. She rejected the first two choices. He told her that he could sterilize her by tying her tubes, at the time of the Caesarean section delivery. As she put it, "I thought sterilize meant fix you so you can't have no more kids, so I took it." The doctor did not discuss with her the technique he was going to use to tie her tubes, or advise her that there were different methods of sterilization.
It is equally clear that the tubal ligation was to be performed at the same time as the delivery. A month or a couple of weeks before delivery Dr. Hardy had told her to go home and think about it, and let him know. She did, and told him, "I would rather be sterilized."
It is also clear that Mr. Sard was in no way involved in any of the discussions between Mrs. Sard and Dr. Hardy. Mr. Sard testified that the first time he ever saw Dr. Hardy to speak to was in June 1970, when he told Dr. Hardy that Mrs. Sard was pregnant again.
There was very little evidence concerning risks or hazards inherent in the sterilization operation recommended by Dr. Hardy. It seems logical that they would add little, if anything, to the risks and hazards inherent in the delivery of a child by Caesarean section. Whatever those added risks *233 and hazards might have been, they were successfully avoided by Dr. Hardy, or by Providence, or both. None developed. To repeat what we quoted above from Cobbs v. Grant, supra:
"Two qualifications to a requirement of `full disclosure' need little explication. First, the patient's interest in information does not extend to a lengthy polysyllabic discourse on all possible complications. A mini-course in medical science is not required; the patient is concerned with the risk of death or bodily harm, and problems of recuperation. Second, there is no physician's duty to discuss the relatively minor risks inherent in common procedures, when it is common knowledge that such risks inherent in the procedure are of very low incidence."
There was no evidence that Mrs. Sard suffered any ill effects from the sterilization procedure, during her recuperation or at any later time. It would be safe to say that at no time did any physical manifestation make her aware that the tubal ligation had been performed.
Appellants do not complain that the performance of the tubal ligation brought any harm upon Mrs. Sard. They do not complain that the operation should not have been performed. They do not contend on appeal that the ultimate failure resulted from negligence by Dr. Hardy. Their sole complaint, stated narrowly but accurately, is that the operation failed to provide, permanently, the expected benefit.
That any medical or surgical therapy or procedure may fail to accomplish the desired, or even the reliably expected result, seems to be universally recognized, both in medicine and in law. That recognition is inherent in the statement for the Court of Appeals by Chief Judge Brune in Lane v. Calvert, 215 Md. 457, 138 A.2d 902 (1958), at 462-63:
"It is well established by the case law in this State that the mere fact that an unsuccessful result *234 follows medical treatment is not of itself evidence of negligence."
It is reflected also in that Court's consistent rejection of the rationale of res ipsa loquitur in medical malpractice cases. Lane v. Calvert, supra; Johns Hopkins Hospital v. Genda, 255 Md. 616, 258 A.2d 595 (1969), and cases cited therein.
The absence of negligence in spite of an unfavorable result is not in all circumstances the equivalent to the absence of negligence in failure to disclose risks and hazards to the patient. In an excellent discussion of informed consent the Supreme Court of Rhode Island said in Wilkinson v. Vesey, 295 A.2d 676 (R.I. 1972):
"Having established defendants' duty to disclose, we will now delineate the extent of the disclosure which should be made. Obviously there is no need to disclose risks that are likely to be known by the average patient or that are in fact known to the patient usually because of a past experience with the procedure in question. * * * It is not necessary that a physician tell the patient any and all of the possible risks and dangers of a proposed procedure. * * * As we noted earlier, materiality is to be the guide. It is our belief that, in due deference to the patient's right to self determination, a physician is bound to disclose all the known material risks peculiar to the proposed procedure. Materiality may be said to be the significance a reasonable person, in what the physician knows or should know is his patient's position, would attach to the disclosed risk or risks in deciding whether to submit or not to submit to surgery or treatment." 295 A.2d 689.
The evidence in this case shows that the physical harm to the patient was zero; that there was one chance in fifty[4]*235 that the benefit would be zero, and forty-nine chances in fifty that the benefit would be all that the patient desired.
On that evidence we hold that a reasonable person, in Mrs. Sard's position, would attach no material significance to the risk of one chance in fifty that she would derive no benefit from the operation. It is significant, and by itself perhaps fatal to her claim, that she produced no evidence to show that she would have refused the operation if she had known[5] that there was a chance of failure.
Although the trial judge did not arrive at his ruling by *236 quite the same route that we have followed, he reached the correct result when he granted a directed verdict on the second and fifth causes of action, based upon the allegation that Dr. Hardy was negligent in failing to inform Mrs. Sard adequately before obtaining her consent.
Ruling on Evidence
We have set out the questions presented in appellants' brief. One of them asks if the court erred in refusing to allow Dr. Hawbaker to testify as to a standard of care. The short answer is that the witness simply was not asked to give such an opinion.
The court had asked the witness if he felt qualified to give an expert opinion, and the witness had said, "No, sir. Absolutely not." True, the question was couched in terms of "this hospital community", but the witness was not asked a question which might have been proper under Shilkret v. Annapolis Emergency Hosp., supra.
We see no erroneous ruling.
Express Warranty
Allegations contained in the seventh and eighth causes of action asserted by Mrs. and Mr. Sard leave some doubt as to the warranty claimed. One allegation states that Dr. Hardy "expressly warranted" that the tubal ligation "would accomplish sterilization", while a later allegation refers to his "warranty" that the "the operation was a complete success".
The first suggests an expected future result. The other suggests a result already accomplished. Although it is possible to make either or both of such warranties, there is a significant difference between them. The principal difference is that an alleged warranty of a past fact has no legal validity unless it is supported by an independent consideration.
In the record in this case there is no evidence of a pre-operative warranty. Dr. Hardy's suggestion to Mrs. Sard that she be sterilized by tying her tubes cannot be construed as an express warranty of result.
*237 Appellants rely for support of the alleged warranty upon statements which they say Dr. Hardy made to them after the operation had been performed. We quote from Mrs. Sard's direct examination:
"Q. When the Doctor said that he would sterilize you, what, in fact, what was his conversation to you about?
A. All he said was sterilize me so I thought sterilize meant fix you so you can't have no more kids, so I took it.
Q. Did the Doctor ever tell you you couldn't have any more kids after he sterilized you?
A. Yes, he did.
Q. What did he tell you?
A. On the day he let me go home from the hospital he told me before I walked out the door, `Go home. Have all the fun you want. You don't have to worry about getting pregnant'.
Q. Before you went to the hospital did the Doctor inform you you would not have to worry about getting pregnant if you were sterilized?
A. After I was sterilized he did."
* * *
"Q. Now after you had the sterilization did you again, after a period of time, resume some type of sexual activity with your husband?
A. Yes.
Q. Did you take any precautions to prevent child birth?
A. No.
Q. Why not?
A. Because Dr. Hardy told me I was sterile and would not have to worry about getting pregnant, a guaranteed operation."
*238 Mr. Sard was asked about his contact with Dr. Hardy in June, 1970. The transcript shows:
"A. I went to Dr. Hardy's office.
Q. Why did you go to Dr. Hardy's office then?
A. I figured he was the one that fixed her. I wanted to know whether she could get pregnant or not.
Q. Had you been to his office before that?
A. No, sir.
Q. What was your temperament, how did you feel?
A. I don't know, I just wanted to find out if she could get pregnant or not.
Q. What did the doctor say to you when you went to his office?
A. I went down there and Dr. Hardy and his nurse, and we went in the back room and I asked Dr. Hardy about it and he said, `It ain't no way she can be pregnant. It's a guaranteed operation. Don't worry about it. Go ahead on home'."
Dr. Hardy's version of what he told Mrs. Sard when she left the hospital was, "I told her that I had tied her tubes and she should be sterile. She didn't have to worry * * * about becoming pregnant."
If these statements, viewed most favorably to the appellants, could be considered as more than ordinary medical reassurance, and could be construed as an express warranty, the warranty lacked consideration, and was invalid.
The requirement that such a contract by a physician be supported by consideration is discussed in Annotation, Contract to Effect Specific Medical Result, 43 A.L.R.3d 1221, in which it is stated, at 1233:
"No case herein denies that the general rule of contract law that any contract must be supported by consideration to be enforceable is applicable to a *239 physician's contract to effect a cure or specific result. In the following cases, moreover, the courts have stated that such a contract would not be supported by the consideration paid for the physician's normal undertaking to use due care and skill, but under the particular circumstances involved, must be supported by a separate consideration."
Cases which hold that an asserted express warranty by a physician, made after the agreement to operate had been reached, must be supported by a separate consideration, are Herrera v. Roessing, 533 P.2d 60 (Colo. App. 1975); Coleman v. Garrison, 349 A.2d 8 (Del. Supr. 1975); Rogala v. Silva, 305 N.E.2d 571 (Ill. App. 1973); Gault v. Sideman, 191 N.E.2d 436 (Ill. App. 1963); and Wilson v. Blair, 211 P. 289 (Mont. 1922).
The Annotation suggests that in cases which have not required a showing of a separate consideration, the alleged warranties were made before the agreement for the physician's services was reached.
We consider it logical, and consistent with other legal principles, to hold that an alleged express warranty cannot be enforced as a warranty unless, (1) it was made before the operation was performed, and was relied upon by the patient in contracting for the service, or, (2) it was supported by a separate consideration. We do so hold.
There was no evidence in this case of a separate consideration for the alleged express warranty made after the operation. Therefore, there was no enforceable warranty. The directed verdict on the seventh and eighth causes of action was correct.
Judgment affirmed.
Appellants to pay costs.
Davidson, J., dissenting:
In its opinion, the majority fails to consider material facts, fails to consider the central issue decided by the trial *240 court, unnecessarily decides issues, and decides those issues erroneously. I respectfully dissent.
I
Viewed in the light most favorable to the appellants,[1] the record shows that in 1965, during the eighth month of her first pregnancy, Mrs. Sard developed eclampsia and suffered 21 convulsions. It was possible, as a result, that she and her baby might die. An emergency Caesarian section was performed in an effort to save them both. The baby did not survive. In March, 1967, Mrs. Sard gave birth, again by Caesarian section, to a healthy child who survived.
In November, 1967, Mrs. Sard consulted Dr. Hardy concerning her third pregnancy. A few weeks before she was to deliver the baby he pointed out that given her past medical history, it was medically inadvisable for her to become pregnant again. He recommended that she use birth control pills or an intrauterine device, or that she have her tubes tied at the time the third Caesarian section was to be performed. He did not tell her about other methods of birth control such as vasectomy. Mrs. Sard made it plain to the doctor that she did not want any more children by explicitly saying that she had "lost a lot of blood," "couldn't afford any more children and didn't really want any more at that time." She then told him, "I would rather be sterilized because I believe it might be more safer than taking a pill. That way I will know I am sterilized and won't have to worry about having to get pregnant again."
Mrs. Sard did not know and Dr. Hardy did not then advise her that the sterilization procedure which he proposed was fallible and that she could become pregnant even after it was performed. Rather, he told her that if he performed the proposed tubal ligation she would not have any more children.[2] He gave her no information as to how successful *241 birth control pills or intrauterine devices might be in preventing pregnancy. Believing that the recommended procedure was the only certain method of permanently preventing pregnancy, Mrs. Sard chose that course of treatment. Dr. Hardy advised her to go home and think about her choice. At a subsequent visit, she elected to be "sterilized." Had she known that the operation was not necessarily effective in all cases, she would not have consented to it.[3]
*242 About 15 minutes before the operations were performed, a nurse told Mrs. Sard that if she wanted to be sterilized she had to sign a hospital form in order to "authorize sterilization." The form stated in pertinent part that "an operation intended to effect sterilization is not effective in all cases." Believing the form to be nothing more than an authorization for the sterilization, Mrs. Sard signed it without reading it or having it read to her, after a nurse told her she did not have time to read it. Following the operations, Dr. Hardy told Mrs. Sard, "Have all the fun you want. You don't have to worry about getting pregnant." He also stated that she was "guaranteed 100 per cent." Believing that she was sterile, Mrs. Sard thereafter engaged in sexual relations with her husband. On 11 January 1971, she gave birth by Caesarian section to a normal child.
II
Here, the appellant contends that the question of whether she consented to the performance of the tubal ligation should have been submitted to the jury. She maintains that the evidence was sufficient to show that, because the doctor not only failed to disclose that the proposed sterilization might not prevent a future pregnancy, but rather told her that it would prevent further pregnancies, her consent to its performance was not "informed." The appellee contends that the evidence that the appellants signed a hospital form, which specifically stated that the proposed sterilization was not effective in all cases, established, as a matter of law, that the appellants' consent was "informed." The trial court, assuming without deciding that the appellants' consent had to be "informed," applied the basic principle of contract law that one who signs a contract is presumed to know its contents, nature and consequences, and is bound by its terms.[4] He agreed with the appellee that the appellants' consent was "informed."
*243 In my view, the only question decided by the trial judge with reference to the issue of informed consent was whether Mrs. Sard's signature on the hospital form precluded her recovery.[5] I believe that this is the only question which need be considered here.[6] I, like the trial court, would assume that the doctrine of informed consent applies in Maryland. I would, however, find that the trial court erred in applying a contract principle associated with arm's length transactions without considering the fiducial qualities of the doctor-patient relationship.
Under the principles of contract law applicable to arm's length transactions, one who signs a contract having read it or without reading it or having it read to him is presumed to know its contents, nature and consequences and is bound by *244 its terms.[7] Even an illiterate who executes a contract under a mistake as to its contents is bound.[8]
The rationale underlying this presumption is that in an arm's length transaction the relationship between the parties is such that each is independent of the other, has no duty or obligation to the other, and is responsible solely for protecting his own interests. Accordingly, a signatory to a contract in an arm's length transaction has an obligation to inform himself and is negligent if he fails so to do.[9] As stated in Spitze v. Baltimore & Ohio R.R.:[10]
... it would lead to startling results if a person who executes, without coercion or undue persuasion, a solemn release under seal, can subsequently impeach it on the ground of his own carelessness, though at the very time of its execution, he might, had he seen fit, have advised himself fully as to the nature and legal effect of the act he was doing. He cannot, under these circumstances, be heard to complain that an imposition was practiced upon him. He cannot invoke his own heedlessness to impeach his solemn release, and then call that heedlessness some one else's fraud. If he did not know what he was signing, it was his plain duty to inquire. He had no right to act as one who understood what he was doing, unless he intended *245 to lead those with whom he was dealing to believe that he did understand the act that he did.
Different considerations are involved when there is a fiducial relationship between the parties. In Herring v. Offutt,[11] the Court of Appeals quoted with approval Justice Cardozo, then Chief Judge of the New York Court of Appeals:[12]
"Many forms of conduct permissible in a workday world for those acting at arm's length, are forbidden to those bound by fiduciary ties. A trustee is held to something stricter than the morals of the market place. Not honesty alone, but the punctilio of an honor the most sensitive, is then the standard of behavior. As to this there has developed a tradition that is unbending and inveterate. Uncompromising rigidity has been the attitude of courts of equity when petitioned to undermine the rule of undivided loyalty by the `disintegrating erosion' of particular exceptions. Only thus has the level of conduct for fiduciaries been kept at a level higher than that trodden by the crowd."
In a fiducial relationship, one of the parties is justifiably dependent to some extent upon the other. Consequently, the dominant party has certain duties and obligations toward the other and is responsible for protecting the other's interests. Included among those duties and obligations is a duty to disclose any information which it is important for the other party to know.[13] The dependent party is not obligated to inform himself and is entitled to rely upon the dominant party to provide him with the information he *246 needs.[14] Accordingly, the dependent party's failure to inform himself does not constitute negligence and such a party is not precluded from showing a lack of knowledge of the contents, nature and consequences of a signed document. In short, where there is a fiducial relationship between the parties, the presumption of knowledge of the contents of a written document does not apply.[15] As stated in dicta in Bollack v. Bollack:[16]
... the natural and ordinary presumption is, that where one in the full possession of his mental faculties executes a deed, will, or other instrument, conferring a benefit upon another, by affixing his signature thereto, that his act is free, intentional, and voluntary.... But the presumption is rebuttable, and has no application where a beneficiary under the instrument stands in a confidential relation to the donor. (Emphasis added.)
In Maryland, a confidential or fiduciary relationship is presumed "whenever two persons stand in such a relation to each other that one must necessarily repose trust and confidence in the good faith and integrity of the other,"[17] and "where the one in whom such confidence is reposed is thereby enabled to exert a dominating and controlling influence over the other."[18] It has long been recognized implicitly that a physician occupies a position of trust and confidence in relation to his patient.[19] Courts in other *247 jurisdictions agree.[20] Thus, the Court of Appeals of Missouri has said:[21]
A physician occupies a position of trust and confidence as regards his patient a fiduciary position. It is his duty to act with the utmost good faith. This duty of the physician flows from the relationship with his patient and is fixed by law not by the contract of employment. The law's exaction of good faith extends to all dealings between the physician and the patient. A person in ill health is more subject to the domination and influence of another than is a person of sound body and mind. The physician has unusual opportunity to influence his patient. Hence, all transactions between physician and patient are closely scrutinized by the courts which must be assured of the fairness of those dealings. (Citations omitted.)
I am convinced that there are fiducial qualities in the doctor-patient relationship which require the application of principles different from those governing arm's length transactions. Applying such principles to the instant case would produce a clear result.
Under the doctrine of informed consent, it is the fiducial quality of the relationship between the doctor and the patient which imposes upon the doctor an obligation to disclose to the patient all material facts reasonably necessary to provide the basis of an informed intelligent *248 decision as to a proposed treatment. Thus, the U.S. Court of Appeals for the District of Columbia Circuit in determining that it is the doctor's duty to impart information which the patient has every right to expect, including the available therapy alternatives and the goals expectably to be achieved, has said:[22]
The patient's reliance upon the physician is a trust of the kind which traditionally has exacted obligations beyond those associated with arms-length transactions. His dependence upon the physician for information affecting his well-being, in terms of contemplated treatment, is well-nigh abject. As earlier noted, long before the instant litigation arose, courts had recognized that the physician had the responsibility of satisfying the vital informational needs of the patient. More recently, we ourselves have found "in the fiducial qualities of [the physician-patient] relationship the physician's duty to reveal to the patient that which in his best interests it is important that he should know."
Similarly, the Supreme Court of California has said:[23]
... the patient, being unlearned in medical sciences, has an abject dependence upon and trust in his physician for the information upon which he relies during the decisional process, thus raising an obligation in the physician that transcends arms-length transactions.
It is also the fiducial quality of the relationship which relieves the patient from the obligation to inform himself. If the doctor fails to provide the material facts necessary for an intelligent decision, the patient's consent to the proposed treatment, being uninformed, is invalid.[24]
*249 If the doctor does provide information to the patient, the patient has the right to rely upon the fact that it is accurate and complete. A patient would not normally expect that a consent form which he was asked to sign would contain material different from that provided by the doctor.[25] Because under such circumstances the patient would have no obligation to inform himself, he should not be presumed to know the contents of a signed consent form.[26]
Here, there was evidence to show that before she decided to undergo a tubal ligation, the doctor told the patient that if the procedure were performed she would not have any more children. Fifteen minutes before the operation, hospital personnel told her that if she wanted to be sterilized she had to sign an authorization form. That form indicated that sterilization is not effective in all cases. In addition, hospital personnel told her that she did not have time to read the form. Under these circumstances, she signed the form without reading it or having it read to her.
In the absence of a presumption that she knew the contents of the document she signed, this evidence was sufficient to raise a question as to whether the patient knew that the proposed tubal ligation would not necessarily be effective.[27] Again, assuming without deciding that the *250 patient's consent had to be "informed," and that the doctor had a duty to disclose accurate, relevant information to the patient, that question should have been submitted to the jury. Accordingly, I would reverse and remand for a new trial.
III
The majority fails to consider the question of whether Mrs. Sard's signature on the hospital form precluded her recovery. Instead, they unnecessarily decide that the doctrine of informed consent is applicable in Maryland and that under that doctrine, a doctor has a duty to make "an adequate disclosure of substantial facts which would be material to the patient's decision." They then delineate the scope of the duty to disclose as disclosure of risks of death or bodily harm peculiar to the proposed procedure. They make it plain that there is no need to disclose risks that are likely to be known by the average patient, or that are in fact known by the patient. Moreover, they determine that there is no duty to discuss the relatively minor risks inherent in common procedures when it is common knowledge that such risks are of very low incidence. The majority finds that materiality is "the significance a reasonable person, in what the physician knows or should know is his patient's position, would attach to the disclosed risk or risks in deciding whether to submit or not to submit to surgery or treatment." They hold that "a reasonable person, in Mrs. Sard's position, would attach no material significance to the risk of one chance in fifty that she would derive no benefit from the operation."
Were I to consider the questions of the scope of the doctor's duty to disclose and whether there was sufficient evidence of a breach of that duty to require submission to the jury, I would reach the opposite result. I agree with the majority that the scope of the doctor's duty to disclose information to the patient is determined by the patient's *251 need to know. As stated by the Court of Appeals of Washington:[28]
The inquiry as to each item of information ... is "Would the patient as a human being consider this item in choosing his or her course of treatment?"
I do not believe that these "items of information" are limited to disclosure of risks of physical harm resulting from the operation. I would delineate the scope of the doctor's duty to disclose differently from the majority by clearly articulating that additional factors are included.
Some courts which have considered the scope of the doctor's duty to disclose have indicated that:
... before a patient will be deemed to give an informed consent, it may be necessary that he know the alternative methods of treatment available to him and the inherent dangers and possibilities of success of such alternatives.[29] (Emphasis added.)
Other courts have indicated that the duty to disclose not only requires a doctor to provide adequate information, but also accurate information. They recognize that the duty to disclose prohibits a doctor from giving misleading information. As stated by the Supreme Court of New Mexico:[29a]
A physician who misleads a patient by not only failing to give a warning of reasonable and recognized risks inherent in a treatment after which the patient would have refused the treatment, but by affirmatively assuring her that there are no risks, knowing such statement to be *252 untrue, is liable for the harmful consequences of the treatment. Such a failure to disclose, or the giving of an untrue answer as to the probable consequences of a treatment constitutes malpractice; and a doctor who fails to so advise his client, or gives an untrue answer as to such consequences, is liable for malpractice unless his failure to do so comes within one of the exceptions to the rule requiring candor and disclosure. Under the circumstances of this case, a fact issue was presented for determination by the jury ... (Emphasis added.)
I would hold that under appropriate circumstances, the doctor's duty to disclose requires him to give a patient adequate and accurate information concerning the alternative methods of achieving a therapeutic goal and the relative chance of success of each of those alternatives. Applying this standard to the instant case would produce a clear result.
Here, the facts, many of which were not even considered by the majority, show that the appellant was not concerned with the possibility of physical harm resulting from the performance of the tubal ligation, but rather was concerned with the question of what available method of birth control would give her the greatest possibility of achieving total, permanent sterility. The record further shows that before she made her decision, her doctor advised her of three available alternative methods of birth control pills, an intrauterine device, and a tubal ligation. He failed to advise her of other methods such as vasectomy. Moreover, with respect to two of the three suggested methods, birth control pills and intrauterine devices, he gave her no information. He failed to tell her how successful they might be in preventing pregnancy. With respect to the third method, tubal ligation, he gave her misinformation. He not only failed to tell her that that method was fallible, but rather told her that if that procedure were performed, she would not have any more children. Having provided her with this inadequate and inaccurate information, he told her to go *253 home and think about which of the alternatives she wished to pursue. Relying upon this inadequate information and misinformation, she elected the tubal ligation procedure.
On the basis of these facts, I cannot conclude, as a matter of law, that the doctor adequately disclosed "substantial facts material to the patient's decision." Indeed, on the basis of these facts, I cannot conceive that a reasonable person could reach an intelligent and informed decision as to which of the suggested alternatives should be pursued. I would have concluded that, under the circumstances here, the doctor had a duty to provide the patient with adequate and accurate information concerning available alternative methods of birth control and the relative chance of success of each of those alternatives. I would further have found that the question of whether the doctor breached his duty to disclose should be submitted to the jury.
Moreover, I cannot agree with my colleagues that, as a matter of law, under the present circumstances "a reasonable person, in Mrs. Sard's position, would attach no material significance to the risk of one chance in fifty that she would derive no benefit from the operation."[30] I believe *254 that in determining the significance a reasonable person would attach to a risk, one must consider not only its incidence, but also the severity of its potential consequences. As the court in Canterbury stated:[31]
A very small chance of death or serious disablement may well be significant; a potential disability which dramatically outweighs the potential benefit of the therapy or the detriments of the existing malady may summons discussion with the patient.
There is no bright line separating the significant from the insignificant; the answer in any case must abide a rule of reason.... The disclosure doctrine, like others marking lines between permissible and impermissible behavior in medical practice, is in essence a requirement of conduct prudent under the circumstances. Whenever nondisclosure of particular risk information is open to debate by reasonable-minded men, the issue is for the finder of the facts.
In accord with this rationale, courts in other states have recognized that the jury should determine whether a particular risk should have been disclosed, when there was evidence that that risk was of low incidence but serious consequence.[32]
*255 Here, the record shows that there was a two per cent chance that a person could become pregnant, notwithstanding the performance of a tubal ligation. It also shows that what I regard as serious consequences would flow if a person with Mrs. Sard's past medical history were to become pregnant again. Pregnancy for any woman entails some physical discomfort. A person with Mrs. Sard's past medical history would have been told by her own doctor that further pregnancies were medically inadvisable. She would suffer more than the usual physical discomforts of pregnancy. In addition, she would suffer the emotional stress and anxiety created by the fear of serious physical disability or death resulting from the performance of a Caesarian section. Moreover, she would undergo the pain and discomfort associated with that major surgery. Finally, assuming that neither she nor the baby died or were physically harmed, she would have to live with the cost, and, in some instances, the emotional stress of raising an unwanted child. Given the serious consequences which would befall a person in Mrs. Sard's position, were she to become pregnant, I am unable to conclude, as a matter of law, that in deciding to undergo a tubal ligation such a person would attach no material significance to the fact that she had a two per cent chance of becoming pregnant after that procedure was performed. Under the circumstances here, I believe that the question of whether the doctor made an adequate disclosure of substantial facts which would have been material to the patient's decision should have been submitted to the jury. Accordingly, I would have reversed.
IV
The majority additionally unnecessarily decides that the evidence was insufficient to require that the question of whether there was a breach of an enforceable express warranty be submitted to the jury. They hold that an alleged express warranty cannot be enforced unless "1) it was made *256 before the operation was performed, and was relied upon by the patient in contracting for the service, or 2) it was supported by a separate consideration." They say that "in the record in this case there is no evidence of a pre-operative warranty." They find that "there was no evidence in this case of a separate consideration for the alleged express warranty made after the operation." They conclude that "there was no enforceable warranty."
Were I to consider the question of whether there was sufficient evidence of a breach of an enforceable express warranty to require submission to the jury, I would reach the opposite result. I agree with the majority that an express warranty made before the operation was performed and relied upon by the patient in contracting for the service can be enforced without a separate consideration.[33] I disagree with the majority that here "there is no evidence of a pre-operative warranty."
In Maryland, the question of whether a doctor's representation as to the effectiveness of a proposed therapeutic procedure constitutes an enforceable express warranty or is nothing more than an "ordinary medical reassurance" has not been considered. Some courts have recognized that such representations can constitute express warranties.[34] Other courts which have considered the question of whether a particular representation is a "warranty" or a "reassurance" have recognized that it involves a question of fact which ordinarily should be submitted to the jury.[35] I agree.
Here, the record shows that before Mrs. Sard decided to undergo the proposed tubal ligation, the doctor told her that if that procedure were performed she would not have any *257 more children.[36] She made it plain to her doctor that her reason for electing and undergoing the proposed tubal ligation was the fact that it would result in total permanent sterility. Had she known that the proposed procedure was fallible, she would not have agreed to have the tubal ligation performed.[37]
This evidence is sufficient to show that here the doctor made an express promise to effect a specific result which was relied upon by Mrs. Sard in contracting for the tubal ligation and before the operation was performed. It was, therefore, sufficient to support a finding that there was a pre-operative express warranty. The issue should have been submitted to the jury. Accordingly, I would have reversed.
NOTES
[1] We are not dealing here with an emergency which requires prompt action, or with consent given by one person on behalf of another who is, at the time, incapable of making a decision.
[2] Some of the cases which have held that expert opinion evidence of the standard of care is required are Getchell v. Mansfield, 489 P.2d 953 (Ore. 1971); Ohligschlager v. Proctor Community Hosp., 283 N.E.2d 86 (Ill. 1972); Trogun v. Fruchtman, 207 N.W.2d 297 (Wis. 1973); Downer v. Veilleux, 322 A.2d 82 (Me. 1974); and Young v. Group Health Cooperative, 534 P.2d 1349 (Wash. 1975).
Contrary holdings are found in Canterbury v. Spence, supra; Wilkinson v. Vesey, 295 A.2d 676 (R.I. 1972); Congrove v. Holmes, 308 N.E.2d 765 (Ohio 1973); and Scaria v. St. Paul Fire and Marine Ins. Co., 227 N.W.2d 647 (Wis. 1975).
See also, Annotation, Necessity and Sufficiency of Expert Evidence to Establish Existence and Extent of Physician's Duty to Inform Patient of Risks of Proposed Treatment, 52 A.L.R.3d 1084, and Harney, Medical Malpractice (1973) at 63.
[3] When the standard of care rendered by other physicians is an issue, many of the cases and writers say that the evidence must relate to the same community, or locality. Maryland takes a broader view. In Shilkret v. Annapolis Emergency Hosp., 276 Md. 187, 349 A.2d 245 (1975), the Court of Appeals held, without regard to a geographical medical community or locality, that, "a physician is under a duty to use that degree of care and skill which is expected of a reasonably competent practitioner in the same class to which he belongs, acting in the same or similar circumstances." Id. at 200.
[4] It was brought out in the plaintiffs' examination of Dr. Hardy that the technique he chose to employ in the tubal litigation at the time of a Caesarean section had, according to a study on the subject, a failure rate of one in fifty.
[5] The parties, and the trial judge, placed more importance than we do upon an authorization form, signed by Mrs. Sard and Mr. Sard before the operation. It was requested of them by the hospital, not by Dr. Hardy. It said:
"AUTHORIZATION FOR STERILIZATION
Date 3-25-68
I/We do hereby request and authorize the Memorial Hospital and the doctors thereof to perform upon Mrs. Katie Sue Sard, an operation intended to effectuate sterilization.
I/We understand what is meant by sterilization and I/We understand that if this operation is successful, the above named patient will be unable in the future to produce children, but I/We understand that an operation intended to effect sterilization is not effective in all cases. I/We consider that this operation will be for the best interest and physical well being of the above named patient. I/We have come to the hospital voluntarily and I/We hereby certify that the above named patient is submitting voluntarily to the operation.
Being mentally capable of giving a valid authorization I/We are signing this paper of our own free will and accord.
David P. Sard, Jr. Katie Sue Sard"
Spouse Patient
Two individuals, presumably hospital personnel, signed as witnesses.
Mr. Sard testified that he signed the authorization, but did not read it. He said that he could not read. He finished the eighth grade in school. He did not ask anyone to read it to him, or to explain it to him.
Mrs. Sard testified that the form was presented to her 10 or 15 minutes before she was taken to the operating room. She was told that it was necessary, to authorize the sterilization. She said that she did not read it, nor ask for any further explanation. She was not in any pain, and did not remember that she had any medication.
We do not discuss the general rule of law that a person is bound by what he signs, whether he reads it or not. The significance of the authorization is the statement that an operation intended to effect sterilization is not effective in all cases. We have already concluded in this case that the risk of failure was not material to the patient's decision.
[1] Katz v. Holsinger, 264 Md. 307, 311, 286 A.2d 115, 118 (1972); Holloway v. Hauver, 22 Md. App. 303, 319, 322 A.2d 890, 898-99 (1974).
[2] The majority opinion indicates that there was no evidence to show that before the operation the doctor told Mrs. Sard that the proposed tubal ligation would result in permanent sterilization. The record shows that, in both the pre-trial deposition and at trial, Mrs. Sard testified that before she decided to undergo the proposed tubal ligation, the doctor told her that if that procedure were performed, she would not have any more children. More particularly, the record shows that at the trial the following colloquy took place:
Q. Now also [in your deposition did you say], "Q. Now did Dr. Hardy or any other doctor you mentioned you have consulted or having been examined by or having been operated upon prior to your decision to be sterilized give you any indication as to the continuing effect of having further children?" Your answer, "Well, Dr. Hardy, all he told me was I would not have no more, I didn't have to worry about having any more."
A. That's what he told me.
Q. He told you before your operation and before your decision to have the sterilization that you would not have any more children?
A. Yes, he did.
[3] The majority states that the appellants "do not complain that the operation should not have been performed." The appellants' pleadings support an inference to the contrary. They state, in pertinent part:
That at all times herein mentioned, said Defendant was negligent in failing to inform the Plaintiff Katie Sue Sard that said surgical procedure and sterilization of her person was not absolute in nature and that a possibility did exist that she could thereafter become pregnant and that the actions and conduct of the Defendant, in failing to properly notify and inform said Plaintiff so that she might declare her decision in accepting or rejecting said surgical procedure, without full information or notice as to the potential results thereof, proximately brought about the Plaintiff's pregnancy and the subsequent birth of her fifth [sic] child." (Emphasis added.)
The majority also finds that Mrs. Sard "produced no evidence to show that she would have refused the operation if she had known that there was a chance of failure." Mrs. Sard's testimony establishes that she was primarily concerned with not having any more children. She objected to the other alternatives and chose the tubal ligation because she was told and believed that that procedure would prevent future pregnancies. Viewed in the light most favorable to the appellant, this testimony supports an inference that had Mrs. Sard been told that the tubal ligation might fail to sterilize her, she would have rejected it. Cobbs v. Grant, 23 Cal. App.3d 236, 100 Cal. Rptr. 98, 102 (1972); Natanson v. Kline, 187 Kan. 186, 354 P.2d 670, 673-74 (1960); DeBarth v. Swedish Hosp. Medical Center, 81 Wash.2d 12, 499 P.2d 1, 12-13 (1972). See Hamilton v. Hardy, 549 P.2d 1099, 1105 (Colo. App. 1976).
[4] See n. 7 below.
[5] At the trial, the doctor moved for a directed verdict. During argument on the motion, the parties, like the trial judge, assumed that the doctrine of informed consent applied in Maryland. They disagreed as to the extent of the doctor's duty to disclose. Mrs. Sard contended that the doctor was required to give her accurate information concerning available alternatives and their probability of success. The doctor asserted that he was required only to inform her of available alternatives and possible physical risks "peculiarly associated with the performance of the procedure."
While the court expressed the view, in passing, that the patient had to be informed of even a one per cent chance of failure, its decision to grant the motion for directed verdict was not ultimately based either upon the finding that the doctor had a duty to disclose the success rate of the operation, or upon the fact that there was insufficient evidence to show that the doctor violated that duty.
[6] Maryland Rule 1085. While it has long been recognized in Maryland that a doctor must obtain his patient's consent before undertaking a therapeutic procedure, the question of whether that consent must be "informed" has not been explicitly determined by the Court of Appeals. Questions such as the scope of the duty to disclose, whether that scope is to be determined by the standards of the profession, thus requiring expert opinion evidence or may be determined by a jury without the aid of expert opinion, whether that scope is to be determined by the objective "reasonable person" standard or a subjective standard, and the scope and extent of a doctor's privilege not to disclose, have not been resolved by that Court.
Few areas of the law presently involve more complexity and controversy than that of informed consent. See generally, Canterbury v. Spence, 464 F.2d 772 (D.C. Cir.1972); Natanson v. Kline, 186 Kan. 393, 350 P.2d 1093 (1960); Informed Consent in Medical Malpractice, 55 Calif.L.Rev. 1396 (1967); Informed Consent A Proposed Standard for Medical Disclosure, 48 N.Y.U. L.Rev. 548 (1973); 75 Harv.L.Rev. 1445 (1962). In my view, such questions should be resolved by this Court only when absolutely necessary.
[7] Merit Music v. Sonneborn, 245 Md. 213, 220, 225 A.2d 470, 474 (1965); Rossi v. Douglas, 203 Md. 190, 199, 100 A.2d 3, 7 (1953); Western Maryland Dairy Corp. v. Brown, 169 Md. 257, 262, 181 A. 468, 471 (1935) (dictum); Spitze v. Baltimore & Ohio R.R., 75 Md. 162, 171, 23 A. 307, 310 (1892); Wolfe v. Madison Nat'l Bank, 30 Md. App. 525, 531, 352 A.2d 914, 917 (1976). See Canaras v. Lift Truck Services, 272 Md. 337, 344, 322 A.2d 866, 870 (1974).
[8] Rossi, supra, 203 Md. at 199, 100 A.2d at 7; Wilson v. Pritchett, 99 Md. 583, 593, 58 A. 360, 362 (1904); Spitze, supra, 75 Md. at 169-71, 23 A. at 309-10; Serdenes v. Aetna Life Ins. Co., 21 Md. App. 453, 461-62, 319 A.2d 858, 863 (1974).
[9] Merit Music, supra, 245 Md. at 224-25, 225 A.2d at 474-75; Boyle v. Rider, 136 Md. 286, 291, 110 A. 524, 526 (1920); Smith v. Humphreys, 104 Md. 285, 290-91, 65 A. 57, 59 (1906); Spitze, supra, 75 Md. at 171, 23 A. at 310.
[10] 75 Md. 162, 171, 23 A. 307, 310 (1892).
[11] 266 Md. 593, 597, 295 A.2d 876, 879 (1972).
[12] Meinhard v. Salmon, 249 N.Y. 458, 164 N.E. 545, 546 (1928).
[13] Herring, supra, 266 Md. at 597, 295 A.2d at 879; Hall v. Hall, 147 Md. 184, 191-92, 127 A. 858, 861 (1925); Williams v. Williams, 63 Md. 371, 397-98 (1885); Todd v. Grove, 33 Md. 188, 192 (1870); see also Gingell v. Backus, 246 Md. 83, 92, 227 A.2d 349, 353 (1967).
[14] Desser v. Woods, 266 Md. 696, 709, 296 A.2d 586, 593 (1972); Herring, supra, 266 Md. at 600-01, 295 A.2d at 880-81; see also Merchants Mortgage Co. v. Lubow, 275 Md. 208, 215-16, 339 A.2d 664, 669 (1975).
[15] Desser, supra, 266 Md. at 708-09, 296 A.2d at 593; Farmer v. O'Carroll, 162 Md. 431, 444-46, 160 A. 12, 17 (1932); Cumberland Coal & Iron Co. v. Parish, 42 Md. 598, 606-07 (1875); Todd, supra, 33 Md. at 195-96.
In addition to establishing the inapplicability of the presumption of knowledge, these cases further shift the burden of proof on the question of knowledge from the dependent party to the dominant party.
[16] 169 Md. 407, 410-11, 182 A. 317, 318 (1935).
[17] Gaver v. Gaver, 176 Md. 171, 185, 4 A.2d 132, 139 (1939).
[18] Tracey v. Tracey, 160 Md. 306, 318, 153 A. 80, 85 (1931).
[19] Williams, supra, 63 Md. at 404 (dissenting opinion); Todd, supra, 33 Md. at 194.
[20] Canterbury, supra, 464 F.2d at 782; Sheets v. Burman, 322 F.2d 277, 279 (5th Cir.1963); Lilly v. Comm'r of Internal Revenue, 188 F.2d 269, 271 (4th Cir.1951), rev'd on other grounds, 343 U.S. 90 (1952); Hammonds v. Aetna Casualty & Surety Co., 243 F. Supp. 793, 802-03 (N.D. Ohio 1965); Berkey v. Anderson, 1 Cal. App.3d 790, 82 Cal. Rptr. 67, 77-78 (1970); Stacey v. Pantano, 177 Neb. 694, 131 N.W.2d 163, 165 (1964); Demers v. Gerety, 87 N.M. 52, 529 P.2d 278, 280 (1974); Allison v. Blewett, 348 S.W.2d 182, 184 (Tex.Civ.App. 1961); Hunter v. Brown, 4 Wash. App. 899, 484 P.2d 1162, 1166 (1971); Mason v. Ellsworth, 3 Wash. App. 298, 474 P.2d 909, 916 (1970); 41 Am. Jur., Physicians & Surgeons, § 74; see Davis v. Arizona State Dental Board, 57 Ariz. 239, 112 P.2d 870, 877 (1941); Mattingly v. Sisler, 198 Okl. 107, 175 P.2d 796, 799 (1946); Alexander v. Knight, 197 Pa. Super. 79, 177 A.2d 142, 146 (1962); Hodge v. Shea, 252 S.C. 601, 168 S.E.2d 82, 84, 87 (1969).
[21] Moore v. Webb, 345 S.W.2d 239, 243 (Mo. 1961).
[22] Canterbury, supra, 464 F.2d at 782.
[23] Cobbs v. Grant, 104 Cal. Rptr. 505, 513, 502 P.2d 1, 9 (1972).
[24] Canterbury, supra, 464 F.2d at 783; Dunham v. Wright, 423 F.2d 940, 943-44 (3d Cir.1970); Berkey, supra, 82 Cal. Rptr. at 77; Salgo v. Leland Stanford Jr. University Bd. of Trustees, 154 Cal. App.2d 560, 317 P.2d 170, 181 (1957); Natanson v. Kline, 186 Kan. 393, 350 P.2d 1093, 1106-07 (1960); Getchell v. Mansfield, 260 Ore. 174, 489 P.2d 953, 954-55 (1971); Cooper v. Roberts, 220 Pa. Super. 260, 286 A.2d 647, 649 (1971); Gray v. Grunnagle, 423 Pa. 144, 223 A.2d 663, 674 (1966); Ball v. Mallinkrodt Chemical Works, 53 Tenn. App. 218, 381 S.W.2d 563, 567 (1964); Holt v. Nelson, 11 Wash. App. 230, 523 P.2d 211, 216 (1974).
[25] Campbell v. Oliva, 424 F.2d 1244, 1251 (6th Cir.1970).
[26] See Campbell, supra, 424 F.2d at 1251; Gray, supra, 223 A.2d at 674.
See also n. 13 above. The cases there cited establish not only that where there is a fiducial relationship, a presumption of knowledge of the contents, nature and consequences of a signed document is inapplicable, but also that the burden of proof on the question of knowledge is shifted.
The Court of Appeals of Maryland has placed the burden of proof in malpractice actions upon the patient. State, ex rel. Janney v. Housekeeper, 70 Md. 162, 171, 16 A. 382, 384 (1889). I wish to make it clear that I would not here incorporate into malpractice actions all of the ramifications of fiduciary law. While I would hold that under the present circumstances a presumption of knowledge is inapplicable, I would not shift the burden of persuasion on the question of knowledge from the patient to the doctor. See Demers, supra, 529 P.2d at 280.
[27] It is unnecessary to consider whether the husband knew or should have known the contents of the consent form. The wife's consent, not her husband's, was necessary. Housekeeper, supra, 70 Md. at 170, 16 A. at 384.
[28] Miller v. Kennedy, 11 Wash. App. 272, 522 P.2d 852, 860 (1974).
[29] Dunham, supra, 423 F.2d at 944. See Canterbury, supra, 464 F.2d at 782, n. 27; Russell v. Harwick, 166 So.2d 904, 905 (Fla. 1964); Bang v. Charles T. Miller Hosp., 251 Minn. 427, 88 N.W.2d 186, 190 (1958); Gray, supra, 223 A.2d at 669-70; Miller, supra, 522 P.2d at 860; Hunter, supra, 484 P.2d at 1167. See also, Powell, "Consent to Operation," 21 Md.L.Rev. 189, 192-93 (1961); Louisell & Williams, Medical Malpractice § 22.01 (1976).
[29a] Woods v. Brumlop, 71 N.M. 221, 377 P.2d 520, 525 (1962). See Berkey, supra, 82 Cal. Rptr. at 77.
[30] In reaching their conclusion, the majority considered three factors:
1) that "the physical harm to the patient was zero;"
2) "that there was one chance in fifty that the benefit would be zero;"
3) that Mrs. Sard "produced no evidence to show that she would have refused the operation if she had known that there was a chance of failure."
The fact that physical harm resulting from the operation was zero is irrelevant. The question here is not whether the doctor violated a duty to disclose risks of bodily harm peculiar to the proposed procedure, but rather whether the doctor violated a duty to disclose alternative methods of treatment and their success rates. Moreover, while physical harm to the patient resulting from a breach of the duty to disclose is relevant to the issue of proximate cause and damages, it has no bearing on the issues of the scope of the duty to disclose and the breach of that duty.
Mrs. Sard did, in my view, produce evidence that she would not have consented to the operation had she known that there was a chance of failure. See n. 3 above. Even if she had failed to produce such evidence, that fact would be irrelevant. Evidence that disclosure would not have resulted in a decision against the proposed procedure, like evidence of physical harm resulting from a failure to disclose risks, is relevant to the issue of proximate cause, and has no bearing on the issues of the scope of the duty to disclose and the breach of that duty. See Canterbury, supra, 464 F.2d at 790-91.
[31] Canterbury, supra at 788.
[32] Canterbury, supra, 464 F.2d 772 (1% risk of paralysis); Cobbs, supra, 104 Cal. Rptr. 505 (5% risk of injury to spleen); Berkey, supra, 82 Cal. Rptr. 67 ("rare and remote" incidence of foot drop); Hamilton v. Hardy, 549 P.2d 1099 (Colo. App. 1976) ("possible relationship" between the use of oral contraceptives and thromboembolism); Coleman v. Garrison, 349 A.2d 8 (Del. Supr. 1975) (1%-2% chance of pregnancy after a tubal ligation); Fogal v. Genesee Hospital, 41 A.D.2d 648, 344 N.Y.S.2d 552 (1973) ("rare and unlikely" possibility of necrotic injuries); Cooper, supra, 286 A.2d 647 (1 in 2500 risk of perforation of stomach); Hunter, supra, 484 P.2d 1162 ("minimal risk" that "dermabrasion" might not be successful in removing dark pigmentation spots from patient's face); Bowers v. Talmage, 159 So.2d 888 (Fla. 1963) (3% risk of paralysis). Contra, Starnes v. Taylor, 272 N.C. 386, 158 S.E.2d 339 (1968) (1/4 of 1% risk of perforation of esophagus); Mason v. Ellsworth, 3 Wash. App. 298, 474 P.2d 909 (1970) (1/4 to 3/4 of 1% risk of perforation of esophagus).
It is interesting to note that in Cobbs, supra, 104 Cal. Rptr. 505, and Wilkinson v. Vesey, 295 A.2d 676 (R.I. 1972), upon which the majority relies to establish the standard for the duty to disclose, the question of adequate disclosure was submitted to the jury. In Cobbs, there was a 5% possibility of injury to the spleen.
[33] Guilmet v. Campbell, 385 Mich. 57, 188 N.W.2d 601, 605-607 (1971). Contra, Coleman, supra, 349 A.2d at 11; Rogala v. Silva, 16 Ill. App.3d 63, 305 N.E.2d 571, 573 (1973).
[34] Custodio v. Bauer, 251 Cal. App.2d 303, 59 Cal. Rptr. 463, 471 (1967); Vilord v. Jenkins, 226 So.2d 245, 246 (Fla.App. 1969). See 41 Am. Jur., Physicians & Surgeons § 105.
[35] Crawford v. Duncan, 61 Cal. App. 647, 215 P. 573, 574 (1923); Guilmet, supra, 188 N.W.2d at 606; Hawkins v. McGee, 84 N.H. 114, 146 A. 641, 643 (1929). See Perin v. Hayne, 210 N.W.2d 609, 616 (Iowa 1973).
[36] See n. 2 above.
[37] See n. 3 above.
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152 F.Supp. 506 (1957)
INLAND MUTUAL INSURANCE COMPANY, a corporation, Plaintiff,
v.
PEERLESS INSURANCE COMPANY, a corporation, Defendant.
No. 840.
United States District Court S. D. West Virginia, Huntington Division.
June 26, 1957.
*507 L. E. Woods, Jr., and C. F. Bagley, Jr., Campbell, McNeer & Woods, Huntington, W. Va., for plaintiff.
Robert W. Lawson, Jr. and Charles W. Yeager, Steptoe & Johnson, Charleston, W. Va., for defendant.
HARRY E. WATKINS, District Judge.
Inland Mutual Insurance Company, hereafter called Inland, has paid $27,500 in settlement of certain litigation and has incurred expenses totalling $11,560.99 in connection therewith. Under the provisions of a reinsurance treaty between the parties, Inland, a West Virginia corporation, seeks reimbursement for two-thirds of this expenditure, or $26,040.66, from Peerless Insurance Company, a New Hampshire corporation, hereafter called Peerless. The case primarily turns upon a construction of the *508 reinsurance treaty, and the issues presented to this Court, sitting without a jury, are very narrow: (1) In an action in the Circuit Court of Fairfax County, Virginia, against an insured of Inland, did Inland keep Peerless fully informed of the proceedings in the case, as required by the reinsurance treaty, and to what extent did Peerless participate in the negotiations surrounding that case? (2) Was attorney Charles Pickett, who represented Inland in the defense of the insured in that action, also the agent of Peerless? (3) Does this reinsurance agreement cover a loss of this type, where Inland has paid its insured $27,500 over and above the amount of insurance coverage, as damages for the failure of Inland's agents to use due diligence to settle a case against an insured? Under the evidence of this case, and the law applicable thereto, I find that these questions must be answered in the affirmative, and that Inland must prevail in this action.
Findings of Fact
On March 28, 1951, while the reinsurance agreement between these parties was in full force and effect, the plaintiff issued a vehicle liability policy to Lota H. Yeatts, T/A Yeatts Transfer Company, of Alta Vista, Virginia, hereafter referred to as Yeatts, or insured. This policy was in the form of the National Standard Automobile Liability Policy, Non-Assessable, in use at that time. Under the terms of that policy, Inland agreed, inter alia, to indemnify Yeatts against liability for personal injuries arising out of the operation of the insured's vehicles to the extent of $15,000 for injuries to one person in any one accident. Pursuant to the reinsurance treaty, Inland retained $5,000 of this coverage and ceded to Peerless the excess, forwarding to Peerless the appropriate proportion of the premium paid by Yeatts.
On April 20, 1951, while both the policy described above and the reinsurance treaty between these parties were in full force and effect, a collision occurred in Fairfax County, Virginia, between a truck owned by Yeatts and an automobile driven by one John J. Arms, in which Arms was seriously injured. Inland received a preliminary notice of this accident on April 23, 1951, from the Nichols Adjusting Company, of Washington, D. C., to whom the truck driver had reported the accident. Inland immediately set aside $1,500 on its books as a reserve for the case. A week later, upon receiving a more detailed report from the Nichols agency, Inland increased its reserve to $3,500. After further investigation reports from the Nichols agency, as well as from other sources, on September 21, 1951, Inland increased its reserve to $7,500, and for the first time notified Peerless of the accident, using a "Preliminary Loss Advice" form provided by Peerless.
Thereafter, until February 4, 1952, when Arms filed suit against Yeatts demanding $125,000 damages, six letters passed between Inland and Peerless regarding this accident. In addition to the correspondence, on October 4, 1951, Kellogg P. Sherwood, the assistant secretary of Peerless who handles reinsurance claims, went to the home office of Inland in Huntington, West Virginia, and examined, discussed, and made notes on the Yeatts-Arms collision file, along with some other cases. After Arms filed suit, Peerless was advised by Inland of all the pertinent developments of the case, through several letters and through another visit of Sherwood to Inland's home office. A reading of this correspondence discloses that medical reports, investigation reports, and opinions of counsel, were furnished Peerless.
On February 14, 1952, Inland informed Peerless by letter that Inland had retained the law firm of Barbour, Garnett, Pickett & Keith, of Fairfax, Virginia, to handle the case. While Peerless disagreed with Inland as to the value of the case and whether there was any liability on the part of the defendant, Peerless did not secure independent counsel to participate in the case, although both parties concede that Peerless could have done so, under the terms of the reinsurance *509 treaty, if Peerless were not satisfied with the manner in which the attorneys retained by Inland handled the case.
Until the date of trial, October 29, 1952, there were no negotiations for settlement of the case, as Arms' attorneys were demanding $60,000 and Inland and Peerless considered that sum much too high. The insured employed attorney Robert J. McCandlish, Jr., of Fairfax, Virginia, as its counsel, and he joined Charles Pickett, of the firm retained by Inland, in defending the case. On the morning of the second day of the trial, after all the evidence was in, Arms' attorney offered to accept $17,500 in full settlement of the action. That figure was in excess of the policy limits of the insured's coverage, so Yeatts agreed to put up $2,500 of this sum if Inland would pay the entire policy coverage of $15,000. McCandlish conveyed this information to Pickett, indicating that he felt the offer should be accepted, and stated to Pickett that if Inland rejected the offer, Yeatts would look to Inland to pay any amount by which the judgment might exceed the $15,000 policy limits. Pickett telephoned Harold G. Talbott, claims supervisor of Inland, at Inland's home office, and advised Talbott of these developments. Pickett stated at that time that he felt that the insured would prevail in the case, or at least the verdict would be low in amount, so that he would be reluctant to recommend paying more than $7,500 in settlement of the Arms' litigation, and was of the opinion that even that sum would be a gift. Talbott discussed the matter with his superiors, who told him to rely upon the advice of his trial attorney, since Pickett was more familiar with the progress of the trial than anyone at the home office. Talbott then called Sherwood, in New York City, and related to him substantially all that had happened. Sherwood consented to the $7,500 figure and Talbott notified Pickett to offer that sum. Pickett offered Arms' attorney $7,500, which was rejected; the case continued and the jury returned a verdict of $75,000, upon which judgment was entered and appeal denied. Inland paid Yeatts $15,000, and was reimbursed by Peerless in the amount of $10,000.
On January 6, 1954, the insured instituted an action against Inland which was removed to the United States District Court for the Eastern District of Virginia, Richmond Division. This action sought $160,000 for damages allegedly sustained as a result of the negligence and bad faith of Inland and its agents in not accepting the $17,500 offer of Arms to settle his action against Yeatts. The alleged damages consisted of $60,000, representing the difference between the $15,000 paid by Inland to Yeatts and the $75,000 judgment against Yeatts, plus $100,000 alleged damage to the business of the insured by reason of attachments levied against the insured's trucks by Arms in an effort to obtain satisfaction of his $75,000 judgment.
Peerless was informed by Inland of this action, but Peerless refused to participate in the defense except for offering suggestions to Inland. After a motion for summary judgment was denied, and the case was set for a jury trial, Inland negotiated an agreement with Yeatts and Arms whereby Inland paid Yeatts $27,500 in full settlement of insured's suit against Inland, which sum Yeatts paid to Arms along with an additional $15,000, in full settlement of Arms' judgment against Yeatts. These payments were in addition to the $15,000 paid by Inland under its policy.
In its complaint in the instant action, Inland asked for full reimbursement from Peerless of the $27,500 paid Yeatts, but at the trial Inland reduced its claim and now seeks two-thirds of that sum, as well as two-thirds of the expenses incurred in the two cases. In its answer, and at the trial, Peerless expressed a willingness to pay its two-thirds share of the expenses in the case of Arms v. Yeatts, when informed of the amount thereof, but denied liability as to the other claims of Inland. Plaintiff has introduced Exhibit No. 19 listing the expenses it incurred in the case of Arms *510 v. Yeatts, indicating a total of $1,695.37, but one item listed thereon in the amount of $200 includes a notation that the insured paid $50 of that sum while Inland paid only $150. Defendant's Exhibit No. 16 substantiates the fact that the insured paid $50 of the $200 figure, so it appears that Inland's actual expenses in the case of Arms v. Yeatts amounted to $1,645.37. Plaintiff's Exhibit No. 20 lists expenses incurred in the case of Yeatts v. Inland, totalling $9,915.62. In summary plaintiff seeks two-thirds of $27,500, $1,645.37 and $9,915.62, which aggregate $39,060.99, of which two-thirds is $26,040.66.
Looking at the evidence as it developed in 1951 and 1952, I find that Inland kept Peerless fully and adequately informed of the significant developments in the case of Arms v. Yeatts. A costly error was made in evaluating the Arms claim, but Peerless cannot now be allowed to avoid its share of the loss by pointing out errors of human judgment through the use of hindsight. Peerless stresses the point that the collision of April 20, 1951, was not reported to it until September 21, 1951, although this was a case involving $75,000. However, as the facts trickled into Inland's home office during the intervening five months, in the judgment of Inland's experienced claims men the case was not one involving over $5,000 so that Peerless should be informed. When it became apparent to Inland's officials that the injuries were quite serious, then Peerless was advised of the claim. Reporting the claim to the reinsurer involved human judgment which, when exercised without the benefit of hindsight such as Peerless now uses, I cannot condemn as insufficient.
The record is replete with testimony adduced by the defendant to the effect that in 1951 and 1952, Sherwood of the Peerless Company insisted that Arms v. Yeatts was a dangerous, potentially costly case, but he could not convince Inland's officers of that fact. With such prescience on the part of Sherwood, it is difficult to see how Peerless can now say that it was not sufficiently informed regarding the details of this accident to make a proper decision concerning payment of the full coverage.
Although Peerless did not take part in investigating the accident, or in selecting the law firm to handle the defense of the case, these actions were carried out by Inland for the mutual benefit of Inland and Peerless, as both companies were concerned with a potential loss. The negotiations for settlement of Arms v. Yeatts were carried on through Inland's attorney, Pickett, but again the action taken was for the mutual benefit of both insurance companies. When Pickett reported to Talbott that the case could be settled for $17,500, Inland's officers conferred among themselves and acceded to Pickett's suggestion that not over $7,500 be offered. Pickett was a competent and experienced lawyer in such matters. But before issuing instructions to Pickett, Talbott felt it necessary to call Sherwood because it was Peerless's money that was at stake; whether $7,500 or $17,500 were paid in settlement, only $5,000 of it would come from Inland, for that was Inland's retention under the reinsurance treaty. There is a conflict as to the exact conversation between Talbott and Sherwood on October 30, 1952, even though each man dictated a memorandum of the telephone call at that time, but it is clear that Sherwood was made to understand that the Arms case could probably be settled if the insurance companies would pay the full policy coverage. Sherwood left the matter up to Talbott, and tacitly agreed with a maximum offer of $7,500. Under this evidence, I find that Peerless actively participated in the negotiations for settlement of the Arms litigation. It was Peerless which stood to gain if the $7,500 offer were accepted by Arms; the rejection of Arms' $17,500 offer was made for Peerless's benefit, with Sherwood's knowledge and consent.
Peerless urges that Inland had a definite interest in keeping the Arms loss down to $7,500 because of a provision in the reinsurance agreement that Inland was to receive a 15 per cent contingent *511 commission on net profits accruing to Peerless on business covered by the reinsurance contract. Peerless has introduced no evidence, however, from which the Court can find that a savings of $7,500 on this one loss would have resulted in a commission to Inland of any amount; there could have been a net loss in that year which would not have been eradicated by even a $7,500 savings. There is no evidence in this case to show that Inland had anything to gain by rejecting the $17,500 offer. In fact, Inland would have been responsible for an additional one-third of the $1,645.37 costs and expenses of the trial if the $7,500 offer had been accepted by Arms, for expenses were paid by the companies in direct proportion to the amount of loss paid and if $7,500 were paid Inland's $5,000 would constitute two-thirds of the loss, whereas when $15,000 was paid Inland's portion was only one-third of the loss.
Conclusions of Law
The pertinent provisions of the reinsurance treaty of August 6, 1947, between these parties are these ("Company" is Inland; "Reinsurer" is Peerless):
"Article III
"Liability of Reinsurer:
"The actual payment by the Company of any loss shall be a condition precedent to any recovery under this Agreement, and subject to such condition, the liability of the Reinsurer shall follow that of the Company in every case and shall be subject in all respects to all the general and special stipulations, clauses, waivers and modifications of the Company's policy, binder or other undertaking, and any endorsements thereon.
"No error or omission in reporting any risk reinsured or marked to be reinsured shall invalidate the liability of the Reinsurer; but the reporting of reinsurance not authorized by this Agreement or by special acceptance hereunder shall not bind the Reinsurer except for the return of premiums paid therefor."
"Article IV
"Claims:
"The Company will advise the Reinsurer promptly of all claims and any subsequent developments pertaining thereto, which may in the Company's opinion develop into losses involving reinsurance hereunder. Inadvertent omission in dispatching such advices shall in no way affect the liability of the Reinsurer under this Agreement, provided the Company informs the Reinsurer of such omission or oversight promptly upon its discovery.
"When so requested, the Company will afford the Reinsurer an opportunity to be associated with the Company, at the expense of the Reinsurer, in the defense or control of any claim or suit or proceeding involving this reinsurance, and the Company and the Reinsurer shall cooperate in every respect in the defense of such suit or claim or proceeding.
"All court costs and expenses, including interest on judgments, paid by the Company, (excluding salaries of permanent officials and employees of the Company) connected with any resistance to, investigations of, or negotiations concerning settlement of such claims, shall be apportioned in proportion to the respective interests as finally determined. * * *"
Under the policy issued by Inland to Yeatts on February 23, 1951, Inland agreed:
"I Coverage ABodily Injury Liability
"To pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of bodily injury, sickness or disease, including death at any time resulting therefrom, sustained by any person, caused by accident and arising out of the *512 ownership, maintenance or use of the automobile."
The policy further states:
"As respects the insurance afforded by the other terms of this policy under coverages A and B the company [Inland] shall:
"(a) defend any suit against the insured alleging such injury, sickness, disease or destruction and seeking damages on account thereof, even if such suit is groundless, false or fraudulent; but the company may make such investigation, negotiations and settlement of any claim or suit as it deems expedient; * * *
"The amounts incurred under this insuring agreement, except settlements of claims and suits, are payable by the company in addition to the applicable limit of liability of this policy."
Peerless takes the position that its liability under the reinsurance agreement was limited to the dollar coverage of the policy issued the insured. In the Yeatts policy, the limit of liability for personal injury was $15,000, of which Inland retained $5,000; Peerless claims that when it paid $10,000 on the Yeatts policy, it completed all its obligations under the reinsurance agreement (except paying two-thirds of the expenses of the Arms suit, which Peerless admits it owes). Inland, however, points to Article III of the reinsurance contract quoted above, where it states that the liability of Peerless follows that of Inland in every case and shall include all undertakings of Inland with respect to every policy issued and covered by the reinsurance agreement. Under the policy issued to Yeatts, Inland incurred obligations
(a) To indemnify Yeatts for personal liability loss up to $15,000,
(b) To defend any suit against the insured, and reserved the right to make investigations, and to negotiate and make settlement of all claims.
Both Inland and Peerless did undertake to defend and investigate, and to negotiate and control the settlement of the Arms claim. The courts in many jurisdictions have construed the right to negotiate and settle claims, coupled with the right reserved in the policy to control the case, as imposing an obligation on the insurer to use reasonable diligence and good faith in its settlement negotiations. Inland says that its expenditure of $27,500 in settlement of the Yeatts-Inland case, plus $9,915.62 expenses connected with the suit, was an expense under undertaking (b) above, and according to the express terms of the Yeatts policy, as quoted above, not subject to the $15,000 limit of the policy. Inland says that the liability arising out of the obligation of the insurer to use due diligence and good faith in its settlement negotiations becomes the liability of the reinsurer, Peerless, and once payment has been made by Inland in settlement of that liability, the obligation of the reinsurer, Peerless, becomes fixed. To support this position, Inland cites American Casualty Co. of Reading, Pa. v. Howard, 4 Cir., 1951, 187 F.2d 322. In that case the insurer took the position that once it had paid its maximum coverage of $5,000 on a liability policy, it had no further obligation to defend further litigation. The court held in an opinion written by Judge Dobie that there was no merit in the insurer's contention, that even though the insurer had paid the full coverage of $5,000, there remained an obligation by insurer to defend subsequent litigation, and pay the costs and expenses arising out of that litgation. It is said that this case clearly holds that the obligation of the insurer is not limited to the payment of the maximum coverage of a policy, and that such insurer has other obligations under the policy which can be quite expensive. It is urged that if there had been a reinsurance agreement in the case just cited, the reinsurer would have been required to pay its proportionate part of the additional expense involved.
*513 No cases have been cited by counsel, nor has the Court found any, relating to the question of whether payment by a reinsured for negligence and bad faith in settling a claim falls within the coverage of a reinsurance contract. The courts have consistently held that a liability insurer which undertakes to defend, investigate, negotiate and settle any claim or suit against an insured, and assumes control of the right of settlement of claims against the insured, may become liable in excess of its undertaking under the policy provisions if it fails to exercise "good faith" in considering offers to compromise the claim for an amount within the policy limits. 40 A.L.R.2d 168, 178.
Applying the unambiguous language of Article III, above, to Inland's undertakings under the Yeatts policy, the conclusion is inescapable that Peerless's liability followed Inland's, including liability to defend, investigate, negotiate and settle any claim or suit against the insured. Defendant's contention that all it was required to do was pay $10,000 on the Yeatts loss is untenable. Contrary to the contentions of Peerless, there is nothing in the reinsurance agreement which limits Peerless's liability to $15,000 on the Yeatts policy. Combining the duties of the two insurance companies under the reinsurance treaty and the reinsured Yeatts policy, I conclude that in consideration for the premiums paid by Yeatts (65% of which went to Peerless and 35% to Inland), the two companies undertook the following obligations: Inland was required to stand ready to pay up to $5,000 to Yeatts for personal injury liability; Peerless was required to stand ready to pay an additional sum, up to $10,000; the two companies were required to defend, and allowed to investigate, negotiate and settle any claim or suit against Yeatts, and share the costs of such action (except for salaries of their own officials and employees) according to the interests of the two companies as finally determined when a claim was paid.
Article III of the reinsurance contract further provides that actual payment by Inland is a condition precedent to reimbursement from Peerless. Inland has shown a payment of $27,500 to Yeatts, which Peerless concedes was paid in good faith settlement of the case of Yeatts v. Inland, and has shown payment of $9,915.62 in counsel fees and other expenses relating to that case. Inland's liability to Yeatts arose out of the negligence and bad faith of attorney Pickett, of Talbott and his superiors at Inland, and of Sherwood representing Peerless, in failing to settle a claim against an insured. Under the language of the reinsurance treaty, the payment of $37,415.62 by Inland is an expense arising out of the case of Arms v. Yeatts and must be shared by the parties according to their interests in that case, just as the $1,645.37 expenses for which Peerless admits liability. Peerless having paid $10,000 in the Arms case, while Inland's share was $5,000, Peerless must reimburse Inland for two-thirds of $37,415.62, as well as two-thirds of $1,645.37, or a total of $26,040.66.
Peerless takes the further position that attorney Charles Pickett was solely the agent of Inland, and any negligence or bad faith on his part could not bind Peerless in any way, but there is no merit in this contention. While Peerless had no part in the employment of Pickett, under the second paragraph of Article IV of the reinsurance treaty, as quoted above, Peerless could have employed independent counsel if it wished and joined in the defense of the Arms v. Yeatts action. Its failure to employ other counsel ratified Inland's employment of Pickett, and Pickett acted for the mutual benefit of Inland and Peerless, so that any negligence or bad faith on his part was the negligence and bad faith of both of his principals, Inland and Peerless. Pickett's fee is included in the $1,645.37 expenses for which Peerless admits two-thirds liability, which is an indirect admission by Peerless that Pickett's services were rendered *514 in Peerless's behalf. As stated in the leading treatise on insurance law, 13 Appleman's Insurance Law & Practice, § 7698, p. 480:
"An agreement by the reinsured to employ counsel and defend the claim creates merely an agency, and not a trust in equity; and the reinsuring companies, by allowing the defense to proceed, make the attorneys so employed their own."
A similar statement of the law is found in 46 C.J.S. Insurance § 1231(b), pp. 214-215:
"* * * if reinsurer fails, after notice, to participate in the defense of the action, reinsured, by operation of law, becomes reinsurer's agent sub modo for the management of the defense, and in the conduct thereof it is bound to exercise the utmost good faith. Reinsured does not, however, became a trustee for reinsurer or incur a trustee's liability. Since reinsurer may become bound by the judgment rendered against reinsured in an action on the original insurance policy, * * * it necessarily follows that reinsurer is at liberty to become a party to that action, and to make any defense thereto which is necessary and proper for the protection of its rights and the failure of reinsurer, after notice, to take part in the defense of the action by the original insured does not irrevocably commit the defense to reinsured alone, but at any time during the progress of the cause reinsurer is entitled to interfere and interpose its defense to protect its own interests, as a party who may be bound by the judgment to be rendered. Under an agreement by reinsured to employ counsel and defend the action, reinsurer, by allowing the defense to proceed, makes the attorney so employed its own, so as to be bound by the result."
As discussed earlier in my Findings of Fact, Peerless interposes the defense that it was not promptly and fully informed of the proceedings in the Arms case. The terms of the reinsurance treaty, Article IV, quoted above, provide that Inland was to advise Peerless of all claims and developments therein which in Inland's opinion might develop into losses involving reinsurance, leaving the matter to Inland's judgment, and further provide that inadvertent omission should in no way affect the liability of Peerless if Inland corrected the oversight promptly upon discoverywhich the facts show was done here. Thus not only do the facts of this case refute Peerless's argument, but the reinsurance agreement itself provides that if Peerless had not been promptly and fully informed it would not affect Peerless's liability. It is also significant to note that Peerless unhesitatingly paid $10,000 on the Arms claim, and admits liability for its proportionate share of some of the expenses in that case, yet takes an inconsistent position with respect to the additional expenses of the case and alleges that Inland failed to keep Peerless promptly and fully advised. Under the facts of the case, and the provisions of the reinsurance agreement, Peerless cannot avoid liability on the ground that it was not kept informed.
In this case, the two insurance companies which are parties here cooperated in the handling of a claim in which both were interested. If their agent, Pickett, negligently and in bad faith rejected an offer to settle a case against the insured, Inland's officers and Peerless's man, Sherwood, ratified Pickett's acts. Under the clear terms of the reinsurance treaty, Peerless must pay its share of the loss occasioned by that alleged negligence and bad faith.
Counsel may prepare an order in accordance with the views expressed in this opinion.
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852 S.W.2d 374 (1993)
Calvin MORGAN, Movant-Appellant,
v.
STATE of Missouri, Respondent.
No. 18173.
Missouri Court of Appeals, Southern District, Division Two.
April 19, 1993.
Craig A. Johnston, Office of the State Public Defender, Columbia, for movant-appellant.
William L. Webster, Atty. Gen., John M. Saleeby, Asst. Atty. Gen., Jefferson City, for respondent.
PREWITT, Judge.
On April 11, 1989 appellant pled guilty to knowingly possessing marijuana. He was sentenced to four years' imprisonment with execution of the sentence suspended and he was placed on four years' probation. His probation was revoked March 13, 1990, and the court ordered the four-year sentence executed.
Thereafter, appellant filed a Rule 24.035 motion. The trial court made findings of fact and conclusions of law and denied the motion without an evidentiary hearing. On appeal this court must determine if the findings of fact and conclusions of law *375 were clearly erroneous. Rule 24.035(j); Phelps v. State, 827 S.W.2d 742, 744 (Mo. App.1992).
For his first point appellant asserts that his counsel was ineffective because counsel failed to object to the execution of the four-year sentence when the maximum penalty for the commission of the crime charged against him at the time he was sentenced was one year. While he was on probation the "Comprehensive Drug Control Act of 1989", §§ 195.005-195.425, RSMo Supp.1989, became effective, which appellant says reduced the punishment for his crime to a maximum penalty of one year.
Appellant contends that under § 1.160, RSMo 1986, his case was still "pending" and he should benefit from the reduction of the penalty. All three districts of this court have held contrary under facts basically identical to those present here. Gleason v. State, 851 S.W.2d 51 (Mo.App.1993); Finley v. State, 847 S.W.2d 105 (Mo.App. 1992); Barnes v. State, 826 S.W.2d 74 (Mo. App.1992). Barnes concludes that where there is a suspended execution of sentence a change in the punishment does not benefit a defendant as there is no prosecution "pending". 826 S.W.2d at 76.
As appellant was not entitled to a reduction of his sentence, his counsel could not have been ineffective in failing to make that request. Point one is denied.
For his second point appellant claims that the trial court erred in accepting his guilty plea because it was entered in violation of Rule 24.02(e) "in that there was no factual basis in the record for the guilty plea court to have accepted appellant's guilty plea." Appellant acknowledges that Sales v. State, 700 S.W.2d 131, 132-133 (Mo.App.1985), is adverse to him as he was essentially read the information and admitted he was guilty of the charge. We have reexamined Sales, and are convinced that it is sound and that it applies here.
In finding a factual basis for a plea of guilty, no particular ritual is required. Crowe v. State, 774 S.W.2d 900, 901 (Mo. App. 1989). If a defendant understands the facts as recited at the hearing at his guilty plea, "it is not necessary to elicit from the defendant a recital of the acts he committed prior to the acceptance of his guilty plea." Id.
Under this point appellant primarily relies upon Jones v. State, 758 S.W.2d 153 (Mo.App.1988). There were elements present here, and in Sales, not present in Jones. In Sales, before accepting the guilty plea, the trial court expressly established that the defendant understood the charges, that he had discussed them with his attorney, and understood the facts of the case. Similar information was developed by the trial judge here. Such facts were not present in Jones. 758 S.W.2d at 155. Point two is denied.
For his remaining point, appellant states that the trial court erred because the findings of fact and conclusions of law were not sufficiently specific. "If the findings and conclusions sufficiently cover all points so as to permit meaningful appellate review, then those findings and conclusions are sufficient." Cook v. State, 752 S.W.2d 483, 485-486 (Mo.App.1988).
All that is required is that such findings be sufficient for an appellate court to determine from them whether they are clearly erroneous. State v. Turner-Bey, 812 S.W.2d 799, 809 (Mo.App.1991); Jackson v. State, 729 S.W.2d 253, 255-256 (Mo. App.1987). The findings here were sufficient and addressed the points now raised. As such, we can give meaningful review of them. Point three is denied.
The judgment is affirmed.
MONTGOMERY, P.J., and FLANIGAN, J., concur.
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27 Pa. Commonwealth Ct. 620 (1976)
Julia E. Genes, Administratrix of the Estate of Louis Genes, Deceased, Edward Hunt, Anthony Pastrick and Robert Terza, Appellants
v.
City of Duquesne, Appellee.
No. 1070 C.D. 1975.
Commonwealth Court of Pennsylvania.
Argued October 28, 1976.
December 17, 1976.
Argued October 28, 1976, before Judges CRUMLISH, JR., KRAMER and MENCER, sitting as a panel of three.
*621 Edgar M. Snyder, with him Daniel R. Delaney, for appellants.
Norman M. Bartko, City Solicitor, for appellee.
OPINION BY JUDGE KRAMER, December 17, 1976:
Louis Genes,[1] Edward Hunt, Anthony Pastrick and Robert Terza, veteran firemen,[2] were removed from their positions of City employment for asserted reasons of economy. They sought and were granted a hearing before the City's Civil Service Commission which upheld their removal. The firemen appealed the Commission's decision to the Court of Common Pleas of Allegheny County. The Court of Common Pleas affirmed the Commission's action, by order without opinion; and the firemen have appealed the court's order to this Court.
The firemen contended before the Commission and the court below and still assert (1) that they were not removed for reasons of economy as permitted by Section 11 of the Act of May 31, 1933 (Act), P.L. 1108, as amended, 53 P.S. § 39871, and (2) that their removal was politically motivated in violation of Section 10 of the Act, 53 P.S. § 39870.
*622 Section 11 reads pertinently:
If for reasons of economy, or other reasons, it shall be deemed necessary by any city to reduce the number of paid members of any fire department, or the number of fire alarm operators or fire box inspectors in the bureau of electricity, then such city shall follow the following procedure:
First. If there are any paid firemen, fire alarm operators or fire box inspectors eligible for retirement under the terms of any pension fund, then such reduction in numbers shall be made by retirement on pension of all the oldest in age and service.
. . . .
Section 10 provides, inter alia, that a fireman may not be removed except for good cause, which shall not be political. Section 12, 53 P.S. § 39872, although not expressly relied upon by the appellants, provides a definition of political cause by its prohibition of discrimination against some employees, including firemen, because of their "political opinions or affiliations."
We discover by reviewing the record that the appellants are four of a total of 14 employees removed from City employment at a savings to the City of $131,000; an amount equal to about nine percent of the City's annual budget and hence clearly substantial. The firemen, nevertheless, contend that indications in the record that (1) the City of Duquesne was not in a condition of fiscal distress when they were removed, (2) the money saved by their removal was spent for other purposes, and (3) the City's tax rate was decreased by only one mill, prove the falsity of the asserted economic basis for their removal. We disagree. The appellants put too narrow a construction on the phrase "for reasons of economy" and ignore the phrase "or other reasons," immediately following, *623 in Section 11. "Reasons of economy" would include, in our judgment, a saving of money by the removal of unneeded employees, regardless of the financial condition of the City. The phrase "for . . . other reasons" would authorize the removal of unneeded employees for reasons other than that of effecting fiscal economics, such as, to improve efficiency. It is significant that before removing the appellants the City obtained the opinion of experts in the field of firefighting that the reduction in the firefighting force resulting from the appellants' removal would not adversely affect fire protection.
The appellants' contention that they were removed for political reasons is also founded on a misconstruction of the statute. Section 10 of the Act prohibits removal for political cause, and Section 12 forbids discrimination because of the political opinions and affiliations of the employee. The appellants' evidence on this issue consisted of the fact that the Mayor and two councilmen had run for office on a promise to reduce taxes, which promise the appellants say was kept by removing them from their positions of employment. The charge made is not that the appellants were discriminated against because of their political opinions or affiliations but that they had become the means of fulfilling other persons' promises made in a political campaign. The latter was not what the Legislature had in mind in forbidding removal for political reasons or because of political opinions or affiliations.
Our scope of review in this class of case is narrow:
[W]hen, as here, the lower court has not held a hearing de novo, we have held that our scope of review is limited to a determination of whether or not (1) the constitutional rights of the appellant were violated by the Commission or (2) the Commission *624 manifestly abused its discretion or committed an error of law, and (3) the findings of fact made by the Commission are supported by substantial evidence.
Fitzgerald v. Civil Service Commission of The City of Philadelphia, 16 Pa. Commonwealth Ct. 540, 543, 330 A.2d 285, 286 (1974).
The findings of fact made by the Commission on both points raised by the appellants are supported by substantial evidence in the record.
Having concluded that the appeals must fail, it is unnecessary to discuss the City's attenuated argument in support of its statement that the appeals to the court below were untimely made, beyond declaring that it is in our opinion without merit because Section 10 of the Act, 53 P.S. § 39870, provides the remedy for firemen removed pursuant to Section 11.
ORDER
AND NOW, this 17th day of December, 1976, the order of the Court of Common Pleas of Allegheny County made July 11, 1975 is affirmed.
NOTES
[1] Mr. Genes died during the proceedings and the Administratrix of his estate was substituted on the record.
[2] None of the four was younger than 58, and one was 64 years of age. All were eligible for retirement under the terms of the City's pension fund.
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367 A.2d 1078 (1977)
Sabastlano PETRELLA
v.
Mark A. IZZO et al.
No. 76-194-Appeal.
Supreme Court of Rhode Island.
January 14, 1977.
*1079 Keenan, Rice, Dolan, Reardon & Kiernan, Leonard A. Kiernan, James A. Currier, Providence, for plaintiff.
Paul A. Anderson, Providence, for defendants.
OPINION
JOSLIN, Justice.
This civil action was brought in the Superior Court to recover money damages for injuries to person and property allegedly resulting from an intersection collision between an automobile owned and operated by the plaintiff and another owned by the defendant M. Izzo and operated by the defendant Mark A. Izzo.[1] The case was tried to a jury which, in response to a written interrogatory, specifically found that the defendant was not guilty of any negligence. Consonant with that finding it returned a verdict for the defendant. The plaintiff then moved for a new trial. It was granted and the defendant appealed.
The precipitating cause of the litigation occurred in the city of Providence on Sunday, February 11, 1973 at about 11:30 a. m. when plaintiff's motor vehicle, which was proceeding northerly on Courtland Street, and defendant's which was traveling easterly on Broadway, collided in the intersection of those streets.
The parties were the only witnesses to the collision. It is not disputed that both were familiar with this intersection, that a stop sign warned northerly-bound Courtland Street traffic to come to a full stop before entering the intersection, and that the view of each into the street on which the other was traveling was obstructed by automobiles which were double parked on Broadway in front of a church located at the southwesterly corner of the intersection.
The parties are not completely in accord about other relevant details. The plaintiff claims that he came to a complete stop at the Courtland Street stop sign before entering the intersection and looked in both directions. When he thought the way clear he proceeded into the intersection where his vehicle was struck at its left front door and fender by defendant's which plaintiff said was traveling "fast."
The defendant's version was that he was traveling about 20 to 25 miles per hour in the lane closest to the center line of Broadway; that he slowed slightly as he approached the intersection; that although plaintiff's automobile was 15 to 20 feet distant when he first saw it, he was already in the intersection and it was too late to avoid a collision; and that at the point of impact the front of plaintiff's vehicle was just beyond the center line of Broadway.
After being instructed on pertinent legal matters, including the doctrine of comparative negligence and the rules of the road with regard to speed and stop signs, the jury found for defendant. The trial justice set the verdict aside and the question for us is whether he erred.
The guidelines for ruling on a motion for a new trial are found in Barbato v. Epstein, 97 R.I. 191, 196 A.2d 836 (1964). They have so frequently been repeated that they need no reiteration here. Suffice it to say that the determination of liability, while initially the jury's responsibility,[2] may be interfered with by a *1080 trial justice on a motion for a new trial, but only if, after engaging in the evidence-sifting process described in Barbato, he concludes that the verdict fails to respond to the merits of the controversy and to administer substantial justice.
To meet these guidelines, a trial justice need not exhaustively analyze the evidence or state all his conclusions on its weight or the witnesses' credibility. He should, however, at least sufficiently refer to what prompted his action to enable a reviewing court to ascertain whether his interference with the verdict was soundly premised or was instead based upon a misconception or oversight of material evidence or was otherwise clearly wrong. Wood v. Paolino, 112 R.T. 753, 755-56, 315 A.2d 744, 745 (1974); Marcinko v. D'Antuono, 104 R.I. 172, 185, 243 A.2d 104, 111 (1968).
The trial justice in this case did not satisfy these standards. True, he adequately summarized the material testimony, but he neglected to say what evidence he accepted and what he rejected, which witnesses he believed and which he disbelieved, or what inferences he drew and what he discarded. Nonetheless, he rejected the jury's finding and impermissibly substituted his own conclusion that "the bulk of the evidence [did not] support the jury's verdict" and that there was "at least some evidence of negligence on the part of the defendant." The only indicated basis for that rejection and substitution was his own belief that the jury gave undue weight to the existence of a stop sign on Courtland Street.[3] It seems to us, however, that plaintiff's response to the Courtland Street stop sign, while undoubtedly relevant under the comparative negligence doctrine to the degree of his negligence, was without bearing on that of defendant.
The trial justice's decision is deficient because it misconceives the legal effect that the plaintiff's failure to yield the right-of-way had on the question of whether the defendant exercised due care and also because it otherwise fails to indicate a reasonable basis for his conclusion that the defendant was negligent. A decision suffering from these deficiencies has no persuasive force, and it therefore becomes incumbent upon us to examine the record in the light most favorable to the party who prevailed before the jury and to support the verdict if that examination reveals any competent supporting evidence. Morinville v. Morinville, R.I., 359 A.2d 48, 54 (1976); State v. Contreras, 105 R.I. 523, 531-32, 253 A.2d 612, 617-18 (1969). When we test the evidence by this standard, it is clear beyond question that the verdict for the defendant has the required support and must therefore be reinstated.
The defendant's appeal from the order granting the plaintiff a new trial is sustained, the order granting the plaintiff a new trial is reversed, and the case is remitted to the Superior Court for entry of judgment on the verdict.
NOTES
[1] Throughout the proceedings in the Superior Court the two-named defendants were treated as if they were one and the same person, and we shall do likewise.
[2] This is particularly true in automobile intersection collision cases where the question of an operator's negligence is usually one for the trier of the fact and but rarely one of law. D'Agostino v. Yellow Cab Co., 105 R.I. 28, 31, 249 A.2d 87, 89 (1969); Hevey v. Vieira, 84 R.I. 59, 65, 121 A.2d 657, 661 (1956); Hamilt v. United Elec. Rys., 75 R.I. 264, 267, 65 A.2d 449, 450 (1949); Spaziano v. Raponi, 65 R.I. 163, 165-66, 13 A.2d 810, 812 (1940).
[3] His statement in this regard was:
"This is a case where I believe the jury gave too much weight to the presence of a stop sign, because the failure to stop or not to stop at the stop sign would not be the proximate cause of the incident because it's uncontradicted that the plaintiff could not see the defendant and the defendant could not see the plaintiff at the stop sign."
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852 S.W.2d 376 (1993)
EQUITABLE LIFE ASSURANCE SOCIETY OF the UNITED STATES/MARRIOTT HOTELS, INC., Appellant/Cross Respondent,
v.
STATE TAX COMMISSION OF MISSOURI, et al.,
Kenneth D. MORTON, Assessor for St. Louis County, Missouri, Respondent/Cross Appellant,
v.
STATE TAX COMMISSION OF MISSOURI, et al., Defendants/Respondents.
Nos. 62286 & 61574.
Missouri Court of Appeals, Eastern District, Division Four.
April 20, 1993.
Motions for Rehearing and/or Transfer Denied May 18, 1993.
*377 Jerome Wallach, Cathy Steele, St. Louis, for appellant/cross-respondent.
Dennis C. Affolter, Clayton, for respondent/cross appellant.
Richard L. Wieler, Jefferson City, for defendants/respondents.
Motions for Rehearing and/or Transfer to Supreme Court Denied May 18, 1993.
CRAHAN, Judge.
These are consolidated appeals from separate decisions of the State Tax Commission of Missouri ("Commission") relating to the valuation and assessment of real property located in St. Louis County, Missouri, commonly known as the St. Louis Marriott Hotel ("the property") for the year 1984.[1] Kenneth D. Morton, St. Louis County Assessor ("Assessor") appeals from the Commission's valuation of the property, contending that the Commission's use of a gross income figure from a "discredited appraisal" rendered its valuation based on the income capitalization approach arbitrary and unsupported by competent and substantial evidence. Equitable Life Assurance Society of the United States/Marriott Hotels, Inc. ("Taxpayer") appeals the ratio applied by the Commission for equalization of the assessment. Specifically, *378 Taxpayer maintains that the Commission erred in applying the arithmetic mean instead of the median ratio derived from the Commission's annual ratio study to satisfy the requirements of Article X, Section 3 of the Missouri Constitution for uniformity of taxation upon the same class of property within each taxing jurisdiction. We affirm the decisions of the Commission in both appeals.
The parties agree that Assessor's appeal does not require construction of the revenue laws but only the valuation placed upon specific property, thereby vesting this Court with jurisdiction pursuant to Mo. Const. art. V, § 3 (1945). See Hermel, Inc. v. State Tax Commission, 564 S.W.2d 888, 897 (Mo. banc 1978). Relying on the same constitutional provision, Taxpayer originally filed its appeal in the Missouri Supreme Court, alleging that construction of the revenue laws was required. The Missouri Supreme Court transferred Taxpayer's appeal to this Court and the appeals were consolidated. Under such circumstances, we are required to examine the jurisdictional issue anew and to retransfer the appeal if jurisdiction is lacking. Collector of Revenue v. Parcels of Land, 566 S.W.2d 475, 476 (Mo. banc 1978); State v. Woods, 645 S.W.2d 745, 746 (Mo.App.1983) (en banc). Because the analysis of this issue is intertwined with our analysis of the precise issue presented by Taxpayer's appeal, we will consider those issues together after considering the merits of Assessor's appeal.
The property in question contains approximately 12.15 acres, zoned commercial, and is improved by a 604 room hotel consisting of six interconnecting buildings, five of which were constructed in 1972 and one of which was constructed in 1981. The improvements include various restaurant and banquet facilities, tennis courts, swimming pools and concrete and asphalt driveways and parking areas.
The neighborhood in which the property is located is strongly influenced by Lambert St. Louis Airport, situated directly to the north. The area contains one of the largest concentrations of transient hotel facilities in the area, including over 4,000 hotel rooms. Adjoining properties include another hotel, a car rental agency, long-term airport parking and the airport entrance itself. The property is directly accessible from Interstate 70 and locally accessible from Interstates 270 and 170.
The property is owned by Equitable Life Assurance Society of the U.S. and is leased to Marriott Hotels, Inc. The original term of the lease is twenty-five years, renewable at lessee's option for five ten-year periods on the same terms and conditions.
The parties agreed and the Commission found that the highest and best use of the property was as improved for hotel use. Assessor valued the property on the general assessment rolls as of January 1, 1984 at $3,946,180. Taxpayer appealed that assessment to the County Board of Equalization which ordered the assessed value reduced to $3,775,000. Taxpayer then sought review of this assessment by the Commission. Following an evidentiary hearing, the Commission determined that the assessed value of the property should be further reduced to $3,443,000.
In support of its determination, the Commission issued extensive findings of fact and conclusions of law evaluating the property according to the three accepted methods for determining the property's true value in money: income capitalization, sales comparison and replacement cost less depreciation. There is no dispute that the Commission properly determined that the income capitalization approach was most reflective of market value in this instance, which was also the method ultimately relied upon by Assessor's and Taxpayer's experts. However, in calculating the market value of the property according to the income capitalization method, the Commission found that neither party presented an appraisal that could be accepted in its entirety. Instead, the Commission recalculated the market value based on facts contained in the analyses presented by each of the parties' experts. Based on these calculations, the Commission determined the true value of the property on January 1, 1984 to be $21,385,000. The Commission further found that application of the constitutionally-mandated *379 assessment ratio of thirty-three and one-third percent would result in assessment of the property at a greater percentage of true value than other property, generally, of the same class within the taxing jurisdiction. Specifically, based on official notice of its assessment ratio study for St. Louis County for the 1984 tax year and the testimony of Mr. James Follina, Manager of Ratio Study for the Commission, the Commission determined that the average assessment ratio for St. Louis County for the tax year 1984 was 16.1 percent (rounded). Applying this ratio to the Commission's calculated market value of $21,385,000, the Commission found the proper assessed value of the subject property on January 1, 1984 to be $3,443,000.
Assessor's AppealValuation Of The Property
The principles which constrain our review of the Commission's actions in assessing property for tax purposes were succinctly summarized in Savage v. State Tax Comm'n of Missouri, 722 S.W.2d 72, 74-75 (Mo. banc 1986):
Our review of the Commission's decision is ordinarily limited to whether that decision is "supported by competent and substantial evidence upon the whole record or whether it was arbitrary, capricious, unreasonable, unlawful or in excess of its jurisdiction." Evangelical Retirement Homes of Greater St. Louis, Inc. v. State Tax Commission, 669 S.W.2d 548, 552 (Mo. banc 1984); § 536.140.2, RSMo 1978. In matters of property tax assessment, this Court has acknowledged "the wisdom of the General Assembly in providing an administrative agency to deal with this specialized field." State ex rel. Cassilly v. Riney, 576 S.W.2d 325, 328 (Mo. banc 1979). Thus, we recognize that the courts may not assess property for tax purposes, Drey v. State Tax Commission, 345 S.W.2d 228, 238-9 (Mo. 1961), that proper methods of evaluation and assessment of property are delegated to the Commission, C & D Investment Co. v. Bestor, 624 S.W.2d 835, 838 (Mo. banc 1981) and that on review, "[t]he evidence must be considered in the light most favorable to the administrative body, together with all reasonable inferences which support it, and if the evidence would support either of two opposed findings, the reviewing court is bound by the administrative determination." Hermel, Inc. v. State Tax Commission, 564 S.W.2d 888, 894 (Mo. banc 1978) (citation omitted). When read together, our cases demonstrate that this Court is loathe to substitute its judgment for the expertise of the Commission in matters of property tax assessment. Absent clear abuse, we will "stay our hand[s]." Pierre Chouteau Condominiums v. State Tax Commission, 662 S.W.2d 513, 517 (Mo. banc 1984) (Blackmar, J. concurring).
Assessor's attack on the Commission's market valuation of the property is a narrow one. Assessor does not dispute the Commission's selection of the income capitalization method or the actual mechanics of the Commission's calculation. Rather, Assessor claims that the starting point for the Commission's calculations, which he agrees is and should be the "gross possible annual income" for the property, is understated, thereby inherently producing a market value that is understated to the same degree. Acknowledging that the "gross possible annual income" figure utilized by the Commission is contained in the analysis presented by Taxpayer's expert, Assessor nevertheless maintains that such figure is arbitrary, capricious and unsupported by substantia] evidence because: (1) the Commission found that Taxpayer's expert was "not credible"; (2) Taxpayer's expert did not adequately explain or quantify or justify his estimate; and (3) the "gross possible annual income" figure accepted by the Commission was against the overwhelming weight of the evidence which showed that the actual gross income for the subject property was substantially higher in both 1983 and 1984. We disagree.
Assessor's first contention is based on a mischaracterization of the Commission's findings. Contrary to Assessor's contention, the Commission did not find *380 that Taxpayer's expert was "not credible." Rather, the Commission found certain of his analyses "not credible" based on its determination that other factual components of such analyses, completely unrelated to "gross possible annual income," were either understated, overstated or inadequately explained. Similarly, the Commission rejected various components of the analyses tendered by Assessor's expert, concluding that neither party had tendered an appraisal that could be accepted in its entirety. The Commission, not this Court, is the judge of the credibility of the witnesses and of the evidence. Missouri Church of Scientology v. State Tax Commission, 560 S.W.2d 837, 843 (Mo. banc 1977). Likewise, the relative weight to be accorded any relevant factor in a property tax appeal is for the Commission, not the courts. St. Louis County v. State Tax Commission, 515 S.W.2d 446, 450 (Mo. 1974).
Assessor is correct that the "gross possible annual income" figure utilized by the Commission was contained in a discounted cash flow analysis ultimately rejected by the Commission. However, we perceive no reason why the Commission's rejection of that particular income capitalization methodology in this instance, based on deficiencies in other components such as expenses, should preclude the Commission from utilizing factual components it finds credible. There may well be instances in which the values assigned particular components are so interdependent that this procedure would not be feasible but Assessor has made no such showing here. Assessor's first contention is denied.
Assessor's next complaint is that Taxpayer's expert failed to provide an adequate explanation for his derivation of his projected "gross possible annual income," thereby rendering the Commission's use of such figure unsupported by substantial evidence. To understand the fallacy of this contention, it is important to understand the precise nature of the valuation the Commission and the parties were required to undertake. In Missouri, real property must be assessed in proportion to value. Mo. Const. art. X, § 3 and 4(a) (1945); § 137.115(1) RSMo.1986;[2]McKay Buick, Inc. v. Lane, 569 S.W.2d 740 (Mo. banc 1978). True value in money is defined as the price which the subject property would bring when offered for sale by one willing but under no compulsion to sell it, and is bought by one willing or desirous to purchase, but who is not compelled to do so. Peterson v. Continental Boiler Works, Inc., 783 S.W.2d 896, 900 (Mo. banc 1990). True value in money is defined in terms of value in exchange and not in terms of value in use. Stephen & Stephen Properties, Inc. v. State Tax Commission, 499 S.W.2d 798, 801-803 (Mo.1973). Real property includes land itself, whether laid out in town lots or otherwise, and all growing crops, buildings, structures, improvements and fixtures of whatever kind thereon, and all rights and privileges belonging or appertaining thereto. § 137.010(3); Greene County v. Hermel, Inc., 511 S.W.2d 762, 770-71 (Mo.1974).
The income capitalization method of valuing real property is a means of satisfying these criteria based on an evaluation of what a willing buyer would pay to realize the income stream that could be obtained from the property when devoted to its highest and best use, in this instance, when operated as a hotel. Under this method, the Commission must project the net income stream that could reasonably be anticipated by an investor/purchaser, discounting future dollars to present levels in order to compensate for risk and the elapsed time required to recapture the initial investment.
For many types of income producing properties, such as apartments or office buildings, this calculation may be relatively straightforward. However, as Taxpayer's expert explained in his appraisal report and in his testimony at the hearing, a hotel operation is a unique investment entity. Although the income actually being derived from hotel operations may be readily ascertainable, as it was in this case, that income *381 stream is the product of four different income-generating sources: land, improvements, business and personal property; yet for real estate assessment purposes, the Commission must value only the real propertyi.e., the land and improvements.[3]
Taxpayer's expert further explained that the "business" component of the income currently being derived from the property is the revenue derived through the application of expert management skills and franchise affiliation. A hotel facility is "consumer intensive" requiring a high degree of retail-type labor. Unlike apartment or office properties where leases may extend for one or more years, a hotel will experience a complete turnover of patronage every two-to-four days. A poor reputation may spread quickly and damage the hotel operation. A hotel may also offer food, beverage and other food services requiring a special level of skill. Thus, according to Taxpayer's expert, expert management is critical to a successful operation. In addition, Taxpayer's expert identified several advantages of a franchise contract, including market identification, mass advertising, association with a successful operation, a referral system, value discounts, sales personnel recruitment, management services and assistance, and sales training programs.
In other words, although the property at issue happens to be a Marriott hotel, what is at issue for tax assessment purposes is not the value of the Marriott hotel; it is the value of the real property which is being used to operate a Marriott hotel. Therefore, the value of the Marriott franchise and business acumen must be excluded if one is to value the property by the income capitalization method. These elements are not part of the "real property" as defined above and, to the extent that these elements influence the income presently being derived from the hotel, that income is not part of the income stream that could reasonably be anticipated by a willing buyer of the land and improvements only.
Based on his experience and evaluation of the specific property, Taxpayer's expert testified that the earnings currently being realized from the property are in fact being profoundly and positively influenced by its identification with Marriott. Specifically, Marriott contributes managements skills, name identification and its franchise, which includes access to one of the largest reservations networks in the world with over five thousand computer connections linked to travel companies world-wide. According to Taxpayer's expert, none of these factors are attributable to the real property and all of them contribute to enhanced earnings.
In an attempt to account for and remove the impact of these factors, Taxpayer's expert studied average daily rates and occupancy rates of competing hotels, in the immediate vicinity of the Marriott and nationally, based on reports recognized as authoritative in the appraisal field. Based on this examination, Taxpayer's expert concluded that the occupancy rate being achieved by the property was exceeding both the local and nationwide markets and was about average in terms of daily room rates. In his opinion, the superior occupancy rate was directly related to the Marriott name identification and franchise such that, if these elements were removed, the occupancy rate would drop significantly.
In order to eliminate the impact of these non-assessable factors in his projection of "gross possible annual income," Taxpayer's expert calculated income levels for the property based on market occupancy and room rental rates instead of the higher occupancy and rental rates being realized by Marriott. Significantly, he further testified that this was the same manner in which a prudent investor would project incomei.e., an investor would use market characteristics as opposed to actual operations of the property.
We find that the foregoing evidence adequately supports the Commission's decision to accept Taxpayer's expert's projection of "gross possible annual income" as the *382 starting point for its calculation of value pursuant to the income capitalization method. Although the precise numerical derivation of the figure set forth in the expert's testimony was not placed in evidence, the narrative explanation of the adjustments performed and the rationale therefor were sufficiently explained and justified to enable the Commission to evaluate the weight that should properly be accorded to the data supplied. The magnitude of the adjustment was readily apparent from a comparison to the actual income derived during the tax year. Moreover, assessments and the valuation of real estate for taxation are never subject to exact ascertainment and are, at best, matters of opinion and estimate on the part of the taxing officials. John Calvin Manor, Inc. v. Aylward, 517 S.W.2d 59, 63 (Mo.1974); Stein v. State Tax Commission, 379 S.W.2d 495, 498 (Mo. 1964). On this record, we find that Taxpayer's failure to supply greater detail in support of its mathematical calculations merely affects the weight, not submissibility of the evidence, a determination which lies within the sound discretion of the Commission. Assessor was afforded the opportunity to probe any perceived deficiencies on cross-examination. Under such circumstances we hold that the "gross possible annual income" figure was supported by substantial evidence and rule this contention against Assessor.
Assessor's final attack on valuation is that the "gross possible annual income" figure utilized in the Commission's calculation of value is contrary to the overwhelming weight of the evidence because it is lower than the actual income realized by the Marriott in both 1983 and 1984 and well below Marriott's own projections. However, in light of our determination that the evidence before the Commission fully justified a finding that Marriott's actual income reflected factors which are not attributable to the real property alone, it would be surprising if this was not the case. Indeed, the Commission's rejection of the "gross possible annual income" submitted by Assessor's expert was expressly attributed to his reliance on actual operating results instead of market data. We find no merit in Assessor's contention and therefore affirm the Commission's findings with respect to the value of the property.
Taxpayer's AppealAssessment Ratio
Taxpayer's appeal is directed to the assessment ratio applied to the property value determined by the Commission. Section 138.100.1(2)[4] requires that the assessed valuation of real property be reduced if its assessment percentage exceeds the average valuation of all real property in the county.[5] Pursuant to § 536.070(6), the Commission took official notice of its 1984 assessment ratio study and the fact that, as shown in such study, the average assessment ratio for real property in St. Louis County was 16.1%. This was the (rounded) arithmetic mean as indicated in the study. Taxpayer did not contest the methodology, findings, conclusions or the application of the ratio study to the subject property. However, both before the Commission and on appeal, Taxpayer objects to the application of the mean ratio of 16.1% contending that the "appropriate measure of central tendency" for the purpose of achieving equality of assessment is the 12.2 percent median ratio of assessment. Thus, Taxpayer maintains that the Commission improperly interpreted the terms "average valuation of all the real ... property of the county" appearing in § 138.100.1(2) to require use of the arithmetic mean ratio as opposed to the median ratio and that such interpretation does not satisfy the requirements of Article X, § 3 of the Missouri Constitution (1945) for uniformity *383 of taxation upon the same class of property within each taxing jurisdiction.
At first blush, Taxpayer's contentions appear to involve construction of the revenue laws and/or the state constitution, which are matters within the exclusive jurisdiction of the Missouri Supreme Court. Mo. Const., art. V, § 3. However, when an appeal can be disposed of by the application of a prior supreme court construction, the supreme court does not have exclusive jurisdiction. Knowlton v. Ripley County Mem. Hosp., 743 S.W.2d 132, 133 (Mo.App. 1988). Even if the supreme court has not addressed the argument directly, jurisdiction is not exclusive if the argument was addressed implicitly. Walter-Kroenke Properties v. State Tax Comm'n, 742 S.W.2d 242, 243 (Mo.App.1987). We hold that Taxpayer's appeal does not fall within the exclusive jurisdiction of the Missouri Supreme Court. Although characterized by Taxpayer as a question of statutory interpretation, upon closer analysis it is clear that Taxpayer's real complaint is that the Commission's order is not supported by substantial evidence.
Relying on Breckenridge Hotels Corp. v. Leachman, 571 S.W.2d 251, 252 (Mo.banc 1978), Taxpayer asserts that it is constitutionally entitled to have its assessment reduced to "the percentage of [true value] at which others are taxed." Acknowledging that § 138.100.1(2) provides for a reduction of assessments which are above the "average" valuation of real property in the county, Taxpayer maintains that the expert testimony adduced at trial established that (1) both the median and the mean are recognized measures of "central tendency"; (2) the median is the preferred measure of central tendency for assessment purposes and is the standard recognized by the International Association of Assessment Offices; and (3) the median will most typically be like all other ratio values with a greater degree of consistency than any other ratio value. Further, because the median is the absolute center of any group of numbers whereas the mean is produced by dividing the total of all ratios by the number of ratios, the mean will be influenced by outlying or extreme values whereas the median will remain relatively constant. Thus, according to Taxpayer's evidence, the median best typifies the assessed value of the mass of property within the county. Use of the median would ensure that 50% of properties were assessed at a ratio above the Taxpayer's property and 50% below. According to Taxpayer's expert, use of the mean in this instance results in an assessment ratio which is higher than 75% of properties and lower than just 25% of properties.
In sum, Taxpayer urges that the median assessment ratio provides competent and substantial evidence of the "percentage value at which others are taxed" whereas the mean ratio results in assessment of property at a greater proportion of true value than other property generally within the county. Thus, Taxpayer concludes, the Commission's adoption of the mean ratio as the average level of assessment for equalization purposes misinterprets and misconstrues § 138.100.1(2) and the uniformity provisions of the federal and state constitutions.
The most obvious deficiency in this analysis is that it focuses almost entirely on the issue of whether Taxpayer's position was supported by substantial evidence. On appeal from an order of the Commission, the issue is not whether the losing parties' position was supported by substantial evidence; it is whether the Commission's decision is supported by substantial evidence. The fact that the evidence might have supported a different result is irrelevant. If the evidence supports more than one finding, we are bound by the Commission's determination. Becker v. Missouri Dept. of Corr. & Human Serv., 780 S.W.2d 72, 76-77 (Mo.App.1989). Only if the decision reached by the Commission was arbitrary, capricious, unreasonable, unlawful, or in excess of the Commission's jurisdiction is there grounds for reversal. Savage v. State Tax Commission, 722 S.W.2d 72, 74-75 (Mo.banc 1986). Further, we must consider the evidence in the light most favorable to the Commission's decision. Hermel, Inc. v. State Tax *384 Commission, 564 S.W.2d 888, 894 (Mo.banc 1978).
In light of these principles, the Missouri Supreme Court's decision in Savage v. State Tax Commission, supra, is dispositive of the issues presented by Taxpayer's appeal. In Savage, the supreme court expressly held that the average level of assessment found by the Commission's ratio studies constitutes substantial evidence of the level at which other taxpayers similarly situated were assessed where, as here, there has been no general reassessment and there is no "common level of assessment." Savage, 722 S.W.2d at 79. Further, the court rejected the contention, similar to that advanced by Taxpayer here, that the language of Breckenridge Hotels Corp. v. Leachman, 571 S.W.2d 251, 252 (Mo.banc 1978), mandating assessment at the level "placed upon the general mass of other property in the county," requires a reduction to the "common" level as opposed to the "average" level. Id. "Average level of assessment" was expressly defined as the "arithmetic mean," the measure utilized by the Commission in this case. Id.
Taxpayer correctly observes that Savage did not consider whether the mean or the median ratio was the better measure of the level at which others were assessed. That is not the issue presented in this appeal either. As we have observed, the issue is whether the arithmetic mean ratio is substantial evidence of the level at which others are assessed, not whether some other measure might be equally good or even superior. Savage holds that the arithmetic mean ratio is sufficient evidence to support the Commission's reduction to that level as a remedy for discrimination caused by the failure to assess all property uniformly at the constitutionally required level. Thus, the Commission's use of the arithmetic mean is supported by substantial evidence.
Taxpayer's contention that "average" must be interpreted to mean "median" in order to satisfy constitutional uniformity requirements also presupposes a level of precision in assessment that has never been required. As our supreme court observed in Cupples Hesse Corp. v. State Tax Commission, 329 S.W.2d 696, 700 (Mo. banc 1959) and reconfirmed in Savage, 722 S.W.2d at 78-79, absent evidence of intentional discrimination, the recognized constitutional standard is that assessments must not be "so grossly excessive as to be inconsistent with an honest exercise of judgment." Such a standard recognizes that "while practical uniformity is the constitutional goal, absolute uniformity is an unattainable ideal." Savage, 722 S.W.2d at 78-79, quoting Justus v. Board of Equalization of Kootenai County, 101 Idaho 743, 620 P.2d 777, 781 (1980), and Sperry Corp. v. State Tax Commission, 695 S.W.2d 464, 467 (Mo.banc 1985). As the United States Supreme Court has observed, "mere errors of judgment do not support a claim of discrimination ... there must be something moresomething which in effect amounts to an intentional violation of the essential principle of practical uniformity." Sioux City Bridge Co. v. Dakota County, Neb., 260 U.S. 441, 447, 43 S.Ct. 190, 192, 67 L.Ed. 340, 343 (1923).
The dispute in this case does not involve an attempt to tax Taxpayer at the statutory level of one-third of true value while others have been assessed at a lesser percentage. Rather, the dispute is over how best to measure the percentage level at which others have been assessed so that the same ratio can be applied to Taxpayer. It is conceded that there was no single common level applied to all taxpayers. Under such circumstances, reasonable minds may well differ on the question of whether the median or the mean is the most representative measure. Neither measure would accomplish absolute uniformity unless every taxpayer appealed, in which case either measure, consistently applied, would result in uniformity.[6] There is no suggestion *385 that the mean was selected for discriminatory reasons or that the median and mean ratios produce such grossly disproportionate results as to be "inconsistent with the exercise of honest judgment." Indeed, Taxpayer concedes that the Commission utilized the mean in part to achieve consistency among all appeals for the 1984 tax year. Thus, there is no basis for a finding that the Commission's use of the arithmetic mean assessment ratio was unconstitutionally discriminatory and, consequently, no merit in Taxpayer's contention that the term "average" must be construed to mean "median" in order to satisfy constitutional uniformity requirements.
Finally, Taxpayer urges that the Commission's use of the mean assessment ratio is arbitrary, capricious and against the overwhelming weight of the evidence because the only witnesses who testified endorsed the median assessment ratio as the most appropriate equalization factor for equalizing assessment. This presupposes, of course, that the selection of the most appropriate factor was a matter beyond the Commission's own expertise. In this regard we note that the ratio studies themselves are conducted under the Commission's auspices. Further, as we have observed, the Missouri Supreme Court has held that the mean assessment ratio as found in the Commission's assessment ratio studies is substantial evidence of the level at which others are assessed and may be used for equalization purposes. Savage, supra, 722 S.W.2d at 79.
Under such circumstances, we believe that the Commission was free to reject the expert's recommendations that the median ratio be used to equalize the assessment. As we have seen, neither the mean nor the median embody a "common level" of assessment. There was no "common level" for the tax year. Further, the evidence supporting the use of the median was, at best, equivocal.[7] As our supreme court observed in Savage, the General Assembly has wisely provided an administrative agency to deal with the specialized problems of property tax assessment and courts are loathe to substitute their judgments for the Commission in such matters. Savage, 722 S.W.2d at 75. We find that the Commission's decision to use the mean assessment ratio to equalize Taxpayer's assessment was within its discretion and assigned area of expertise and was not contrary to the overwhelming weight of the evidence.
For the foregoing reasons, we conclude that Taxpayer's appeal involves only evidentiary issues within our jurisdiction and affirm the Commission's order with regard to equalization of Taxpayer's assessment.
CARL R. GAERTNER, P.J., and CRANE, J., concur.
NOTES
[1] We need not recount in detail the lengthy procedural history which delayed appellate disposition of a 1984 tax assessment until 1993. We note, however, that the cases did not reach this Court until 1992. Briefing was not completed until late 1992 and oral argument and final submission occurred on January 20, 1993.
[2] All statutory references are to RSMo. 1986 unless otherwise indicated.
[3] Tangible personal property is, of course, also taxable, but is not included in the subject property of this appeal, which concerns only the assessment of the real property. § 137.010(4) RSMo. 1986.
[4] Section 138.100.1(2) provides:
(2) They shall reduce the valuation of such tracts or parcels of land or of any tangible personal property which, in their opinion, has been returned above its true value as compared with the average valuation of all the real and tangible personal property of the county.
[5] Strictly speaking, § 138.100.1(2) applies to the Board of Equalization. However, as the Commission recognized, the Commission is obliged to enforce this provision on appeal. See §§ 138.410(1), 138.430(2); State ex rel. Cassilly v. Riney, 576 S.W.2d 325, 330 (Mo. banc 1979).
[6] Contrary to Taxpayer's contentions at the hearing and in its brief, the mean would not change with each revaluation on appeal. The mean utilized by the Commission is the arithmetic mean of a statistically valid sample of properties that is not recalculated with each revaluation. Rather, its value is fixed at the time the ratio study is performed and does not change thereafter. The same is true of the median. Therefore, if every taxpayer appealed and obtained relief, adjusting all taxpayers to either the mean ratio or the median ratio would result in uniformity.
[7] For example, Mr. Follina, the manager of ratio studies of the Commission, admitted that his study resulted in a non-normal distribution pattern and that given such a pattern, the mean ratio would be the more appropriate and representative measure of determining central tendency.
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852 S.W.2d 525 (1993)
The STATE of Texas, Appellant,
v.
Billy ROSENBAUM, Appellee.
No. 865-92.
Court of Criminal Appeals of Texas, En Banc.
May 5, 1993.
Dick DeGuerin, Houston, for appellee.
Jim James, Special Prosecutor, Bryan, Robert Huttash, State's Atty., and Carl E.F. Dally, First Asst. State's Atty., Austin, for appellant.
Before the court en banc.
OPINION ON STATE'S PETITIONS FOR DISCRETIONARY REVIEW
MILLER, Judge.
Appellee was indicted for perjury and aggravated perjury. Because the District Attorney could be called to testify, the district attorney moved that he and his staff be disqualified. The district judge *526 granted the motion and disqualified the District Attorney and his staff from prosecuting the case. By court order, the district judge appointed a special prosecutor[1] to "investigate" and "prosecute" the case. Subsequently, the trial court quashed the indictment of appellee for aggravated perjury. The State appealed the court order to quash as authorized by Article 44.01(a)(1), Vernon's Annotated Code of Criminal Procedure. Moreno v. State, 807 S.W.2d 327 (Tex.Crim.App.1991); Garrett v. State, 824 S.W.2d 181 (Tex.Crim.App. 1992). The special prosecutor timely filed notice of appeal with the Fourteenth Court of Appeals.
The Court of Appeals relied on State v. Muller, 829 S.W.2d 805 (Tex.Crim.App. 1992), and held that it was without jurisdiction to consider the merits of the appeal because the requirements of Art. 44.01(d), V.A.C.C.P., had not been met. The court of appeals held that the requirements were not met because no express or specific authorization[2] to make the appeal was given to the special prosecutor by the District Attorney. State v. Rosenbaum, 830 S.W.2d 793 (Tex.App.Houston 1992).
We granted review of the State's petitions for discretionary review to determine if a proper appeal may be made by a special prosecutor, appointed by court order to replace a disqualified district attorney, without authorization from that district attorney. We will reverse the court of appeals and remand for consideration of the merits of the State's appeal.
In State v. Muller, 829 S.W.2d at 809, this Court held "prosecuting attorney" as used in 44.01(d) means "the county attorney, district attorney, or criminal district attorney who has the primary responsibility of prosecuting cases in the court hearing the case and does not include an assistant prosecuting attorney." Muller, 829 S.W.2d at 809. In Muller, an assistant prosecuting attorney filed an appeal. This Court held that Art. 44.01 did not allow the elected district attorney's subordinate to make an appeal. We held that Art. 44.01(d) plainly on its face did not include an assistant prosecutor or other subordinate. Id. We also held that this interpretation of Article 44.01(d) applied to all parts of Article 44.01. Ibid. at 810.
Because of 44.01(d) we held that "the phrase `make an appeal' clearly requires... the prosecuting attorney to personally supervise and authorize the appeals to be undertaken by his office on behalf of the State." Id. However, we also pointed out that the appeal does not necessarily need to carry the prosecuting attorney's signature. This just requires the prosecuting attorney to "`make an appeal' by personally authorizingin some fashionthe specific notice of appeal in question. More specifically... he must either physically sign the notice of appeal or personally instruct and authorize a subordinate to sign the specific notice of appeal in question." Id.
In the instant case the Honorable John L. Placke disqualified the District Attorney, Charles J. Sebesta, Jr., and his staff by granting the State's Motion for Appointment of Special Prosecutor. The district attorney's office was disqualified because the DA could be called to testify in appellee's trial for perjury. Judge Placke then appointed special prosecutor, Jim W. James, by a court order to "investigate" and "prosecute" the case.[3]
At a pretrial hearing after the appointment of James, the Honorable Larry Gist quashed a portion of the indictment for lack of materiality. James gave timely notice of appeal of the order to quash which he signed and filed in the Fourteenth Court of Appeals. The elected District Attorney did not sign the notice of appeal as prior to the filing of the notice of the appeal, the disqualified district attorney made motion *527 to the court that he not be required to sign the appeal.
The State agrees with Judge Ellis' dissenting opinion in the Court of Appeals and contends that the special prosecutor is authorized to perform all duties of the district attorney and has all the powers of the district attorney; thus, the special prosecutor "steps into the shoes" of the district attorney. The State alleges that the power to make an appeal is included in the powers of the district attorney; therefore, the State claims the appellate court had jurisdiction to consider the merits of its appeal.
Appellee counters that the requirements for a proper appeal by the state in Art. 44.01(d) were not met. Appellee claims that the special prosecutor was without authority to make the appeal under Article 44.01(d); and, therefore, notice of appeal was never properly given by the State. Appellee asserts that since notice was not properly given, the appellate court was without jurisdiction to consider the appeal.
The result reached by the Court of Appeals is reasonably understood from our language in Muller, 829 S.W.2d 805, where we stated that Article 44.01 requires the elected "prosecuting attorney" (and not his assistant) to "make" the State's "notice of appeal ...", and that the prosecuting attorney "must physically sign it [the notice of appeal], or personally instruct and authorize a subordinate to sign the specific notice of appeal in question." However, we agree with the State that the case before us is distinguishable, on its facts, from State v. Muller, 829 S.W.2d 805.
According to Muller, 829 S.W.2d at 809, this Court interpreted Article 44.01 to mean that only the actual prosecuting attorney, not a subordinate to the prosecuting attorney, may make an appeal for the state. However, Muller did not cover the situation presented in this case where the district attorney is altogether removed from a case and a special prosecutor is substituted for that district attorney.
Article 2.07(b-1), V.A.C.C.P., allows the district attorney to recuse himself from a case if necessary. Upon approval of the recusal request by the judge, the district attorney is considered disqualified. Art. 2.07(b-1), V.A.C.C.P. Article 2.07(a) provides that if the attorney for the state[4] is disqualified[5], a judge "may appoint any competent attorney to perform the duties of the office during the absence or disqualification of the attorney for the state." V.A.C.C.P. 2.07(b-1). Article 2.07(a) states plainly that the pro tem attorney will perform the duties of the district attorney.[6]
In addition, over 120 years ago the Texas Supreme Court (then vested with general authority over criminal matters) held that "an attorney pro tem appointed by the court has all the powers and duties of the regular prosecuting attorney." State v. Lackey, 35 Tex. 357 (1872). Thus, if a district attorney is disqualified, the court may appoint any competent attorney to assume all the district attorney's duties and powers during his disqualification.
In this case the trial judge followed Article 2.07 by appointing James to perform the duties of Charles J. Sebesta, Jr., the disqualified district attorney. By his request to be disqualified the district attorney manifested his intention to give his full power and authority to the special prosecutor in the case. In addition, his request not to sign the appeal shows he still believed that the special prosecutor had full power and control over the case.[7]
*528 As previously discussed, an attorney pro tem or special prosecutor takes the place of the disqualified district attorney assuming all the district attorney's powers and duties in the case. Therefore, the special prosecutor is not subject to the direction of the disqualified district attorney as is a subordinate, but, for that case, he is the district attorney. Thus, this case before us is distinguished from Muller because no subordinate to the district attorney is involved, but a substitute who was given the primary responsibility for the case by court order.
We find that the special prosecutor was given all the powers and duties of the district attorney by the court order to "investigate" and "prosecute" the case; thus, the special prosecutor had, included in the powers of the district attorney, the authority to make the appeal of the district court's order. We hold that upon the timely filing of the notice of appeal, the Court of Appeals had jurisdiction. The State's ground for review is sustained.
Accordingly, the judgment of the Court of Appeals is reversed and we remand this cause to the Court of Appeals for consideration of the merits of the State's appeal.
CLINTON, Judge, concur.
The Constitution of the State of Texas contemplates "the election of District Attorneys in such districts, as may be necessary." Article V, § 21; Interpretive Commentary. Accordingly, the Legislature has mandated that voters of Washington and Burleson counties elect a district attorney to represent the State in the district court for the 21st Judicial District. V.T.C.A. Government Code, § 43.108. Agreeing with the result reached by the court, nevertheless I believe this cause presents a question of constitutional dimension that must be examined and considered with more care.
I
Ever since at least 1858 the Legislature has assigned to district attorneys a basic duty of office relative to criminal prosecutions, viz:
"It is the duty of each District Attorney to represent the State in all criminal cases in the District Courts of his District, except in cases where he has been, before his election, employed adversely..."
Article 2.01, V.A.C.C.P.[1]
Early on, should the district attorney be absent, the district judge had the power to appoint an attorney at the bar to perform the prosecutorial duties of the district attorney, including preparing such indictments as the grand jury may request. Upon taking the constitutional oath of office the appointee became "district attorney pro tem." State v. Lackey, 35 Tex. 357 (1872); Bennett v. State, 27 Tex. 701 (1864); State v. Gonzales, 26 Tex. 197 (1862); State v. Johnson, 12 Tex. 231 (1854).
Later, the Legislature sanctioned and formalized the practice with provisions that with modifications remain in effect to this day. Article 2.07(a), V.A.C.C.P., as amended.[2]
Thus, as correctly discerned by the State:
*529 "... It has been the law in this State for over 120 years that: `A district attorney pro tem is legally authorized to do whatever the law authorizes a district attorney to do.' State v. Lackey, 35 T 357 (1982)."
State's PDRs and Briefs, at 8.[3]
II
In this cause the elected district attorney chose to recuse himself and his "staff" under recently enacted § 2.07(b-1). Presumably because his pleading is styled a motion for "appointment of a special prosecutor," the majority appears to treat a "district attorney pro tem" and a "special prosecutor" functionally synonymously, without any distinction. Majority Opinion, passim, and at 527. In that, I believe, are seeds for producing confusion between the two positions.
The term "special prosecutor" first appeared in any code of criminal procedure with the revision of 1965, when the revisors added to Article 2.01, the following admonition:
"... It shall be the primary duty of all prosecuting attorneys, including any special prosecutor, not to convict, but to see that justice is done. They shall not suppress facts or secrete witnesses capable of establishing the innocence of the accused."
See Special Commentary and Historical Note.[4]
Both the State Prosecuting Attorney and the "special prosecutor" distinguish a "district attorney pro tem" from a "special prosecutor," pointing out as to the latter, viz:
"... In some instances a so called `special prosecutor' may assist a district attorney in investigating and prosecuting a particular case, but the prosecuting attorney in that instance is responsible for and in control of the prosecution. See Davis v. State, 148 Tex.Crim. 499, 188 S.W.2d 397 (App.1945); Lopez v. State, 437 S.W.2d 268 (Tex.Cr.App.1968)."
PDR and Briefs, at 8. Those cases and others make clear the distinction between the two positions.
Basically, a "district attorney pro tem" is appointed by the district court, and after taking the oath of office assumes the duties of the elected district attorney and in effect replaces the latter in performing germane functions of office for purposes contemplated by the appointment. On the other hand, a "special prosecutor" is permitted by the elected district attorney to participate in a particular case to the extent allowed by the prosecuting attorney, without being required to take the constitutional oath of office.[5]
*530 While some opinions express the view that the trial judge has some discretion in the matter, especially when objection is made, it is enough today that we draw germane distinctions between a district attorney pro tem and a "special prosecutor" to demonstrate that the office of the former is not the same as the position of the latter.
With those cautions and observations, I join the judgment of the Court.
NOTES
[1] We use the term "special prosecutor" because that is the term used by the parties and the court of appeals. We acknowledge, however, the remarks of our brother Clinton in his concurring opinion noting the proper categorization of special prosecutor and district attorney pro tem.
[2] All emphasis supplied by this author unless otherwise indicated.
[3] James took the required oath of office which was filed with the order.
[4] Attorney for the state includes "a district attorney." Art. 2.07(d), V.A.C.C.P.
[5] Article 2.07(b-1) allows the district attorney to recuse himself from a case if necessary. Upon approval of the request by the judge, the district attorney is considered disqualified. Art. 2.07(b-1), V.A.C.C.P.
[6] This Court has held that when interpreting a statute, one must "necessarily focus on the literal text of the statute in question." State v. Muller, 829 S.W.2d at 808; citing Boykin v. State, 818 S.W.2d 782 (Tex.Crim.App.1991). "Even though another reading may be more `desirable,' the court may not strain the plain meaning of the statute." Muller, 829 S.W.2d at 808; Smith v. State, 789 S.W.2d 590 (Tex.Crim. App.1990).
[7] The filing of this motion is not critical to our analysis nor is it a determining factor in our analysis of this case. This motion, however, does evidence the district attorney's intent that the special prosecutor was to act, in all respects, as the district attorney on this case.
[1] Act of February 15, 1858; Article 30, C.C.P. 1856, as amended; Oldham & White, Digest of the General Statute Laws of the State of Texas 571 (1859); article 31, C.C.P. 1979; article 30, C.C.P. 1895; article 30, C.C.P. 1911; article 25, C.C.P. 1925.
All emphasis is mine unless otherwise indicated.
[2] See and compare Act of August 7, 1876, p. 87, § 12; article 39, C.C.P. 1879; article 38, C.C.P. 1895; article 38, C.C.P. 1911; article 31, C.C.P. 1925; article 2.07, C.C.P. 1965. All authorized the trial judge to appoint a district attorney pro tem "to perform the duties" whenever the district attorney "shall fail to attend any term of the district [court;]" the appointee was allowed the same compensation for his services as the district attorney, his appointment was not to exceed beyond term of court and was vacated "upon the appearance of the district [attorney]."
In 1967 the Legislature cast the need for an appointment solely in terms of the district attorney being "disqualified in any case." Acts 1967, 60th Leg., Ch. 659, p. 1733, § 4.
Later the Legislature restored the circumstance of "absence," and added as well "otherwise unable to perform the duties of his office, or in any instance where there is no attorney for the State." Acts 1973, 63rd Leg., Ch. 154, p. 356, § 1.
That an otherwise qualified attorney for the State may be allowed to recuse himself "for good cause" and then be considered "disqualified" was added by Acts 1987, 70th Leg, Ch. 918, p. 3107, § 1.
[3] The State Prosecuting Attorney filed the principal PDR and Brief in Support Thereof. The district attorney pro tem, though calling himself "special prosecutor," also filed a PDR and supporting brief, conceding that his is "taken directly and verbatim" from the former because it "adequately and forthrightly presented the State's argument in this case." Id., at 9. Compare majority opinion, at 528, n. 2.
[4] In Lopez v. State, 628 S.W.2d 77 (Tex.Cr.App. 1982), the Court construed this passage to apply to "a privately retained attorney employed to prosecute the case." Id., at 80. It is unclear whether the attorney was assisting in or solely engaging in the prosecution, but in any event it does appear that he was not a court appointed district attorney pro tem.
[5] See, e.g. Lopez v. State, 628 S.W.2d 77, at 80 (Tex.Cr.App.1982); Reed v. State, 503 S.W.2d 775, at 776 (Tex.Cr.App.1974); Ex parte Powers, 487 S.W.2d 101, at 104 (Tex.Cr.App.1972); Lopez v. State, 437 S.W.2d 268, at 269 (Tex.Cr.App. 1968); Figueroa v. State, 375 S.W.2d 907 (Tex. Cr.App.1964); Bingham v. State, 163 Tex.Cr.R. 352, 290 S.W.2d 915, at 918-919 (1956); Loshe v. State, 160 Tex.Cr.R. 561, 272 S.W.2d 517, at 519, 520 (1954); Phillips v. State, 159 Tex.Cr.R. 286, 263 S.W.2d 159, at 160 (1953); Davis v. State, 148 Tex.Cr.R. 499, 188 S.W.2d 397, at 399-400 (1945); see also Harwell v. State, 149 Tex.Cr.R. 559, 197 S.W.2d 349, at 350 (1946); Fitzgerald v. State, 722 S.W.2d 817, at 820 (Tex.App.Tyler 1987) (assistant district attorney of another county serving as special prosecutor), affirmed on other grounds, 782 S.W.2d 876 (Tex.Cr.App. 1990); Liveoak v. State, 717 S.W.2d 691, at 694 (Tex.App.San Antonio 1986), PDR refused with disclaimer on other ground, 741 S.W.2d 451 (Tex.Cr.App.1987).
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852 S.W.2d 122 (1993)
313 Ark. 1
FAYETTEVILLE SCHOOL DISTRICT NO. 1, Appellant,
v.
ARKANSAS STATE BOARD OF EDUCATION, Appellee.
No. 92-1226.
Supreme Court of Arkansas.
May 3, 1993.
*123 Rudy Moore, Jr., Fayetteville, for appellant.
Sharon Carden Street, Tim Humphries, Sr. Asst. Atty. Gen., Little Rock, for appellee.
HOLT, Chief Justice.
The Fayetteville School District No. 1 (the School District) appeals the denial of its request for a permanent injunction by the Pulaski County Chancery Court to halt the State Board of Education (the Board) from withholding Minimum Foundation Program Aid (MFPA) funds the Board claims it overpaid the School District in the total amount of $623,535 over the budget years of 1984-85 and 1985-86. The Board notified the School District on July 18, 1988 that $124,707 would be withheld from the School District's 1988-89 budget and that the remaining $498,828 would be withheld in the same manner from the District's future MFPA proceeds pursuant to Ark. Code Ann. § 6-20-310 (Supp.1991). We affirm the chancellor's rulings.
This controversy arose from our decisions in Arkansas Pub. Serv. Comm'n v. Pulaski County Bd. of Equalization, 266 Ark. 64, 582 S.W.2d 942 (1979) and Dupree v. Alma Sch. Dist. No. 30, 279 Ark. 340, 651 S.W.2d 90 (1983) and the remedial legislation passed by the Arkansas General Assembly in response to these decisions. In Public Serv. Comm'n v. Pulaski County, supra, we held that our constitution requires that all property subject to taxation must be taxed according to its value and that this value must be equal and uniform throughout the state. To put this holding into effect, we affirmed the trial court's approval of an agreement of all the parties in litigation, except one which had not argued the matter in its brief, for statewide reassessment over a five year period commencing January 1, 1981. Under this plan, our seventy-five counties were put into groups of fifteen counties to be reassessed each year named Groups One through Five, respectively. The order of placement of counties within these groups was to proceed from those counties which were deemed to have the greatest disparity between assessed and actual values to those with the least disparity.
Later in Dupree, supra, we declared the funding formula for state aid to local school districts to be unconstitutional and found that the ongoing reassessment of our counties required by Public Serv. Comm'n v. Pulaski County, supra, would not alter this holding.
Following Dupree, the General Assembly passed the School Finance Act of 1984, now Ark.Code Ann. § 6-20-301 through § 6-20-319 (1987 & Supp.1991), which contained an equalizing formula whereby a school district's local wealth per student determined the amount of state aid per student the district received thus guaranteeing that the combination of local and state monies would equal a minimum amount per student. This Act took into account the fact that the fifteen counties in Group Four were to be reappraised in the 1984-85 school year and the fifteen counties in Group Five were to be reappraised in the 1985-86 school year. It further provided that until actual reassessments for the districts in Groups Four and Five could be undertaken, MFPA levels would be based on estimates made by the Assessment Coordination Division of the Public Service Commission. Specifically, Ark. Code Ann. § 6-20-310(a) (Supp.1991) provided for "set-aside funds" or an adjustment against funds the school district was to receive if the actual, reassessed property value exceeded the former value by greater than five percent:
Funds shall be set aside from the total monies available for allocation under the provisions of this Act for adjustments in aid allocation for any district whose actual real property assessment, when certified by the county clerk and/or the county school supervisor, has increased or decreased by more than five percent from the projected amount used in determining aid for the district. The Department of Education shall adjust to the five *124 percent level in the year in which the funds are distributed. This provision shall only apply in the 1984-85 year to districts in the fifteen counties completing the reappraisal process in that year and in 1985-86 to only the districts located in those counties completing the reappraisal process in that year.
Section 6-20-310(a) was amended by Act 674 of 1985 to allow the Department of Education to recover overpayment amounts over a two year period for districts whose repayment amounts were significant. It was again amended by Act 203 of 1987 to provide additional relief to districts with significant repayment amounts by allowing repayments to be spread out over five rather than two years and by Act 480 of 1989 to ensure that any increase in MFPA due to increased enrollment was deleted from the calculation of a district's increase in MFPA for the purpose of calculating the amount of repayment.
In 1985, Washington County reassessed its property. The Board of Education claimed the increase in current market values of property in that county resulted in overpayment by the state of $623,535 recoverable by the state pursuant to Ark. Code Ann. § 6-20-310(a) (Supp.1991). The School District sought a preliminary injunction to stay the withholding of the first installment, $124,707, claiming it would suffer irreparable harm, but this was denied after a hearing. The School District then filed an amended complaint seeking a permanent injunction on constitutional grounds. The case was submitted to a chancellor upon stipulated facts, briefs, and the testimony given in the prior hearing on the District's motion for a preliminary injunction. The chancellor found that the School District had failed to establish that the payback provisions of the 1984 School Finance Act were unconstitutional, arbitrary, or inequitably applied and denied the District's request for a permanent injunction.
Testimony by witnesses for the School District revealed that the last counties to be reappraised, those in Groups Four and Five, were purposefully saved for last because they were deemed to have the smallest disparity between reassessed and actual values.
The procedure under the School Finance Act was that the Assessment Coordination Division of the Public Service Commission was to provide estimates of reappraised values for school districts in Groups Four and Five until actual reappraisals were completed. Once reappraisal was completed, the Assessment Coordination Division was to make another estimate of what the property should have been appraised for in those previous two years, and if the variance between this second estimate and the actual value is greater than five percent, a reclamation of aid was to take place.
In support of its claim of irreparable harm, the District presented testimony that under the School Finance Act of 1984, 70% of a school district's current net revenues are to be spent on salaries and benefits for teachers and administrators, and the School District did this with the monies received which the Board is now seeking to reclaim. Furthermore, school districts in Arkansas are required to renew the contracts of their teachers and administrators for a subsequent year at the same terms as the previous year, so now the School District is locked into contracts at certain rates based on the monies received from the Board which the Board now wants back. Since this salary expense is set, the shortfall in revenue comes out of supplies, maintenance, and salaries for support staff.
Other testimony presented by the District revealed that the counties in Groups Four and Five which received MFPA funds based on estimates of fair market value which the Board subsequently determined to be in error were the only districts in the state subject to the retroactive payback provisions of the Act.
The Board responded by putting on evidence that the School District failed to show irreparable harm was wrought by the withholding of $124,707 in MFPA funds during the 1988-89 school year. While the School District argues that the withholding of funds created a great hardship, in fact the District ended the 1987-88 school year *125 and thus went into the 1988-89 year with a budget surplus of $977,211. Also, the amount withheld was only 1.66% percent of $7,525,243, the total MFPA funds received by the District for the 1988-89 school year.
POINT I: DID THE SCHOOL FINANCE ACT OF 1984 AS AMENDED REPRESENT SPECIAL AND LOCAL LEGISLATION IN VIOLATION OF AMENDMENT 14 OF THE ARKANSAS CONSTITUTION?
Amendment 14 to the Arkansas Constitution provides that the "General Assembly shall not pass any local or special act."
The School District argues that the School Finance Act of 1984 violates this constitutional prohibition because the effect of the law is to arbitrarily separate certain school districts from the benefits of the Act, whereby, the only school districts which are forced to repay overpayments of state aid are those in the Fourth and Fifth Groups which were given erroneous estimates by the Assessment Coordination Division. In addition, Groups Four and Five contain the only school districts which must pay back overpayments while other categories of school districts, i.e., isolated schools, hardship or emergency schools, schools consolidated in 1983-84 or 1985-86, and schools with less than 360 students average daily membership were either allowed gradual or no reduction in overpayments.
In Owen v. Dalton, 296 Ark. 351, 757 S.W.2d 921 (1988), we held:
An act is special if by some inherent limitation or classification it arbitrarily separates some person, place, or thing from those upon which, but for such separation, it would operate, and the legislation is local if it applies to any division or subdivision of the state less than the whole;
and in City of Little Rock v. Waters, 303 Ark. 363, 371, 797 S.W.2d 426 (1990), we specifically stated that just because a statute may ultimately affect less than all the state's territory it does not necessarily render it local or special.
In evaluating the facts, the chancellor noted that the determinative factor is whether the General Assembly acted in an arbitrary manner to separate one division of the state from another. We apply the rational basis test to determine whether such a separation is arbitrary. Streight v. Ragland, Comm'r, 280 Ark. 206, 655 S.W.2d 459 (1983). Under the rational basis test, legislation is presumed constitutional and rationally related to achieving any legitimate governmental objective under any reasonably conceivable fact situation. Id. This presumption places the burden of proof on the party challenging the legislation to prove its unconstitutionality, i.e., that the legislation is not rationally related to achieving any legitimate objective of the government under any reasonably conceivable fact situation. Phillips v. Giddings, 278 Ark. 368, 646 S.W.2d 1 (1983). The School District had the burden of showing that the General Assembly acted arbitrarily when it implemented the School Finance Act of 1984 in its amendments and it has failed in this regard.
The Board cites Thomas v. Foust, 245 Ark. 948, 435 S.W.2d 793 (1969), for the rule that even though a law is limited in effect to only a few classifications, it is not necessarily special or local legislation if the classification is not arbitrary and bears a reasonable relation to the purpose of the law. We hold that the rule in Thomas v. Foust, supra, controls and agree with the trial court's detailed and well reasoned opinion in which the chancellor found that the School Finance Act of 1984, as amended, was general legislation and not special or local legislation because it bears a reasonable relationship to the law.
The purpose of the Act was to provide more equitable school funding which in turn was dependent on assessments that were based upon current market values established by reassessment. The districts singled out for classification into Groups Four and Five were those in which reassessment would not be complete and which would therefore require special treatment to take that into account.
As was aptly stated by the chancellor:
It is clear that the General Assembly had to rectify one problem prior to the solving *126 of another. After Alma, the legislature had to formulate a method to allocate MFPA when some real property values were unavailable since county-wide reappraisal had not been completed. The plaintiff has failed to prove that the legislation did not have a rational basis, i.e., an attempt to fairly distribute state aid on a per student basis when some counties had not completed reappraisal. The counties in the fourth and fifth-year reappraisal groups were treated similarly under the act and necessary adjustment would be made in all school districts in those counties. Although these school districts were treated differently than the districts in the first three groups of counties, the intended result was that, after adjustment, all the districts would eventually be treated equally.
All legislative acts are presumed to be constitutional, and all doubts will be resolved in favor of an act's constitutionality if it is possible to do so. Davis v. Cox, 268 Ark. 78, 593 S.W.2d 180 (1980). In light of this rule and the findings of the chancellor, we hold that this School Finance Reform Act of 1984 is constitutional.
POINT II: DOES THE 1984 SCHOOL FINANCE ACT, AS AMENDED, VIOLATE ARTICLE 14, SECTION 2 OF THE ARKANSAS CONSTITUTION?
Article 14, § 2 of the Arkansas Constitution states:
No money belonging to the public school fund, or to this State for the benefit of schools or universities, shall ever be used for any other than for the respective purposes to which it belongs.
The School District argues that public policy and cases following Lepanto Special Sch. Dist. v. Marked Tree Special Sch. Dist., 173 Ark. 82, 291 S.W. 1006 (1927), support the rule that a school district cannot be compelled to repay funds erroneously apportioned to it if such funds were consumed for educational purposes. See Newark Sch. Dist. v. Cord-Charlotte Sch. Dist., 278 Ark. 110, 644 S.W.2d 253 (1983).
The School District erroneously states "Lepanto says such funds are not recoverable from the School District and to do so would implicitly violate Article 14, Section 2 of the Arkansas Constitution." We assume the District intended Section 3 rather than Section 2, since in Lepanto we cited Section 3:
This court is committed to the doctrine that school taxes erroneously levied and distributed, pursuant to the levy, to a school district and consumed in educational purposes, cannot be recovered by the school district rightfully entitled thereto. The district to which the taxes rightfully belonged should have proceeded by injunction or other proper remedy to prevent the wrongful assessment, levy and distribution of taxes, or else have brought a suit for recovery of such taxes before they were expended for educational purposes by the district wrongfully receiving them.
Appellant contends, however, that the rule therein announced is in conflict with the last proviso of § 3, Article 14, of the Constitution of the State. The proviso referred to is as follows:
Provided, further, that no such tax shall be appropriated to any other purpose not to any other district than that for which it was levied.
Lepanto Special Sch. Dist. v. Marked Tree Special Sch. Dist, 173 Ark. 82, 83-4, 291 S.W. 1006, 1007 (1927). Also, Newark Sch. Dist., supra, does not cite Article 14 at all.
The Board in its argument distinguishes Lepanto and replies that the legislative enactments which provide recoupment of the overpaid funds was a valid legislative exercise complimenting our decisions in Dupree v. Alma Sch. Dist. No. 30, 279 Ark. 340, 651 S.W.2d 90 (1983) and Arkansas Pub. Serv. Comm'n v. Pulaski County Bd. of Equalization, 266 Ark. 64, 582 S.W.2d 942 (1979). We agree.
We also agree with the chancellor that the School District failed to discern the important differences between the Lepanto case and the present case. The Lepanto Court was not considering a state statute which required the state to pay a school district less MFPA in a subsequent year because of an overpayment based on assessed valuation prior to the Pub. Serv. *127 Comm'n case in a previous school year. Also, in Lepanto we held that one school district could not recover funds to which it is entitled from another school district who had expended those funds, not, as here, that the state acting according to state law could not recover funds from a school district. For these reasons, Lepanto offers no precedential authority for the District's proposition.
It is obvious to us that the payback provisions of the School Finance Act of 1984 as amended represent a legal recoupment of state funds. In order for the state to distribute state funds to school districts, the state had to devise a mechanism which considered the outcome of the Publ. Serv. Comm'n case directing reassessment of property and the Dupree case holding the school finance formula unconstitutional. Without considering both of these cases, there was no way to legally distribute state funds to school districts. The School Finance Act and subsequent amendments defined how state funds would be distributed while the Assessment Coordination Division reassessed property values throughout the state. Since this court ordered reassessment and determined when each county would be assessed, the General Assembly rightfully addressed through these enactments, the flow of state funds, all of which were within the parameters established by this court's opinions.
POINT III: DOES THE 1984 SCHOOL FINANCE ACT AS AMENDED PROVIDE EQUAL AND UNIFORM ASSESSMENT OF REAL PROPERTY IN THE SCHOOL DISTRICT AS REQUIRED BY ARTICLE 16, SECTION 5, OF THE ARKANSAS CONSTITUTION?
Article 16, § 5, in part, requires "all real and tangible personal property subject to taxation shall be taxed according to its value, that value to be ascertained in such manner as the General Assembly shall direct, making the same equal and uniform throughout the state." The School District argues that since Arkansas Pub. Serv. Comm'n v. Pulaski County Bd. of Equalization, supra, defined "value" as "current market value," the use of estimates of value by the PSC in determining the MFPA funds to be received and subsequently recouped from districts in Groups Four and Five is unconstitutional. The School District cites no authority in support of this argument, and we will not address arguments not supported by authority. Goodwin v. Harrison, 300 Ark. 474, 780 S.W.2d 518 (1989) (assignments of error that are unsupported by convincing argument or authority will not be considered on appeal unless it is apparent without further research that they are well taken).
For all the foregoing reasons, we affirm.
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852 S.W.2d 150 (1993)
42 Ark.App. 5
James P. O'FLARITY, Conservator of the Estate of Jessie E. O'Flarity, Appellant,
v.
Gloria M. O'FLARITY, Appellee.
No. CA 92-912.
Court of Appeals of Arkansas, Division II.
April 28, 1993.
*152 W.J. Walker, Leonard L. Scott, Little Rock, for appellant.
Robert S. Laney, Camden, for appellee.
ROGERS, Judge.
At issue in this appeal is the extent to which two co-depositors, Jessie E. O'Flarity and Gloria M. O'Flarity, appellee, own the funds in a joint account. Appellant, James P. O'Flarity, is conservator of the estate of his mother, Jessie E. O'Flarity. Appellant brings this appeal from the ruling of the probate judge that Jessie O'Flarity and appellee own fifty percent of the funds in the account in question.
Because of Jessie O'Flarity's failing health, appellant was appointed conservator of her estate in 1991. Acting in that capacity, he then withdrew all the funds from the joint account in question held in the names of "Gloria M. or Jessie E. O'Flarity." Appellee then brought suit to recover such sums, claiming ownership of the money in the account she and her mother had. The probate judge found that all of the funds in the account, which had an ending balance of $106,262.31, could not be traced but concluded that appellee and her mother, Jessie, each were entitled to fifty percent of the account.
On appeal, appellant first argues the probate judge erred in determining appellee was entitled to one-half of the joint account. In this regard, he asserts that appellee failed to carry the burden of proving a gift of the funds was made to her. We do not agree.
Appellee and her mother lived together from 1968 to 1991. In 1968, appellee opened an account under the names of "Gloria M. or Jessie E. O'Flarity." The account was taxed under appellee's social security number, and deposits to the account were made from appellee's social security, disability, and retirement Veteran's payments, as well as other sources. Jessie O'Flarity purchased a house in 1969 and a second house in 1970. In 1971, she deeded both properties to Jessie E. O'Flarity and Gloria Marie O'Flarity as joint tenants with right of survivorship. Jessie and Gloria lived in one house and rented the other. In 1989, both properties were sold, and the proceeds were ultimately deposited in the joint account. In connection with the sale of one of the properties, the buyer executed a promissory note payable to both Jessie and Gloria, and the monthly payments were deposited in their joint account. Other funds contributed to the account were proceeds from the sale of school bonds originally purchased by Jessie and held jointly by Jessie and Gloria.
Appellee testified that she made additional deposits to the account from the proceeds of her individual savings account, the sale of personal property, and various insurance proceeds. She also stated that, during the twenty-three years she and her mother lived together, she took care of making all the deposits to and withdrawals from their joint account and that their living expenses were paid for in part from the account. She testified that she and her mother both provided the funds deposited in the account and that her mother had told her she wanted appellee to have such funds.
Appellee testified that she was the one that opened the bank account in 1968; because she was disabled, she put her mother's name on the account so that, if appellee died, her mother would have access to the money. She testified that all of her disability and social security checks were deposited into the account and that, in 1968, the monthly amount of those checks was approximately $1,000.00 and had increased to over $2,200.00 by the time of the hearing. She also testified that her mother had a separate bank account of her own, to which her mother deposited her own social security checks and various other funds. Gloria testified that she and her mother lived in one of the houses her mother had *153 purchased and rented the other and that Gloria paid all of the taxes, insurance, and upkeep on the rental house. She stated that she was aware that her mother deeded both pieces of property to Jessie E. O'Flarity and Gloria Marie O'Flarity as joint tenants with right of survivorship and that her mother did so because she wanted appellee to have that property. She also testified that, upon the sale of one of those properties, she and her mother received $3,648.00 as a down payment and subsequently received the balance of the amount due on the property in the sum of $65,487.50. These sums were deposited in the joint account. Appellee stated the money was placed in that account because she paid all the bills and "[M]other wanted me to have it." She testified that the furniture from one of the houses was subsequently sold for approximately $8,000.00 and that those proceeds were also placed in the joint checking account.
Appellee testified that, when the second piece of property was sold, she and her mother received a down payment of $3,904.50, which was deposited in the joint account. The buyers of the property also executed a promissory note in the sum of $70,000.00 payable to appellee and her mother; those monthly payments of $629.18 were also deposited in the joint account. Appellee also indicated that, in 1968, she had her own savings account at First Federal with a balance of $10,267.50 and that she subsequently closed out that account and transferred the money to the joint account she shared with her mother.
Appellee also testified that her mother had placed appellee's name on a Merrill Lynch account consisting of tax-free school bonds. She stated that, in January 1990, her mother sold the bonds and indicated she wanted appellee to have those proceeds. Appellee testified that, when her mother sold the bonds, Merrill Lynch sent the proceeds to her mother; her mother then gave the money to appellee and instructed her to deposit the funds in the joint account.
Gloria testified that her mother had also given money and property to other family members. In this regard, Gloria testified: [My mother] has refused to make a will because she said, "I want to distribute my stuff and take care of all my children and make sure they all have a home and everything they need before I go." And that's what she thought she had done. She said, "I don't want anybody fighting over my estate when I'm gone." And she said, "I'll give everybody their houses, homes, money, whatever they need." And she had just enough. She said, "I have enough in my account now to bury me, and everybody else has their own share now, and I'm happy."
Appellee indicated that she considered the funds in the joint account to be hers and that the only reason she initially put her mother's name on the account in 1968 was because "I wasn't expected to live when I got out of the service and I wanted whatever I had to go to Mother." She stated that her mother never exercised any control over the joint bank account, never wrote a check off of it, and never personally made any deposits into the account.
Beverly Stamper, one of Jessie O'Flarity's daughters, testified that she lived in the Little Rock area until 1985. She testified she was aware of the transactions concerning the two pieces of real estate in question and that her mother had told her that, because appellee had taken care of the rental house, it should go to her and that the house in which the two of them lived was "their home." She stated that her mother was very generous with all of her children and had given each of them money or property from time to time.
James P. O'Flarity testified that, although he borrowed $25,000.00 from his mother on one occasion, he subsequently repaid it and that his mother never gave him large sums of money. He also testified that, in 1986 or 1987, his mother telephoned him and indicated that she was in dire financial straits and also indicated that Gloria "does her own thing." Therefore, appellant testified that, for the following year, he sent his mother $750.00 to *154 $1,500.00 per month for her living expenses. He also testified that his mother had given him thirty-nine acres of property in east Mississippi, on which he has paid taxes since she deeded it to him. He stated that, when his mother's health failed to the point that he believed she needed additional care, Gloria refused to cooperate with family members concerning the records on his mother's bank account so that they could have access to funds to pay for her care. He testified that his mother put bank accounts and real estate in joint names for testamentary purposes and never intended to give away any of it during her lifetime. He also testified that, when the two parcels of property held in appellee's and his mother's names were sold, his mother did not endorse the checks and had no recollection of signing the deeds.
Mary Kathryn Rogers, another daughter of Jessie O'Flarity, testified that she has lived a few doors away from her mother since 1970 and that her mother and appellee took care of each other. She testified that her mother deeded a house on Louisiana Street to her in 1986, which she and her mother had previously owned as joint tenants with right of survivorship. She testified that her mother did not intend for Gloria to have all the funds in the joint account. In this regard, Mary Kathryn stated: "[My mother is] alert and she knows that all of this is going on and it grieves her greatly. She says, `I trusted Gloria with everything I had. I didn't think she could do this to me.' She knows that Gloria wants all of it and it's really grieving her."
The rule in Arkansas is that the law presumes a gift when the donor registers legal title in a family member's name. Perrin v. Perrin, 9 Ark.App. 170, 176, 656 S.W.2d 245, 248 (1983). Therefore, with regard to the proceeds from the sale of both parcels of real estate which were owned jointly by appellee and her mother, it is presumed that appellee is entitled to one-half of these amounts.
Whether elements of an effective inter vivos gift have been proven with regard to the school bonds and other sources of revenue to the account is a question of fact. See Warren v. Warren, 33 Ark.App. 65, 800 S.W.2d 730, 731 (1990). The required elements for an effective inter vivos gift are that the donor knew and understood the effect of his act, and intended that effect; that the donor made actual delivery of the chattel to the donee or his agent; that the donor, by delivery, intended to pass title immediately; and that the donee actually accepted the chattel as a gift. McCune v. Brown, 8 Ark.App. 51, 57, 648 S.W.2d 811, 814 (1983). These elements must be proved by clear and convincing evidence. Id. Accord Kelley v. Pipkin, 268 Ark. 1009, 1014, 598 S.W.2d 102, 105 (1980). Even where the burden of proof is by clear and convincing evidence, we defer to the superior position of the chancellor to evaluate the evidence. Akin v. First Nat'l Bank, 25 Ark.App. 341, 345, 758 S.W.2d 14, 19 (1988). A requirement that the evidence be clear and convincing does not mean that the evidence must be uncontradicted. Freeman v. Freeman, 20 Ark.App. 12, 15, 722 S.W.2d 877, 879 (1987). Although probate cases are reviewed de novo on the record, we will not reverse the finding of the probate judge unless clearly erroneous. Winters v. Winters, 24 Ark.App. 29, 34, 747 S.W.2d 583, 586 (1988); Birch v. Coleman, 15 Ark.App. 215, 221, 691 S.W.2d 875, 878-79 (1985); Ark.R.Civ.P. 52(a). In this regard, we give due deference to the probate judge's superior position to determine the credibility of the witnesses and the weight to be accorded their testimony. Thomas v. Thomas, 30 Ark.App. 152, 156, 784 S.W.2d 173, 175 (1990). We find the evidence sufficient to prove the elements of a gift regarding appellee's interest in the joint account and cannot say that the finding of the probate judge that appellee is entitled to a fiftypercent share of the account is clearly erroneous.
The creation of joint bank accounts is addressed in Ark.Code Ann. § 23-32-1005(1)(A) (1987). However, the present wording of subparagraph (1)(A) was included by amendment, Act 843 of 1983, and the amendment does not apply to deposits established *155 prior to the effective date of Act 843. Courtney v. Courtney, 296 Ark. 91, 95, 752 S.W.2d 40, 42 (1988); see also Martin v. First Security Bank, 279 Ark. 273, 274, 651 S.W.2d 70, 71 (1983). Instead, the former statute, Ark.Stat.Ann. § 67-521 (Repl.1980), applies. That statute provides in pertinent part:
When a deposit shall have been made in the names of two (2) or more persons and in form to be paid to any of the persons so named, such deposit and any additions thereto made by any of the persons named in the account, shall become the property of such persons as joint tenants....
In Park v. McClemmens, 231 Ark. 983, 334 S.W.2d 709 (1960), the supreme court held that § 67-521 should be considered together with the testimony, facts, and circumstances disclosed by the record to arrive at the intent of the depositor. 231 Ark. at 986, 334 S.W.2d at 712.
Based on this, the trial court could find that appellee intended to establish a joint tenancy when she created the account in question. Additionally, the record reflects that the actions of Jessie O'Flarity in commingling her funds with those of appellee in the account establish her intent to share such funds with appellee. Commingling of funds in a joint account leads to the conclusion that the parties intended all deposits to the account from whatever source to be held jointly by the parties, and it takes clear and convincing evidence to overcome this presumption. See Lofton v. Lofton, 23 Ark.App. 203, 209-10, 745 S.W.2d 635, 639 (1988). We cannot say that the actions of Jessie O'Flarity and appellee in dealing with the funds placed in the account fail to show an intent to own such funds jointly. We find there was insufficient evidence presented to overcome a presumption of owning the funds jointly.
Appellant also argues that Jessie O'Flarity, as a joint tenant to the account, had the right to withdraw all of the funds in question and that, therefore, James P. O'Flarity, as conservator of the estate of Jessie E. O'Flarity, was equally entitled to exercise his mother's right to withdraw all of the funds in the account. While he may be entitled to withdraw the funds on her behalf, we cannot agree that he is entitled to retain the funds. Although a bank or savings and loan may rightfully pay all the funds in an account to either of the two co-depositors in a joint account, it does not necessarily follow that either of the co-depositors may withdraw such funds without accounting to the other co-depositor for such action. See Savage v. McCain, 21 Ark.App. 50, 52, 728 S.W.2d 203, 204 (1987); see also McEntire v. McEntire, 267 Ark. 169, 175, 590 S.W.2d 241, 244-45 (1979). Each depositor's right to the funds may depend on an agreement among the co-depositors as to their respective ownership rights in the account. See Haseman v. Union Bank of Mena & Haseman, 262 Ark. 803, 807, 562 S.W.2d 45, 48 (1978).
Appellant also asserts that the probate judge erred in finding that appellee was entitled to one-half of the proceeds of the promissory note from the sale of the property made payable to appellee and her mother. In this regard, appellant argues that the ownership of the note was not an issue before the court. We cannot agree. Appellee correctly points out that appellant's own counsel asked the judge about the disposition of the real estate promissory note. At the conclusion of the hearing, the judge announced her findings regarding the joint account and asked if there were any additional questions. Appellant's counsel responded: "Judge, we have a real estate note involving one of the sales, about '75." The court then responded: "Well, that would mean each one of you get one-half of that real estate note." No further discussion of the note took place. Not only did appellant's counsel fail to object to the issue being addressed by the court, but it was appellant's own counsel who invited a ruling on the issue. Additionally, we disagree with appellant's alternative argument that the evidence does not support a finding that appellee owns fifty percent of the proceeds of the note. When considering ownership of a note payable to two parties, we can look to cases dealing *156 with notes payable to a husband and wife for guidance. In such a case, there is a presumption that the taking is by the parties as tenants by the entirety. See Ramsey v. Ramsey, 259 Ark. 16, 19, 531 S.W.2d 28, 30 (1975). The fact that the consideration for the note taken in the two names was given by only one of the parties is of little significance where that party is responsible for the note being taken in both names, and the presumption is that there was a gift of an interest by that party to the other. See 259 Ark. at 19, 531 S.W.2d at 30-31.
Finally, appellant argues that the court erred in failing to grant a new trial pursuant to appellant's motion for rehearing and new trial. Arkansas Rule of Civil Procedure 59(a) (1992) provides in part:
(a) Grounds. A new trial may be granted to all or any of the parties and on all or part of the issues on the application of the party aggrieved, for any of the following grounds materially affecting the substantial rights of such party: (1) any irregularity in the proceedings or any order of court or abuse of discretion by which the party was prevented from having a fair trial; (2) misconduct of the jury or prevailing party; (3) accident or surprise which ordinary prudence could not have prevented; (4) excessive damages appearing to have been given under the influence of passion or prejudice; (5) error in the assessment of the amount of recovery, whether too large or too small; (6) the verdict or decision is clearly contrary to the preponderance of the evidence or is contrary to the law; (7) newly discovered evidence material for the party applying, which he could not, with reasonable diligence, have discovered and produced at the trial; (8) error of law occurring at the trial and objected to by the party making the application. Appellant, however, fails to state any of the reasons listed in Rule 59, which would provide a basis for granting a new trial. Further, appellant stated in his motion that a new trial should be granted so Jessie O'Flarity could have an opportunity to testify as to her intent concerning ownership of the funds in question. In this regard, appellant stated in his motion: "It was not deemed wise by counsel to put [Jessie O'Flarity] through the trauma of coming to court to testify inasmuch as no allegation of the petition of Gloria O'Flarity was support [sic] at trial." The fact that appellant failed to call Jessie O'Flarity as a witness at trial is not an adequate ground for granting a new trial. It is well settled that the granting of a new trial addresses itself to the sound discretion of the trial court, and this court will not reverse unless it appears that the trial court abused its discretion. Franklin v. Griffith Estate, 11 Ark.App. 124, 128, 666 S.W.2d 723, 725-26 (1984). We find no abuse in the denial of appellant's motion.
Affirmed.
MAYFIELD and COOPER, JJ., agree.
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615 F.Supp. 1163 (1985)
UNITED STATES of America, Petitioner,
v.
WESTINGHOUSE ELECTRIC CORPORATION, Respondent.
Misc. No. 11710.
United States District Court, W.D. Pennsylvania.
August 15, 1985.
*1164 Craig R. McKay, Asst. U.S. Atty., Civil Div., Pittsburgh, Pa., Robert L. Ashbaugh, Dept. of Justice, Civil Div., Washington, D.C., for petitioner.
Herbert L. Fenster, Washington, D.C., Philip Baskin, Pittsburgh, Pa., for respondent.
Joseph A. Katarincic, Pittsburgh, Pa., for amicus curiae Chamber of Commerce of U.S.
Stephen A. Bokat, Washington, D.C., for amicus curiae Institute of Internal Auditors.
OPINION
ROSENBERG, District Judge.
This matter is before me after the filing by the Inspector General (IG) of the Department of Defense (DOD) for the United States of America on December 27, 1984, of a Petition For Enforcement of Administrative Subpoena by the Government, pursuant to the Inspector General Act of 1978, as amended 5 U.S.C. Appendix § 6(a)(4) and 28 U.S.C. § 1345, against Westinghouse Electric Corporation (Westinghouse) (respondent). The subpoena was served upon the respondent Westinghouse on September 28, 1984, and after Westinghouse refused compliance, this action followed.
Joseph H. Sherick, the Inspector General, on September 27, 1984 issued the subpoena duces tecum to an official of the respondent, commanding his appearance before Mr. Newton H. Davis, Branch Manager, Defense Contract Audit Agency (DCAA), Pittsburgh, Pennsylvania, or his designees, at 1000 Liberty Avenue, Room 2112, on October 11, 1984, at 9:00 o'clock a.m., and to bring "the following information, documents, reports, answers, records, accounts, papers, and other data and documentary evidence pertaining to internal audits for the period January 1, 1982 through October 1, 1984, for which costs have been incurred by Westinghouse Electric Corporation and any of its segments and allocated to contracts awarded by the Department of Defense or to any subcontractors under the Department of Defense prime contracts to include the items listed in Appendix A which are necessary in the performance of the responsibility of the Inspector General under the Inspector General Act to produce and supervise audits and investigations relating to, and to promote economy, efficiency, and effectiveness in the administration of, and to prevent and detect fraud and abuse in, the programs and operations of the Department of Defense".
The respondent in its answer contended that the administrative subpoena issued by the IG should not be enforced because (1) the subpoena fails to identify the investigation or inquiry to which it relates; (2) the subpoena was issued for the unlawful and improper purpose of obtaining information for another agency, the DCAA, which does not have subpoena power[1] to coerce a settlement of a collateral contract dispute (as to whether the DCAA has a right to examine the respondent's internal audit reports, an issue which is presently before the Armed *1165 Services Board of Contract Appeals for decision); (3) the documents sought are not related to DOD programs nor necessary to the performance of the IG's statutory functions; and (4) the production would be unduly burdensome.
AMICUS CURIAE
After the respondent filed an answer, the Chamber of Commerce of the United States (Amicus) averring it was the largest federation of business and professional organizations in the United States and that it represented the interests of its members in matters before the court, filed a motion for leave to present a brief amicus curiae on March 4, 1985. In its brief it attempted to support the position of the respondent by arguing that internal audit departments of corporations must be independent and confidential in order to be effective. On May 10, 1985, the Institute of Internal Auditors (Amicus) averred it is an international organization comprised of internal auditors in both government and private sectors, and filed a Motion to Submit Brief Amicus Curiae. It also practically reiterated the position of the Chamber of Commerce, adding that allowing the government "unrestricted access" to internal audit reports would ultimately discourage detection of fraud, waste and abuse by the internal auditors. These motions were granted.
DISCOVERY
Initially, the respondent requested discovery in the proceeding of the depositions of Joseph H. Sherick, the Inspector General of the Department of Defense, James H. Curry, Assistant Inspector General for Audit Policy and Oversight of the Department of Defense, Derrick Vander Schaaf, Deputy Inspector General of the DOD; Charles O. Starrett, Director, Defense Contract Audit Agency, and Newton H. Davis, Pittsburgh Branch Manager of the DCAA.
After conferences among counsel, the documents sought by the respondent were: a DCAA memorandum request for a subpoena directed to the IG, dated August 14, 1984; a DCAA memorandum request for a subpoena directed to the IG, dated August 16, 1984; guidelines for the issuance of IG subpoenas dated October 7, 1983; Working Draft, Report on Oversight Review of DCAA Access to Contractor Records, dated January 11, 1983; and the Access to Records Summary of Twenty-three Field Offices with a handwritten tabulation of this summary, all of which were submitted to me for in camera examination.
Pursuant to agreement of counsel, a court-supervised deposition of Sherick and Curry was conducted on February 26, 1985. Subsequently, after frequent consultations and after judicial concilliation between counsel, both parties agreed that the government's production of all the previously listed documents requested by Westinghouse, except for the field office summary, along with the additional court-supervised depositions of Starrett and Davis, would satisfy the respondent's Motion For Leave to Take Discovery. After a date was scheduled for those two depositions, both parties filed a stipulation on May 2, 1985, which obviated the need for an in-court examination. Thereafter discovery was closed. A final argument was had on May 15th, at which time the stipulation and exhibits were admitted into evidence.
THE CASE
Joseph H. Sherick, the incumbent Inspector General for the Department of Defense had been in government service for over 40 years. He was previously selected and appointed by the Secretary of Defense to be the Assistant to the Secretary for Review and Oversight. After the enactment of the 1982 Amendment to the Inspector General Act of 1978, President Reagan, obviously impressed with his career and service as anticipated, appointed him as the Inspector General for the DOD by authority of the 1982 Amendment. He was accepted by the Senate with approval and took office in April, 1983.
When Sherick first came into office he assumed total control and attempted eventually to perform in accordance with the *1166 promises made to the Committee in the Part 2 Hearing, infra.
The IG stated that he has oversight responsibility for all Department of Defense programs and activities, and to carry out this vast responsibility he is authorized to utilize and coordinate all of the audit, investigative and inspection organizations and resources of the DOD. Although he has an organization of approximately 1,000 people "to promote economy and efficiency as well as to prevent and detect fraud and abuse in a Department of 3 million", the IG must rely upon the resources of the 15,000 auditors and investigators of various accounting agencies in the DOD. It is the interrelation between these agencies which has become the focal point for the refusal by Westinghouse to comply with the subpoena.
The IG has all encompassing oversight responsibility for DOD programs and activities. To carry out this assignment, part of his duties include an evaluation of the "quality and breadth" of each organization that is guided and supervised by the IG. Pursuant to these oversight activities, when the IG uncovers "weaknesses and vulnerabilities" in the practices of the office of the IG or any other DOD auditing agency, the IG is then required to take measures to "reduce these vulnerabilities". (Sherick Affidavit, Document 1, page 1).
In June and July, 1983, the IG initiated a review of certain activities of the DCAA, the largest auditing agency in the DOD. He was thereafter periodically advised as to its progress by review of James H. Curry, the Assistant Inspector General for Audit Policy and Oversight. One area which was covered was the question of the availability to DCAA of certain records by DOD contractors. The records under question included: Board of Director meeting minutes; certain communications between a company and its outside public accounting firm; certain "audit trail" documents, and the reports of the internal audit staff of the contractors.
In each year between at least 1976 and 1983, Westinghouse presented information to the DCAA relating to the costs incurred by its internal audit activity involving defense contracts. A certain proportion of these costs were charged to the government and it approved the payment of these costs. For example, in 1983 the government was billed for and paid the sum of $554,000 as its allocated portion of internal audit costs. Following review and discussion of the allowability and allocability of such costs, the DCAA, each year, recommended approval of those costs for payment by the government until August, 1984. Prior to August, 1984 the audit costs of the respondent were approved on the basis of records other than internal audit reports and without DCAA's access to those reports (Stipulation, Document 31 and the Muhlberg Affidavit).
The evidence in the instant case, consisting of affidavits, exhibits and testimony is primarily concerned with: the IG's review and recommendations of June and July, 1983 regarding DOD auditors' access to contractor records; the request by DCAA through two August 1984 memoranda for the issuance of a subpoena; and the motivation for the issuance by the IG of the September, 1984 subpoena directed to the respondent for the production of internal audit report documents from January 1, 1982 through October 1, 1984 of DOD contracts of the corporation.
Curry testified that the purpose of the IG's July, 1983 review of DCAA audit procedures was in response to allegations about certain areas of weakness therein, such as the access by DCAA to records, the handling of suspected fraud, the reporting procedures on savings and the relationship between the investigators and auditors. The final report concerning this review was issued on March 4, 1984 (Exhibit C-1, admitted February 26, 1985).
Curry stated that the primary function of any audit is to determine "the adequacy of the internal controls of the activity that's being subject to audit". (Document 18, page 26). The purpose for the request of the internal audit reports of a contractor would be to evaluate the efficiency of their *1167 internal systems and controls. Therefore, as a preliminary consideration prior to a DCAA audit "the first thing they have to know is the adequacy of the internal controls" (Document 18,[2] page 20).
In connection with the preparation of the DCAA report concerning their access to contractors' records, the DCAA personnel visited 28 field offices and determined to what types of documents the government auditors had access. Of 23 major defense contractor locations, where there was internal audit department functions, 6 of the contractors' locations were not providing DCAA with "complete access", which included the reports from their internal audit departments (Document 18, pages 23 and 29).
Subsequent to the compilation of this report, 4 of the contractors agreed to provide access to their internal audit reports, so as of the time of his deposition Curry stated that 21 out of 23 of the defense contractor locations investigated were providing DCAA with access to their internal audit reports.
Of the corporations providing DCAA access to internal audit reports, some of them may not have provided all of their internal audit reports to the DCAA. However, Curry testified that he knew of no instance where an internal audit report requested by the DCAA was denied by any of the 21 contractor locations providing access. In addition, a survey on July 20, 1984 of over 200 contractor locations indicated that the DCAA was obtaining access to internal audit reports at all except 16 of them (Document 18, page 44).
The IG issued a Memorandum on September 19, 1983 providing that the DOD audit and investigative agencies which are under his control may request the issuance of an IG subpoena in support of audits and investigations conducted by them, where that audit or investigation is in furtherance of a statutory function of the IG and within the scope of the IG's statutory power. This memorandum was issued by the IG to all relevant auditing segments of the DOD, the "effective organization" of the IG, including the Army Auditing Agency, Navy Audit Agency, Air Force Audit Agency, DCAA, and the Criminal Investigative Divisions of the Army, Navy and Air Force. The memorandum was admitted as respondent's Exhibit S-2 and it outlined the policy of the office of the IG with regard to audits, investigations and the issuance of subpoenae. In explaining the policy the IG testified:
"I'm not in the business of issuing subpoenas. What I am in the business is of investigating and auditing and inspecting. And if I feel that an inspection that they have under way is of vital interest to the Department of Defense, and comes within my function, and is one in which I should give it priority, I will pick up that investigation and incorporate it as part of my function and responsibility. I will designate it as such and carry it out, using one of those service organizations, if they're already involved in that subject ..." (Sherick testimony, Tr. page 131)
In February, 1984, DCAA advised Westinghouse that it wished to conduct what it called an "inter-operational audit" of the Westinghouse internal audit functions. On June 11, the branch manager of DCAA, Pittsburgh office, set forth the DCAA rationale for requesting both the operational audit and the internal audit reports. DCAA indicated that its purpose was to obtain support for its contract auditing function. Westinghouse declined to comply with the DCAA request because these it said were internal audit reports or management documents which do not reflect incurrence and allocation costs.
On August 14, DCAA requested the IG to issue a subpoena to respondent for immediate access to all internal audit reports relating to any of their organizational elements which allocate costs to DOD contracts. On August 16, DCAA sent a second detailed letter to the IG requesting the issuance of a subpoena, for all documents *1168 generated by the Westinghouse international audit department and stated that the internal audit reports were needed "in order to reach an internal opinion on the reasonableness and allocability of internal audit costs incurred and allocated to government contracts by WEC".
The two August memoranda of DCAA (Stipulation Exhibits 1 and 2) stated that the internal audit reports "are needed for audit reviews which include in their objectives and the promotion of economy and efficiency and the prevention of fraud and abuse ..." In addition, both memoranda set forth the background of the Westinghouse audit, and the circumstances surrounding the refusal by Westinghouse to produce the documents.
After receiving the DCAA memoranda and their request for the issuance of a subpoena, the IG and his staff carefully examined this situation because, as the IG said, "I was really concerned, very much concerned, because the first thing I had to do was determine that if if this was an indication to me that there was a potential for fraud, waste or mismanagement of Government resources and Government assets at the Westinghouse Plant" (Document 18, page 124).
After the IG received the first memorandum from the DCAA which indicated that there was a problem with access to certain records of the respondent, the IG stated that he was "concerned about that". He further asserted that this memorandum (of August 14, 1984) provoked him to ask "... why one of our major contractors would be uncooperative ... what the background of the whole problem was ... and how long this situation had gone on ..." (Document 18, pages 118 to 114).
After receiving the second memorandum from the DCAA, the IG testified that "... I was appalled that one of our major contractors would fail to cooperate with us. My sentiment was how could this contractor be so insensitive? Here, we are in the Department of Justice being criticized up and down, day and night, for not being concerned about utilization of taxpayers' resources and he's a part of the defense industry. And yet, when we ask him for reports that are routine parts of his internal control system, he refused to cooperate with us, denies us these reports. And then when I looked at the history, it showed that he had been denying them for a long time" (Document 18, page 115).
The two August memoranda contained the first request for a subpoena that the IG had ever received. The IG stated that the subpoena was not "automatically" issued, but instead the request for these documents was taken over by the IG and became his own audit (Document 18, pages 149-153).
After receiving the two memoranda from DCAA in August, 1984, the oversight responsibility for the case of respondent's refusal to produce the internal audits became that of the IG. Sherick testified that at that point "... I made it my responsibility ..." and that "... It was mine and no one else's ..." even though he used the auditors and staff of the DCAA who were then acting under his direction (Document 18, page 142). The IG emphatically stated "I did not ever think that my subpoena was a tool of DCAA. It is not a tool of anybody's but me". (Document 18, page 137).
Westinghouse is the thirteenth largest contractor with whom the DOD deals. Each year it has approximately nine billion dollars of open contracts with the DOD and two million dollars of direct contracts. At any one time, the respondent has approximately two hundred million dollars of government-owned material and property in its plants and facilities. Therefore, according to the IG, it is important for the government to know about any embezzlement[3] or fraud since it can be assumed *1169 there would be some "impact" on the government from any of these activities (Document 18, pages 97-98).
Sherick testified that he believed it was necessary to examine the internal audit reports of contractors in order to evaluate the control systems of a company which would insure that costs were being properly allocated to government contracts. Sherick agreed with Curry that a sampling procedure involved in internal audits could be duplicated by the government, but that it was more cost effective to have the actual reports of the contractor, and that such reports would be useful in evaluating the actions taken by a contractor after uncovering fraud or embezzlement (Document 18, pages 96 and 98).
The IG stated that there were a number of considerations and questions he had when he evaluated the August requests of the DCAA. The IG wanted to know: whether the accounting records and data systems of the respondent were inaccurate or unreliable; whether the work of the internal audit staff was "effective in policing itself against possible fraud, waste and mismanagement"; whether the respondent was equally diligent in searching for waste or abuse in government contracts as compared to commercial contracts; whether the act of refusal of respondent in producing the documents was itself an indication of possible frustration by Westinghouse of the efforts of its own internal audit staff with regard to possible unremedied practices of the corporation, possible nonadjustment of identified accounting errors, or perhaps failure to investigate suspicions of misconduct (Sherick Affidavit, pages 4, 5). Finally, Sherick stated that he wanted to see the actual internal audit reports which were being paid for by the government, and "to see if the government could save money by reducing its audit efforts by relying on the work already performed by the internal auditors" (Sherick Affidavit, page 5).
The IG testified that the DCAA independently continued to administratively process the demand for the internal audit reports of the respondent by withholding payments to Westinghouse and by filing certain forms. However, the IG did not "adopt" or attempt to enforce the demand of the DCAA but instead the IG made his "own demand", motivated in part by Sherick's desire to learn what was behind the respondent's refusal, and because he "... had a suspicion that there's something there that they don't want us to have". (Document 18, pages 144, 145).
The IG had no intention to "sublet" any of his powers to the DCAA, but he chose DCAA to initially receive the information requested by the subpoena because they were familiar with the situation; they had their auditors already at the location of the respondent's headquarters in Pittsburgh; they knew what records were involved and they had long experience in reporting back to the IG for direction. The IG considered using some of the limited number of auditors in his own staff; but at that time his auditors were "tied up in my spare parts reviews". In addition, using the DCAA auditors would save the government travel expenses and the expenses involved in new auditors learning the contractor's system. (Document 18, page 198).
The IG stated that his office "will actively involve ourself in the analysis of the material ..." produced by the subpoena (Document 17, page 208). As the audit of the subpoenaed documents proceeds, the IG will personally be informed of the findings through Mr. Eberhardt, of the IG's office. The IG assured the court that his office routinely handles the most secret and sensitive matters, and that he considers protecting the confidentiality of the Westinghouse records to be a "solemn trust" (Document 18, page 177, 210).
*1170 The IG repeatedly demonstrated his belief and practice that all of the various audit and investigatory divisions within the DOD were under his immediate control. For example, the IG used the DCAA in his massive spare parts investigation which uncovered lavishly expensive Allen wrenches and hammers (Document 18, page 172). Furthermore, it was not unusual for the IG to not only employ the DCAA in his investigations, but to receive information from the DCAA that would lead to an investigation or other action by the IG (Document 18, page 184). Therefore, it is apparent that the audit and investigatory functions within the DOD are not regimented in a static order, but that all these resources are in a state of flux and can be assembled and reassembled according to the will of the IG.
The DOD contract business with the respondent is in the billions of dollars each year for all kinds of contracts. Some are cost reimbursement type, incentive, time and materials, labor hour, price redeterminable, or any combination thereof. There is no indication upon what basis the more than two billion dollars of work in progress and facilities and material in their plant is being used for defense contracts. It would be a matter of logic to ascertain how the government funds have been accounted for by the respondent as to contract prices, repairs, losses or guarantees.
MENS LEGISLATORIS
Although the respondent has raised no constitutional questions here, and since it does question the legal and functional capacity and power of the IG to issue this specific subpoena duces tecum for the particular documents which he requested, and has also asserted a lack of intention on the part of Congress to grant power to the IG to subpoena the particular internal audit documents of the respondent, it becomes necessary that we examine both the original Inspector General Act of 1978, 5 U.S.C. Appendix 3, and the Amendment of 1982, 5 U.S.C. Appendix 3, § 8, as well as the Congressional Report of 1978 and the history and hearings in the Senate in connection with the amending Act of 1982, before the Committee on Governmental Affairs, United States Senate, Ninety-seventh Congress, First Session, Part 1, June 18, 1981 and Part 2, March 25, 1982. These include Senatorial hearings conducted by the Senate as they relate to the contemplated Act of 1982.
The Inspector General Act of 1978 (1978 Act) established the office of Inspector General in seven executive departments and six executive agencies and consolidated existing auditing and investigative resources to more effectively combat fraud, waste and mismanagement in the programs and operations of those departments, and agencies (1978 U.S.Code, Cong. & Ad. News, page 2676).
Congress provided in the 1978 Act that each IG would be an independent official and appointed by the President of the United States and confirmed by the Senate. It provided for their purposes and duties and gave each the mandate "to consolidate existing auditing and investigative resources to more effectively combat fraud, abuse, waste and mismanagement in the programs and operations of those departments and agencies". It stated rules and regulations by which he was to be governed and by which he would be accountable, particularly, to the Congress.
We must remember here that the Inspector General Act of 1978 did not create an IG for the DOD, as we shall presently see and understand; however the 1978 Act became the foundation for the changed enactment of 1982 which did create the IG of the DOD.
The 1978 Act stated:
"It shall be the duty and responsibility of each Inspector General ...
To recommend policies for, and to conduct, supervise, or coordinate relationships between such establishment and other Federal agencies; State and local governmental agencies, and nongovernmental entities with respect to (A) all matters relating to the promotion of economy and efficiency in the administration *1171 of, or, the prevention and detection of fraud and abuse in, programs and operations administered or financed by such establishment, or (B) the identification and prosecution of participants in such fraud or abuse." 5 U.S.C.Appe. § 4(a)(4).
To effectuate this broad mandate over "all matters" relating to economy and efficiency of an agency, Congress empowered each IG:
"... (4) to require by subpena (sic) the production of all information, documents, reports, answers, records, accounts, papers, and other data and documentary evidence necessary in the performance of the functions assigned by this Act ..."
Therefore, in examining only the language of the 1978 Act (which was later made applicable to the IG of the DOD), for the subpoena in the instant case to be enforceable, the internal audit reports sought must be "necessary" for the IG's oversight responsibilities with regard to "all matters" relating to economy and efficiency of the DOD.
Both the 1978 Inspector General Act and the Amendment of 1982 are not only unambiguous, but they speak clearly and distinctly for the purpose of preventing and detecting "... fraud and abuse in, programs and operations administered or financed by ..." the specific departments. However, because the respondent in raising the contentions as it does seems to have confused a comment in the Congressional Report for the 1978 Act and has disregarded the specifics in both Acts, but particularly in the Amendment of 1982, and when Congress has spoken as vehemently as it did here, it is appropriate, while not necessary, that these be pointed out to add further forcefulness to the statutory text.
In analyzing an issue of statutory construction we "`must begin with the language of the statute itself'". Bowsher v. Merck, 460 U.S. 824, 830, 103 S.Ct. 1587, 1591, 75 L.Ed.2d 580 (1983) (quoting cases).
The case of Train v. Colorado Pub. Int. Research Group, 426 U.S. 1, 96 S.Ct. 1938, 48 L.Ed.2d 434 (1976) re-enforced what was stated in United States v. American Trucking Assns., 310 U.S. 534, 543-44, 60 S.Ct. 1059, 1063-64, 84 L.Ed. 1345 (1940) "To the extent that the Court of Appeals excluded reference to FWPCA's legislative history in discerning the meaning of the statute, the court was in error, for `[w]hen aid to construction of the meaning of words, as used in the statute, is available, there certainly can be no `rule of law' which forbids its use, however clear the words may appear on `superficial examination.'"
It was stated in Stafford v. Briggs, 444 U.S. 527, 100 S.Ct. 774, 63 L.Ed.2d 1 (1980), at page 536, 100 S.Ct. at page 780,
"Our analysis does not stop with the language of the statute; we must look to `the objects and policy of the law.' Brown v. Duchesne, 19 How. [183] at 194 [15 L.Ed. 595]. In order to `give [the Act] such a construction as will carry into execution the will of the Legislature ... according to its true intent and meaning,' ibid, we turn to the legislative history. Schlanger v. Seamans, 401 U.S. 487, 490, n. 4 [91 S.Ct. 995, 997, n. 4, 28 L.Ed.2d 251] (1971). See also United States v. Culbert, 435 U.S. 371, 374, n. 4 [98 S.Ct. 1112, 1114, n. 4, 55 L.Ed.2d 349] (1978); Train v. Colorado Public Interest Research Group, 426 U.S. 1, 9-10 [96 S.Ct. 1938, 1942-43, 48 L.Ed.2d 434] (1976).
The respondent insists that the clause in the Congressional Report of the Inspector General Act of 1978, at page 2709, that "The use of the subpoena power to obtain information for another agency component which does not have such power would clearly be improper", be translated in its strict literal sense. This would be unreasonable, particularly in light of what remedies Congress was attempting to effect by means of the creation of IGs in all departments, except in the DOD, and in light of the fact that it took another amending statute, after three years of concerned study, to create the IG for the DOD with special, additional statutory provisions.
*1172 Mr. Chief Justice Burger cited Brown v. Duchesne, 19 How. 194, at 197:
"`We think these laws ought to be construed in the spirit in which they were made that is, as founded in justice and should not be strained by technical constructions to reach cases which Congress evidently could not have contemplated, without departing from the principle upon which they were legislating, and going far beyond the object they intended to accomplish. Stafford v. Briggs, supra [444 U.S. 527], at page 545 [100 S.Ct. 774 at page 785, 63 L.Ed.2d 1 (1980)]'."
In order to determine if Congress intended to limit this expansive language, I have thoroughly examined the legislative history and surrounding statutory circumstances of both the 1978 Inspector General Act and the 1982 Amendment. See North Haven Board of Education v. Bell, 456 U.S. 512, 522, 102 S.Ct. 1912, 1918, 72 L.Ed.2d 299 (1982).
Congress outlined the tremendous scope of the problem indicating that fraud, abuse and waste in the operations of Federal departments and agencies and in federally funded programs were reaching "epidemic proportions". The problem was not new, but the evidence indicated that waste and mismanagement was now of an "extraordinary magnitude". The "cardinal principle" that had been violated in the previous auditing structure was that the auditors and investigators were under the supervision of the officials of the programs which they were attempting to audit and investigate. (1978 U.S.Code, Cong. & Ad.News, 2679-2681), Congressional Report).
Congress finally made a big step forward. It enacted the Inspector General Act of 1978. By this statute it created numerous inspector generals, one for each department or agency.[4] They had the power of subpoena to inspect all documents necessary for the ascertainment of fraud, abuse, waste and mismanagement in government contracts.
While the 1978 Act did not give the IG powers to administer or to prosecute where the facts of the case might be such as would require these matters to be done, it did give him the power to report to the proper department and agency for such action and in order to permit the IG to investigate and ascertain the factual matters required for his duties, it gave him the power "to subpena (sic) such materials as he deems necessary to carry out his duties and responsibilities ..." (§ 6(a)(4), page 2708).
Oddly enough, while the legislators were considering the adoption of this statute and its particular wording, it spoke very insistently of the need of the IG of the DOD, but in the adoption of the Statute, the DOD was disregarded.
At its inception, the Congressional Report[5] at page 2676 states:
"The purpose of this legislation is to create Offices of Inspector Auditor[6] General in seven executive departments and six executive agencies to consolidate existing auditing and investigative resources to more effectively combat fraud, abuse, waste and mismanagement in the programs and operations of those departments and agencies." (footnote added)
At page 2677, the Report summarizes the legislation and indicates that H.R. 8588, as amended by the Committee, requires the appointment of an Inspector General in each of the 13 affected executive departments and agencies; that each requires appointment by the President with the advice and consent of Congress without regard to political affiliation, solely on the basis of integrity and demonstrated ability in accounting, auditing, financial analysis, *1173 law, managements analysis, public administration or investigation. It also details the duties and responsibilities of the Inspector General.
Congress stated at page 2682,
"... it is a fact of life that agency managers and supervisors in the executive branch do not always identify or come forward with evidence of failings in the programs they administer."
And it follows through at page 2682, with the Inspector, the head of the agency or department, would not be under the supervision of any other official in the agency, and even the agency head would have no authority to "prevent the Inspector ... from initiating the completing audits and investigations he believes necessary".
On page 2702, under Section 4. "Duties and Responsibilities", the Report specifies the functions of the Inspector General, Subsection (a)(1), to provide supervision and coordinate policy direction and conduct, supervise audits and investigations relating to programs and operations of his establishment; under Subsection (a)(2) to make recommendations to his agency head and the Congress; Subsection (2)(3) to recommend policies for and to supervise or coordinate activities carried out by such agency or financed by such agency for the purpose of promoting economy and efficiency and detecting fraud and abuse in its programs and operations.
The Congressional Report, however, bespoke itself when it stated at page 2678:
"The committee has decided that the legislation should also cover the Department of Defense. The legislation contains several provisions necessary to meet the unique needs of the Defense Department". (Emphasis added).
And yet, when Congress enacted the final version, the IG for the DOD was omitted. The explanation is eventually supplied by the Senators at the two hearings held on June 18, 1981 and March 25, 1982.
In the meantime, the Secretary of Defense supplied his own employees as various inspector generals in the defense agencies. But the Secretary also appointed one whom he titled the Assistant to the Secretary of Defense for Review and Oversight (Tr. page 86), and whom he used as were the other statutorily appointed inspector generals in accordance with the provisions of the Inspector General Act of 1978. This did not meet with the approval of the Senators and they expressed themselves openly in the hearings held for the purpose of providing an Inspector General for the Department of Defense and two other departments, the Department of Justice and the Department of Treasury.
At the hearing before the Committee on Governmental Affairs in the United States Senate, Part 2, on March 25, 1982[7] for Inspector General Legislation, Chairman Senator William V. Roth, Jr., amongst others made clarifying remarks regarding the purpose and intention of the legislation which was to be considered by the Congress.
Excerpts follow:
Page 3:
"I am particularly concerned about the lack of centralized audit and investigative responsibilities in the Defense Department. Audit resources are so dispersed in D.O.D. that it is almost like straining tea through an ocean fishing net: too many pieces of tea leaf are getting through. Just to use one example, there are over 18,000 employees in D.O.D. performing audit and investigative functions and some $500 million is spent annually to support their activities. Yet these personnel are spread over at least 18 different agencies with D.O.D. and until recently there were some eleven coordinating committees to ensure cooperation among the various audit organizations in D.O.D. Clearly, there is no `rapid deployment force' when it comes to controlling waste and fraud in D.O.D. but rather a mixed jumble of, in many *1174 cases, uncoordinated agencies and programs.
. . . . .
We must have a strong, statutory Inspector General in place in D.O.D. as soon as possible.
. . . . .
We can't accept fraud in D.O.D. programs, like that which may have resulted in over 80 percent cost overruns for the overhaul of Navy ships, recently, without establishing better mechanisms for controlling fraud. We cannot tolerate bad management practices and effective service coordination without creating an inspector general to systematically review inter-service management and push for improvements".
And Senator Bentsen said at page 8: "Everyone, in other words, knew that there was waste in that huge appropriation, but we didn't know where to find it. With an independent inspector general at DOD, we'll all be in a better position to monitor how the hundreds of billions of dollars we appropriate every year for defense are being spent." (Emphasis supplied).
When the dissatisfaction of certain Senators became more manifest and a new amending bill to create an IG for the DOD became more realistic, it appears that the Secretary of Defense also presented a bill which, according to the Senators, would merely have continued on an IG as an employee of the Secretary of Defense. This the Senators did not accept.
At the second hearing the Senators practically accused the Defense Secretary of being antagnostic to the bill which would have created an independent IG, primarily because the Secretary wanted to have control over the IG.
The Senators on the Committee argued that if the Secretary had control over the IG and could tell him what to do or what he should not do, then he would not be independent. They stated that they would not stand for that. They wanted an independent IG.
Deputy Secretary of Defense, Frank Carlucci, argued that the Secretary of Defense should have the power of veto over any matter which the IG would want to process, because of certain problems which would affect the welfare and security of the United States.
Senator Prior voiced his fear and stated that he didn't think that speaks of independence. Senator Eagleton and others voiced their apprehensions to Mr. Carlucci's testimony, and that if the amendment as requested was approved, it would be merely a "cosmetic" approach.
When the amending statute of 1982 was finally enacted, Congress yielded in part to the Secretary of Defense by permitting him a veto power only of such matters as dealt with security in defense but not otherwise. But even in the veto power the Secretary was required to report the facts of the case to Congress within thirty days.
THE DEFENSE CONTRACT AUDIT AGENCY (DCAA) RULE
Did the Senators in the hearing before the Committee on Governmental Affairs in the United States Senate Second Session, Part 2, on March 25, 1982, contemplate that the DCAA would under the new IG Amendment be an unrelated agency in the Defense Department family of agencies without any obligations to the IG to be? Did the Senators of the Committee at the Part 2 hearing intend that the IG should have no relationship with, or use of the facilities and resources and personnel of the DCAA as with all other component agency parts of the DOD?
Inasmuch as the respondent imputes a lack of cohesiveness of the DCAA within the entire family of defense agencies, it is noteworthy that the Senators discussed DCAA's significance in the 1978 Report.
On page 2694, it is stated:
"... DCAA does have significant auditing responsibilities, and in the past there has been no systematic cooperation between DCAA and DAS. For example, if DCAA discovers that a contractor is pursuing *1175 a course of action which amounts to fraud against DOD, DCAA will share that information with the contracting officer but ordinarily no contact is made with DAS which has the primary responsibility for internal audit of the Department of Defense."
Thereafter the report discusses internal strife and a lack of communication. The Committee said (at page 2696):
"But the deficiencies which exist intensify the committee's belief that the Secretary of Defense, and Congress, need a strong and independent auditing and investigative capability at the OSD level".
Since the GAO[8] reported important improvements by the service itself "to upgrade the placement of auditing in the service and to remove all restrictions on the functioning of the service audit agencies", the Committee recommended that no "organizational changes be made in the service audit and inspection functions". Then, at the 1982 Act Amendment hearings, this problem was blared out loud.
The respondent objects to the action of the IG's subpoena of the respondent's internal audit reports on the theory that it is a device which furthers the ulterior purpose of the DCAA. Accordingly, we should better understand the complex parts of the DOD, and particularly the DCAA. In a conversation between Sherick and Senator Eagleton, the Senator said (Report, page 27): "... there are some 18,000 individuals in the Department of Defense that in one form or another have something to do with auditing, investigating, accounting and the like"; that "there are about 4,000 support people"; that this "included the Defense Contract Audit Agency"; that "[t]here is an inspector general for each of the services"; and that each of the following have inspector generals: the Army, Navy, Air Force, Marine Corps, Defense Communications Agency, Defense Intelligence Agency, Defense Logistics Agency, Defense Mapping Agency and Defense Nuclear Agency. A summary sheet was prepared for the Committee which is reflected in the Report, page 29. In total the figure for auditors was 13,389 professionals; 4,426 support people; and 2078 augmentees. All were under the command and control of the Secretary. The Senators discussed the DCAA thoroughly at the hearings as is reflected from pages 30 through 39.
The Committee was told by Sherick who was then the Assistant to the Secretary of Defense for Review and Oversight that these were experienced auditors and "[t]heir expertise is generally across the board in the evaluation of proposals and the post-award audit of the contract that eventually comes out of that proposal". (Report, page 32). Senator Eagleton asked Sherick whether his statement would be a fair conclusion and he was told that it would. The statement reads as follows:
"... In short, the large part of DCAA's responsibility is pre-award work. They are not necessarily looking at whether fraud or waste has been committed after a contract has been entered into. They are advisers and not necessarily skeptical critics of the contracting officers, and the contracting processes". (Report, page 32).
Sherick supplemented this with "they are critics in the sense that they disallow and question costs on contracts. That is their job. They do not review the contracting process; that is the function of the internal audit agencies".
As relates to privileged communications, the matter was discussed before the Committee (Report, page 35), and the answer to Senator Eagleton by Sherick was "I think there may be privileged contractor data. DCAA is looking at the contractor's proposal, and looking at important information that is competitive in nature and shouldn't be revealed. Beyond that I think all the proposals are open to audit".
Senator Eagleton said he understood and summarized his concerns as follows (Hearing, Part 1, page 38): *1176 First, that an office which performs in certain ways "is destined to be a weak office without adequate resources and without a substantial mandate in the very important area of defense contract and procurement ...";
Second, that the DCAA should not be regarded as sacrosanct;
Third, that the DCAA lends a very valuable service in the advisory role to negotiating contract officers who need such auditors at their sides with "a tough auditing capacity"; and
Fourth, that "... We still need, once you get beyond the advisory role, a tough auditing capacity ..." and that most auditing "is not auditing at all; it is financial negotiating advice that is given to the negotiating team".
Sherick then made the comment (Hearing, Part 1, page 38), that "They (DCAA) have a reputation for being very professional people".
In the Hearing, Part 1, page 40, in one of the written questions of Senator Roth to Deputy Secretary Carlucci, part of the question asked was "... what is being planned to make the DCAA more effective and what role could the proposed Inspector General plan in making this office more effective?" A part of the answer was "... The proposed Inspector General is charged with evaluating and monitoring contract audits and should thereby be able to assist in improving DCAA's effectiveness".
In a written question by Senator Roth to Deputy Secretary Carlucci, who was insisting that the DCAA belonged with the advisory staff of negotiators for the DOD, even he agreed that if the DCAA was not included in the transfer of offices, the Senate could not be assured that the contract audit principles would be effectively managed and reviewed by the IG.
At page 34 of the Hearing, Part 1, it was stated that DCAA audit reports were not always acted upon. And when Senator Eagleton, talking about the performance of DCAA with regard to the report of the GAO, asked in effect of Sherick, the contemplated IG, what would you do to eliminate the problem of the DCAA auditors having too close a relationship with the contractors and not being as vigilant as it should be in its auditing and examining of the records, Sherick said, "I have oversight and evaluation over DCAA and I will look into that matter". (Hearing, Part 1, page 35).
Sherick further answered (Hearing, Part 1, page 34), "That is one of the things I will look into to find out why price negotiating memoranda are not being written and why are they not addressing the auditors' problems and recommendations. He owes it to the auditor to say why he did not take that advice". Senator Eagleton then responded, "I hope you will use your influence, Mr. Sherick, to see that it is rectified. It has been a continuing problem ...".
At the Hearing, Part 1, page 37, Senator Eagleton pointed out that the DCAA and also the negotiating contractors and the government contract auditors had limited their own access to some important information, and that "Contrary to both DOD policy and regulations and public law, contract auditors are not always provided with the information necessary to review contractor pricing proposal or contractor cost. Contractor auditors may have compounded the problem by entering into agreements which have limited their own access to contractor data". All the other Senators echoed this concern that DCAA was not getting all the information to execute its proper functions.
The IG Amendment of 1982 did not come by quickly or by unanimous thinking. Various versions in both the Senate and House were argued, mulled over and amended. But the Senate also had some versions backed by the DOD which resisted an independent IG. At the bottom of these versions the main concern was whether the IG was to remain as a DOD employee under the control of the Secretary, or whether a presidentially appointed IG was to be created as an independent official working in that Department with the Secretary.
*1177 The second and lesser amount of argument related to the DCAA. There were those who argued that DCAA should continue as in the past and those, who eventually prevailed and who backed the idea that the DCAA should be as it is, an agency in the DOD belonging with the other agencies in the Department and under the guidance and direction of an independent IG.
THE INSPECTOR GENERAL AMENDMENT OF 1982
The mood and thinking of the Senators who favored a powerful and independent IG for the DOD during the Part 2 Hearing especially and eventually permeated Congress and it enacted the Amendment of 1982 as it presently exists.
It is significant that while the 1982 Amendment creates inspector generals for the Department of Justice, Treasury and Defense, it provided that the first two remain exactly in the same category as all other inspector generals created by the Act of 1978. But it is noteworthy that it made significant changes found in § 8 for the DOD. That reads as follows:
"4. ...
(c) In Addition to the other duties and responsibilities specified in this Act, the Inspector General of the Department of Defense shall
(1) be the principal adviser to the Secretary of Defense for matters relating to the prevention and detection of fraud, waste and abuse in the programs and operations of the Department;
(2) initiate, conduct and supervise such audits and investigations in the Department of Defense (including the military departments) as the Inspector General considers appropriate;
(3) provide policy direction for audits and investigations relating to fraud, waste, and abuse and program effectiveness;
(4) investigate fraud, waste, and abuse uncovered as a result of other contract and internal audits, as the Inspector General considers appropriate;
(5) develop policy, monitor and evaluate program performance, and provide guidance with respect to all Department activities relating to criminal investigation programs;
(6) monitor and evaluate the adherence of Department auditors to internal audit, contract audit and internal review principles, policies and procedures;
(7) develop policy, evaluate program performance, and monitor actions taken by all components of the Department in response to contract audits, internal audits, internal review reports and audits conducted by the Comptroller General of the United States;
(8) request assistance as needed from other audit, inspection and investigative units of the Department of Defense (including military departments); ..." (Emphasis supplied).
A proper understanding must be had of the difference between § 8 of the Inspector General Act of 1978 and that in the Amendment of 1982.
The Act of 1978 did not create an inspector general for the DOD. All it did was to authorize the Secretary of Defense to provide his own inspector general. This had come about because of the opposition of the Defense Department to the creation of an IG equal to those of other departments. In order to take care of the situation Congress in the 1978 Act then gave special instructions to the Secretary of Defense. Primarily, it required the Secretary to submit to Congress semi-annual reports summarizing the activities of the auditing and investigative units of the department, which Congress, numerically and alphabetically detailed, and § 8(5)(c)(1) authorized the establishment of a task force "to study the operation of the audit, investigative, and inspection components in the Department of Defense which engage in the prevention and detection of fraud, waste, and abuse ..." It provided further of the rights and powers of the task force and regulated its functioning.
*1178 It provided also that the task force submit a final report to the Secretary of Defense and the Director of the Office of Management and Budget, who may in the form of addenda, provide additional information, which the Secretary shall submit to Congress.
Section 8 of the Amending Act of 1982 deals exclusively with IG of the DOD, and while it turned over to the new IG the functions of task force, it prescribed detailedly what the powers were that had been granted to the IG.
It is noticeable that the IG of the DOD was given, when requested as needed, assistance "from other audit inspection and investigative units of the Department (including the military departments)". The DCAA not being excluded was thus included within the whole family of agencies in the DOD. By including the DCAA we see the working of Congress to enable the IG to do that which he was intended to do.
Sherick promised Senator Eagleton that "I have oversight and evaluation over DCAA ...", (Hearing Part 1, page 35), and as the IG of the DOD he has proceeded to effectuate full control and guidance over the DCAA.
RESPONDENT'S CONTENTIONS
The many contentions of the respondent in its defense resisting the issuance of the IG's subpoena revolve in the main about two objections. First, that the pronouncement of the Supreme Court in the Merck case, infra, is the law of this case; and second, that Congress pronounced such action as being practiced by the IG now for the benefit of the DCAA to be improper. Several other contentions are also argued.
The Merck Case. The respondent and Amici rely heavily on Bowsher v. Merck & Co., Inc., 460 U.S. 824, 103 S.Ct. 1587, 75 L.Ed.2d 580 (1983), to the effect that the Supreme Court said that the Comptroller General could not have access to indirect costs of a contract. The Merck case had three fixed-price negotiated contracts with the Defense Supply Agency and the Veterans Administration for the sale of pharmaceutical products. The prices were based on those in Merck's catalog. The contracts were negotiated rather than awarded after formal advertising. A negotiated contract is the method authorized by the statute for use in situations in which formal advertising and bidding is deemed impractical or unnecessary (See footnote, page 827, 103 S.Ct. page 1590). Each contract contained a standard access-to-records clause granting the Comptroller General the right to examine directly pertinent records involving transactions relating to the contract. In reliance upon these, the Comptroller General issued a formal demand to Merck for access to a series of documents and records directly pertinent to the contracts.
The district court, after the Comptroller General sought enforcement, rejected Merck's argument that the costs records were not directly pertinent to the fixed-price contracts. Merck also expressed concern in participating with the Comptroller General's demand without adequate assurance of the confidentiality of the cost data which it was requested to supply.
The Supreme Court held that the statutory language "directly pertinent"[9] as authority to the Comptroller General had a restrictive meaning in which Congress intended to prevent "snooping" of private businesses, as was reflected in the Congressional Report.
So far as the instant case is concerned, it is to be noted that the Supreme Court was not unmindful that Congress sought in granting the GAO access authority to equip that agency with a tool to detect fraud, waste, inefficiency and extravagance *1179 in Government contracting generally. Justice O'Connor handed down the opinion and said (at page 834, 103 S.Ct. at page 1593). "Obviously, broad access to cost records would enhance the GAO's ability to evaluate the reasonableness of the price charged the Government and to identify areas of waste and inefficiency in procurement".
But because the congressional intent was to protect the privacy of contractor's records involving non-governmental transactions, the government was precluded from inspecting records of indirect costs. Indirect costs were said to be costs incurred in the area of research and development, marketing and promotion, distribution, and administration, which are not directly attributable to a particular product (at page 826, 103 S.Ct. at page 1590). The court determined finally that (at pages 844-45, 103 S.Ct. at pages 1599-1600):
"Because of the GAO's mandate to detect fraud, waste, inefficiency and extravagance through full audits of Government contracts, we cannot accept Merck's view that the only records directly pertinent to the four fixed-price contracts at issue are those necessary to verify that Merck actually had an established catalog price for the item procured, that it sold the items in substantial quantities to the general public at the catalog price, that it delivered the product specified, and that it received from the Government no more than the amount due under the contract. On the other hand, given the policy of protecting the privacy of the contractors' business records also expressed in the statutory language and legislative history, neither can we accept the Government's contention that it must be permitted access to all of Merck's cost records". (Emphasis supplied).
The present situation is different. The statutes creating the Inspector Generals and their specific powers, especially that of Inspector General of the Department of Defense, contain no limited or restrictive power such as was imposed upon the Comptroller General. There is only a specific veto power imposed on the Inspector General for Defense as it relates to matters of national security when the Secretary may veto the action of the Inspector General and report fully to Congress within 30 days of the circumstances involved and his reasons for the veto. Otherwise, the statute creating the Inspector General of Defense is lavishly concerned with the extraordinary independent, capability and potency of the Inspector General. The Secretary did not veto the instant action of the IG.
The Subpoena is Improper. The respondent maintains that the IG may not use the subpoena power in behalf of any other component of the DOD agencies and that includes the DCAA. On this basis it cites the Congressional Senate Report 95-1071, at pages 2676, 2709 of the enactment of the 1978 Inspector General Act. That reads as follows:
"The Committee intends, of course, that the Inspector and Auditor General will use this subpoena power in the performance of his statutory functions. The use of subpoena power to obtain information for another agency component which does not have such power would clearly be improper".
Congress had its reasons for omitting the power of inspector generals of the various agencies created under the Act of 1978, in an effort to control, limit and restrict each inspector general within that particular department to not interfere with any other department through any of its agencies. Under the Act of 1982, the IG was given overall power within the DOD of all agencies which composed it. It would seem that the respondent would put the DCAA in the category of an independent functionary over which the IG could have no authority.
In the wording of the Defense IG's authority in § 8 we see that the IG is given power to "initiate, conduct and supervise such audits and investigations ..."; and to "monitor actions taken by all components of the Department in response to contract *1180 audits, internal audits, internal review reports"; to "request assistance as needed from other audits, inspection and investigative units of the Department of Defense (including the military departments)", (Emphasis supplied), as he considers "appropriate". And thus while the respondent argues that the DCAA is an independent component of the DOD, it is completely available for use when called upon by the IG both as a source of information and to carry our investigative delegations and assignments. Additional provisions in the 1982 Amendment give the IG powers in all agencies of the DOD, including the "military".
While Congress did not intend that any IG created by the 1978 Act would act as a rubber stamp, automatically approving and issuing subpoenas for the use of other departments, it also did not intend to restrict the IG's own investigations, intra-departmentally no matter how they were commenced but the DOD had no IG as of that time.
There is no similar Congressional expression for this intra-agency prohibition of lending subpoena power in the 1982 Amendment which created the IG for the DOD. However, from the numerous and forceful statements of the legislators, as well as from the text of the 1982 Amendment, it is clear that the various auditing or watchdog agencies within the DOD were not intended to operate in a vacuum. Congress indicated that if an investigation by one agency should kindle the interest, duty or even curiosity of the IG, himself, to investigate a contractor, he should not be prevented or discouraged.
Collateral Processing. The respondent contends that because it appealed a decision of the DCAA regarding its demands for documents as to the Armed Service Board of Contract Appeals, ASBCA No. 30593, as of January 9, 1985, the IG of the DOD could not interfere with that process. The 1982 Inspector General Amendment states nothing at all about proceedings which would terminate or otherwise interfere with the IG's independent powers to proceed to initiate, conduct and supervise such audits and investigations as he considers appropriate.
Whether or not the DCAA, itself, has any rights to access of such records as demanded, which the respondent refused, is of no concern to this enforcement proceeding. While the Armed Services Board of Contract Appeals may have the right and may eventually make a determination that the DCAA as an agency must pay for audits after requesting certain documents from the respondent based upon clauses in the contracts and by regulations, and may therefore grant or deny the respondent's appeal, that would not affect the IG's right to investigate and of the right of the IG even to use the DCAA as his own personnel in initiating, conducting and supervising such audits and investigations, as he considers appropriate. There is no substantial connective basis by which the respondent may indicate that its preliminary appeal to the Armed Services Board prevents and estops the statutory right of the IG to proceed in this case, since that appeal does not affect the power, authority, or purpose underlying the issuance of the IG subpoena. Therefore, the fact that the respondent has taken an appeal is not an issue here and does not deprive the IG of the right to look at the respondent's internal audit reports, as part of his own investigation.
The IG was given independent authority to act in the manner in which he considered appropriate, even if such matters were collateral to any other proceeding, say for instance, the IRS. The provisions and regulations governing appeals to the Armed Service Board of Contract Appeals constituted an independent process which permits the adjudication of contract disputes under certain circumstances.
The 1982 Amendment leaves no doubt that the intention of Congress in authorizing investigations supported by subpoenas and enforcement of subpoenas was intended to enable the IG to discover and procure evidence and not to prove pending charges or complaints. Similarly, the administrative *1181 apparatus established by Congress for other agencies was intended to delegate effective power to investigate certain matters within the scope of their authority. Oklahoma Press Publishing Co. v. Walling, 327 U.S. 186, 66 S.Ct. 494, 90 L.Ed. 614 (1946).
Scope and Subject of Subpoena. The respondent contends that the scope of the subpoena is too broad. Because of the manner in which audits are conducted by the respondent's internal audit department, where the audits encompassing defense contracts are not segregated from the other internal audit reports, the respondent would be required to produce 920 audit reports out of a total of 1,171 audits performed during the period between January 1, 1982 through October 1, 1984. The government seeks only internal audit work involving costs charged to the DOD. However, because of the intermingling of information pertaining to defense contracts, the respondent alleges that disclosure would compromise confidential matters not related to defense.
The Supreme Court has consistantly held in summons enforcement proceedings, particularly involving the IRS, that "absent unambiguous directions from Congress" restrictions upon summons power should be avoided. I find that in the instant case, based upon the language of the statute as well as the legislative history previously quoted, Congress has similarly made a policy choice in favor of disclosure of all relevant information, and for the IG to have a "broad latitude" in deciding what materials are necessary. United States v. Arthur Young & Co., 465 U.S. 805, 104 S.Ct. 1495, 1502, 79 L.Ed.2d 826 (1984).
The respondent argues that their internal audit reports have confidential and candid information relating to their non-defense contracts intermingled with DOD related data and evaluations, and that it would be detrimental to their interests to disclose any of these reports to government auditors. However, the corporation does provide these internal audit reports to their independent certified public accountants, who perform a "public responsibility" which transcends their employment relationship with the client. United States v. Arthur Young & Co., supra, at 1503. Similarly, the IG must perform his public responsibility in examining the internal audit reports and has assured the court that it will do so with due consideration with the concerns of the respondent, and with personnel that have been cleared for highly sensitive matters.
In United States v. Noall, 587 F.2d 123, 126, C.A.2, 1978, the government on behalf of the IRS sought to examine all of the internal audit reports and related work papers of a corporation for certain periods. Although the corporation objected that the materials sought were confidential and reflected their operational plans and procedures, and that the reports might contain "hearsay rumors, [and] opinions", the Court of Appeals for the Second Circuit ordered their production. The court stated that what the internal auditors reported "might throw light" on the correctness of the corporate tax returns, and that since Congress has decided the policy issue it is not for the courts to challenge that determination. The court rejected as unpersuasive the argument that requiring production of internal audit reports runs counter to public policy because of the possible inhibition on full and frank disclosure by the internal auditors. In the instant case, I find that the public policy of preventing fraud, waste, abuse and mismanagement of public funds, so forcefully articulated by Congress, outweighs any possible "chilling effect" on the internal auditors with regard to their duties.
The IG is seeking:
"Any and all documents generated by the Westinghouse Electric Corporation internal audit department including those related to its budgeting and planning, as well as operations and allocations of its costs to segments having Government contracts. The documents should include, but not be limited to schedules of audits, working papers generated during the audit, written reports summarizing *1182 the results of audit, followup action taken to implement the recommendations, and personnel records documenting the time spent by the employees assigned to the internal audit department." (Document No. 1, Appendix A).
The scope of his investigation is limited to "Government Contracts" and such a request is sufficiently specific for the respondent to be fully aware of what is required to be in compliance with the subpoena. These documents will enable the IG to discover whether there have been instances of mischarging, and whether the respondent has diligently searched for and remedied any incidents of misconduct or wasteful practices found.
It was the choice of the respondent to intermingle the operational funds of the government contracts with those of its private sector contracts. It is the government's own funds which it has never been able to audit. If the respondent had kept separate its own corporate business from the government contract business in its internal audit operations, it might have presented the argument here that the IG could not intrude upon its corporate reports. But the respondent was the one who chose to intermingle the government's operational auditing with its own. That in effect made the total reports matters of interest and concern to the government because its funds were involved to whatever degree in those reports.
It voluntarily took $554,000 in 1982 and what may have been similar amounts in the other required years for auditing, and by this means it sold its right to secrecy and opened the door to the government and its right to inspect the internal audit operational reports. What the DOD bought and paid for is of concern to the IG and to the public at large; and even though the IG speaks of it only passingly, it becomes a fundamental part of the IG's functions as Congress declared it to be in the IG statutes.
The IG must perform his public responsibility in examining the internal audit reports and has assured the court that he will do so with due consideration of the concerns of the respondent, and with personnel that have been cleared for highly sensitive matters.
Enforceability of Subpoena. The respondent contends that the legal requirements to establish the enforceability of an administrative subpoena have not been met. The Supreme Court has required that the investigation and subpoena by the administrative agency be for a legitimate purpose, that the inquiry be reasonably relevant to the purpose, and that the demand should not be too indefinite, too broad, or unreasonable. United States v. Powell, 379 U.S. 48, 57-58, 85 S.Ct. 248, 254-55, 13 L.Ed.2d 112 (1964); United States v. Morton Salt Co., 338 U.S. 632, 652, 70 S.Ct. 357, 368, 94 L.Ed. 401 (1950); Oklahoma Press Publishing Co. v. Walling, 327 U.S. 186, 208-09, 66 S.Ct. 494, 505-06, 90 L.Ed. 614 (1946); Endicott Johnson v. Perkins, 317 U.S. 501, 509, 63 S.Ct. 339, 343, 87 L.Ed. 424 (1943).
The cases have carefully distinguished between the limitations on a judicial subpoena and the broad latitude that must be given to an administrative subpoena. An administrative agency "... has a power of inquisition, if one chooses to call it that, which is not derived from the judicial function. It is more analogous to the Grand Jury, which does not depend on a case or controversy for power to get evidence but can investigate merely on suspicion that the law is being violated, or even just because it wants assurance that it is not". United States v. Morton Salt Co., supra, 338 U.S., at 642-43, 70 S.Ct. at 363-64.
It is not necessary for the agency issuing the subpoena to have "probable cause" to believe that a violation has occurred. "... Even if one were to regard the request for information in this case as caused by nothing more than official curiosity, nevertheless law-enforcing agencies have a legitimate right to satisfy themselves that corporate behavior is consistent with the law and the public interest". United States v. Morton Salt Co., supra, at 652, 70 S.Ct. at 368.
*1183 I find that the subpoena was issued for a legitimate purpose within the permissible area of the IG's authority. At the time of the issuance of the subpoena the weight of the evidence abundantly demonstrates that the IG had: personal interest, "official curiosity", and "suspicion", that the lack of production of respondent's internal audits, and the other surrounding circumstances involving this contractor, required an investigation to discharge his responsibilities to the DOD and the public.
The documents sought from the respondent, as outlined in Appendix A of the IG subpoena, supra, have been detailedly set forth. The arguments that the subpoena is not reasonably relevant to the IG's statutory purpose, is not specific enough, or is unduly burdensome, are all without merit. Both the IG and his deputy testified that it was of paramount importance to examine "the effectiveness of the internal controls". (Document 18, page 73). The better those internal controls are, the less audit work is required, and the less risk there is to the government and the public. (Document 18, at pages 74-75). It has been repeatedly established that having these documents will save the DOD the cost of duplicating these efforts, and more importantly they will demonstrate how effective the respondent has been in discovering instances of fraud, waste or mismanagement, and how effective the remedies undertaken by the respondent have been. It would be difficult to imagine any inquiry more relevant to the IG's statutory purpose.
As to whether the subpoena is too broad, too indefinite, too burdensome, or unreasonable, I have previously found that the documents sought in Appendix A of the IG subpoena were described in sufficient detail and reasonably related to the IG's investigation. It would be needless to put additional matters into the subpoena to lengthen it more than it is. As for its breadth, it is no different from what a civil complaint filed in court may have. It is inclusive, but not overly broad. Additionally, the indication of the IG's purpose contained in the subpoena is sufficient for me to evaluate the reasonableness of the documents sought in light of the IG's administrative duty. The respondent attacks the subpoena as lacking in specificity, and also that it is too broad. I shall no further comment.
The Subpoena is Sidetracked by the Respondent's Appeal. The respondent contends that because it appealed a decision of the DCAA regarding its demands for documents to the Armed Service Board of Contract Appeals, ASBCA No. 30593, as of January 9, 1985, the IG of the DOD could not sidetrack that process by his subpoena. The 1982 Inspector General Amendment says nothing at all about proceedings which would terminate or interfere with the IG's independent powers to proceed to initiate, conduct and supervise such audits and investigations as he considers appropriate.
Whether or not the DCAA, itself, has any rights to access of such records as demanded, which the respondent refused, is of no concern to this enforcement proceeding. While the Armed Services Board may have the right and may eventually make a determination that the DCAA as an agency must pay for audits after requesting certain documents from the respondent based upon the clauses in the contracts and by regulations, and may thereafter grant or deny the respondent's appeal, that would not affect the IG's right to investigate and use the DCAA as his own personnel in initiating, conducting and supervising such audits and investigations, as he considers appropriate. There is no substantial connective basis by which the respondent may indicate that its preliminary appeal to the Armed Services Board prevents or estops the statutory right of the IG to proceed in this case, since that appeal does not affect the power, authority, or purpose underlying the issuance of the IG subpoena. Therefore, the fact that the respondent has taken an appeal is not an issue here and does not deprive the IG of the right to look at the respondent's internal audit reports, as part of his own investigation.
*1184 The IG was given independent authority to act in the manner in which he considered appropriate, even if such matters were collateral to any other proceeding, say for instance, the IRS. The provisions and regulations governing appeals to the Armed Service Board of Contract Appeals constituted an independent process which permits the adjudication of contract disputes under certain circumstances.
The 1982 Amendment leaves no doubt that the intention of Congress in authorizing investigations supported by subpoenas and enforcement of subpoenas was intended to enable the IG to discover and procure evidence and not to prove pending charges or complaints. Similarly, the administrative apparatus established by Congress for use of other agencies by the IG was intended to delegate effective power to investigate certain matters within the scope of his authority. Oklahoma Press Publishing Co. v. Walling, 327 U.S. 186, 66 S.Ct. 494, 90 L.Ed. 614 (1946).
The Subpoena is Too Burdensome. The respondent states that compliance with the subpoena would require approximately 3700 hours of effort and $55,000 in direct reproduction costs (although the government has not required that the documents be copied, only made available for inspection), in order to produce the 920 internal audit reports that relate to DOD contracts. This process, according to the respondent, would be extremely disruptive of their internal audit process in terms of diversion of personnel, and the temporary loss of access to records.
In United States v. Firestone Tire & Rubber Co., 455 F.Supp. 1072 (D.C.D.C., 1978), the National Highway Traffic Safety Administration sought different types of records over a four-year period. Firestone complained that compliance would entail 100,000 hours of work and $2,000,000, which would be unduly burdensome and unreasonable. The court, nevertheless, upheld the subpoena. Quoting F.T.C. v. Texaco, Inc., 555 F.2d 862, 882, C.A.D.C., 1977, cert. den. 431 U.S. 974, 97 S.Ct. 2939, 53 L.Ed.2d 1072 (1977), the court summarized the relevant considerations:
"We emphasize the question is whether the demand is unduly broad. Some burden on subpoenaed parties is to be expected and is necessary in furtherance of the agency's legitimate inquiry and the public interest. The burden of showing that the request is unreasonable is on the subpoenaed party. Further, that burden is not easily met where, as here, the agency inquiry is pursuant to a lawful purpose and the requested documents are relevant to that purpose. Broadness alone is not sufficient justification to refuse enforcement of a subpoena. Thus courts have refused to modify investigative subpoenas unless compliance threatens to unduly disrupt or seriously hinder normal operations of a business." 455 F.Supp. at 1083-84.
I find that the subpoena in the instant case has not been shown to be unreasonable or unduly burdensome. If there were reasons for modifying the subpoena to avoid an unjust burden on the part of the respondent, it would have been in order for the respondent to come for a protective order from the court. But it would be difficult to see how any protective order could be had segregating only government related matters when the respondent chose to combine and intermingle them with its own audit operations.
The IG has been available and continues to remain available to discuss and implement methods to reduce the inconvenience of the respondent in compliance. As the respondent has pointed out the government has auditors already on site at many locations and could work with the respondent to facilitate the review and production of the relevant internal audit reports.
Credibility of Inspector General. Counsel presented by means of a lighted shadow box, three documents separately. The first was Stipulation Exhibit 1, which was the August 14, 1984 request by the DCAA to the IG for the issuance of a subpoena duces tecum; the second, Stipulation Exhibit 2, was the more detailed August *1185 16, 1984 request by the DCAA for the issuance of a subpoena; the third, Respondent's Exhibit S-3, the letter dated September 27, 1984, which the IG sent to the DCAA stating that he would issue the subpoena to the respondent.
Counsel's argument was to the effect that the IG has the power for issuance of a subpoena for only his "own" investigation, but that he did not have any power whatsoever to issue a subpoena for any agency within the DOD, and especially for the DCAA, because the DCAA, he contended, was independent and in effect a neutral agency for the purpose of obtaining and giving information to the contract audit processings.
Much has been quoted here from the hearings of the Committee on Governmental Affairs, Part 2, supra, indicating that the DCAA was an agency of the DOD, was not sacrosanct, had been ineffective in its performance, and after much debate, the intent of Congress was expressed to place the DCAA under the guidance and direction of the IG. I find that in the course of exercising his oversight powers he invited the submission of particular problems or inquiries after which he would determine whether or not to launch his own investigation. Therefore, it is critically important in any review of this process to analyze the credibility of the IG and discuss his motivation for issuing the subpoena.
As for counsel's argument that the IG did not issue the subpoena for "his own purpose", but only for that of the DCAA, it is difficult to understand what counsel could possibly mean by the IG's "own" purpose, since Congress had given him the overall departmental jurisdiction and mandate to ferret out fraud, waste and mismanagement. The evidence demonstrates that the IG's purposes were just that, and within the discretion which the IG considers "appropriate". The IG has only a small department of his own but was given the right to use the resources, equipment and personnel of every agency, including the DCAA, all of which Congress constituted as his servants, when the IG considers it appropriate to use them. And thereafter, lacking uncommitted personnel of his own, using the DCAA personnel in this case was in accordance with the power and discretion which Congress bestowed upon him.
The respondent contends that the IG invited all of the DOD investigative divisions under his control to use his subpoena power as a "tool" for their access to records, that the DCAA did indeed request the issuance of a subpoena in an investigation of the respondent, and that the IG did automatically issue the subpoena not for his own investigation, but for the DCAA. Counsel for the respondent urges the court to look only at the contemporaneous but terse memoranda between the IG and the DCAA.
The respondent charges that the memoranda in question do not state their true purpose but merely recite general statements as to their statutory purpose. The critical phase for the respondent is in the September 27, 1984 memorandum from the IG, in which he requests the assistance of the DCAA in executing the subpoena and further requests that the DCAA continue its audit into these matters indicating, according to the respondent, that the IG was merely handing over an illegal subpoena to the DCAA (Document 34, pages 296-297).
I must look to all of the evidence, however, and particularly to evidence characterizing the motivation of the IG. I found the IG to be a highly credible witness. I believe the IG's statements: that he was "appalled" by the lack of cooperation by the respondent; that the DCAA audit was taken over by himself; that "I did not ever think that my subpoena was a tool of DCAA. It is not a tool of anybody's but me".; that he provided for Michael Eberhardt, Assistant Inspector General, to report directly to him as to the progress of the audit; and that he would do all in his power to protect the confidentiality of the documents disclosed.
After counsel for the respondent accused the IG of using his subpoena power for the coersive use of the DCAA, as it maintained, the August 14, 1984 Memorandum, Exhibit *1186 1; the August 16, 1984 Memorandum, Exhibit 2; and the IG's letter dated September 27, 1984, Exhibit S-3, proved the IG had to come to an understanding with the DCAA to help it coerce the respondent into producing the internal audit reports. Counsel for the respondent asserted that these were proof of a combination for an understanding between the two parties for an "ulterior" purpose. I then put the question to counsel for the respondent of whether the IG was "worthy of credibility". He honorably responded that "I, like Your Honor would have difficulty in finding that an officer of the executive branch is lacking in credibility". If the contention of counsel that there had been a collusion between the IG and the DCAA are true, then the IG's testimony before me at the deposition would have to be false. As the judge of credibility, I did not have any difficulty, as counsel for the respondent hesitated to state, in finding that the IG's vociferous description of his purpose in issuing the subpoena was true.
Burden of Proof. The Supreme Court has held that in challenging an administrative subpoena on appropriate grounds, the burden of showing an abuse of process is on the respondent. In the case of an IRS summons, where motivation of the "good faith" of an agency becomes an issue, the burden of disproving a valid purpose on the part of the issuer is a "heavy one". United States v. LaSalle National Bank, 437 U.S. 298, 316, 98 S.Ct. 2357, 2367, 57 L.Ed.2d 221 (1978).
The Court of Appeals for this Circuit in N.L.R.B. v. Interstate Dress Carriers, Inc., 610 F.2d 99, 112, C.A. 3, 1979, stated that in opposing an enforcement proceeding involving an N.L.R.B.'s subpoena: "Of course, the burden on the party to whom the subpoena is addressed is not a meager one. [Citing LaSalle National Bank, supra]. It must come forward with facts suggesting that the subpoena is intended solely to serve purposes outside the purview of the jurisdiction of the issuing agency". (citations omitted).
While the respondent presented its evidence mainly by the affidavits and documents procured in discovery, it relied heavily for its defense that the IG and DCAA arrived at the expedient of forcing the respondent to reveal its internal audit reports to the DCAA by means of the IG's subpoena power.
In deposing before the court the Deputy Inspector General Curry almost the entire substance dealt with the fact that the DCAA had made a study of 28 company locations to show that it was not entirely a popular request to companies for the compliance of divulging the internal audit reports. While it may not have been totally acceptable to the 28 company locations studied, we must remember that the DOD dealt with 200 companies and with their subcontractors. And so the study is not a fair evaluation of popularity; but popularity has nothing to do with this matter before me now.
What the DCAA did in previous years and how it related to various contractors was before the 1982 Amendment. What the IG has done with the subpoena power in this instance relates to the authority and the fairly mandated directions of Congress in the 1982 Amendment. So it is in the same way that the respondent argues that the DCAA had never received any of these reports for twenty years, or made complaints that the respondent had not given the reports, nor chose previously that the DCAA was entitled to its internal audit reports. This, of course, is no excuse for the respondent who no longer deals with the DCAA but with the IG. This is a new ball game in which the star player and the rules are altogether different from what they were before the 1982 authorized the IG to act. Therefore, this evidence has no persuasive value in furthering the belief that there was any stratagem used by the IG agreeably with the DCAA.
The second deposition was that of the IG and I need not repeat here the many statements which he made throughout his testimony (as he was being cross-examined by *1187 counsel for the respondent). Yet a few references are in order.
At page 206 of the transcript:
"The Court: Did anyone at any time intercede in such a way as to pressure you into issuing this subpoena?
The Witness: No, sir. No, Your Honor."
"The Court: Did you, of your own free will and good conscience, examine the matters, the facts, the circumstances in such a way as they related to law and your functional duty before you issued the subpoena?
The Witness: Yes, Your Honor.
The Court: If the subpoena honored or enforced, is it your intention to sublet any of your powers, and I will use the word `sublet' intentionally. Not delegate, but sublet your rights and authority and constitutional obligations to anyone else?
The Witness: No, sir."
When asked by the court who would assist him, the answer was
"I have 570 auditors that work for me and I have a contract audit group ... I would ask them to work with the DCAA to protect the record from that kind of violation." (Tr. page 209).
At page 210:
"The Court: In response to certain of its documents. Would you have the ability to respect, you through your agencies, and representatives, and your staff, would you have the capability of seeing that that was done in accordance with your oath of office and the duties and functions which Congress has imposed upon you?
The Witness: Yes, sir. I think that I have that capability. I deal with the most sensitive military programs in the Department of Defense and am cleared ___ I have the same clearances as the Secretary of Defense. My people are all cleared for top secret".
At page 211, when asked whether he would be concerned in good conscience to see to it that none of the rights of Westinghouse would be violated, his answer was:
"Let me assure you, Your Honor, that I consider that a solemn trust and I would take the actions that are necessary to protect those records."
The court then asked:
"And again, you say, that the action that has occurred right now, in regards to the issuance of this subpoena, was solely that of your own determination?
And the witness answered: "That's right."
"The Court: Based upon what information you had and not to serve or subserve any other purposes?
"The Witness: "No."
"The Court: How about rights not to disclose certain information to DCAA?
The Witness: There are, if there are rights not to disclose involved with any paper, I would expect that Westinghouse would tell me that and I would certainly live up to that kind of a limitation".
Towards the end of his testimony, the witness volunteered this statement: (Tr. page 214)
"Your Honor, I would like to comment on one thing. There was no inference here that as a result of Congressional hearing that there would be pressure put on me. I want that I would like to have it in the record that, you know, I'm independent of the Congress and the Department of Defense in carrying out my responsibilities. I have served the Government for over 40 years and I am more than eligible for retirement. That kind of inference bothers me because that's the last thing in the world that I would let affect my decision. And if it came to that kind of an issue, I would resign and I will not take that kind of ___".
Since the burden is upon the respondent to prove, by at least a preponderance of the evidence in its case, particularly in its attack of impropriety of the issuance of the subpoena and its ulterior motivation in doing so, and because all of the credible evidence, even though produced for the most part by the respondent, is on the side of the petitioner with very little weight on the side of the respondent, the respondent has *1188 failed to convince the court that the petition for the enforcement of the subpoena should not be granted.
SUMMARY
With expressed antagonism against the overwhelming number of money grabbers, mismanagers and those who acquired public funds, through federal channels in the name of costs, expenses and profits, Congress finally broke out with exasperation to enact the IG statutes. Because the DOD was unique in its national security function, with so much of it integrated in confidentiality, and being the most costly part of the government wrapped up in fabulous hundreds of billions of dollars, Congress spent in excess of three years in finally arriving at a particularly devised medium to combat fraud, abuse, waste and mismanagement. And so it constituted an all powerful IG of the DOD (with additional powers compared to the other IGs) who would be virtually devoid of resources, facilities, equipment and personnel, and practically speaking, a pauper on budget allowances with only a nucleus of personnel. And, through the megical dexterity of Congress, all the resources, facilities, equipment and the nineteen thousand auditors and investigators in the scattered, disjointed DOD agencies were brought under the independent and discretionary authority of the IG who could more effectively combat fraud, waste, abuse and mismanagement.
After the enactment of the Inspector General Amendment, the President appointed Joseph H. Sherick, a dedicated and experienced public servant with a legal foundation, and more than 40 years of government service in the related fields; and the Senate confirmed him. He already had much knowledge of the perplexed state of affairs in the DOD because of the lack of integration among the many unsupervised department agencies.
In addressing the Senate Committee on Governmental Affairs Sherick said in a prepared statement that if he became the primary monitor of the DOD, he would be: (Hearing, Part 1, pages 44-45)
"(1) Working closely with the President's Council on Integrity and Efficiency to achieve coordinated, government-wide attacks on fraud and abuse involving more than one federal agency.
(2) Cooperating closely with Inspectors General in other civil federal agencies to insure that there is both an exchange of ideas on methods and techniques, as well as a careful coordination of any investigation or audit which involves DOD and these other agencies.
(3) Coordinating efforts of the Departments' auditors, Inspectors General and Criminal Investigative agencies, to achieve a uniform and balanced approach to rooting out or preventing fraud, waste and abuse.
(4) Developing new ideas and approaches in improving DOD operations and reducing fraud, waste or mismanagement.
(5) Placing emphasis on use of Hotlines and mail drops to report and expose instances of fraud or abuse."
He was, in effect, even then inviting the submission to his office of matters which might require his attention. Subsequently, he also invited any member of the public to inform him of potential DOD complaints by means of a "hotline" about which he testified. The IG knew what valuable services the DCAA provided to the contract officers within the Department. He also knew that there had been lacking a follow-up on many matters, often of moment, when the DCAA presented information to the appropriate agencies. Prior to the 1982 Amendment, the DCAA was a practically isolated and independent agency in the employment of the DOD under the supervision of the Secretary. The new IG required the DCAA to be more responsible.
Because of the minimal number of his attached auditing personnel, the IG was required to perform his duties using the personnel of those agencies best and most conveniently suited for the task of effectuating the IG's inquiry within the sphere or limitation of his purpose.
When the DCAA made its requests for a subpoena to compel the respondent to open *1189 up its records for review by the DCAA, the IG gave the matter much study, communicated a possible compromise unsuccessfully with the respondent, and then after obtaining the necessary information for an appropriate discretionary determination, he issued a subpoena duces tecum to the respondent based upon his own investigation.
After a final hearing was had on May 15, 1985, in addition to the previous evidence of the depositions of the IG and the Deputy IG, the exhibits, affidavits, and finally the stipulation of the parties, the issue was clarified.
In order to invalidate the IG's subpoena, the highly competent and skilled counsel for the respondent (and the Amici in their briefs) eloquently proferred the story that the DCAA had conspired with or used a willing IG to accommodate it in doing that which it, itself, was powerless to do to issue a subpoena duces tecum to the respondent because the DCAA had wanted to coerce the respondent into revealing its internal audit reports; and so the IG issued the subpoena for the DCAA and not for the IG's "own" purpose.
The respondent and the petitioner admittedly agree that the request by the DCAA for the IG to issue a subpoena was in violation of nothing in either the 1978 or 1982 statutes, but seemingly of a Committee comment from the 1978 Congressional Report that "The use of the subpoena power to obtain information for another agency component which does not have such power would clearly be improper". 1978 U.S. Code Cong. & Ad.Report No. 1071, at page 2709.
In so arguing, counsel was intermixing dissimilar motivations for the 1978 Act and the 1982 Amendment. Was not the Committee referring to Department agencies other than that for which each IG served? The aim evidently of Congress was to circumscribe and confine each IG within his own department and to not intermeddle with the affairs of any other department through their personnel or agencies. Thus it was expected that the 15 IGs appointed under the 1978 Act would not cross departmental lines into other departments and so they would avoid conflicts and confusion.
The purpose of the 1978 Act was to consolidate audit and investigative functions within each department under a single, responsible official. There was no IG of the DOD created under this Act, to which the Committee comment could refer. Under the 1982 Amendment, instead of consolidating each DOD auditing agency, Congress allowed each to nominally remain, but placed them under the umbrella of a powerful and independent IG. The new Congressional scheme provided for the independent integration of all DOD auditing and investigative units within the descretion of the IG. The previous Committee comment does not apply to this situation.
The DCAA is not only a DOD agency, but the Act of 1982 placed it under the supervision and control of the IG for the DOD, and so no matter how imaginative one may be to infuse a plot between the IG of the DOD and the DCAA of the DOD as separate elements, it plainly lacks fundamental logic. In order to give the respondent's postulate any plausability, there must have been some worthy evidence of a prearrangement between the IG and some one or more responsible members of the DCAA. What the DCAA did and what the IG did shows no evidence of any improper, even fragmentary, collusion. The respondent presented no preponderance of evidentiary credibility that the "two" had entered into a scheme for compelling compliance by the respondent to produce documents for the exclusive purposes of the DCAA. The respondent called the IG for his deposition; and he appeared before me as an honorable and reliable witness. I find his unimpeached and uncontradicted testimony to be totally credible.
In addition to the primary contention by the respondent that the subpoena was issued for an improper purpose by the IG (on behalf of the DCAA and to coerce settlement of a related administrative dispute), the respondent relied on the Merck case, supra, allegations that the scope and subject of the subpoena were too broad, and *1190 the argument that compliance would be unduly burdensome.
As previously stated, the authority of the Comptroller General to examine directly pertinent contract records in the Merck case, supra, was far more limited than the authority of the IG of the DOD: allowing him to subpoena any records necessary for his oversight responsibilities with regard to "all matter" relating to economy and efficiency in the DOD. In the instant case, the IG is well within his broad statutory discretionary rights.
The IG assured the court that he would personally monitor any possible problems with confidentiality. In addition, the reproduction costs (not required by the subpoena) of the 920 audit reports in question will be approximately $55,000, not an unreasonable amount of money (to be paid by the government), which will ultimately save the government the much greater expense of duplicating the actual audits themselves. Inspection of the internal audit reports will not be unduly burdensome, and the IG will expectantly accommodate any logistical problems involved in the production of these records.
The government paid the respondent $554,000 in 1983 for its share of respondent's internal audit activities, as a proportion of the total auditing cost. This cost was paid by the government, although the DOD has not examined the actual reports and does not know what they actually purchased by that money a quid pro nihil. Thus, as the IG stated, "... I had suspicion that there's something there that they don't want us to have." and "I want to see what the Government is getting for its money". (Document 18, page 144 and Sherick Affidavit, page 5).
While it may be that the IG should not have used the DCAA because the DCAA had reasons of its own for getting information about the internal audit reports, it was nevertheless a discretionary right which Congress had given him, lacking his own personnel with which to act. He acted, he said, with the DCAA auditors because they were familiar with the subject matter, they were close to the source of the records, and they had long experience in reporting back to him on problems that they have found. Under such circumstances, it is not for this court to forbid the IG from using DCAA employees and to direct him to use some other agency employees or hire special employees for that purpose.
Because the respondent has been brought into this action for enforcement of a civil writ, it must be understood that that does not presume any culpability on the part of the respondent. The respondent properly resorts to due process in this judicial proceeding to test its theories as to the correctness or the incorrectness of the IG's authority to issue the subpoena. Neither do I infer, in any way, any wrongdoing on the part of the respondent because it is presently before me or the public officials who are before me, when I state that the public has a irrefutable and absolute right to demand: that its money payments be returned to it in full money value of whatever kind for which it bargains; that its own officials and employees and those with whom it deals be honest and honorable; and, that its legislators provide determined and independent processes and functionaries to eliminate or at least to substantially lessen the infiltration of fraud and waste in its publicly budgeted spending.
Thus, when the Congress endows administrative agents and agencies with means and methods for improving the public welfare and provides resort for enforcement by court procedure, it becomes incumbent upon the judiciary to enforce the specific process in aid of the public's right to a remedy in accordance with law as it pertains to the facts.
To do otherwise, would reinstate the public dilemna as it was as of the time when the Senators, concerned as they were, complained at the Hearing, Part 2, before the Committee on Governmental Affairs, on March 25, 1982, that if an IG for the DOD were created without strength and independence, *1191 it would be only for a "cosmetic" purpose. The Senators made it perfectly plain at the hearing and in the amending Act of 1982 that they intended and wanted an independent IG who would have power and purpose to prevent and detect fraud, abuse and waste in the government programs.
In view of the attitude of the Senators as translated into clear, determined words by Congress in the 1982 Amendment, and lacking any illegality or impropriety on the part of the IG in issuing the subpoena, and being abundantly obvious from the evidence as a whole of the circumstances which required the issuance of a subpoena within the discretion of the IG, it is not for this court to substitute its judgment for that of the IG.
The IG might have delegated personnel other than those of the DCAA, but as the evidence indicates because of his lack of personnel and because the auditors of the DCAA are highly expert in their field and have special knowledge which no other personnel in any of the other agencies in the DOD possess, and with the assurance of the IG that the matter will be treated with professional confidence, and that only such matters will be reported as the law requires, I find that it is as much as the respondent may hope for.
We must remember that it is the auditing of the internal operations for which government money was spent and with which government resources, equipment and personnel have and are likely being used. Accordingly, the objections of the respondent will be denied, and the Petition for Enforcement of Administrative Subpoena by the Government will be enforced.
The Findings of Fact and Conclusions of Law are incorporated in this opinion in accordance with Federal Rule of Civil Procedure 52.[10]
NOTES
[1] This outgrowth springs from the root of the Congressional Report that it would be improper for the IG to serve another agency.
[2] In-court depositions of Sherick and Curry.
[3] The IG has repeatedly stated that one reason for examining the respondent's internal audit reports would be to discover what, if any, action is taken by respondent upon the discovery of fraud, waste, or abuse involving DOD conracts. In a matter first raised by counsel for the respondent, Sherick testified as to his knowledge (derived solely from newspaper accounts) of an incident of alleged embezzlement and fraudulent invoicing which included a Westinghouse employee at its Baltimore facility, which principally performs defense contract work. An affidavit submitted by the government indicated that approximately $65,000 may have been misdirected to the possible detriment of the DOD. (See Document 18, pages 98-103 and Document 15).
[4] Departments of Agriculture, Commerce, Education, HUD, Interior, Labor, Transportation; Agencies of Community Services, Environmental Protection, General Services, National Aeronautics and Space, Small Business Administration and Veterans' Administration.
[5] 1978 U.S.Code, Cong. & Ad.News.
[6] Auditor while originally contained was but an additional title for the IG.
[7] Hereafter referred to as the Part 2 Hearing.
[8] General Accounting Office
[9] The language which the Supreme Court interpreted is from the statute in these words:
"(b) except as provided in subsection (c), each contract negotiated under this chapter shall provide that the Comptroller General and his representatives are entitled, until the expiration of three years after final payment, to examine any books, documents, papers, or records of the contractor, or any of his subcontractors, that directly pertain to, and involved transactions relating to, the contract or subcontract". 10 U.S.C. § 2313(b). (Emphasis added).
[10] Rule 52. Findings by the Court. "(a) Effect. In all actions tried upon the facts without a jury or with an advisory jury, the court shall find the facts specially and state separately its conclusions of law thereon ... If an opinion or memorandum of decision is filed it will be sufficient if the findings of fact and conclusions of law appear therein.
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852 S.W.2d 198 (1993)
Regina Katherine (Gilliam) BELL, Petitioner-Appellant,
v.
Clarence GILLIAM, Respondent-Respondent.
No. 18131.
Missouri Court of Appeals, Southern District, Division Two.
May 6, 1993.
*199 W.H. Winchester, III, Stephanie M. Gleason, Drumm, Winchester & Gleason, Sikeston, for petitioner-appellant.
James M. McClellan, Dempster, Barkett, McClellan & Edwards, Sikeston, for respondent-respondent.
GARRISON, Judge.
Appellant (Wife) appeals from the trial court's modification of a child support award. The original decree dissolving the marriage was entered on February 24, 1987 and included an order that respondent (Husband) pay child support of $150 per week for the one minor child born of the marriage.
Husband filed an earlier motion to modify which was denied by the trial court in December 1990. The legal file furnished with this appeal does not include a copy of the order or indicate any findings made by the court in denying that request for modification.
On July 31, 1991, Husband filed another motion to modify directed to the child support award. The matter was heard by the trial court on October 16, 1991. On March 26, 1992, the trial court entered a decree by which it reduced the child support award from $150 per week to $120 per week. The decree was later amended in ways which are not pertinent to this opinion. Wife alleges the trial court erred in entering the modification.
The standard for review of this matter is consistent with other court-tried cases. Therefore, the decision of the trial court is to be affirmed unless it is not supported by substantial evidence, is against the weight of the evidence, or it erroneously declares or applies the law. Murphy v. Carron, 536 S.W.2d 30, 32 (Mo. banc 1976); Laws v. Laws, 796 S.W.2d 439, 440 (Mo.App.1990); Wiebusch v. Deke, 762 S.W.2d 521, 524 (Mo.App. 1988). The party who is challenging *200 the decree bears the burden of demonstrating error. Ibrahim v. Ibrahim, 825 S.W.2d 391, 393 (Mo.App.1992).
Wife's sole point on this appeal is, for purposes of clarity, set out verbatim:
The trial court erred in granting respondent's motion to modify as to child support reducing the child support obligation because the burden is upon the movant to show a change in circumstances that have occured [sic] since the decree of dissolution so substantial and continuing in nature as to render the terms of the original decree unreasonable which the respondent failed to do:
(A) Respondent's injury at work and resulting approximately three months off from work did not establish a substantial and continuing change in circumstances when respondent returned to work earning as much, if not more, gross income;
(B) Respondent's remarriage and voluntary assumption of support of three stepchildren are irrelevant when examining child support;
(C) The enabling statute establishing child support guidelines empowers the trial court with wide discretion in the utilization and application of said guidelines;
(D) Respondent's burden is even greater when there is a short period of time since the last order on support requiring a showing of extraordinary change in circumstances so substantial and continuing in nature.
Our discussion of paragraphs (C) and (D) of the point is determinative of this appeal.
Husband responds with the argument that the child support award complied with the guidelines of Supreme Court Rule 88.01[1] and that the issue of child support was not preserved for appellate review because Wife did not include a Form 14 in the legal file which was filed with this court. This refers to Civil Procedure Form No. 14 which is required and which provides a method of calculating the amount of child support presumed by Rule 88.01 to be correct. In support, Husband cites the case of Ibrahim v. Ibrahim, supra. In that case the court found that a party who wishes to challenge a child support award on the basis that it does not conform to the requirements of Rule 88.01 must show that Civil Procedure Form No. 14 was filed in the trial court and it should be included in the legal file on appeal. We do not agree that, under the circumstances of the instant case, this failure is determinative of this appeal. Here, Wife's challenge to the child support award is not on the basis that it fails to, but should, conform to the child support guidelines calculated pursuant to Civil Procedure Form No. 14 and presumed correct by Rule 88.01. Rather, her complaint is that Husband failed to satisfy his burden to show a substantial and continuing change of circumstances so as to authorize the modification. Therefore, the instant case is distinguishable from Ibrahim, and the issue here is not controlled by it.
Wife's argument is that Husband, who had the burden of proof, failed to show a change of circumstances so substantial and continuing as to justify modification. Section 452.370[2] governs modification of child support awards. It provides, in part:
1. ... [T]he provisions of any decree respecting maintenance or support may be modified only upon a showing of changed circumstances so substantial and continuing as to make the terms unreasonable. In a proceeding for modification of any child support award, the court, in determining whether or not a substantial change in circumstances has occurred, shall consider all financial resources of both parties, including the extent to which the reasonable expenses of either party are, or should be, shared by a spouse or other person with whom he or she cohabits, and the earning capacity of a party who is not employed.
Wife's argument, however, ignores other provisions of § 452.370 which immediately follow that quoted above. Those additional provisions are:
*201 If the application of the guidelines and criteria set forth in supreme court rule 88.01 to the financial circumstances of the parties would result in a change of child support from the existing amount by twenty percent or more, then a prima facie showing has been made of a change of circumstances so substantial and continuing as to make the present terms unreasonable.
2. When the party seeking modification has met the burden of proof set forth in subsection 1 of this section, then the child support shall be determined in conformity with criteria set forth in supreme court rule 88.01.
In the instant case, Husband's evidence of income, which he contends should be attributable to each of the parties in calculating the child support under the Rule 88.01 guidelines, would have resulted in a reduction of the amount to be paid by Husband of more than twenty percent.[3] Therefore, under § 452.370, Husband met his burden to make a prima facie showing of a change of circumstances so substantial and continuing as to make the existing child support order unreasonable. Kieninger v. Kieninger, 836 S.W.2d 515, 518 (Mo.App.1992). Once Husband made this prima facie showing of change of circumstances, he was entitled to a new award calculated according to Rule 88.01 and Form No. 14 unless the court determined, after considering relevant factors, that the amount was unjust or inappropriate. Campbell v. Campbell, 811 S.W.2d 504, 506 (Mo.App.1991). The evidence was, therefore, sufficient in the instant case to have permitted the trial court to find a change of circumstances which would authorize it to modify the child support award. The question becomes, however, whether the trial court made adequate findings to support the modified award which it entered.
Rule 88.01 provides, in pertinent part:
... There is a rebuttable presumption that the amount of child support calculated pursuant to Civil Procedure Form No. 14 is the amount of child support to be awarded in any judicial or administrative proceeding for dissolution of marriage, legal separation, or child support. It is sufficient in a particular case to rebut the presumption that the amount of child support calculated pursuant to Civil Procedure Form No. 14 is correct if the court or administrative agency enters in the case a written finding or a specific finding on the record that the amount so calculated, after consideration of all relevant factors, is unjust or inappropriate.
Wife acknowledges that the child support guidelines under Rule 88.01 are mandatory but argues that the trial court has wide discretion in applying them. She cites Rothfuss v. Whalen, 812 S.W.2d 232 (Mo.App.1991), and In re Marriage of Zavadil, 806 S.W.2d 506 (Mo.App.1991), for the proposition that the child support guidelines should not be automatically or rigidly applied, but rather the trial court still retains discretion in setting the amount of child support. We do not disagree with that principle. Its application in the instant case by Wife, however, ignores the fact that Rule 88.01 itself permits the exercise of discretion in setting the amount of child support but mandates the procedure for doing so. The trial court is permitted by the rule to depart from application of the child support guidelines and exercise its discretion if it also makes "a written finding or a specific finding on the record that the amount so calculated, after consideration of all relevant factors, is unjust or inappropriate." See Campbell v. Campbell, 811 S.W.2d at 506; and Beeman v. Beeman, 816 S.W.2d 15, 17 (Mo.App.1991).
It has been held that this requirement applies to cases involving modification of decrees. Once a substantial and continuing change of circumstances is shown under § 452.370, the provisions of Rule 88.01 become mandatory. The court is then required to either order the payment of child support calculated pursuant *202 to Form No. 14, or it must make a finding that the amount so calculated would be unjust or inappropriate after considering all relevant factors. Kieninger v. Kieninger, 836 S.W.2d at 518; Campbell v. Campbell, 811 S.W.2d at 506.
A child support award is ineffective if it constitutes a departure from the amount calculated by the procedures found in Form No. 14 without there also being a specific finding, after consideration of all relevant factors, that the amount so calculated would be unjust or inappropriate. Beeman v. Beeman, 816 S.W.2d at 17.
The modification decree from which Wife appeals in the instant case does not set forth the factual findings upon which the award is based. Likewise, it does not make a finding that, after consideration of all relevant factors, application of the Rule 88.01 guidelines would be unjust or inappropriate. Its findings are, in pertinent part:
4. That since the rendition of the decree in this cause, there has been a change in the circumstances of the parties considering the respective incomes of both parties as set forth in the Presumed Child Support Guidelines under Supreme Court Rule 88.01 and said change in circumstances is so substantial and continuing as to make the terms of the original Decree with respect to child support unreasonable.
IT IS ORDERED, ADJUDGED AND DECREED by the Court that Respondent shall pay to the Petitioner in accordance with Supreme Court Rule 88.01, as support for the minor child ... the sum of $120.00 per week....
It is necessary that the record on appeal permit a determination of the decisions made by the trial court regarding the calculations required under Form No. 14. Umphenour v. Umphenour, 831 S.W.2d 764, 767 (Mo.App.1992). Neither this decree nor the record discloses whether the child support of $120 per week complies with the child support guidelines calculated pursuant to Rule 88.01 and Form No. 14 or whether it is some other figure arrived at by application of the trial court's discretion. If it is the former, the record does not disclose the trial court's findings of the amounts of income attributable to the parties which were used to calculate the applicable child support under the guidelines. If it is the latter, the record does not contain a finding that, after consideration of all relevant factors, the amount calculated under Rule 88.01 was "unjust or inappropriate." In short, we are unable to determine how the trial court arrived at the amount of child support ordered and whether the guidelines were followed and applied.
It is true that generally in court-tried cases when no findings of fact are made and the record supports the ruling, the appellate court considers the facts to have been found in accordance with the result reached. Rule 73.01(a)(2). This rule has not always been applied, however, in modification actions because of the requirements of Rule 88.01 that either the child support be ordered in the amount calculated by the procedures found in Form No. 14 or the trial court find that amount is unjust or inappropriate. Kieninger v. Kieninger, 836 S.W.2d at 518; Campbell v. Campbell, 811 S.W.2d at 506.
In Tuning v. Tuning, 841 S.W.2d 264 (Mo.App.1992), this court determined it was necessary to reverse and remand a modification action where the trial court made no determination of the proper amounts to be used in making the Form No. 14 calculations and also made no finding that application of the guidelines would be unjust or inappropriate. The same result should apply here.
We find that the trial court erred in not making findings from which we can determine whether the modified child support award was arrived at by applying the child support guidelines under Rule 88.01, together with its findings concerning the amounts which should be used to make the Form No. 14 calculations. If the child support guidelines under Rule 88.01 were not applied, the trial court erred in failing to make a specific finding that the guidelines, after consideration of all relevant factors, *203 would be unjust or inappropriate. Accordingly, we reverse and remand this cause to the trial court to make such findings consistent with this opinion. In doing so, the trial court may take such additional evidence on the issues as it deems necessary.
MONTGOMERY, P.J., and PREWITT, J., concur.
NOTES
[1] All references to rules are to Missouri Rules of Court, V.A.M.R.
[2] All references to statutes are to RSMo 1986, V.A.M.S.
[3] Wife raises no issue that the legal file contains no indication that Husband filed a Form No. 14 with the trial court. We, likewise, do not address that issue.
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852 S.W.2d 499 (1993)
Ex Parte Troy KUNKLE.
No. 70,909.
Court of Criminal Appeals of Texas, En Banc.
February 3, 1993.
Rehearing Denied March 3, 1993.
*501 Richard W. Rogers, III, Corpus Christi, for appellant.
Robert Huttash, State's Atty., Austin, for the State.
Before the court en banc.
OPINION
McCORMICK, Presiding Judge.
This is a post-conviction application for writ of habeas corpus filed pursuant to Article 11.07, V.A.C.C.P.
Applicant Troy Kunkle was convicted by a jury of capital murder; after the jury answered the statutory special issues in the affirmative, the trial court sentenced applicant to death. On direct appeal, this Court affirmed applicant's conviction and sentence. Kunkle v. State, 771 S.W.2d 435 (Tex.Cr.App.1986), cert. denied, 492 U.S. 925, 109 S. Ct. 3259, 106 L. Ed. 2d 604, rehearing denied, 492 U.S. 937, 110 S. Ct. 21, 106 L. Ed. 2d 634 (1989). Applicant now challenges his sentence by writ of habeas corpus alleging that he was sentenced to death in violation of the Sixth, Eighth and Fourteenth Amendments to the United States Constitution. Specifically, applicant contends:
(1) He was sentenced to death in violation of the Eighth Amendment because the jury was not instructed that it could consider and give effect to his mitigating evidence in imposing its sentence as required by Penry v. Lynaugh, 492 U.S. 302, 109 S. Ct. 2934, 106 L. Ed. 2d 256 (1989);
(2) The failure of the trial court to define `deliberately' as requested by applicant violated his constitutional rights to due process of law;
(3) The Texas death sentencing statute, on its face and as applied in this case, provides inadequate guidance to the jury and did not allow the jury to consider and act upon mitigating evidence proffered by the defense as the basis for a sentence less than death;
(4) The trial court failed to instruct the jury on the nature, function and definition of mitigating evidence, and the manner in which consideration of the mitigating evidence could be included in their responses to the questions required under Article 37.071, V.A.C.C.P.; and
(5) He was denied effective assistance of counsel because trial counsel failed to advance applicant's Penry claim in the trial court.[1]
We shall deny applicant's claims.
In Jurek v. Texas, 428 U.S. 262, 96 S. Ct. 2950, 49 L. Ed. 2d 929 (1976), the Supreme *502 Court explicitly determined that Article 37.071 of the Texas Code of Criminal Procedure is not facially unconstitutional.[2] Thus, applicant's challenge to the facial validity of Article 37.071 is without merit.
The Supreme Court emphasized this finding in Penry, but determined that Article 37.071 could be unconstitutionally applied to defendants who present mitigating evidence which cannot be adequately considered and given effect under the statutory special issues authorized by Article 37.071. Penry v. Lynaugh, 492 U.S. at 320-322, 109 S.Ct. at 2948. The Penry decision requires trial courts to submit "instructions informing the jury that it [can] consider and give effect to the [particular] mitigating evidence ... by declining to impose the death penalty," in all cases where evidence is presented to the jury that: (1) is mitigating in nature; (2) is relevant to a juror's determination that death would not be the appropriate "reasoned moral response" to the defendant's particular circumstances; and, (3) the mitigating effect of the evidence cannot be considered under the statutory special issues. Penry v. Lynaugh, 492 U.S. at 328-330, 109 S.Ct. at 2952. If mitigating evidence is presented that can be considered and given full effect under the special issues authorized by Article 37.071, however, there is no need to submit a particularized charge on mitigation to the jury in addition to the statutory special issues. Therefore, we shall examine the evidence presented at trial to determine whether application of the statute and the court's failure to specifically charge the jury on mitigation were errors of constitutional dimension.[3]
During the guilt/innocence stage of applicant's trial, applicant offered evidence of his drug and alcohol use at the time of the murder, arguably in an attempt to diminish his culpability. He did not reintroduce this evidence at punishment, but because evidence introduced at the guilt/innocence stage may be considered at punishment, we shall address the evidence as if it had been introduced and argued at punishment. See Crane v. State, 786 S.W.2d 338, 354 (Tex.Cr.App.1990) (in answering special issues, jury may consider all evidence adduced at both phases of trial). Specifically, applicant showed that he had ingested a combination of LSD, marihuana and alcohol before he murdered the complainant by shooting him in the back of the head. Although *503 an expert witness testified that any person given the amount of substances ingested by applicant "could lose control over [his] behavior,"[4] no evidence was offered to show that ingesting the drugs and alcohol caused applicant to suffer temporary insanity, organic brain damage or permanent mental impairment comparable to the impairment suffered by Penry. We find this evidence not significantly different from the evidence in prior decisions where we determined that evidence of drug and alcohol abuse can be given adequate mitigating effect under the statutory special issues of Article 37.071. See Lackey v. State, 819 S.W.2d 111 (Tex.Cr.App.1991) (On Motion for Rehearing); Lane v. State, 822 S.W.2d 35 (Tex.Cr.App.1991). But see Ex parte Rogers, 819 S.W.2d 533 (Tex.Cr. App.1991) (Clinton, J. dissenting) (would find habitual use of drugs has relevance beyond scope of special issues). Because we find that applicant's evidence of drug and alcohol use could be adequately considered and given effect under the special issues as charged, applicant was not entitled to a special mitigating charge based on such.
In the punishment stage of trial, applicant introduced testimony showing that his father had been discharged from military service for depression and that he had been treated for depression with both medication and therapy; there was additional testimony that applicant's mother had been treated for depression. Applicant's father also testified that he asked applicant to move out of the family home after discovering applicant smoking marihuana. The father testified that at this time applicant weighed about 189 pounds, but after moving out of the family home applicant went down to 130 pounds and "didn't look good"he had sores on his face and was unkempt. Applicant's father further testified that he encouraged applicant to attend therapy with the family, but applicant had refused. The dissimilarity of this evidence to that in Penry[5], in addition to applicant's failure to show how his parents' emotional problems or removal from the family home affected him or related to the offense, lead us to conclude that this evidence could be adequately considered and given effect under the special issues as charged. See Nobles v. State, 843 S.W.2d 503 (Tex.Cr.App., No. 69,991, June 10, 1992), and Trevino v. State, 815 S.W.2d 592, 622 (Tex.Cr.App.1991), rev'd on other grounds, Trevino v. Texas, ___ U.S. ___, 112 S. Ct. 1547, 118 L. Ed. 2d 193 (1992) (mitigating charge unwarranted where evidence unrelated to any aspect of how or why death would or would not be appropriate response to applicant's actions). Therefore, applicant was not entitled to a special mitigating charge based on evidence of his or his family's emotional problems.
There was no direct testimony as to applicant's age, but there was evidence that he was born on May 27, 1966. Since the offense took place on August 12, 1984, applicant appears to have been eighteen (18) at the time of the offense. Applicant alleges in his brief, however, that he was seventeen (17) at the time of the offense. This Court has consistently held that evidence of youth can be considered under the statutory special issues and that no special mitigating instruction is required for the jury to give effect to this evidence. Jackson v. State, 822 S.W.2d 18, 23 (Tex.Cr. App.1990); Lackey v. State, 819 S.W.2d 111 (Tex.Cr.App.1991) (on rehearing); Ex *504 parte McGee, 817 S.W.2d 77 (Tex.Cr.App. 1991). But see Graham v. Collins, 950 F.2d 1009 (5th Cir.1992), cert. granted, ___ U.S. ___, 112 S. Ct. 2937, 119 L. Ed. 2d 563 (1992).
Clearly, the mitigating evidence offered at applicant's trial could be constitutionally considered and given effect under the special statutory issues as charged and Article 37.071 was not unconstitutionally applied to applicant. We conclude, therefore, that the trial court did not err in refusing to instruct the jury on the nature and effect of mitigating evidence nor did it err in refusing to instruct the jury on the manner in which mitigating evidence could be considered in their responses to the special issues..See Johnson v. State, 691 S.W.2d 619, 625-626 (Tex.Cr.App.1984) (court's charge at punishment following Article 37.071 adequately guides jurors in application of mitigating evidence); Earvin v. Lynaugh, 860 F.2d 623, 625 (5th Cir.1988).
Applicant contends, however, that counsel was forced to withhold mitigating evidence analogous to that present in Penry because of the operation of Article 37.071. Applicant acknowledges that there was no attempt to proffer the evidence at trial, nor was there a request for a jury instruction on the effects of mitigating evidence. After filing his writ of habeas corpus, applicant requested a hearing to develop the evidence that was withheld, but the trial court denied such. Applicant attached affidavits to his writ application to partially explain what mitigating evidence was withheld. We have previously determined, however, that we shall not consider such affidavits in determining the merits of applicant's Penry claims. Ex parte Goodman, 816 S.W.2d 383, n. 6 386 (Tex.Cr.App. 1991).
In Goodman, a majority of this Court agreed that we shall not consider
"... evidence provided to this Court by way of affidavit as it could have been introduced at the punishment phase of applicant's trial. We will not entertain arguments addressing evidence which would have been proffered by defense counsel had the trial judge allowed an additional jury instruction on that evidence. To do so would, in effect, allow applicant to make a `post-conviction bill of exception,' a procedure which does not comport with this Court's contemporaneous objection rule.
"As to the admissibility of mitigating evidence, we have always held that such evidence was admissible and, thus, we are disinclined to excuse noncompliance in the area of introducing mitigating evidence. Consequently, absent a contemporaneous offer of proof or bill of exception detailing what mitigating evidence was TACTICALLY withheld by the appellant during trial, we will not be heard to consider the same now." Ex parte Goodman, 816 S.W.2d 383, n. 6 386 (Tex.Cr.App.1991) (emphasis in original).
Albeit originally appearing only in a footnote, we now adopt such language as the rule. Thus, we shall not consider mitigating evidence not presented or proffered at trial in determining the merits of applicant's Penry claims. Thus, we find applicant's claims in one, three and four to be without merit.
Not entitled to have the merits of his Penry claim determined on evidence not proffered or admitted at trial, applicant next contends his trial counsel was rendered ineffective because Article 37.071 forced his counsel to withhold evidence analogous to that present in Penry. Consequently, applicant wants this Court to rule that he has satisfied the first prong of the test for ineffective assistance of counsel as enunciated in Strickland v. Washington, 466 U.S. 668, 687, 104 S. Ct. 2052, 2064, 80 L. Ed. 2d 674 (1984), and adopted by this Court in Hernandez v. State, 726 S.W.2d 53 (Tex.Cr.App.1986).
The Supreme Court in Strickland established the standard for determining whether counsel provided constitutionally satisfactory services as one of "reasonably effective assistance." Thus, to successfully prevail on an ineffective assistance claim, applicant must:
"First, ... show that counsel's performance was deficient. This requires *505 showing that counsel made errors so serious that counsel was not functioning as the `counsel' guaranteed the defendant by the Sixth Amendment.
"Second, ... show that the deficient performance prejudiced the defense. This requires showing that counsel's error were so serious as to deprive the defendant of a fair trial, a trial whose result is reliable. Unless a defendant makes both showings, it cannot be said that the conviction or death sentence resulted from a breakdown in the adversary process that renders the result unreliable."
Consideration of the "totality of the representation," rather than isolated acts or omissions of trial counsel, determines whether this standard has been met. Ex parte Raborn, 658 S.W.2d 602, 605 (Tex. Cr.App.1983). The burden of proving ineffective assistance of counsel falls on the accused and such contentions must be proved by a preponderance of the evidence. Cannon v. State, 668 S.W.2d 401 (Tex.Cr. App.1984).
The right to "reasonably effective assistance of counsel" does not guarantee errorless counsel, or counsel whose competency is to be judged by hindsight. Saylor v. State, 660 S.W.2d 822, 824 (Tex. Cr.App.1983). Rather, the right to counsel affords an accused an attorney "reasonably likely to render and rendering reasonably effective assistance." Cannon, 668 S.W.2d at 402. A fair assessment of counsel's performance requires that every effort be made to eliminate the distorting effects of hindsight, to reconstruct the circumstances, and to evaluate the conduct from counsel's perspective at the time. "Because of the difficulties inherent in making the evaluation, a court must indulge a strong presumption that counsel's conduct falls within the wide range of reasonable professional assistance; that is, the defendant must overcome the presumption that, under the circumstances, the challenged action `might be considered sound trial strategy.'" Strickland, 466 U.S. at 688-689, 104 S.Ct. at 2065. Strategic choices made after a thorough investigation of law and facts relevant to plausible options are thus virtually unchallengeable. Strategic choices made after a less than complete investigation, however, are reasonable only to the extent that "reasonable professional judgments support the limitations on investigation."
The record in applicant's case clearly demonstrates the decision not to present evidence in the punishment phase of applicant's trial was a strategic one on the part of defense counsel. In an affidavit attached to the writ application, trial counsel for applicant stated:
"... There was mitigating evidence available in Troy's case that was not presented on his behalf.
"The reason for this is because it was my understanding that Texas law did not allow any instructions to supplement or modify the death penalty questions under the capital murder statute. I screened the available evidence because I did not want to give the State any more evidence for the jury to use against Troy in answering those questions. If I believed the trial court would have given the jury some sort of instruction that they could consider certain evidence as pure mitigation as Penry v. Texas provides, and not in direct relationship to the two questions, I would have introduced evidence about Troy's father's and mother's histories of mental problems and the effects it had on Troy. I would also have introduced evidence of early childhood abuse and behavioral problems and various attempts to acquire help.
"... I have attached copies of psychiatric evaluations in my possession at trial time."
Trial counsel further emphasized that this was a strategical choice at the hearing on applicant's writ for habeas corpus when he stated:
"... [W]hat we are asking forthe evidentiary hearingis for the opportunity to develop, on the record, evidence that was available to us at Troy Kunkle's trial that we did not use. The reason we didn't use it was because at the time that case was decided, the Texas law said that the jury issues in a death penalty case *506 were only two; they were, was the crime deliberate, and wasdid the evidence show, beyond a reasonable doubt, whether there was a likelihood that the defendant would engage in future acts of criminal conduct.... There is a certain type of evidence that the Texas statute didn't take into consideration, and that's evidence that might be both mitigating, but might also show either deliberation or show that the defendant would get in trouble in the future."
There is absolutely no evidence that this strategic choice by applicant's counsel was based on anything less than a thorough and complete investigation of the facts and law at the time of trial. See Romero v. Lynaugh, 884 F.2d 871, 876-877 (5th Cir. 1989) (trial counsel not ineffective for failing to argue youth, intoxication and family background as mitigating at sentencing when such was before the jury; dramatic strategy at sentencing did not render him ineffective); DeLuna v. Lynaugh, 873 F.2d 757, 758-759 (5th Cir.1989) (trial strategy not to emphasize youth, intelligence level, and substance abuse reasonable; failure to put on family to beg for life not unreasonable).
It is quite clear, that under the law at the time, applicant's mitigating evidence would have been admissible. Jurek v. Texas, supra; Lockett v. Ohio, 438 U.S. 586, 98 S. Ct. 2954, 57 L. Ed. 2d 973 (1978); Eddings v. Oklahoma, 455 U.S. 104, 102 S. Ct. 869, 71 L. Ed. 2d 1 (1982); Quinones v. State, 592 S.W.2d 933, 947 (Tex.Cr.App.1980); Article 37.071, V.A.C.C.P. Jurek, Lockett, Eddings and Quinones, supra, were all decided prior to applicant's trial and held that a defendant must be entitled to present evidence of any mitigating circumstances when he is on trial for his life.[6] We refused to consider the affidavits attached to applicant's writ in deciding the merits of applicant's Penry claim, but in the interest of justice, we have carefully reviewed them to determine whether the withheld evidence was admissible at punishment.
The affidavits contain evidence of applicant's parents' mental histories and allegations by trial counsel that he also had evidence of early abuse and behavioral problems. Evidence of a difficult family history and emotional disturbance has long been admissible by defendants in the penalty stage of a capital murder case. See McGautha v. California, 402 U.S. 183, 193, 91 S. Ct. 1454, 1460, 28 L. Ed. 2d 711 (1971); Burns v. State, 761 S.W.2d 353, 358 (Tex. Cr.App.1988). Applicant's trial counsel, however, made a tactical decision to neither present nor proffer this evidence at the punishment stage. Applicant would have this Court, using hindsighti.e., considering his trial counsel's trial tactics in light of the subsequent decision in Penryhold that trial counsel did not perform reasonably. But this Court previously held that counsel's performance is to be evaluated at the time of trial. Butler v. State, 716 S.W.2d 48, 54 (Tex.Cr.App.1986). We are unable to conclude that such a deliberate decision, under the circumstances and after a thorough investigation of available mitigating evidence, rendered applicant's trial counsel unreasonable at the time of trial. May v. Collins, 904 F.2d 228, 232 (5th Cir.1990). Relief is therefore denied on applicant's fifth claim.
In his second claim, applicant alleges that the trial court erred in refusing to define "deliberately" in the charge to the jury.[7] Applicant contends that this refusal prevented the jury from considering all mitigating evidence and giving it a reasoned moral response in violation of the *507 Eighth and Fourteenth Amendments. This Court has repeatedly held that the trial judge's failure to define "deliberately" in the jury charge does not constitute error. Cantu v. State, 842 S.W.2d 667 (Tex.Cr. App.1992) and the cases cited therein. See Jurek v. Texas, 428 U.S. at 270-272, 96 S.Ct. at 2956. Applicant's second claim is overruled.
Accordingly, all habeas relief is denied.
MALONEY, J., dissents.
CLINTON, Judge, dissenting.
The majority rejects applicant's contentions that he was entitled to an instruction on mitigating evidence to account for his proof of voluntary intoxication, disadvantaged background, and youth. My dissenting views have been ventilated elsewhere, and I fall back on those now. See e.g., Ex parte Rogers, 819 S.W.2d 533 (Tex.Cr.App. 1991) (Clinton, J., dissenting); Lackey v. State, 819 S.W.2d 111 (Tex.Cr.App.1991) (Clinton, J., dissenting on appellant's motion for rehearing); Jackson v. State, 822 S.W.2d 18 (Tex.Cr.App.1991) (Clinton, J., dissenting to refusal of appellant's motion for rehearing). Because the Court also denies applicant relief on his Sixth Amendment ineffective assistance of counsel claim, I write further.
For a number of years this Court failed to comprehend the full impact of decisions of the United States Supreme Court in Lockett v. Ohio, 438 U.S. 586, 98 S. Ct. 2954, 57 L. Ed. 2d 973 (1978) and Eddings v. Oklahoma, 455 U.S. 104, 102 S. Ct. 869, 71 L. Ed. 2d 1 (1982). Accordingly, the Court held that there was no Eighth Amendment problem with the operation of Article 37.071, V.A.C.C.P., at least so long as capital defendants were allowed to present unlimited mitigating evidence at trial. It did not matter to the Court that under our statutory scheme jurors might have no occasion to effectuate that evidence.
"Rather than acknowledge the circumstantial inadequacy of 37.071(b)(2) to accomplish the mandate of Lockett and its progeny, a majority of this Court has blithely said, time and again, that in considering whether to impose a death sentence the jury must be allowed to consider whatever evidence of mitigating circumstances the defense can bring before it. But they have also repeatedly denied the utility, much less necessity, of informing the jury that they may so consider the evidence."
Stewart v. State, 686 S.W.2d 118, 126 (Tex. Cr.App.1984) (Clinton, J., dissenting). Indeed, until the decision in Penry v. Lynaugh, 492 U.S. 302, 109 S. Ct. 2934, 106 L. Ed. 2d 256 (1989), this Court steadfastly refused to acknowledge what the Supreme Court found to be a principle firmly embedded in its Eighth Amendment jurisprudence, viz: that jurors must be empowered to give full effect to all mitigating evidence, not just that which militates in favor of negative answers to our particular statutory special issues. Allowing presentment of mitigating evidence having no bearing on special issues was certainly correct; but it was hardly all that the Eighth Amendment required. By repeatedly denying "the utility, much less the necessity" of providing the jury a mechanism by which to assess a penalty less than death on the basis of such evidence, this Court offered a placebo, not a remedy.
But alas, the placebo has proved to be an elixir, a veritable cure-all. For today the majority holds what was intimated in Ex parte Herrera, 819 S.W.2d 528 (Tex.Cr. App.1991), viz: that because consistent with our caselaw applicant could have presented any mitigating evidence he wished at trial, his failure to do so amounted to no more than a choice of strategy, not ineffective assistance of counsel. I would readily accept such reasoning in a post-Penry prosecution. In that context counsel will know that presentment of mitigating evidence that goes beyond the scope of special issues will entitle him to an instruction to which the jury can respond with a life sentence. If counsel is afraid that such evidence has a greater tendency to persuade the jury to answer a special issue "yes," however, than it has to persuade that life is a more appropriate response irrespective of the answers to special issues, he may certainly make the strategic *508 decision to forgo presenting that evidence to the jury. It would not occur to me to call that ineffective assistance of counsel. But in a pre-Penry prosecution, given this Court's caselaw, presenting mitigating evidence outside the special issues would not assure counsel of a jury instruction. If the evidence militates in favor of affirmative answer to a special issue, it would only hurt his client, without any potential trade-off. This Court induced the tactical decision not to present mitigating evidence by insisting that presentment was all he was entitled to under the Eighth Amendment. How ironic that the Court now holds counsel was not ineffective in failing to present that evidence because he was, after all, entitled to present it under our then-extant caselaw.
"We should not now deny a Sixth Amendment ineffective counsel claim because of a court induced `tactical' decision to avoid helping the State satisfy its burden of proof. See May v. Collins [904 F.2d 228], at 232-34 [(CA 5 1990)] (Reavley, J., concurring)."
Ex parte Herrera, supra, at 532 (Clinton, J., dissenting). Because the majority does, I respectfully dissent.
BAIRD, J., joins.
NOTES
[1] Applicant also contends in point 13 that his "rights under the Sixth and Eighth Amendments to the Constitution were violated because the jurors in [his] case were never told by the court or by counsel, whether at voir dire, during the trial, in argument, or by instruction, that they could consider and give effect to mitigating evidence to determine whether to sentence the [applicant] to death as required by Penry." This is merely a combination of applicant's claims under 4 and 5, and its disposition is controlled by the disposition of those claims.
[2] Article 37.071, V.A.C.C.P., states, in part:
"(a) Upon a finding that the defendant is guilty of a capital offense, the court shall conduct a separate sentencing proceeding to determine whether the defendant shall be sentenced to death or life imprisonment....
"(b) On conclusion of the presentation of the evidence, the court shall submit the following three issues to the jury:
"(1) whether the conduct of the defendant that caused the death of the deceased was committed deliberately and with the reasonable expectation that the death of the deceased or another would result;
"(2) whether there is a probability that the defendant would commit criminal acts of violence that would constitute a continuing threat to society; and
"(3) if raised by the evidence, whether the conduct of the defendant in killing the deceased was unreasonable in response to the provocation, if any, by the deceased."
Acts 1973, 63rd Leg., p. 1125, ch. 426, art. 3, § 1, eff. June 14, 1973. Amended by Acts 1981, 67th Leg., p. 2673, ch. 725, § 1, eff. Aug. 31, 1981; Acts 1985, 69th Leg., ch. 44, § 2, eff. Sept. 1, 1985.
Article 37.071 was amended effective Sept. 1, 1991, but appellant was tried under the statute as amended in 1985. All references in this opinion will be to Article 37.071 as stated above.
[3] We note that although applicant failed to object to the statutory instructions given at punishment or to request a specific mitigating instruction, i.e., a Penry instruction, this Court has determined that allegations of Penry error occurring in cases tried before Penry will not be procedurally barred on appeal. Black v. State, 816 S.W.2d 350 (Tex.Cr.App.1991) (Campbell, J., concurring to Part II B). Furthermore, we have held that such claims are cognizable via habeas corpus despite an applicant's failure to raise them on direct appeal. Ex parte Goodman, 816 S.W.2d 383, 385 (Tex.Cr.App.1991). Therefore, applicant's Penry claims are properly before this Court in this application for habeas corpus.
[4] The expert testified as follows to the results of a person ingesting a combination of drugs and alcohol:
"[He] would be grossly impaired in terms of the higher intellectual functions, and that is that they would have the inability to concentrate, inability to remember. Their judgments would be impaired. They would also suffer gross motor abnormalities and also sensory abnormalities at that concentration of alcohol...."
[5] No evidence was offered to show that applicant suffered from a limited intellectual ability or that he was deprived of an education. In fact, the State tried to introduce evidence of applicant's intelligence and psychological testing results but was prevented from doing so when the trial court sustained applicant's objections to such. Moreover, applicant offered no evidence comparable to that in Penry, i.e., that applicant was mentally retarded, suffered from organic brain damage or had an inability to learn.
[6] Applicant committed the offense in 1984 and was tried and convicted subsequent to that. We also note here that Penry was decided on June 26, 1989, and applicant's Writ of Certiorari was denied by the Supreme Court on July 3, 1989.
[7] Applicant requested that the jury be instructed that:
"[A]s used in the first special issue, the word `deliberately' has a meaning different and distinct from the word `intentionally' as the word was previously defined in the charge. The word `deliberately' as used in the first special issue means a manner of doing an act characterized by or resulting from careful consideration, a conscious decision involving a thought process which embraces more than mere will to engage in the conduct."
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535 S.W.2d 201 (1976)
Dan FINCH et ux., Appellants,
v.
TEXAS EMPLOYERS' INSURANCE ASSOCIATION, Appellee.
No. 8347.
Court of Civil Appeals of Texas, Texarkana.
March 9, 1976.
Rehearing Denied April 13, 1976.
*202 John E. Agnew, Carter, Jones, Magee, Rudberg, Moss & Mayes, Dallas, for appellants.
Wayne Pearson, Burford, Ryburn & Ford, Dallas, for appellee.
CORNELIUS, Justice.
This is a breach of contract suit brought by Dan Finch and wife against Texas Employers' Insurance Association based upon a compromise settlement agreement which paid Finch $40,194.93 in workmen's compensation and medical benefits for total and permanent disability, and provided that Texas Employers' would ". . . pay for all future hospital and medical expenses, if any, ... authorized in advance by the association." Finch alleged that Texas Employers' refused to pay for certain nursing services he had incurred since the settlement, and that it committed an anticipatory breach of the agreement by refusing to authorize future services and by repudiating any obligation on its part to pay for them. Finch sought to recover the value of nursing services previously performed by his wife, and damages amounting to the value of future nursing services for the remainder of his life.
After settling his workmen's compensation claim with Texas Employers', Finch had brought a third party tort action against Big Chief Drilling Company, alleging it was responsible for his injuries. As a result of that suit, Finch was awarded $250,000.00, and out of that award Texas Employers' was reimbursed for the initial benefits it had paid Finch pursuant to the settlement agreement.
The trial court granted Texas Employers' motion for summary judgment, which contended that Finch could not recover because (1) by reason of Sec. 6a of Article 8307, Tex.Rev.Civ.Stat.Ann., Finch's recovery in the third party tort action waived his right to future medical expenses under the compromise settlement agreement, or in the alternative, Texas Employers' was subrogated to Finch's third party recovery to the extent that it had no liability for medical expenses until the award in the third party action was first used for those purposes, (2) no "medical services" as contemplated by the compromise settlement agreement had actually been performed, and (3) no recovery could be had for medical services not yet performed.
Article 8307, Sec. 6a, as amended in 1973, provides that the net amount recovered from a third party action shall be applied to reimburse the association for past benefits and medical expenses it has paid, and any amount in excess of those benefits shall be treated as an advance against future benefit payments of compensation which the injured party is entitled to receive. But the events pertinent to this cause of action occurred prior to the 1973 amendment when Sec. 6a provided in part as follows:
"Where the injury ... was caused under circumstances creating a legal liability in some person other than the subscriber to pay damages in respect thereof, the employé may at his option proceed either at law against that person... or against the association . . but not against both, and if he elects to proceed at law against the person other than the subscriber, then he shall not be entitled to compensation under this law. If compensation be claimed under this law by the injured employé . . . then the association shall be subrogated to the rights of the injured employé in so far as may be necessary and may enforce... the liability of said other person, and in case the association recovers a sum greater than that paid or assumed by the association to the employé ... then out of the sum so recovered the association shall reimburse itself and pay said cost and the excess so recovered shall *203 be paid to the injured employé . .."
There is no equitable right of subrogation as to workmen's compensation benefits paid by an insurance carrier. Fidelity Union Casualty Co. v. Texas Power & Light Co., 35 S.W.2d 782 (Tex.Civ.App. Dallas 1931, writ ref'd); Fox v. Dallas Hotel Co., 111 Tex. 461, 240 S.W. 517 (1922); Aetna Life Ins. Co. v. Otis Elevator, 204 S.W. 376 (Tex.Civ.App. Galveston 1918, writ ref'd). Therefore, Texas Employers' subrogation rights as to future medical expenses in this case must be found, if at all, in Sec. 6a as it existed prior to the 1973 amendment. In construing that section our Supreme Court said in Watson v. Glen Falls Insurance Company, 505 S.W.2d 793 (Tex.1974):
"The legislators ... did not draft the statute with future medical payments in mind; the objective was to protect the compensation carrier's subrogation rights to the initial award. Medical payments were nonexistent in 1917."
. . . . .
"A harmonizing of the statute leaves only one conclusion; the Legislature did not intend to include future medical payments within the election provision of Section 6a. The recent amendment to Section 6a bears this out. Section 6a now considers any excess over the initial compensation claim recovered in a third-party action as an advance against future medical payments." (emphasis supplied).
. . . . .
Since Sec. 6a prior to its amendment did not apply to future medical expenses, Finch's recovery in the third party action did not waive his right to them, and Texas Employers' subrogation rights extended only to the initial benefits paid under the terms of the compromise settlement agreement.
As shown by the motions for summary judgment and supporting proof, there are genuine issues of fact as to whether nursing services of the character covered by the compromise settlement agreement had actually been performed, and whether Texas Employers' had refused to authorize future services in such a way as would constitute an anticipatory breach of its agreement, for which damages would be recoverable. See 13 Tex.Jur.2d, Contracts, Sec. 309, p. 562; Sec. 315, p. 572; Sec. 316, p. 574. Summary judgment was therefore improper.
The judgment of the trial court is reversed and the cause is remanded for trial on the merits.
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367 A.2d 653 (1976)
Marlene B. PEARSON and William J. Pearson, her husband, Plaintiffs,
v.
George J. BOINES, M.D. and George P. Liarakos, M.D., Defendants.
Superior Court of Delaware, New Castle County.
Submitted October 8, 1976.
Decided December 17, 1976.
Arthur J. Sullivan, Wilmington, for plaintiffs.
*654 Stuart B. Young, of Young, Conaway, Stargatt & Taylor, Wilmington, for defendant Boines.
Jane R. Roth, of Richards, Layton & Finger, Wilmington, for defendant Liarakos.
O'HARA, Judge.
This is a medical malpractice case. Defendants have moved for dismissal on the grounds that plaintiffs' claim is barred by the statute of limitations.
In early 1972, Dr. Boines, a specialist in multiple sclerosis, examined Mrs. Pearson and concluded that she was suffering from the disease. He advised her that she should have no more children and went on to recommend that she have something done so she could not. On March 27, 1972, Mrs. Pearson signed a consent to have a sterilization operation performed by Dr. Liarakos, a specialist in obstetrics and gynecology. Two days later, Dr. Boines wrote Dr. Liarakos confirming a diagnosis of multiple sclerosis and suggested a tubal ligation as an "absolute medical necessity." Plaintiffs allege also that Mrs. Pearson was led to believe the operation was of this extreme importance. On May 23, 1972, the operation was successfully performed.
However, two years later, in mid-1974, Mrs. Pearson's treating physician, Italo V. Monteleone, M.D., allegedly told her she did not have multiple sclerosis and never did. Plaintiffs argue it was at this point that the Pearsons learned the sterilization had not been necessary. Plaintiffs have also filed an affidavit of another doctor saying sterilization is not required even with multiple sclerosis. In addition, they have cited writings by experts whose opinions amount to much the same conclusion.
Judge Joseph T. Walsh of this Court, in Pearson v. Boines, unreported opinion, C. A. 1097 (1976), denied defendants summary judgment motion based on the grounds that no issue of material fact existed. The motion now before the Court raises the two year statute of limitations as a bar to the suit since the operation occurred in May, 1972 and the complaint was filed November 21, 1974.
Obviously, defendants will prevail in this argument unless some theory is found which has operated to toll the statute and permit the suit. Plaintiffs argue that the "inherently unknowable injury" theory, the only such theory specifically adopted in Delaware for this purpose, applies. They cite Layton v. Allen, Del.Supr., 246 A.2d 794 (1968). That case stood for the proposition that an injury is sustained when the harmful effect first manifests itself and becomes physically ascertainable. Plaintiffs argue that this occurred when Dr. Monteleone informed Mrs. Pearson that she did not have multiple sclerosis. Defendants counter by saying that the injury was Mrs. Pearson's inability to have children, a fact perceptible to her from the time of the operation. Only in a case where the plaintiff is blamelessly ignorant of the injury and the wrongful act, they argue, will the statute of limitations not run. Layton v. Allen, supra.
The Court must conclude that plaintiffs' reliance on Layton v. Allen, supra, is misplaced. The holding of the case, having dealt with unknowable conditions in a physical sense, is far too narrow to embrace the situation here, where the physical state of Mrs. Pearson was immediately manifest. See also, Lembert v. Gilmore, Del.Super., 312 A.2d 335 (1973); Bradford, Inc. v. Travelers Indemnity Company, Del.Super., 301 A.2d 519 (1972).
Although it certainly appears that the lay person should be protected in his natural and necessary reliance on the medical doctor, defendants seem well supported by Delaware case law in their argument that it is the sterilization itself which constitutes the injury. A different set of rules may one day be formulated for the situation where an operation is successful and *655 its effects clearly known, but the wisdom of such operation is called into question later. However, when and if such a rule is formulated it will have to be cloaked with proper safeguards to prevent a plaintiff from bringing a suit on the basis of one isolated doctor's opinion many years after the operation or treatment. Presumptions as to lack of due diligence could also be incorporated. In any event, it is not for this Court to set up a special rule for the type of case presented here, but rather for the legislature.
It should be noted that there has been some uncertainty as to which statute of limitations was applicable: 10 Del.C. § 8119; or 18 Del.C. § 6856, signed April 26, 1976, and having subsequent immediate effect on "pending" malpractice cases unless it "would work injustice." 18 Del.C. § 6856. The new law applies generally a two year statute of limitations except "in the event of personal injury the occurrence of which, during such period of two years, was unknown to and could not in the exercise of reasonable diligence have been discovered by the injured person." In such cases, the action may be brought within three years of the occurrence.
Defendants' position is that the same reasoning applies even under the new statute; that is, the injury (sterilization) was immediately discernible at the time of the operation. Plaintiffs' position is that application of the new statute has no effect on the case. The Court is willing, for purposes of this motion, to accept both positions and will view 18 Del.C. § 6856 as codifying the Layton v. Allen, supra, rule to allow plaintiffs one extra year over the usual two in which to bring suit in cases of inherently unknowable injury, which, we have already decided, is not present here. Since the complaint here was filed less than three years after the sterilization operation, it becomes irrelevant for the purposes of this motion to determine which statute of limitations applies.
The factual situation not fitting within the "inherently unknowable injury" mold, and no other theory being advanced upon which the statute can be tolled, the Court must conclude that the statute of limitations has run. The motion to dismiss is, therefore, granted.
IT IS SO ORDERED.
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367 A.2d 714 (1977)
Paul A. RUSSO et al.
v.
STEARNS FARMS REALTY, INC., et al.
No. 75-321-Appeal.
Supreme Court of Rhode Island.
January 7, 1977.
*715 Corcoran, Peckham & Hayes, Kathleen Managhan, Joseph T. Houlihan, Newport, for plaintiffs.
Swan, Keeney, Jenckes & Asquith, Conrad M. Cutcliffe, Providence, for defendants.
OPINION
BEVILACQUA, Chief Justice.
This is a civil action which seeks to quiet title to certain real property located in the town of Jamestown by virtue of the adverse possession by the plaintiffs and their predecessors in title for the statutory period in accordance with G.L.1956 (1969 Reenactment) § 34-7-1. Trial was held before a justice of the Superior Court sitting without a jury. The trial justice awarded title to the plaintiffs and the defendants initiated this appeal from that judgment. We affirm.
The plaintiffs and their predecessors in title were under the impression that they owned certain land contiguous to the south and west of the land to which they hold record title and upon which their house is located.[1] According to the recorded title, plaintiffs' southern boundary lies 3 inches from their house. The defendants hold record title to the disputed land both to the south and to the west.
The plaintiffs and their predecessors in title used the land immediately to the south of the house as a driveway, regularly parking their vehicles in this area. The remainder of the southern portion of the disputed property is cleared land surrounded by woods. This area has been cleared and used for recreation by plaintiffs and their predecessors in title for more than 10 years. When the Martins, plaintiffs' immediate predecessors in title, lived in the *716 house, this southern portion was used by them as a play area for their grandchildren. In the southeast corner of the cleared land, the Martins had a swing set and a brick barbecue. In addition, there was a sandbox and picnic table on this portion of the disputed land. There was testimony by Mrs. Martin that they used this property to the south of the house frequently for cookouts and family outings. They also performed general maintenance work, cutting grass, raking acorns, and cleaning up branches.
The plaintiffs, like the Martins, used this area for recreation. They replaced the swing set left by the Martins with their own which they placed in the southwest corner of the property. In this corner, they also had a dog house. They installed two horseshoe pits near the southern edge of the clearing; they repaired the brick barbecue and set up a new picnic table. In addition, plaintiffs put up a split rail fence along East Shore Road on the southeastern side of this portion of the disputed land. They improved the driveway, putting in gravel; they cut down a birch tree, and planted ten to twelve evergreen trees to the south of the driveway in the cleared area. In addition to improving the area, plaintiffs performed normal maintenance, cutting the grass, raking acorns and clearing the driveway.
On the western portion of the disputed land was a garage with an attached shed. These buildings were in existence at the time the Martins purchased their house. The Martins used the shed for storage of garden tools and children's playthings. Behind these buildings and further to the west was an outhouse which was used by the occupants of the house from the late 1920's until sometime in 1963 or 1964 when the Martins installed indoor plumbing and tore the outhouse down. They filled in the remaining hole so that, according to testimony, their grandchildren could safely play in this area of the yard.
Soon after plaintiffs purchased the house, they tore down the garage, leaving the shed. The plaintiffs remodeled the shed and used it as a stall for their children's pony. The plaintiffs cleared some of the brush and built a corral fence around this portion of land to the west of the house. In addition, they planted grass to the west of the driveway.
The defendants contend that the trial justice erred in finding that plaintiffs had acquired title to the land by adverse possession thereof for several reasons: first, that plaintiffs failed to sustain the burden of establishing such adverse possession by strict proof; second, that plaintiffs failed to establish that the use of the western portion was continuous; third, that plaintiffs failed to establish that their use of the southern portion was exclusive and uninterrupted; and fourth, that there was insufficient evidence to support the finding that plaintiffs' adverse possession extended 70 feet south from their house. In addition, defendants argue that the trial justice assumed facts not in evidence in evaluating the testimony of Terrance F. McGaughan, one of the defendants, and that he improperly used the view he took of the property as evidence. We find none of these arguments sufficient to mandate reversal of the trial court decision.
I
To acquire title to land by adverse possession, a claimant must prove actual possession of the property claimed and acts of dominion over that property as required by law. Dodge v. Lavin, 34 R.I. 514, 84 A. 857 (1912). The generally accepted rule is that the possession required to acquire title pursuant to this statute must be actual, open, notorious, hostile, under claim of right, continuous and exclusive. Sherman v. Goloskie, 95 R.I. 457, 188 A.2d 79 (1963). As this court has frequently stated, claimants must establish each of these elements of possession by *717 strict proof; that is, proof by a proponderance of the clear and positive evidence. Finocchiaro v. Francescone, 97 R.I. 371, 198 A.2d 37 (1964); Sherman v. Goloskie, supra; Day. v. Proprietors of Swan Point Cemetery, 51 R.I. 213, 153 A. 312 (1931). The determination of whether claimants sustained their burden of proof involves an exercise by the trial justice of his factfinding power. It is well-settled that the trial justice's findings of fact will be upheld unless they are clearly wrong or unless he has misconceived or overlooked material evidence. 1 Kent, R.I.Civ.Prac. § 52.5 at 384 (1969). Here the trial justice found that the acts of dominion upon which plaintiffs relied to establish adverse possession were sufficient to manifest an intent to oust the true owner thereof and to put the true owner on notice of the claim of ownership. From a close examination of the record, we are unable to perceive that the trial justice either overlooked or misconceived any material evidence bearing on the issues or that the evidence adduced to support the claim of adverse possession is not clear and positive.
The defendants argue that because there was a gap in the use of the western portion of the disputed land, plaintiffs failed to establish the requisite continuity of possession. They claim that the use of the area ceased in 1963 or 1964 when the outhouse was removed, and did not resume until 1967 when plaintiffs built a corral. However, evidence was adduced at trial that the Martins and their predecessors used the outhouse for more than 10 years prior to its removal. This `continuous use for the statutory period was sufficient to establish adverse possession to this portion of land. In addition, the apparent gap in use did not break the continuity of possession. Since the land in dispute was relatively unimproved rural land, continual use was not necessary. As we stated in La-Freniere v. Sprague, 108 R.I. 43, 52-53, 271 A.2d 819, 824 (1970):
"It is true that the continuous and uninterrupted possession required to constitute adverse possession by the statute does not require a constant use of the occupied area. It is necessary that it be continuous only in the sense that the claimant exercised a claim of right without interference at such times as it was reasonable to make a proper use of the land. [citation omitted]. * * * [T]emporary breaks in the use to which the occupier was putting the disputed area do not necessarily destroy the requisite continuity."
Essentially, the test is whether the use to which the land has been put is similar to that which would ordinarily be made of like land by the owners thereof. Sherman v. Goloskie, supra 95 R.I. at 466, 188 A.2d at 84. An examination of the record reveals acts of possession that took place during this period of time. The Martins removed the outhouse; they filled in the hole that remained so that their grandchildren could safely play in this area. Furthermore, the shed which stood on this land was used by the Martins throughout this period of time. These acts of dominion were sufficient to provide notice to the world that the Martins claimed title to this land. Therefore, we conclude that the trial justice did not err in finding that plaintiffs acquired title to the western portion of land by adverse possession.
With regard to the southern portion of the disputed land, defendants argue: (1) that there was insufficient evidence to justify the trial justice's finding that plaintiffs' possession extended 70 feet south from their house, and (2) that defendants' posting of "No Hunting" signs on this property established that plaintiffs' possession was not exclusive and uninterrupted.
The defendants' first argument is based on the fact that the largest estimate of the size of the grassy area was 40-50 feet. *718 The defendants thus argue that there is no evidence to support the trial justice's award of an area 70 feet south of the house. The defendants' argument, however, overlooks other testimony. While the estimates of the extent of the grassy area given by the witnesses varied from 20-30 feet to 40-50 feet, most of the witnesses agreed that the present extent of this cleared area was the same as it had been throughout the statutory period. Thus, the trial justice could properly have decided to disregard the witnesses' estimates as unreliable; there was sufficient evidence that the present extent of the clearing was the area actually possessed by plaintiffs and their predecessors.
The defendants' posting of "No Hunting" signs did not establish as a matter of law that plaintiffs' possession was nonexclusive or interrupted. Mrs. McGaughan, one of the defendants, testified that she posted "No Hunting" signs within 40 to 50 feet of the house. John J. Martin, plaintiffs' predecessor in title, corroborated her testimony; however, he also testified that he saw her posting signs on the border of his property which he believed to be where the clearing met the wooded area. As a result, the trial justice could have concluded that Mrs. McGaughan was not posting signs in the cleared area claimed by plaintiffs, but rather in the wooded area to the south. Her testimony during cross-examination further supports this conclusion. She testified that she did not notice any of the easily identifiable features of the yard, i. e., the fireplace, shed, picnic table, or swing set. Based on this testimony, the trial justice could reasonably have concluded she was not posting signs within the cleared area claimed by plaintiffs.
II
The defendants contend that the trial justice used as evidence his view of the property. The taking of a view is not per se error, but a view is not evidence; it is intended as a device to enable the judge or jury to better comprehend and apply the evidence adduced at trial. Corrado v. Providence Redevelopment Agency, 110 Rawle I. 549, 294 A.2d 387 (1972). The trial justice was aware that the view was not evidence and so stated in deciding to take the view. The defendants argue that the trial justice's mention of the view in his decision establishes that he used it as evidence. They further argue that his alteration of the surveyor's boundaries in the final decision was based only on his view of the property. After a careful examination of the record, we conclude that there was sufficient evidence apart from the view to support the lower court's modification of the survey. As discussed above, there was ample testimony that the extent of the clearing remained unaltered throughout the period of adverse possession. The view could properly be used to interpret and understand the testimony relating to the extent of possession. The trial court's statement, "[t]he photographs in evidence and the view I took of the premises in conjunction with the testimony in this case, leads me to believe that Mr. O'Loughlin missed, in a few instances, the actual lines of occupation which I presume he was trying to reflect," does not establish that he used the view as evidence.
We have examined the defendants' other contentions and find them to be without merit.
The defendants' appeal is denied and dismissed, and the judgment appealed from is of firmed.
PAOLINO, J., did not participate.
NOTES
[1] Since the plaintiffs' possession commenced in 1967, and this suit was initiated in 1974, in order to prove that the disputed land was adversely possessed for the 10 years required by G.L.1956 (1969 Reenactment) § 34-7-1, it was necessary to tack the adverse possession of their predecessors in title, the Martins.
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535 S.W.2d 374 (1976)
Louita D. WILSON, Guardian, Appellant-Appellee,
v.
The GROOS NATIONAL BANK OF SAN ANTONIO, Texas, Appellee-Appellant.
No. 906.
Court of Civil Appeals of Texas, Tyler.
March 11, 1976.
*375 Joel H. Pullen, Tinsman & Houser, Inc., San Antonio, for appellant-appellee, Louita D. Wilson, guardian.
William L. Morrow, Stiernberg, Skaggs & Koppel, Harlingen, Groce, Locke & Hebdon, San Antonio, for appellee-appellant, Groos Nat. Bank.
MOORE, Justice.
This is an appeal from an order of the trial court overruling in part and sustaining in part defendant's plea of privilege to be sued in Bexar County.
On January 29, 1974, plaintiff, Louita D. Wilson, as Guardian of the Estate of Braddie G. Lowe, brought suit in the 63rd District Court, Val Verde County, Texas, against defendant, Groos National Bank, the former guardian of Braddie G. Lowe's estate. On February 27, 1974, defendant mailed its plea of privilege to plaintiff by registered mail, return receipt requested. The plea was not filed with the District Clerk until the following day, February 28, 1974. The bank alleged that no exception to the exclusive venue statute[1] existed and that it was entitled to be sued in Bexar County, the county of its residence. The attorney for plaintiff admits that he received a copy of defendant's plea of privilege in the mail on February 28, 1974. Plaintiff's controverting affidavit was not filed until March 13, 1974, some three days after the ten-day period allowed by Rule 86, Texas Rules of Civil Procedure. On May 15, 1975, the trial court, after a hearing before the court, without the aid of a jury, entered an order granting in part and overruling in part defendant's plea of privilege. The court ordered a portion of the cause against the bank to be transferred to Bexar County, and after a severance of that portion, overruled the bank's plea as to the remainder of plaintiff's suit holding that venue over that portion of the case was properly laid in Val Verde County. Both plaintiff and defendant perfected appeals to this court.
Defendant, Groos National Bank, takes the position that it was entitled to have the entire cause transferred to Bexar County on the ground that plaintiff's controverting affidavit was not timely filed in accordance with Rule 86, supra. We agree with defendant's contention.
*376 Rule 86, supra, provides that a party contesting a plea of privilege must file a controverting affidavit in response thereto "within ten days after he or his attorney of record received the copy of the plea of privilege." The record shows without dispute that plaintiff's attorney received the copy of defendant's plea of privilege on February 28, 1974, and that the controverting affidavit was not filed until March 13, 1974. Thus, the controverting affidavit was filed 13 days after plaintiff received a copy of the plea of privilege rather than within the ten-day period provided by Rule 86.
Plaintiff seeks to sustain the judgment on the ground that she timely filed a sworn motion for extension of time in which to file her controverting affidavit. While plaintiff did file such a motion attempting to establish good cause for the late filing, the record is before us without a statement of facts or findings of fact and conclusions of law. In these circumstances we are not in a position to determine whether any proof of good cause was presented. The mere allegation in a verified motion alleging good cause for an extension of time to file the controverting affidavit is not sufficient; such facts must be established by extrinsic evidence. Poston Feed Mill Company v. Leyva, 438 S.W.2d 366, 369 (Tex.Civ.App.Houston (14th Dist.) 1969, writ dism'd). Absent extrinsic proof of good cause excusing the late filing, the plea of privilege must be sustained and the entire cause transferred to Bexar County. LPG, Inc. v. Development Associates, Inc., 498 S.W.2d 736, 737 (Tex. Civ.App.El Paso 1973, no writ); Bond v. Lewis, 496 S.W.2d 181, 184 (Tex.Civ.App. Waco 1973, no writ); Poston Feed Mill Company v. Leyva, supra.
Plaintiff further seeks to sustain the judgment on the ground that her attorney received the copy of the plea of privilege by mail rather than by actual delivery in person and therefore she is entitled to an additional three days, pursuant to Rule 21a, Texas Rules of Civil Procedure. Rule 21a provides, in part that "Whenever a party has the right or is required to do some act or take some proceedings within a prescribed period after the service of a notice or other paper upon him and the notice or paper is served upon him by mail, three days shall be added to the prescribed period." In view of the specific mandate of Rule 86 requiring the controverting plea to be filed within ten days after it has been "received," we do not believe Rule 21a applies. Rule 86 does not require a party desiring to contest a plea of privilege to take action within ten days of service of the plea of privilege. The rule requires no action at all until the plea of privilege is actually "received" by the adverse party. The rule clearly provides that the controverting plea must be filed within ten days after the plea of privilege is "received."
Where the controverting plea is not timely filed, the trial judge has authority only to enter an order transferring the cause to the county of the residence of the defendant. Alley v. Ponca Wholesale Mercantile Co., 360 S.W.2d 870, 871 (Tex.Civ. App.Amarillo 1962, no writ); Cowan v. State, 356 S.W.2d 170, 172 (Tex.Civ.App. Austin 1962, writ dism'd); Terrell v. Vandergriff, 351 S.W.2d 910, 911 (Tex.Civ.App. Amarillo 1961, no writ). In order to extend the trial court's jurisdiction beyond the ten-day period allowed by the rule, appellee had the burden of proving good cause existed. In the absence of a statement of facts the record fails to show good cause existed. Consequently, the trial court was without power to overrule the bank's plea of privilege after the expiration of the ten-day period and as a result the bank was entitled to have the entire cause transferred to Bexar County.
Accordingly, the judgment of the trial court is reversed and judgment is hereby rendered transferring the entire cause to the District Court of Bexar County, Texas.
NOTES
[1] Article 1995, Vernon's Ann.Texas Statute.
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535 S.W.2d 188 (1976)
Ex parte Allen Edward RUNO.
No. 52028.
Court of Criminal Appeals of Texas.
April 7, 1976.
*189 Jim D. Vollers, State's Atty., Austin, for the State.
OPINION
DAVIS, Commissioner.
Appeal is taken from an order entered after a hearing in a habeas corpus proceeding seeking reduction of bail.
Appellant's application for writ of habeas corpus alleged that appellant was held in confinement by reason of an indictment:
Cause No. 11,793, exercise of control of property, other than real property of the value of more than $200.00 and less than $10,000 without the consent of the owner and with intent to deprive the owner of the property. See V.T.C.A. Penal Code, Sec. 31.03(a)(2). In addition said indictment contains additional paragraphs alleging that appellant has previously been convicted of two felony offenses. Bail $125,000.00.
At the hearing, appellant was allowed to amend his application for writ of habeas corpus to allege that he was further confined and restrained by virtue of an order entered by the Justice of the Peace of Precinct No. 1 of Walker County following an examining trial on February 18, 1976 in Cause No. 133, such order binding appellant over to the grand jury on a charge of possession of a firearm by an ex-felon and setting bond at seventy-five thousand dollars. The amendment alleged that said bail is excessive in amount.
The record reflects that a stipulation was offered in evidence reciting that appellant had been previously convicted in the 54th Judicial District Court of McLennan County, Texas in Cause No. 14,160 on March 11, 1958, for the offense of murder, and that prior to that offense appellant was convicted in Criminal District Court Number Three of Harris County, Texas in Cause No. 68,758, on April 16, 1953, under the name of Allen Edward Runo for the offense of robbery by assault. The record contains the further stipulation that appellant received a full and unconditional pardon in 1973 for all prior felony convictions.
The record reflects the introduction of the indictment in Cause No. 11,793 and the transcription of the court reporter's notes at the examining trial hearing in Cause No. 133 in Justice Court, Precinct No. 1 of Walker County.
After the hearing in the habeas corpus proceeding, the court denied the request to lower the bonds.
Kathy Runo, wife of appellant, testified that bail could possibly be made in the amount of twenty thousand dollars.
*190 The ability or inability of the accused to make bail does not, alone, control the amount. Ex parte Poindexter, 511 S.W.2d 529 (Tex.Cr.App.); Ex parte Von Bierberstein, 487 S.W.2d 345 (Tex.Cr.App.); Ex parte Roberts, 468 S.W.2d 410 (Tex.Cr. App.); Ex parte Nectoux, 455 S.W.2d 249 (Tex.Cr.App.).
Ex parte Roberts, supra, cited Article 17.15, V.A.C.C.P. and quoted the applicable rules contained therein for fixing the amount of bail. Among those rules it is stated that "the bail shall be sufficiently high to give reasonable assurance that the undertaking will be complied with," and "the nature of the offense [as well as] the circumstances under which it was committed are to be considered."
Taking into consideration the "nature of the offense" necessarily involves the punishment permitted under the law. Ex parte Taylor, 531 S.W.2d 335 (Tex.Cr.App.); Ex parte Cascio, 140 Tex. Crim. 288, 144 S.W.2d 886.
Under V.T.C.A. Penal Code, Sec. 12.42, upon conviction in Cause No. 11,793 and a finding that appellant has been previously convicted of two felony offenses, the punishment is for life.
V.T.C.A. Penal Code, Sec. 46.05, provides that, "A person who has been convicted of a felony involving an act of violence to a person or property commits an offense if he possesses a firearm away from the premises where he lives." This offense is classified as a felony of the third degree and upon conviction carries punishment of not more than ten nor less than two years. See V.T.C.A. Penal Code, Sec. 12.34. (Subdivision (b) of Section 12.34, supra, provides that in addition to imprisonment a fine not to exceed $5,000 may be assessed.)
The testimony adduced at the examining trial, introduced into evidence at the habeas corpus hearing, reflects that when appellant was arrested pursuant to a capias issuing after return of indictment in Cause No. 11,793 appellant was alone in an automobile in which one Colt .38 super caliber automatic pistol, one "Colt 357 Python357 Magnum caliber pistol," and one box of .357 Magnum shells were found.
The court is authorized to consider the nature of the offense and fix bail sufficiently high to give reasonable assurance that the undertaking will be complied with.
We find that bail of one hundred twenty-five thousand dollars in Cause No. 11,793 is not excessive. On the other hand, considering the nature and circumstances of the offense in Cause No. 133, we conclude that seventy-five thousand dollars is excessive bail, and order reduction of bail in that cause to five thousand dollars.
No abuse of discretion is shown in denying reduction of amount of bail in Cause No. 11,793 and bail in Cause No. 133 is set at five thousand dollars.
It is so ordered.
Opinion approved by the Court.
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535 S.W.2d 953 (1976)
TEXAS FARM PRODUCTS COMPANY, Appellant,
v.
Charles Curtis LEVA, Appellee.
No. 890.
Court of Civil Appeals of Texas, Tyler.
April 15, 1976.
Rehearing Denied May 6, 1976.
*954 Mike Hatchell, Ramey, Flock, Hutchins, Grainger & Jeffus, Tyler, William Drew Perkins, Lufkin, for appellant.
Dale Friend, Kronzer, Abraham & Watkins, Houston, for appellee.
McKAY, Justice.
Appellee brought this action against his employer, Texas Farm Products Co., appellant, as a common law damage suit for personal injury to his right hand while he was working on his job. Trial was before a jury, and based upon the verdict, the trial court rendered judgment for appellee in the total amount of $91,000. Appellant challenges the action of the trial court by nine points of error.
*955 The court submitted a single issue on negligence, a proximate cause issue, and a damage issue with six separate elements. The jury found against appellant on the negligence and proximate cause issues, and awarded damages to appellee on each element of damage.[1]
Appellant attacks the answers of the jury to subsections (d), (e), and (f) of issue 3 on the grounds that there is no evidence to support the answers, that each such answer is not supported by any probative evidence or by factually sufficient evidence, and that each such answer is against the great weight and overwhelming preponderance of the evidence. Appellant further complains that the damages awarded in each answer in (d), (e) and (f) are excessive.
Appellant is subject to the workmen's compensation provisions in Art. 8306, et seq., but it does not carry workmen's compensation insurance. Even though appellant plead common law defenses of volenti and contributory negligence, no such issues were submitted as they were not available to appellant.
In passing upon the no evidence points, we must view the evidence in its most favorable light in support of the jury finding of the vital fact, considering only the evidence and the inferences which support the finding and rejecting the evidence and inferences which are contrary to the finding. In passing upon the insufficient evidence points we must consider all the evidence in the record, both favorable and unfavorable to the jury verdict, and set aside the verdict and remand the cause if we conclude that the verdict is so against the great weight and preponderance of the evidence as to be manifestly unjust. In re King's Estate, 244 S.W.2d 660 (Tex.1952); Calvert, "No Evidence" and "Insufficient Evidence" Points of Error, 38 Tex.L.Rev. 361 (1960).
Appellee was a 21 year old college student who was employed by appellant to grease and oil and change the filters and fluid in appellant's motor vehicles. After he had worked only a few days, appellee was told to service a forklift. Appellee's immediate supervisor, Murph King, pointed out for him the various grease fittings, location of the oil pan, and the hydraulic fluid compartments. Appellee had never serviced a forklift. In order to drain the oil from the machine, the oil pan bolt which was located underneath the center of the machine had to be loosened and removed. It was necessary to jack up the forklift to gain access to the oil pan bolt. Appellee *956 found a large hydraulic jack near his work station, discovered by investigation how it operated, slid it underneath the rear of the forklift and jacked up the machine. He then serviced that machine including the loosening of the oil pan bolt underneath the center of the forklift.
When he finished that job another forklift was brought to his work stall to be serviced. While appellee was servicing the first forklift, Murph King had observed his use of the big jack, and King brought him a smaller hydraulic jack which King indicated was especially designed for forklifts and directed appellee to use the smaller jack. Appellee proceeded to jack up the second forklift from the rear with the smaller jack. He then attempted to loosen the oil pan bolt but found it was too tight and that he needed a different wrench to apply more leverage to it. As he was withdrawing his right hand from underneath the machine, the forklift slipped from the jack and its wheel caused a severe and crushing injury to his right hand. The record indicates that the lift portion of the jack had not been placed at the proper location underneath the rear of the forklift.
Appellant attacks the jury award of $22,500.00 in damages for loss of earning capacity which appellee will suffer in the future. Appellant argues that damages for diminution of earning capacity are for a general loss of the ability to earn and not just for the loss of the ability to perform a particular kind of work or to pursue specific employment, and that one may suffer no diminished capacity to earn even if his injuries force an abandonment of or an inability to pursue a particular trade or line of employment. Appellant further maintains that where a claimant's earning capacity has only been impaired but not obliterated, the loss of earning capacity can best be shown by comparing his actual earnings before and after his injury.
Appellant cites the old case of El Paso Electric Ry. Co. v. Murphy, 49 Tex. Civ. App. 586, 109 S.W. 489 (1908, writ ref'd), to support its proposition and argument. While the Murphy case holds that evidence of what an injured party earned in salary or wages both before and after his injury is admissible, the case also holds:
"... Where one's earning capacity is not destroyed, but only impaired, the damages he has sustained can be best shown by what he was capable of earning before he was injured and what he was capable of earning afterwards, and the difference will indicate the damages he has sustained. It must be observed that the matter to be determined is not what he actually earned before his injury, but what his earning capacity actually was, and to what extent that capacity has been impaired. ..." (Emphasis added.)
The amount which an injured party might have earned in the future is always uncertain and such amount must be largely left to the sound discretion of the jury, but the verdict must be based on more than conjecture and it must be an intelligent judgment based upon facts of record. McIver v. Gloria, 140 Tex. 566, 169 S.W.2d 710, 712 (1943). McIver further says, "If plaintiff's earning capacity is not totally destroyed, but only impaired, the extent of his loss can best be shown by comparing his actual earnings before and after his injury."
When the contention is made that the jury's evaluation of damages is erroneous the burden of establishing that proposition is upon the party making the complaint. Hammond v. Stricklen, 498 S.W.2d 356 (Tex.Civ.App.-Tyler 1973, writ ref'd n. r. e.); City of Austin v. Selter, 415 S.W.2d 489 (Tex.Civ.App.-Austin 1967, writ ref'd n. r. e.). When an appellant claims that damages awarded by a jury are excessive, "in the absence of an affirmative showing of bias or prejudice the Courts of Civil Appeals will give every intendment to the evidence supporting the verdict." City of Austin v. Selter, supra; Texas Consolidated Transportation Co. v. Eubanks, 340 S.W.2d 830 (Tex.Civ.App.-Waco 1960, writ ref'd n. r. e.).
Appellee dropped out of school after his sophomore year in high school and became *957 employed by Sears in Houston principally repairing bicycles and lawn mowers. He worked there about two and one-half years and was paid approximately $125.00 per week. He then worked at Al's Wholesale Distributor in Houston as a mechanic on power lawn equipment for five or six months with pay at about $140.00 per week. He then married and moved to Pasadena to attend San Jacinto Junior College. After passing a G.E.D. test (a high school equivalent test), he attended San Jacinto two semesters and worked part time at a gasoline service station with general duties at $2.00 per hour. Then he and his wife moved to Nacogdoches so he could attend Stephen F. Austin University. He was not enrolled immediately, and he obtained a job at an Exxon station in Nacogdoches. He worked there only a short time at $2.00 per hour before he was employed by appellant at $1.85 per hour. He had done oil and grease jobs on passenger cars on both service station jobs.
The record shows that as a result of his injury appellee had his little finger on his right hand amputated, his ring finger became permanently stiff in a curved position, and he is unable to make a fist with his right hand.
Appellee had diminished strength in his hand and he cannot grasp objects. His skin is tender and sensitive. He is right-handed. Before the injury he could not only do his work, but he could also type, play tennis and play the saxophone. He can type slowly but cannot grasp a tennis racquet well, nor is he able to play the saxophone. He cannot do automobile or other mechanical work. He has skin grafts on the top of his hand, but there are or were open areas between his thumb and index finger where there was no skin and the tissue was exposed. Dr. Epstein testified he had 20% permanent impairment of the function of his hand, but that he had normal use of the thumb, index and middle fingers.
Since his injury appellee worked again for appellant for $2.00 per hour. He worked a short time for a contractor installing floor covering at one of the buildings on campus at $3.00 per hour, and he was working at Collins Electronics at $1.75 per hour at the time of trial. He was being paid $1.85 per hour at the time of injury. Appellee testified that he was a sophomore student majoring in Political Science and that he hoped to get his degree and then enter law school and receive a law degree.
The record indicates that appellee has had limited working experience since his injury and that at the time of trial he was a college student. He has not been in the general labor market. Even though appellee indicates a strong desire to obtain a degree in Political Science and enter law school, there is no certainty that he can do so. He may be required to work with his hands indefinitely. It is common knowledge that it becomes increasingly difficult to be admitted to law school. We are of the opinion that there is sufficient evidence of probative force to support the answer of the jury to subsection (d) of issue 3, and that such answer is not against the great weight and overwhelming preponderance of the evidence. Neither are we convinced that the award of damages in 3(d) is excessive.
"In determining whether a verdict is `excessive' the courts must review only that evidence favorable to the award, and the findings of the jury thereon will not be disturbed on ground of `excessiveness' if there is any evidence to sustain the award; they will not merely interfere and substitute their judgments, nor is it material that the courts might have awarded a lesser sum as fact finders; there must be some circumstantial indication of bias or prejudice ..." Hammond v. Stricklen, supra, and cases cited.
Appellant's points one, two and three are overruled.
In points 4 through 9 appellant attacks the jury's award of $10,000.00 for physical and cosmetic impairment in the past (issue 3(e)), and the award of $20,000.00 (f) for physical and cosmetic impairment which, in reasonable probability, he will suffer in the future. Appellant charges that there is no *958 evidence, factually insufficient evidence, and that each answer is against the great weight and overwhelming preponderance of the evidence.
Appellant made no objections to the court's charge. The question then evolves into what evidence does the record reveal on the separate issue of physical and cosmetic impairment. The jury was instructed "to consider each element of damage separately so as not to include damages for one element in any other element." Our courts have had difficulty in determining whether recovery for loss of earning capacity and a separate recovery for physical impairment constitutes a double recovery.
In the old case of International & G. N. Ry. Co. v. Butcher, 98 Tex. 462, 84 S.W. 1052 (1905), the court reversed and remanded the case because of the objection that the charge permitted a double recovery by submitting four groups of facts upon each of which the jury was instructed, if they found for the plaintiff, to find damages as follows:
"First. Physical and mental suffering, past and future. Second. The future effect of the injuries upon Butcher's mental and physical health. Third. For any impairment of his ability or capacity to pursue, after he arrives at his majority, the course of life he might otherwise have followed. Fourth. For decreased physical and mental ability to labor and earn money."
The reversal in Butcher was because the "charge separated the effects of the injuries in such way as to allow the jury to assess more than one sum for a disability to earn money."
The Butcher opinion reasoned that:
"The injuries which would produce a future effect upon his physical or mental health would necessarily cause the impairment of his ability or capacity to pursue a calling that he otherwise could have pursued, and such physical and mental impairment as would have the effect in the future to prevent Butcher from pursuing any vocation that he might have chosen would decrease his ability to labor and earn money. The elements of the last three propositions are so blended in their effects upon the sufferer that they are not capable of separation so as to admit of distinct compensation. The decreased capacity to labor and earn money would necessarily be a result of the impairment of physical and mental health, and would be embraced in the incapacity to follow the calling he might otherwise have chosen. Incapacity to earn money could result from nothing except physical or mental injury, and would be embraced in incapacity to pursue any desirable vocation..."
The cases of International-Great Northern R. Co. v. King, 41 S.W.2d 234 (Tex. Comm'n App.1931, holding approved), and Yessler v. Dodson, 104 S.W.2d 95 (Tex.Civ. App.-Amarillo 1937, writ dism'd), followed and cited Butcher, and they, like Butcher, were reversed on objections to the charge. In Missouri, K. & T. Ry. Co. of Texas v. Beasley, 106 Tex. 160, 155 S.W. 183, 187, 188 (1913), the court held that a charge which instructed the jury that they could consider past and future loss of time, decreased capacity to earn money in the future, and past and future mental and physical suffering would permit double recovery. There was an objection to the charge on that ground.
The problem presented here is discussed in Green v. Baldree, 497 S.W.2d 342 (Tex. Civ.App.-Houston (14th Dist.) 1973, no writ), at pages 348, 349, 350:
"It long has been held proper for a trial court in the submission of the damage issue in a personal injury case to direct the jury's attention to the particular elements of damage that may, under the pleadings and evidence, be considered in answering that issue. It is also proper that the court by instruction limit the jury's consideration to those elements of damage so listed. Houston Transit Co. v. Felder, 146 Tex. 428, 208 S.W.2d 880 (1948). It is sometimes difficult to direct the jury's attention to those different elements of damage and at the same time be *959 assured that the jury will not consider one of them twice....
"Another facet of the damage issue in a personal injury case which the courts have considered in connection with the possibility of double recovery grows out of the submission of both loss of earning capacity and physical impairment as separate elements of damage....
* * * * * *
"It would not be proper in every personal injury case to instruct the jury that it might consider loss of earning capacity, pain and physical impairment as separate elements of plaintiff's damage. In order to be entitled to that submission the plaintiff must sustain the burden of proving that the effect of his physical impairment extends beyond any impediment to his earning capacity and beyond any pain and suffering to the extent that it produces a separate and distinct loss that is substantial and for which he should be compensated...."
The question presents itself: Even when there is no objection to the charge that elements of damage separately submitted to the jury for separate answers permit double recovery, may the same evidence be used to award damages to appellee for loss of earning capacity and for physical impairment when the complaint on appeal is no evidence, insufficient evidence and excessive damages? If the jury award for physical impairment was for the loss of earning capacity because of physical impairment it would be a double recovery. Nevertheless, there may be physical impairment which bears no relation to economic loss and does not necessarily affect an injured party's capacity to work and earn money. In the instant case the record reveals that appellee has substantial limitations in typing and playing tennis, and he can no longer play the saxophone because of his physical impairment. In the absence of a proper objection and because the trial court did instruct the jury not to include damages for one element in any other element, the jury could properly find damages for physical impairment. Mikell v. La Beth, 344 S.W.2d 702, 709 (Tex.Civ.App.-Houston 1961, writ ref'd n. r. e.).
"Disfigurement is also a proper element of damage aside from any effect it might have on earning capacity." Houston Lighting & Power Co. v. Reed, 365 S.W.2d 26, 30 (Tex.Civ.App.-Houston 1963, writ ref'd n. r. e.). There is evidence in the record that appellee was reluctant to show his hand to his wife, that he was embarrassed to shake hands, and that there were some portions of the back of his hand where the tissue was exposed.
Since physical and mental pain and suffering, and past and future loss of earning capacity are covered in other issues, the jury could properly award damages for noneconomic physical impairment in 3(e) and for cosmetic disfigurement in 3(f). We find there is factually sufficient evidence to support issues 3(e) and 3(f).
We have pointed out that the burden of establishing that the damages found by the jury are excessive is on the party complaining, and the jury findings will not be disturbed if there is evidence to sustain the award. There must be some indication of bias or prejudice, and in absence of an affirmative showing of these, "the courts of civil appeals will give every intendment to the evidence supporting the verdict." Hammond v. Stricklen, supra, p. 363.
While the aggregate total of the damages is large, we find no reversible error in the record. Appellant's points 4 through 9 are overruled.
Judgment of the trial court is affirmed.
NOTES
[1] "ISSUE NO. 1: Do you find from a preponderance of the evidence that under the facts and circumstances presented to you by the evidence the Defendant, Texas Farm Products Company, or any of its servants, agents or employees, were negligent in failing to provide proper equipment or instruction for the Plaintiff?
"Answer `Yes' or `No'.
"ANSWER: `Yes.'
"If you have answered Issue No. 1 `Yes' and only in that event, then answer Issue No. 2.
"ISSUE NO. 2: Do you find from a preponderance of the evidence that such negligence was a proximate cause of the occurrence in question?
"Answer `Yes' or `No'.
"ANSWER: `Yes.'
"ISSUE NO. 3: What sum of money, if any, if paid now in cash, do you find from a preponderance of the evidence would fairly and reasonably compensate Charles Curtis Leva for his injuries which you find from a preponderance of the evidence resulted from the occurrence in question?
"Answer separately in dollars and cents with respect to each of the following elements:
"(a) Physical pain and mental anguish in the past. ANSWER: `$25,000.00'
"(b) Physical pain and mental anguish which, in reasonable probability, he will suffer in the future. ANSWER: `$12,500.00'
"(c) Loss of earnings in the past, since he last worked for Texas Farm Products Company. ANSWER: `$1,500.00'
"(d) Loss of earning capacity which, in reasonable probability, he will sustain in the future. ANSWER: `$22,500.00'
"(e) Physical and cosmetic impairment in the past. ANSWER: `$10,000.00'
"(f) Physical and cosmetic impairment which, in reasonable probability, he will suffer in the future. ANSWER: `$20,000.00'
"You are instructed that in answering Issue No. 3 to consider each element of damage separately so as not to include damages for one element in any other element."
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01-03-2023
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10-30-2013
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